<PAGE>

                                   FORM 10-K/A
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934                                   $250
                                                  -------------
For the fiscal year ended      December 31, 1995
                         ---------------------------
                                        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   0-23466
                       ----------
                         SHURGARD STORAGE CENTERS, INC.
               --------------------------------------------------
             (Exact name of registrant as specified in its charter)

     DELAWARE                                          91-1603837
-----------------------                      ---------------------------------
(State of organization)                      (IRS Employer Identification No.)



            1201 THIRD AVENUE, SUITE 2200, SEATTLE, WASHINGTON 98101
            ---------------------------------------------------------
            (Address of principal executive offices)   (Zip code)

     Registrant's telephone number, including area code: (206) 624-8100
                                                         --------------

Securities registered pursuant to Section 12(b) of the Act:  None
Securities registered pursuant to Section 12(g) of the Act:

                 Class A Common Stock, par value $.001 per share
                ------------------------------------------------
                 Class B Common Stock, par value $.001 per share
                 -----------------------------------------------
                         Preferred Share Purchase Rights
                         -------------------------------
                                (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 (Section 229.405 of this chapter) 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 this Form 10-K.      X
                                                  ---

     Aggregate market value of voting stock held by non-affiliates of the
registrant as of March 1, 1996:  $594,413,669

    Class A Common Stock outstanding as of March 1, 1996:  23,046,517 shares
      Class B Common Stock outstanding as of March 1, 1996:  154,604 shares

Documents incorporated by reference:  Part III is incorporated by reference from
the proxy statement to be filed in connection with the Company's Annual
Shareholders' Meeting to be held May 14, 1996.

                            There are 26 pages.


<PAGE>

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

OVERVIEW

    The Company is a fully integrated, self-administered, self-managed REIT
headquartered in Seattle, Washington, specializing in all aspects of the self
storage industry.  The Company operates a network of more than 265 storage
centers located throughout the United States and in Europe.  Of these
properties, it owns, as of December 31, 1995, directly and through its wholly
owned subsidiaries and joint ventures, 181 operating properties (including 178
self storage properties), containing approximately 11.8 million net rentable
square feet, located in 19 states.  Self storage properties offer low-cost,
easily accessible storage space for personal and business uses.  The Company's
investment objectives are to maximize shareholder value by increasing funds from
operations through internal growth and through the acquisition and development
of additional self storage properties.  The Company believes that its access to
both the debt and equity markets, the experience of its management team in
acquiring, developing, and operating self storage properties, its geographic
diversification and its emphasis on quality will enhance its ability to achieve
this objective.

    During 1994 and 1995, the Company expanded its portfolio of real estate
properties and real estate based investments through the use of equity and debt
capital.  During 1995, the Company acquired 15 and developed nine new centers
directly or through joint ventures.  The following discussion of the Company's
operations provides additional comparative financial information and discussion
of each of the areas of Company growth, including internal or same store growth,
direct acquisitions, domestic development, European development, property
management operations and other forms of real estate investments.  A discussion
of capital expenditures, financing transactions and liquidity is also included.

When used in this discussion, the words "believes," "anticipates," "projects"
and similar expressions are intended to identify forward-looking statements.
Such statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those projected.  Factors which could
affect the Company's financial results are described below and in Item 1
(Business) of this Annual Report on Form 10-K.  Forward-looking statements are
based on estimates as of the date hereof; estimates are likely to change over
time as additional information becomes known. The Company undertakes no
obligation to publicly release the results of any revisions to these forward-
looking statements reflecting new estimates, events or circumstances after the
date hereof.

INTERNAL GROWTH

    In 1995, management continued its focus on internal growth, i.e.,
increasing net operating income from its existing real estate assets through
revenue optimization and cost  containment.  The Company differentiates its
product from other storage operators through a high quality, high service
strategy that it believes translates into premium rents.  Management implements
this quality strategy by emphasizing customer service and satisfaction,

                                          2

<PAGE>

maintaining convenient and secure stores, and pursuing ongoing market research
and Company marketing programs.  The Company believes the key to the success of
this strategy is the quality of its employees' interaction with customers.
Accordingly, the Company focuses on employee training programs that emphasize a
team-oriented approach to customer service.

    The Company's original portfolio was assembled on March 1, 1994 (the
Consolidation date) through the consolidation of 17 publicly held limited
partnerships (the Predecessor) administered by the Management Company. Real
estate assets acquired consisted of 137 self storage centers (including five
through joint ventures), one commercial building, and two business parks located
in 17 states.

    The Company regularly reviews its asset portfolio, comparing it to
established internal standards, identifying those few properties which can not
economically meet those standards, and disposing of them over time.  Based on
such analysis, during 1995 the Company sold three of its storage centers to an
unaffiliated purchaser.  The sales provided $6.4 million in net proceeds and
resulted in a net gain of $223,000.

    The following table summarizes the operating performance of the storage
centers from the original portfolio:



<TABLE>
<CAPTION>

DOLLARS IN THOUSANDS EXCEPT AVERAGE RENT         YEAR ENDED DECEMBER 31,             YEAR ENDED DECEMBER 31, (1)
                                          -----------------------------------      --------------------------------
                                          PRO FORMA     PRO FORMA        %         PRO FORMA                   %
                                            1993(2)       1994(2)      CHANGE       1994(2)       1995       CHANGE
                                          ---------     ---------      ------      ---------     -------     ------
<S>                                       <C>           <C>            <C>         <C>           <C>         <C>
Rental revenue                              $71,682       $76,445       6.6%       $75,307       $79,616       5.7%
Property operating expenses (3)              23,695        23,958       1.1%        23,383        24,002       2.6%
                                             ------        ------                   ------        ------
Net operating income                         47,987        52,487       9.4%        51,924        55,614       7.1%
                                             ------        ------                   ------        ------
                                             ------        ------                   ------        ------
Avg. Annual rent per sq.ft. (4)              $7.84         $8.25        5.2%        $8.31         $8.87        6.8%
Avg. sq.ft. occupancy                         87%           89%                      89%           88%
Total net rentable sq.ft.                  9,600,000     9,600,000                 9,400,000    9,400,000
No. Of properties (5)                         137           137                      134           134

</TABLE>


---------------
(1) Excludes the three storage centers sold in 1995.
(2) Represents the actual historical results of the properties as if they had
    been acquired by the Company on January 1, 1993.
(3) Includes all direct property expenses.  Does not include property
    management fees previously charged by the Management Company nor does it
    include any allocation of joint expenses incurred by the Company such as
    off-site management personnel.
(4) Average annual rent per square foot is calculated by dividing actual rent
    collected by the average number of square feet occupied during the period.
(5) Includes 100% of the operating results of four properties in which the
    Company owns a 30% interest (operating results for these properties are not
    consolidated in the Company's financial statement), as well as one property
    in which the Company owns a 90% interest (operating results for this
    property are consolidated in the Company's financial statements).

    As demonstrated by the operating information above, the Company's same
store net operating income is primarily driven by its ability to increase
revenues while limiting expense increases.  In order to maximize property
revenue, the Company invests in various programs that enhance its ability to
bring in and keep storage customers.  Providing the best customer service
requires the Company to select exceptional employees and provide them with on-
going quality training.  Company personnel are trained in all aspects of the
storage operation from operating the computer system and closing a telephone
sale to analyzing

                                          3

<PAGE>

demand and pricing strategies.  Personnel are trained and authorized to make
substantially all pricing and customer service decisions on-site, with reference
to the Company's values and mission statement.  The Company continually
evaluates and improves its personnel and training programs.  Another revenue
enhancing program undertaken by the Company in 1994 was the establishment of the
national call center which fields overflow calls from all the individual
properties, providing personal service when on-site employees are not available.
Employees at the national call center are able to market and sell a rental at
the Company store nearest to the caller.

    Net operating income has risen over the last three years due to increases
in revenue, which are a function of changes in rental rates and occupancy.
While storage has a seasonal trend, spring and summer being peak occupancy
periods, the cycle is annual and the revenue trend from 1993 to 1995 reflects
general market changes.  Revenue gains from 1993 to 1994 were driven
approximately 80% by rent increases and 20% by climbing occupancy rates, while
the change from 1994 to 1995 resulted entirely from rental rate increases.  As a
result of competition, the Company does not expect to be able to continue to
increase rental rates in excess of inflation each year over the long-term.

    Industry occupancy rates have risen since 1990 as demand continued to rise
during a period of scarce capital and thus little storage development.
Management believes the month-to-month nature of storage rentals is such that in
order to maintain available product for incoming customers, occupancy in the
high 80s to low 90s is considered "full." Beyond that level, average market
rates will begin to rise.  Management has begun to see development activity pick
up in many of its markets and, due to the increasing competition, does not
expect to be able to raise rents at the same rate as in the past in markets
where development occurs close to the Company's existing stores.  Management
believes that some of its markets will begin to reflect the effect of this
development in 1996 or 1997.

    The following table is a geographical summary of the changes in average
revenues, rates and occupancies for the original portfolio of  storage centers
held by the Company throughout the years indicated:




<TABLE>
<CAPTION>

                     % CHANGE IN              % CHANGE IN RATE PER          % CHANGE IN SQ. FT.
                       REVENUES                       SQ. FT.                     OCCUPANCY
              -------------------------     -------------------------     -------------------------
              93 TO 94        94 TO 95       93 TO 94       94 TO 95       93 TO 94       94 TO 95
              ---------      ----------     ----------     ----------     ----------     ----------
<S>           <C>            <C>            <C>            <C>            <C>            <C>
ARIZONA         16.3%           10.4%          19.8%          21.7%          (5.7%)         (8.4%)
CALIFORNIA       2.8             4.7            4.9            6.9           (3.0)          (1.3)
COLORADO         7.2             5.6           11.2            7.4           (4.9)          (2.7)
FLORIDA          3.1             3.4            0.4            5.6            2.7           (2.8)
ILLINOIS        11.9             4.8            4.9            5.3            5.1           (0.3)
MICHIGAN        14.4            11.9            9.7           10.1            4.2            1.8
NEW YORK         8.8             9.1            2.0            3.4            9.2            5.8
OREGON           9.3             7.3            5.9            7.2            3.6            0.7
TEXAS            3.7             2.7            3.0            7.5            0.2           (4.6)
VIRGINIA         7.8             4.9            5.8            4.0           (1.5)           1.0
WASHINGTON       3.9             5.3            3.3            3.0            0.1            1.3
OTHER            8.7             4.8            6.7            6.6            3.4           (2.2)
              ---------      ----------     ----------     ----------     ----------     ----------
TOTAL            6.6%            5.7%           5.2%           6.8%           1.6%          (1.1%)


</TABLE>



    The Company maintains a diversified portfolio which it believes offers
protection against the individual market fluctuations that result in
geographical performance differences.  Over the last three years, market
conditions in Phoenix,AZ, Detroit, MI, Chicago, IL and New York, NY contributed
to above average revenue increases.  Phoenix, in particular, demonstrates the
Company's use of rate optimization; although occupancy declined in the Phoenix
market, revenues rose well above average due to rate increases.  Market
conditions in

                                          4

<PAGE>

southern California resulted in lower than average revenue growth.  The Florida
and Houston, TX markets have grown below the portfolio average as competition in
these markets has made it difficult to move rates and/or occupancy levels.

ACQUISITIONS

    Although the real estate market has in many cases driven acquisition prices
up, the Company has continued to selectively seek acquisition opportunities for
high quality storage centers that meet existing investment standards.  The
Company also has limited its efforts to pursuing only those centers that enhance
its existing network of stores and thus can be efficiently managed and operated.
In many cases, this has resulted in the purchase of properties previously
managed by the Company under a third-party property management contract.  The
following table summarizes the operating performance of properties acquired
during 1994 and 1995:




<TABLE>
<CAPTION>



DOLLARS IN THOUSANDS EXCEPT AVERAGE RENT                1994 ACQUISITIONS                1995 ACQUISITIONS
                                            ---------------------------------------      -----------------
                                                     YEAR ENDED DECEMBER 31,
                                            --------------------------------------          YEAR ENDED
                                              1994           1995         $ CHANGE       DEC. 31, 1995 (1)
                                            --------       --------       --------       -----------------
<S>                                         <C>            <C>            <C>            <C>
Rental revenue                               $1,920         $5,939         $4,019              $6,352
Property operating expenses (2)                 554          1,957          1,403               1,770
                                            -------        -------        -------              ------
Net operating income                         $1,366         $3,982         $2,616              $4,582
                                            -------        -------        -------              ------
                                            -------        -------        -------              ------
Avg. annual rent per sq.ft. (3)             n/a (4)         $8.01                              10.25
Avg. sq.ft. occupancy                         91%            91%                                86%
Total net rentable sq.ft.                   730,000        730,000                            970,000
# of properties                               20             20                                  15
# of property-months (5)                      80            240                                 115

</TABLE>


----------------

(1) Includes the operating results of the three properties owned by Shurgard
    Institutional Partners in which the Company owns a 59.5% interest.
(2) Includes all direct property expenses.  Does not include property
    management fees previously charged by the Management Company nor does it
    include any allocation of joint expenses incurred by the Company such as
    off-site management personnel.
(3) Average annual rent per square foot is calculated by dividing actual rents
    collected by the average number of square feet occupied during the period.
(4) Information is not available for this period.  Under the prior owner, the
    average rate per square foot for these properties was $7.34.
(5) Represents the sum of the number of months each property operated during
    the year.

    In September 1994, the Company purchased 20 storage centers from an
unaffiliated storage operator based in Raleigh, North Carolina for an aggregate
purchase price of $34 million.  These centers were financed with $30 million
from the Company's lines of credit, a $1 million note to the seller and $3
million in cash.  This acquisition gave the Company a significant presence in
the Raleigh market as well as expanding its presence in Washington DC, Richmond
and Virginia Beach, VA.  For 1995, annual return on this investment, defined as
net operating income divided by the historical investment amount, was 11.4%.

    In May 1995, the Company purchased the limited partner interest in Shurgard
Evergreen Limited Partnership (the Evergreen Partnership), an entity formed in
May 1990 to

                                          5

<PAGE>


develop and own self storage centers, of which the Company is the general
partner. The limited partner interest was owned by a wholly owned subsidiary of
the State Investment Board of the State of Washington. The Evergreen Partnership
developed and owns seven self storage centers directly and, through a joint
venture, owns an interest in an additional three centers.  Three of the centers
are located in the Atlanta, Georgia area, three are located in the Portland,
Oregon area, and one each is located near Philadelphia, Pennsylvania, Phoenix,
Arizona, San Antonio, Texas and Seattle, Washington.  The ten centers have an
aggregate of 630,000 net rentable square feet.  The purchase price for the
limited partner interest in the Evergreen Partnership was $35.5 million which
was financed through the Company's line of credit.  For 1995, annualized return
on this investment, defined as annualized net operating income divided by the
historical investment amount, was 10.8%.

    In addition to these major acquisitions, the Company has also acquired four
self storage properties through individual purchases and one storage property
through the Merger.  These five storage centers, having a total of approximately
340,000 net rentable square feet of storage space, are located and were acquired
as follows:  Daly City, California (March 1995), Taylor, Michigan (March 1995),
Orland Park, Illinois (May 1995), Puyallup, Washington (May 1995) and Madison
Heights, Michigan (June 1995).  The Company continues to evaluate potential
acquisitions from both affiliated and unaffiliated owners.  The Company is
currently discussing possible transactions involving certain affiliated
partnerships, including possible acquisitions of interests in or mergers with
such partnerships.  There are currently no agreements, but the Company intends
to pursue one or more of these transactions in the near future.  Of course,
whether and when the Company will pursue or consummate any particular
transaction depends on a number of factors, and there is no assurance that the
Company will complete any such transaction.

DOMESTIC DEVELOPMENT

    Due to the increased competition for acquisitions in the storage market and
the Company's focus on maintaining its high quality standards and consistent
building design to develop brand awareness, the Company's long-term growth plan
focuses heavily on the development of new storage centers in markets in which
the Company currently operates.  Implementation of this development strategy
began in 1994 and is expected to continue throughout 1996 and beyond.  Each
development project progresses through a series of review processes from initial
review, through due diligence, final review and finally to the land purchase and
construction.  Management's substantial experience in storage development has
aided in the success of this strategy.

    In addition to utilizing the experience of its in-house real estate
development personnel, the Company has begun establishing relationships with
quality storage operators outside its current markets.  Management believes that
the most efficient way to operate storage centers is to saturate a market
thereby creating brand awareness and allowing certain economies of scale in
operation processes and advertisement.  These relationships create instant
presence in a new market as affiliate owned centers begin using the "Shurgard"
name.  In exchange for the use of the Company name, computer, systems and
general operations support services, the affiliate pays the Company an
affiliation fee of 2% of revenues.  Additionally, these affiliation agreements
provide the framework for the joint development of additional storage centers,
allowing the Company to take advantage of the local operators' contacts.  The
Company has signed two such affiliation agreements, one with a Tennessee
developer that began opening jointly developed centers in 1995 and one with a
Florida developer that will begin construction on its first joint development in
1996.

    The Company opened three facilities in Texas (100% owned) and three
facilities in Tennessee (owned through joint ventures) during 1995 and has
numerous projects in various stages of review.  Construction costs on all six
projects completed during 1995 were within


                                          6


<PAGE>

4% of their original projected cost.  All six projects are renting up at or
ahead of plan. The following table summarizes domestic development projects in
progress during 1995:


<TABLE>
<CAPTION>

                                                                ESTIMATED
                                                              COMPLETED COST
                                         # OF PROJECTS          OF PROJECTS
                                       -----------------      --------------
<S>                                     <C>                    <C>
OPENED DURING 1995                              6                 $17 MILLION

CONSTRUCTION IN PROGRESS                        7                 $25 MILLION

LAND PURCHASED PENDING CONSTRUCTION             3                 $14 MILLION

PROJECTS EXPECTED TO OPEN IN 1996            15 - 20

</TABLE>

    In the current real estate environment, management believes that a long-
term strategy of growth through development will result in the highest returns
over the long-term.  A development strategy, however, creates a short-term drag
on earnings during the rent-up phase of a project.  Although interest and pre-
opening costs are capitalized during the construction period, cash flow does not
generally exceed interest expense on development projects for at least the first
year of operations; the timing of positive cash flow cannot be predicted as it
is based on a number of factors including length of construction and timing of
opening dates.  This rent-up deficit was $105,000 in 1995 and the effect will
increase in 1996 as more development locations are opened.  The rent-up deficit
for a typical $3 million project, assuming it takes 21 months to rent-up and it
is financed with debt at 8% to 8.5%, is estimated to be $240,000 to $250,000 in
the first year of operations.  This represents a decrease in FFO of
approximately $.01 per share per property during this initial year.  Despite
this initial rent-up phase deficit, Management believes the Company will, at a
minimum,  be able to maintain current dividend rates in 1996.  The potential of
developing 30 to 40 properties per year sometime after 1996 is presently being
evaluated.  The Company is currently considering various alternatives which, if
implemented, could minimize this rent-up deficit as the volume of development
projects increases.  some of these alternatives include, but are not limited to,
phased development, joint venture development programs, and increasing the rate
at which stores rent-up.

The "projects expected to open in 1996," in the table above, as well as the
number of potential developments after 1996, are forward looking statements from
which actual results may vary materially.  The number of projects could be
reduced by zoning and permitting delays outside of the control of the Company,
increased competition for sites, delays during construction caused by, among
other things, weather, unforeseen site conditions, labor shortages, scheduling
problems with contractors, subcontractors or suppliers, or resource constraints.


EUROPEAN DEVELOPMENT

    During 1995, the Company invested $5.4 million in SSC Benelux & Co., SCS
(hereafter Benelux SCS), a Belgian entity that will own and operate self storage
properties in the Benelux region of Europe. Through its entitlement to a
majority of the seats on the Board, the Company currently has authority to
direct the business affairs of Benelux SCS.  Its percentage interest in economic
benefits from this partnership is 85.6%.  At December 31, 1995, the Company was
obligated to invest an additional $1.6 million under commitments made in 1994
and 154,080,000 Belgian francs (approximately $5.3 million at current exchange
rates) under commitments made during 1995.  The funding for investments made
during 1995 was obtained from the Company's cash flow from operations, proceeds
from the equity offering and available lines of credit.

                                          7


<PAGE>

    The storage industry is not yet well established in much of Europe and
Benelux SCS is in the process of developing the market in the Brussels area.
During 1995, Benelux SCS opened three developed storage centers in Belgian at a
total cost of $10.6 million.  These centers have been funded through a
combination of outside debt and equity capital from both the Company and its
Belgian partner.  Current debt covenants limit the debt to equity ratio to 60%.
Benelux SCS is currently evaluating four additional development sites and plans
to develop two sites during 1996.  Because of the newness of storage to this
market, the rent-up period for these storage centers is expected to be
substantially longer than that of domestic development projects.  Management
estimates that the European sites may take two and a half to three years to
reach a stabilized occupancy of approximately 85%.  The Company's remaining
investment commitment will fund its pro rata share of the negative cash flow
expected during 1996 as well as additional development projects.

OTHER REAL ESTATE INVESTMENTS

    In addition, the Company has made several investments during 1994 and 1995
through participating mortgages, joint ventures and limited partnerships.

    The Company has paid approximately $11.6 million and committed an
additional $400,000 for investment in two 10-year participating mortgage loans,
which are nonrecourse to the borrower and are secured by real estate, including
four storage centers and office/warehouse space.  The Company will receive
interest at 8% per annum plus 50% of both operating cash flow and distributions
from the gain on sale of real property, as defined.  The Company has options to
purchase the properties at established prices, generally exercisable in 1999 and
extending until maturity of the loans.

    The Company has entered into three joint ventures with a storage operator
and developer to develop three properties in the Nashville, Tennessee
metropolitan area.  The Company's economic interest in these joint ventures
range from 50% to 92%.  The Company has guaranteed $1.9 million of loans, its
pro rata portion of the joint ventures' debt.  Subsequent to year end, the
Company committed to invest $1.0 million and guaranteed $2.1 million of debt in
a joint venture to develop a site in Orlando, Florida under a similar
arrangement.  The financial information of these projects are not consolidated
in the Company financial statements because the affiliation agreement allows the
local operator to control the daily operations of the property and all
significant investment decisions require the approval of both parties regardless
of ownership percentage.  (See DOMESTIC DEVELOPMENT)

    During 1995, the Company purchased, for $3.8 million in cash, 3.5 limited
partnership units of Shurgard Institutional Fund LP II, an affiliated
partnership in which it owns an interest through the general partner.  The
Company is now entitled to 37% of partnership cash flow.  Subsequent to year
end, the Company also purchased, for $1.1 million in cash, one limited
partnership unit in Shurgard Institutional Fund LP, an affiliated partnership in
which it also owns an interest through the general partner. The Company is now
entitled to 9% of this partnership's cash flow.


PROPERTY MANAGEMENT OPERATIONS

    In connection with the Merger in March 1995, the Company internalized the
management of its own properties as well as acquired certain management
contracts and relationships under which it provides property management services
to outside parties.  Prior to the Merger, the Company paid a property management
fee equal to 6% of revenues to the Management Company.  The Company now incurs
the actual costs of property management and receives property management fees
from affiliated partnerships and outside parties.  The

                                          8

<PAGE>

following table compares property management fees for 1994 and 1995 (as if the
Merger had not taken place) to actual property management costs incurred for
1995:

<TABLE>
<CAPTION>

IN THOUSANDS                                6% OF 1995
                                           REVENUES (1)     ACTUAL 1995
                                        ----------------   -------------
<S>                                     <C>                <C>
Property management fees                        $5,544           $1,320
Property management expenses:
   Operating                                                      3,850
   Administrative                                                   911
Third party property management revenues                         (2,978)
                                                 ------          -------
Net cost of property management                 $5,544           $3,103
                                                 ------           ------
                                                 ------           ------

</TABLE>
----------------

(1) Approximately equal to the fees that would have been paid had the Merger
not occurred.

    Due to the Merger, the Company increased its earnings by $2.44 million in
1995 representing the nine month operating benefit of the internalization of
property management and the acquisition of third party management contracts.
This represents an annualized return of 11% on its $29.4 million investment in
the Management Company.  Since the Merger, the Company has added management
contracts and licensing agreements for 14 additional properties, bringing the
total number of managed or licensed properties to nearly 90 storage centers.
Management will continue to pursue growth opportunities in this area to maximize
brand awareness, realize economies of scale in management and as a means of
establishing relationships with owners of quality projects that may provide
future acquisition opportunities.  However, property management revenue will be
limited to 5% or less of total revenue due to limitations imposed by the REIT
qualification requirements (see REIT QUALIFICATION AND DISTRIBUTION
REQUIREMENTS).


PRE-CONSOLIDATION INCOME AND EXPENSES

    The Predecessor operating results presented in the consolidated financial
statements are not comparable in all material respects with financial statements
of the Company.  The most significant differences relate to (1) lower
depreciation resulting from the Company's lower original cost of storage centers
and (2) higher debt and related interest expense as a result of certain limited
partners electing to take a cash payment in lieu of the Company's common stock
at the Consolidation Date.  The following discussion summarizes differences for
the periods presented which do not directly relate to property operations.

    General and administrative expenses from January 1, 1994 to the
Consolidation Date for the Predecessor included certain expenses related to the
liquidation of the Partnerships including audit, tax and legal fees.  State
taxes for the Predecessor were also high for the two months of 1994 due to the
tax resulting from the sale of assets.

    The Predecessor financial statements for the period from January 1, 1994 to
the Consolidation Date and for the year ended December 31, 1993 include various
nonrecurring items related to the Consolidation of the seventeen partnerships
which comprise the Predecessor; these include the gain incident to the
sale of net assets and related incentive management fees, legal expenses, 
hostile takeover defense and transaction costs. The Company's debt at 
December 31, 1994 is $141 million higher than the Predecessor's debt at 
December 31, 1993.  This additional debt is reflected in the Company's interest 
expense and earnings for the year ended December 31, 1994. Certain of the 
limited partners of the partnerships included in the Consolidation elected to 
take cash rather than stock in the Company.  The Company borrowed the 
$67 million required for these cash payments as well

                                          9

<PAGE>

as approximately $20 million to pay liabilities related to the Consolidation
which were assumed from the Predecessor and approximately $10 million to cover
loan closing costs and establish cash reserves.  Interest on the $97 million for
the year ended December 31, 1994 is $6.7 million.  Additionally, as a result of
the Consolidation, the majority of the debt held by the partnerships, including
short-term debt at relatively low interest rates, was refinanced at a slightly
higher rate (8.28%).  The Company also borrowed $30 million in connection with
the acquisition of the 20 storage centers on September 1, 1994 and $12 million
in connection with an investment in participating mortgages on December 14,
1994; interest on this $42 million was $806,000.


FUNDS FROM OPERATIONS

    Funds from operations (FFO) is used by many financial analysts in
evaluating REIT's financial performance.  However, FFO should not be considered
as an alternative to net income (determined in accordance with Generally
Accepted Accounting Principles, GAAP) as an indication of the Company's
financial performance or cash from operating activities (determined in
accordance with GAAP) or as a measure of liquidity, not is it necessarily
indicative of sufficient cash flow to fund all of the Company's needs.  The
Company had historically defined FFO as net income before extraordinary items,
plus depreciation and amortization, plus or minus certain non-recurring revenue
and expenses. The Company has modified its definition of FFO in accordance with
the recommendations of NAREIT (the REIT industry association) to exclude
amortization of financing costs.  Accordingly, management now calculates FFO as
net income before extraordinary items, plus depreciation and amortization
relating to real estate activities, plus or minus certain non-recurring revenue
and expenses.  The following table reconciles its previous definition to the new
NAREIT definition (in thousands):


<TABLE>
<CAPTION>

                                                                   Year ended December 31,
                                                -------------------------------------------------------------
                                                 Pro forma                Pro forma
                                                   1993(1)                 1994(1)                    1995
                                                -----------             ------------              -----------
<S>                                             <C>                     <C>                       <C>
Net income before extraordinary item            $   19,095              $    21,917                 $ 29,572
Depreciation/amortization (including JV)            12,887                   13,632                   17,559
Non-recurring revenue/expenses                        (317)                     (58)                    (223)
                                                 -----------            ------------              -----------

FFO as previously defined                           31,665                   35,491                   46,908

Less deferred financing costs                          820                      820                    1,120
                                                -----------             ------------              -----------

FFO as currently defined                        $   30,845              $    34,671                 $ 45,788
                                                -----------             ------------              -----------
                                                -----------             ------------              -----------

</TABLE>

---------------
(1) Represents the actual historical results as if the Predecessors' properties
    had been acquired by the Company on January 1, 1993.  Assumes the Company's
    fixed rate seven-year debt (8.28%) was outstanding during the entire
    period.

    Using the NAREIT definition, FFO for 1995 rose $11.1 million over the 1994
pro forma FFO which had grown $3.8 million from pro forma 1993.  As previously
discussed, this growth rate reflects the improved performance of the original
portfolio of properties as well as the addition of properties acquired during
the two years.  Management believes future growth rates will slow as the rent-up
period on development projects partially offsets operating results from current
properties and acquisitions.



                                          10

<PAGE>

INVESTING TRANSACTIONS

    On March 1, 1994, the Company acquired the assets, subject to existing
liabilities, of the Predecessor for an aggregate cost of $387.4 million. The
Consolidation  was funded by the issuance of 16,983,728 shares of Company's
Class A and Class B Common Stock and $67.1 million in borrowings from a
financial services company.  Additionally, in 1994, the Company purchased a
chain of twenty storage centers in the mid-Atlantic region for $34 million.
Investments in other real estate assets during 1994 consisted primarily of the
two participating mortgages and two of the Tennessee joint ventures discussed
earlier.

    On March 24, 1995, in order to create a fully integrated company and more
closely align the interests of management with the shareholders, the Management
Company merged with the Company.  Pursuant to the Agreement and Plan of Merger,
the outstanding shares of the Management Company common stock were converted
into an aggregate of 1,289,734 newly issued shares of the Company's Class A
Common Stock (Class A Stock) and an additional 282,572 shares that replaced the
Class A Stock previously owned by the Management Company, subject to certain
adjustments.  The market value of consideration on the date of the Merger was
$29.4 million.  Pursuant to the Merger Agreement, Management Company
shareholders are also entitled to receive additional shares of Class A Stock in
the future based on (i) the extent to which, during the five years following the
Merger, the Company realizes value on this back end interest as a result of
certain transactions relating to interests in or assets of six limited
partnerships acquired by the Company in the Merger or (ii) the value, at the end
of five years after the Merger, or in the event of a change of control of the
Company, of any remaining interests in such partnerships as determined by
independent appraisal.  One of the six partnerships is the Evergreen
Partnership, the limited partnership interest of which the Company purchased
during 1995.  As a result of this purchase, the Board of Directors could, at
their option, choose to liquidate the partnership, and upon such liquidation the
Company would be required to issue additional shares based on an independent
appraisal.

    During 1995, the Company invested $7.6 million in a storage center acquired
in the Merger (which was a non-cash transaction), $9.4 million in acquisitions
of four operating storage centers, $30.1 million in domestic development and
expansion projects ($9.6 million of which were completed during the year), $10.6
million in European development projects, and $4.1 million in capital
improvements to its existing portfolio.  The $6.5 million increase in other real
estate investments reflects primarily the $3.8 million invested in the limited
partnership units and the $2.6 million invested in the Tennessee joint ventures.
As described above, the Company also invested $36 million in cash in the
purchase of the Evergreen partnership interest.  Proceeds from the sale of real
estate contributed $3.3 million in cash.


CAPITAL EXPENDITURES

    In addition to continued investments in acquisitions and developments, the
Company makes investments in improving its current portfolio of real estate.
Investments in existing storage properties include primarily expansions,
conversions (i.e., size of units or climate control) and certain recurring
improvements that management believes are necessary to maintain the Company's
quality standards and its ability to generate premium returns. The following
table summarizes the type of recurring expenditures the Company anticipates and
the average cost per square foot per year:

<TABLE>
<CAPTION>

                                              Annual Cost per Sq.Ft.
                                            --------------------------
<S>                                         <C>
Roofs                                               $0.07

Pavement                                             0.05

Sealant                                              0.03

Other                                              0.02-0.03
                                            --------------------------
     Total                                        $0.17-0.18

</TABLE>

                                          11

<PAGE>

    The above amounts assume expenditures are made evenly over the life of the
project, this however does not occur in reality.  In certain years expenditures
will be significantly higher than $0.18 per square foot, but this in turn would
mean other years will be significantly lower.  In addition to these types of
expenditures, the Company invests in other improvements such as security
upgrades.   Of the $4.1 million in capital improvements expended during 1995,
$2.2 million was for roof, pavement and sealant.  Specifically identified
capital improvements expected for 1996 total $3.6 to $4.1 million, of which $1.7
to $2.2 represents roofs, pavement and sealant.


FINANCING TRANSACTIONS

    On June 9, 1994, the Company refinanced substantially all of its existing
debt through a debt purchase transaction with Nomura Asset Capital Corp., a
subsidiary of Nomura Securities International, Inc.  The $122.6 million of
indebtedness, secured by certain real estate, has a seven year term, a fixed
rate equal to 8.28% and requires monthly payments of interest only until
maturity.  The Company paid $1.8 million in fees for this seven-year loan.  The
following table summarizes the uses of proceeds from this loan (in thousands):

<TABLE>
<CAPTION>
<S>                                                 <C>
Repayment of consolidation debt                         $104,600
Repayment of other debt                                   14,156
Loan fees and closing costs                                2,371
Net proceeds                                               1,453
                                                    ------------
      Loan proceeds                                     $122,580
                                                    ------------
                                                    ------------

</TABLE>

    Repayment of other debt represents retirement of notes assumed from the
Predecessor in connection with the Consolidation.  In connection with the
refinance, the Company wrote off $1.2 million of unamortized loan fees. The
refinancing provided the Company with stabilized debt service costs and greater
flexibility for future growth.  Additionally, in 1994, the Company established
two $50 million lines of credit under which it borrowed $42 million in 1994 to
fund property acquisitions.

    In June and July 1995, the Company issued a total of 4.92 million
additional Class A Common shares through a public offering.  These shares were
issued at $23.00 per share, providing net proceeds after offering costs of $106
million.  Net proceeds were used to repay lines of credit and the remaining
funds have been used to fund storage center acquisitions, development, and
general corporate purposes.

    Prior to the stock offering, $96 million was outstanding on the Company's
domestic lines of credit.  This amount had been borrowed to meet interim
acquisition and development requirements and repay the $4.3 million line of
credit assumed in the Merger.  All outstanding balances on the Company's
domestic lines of credit were repaid on June 13, 1995.  Subsequent to the
offering, the Company invested the excess proceeds in real estate developments
and borrowed an additional $11 million on its lines.  Additionally, during 1995,
the Company borrowed $2.9 million under its European line of credit to fund
development activity in Belgium.  Subsequent to year end, the Company borrowed
an additional $13 million on its domestic lines to fund construction.


                                          12
<PAGE>

SHORT-TERM AND LONG-TERM LIQUIDITY

    Cash balances decreased from December 31, 1994 to December 31, 1995
primarily as a result of the capital expenditures, financing and equity
transactions described above. The following table summarizes certain information
regarding the Company's liquidity and capital resources:

<TABLE>
<CAPTION>

                                          At December 31,
                                     1994            1995
                                   -----------   -------------
<S>                               <C>           <C>
Debt to total assets                   34%            23%
Total market capitalization       $520 million  $769 million
Debt to total market cap               32%            19%
Weighted avg. interest rate          8.16%           8.18%
Available lines of credit         $58 million    $92 million

</TABLE>

    The Company's total debt at December 31, 1995 was $143 million, of which
$132 million is fixed rate debt.  Because of the limited use of variable rate
debt, fluctuations in interest rates have minimal impact on the Company.  In
addition to affecting interest expense, however, rising interest rates in the
future may also limit the amount available to the Company under its credit
facilities due to certain restrictive covenants. Management believes it will be
able to raise sufficient debt or equity capital to fund its growth plan in 1996,
make required principal payments and make  dividend payments in accordance with
REIT requirements.  Cash provided by operating activities for the year ended
December 31, 1995 was $46 million.  The Company declared the following dividends
during 1995:

    For Quarter Ended   Record Date    Payable Date   Per Share Amount
     -----------------   -------------  -------------  ----------------
    Dec. 31, 1994       Feb. 10, 1995  Mar. 29, 1995       0.44
    Mar. 31, 1995       Mar. 24, 1995  May 19, 1995        0.46
    June 30, 1995       June 2, 1995   July 31, 1995       0.46
    Sept. 30, 1995      Nov. 9, 1995   Nov. 22, 1995       0.46
    Special Dividend    Dec. 4, 1995   Dec. 18, 1995       0.10
    Dec. 31, 1995       Dec. 26, 1995  Jan. 26, 1996       0.46

In order to distribute accumulated earnings and profits related to the Merger
with the Management Company, the Company accelerated its usual fourth quarter
dividend and declared a special dividend.


REIT QUALIFICATION AND DISTRIBUTION REQUIREMENTS

    As a REIT, the Company is not required to pay federal income tax on annual
taxable income that it currently distributes to its shareholders, provided that
the Company distributes an amount equal to at least 95% of its taxable income.
Such distributions must be made in the taxable year to which they relate or in
the following taxable year if declared before the REIT timely files its tax
return for such years and is paid on or before the first regular dividend
payment date after such declaration.  The Company's first distribution in 1995
was partially applied towards the Company's 1994 distribution requirement.

    In connection with the Merger, the accumulated earnings and profits of the
Management Company were carried over to the Company for tax purposes.  In order
to maintain its REIT qualification, the Company was required to distribute to
its shareholders in 1995 an amount necessary to eliminate such accumulated
earnings and profits.  The Company did so through accelerating its normal
quarterly distribution and a special distribution of $2.3 million.  As a result
of these additional distributions, approximately 14% of the 1995 dividends were
return of capital for federal income tax purposes.

    As a REIT, the Company must derive at least 95% of its total gross income
from specified classes of income related to real property, dividends, interest
or certain gains from the sale or other disposition of stock or other
securities.  The Company's revenues from truck rentals, sales of locks and boxes
and management services performed for owners of other properties do not qualify
under this 95% gross income test. Such nonqualifying income was approximately
4.4% of gross revenue in 1995 and the Company estimates that it will meet the
95% test in 1996.  The Company's acquisition of additional properties and
development of new properties will tend to reduce the percentage of
nonqualifying income, while additional management contracts and the sales of
properties from the existing portfolio will tend to increase the percentage of
nonqualifying income. There can be no assurance, however, that acquisitions and
development activities will occur on such a scale or within such time periods
that nonqualifying income will meet the 95% test for future years.  Accordingly,
the Company may be required to defer or reduce its income from its third-party
management services to avoid terminating its REIT qualification.

                                          13

<PAGE>

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>


                                            December 31,   December 31,
(in thousands, except share data)               1994           1995
----------------------------------------------------------------------
<S>                                         <C>            <C>
  ASSETS:
----------------------------------------------------------------------
    Storage centers:
----------------------------------------------------------------------
       Land                                   $  88,532      $ 105,224
----------------------------------------------------------------------
       Buildings and equipment, net             362,332        404,329
----------------------------------------------------------------------
       Construction in progress                     532         20,942
----------------------------------------------------------------------
           Total storage centers                451,396        530,495
----------------------------------------------------------------------
    Other real estate investments                15,104         21,407
----------------------------------------------------------------------
    Cash and cash equivalents                    13,162          5,683
----------------------------------------------------------------------
    Restricted cash and investments               2,766          5,551
----------------------------------------------------------------------
    Other assets                                 12,162         47,258
----------------------------------------------------------------------
           Total assets                       $ 494,590      $ 610,394
----------------------------------------------------------------------
  Liabilities and Shareholders' Equity:
----------------------------------------------------------------------
    Accounts payable and other liabilities    $  10,138      $  19,101
----------------------------------------------------------------------
    Dividends payable                                           10,669
----------------------------------------------------------------------
    Lines of credit                              42,000         10,905
----------------------------------------------------------------------
    Notes payable                               125,137        131,935
----------------------------------------------------------------------
           Total liabilities                    177,275        172,610
----------------------------------------------------------------------
    Minority interest in other real estate
           investments                              470          3,288
----------------------------------------------------------------------
    Commitments (Notes C and D)
----------------------------------------------------------------------
    Shareholders' equity:
----------------------------------------------------------------------
       Class A common stock, $0.001 par
           value; 120,000,000 authorized;
           16,829,283 and 23,039,317
           shares issued and outstanding        317,434        452,852
----------------------------------------------------------------------
       Class B common stock, $0.001 par
           value; 500,000 shares authorized;
           154,604 issued and outstanding;
           net of loans to shareholders of
           $4,002                                (1,086)        (1,086)
----------------------------------------------------------------------
       Retained earnings (deficit)                  497        (17,270)
----------------------------------------------------------------------
           Total shareholders' equity           316,845        434,496
----------------------------------------------------------------------
           Total liabilities and
             shareholders' equity              $494,590       $610,394
----------------------------------------------------------------------
</TABLE>

See notes to consolidated financial statements.


                                      14

<PAGE>

                      CONSOLIDATED STATEMENTS OF NET INCOME

<TABLE>
<CAPTION>

                                                                 Predecessor                               Company
                                                        -------------------------------         ------------------------------
                                                        Year Ended        Period from           Year Ended          Year Ended
                                                          Dec. 31,      Jan. 1, 1994 to           Dec. 31,            Dec. 31,
(in thousands, except per share data)                       1993          Mar. 1, 1994              1994                1995
<S>                                                     <C>                 <C>                 <C>                 <C>
------------------------------------------------------------------------------------------------------------------------------
  REVENUE:
------------------------------------------------------------------------------------------------------------------------------
    Rental                                              $  72,217           $  12,348           $  66,697           $  92,397
------------------------------------------------------------------------------------------------------------------------------
    Other real estate investments                             129                  20                 224               1,396
------------------------------------------------------------------------------------------------------------------------------
    Property management                                                                                                 2,978
------------------------------------------------------------------------------------------------------------------------------
          Total revenue                                    72,346              12,368              66,921              96,771
------------------------------------------------------------------------------------------------------------------------------
  EXPENSES:
------------------------------------------------------------------------------------------------------------------------------
    Operating                                              16,879               2,961              15,799              24,851
------------------------------------------------------------------------------------------------------------------------------
    Management fees                                         4,695                 733               4,046               1,320
------------------------------------------------------------------------------------------------------------------------------
    Depreciation and amortization                          13,923               2,390              11,373              17,410
------------------------------------------------------------------------------------------------------------------------------
    Real estate taxes                                       7,066               1,170               5,840               7,596
------------------------------------------------------------------------------------------------------------------------------
    General, administrative and other                       2,390               1,232               2,502               4,859
------------------------------------------------------------------------------------------------------------------------------
          Total expenses                                   44,953               8,486              39,560              56,036
------------------------------------------------------------------------------------------------------------------------------
          Income from Operations                           27,393               3,882              27,361              40,735
------------------------------------------------------------------------------------------------------------------------------

  OTHER INCOME (EXPENSE):
------------------------------------------------------------------------------------------------------------------------------
    Interest and other income                                 590                 188                 745                 875
------------------------------------------------------------------------------------------------------------------------------
    Interest expense                                       (2,288)               (487)             (9,105)            (12,038)
------------------------------------------------------------------------------------------------------------------------------
    Incentive management fees                                                  (5,340)
------------------------------------------------------------------------------------------------------------------------------
    Gain on sale of net assets                                                 48,223
------------------------------------------------------------------------------------------------------------------------------
    Litigation, hostile takeover defense
         and consolidation expenses                        (7,411)            (12,180)
------------------------------------------------------------------------------------------------------------------------------
          Other income (expense), net                      (9,109)             30,404              (8,360)            (11,163)
------------------------------------------------------------------------------------------------------------------------------

          Income before extraordinary item                 18,284              34,286              19,001              29,572
------------------------------------------------------------------------------------------------------------------------------
  Extraordinary item - loss on retirement of debt                                                  (1,180)
------------------------------------------------------------------------------------------------------------------------------
          Net Income                                    $  18,284           $  34,286           $  17,821           $  29,572
------------------------------------------------------------------------------------------------------------------------------

  NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE:
------------------------------------------------------------------------------------------------------------------------------
    Income before extraordinary item                                                            $    1.12           $    1.43
------------------------------------------------------------------------------------------------------------------------------
    Extraordinary item - loss on retirement of debt                                                 (0.07)
------------------------------------------------------------------------------------------------------------------------------
          Net Income                                                                            $    1.05           $    1.43
------------------------------------------------------------------------------------------------------------------------------

  Net Income per Unit of Limited
    Partnership Interests                                $  34.11            $  63.97
------------------------------------------------------------------------------------------------------------------------------

  Distributions per Unit of Limited
    Partnership Interests                                $  59.57            $ 732.05
------------------------------------------------------------------------------------------------------------------------------

</TABLE>

See notes to consolidated financial statements.


                                      15

<PAGE>

          CONSOLIDATED STATEMENTS OF PARTNERS' AND SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>

PREDECESSOR
                                                        Limited               General
(in thousands)                                          Partners              Partners             Total
---------------------------------------------------------------------------------------------------------
<S>                                                     <C>                 <C>                 <C>
  BALANCE, JANUARY 1, 1993                              $ 368,292           $    (498)          $ 367,794
---------------------------------------------------------------------------------------------------------
  Distributions                                           (31,606)               (310)            (31,916)
---------------------------------------------------------------------------------------------------------
  Earnings                                                 18,101                 183              18,284
---------------------------------------------------------------------------------------------------------

  BALANCE, DECEMBER 31, 1993                            $ 354,787           $    (625)          $ 354,162
---------------------------------------------------------------------------------------------------------
  Distributions                                          (388,432)             (4,018)           (392,450)
---------------------------------------------------------------------------------------------------------
  Contribution                                                                  4,002               4,002
---------------------------------------------------------------------------------------------------------
  Earnings                                                 33,645                 641              34,286
---------------------------------------------------------------------------------------------------------

  Balance, March 1, 1994                                $     ---           $     ---           $     ---
---------------------------------------------------------------------------------------------------------

</TABLE>

<TABLE>
<CAPTION>

COMPANY                                 Class A                       Class B
                                      Common Stock                  Common Stock           Loans to       Retained
                                  ---------------------          --------------------      Class B        Earnings
(in thousands)                    Shares        Amount           Shares       Amount      Shareholders    (Deficit)        Total
----------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>         <C>                <C>        <C>           <C>             <C>            <C>
  Balance, July 23, 1993
    (inception) and
----------------------------------------------------------------------------------------------------------------------------------
    Dec. 31, 1993                    ---      $     ---            ---      $     ---       $    ---      $     ---      $     ---
----------------------------------------------------------------------------------------------------------------------------------
  Issuance of common
    stock                         16,829        317,434            155          2,916         (4,002)                      316,348
----------------------------------------------------------------------------------------------------------------------------------
  Net Income                                                                                                 17,821         17,821
----------------------------------------------------------------------------------------------------------------------------------
  Dividends                                                                                                 (17,324)       (17,324)
----------------------------------------------------------------------------------------------------------------------------------

  Balance, Dec. 31, 1994          16,829        317,434            155          2,916         (4,002)           497        316,845
----------------------------------------------------------------------------------------------------------------------------------
  Issuance of common
    stock                          6,210        135,418                                                                    135,418
----------------------------------------------------------------------------------------------------------------------------------
  Net Income                                                                                                 29,572         29,572
----------------------------------------------------------------------------------------------------------------------------------
  Dividends                                                                                                 (47,339)       (47,339)
----------------------------------------------------------------------------------------------------------------------------------

  Balance, Dec. 31, 1995          23,039      $ 452,852            155      $   2,916      $  (4,002)     $ (17,270)     $ 434,496
----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

See notes to consolidated financial statements.


                                      16

<PAGE>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                             Predecessor                     Company
                                                                      ----------------------------  -------------------------
                                                                      Year Ended     Period from    Year Ended     Year Ended
                                                                        Dec. 31,   Jan. 1, 1994 to    Dec. 31,       Dec. 31,
(in thousands)                                                            1993      Mar. 1, 1994        1994           1995
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>          <C>              <C>            <C>
  OPERATING ACTIVITIES:
-----------------------------------------------------------------------------------------------------------------------------
    Net Income                                                         $  18,284      $  34,286      $  17,821      $  29,572
-----------------------------------------------------------------------------------------------------------------------------
    Adjustments to reconcile earnings
        to net cash by operating activities:
-----------------------------------------------------------------------------------------------------------------------------
      Depreciation and amortization                                       13,923          2,390         11,392         17,485
-----------------------------------------------------------------------------------------------------------------------------
      Gain on sale of net assets                                                        (48,223)
-----------------------------------------------------------------------------------------------------------------------------
      Other                                                                                                              (223)
-----------------------------------------------------------------------------------------------------------------------------
      Loss on retirement of debt                                                                         1,180
-----------------------------------------------------------------------------------------------------------------------------
      Earnings in excess of distributions
        from joint ventures                                                                 (20)          (149)
-----------------------------------------------------------------------------------------------------------------------------
      Minority interest in earnings from investments
        in joint partnerships                                                                                             251
-----------------------------------------------------------------------------------------------------------------------------
      Changes in operating accounts:
-----------------------------------------------------------------------------------------------------------------------------
        Restricted cash                                                                                 (2,766)        (2,785)
-----------------------------------------------------------------------------------------------------------------------------
        Other assets                                                      (2,594)         2,675         (1,196)           518
-----------------------------------------------------------------------------------------------------------------------------
        Accounts payable and other liabilities                             1,557         (2,391)         3,027          1,295
-----------------------------------------------------------------------------------------------------------------------------
        Accrued consolidation expense                                      3,879         16,399
-----------------------------------------------------------------------------------------------------------------------------

  Net cash provided by operating activities                               35,049          5,116         29,309         46,113
-----------------------------------------------------------------------------------------------------------------------------

  INVESTING ACTIVITIES:
-----------------------------------------------------------------------------------------------------------------------------
    Proceeds from sale of real estate and equipment                                      64,120                         6,398
-----------------------------------------------------------------------------------------------------------------------------
    Purchase of other real estate investments                                                          (12,534)        (6,670)
-----------------------------------------------------------------------------------------------------------------------------
    Distributions in excess of earnings
      from joint ventures                                                    306                                          452
-----------------------------------------------------------------------------------------------------------------------------
    Purchase of amortizable assets                                                                                       (416)
-----------------------------------------------------------------------------------------------------------------------------
    Purchase of property management company                                                                              (885)
-----------------------------------------------------------------------------------------------------------------------------
    Investment in limited partnership                                                                                 (35,671)
-----------------------------------------------------------------------------------------------------------------------------
    Acquisition of and improvements to storage centers                    (5,888)        (1,158)      (102,635)       (49,519)
-----------------------------------------------------------------------------------------------------------------------------

  Net cash (used in) provided by investing activities                  $  (5,582)     $  62,962      $(115,169)     $ (86,311)
-----------------------------------------------------------------------------------------------------------------------------


  FINANCING ACTIVITIES:
-----------------------------------------------------------------------------------------------------------------------------
    Proceeds from stock offering, net                                  $              $              $              $ 106,012
-----------------------------------------------------------------------------------------------------------------------------
    Contribution by minority partner                                                                                      778
-----------------------------------------------------------------------------------------------------------------------------
    Dividends or distributions paid                                      (31,916)          (764)       (17,324)       (36,670)
-----------------------------------------------------------------------------------------------------------------------------
    Net proceeds from (payments on) lines of credit                        2,620            680         42,000        (35,432)
-----------------------------------------------------------------------------------------------------------------------------
    Proceeds from notes payable                                                             350        227,180
-----------------------------------------------------------------------------------------------------------------------------
    Payment of financing costs                                                (4)                       (8,718)        (1,088)
-----------------------------------------------------------------------------------------------------------------------------
    Payment of assumed consolidation liabilities                                                       (14,946)
-----------------------------------------------------------------------------------------------------------------------------
    Principal payments on notes payable                                     (969)          (855)      (129,171)          (552)
-----------------------------------------------------------------------------------------------------------------------------
    Distributions to minority partners                                                                                   (329)
-----------------------------------------------------------------------------------------------------------------------------

  Net cash (used in) provided by financing activities                    (30,269)          (589)        99,021         32,719
-----------------------------------------------------------------------------------------------------------------------------

  (Decrease) increase in cash and cash equivalents                          (802)        67,489         13,161         (7,479)
-----------------------------------------------------------------------------------------------------------------------------
  Cash and cash equivalents at beginning of period                         9,859          9,057              1         13,162
-----------------------------------------------------------------------------------------------------------------------------

  Cash and cash equivalents at end of period                            $  9,057        $76,546      $  13,162      $   5,683
-----------------------------------------------------------------------------------------------------------------------------

</TABLE>

See notes to consolidated financial statements.

                                       17

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - ORGANIZATION
   Shurgard Storage Centers, Inc. (the Company) was organized under the laws of
the State of Delaware on July 23, 1993, to serve as a vehicle for investments
in, and ownership of, a professionally managed, nationally diverse real estate
portfolio consisting primarily of self-service storage properties which provide
month-to-month leases for business and personal use. The Company intends to
qualify as a real estate investment trust (REIT) as defined in Section 856 of
the Internal Revenue Code.
   On March 1, 1994 (Consolidation Date), the Company completed the acquisition
of 17 publicly-held limited partnerships (the Predecessor, Note O) administered
by Shurgard Incorporated (the Management Company) as a means for assembling an
initial portfolio of real estate investments (Note E). On March 24, 1995, the
Company became self-advised and self-administered after acquiring the Management
Company through a merger (the Merger, Note E).

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
   BASIS OF PRESENTATION: The consolidated financial statements include the
accounts of the Company and its subsidiaries, including both U.S. and Belgian
subsidiaries. All intercompany balances and transactions have been eliminated
upon consolidation. Prior to the Consolidation Date, the Company was inactive.
   The accompanying combined financial statements for the year ended December 
31, 1993, and for the period from January 1, 1994 to March 1, 1994 represent 
the Predecessor's combined results of operations and cash flows through the 
Consolidation Date. The Predecessor financial statements are not comparable 
in all material respects with financial statements of the Company. The most 
significant differences relate to (1) the Company's lower original cost of 
storage centers lower depreciation expense due to and (2) higher debt and 
related interest expense as a result of certain limited partners electing to 
take a cash payment in lieu of the Company's common stock at the 
Consolidation Date. Certain amounts in the Predecessor financial statements 
have been reclassified to conform to the Company's current year presentation.
   The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
   STORAGE CENTERS: Storage centers are recorded at cost. Depreciation on
buildings and equipment is recorded on a straight-line basis over their
estimated useful lives which range from three to 30 years.
   OTHER REAL ESTATE INVESTMENTS: The Company consolidates the accounts of 
those joint ventures in which the Company has effective control as evidenced 
by, among other factors, a majority interest in the investment and the 
ability to cause a sale of investment assets. A minority interest in earnings 
from such investments is included in other income. All other investments in 
joint ventures are accounted for on the equity method and are included in 
other real estate investments. Investments accounted for on the equity method 
include four joint ventures owning a total of seven storage centers as well 
as investments in certain limited partnerships. Participating mortgages, 
which are accounted for as loans, are also included in other real estate 
investments.
   CASH EQUIVALENTS: Cash equivalents consist of money market instruments and
securities with original maturities of 90 days or less.
   RESTRICTED CASH AND INVESTMENTS: Restricted cash and investments consist of
certain cash deposits and securities held in trust in connection with certain
notes payable. Restricted cash deposits represent expense reserves required by
lenders. Restricted securities (Note H), per the loan agreement, must be held to
maturity and thus are carried at amortized cost. The premium is amortized over
the estimated remaining life of the security using the constant yield method.
   OTHER ASSETS: Other assets include financing costs, non-competition
agreements, and goodwill, which are presented net of accumulated amortization of
$906,000 and $3,765,000 for the years ended December 31, 1994 and 1995,
respectively. Financing costs are amortized on the effective interest method
over the life of the related debt and the related expense is included in
amortization. Non-competition agreements and good will are amortized over their
estimated useful lives which range from three to 30 years.
   FEDERAL INCOME TAXES: To qualify as a REIT, the Company must distribute
annually at least 95% of its taxable income and meet certain other requirements.
Additionally, as a REIT, it will not be subject to federal income taxes to the
extent of dividends. The Company was not required to pay any federal income tax
in 1994 and intends to make elections regarding dividends such that it will not
pay federal taxes for 1995. As a result, no provision for federal income taxes
has been made in the Company's financial statements.
   The financial statements of the Predecessor do not reflect a provision for
federal income taxes because such taxes were the responsibility of the
individual partners.
   FOREIGN EXCHANGE: The consolidated financial statements are prepared in 
United States dollars. Assets and liabilities of the foreign subsidiary are 
denominated in foreign currencies and are translated to United States dollars 
at the exchange rates in effect on the balance sheet date. Revenues, costs 
and expenses for this subsidiary are translated using an average rate. 
   REVENUE RECOGNITION: Revenue is recognized when earned under accrual
accounting principles.

   GAIN ON SALE OF NET ASSETS: Gain on sale of net assets is calculated as the 
excess of the purchase price paid to the Predecessor by the Company over the 


                                      18

<PAGE>

book value of the net assets of the Predecessor on the Consolidation Date.
   NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE: Net income per share is
calculated based on the weighted average shares outstanding during the periods
presented (16,983,887 and 20,675,356 shares for the years ended December 31,
1994 and 1995, respectively).
   EARNINGS PER UNIT OF LIMITED PARTNERSHIP INTEREST: Earnings per unit of
limited partnership interest of the Predecessor is based on total earnings
allocated to the limited partners divided by the total number of $1,000 limited
partnership units outstanding during the year (530,607 units for the year ended
December 31, 1993 and the period ended March 1, 1994).
   DISTRIBUTIONS PER UNIT OF LIMITED PARTNERSHIP INTEREST: Distributions per
unit of limited partnership interest of the Predecessor is based on the total
amount distributed to the limited partners divided by the total number of $1,000
limited partnership units outstanding during the year (530,607 units for the
year ended December 31, 1993 and the period ended March 1, 1994).
   IMPAIRMENT VALUATION OF LONG-LIVED ASSETS: The Company, using its best 
estimates based on reasonable and supportable assumptions and projections, 
reviews storage centers and other assets for impairment whenever events or 
changes in circumstances have indicated that the carrying amount of its 
assets might not be recoverable. Impaired assets are reported at the lower of 
cost or fair value. At December 31, 1995, no assets had been written down.
   FINANCIAL INSTRUMENTS: The carrying values reflected in the balance sheet at
December 31, 1995, reasonably approximate the fair value of cash and cash
equivalents, other assets and capitalized ground leases. The Company estimates
that the fair value of its notes from shareholders is $2.5 million. Based on the
borrowing rates currently available to the Company for bank loans with similar
terms and average maturities, the fair value of fixed rate long-term debt is
estimated to be $131.6 million.

NOTE C -- STORAGE CENTERS

<TABLE>
<CAPTION>

        (in thousands)                                                            Dec. 31, 1994     Dec. 31, 1995
-------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>               <C>
             Land                                                                $       88,532    $      105,224
-------------------------------------------------------------------------------------------------------------------
             Buildings                                                                  368,593           424,760
-------------------------------------------------------------------------------------------------------------------
             Equipment                                                                    5,123             7,935
-------------------------------------------------------------------------------------------------------------------
                                                                                        462,248           537,919
-------------------------------------------------------------------------------------------------------------------
             Less accumulated depreciation                                              (11,384)          (28,366)
-------------------------------------------------------------------------------------------------------------------
                                                                                        450,864           509,553
-------------------------------------------------------------------------------------------------------------------
             Construction in progress, including related land of $8,353
-------------------------------------------------------------------------------------------------------------------
               at December 31, 1995                                                         532            20,942
-------------------------------------------------------------------------------------------------------------------
                                                                                 $      451,396    $      530,495
-------------------------------------------------------------------------------------------------------------------
</TABLE>

      The Company has entered into ten construction contracts for improvements
to current facilities. Outstanding commitments under these contracts total $6.7
million. In 1995, the Company capitalized approximately $1.1 million in interest
related to the development of storage centers.

NOTE D -- OTHER REAL ESTATE INVESTMENTS
<TABLE>
<CAPTION>


        (in thousands)                                                            Dec. 31, 1994     Dec. 31, 1995
-------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>               <C>
             Investments in participating mortgages                               $      11,300     $      11,587
-------------------------------------------------------------------------------------------------------------------
             Investments in joint ventures                                                3,804             6,056
-------------------------------------------------------------------------------------------------------------------
             Investments in limited partnership                                                             3,764
-------------------------------------------------------------------------------------------------------------------
                                                                                  $      15,104     $      21,407
-------------------------------------------------------------------------------------------------------------------
</TABLE>

   The Company has paid approximately $11.6 million and committed an 
additional $400,000 for investment in two 10-year participating mortgage 
loans, which are nonrecourse to the borrower and are secured by real estate, 
including four storage centers and office/warehouse space. The Company will 
receive interest at 8% per annum plus 50% of both operating cash flow and 
distributions from the gain on sale of real property, as defined. The Company 
has options to purchase the properties at established prices, generally 
exercisable in 1999 and extending until maturity of the loans.
   The Company has entered into joint ventures with a storage operator and 
developer to develop three properties in the Nashville, Tennessee 
metropolitan area. The Company's economic interest in these ventures range 
from 50% to 92%. The Company has guaranteed its pro rata portion of the joint 
ventures' debt which total $1.9 million. In addition, the Company holds a 30% 
interest in Shurgard Joint Partners II, a limited partnership which owns four 
storage centers.
   During 1995, the Company purchased, for $3.8 million in cash, limited
partnership units in Shurgard Institutional Fund LP II, an affiliated
partnership in which it already owned an interest through the general partner.
The Company is now entitled to 37% of


                                       19

<PAGE>

partnership cash flow. Subsequent to year end, the Company also purchased one
partnership unit in Shurgard Institutional Fund LP, an affiliated partnership in
which it already owned an interest through the general partner. This unit was
purchased for $1.1 million in cash, bringing the Company's total interest in
this partnership to 9% of cash flow.

NOTE E -- ACQUISITIONS
   On March 1, 1994, the Company acquired the assets, subject to existing
liabilities, of the Predecessor for a cost of $387 million (the Consolidation).
A summary of the assets and liabilities assumed in this transaction are as
follows (in thousands):

<TABLE>
<S>                                                               <C>
-------------------------------------------------------------------------------
            Real estate                                           $    417,218
-------------------------------------------------------------------------------
            Interest in joint ventures                                   7,074
-------------------------------------------------------------------------------
            Cash, receivables and other assets                          10,642
-------------------------------------------------------------------------------
            Notes payable                                              (26,192)
-------------------------------------------------------------------------------
            Other liabilities                                          (21,326)
-------------------------------------------------------------------------------
                                                                  $    387,416
-------------------------------------------------------------------------------
</TABLE>


   The Consolidation was funded by the issuance of 16,983,728 shares of common
stock and $67,068,631 in proceeds from a note payable to a financial services
company. Assets assumed by the Company included approximately $2,947,000 in cash
and cash equivalents. Real estate assets acquired in the Consolidation consist
of 134 self-service storage centers and two business parks located in seventeen
states, as well as interests in two joint ventures owning an additional five
storage centers. In 1994, the purchase price was increased $1,200,000 for
estimated additional costs related to the Acquisition.
   On September 1, 1994, the Company purchased twenty storage centers for $34 
million from an unaffiliated seller. These centers, located in Maryland, 
Virginia and North Carolina, were financed through a $30 million draw on the 
Company's credit facility, a $1 million note to the seller and approximately 
$3 million from cash reserves. The note to the seller is due in two $500,000 
installments in September 1995 and 1996 which include accrued interest. The 
discounted value of these notes on the acquisition date was estimated to be 
$917,000.
   On March 24, 1995, the Company merged with the Management Company in order to
become self-administered and self-advised. On that date, the Company issued
1,266,704 new shares of Class A common stock to the shareholders of the
Management Company. In addition, 282,572 shares previously owned by the
Management Company were reissued to Management Company shareholders. On August
28, 1995, pursuant to the Merger Agreement, an additional 23,030 shares were
issued as a result of adjustments identified in the audit of the Management
Company's final statement of assets, liabilities and stockholder's equity. The
Management Company shareholders may receive additional shares over the next five
years as consideration for certain partnership interests held by the Management
Company which were not valued at the time of the Merger. A summary of the assets
and liabilities assumed in this transaction are as follows (in thousands):

<TABLE>
<S>                                                                <C>
-------------------------------------------------------------------------------
            Storage centers                                        $     7,964
-------------------------------------------------------------------------------
            Cash                                                           780
-------------------------------------------------------------------------------
            Other assets                                                35,133
-------------------------------------------------------------------------------
            Line of credit                                              (4,337)
-------------------------------------------------------------------------------
            Notes payable                                               (7,275)
-------------------------------------------------------------------------------
            Other liabilities                                           (2,856)
-------------------------------------------------------------------------------
                                                                   $    29,409
-------------------------------------------------------------------------------
</TABLE>

   During the second quarter of 1995, the Company purchased the limited
partnership interest in a partnership (the Evergreen Partnership) which owns
seven storage centers and a 59.5% interest in a joint venture owning three
additional storage centers. The Company paid $35.5 million in exchange for the
99% limited partnership interest. The Company already owned the 1% general
partnership interest.
   The following unaudited pro forma statements of income represent the results
of operations of the Company for the years ended December 31, 1994 and 1995, as
if all properties owned by the Company at December 31, 1995 had been acquired on
January 1, 1994 and the merger of the Management Company, the acquisition of the
Evergreen Partnership, and the 1995 stock offering (Note I) had been consummated
on January 1, 1994. The pro forma results do not necessarily indicate the actual
results that would have been obtained, nor are they necessarily indicative of
the future operations of the combined companies.


                                       20

<PAGE>
<TABLE>
<CAPTION>

                                                                            Year ended December 31,
     (in thousands)                                                       1994                1995
<S>                                                                    <C>                 <C>
------------------------------------------------------------------------------------------------------
     Revenues and other income                                         $  94,601           $  99,842
------------------------------------------------------------------------------------------------------
     Operations expenses                                                 (38,063)            (39,464)
------------------------------------------------------------------------------------------------------
     Depreciation and amortization                                       (16,833)            (18,059)
------------------------------------------------------------------------------------------------------
     Interest expense                                                    (11,006)            (10,170)
------------------------------------------------------------------------------------------------------
       Net income before extraordinary item                               28,699              32,149
------------------------------------------------------------------------------------------------------
     Extraordinary item - loss of retirement of debt                      (1,180)
------------------------------------------------------------------------------------------------------
       Net income                                                      $  27,519           $  32,149
------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------
     Per share data:
------------------------------------------------------------------------------------------------------
     Net income before extraordinary item                              $    1.24           $    1.39
------------------------------------------------------------------------------------------------------
     Extraordinary item - loss of retirement of debt                        (.05)
------------------------------------------------------------------------------------------------------
     Net income                                                        $    1.19           $    1.39
------------------------------------------------------------------------------------------------------
</TABLE>

NOTE F - BELGIAN OPERATIONS
   The Company has invested $5.4 million in a Belgian subsidiary, and has
committed to invest an additional $6.9 million to acquire, develop, and operate
storage centers. At December 31, 1995, the Company's investment represents an
85.6% interest in three Belgian storage centers. The Company controls the
majority of the seats on the subsidiary's Board of Directors.
   Ground leases related to two of these centers are included in land at the
discounted value of required cash payments ($1.9 million) and the corresponding
liabilities have been recorded in other liabilities. The lease terms are 27 and
99 years with bargain purchase options at 27 and 16 years, respectively. These
leases require annual payments of approximately $170,000 in each of the next
five years.

NOTE G - LINES OF CREDIT
   In August 1994, the Company established a $50 million revolving two-year
credit facility with a commercial bank group. This credit facility accrues
interest at either the banks' prime rate or LIBOR plus 175 basis points (reduced
from 200 basis points in June 1995) and can be fixed for various periods at the
Company's option. On December 31, 1994 and 1995, the outstanding balances under
this credit facility were $42 million and $8 million with weighted average
interest rates of 7.8% and 7.4%, respectively. The credit facility is secured by
real estate and may extend any outstanding balance for a one year term.
Subsequent to year end, the Company borrowed an additional $13 million under
this credit facility.
   In December 1994, the Company established a second $50 million two-year
revolving credit facility with a financial services company. This credit
facility is secured by real estate, bears interest at LIBOR plus 175 basis
points, and requires a draw fee equal to 25 basis points of the amount drawn. No
amounts were outstanding under this credit facility on either December 31, 1994
or 1995.
   The loan agreements related to the above lines of credit provide for certain
restrictive covenants based on net worth and cash flow. The actual amount
available on these credit facilities is a function of the quarterly performance
of the secured properties and the quarterly interest rate.
   The Company has two additional credit facilities maturing January 2000, with
a Dutch bank under which it has borrowed approximately $2.9 million, the maximum
available. These credit facilities accrue interest at 100 basis points above the
Belgium Interbank Offer Rate. The Company purchased an agreement under which the
effective rate on borrowings would not be above 6% or below 4.45%.

NOTE H - NOTES PAYABLE

<TABLE>
<CAPTION>
<S>                                                                <C>
     (in thousands)                                                Dec. 31, 1994  Dec. 31, 1995
-------------------------------------------------------------------------------------------------
           Note payable to financial services company                $   122,580    $   122,580
-------------------------------------------------------------------------------------------------
           Mortgage notes payable                                          1,467          8,733
-------------------------------------------------------------------------------------------------
           Other notes payable                                             1,090            622
-------------------------------------------------------------------------------------------------
                                                                     $   125,137    $   131,935
-------------------------------------------------------------------------------------------------
</TABLE>


   On June 9, 1994, the Company refinanced substantially all of its existing
debt through a debt purchase transaction with a financial services company. The
$122.58 million loan provides the Company with funds for seven years at a fixed
rate equal to 8.28%, requires monthly payments of interest only until maturity
and is secured by the 86 properties owned by SSC Property Holdings, Inc., a
wholly owned subsidiary of the Company. The refinancing of existing debt
resulted in a loss on early retirement of $1.18 million, consisting of
unamortized loan fees. As required by the loan agreement, the Company has
deposited cash in restricted accounts to fund certain expenses including real
estate taxes and insurance. During 1995, the Company sold two properties
securing this note


                                       21

<PAGE>

and, as part of the defeasance, was required to place U.S. treasury notes
costing $3.1 million into a trust account. These treasury notes mature in June
2001 and carry an effective interest rate of 5.1%.
   The mortgage notes are secured by a deed of trust on two storage centers. The
first is due in monthly installments of $13,441, including principal and
interest at 10.25%, and matures April 2001. The second is a participating
mortgage for $7.3 million requiring fixed monthly payments of interest only at
8% plus quarterly payments of 90% of cashflow, as defined. This mortgage also
requires payment of 90% of the storage center's appreciation upon maturity,
December 2003. Other notes payable consists of local improvement district
warrants and a note taken in connection with a real estate acquisition. The
approximate maturities of principal over the next five fiscal years range from
$20,000 to $516,000.

NOTE I -- SHAREHOLDERS' EQUITY
   In addition to the rights, privileges and powers of Class A common stock,
Class B common stockholders received loans from the Company to fund certain
obligations to the Partnerships. The loans are due between 2000 and 2003 and are
secured by the Class B stock. Class B common stock is convertible to Class A
stock at a one-to-one ratio as the loans are repaid.
   The Company has authorized 40,000,000 shares of preferred stock, of which
2,800,000 shares have been designated as Series A Junior Participating Preferred
Stock, and none are issued and outstanding at December 31, 1995. The Board of
Directors is authorized to determine the rights, preferences and privileges of
the preferred stock including the number of shares constituting any such series,
and the designation thereof.
   In June and July, 1995, the Company issued a total of 4.9 million 
additional Class A Common shares at $23.00 per share, providing net proceeds 
after offering costs of $106 million. Net proceeds were used to repay lines 
of credit and to fund storage center development and acquisitions, as well as 
other general corporate purposes.

NOTE J -- STOCK OPTIONS
   The Company has established the 1993 Stock Option Plan (the 1993 Plan) for
the purpose of attracting and retaining the Company's directors, executive
officers and other employees. The 1993 Plan provides for the granting of options
for up to 3% of the Company's outstanding shares of Class A common stock at the
end of each year, limited in the aggregate to 5,000,000 shares. In general, the
options vest ratably over five years and must be exercised within ten years from
date of grant. The exercise price for qualified incentive options under the 1993
Plan must be at least equal to fair market value at date of grant and at least
85% of fair market value at date of grant for non qualified options. The 1993
Plan expires in 2003.
   The Company also established the Stock Option Plan for Nonemployee Directors
(the Directors Plan) for the purpose of attracting and retaining the services of
experienced and knowledgeable outside directors. This plan was amended during
1995 and provided current outside directors with 6,000 shares each in 1995 and
3,000 shares each annually thereafter. Such options vest upon continued service
until the next annual meeting of the Company. The total shares reserved under
the Directors Plan, as amended, is 200,000. The exercise price for options
granted under the Directors Plan is equal to fair market value at date of grant.

<TABLE>
<CAPTION>

                                          No. of Shares   Option Price per Share
--------------------------------------------------------------------------------
<S>                                       <C>             <C>
   Outstanding, January 1, 1994                 ---
--------------------------------------------------------------------------------
     Granted                                  9,200           $18.90 to $23.07
--------------------------------------------------------------------------------
   Outstanding, December 31, 1994             9,200           $18.90 to $23.07
--------------------------------------------------------------------------------
     Granted                                196,500           $20.75 to $23.88
--------------------------------------------------------------------------------
     Forfeited                              (13,200)               $23.00
--------------------------------------------------------------------------------
     Exercised                                 (300)               $23.00
--------------------------------------------------------------------------------
   Outstanding, December 31, 1995           192,200           $18.90 to $23.88
--------------------------------------------------------------------------------
   Exercisable, December 31, 1995            15,100           $18.90 to $23.88
--------------------------------------------------------------------------------
</TABLE>

   During 1995, the Company established the 1995 Long-Term Incentive
Compensation Plan (the 1995 Plan). In addition to options authorized under the
1993 Plan, the 1995 Plan provides for stock appreciation rights, stock awards
(including restricted stock), performance awards, other stock-based awards and
dividend equivalent rights. The 1995 Plan requires mandatory acceleration in the
event of certain mergers and consolidations or a sale of substantially all the
assets or a liquidation of the Company, except where such awards are assumed or
replaced in the transaction. The 1995 Plan permits the plan administrator to
authorize loans, loan guarantees or installment payments to assist award
recipients in acquiring shares pursuant to awards and contains certain
limitations imposed by recent tax legislation. The 1995 Plan allows for grants
to consultants and agents, as well as officers and key employees of the Company.
Subsequent to year end, the Company granted 40,160 options at fair market value
which ranged from $26.88 to $27.00 and vest ratably over three years.
Additionally, performance awards for additional 12,994 shares were granted
contingent upon meeting certain performance objectives over the next three
years. The options granted under the 1995 Plan include dividend equivalent
rights under which the dividends of a granted option accrue to the grantee from
the date of grant to the exercise date.


                                       22

<PAGE>

   In October 1995, the Financial Accounting Standards Board issued Statement 
No. 123, "Accounting for Stock-Based Compensation." This statement provides
that the measure of compensation cost be based on the value of the award and
be recognized over the service period. Companies may elect to adopt the 
stock-based compensation accounting recognition method under the new standard 
or continue accounting for it under current guidance, Accounting Principles 
Board Opinion No. 25, "Accounting for Stock Issued to Employees." The Company 
will adopt this standard on January 1, 1996. The Company is currently evaluating
which measurement criteria it will use to account for such compensation.

NOTE K - SHAREHOLDER RIGHTS PLAN
   In March 1994, the Company adopted a Shareholder Rights Plan and declared a
dividend distribution of one Right for each outstanding share of common stock.
Under certain conditions, each Right may be exercised to purchase one one-
hundredth of a share of Series A Junior Participating Preferred Stock at a
purchase price of $65, subject to adjustment. The Rights will be exercisable
only if a person or group has acquired 10% or more of the outstanding shares of
common stock, or following the commencement of a tender or exchange offer for
10% or more of such outstanding shares of common stock. If a person or group
acquires more than 10% of the then outstanding shares of common stock, each
Right will entitle its holder to receive, upon exercise, common stock (or, in
certain circumstances, cash, property or other securities of the Company) having
a value equal to two times the exercise price of the Right. In addition, if the
Company is acquired in a merger or other business combination transaction, each
Right will entitle its holder to purchase that number of the acquiring Company's
common shares having a market value of twice the Right's exercise price. The
Company will be entitled to redeem the Rights at $.0001 per Right at any time
prior to the earlier of the expiration of the Rights in March 2004 or the time
that a person has acquired a 10% position. The Rights do not have voting or
dividend rights, and until they become exercisable, have no dilutive effect on
the Company's earnings.

NOTE L - ADVISORY AND MANAGEMENT AGREEMENTS
   Prior to the Merger, the Management Company advised the Company with respect
to its investments, managed the day-to-day operations of the Company, and
provided property management services. The agreements provided for an annual
advisory fee, incentive advisory fees, reimbursement for certain costs and
expenses, and property management fees. The property management fee is equal to
approximately 6% of property revenues. These agreements were eliminated through
the Merger of the Company and the Management Company on March 24, 1995. Property
management fees for the years ended December 31, 1994 and 1995 were $3,987,000
(representing ten months of operations) and $1,261,000 (representing three
months of operations), respectively. In addition, the Company paid $59,000 each
year during 1994 and 1995 under an advisory agreement.
   In connection with the management of storage centers, the Predecessor paid to
the Management Company a property management fee of 6% of rental revenues.
Incentive management fees were paid by two of the partnerships included in the
Predecessor. These incentive fees were based on the amount of distributions to
partners at 8% and 25% depending on the cumulative amount of distributions to
limited partners. No comparable fee is paid by the Company.

NOTE M - SUPPLEMENTAL QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>


                                                                                           Company
                                                  Predecessor                              -------
                                                  -----------                        Three months ended
                                                   Jan. 1 to       ----------------------------------------------------
                                                    Mar. 1         March 31,      June 30,       Sept. 30,     Dec. 31,
(in thousands, except per share data)                 1994            1994           1994           1994          1994
-----------------------------------------------------------------------------------------------------------------------
<S>                                                <C>            <C>            <C>            <C>            <C>
     Revenues                                      $  12,368      $   6,164      $  19,131      $  20,515      $ 21,111
-----------------------------------------------------------------------------------------------------------------------
     Income from operations                            3,882          2,852          7,702          8,584         8,223
-----------------------------------------------------------------------------------------------------------------------
     Net income before
       extraordinary item                             34,286          2,230          5,563          6,004         5,204
-----------------------------------------------------------------------------------------------------------------------
     Extraordinary item - loss on
       retirement of debt (Note H)                                                  (1,180)
-----------------------------------------------------------------------------------------------------------------------
     Net income                                    $  34,286      $   2,230      $   4,383      $   6,004      $  5,204
-----------------------------------------------------------------------------------------------------------------------
     Net income before extraordinary item per
       common and common equivalent share          $     ---      $    0.13      $    0.33      $    0.35      $   0.31
-----------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       23

<PAGE>

   Company operating information for the quarter ended March 31, 1994 
reflects only one month of operating results. Predecessor information 
includes the gain on sale of net assets and related expenses and results in a 
net income per unit of limited partnership interest of $63.97.

<TABLE>
<CAPTION>


                                                                                      Three months ended
                                                                        -----------------------------------------------------
                                                                        March 31,      June 30,       Sept. 30,      Dec. 31,
     (in thousands, except per share data)                                1995           1995           1995           1995
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>            <C>            <C>            <C>
            Revenues                                                   $  21,368      $  24,107      $  26,088      $  25,208
-----------------------------------------------------------------------------------------------------------------------------
            Income from operations                                         8,551         10,329         11,483         10,372
-----------------------------------------------------------------------------------------------------------------------------
            Net income                                                     5,354          6,638          9,221          8,359
-----------------------------------------------------------------------------------------------------------------------------
            Net income per common and common equivalent share          $    0.31      $    0.35      $    0.40      $    0.35
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

NOTE N - SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>

                                                                              Predecessor                     Company
                                                                        ---------------------------      -------------------
                                                                        Year ended   Period from
                                                                         Dec. 31,   Jan. 1, 1994 to      Year Ended Dec. 31,
     (in thousands)                                                       1993      Mar. 1, 1994        1994           1995
<S>                                                                     <C>         <C>               <C>              <C>
-----------------------------------------------------------------------------------------------------------------------------
            Cash paid during the period for interest                    $  2,288    $     487         $  8,829      $  13,372
-----------------------------------------------------------------------------------------------------------------------------
            Liabilities incurred in connection
-----------------------------------------------------------------------------------------------------------------------------
              with the construction of
-----------------------------------------------------------------------------------------------------------------------------
              storage centers                                           $    206    $     ---         $    ---      $   4,457
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

NOTE O -- PREDECESSOR
   The combined financial statements of the Predecessor include the accounts 
of the partnerships listed below for the year ended December 31, 1993, and 
the period from January 1 to March 1, 1994, except for Shurgard Income 
Properties II, III, and IV, each of which are as of their fiscal year ended 
September 30, 1993.

   Shurgard Mini-Storage Limited Partnership I
   Shurgard Income Properties II
   Shurgard Income Properties III, a Real Estate Limited Partnership
   Shurgard Income Properties VI, a Real Estate Limited Partnership
   Shurgard Income Properties Five, a Real Estate Limited Partnership
   Shurgard Income Properties Six, a Real Estate Limited Partnership
   Shurgard Income Properties Seven, a Real Estate Limited Partnership
   Shurgard Income Properties Eight, a Real Estate Limited Partnership
   Shurgard Income Properties Nine, a Real Estate Limited Partnership
   Shurgard Income Properties Ten, a Real Estate Limited Partnership
   Shurgard Income Properties Eleven, a Real Estate Limited Partnership
   Shurgard Income Properties Twelve, a Real Estate Limited Partnership
   Shurgard Income Properties -- Fund 14 Limited Partnership
   Shurgard Growth Capital -- Fund 15 Limited Partnership
   Shurgard Income Properties -- Fund 16 Limited Partnership
   Shurgard Growth Capital -- Fund 17 Limited Partnership
   Shurgard Income Properties -- Fund 18 Limited Partnership



                                       24

<PAGE>



Board of Directors
Shurgard Storage Centers, Inc.
Seattle, Washington


   We have audited the accompanying consolidated balance sheets of Shurgard 
Storage Centers, Inc., and subsidiaries (the Company) as of December 31, 1995 
and 1994, and the related consolidated statements of income, shareholders' 
equity, and cash flows for the years ended December 31, 1995 and 1994. We 
have also audited the combined statements of income, cash flows and partners' 
equity (deficit) of the 17 limited partnerships (the Predecessor) described 
in Note A, for the period from January 1, 1994 to March 1, 1994 and for the 
year ended December 31, 1993. These financial statements are the 
responsibility of the Company's and Predecessor's management. Our 
responsibility is to express an opinion on these financial statements 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 consolidated financial statements of the Company and the
combined financial statements of the Predecessor present fairly, in all material
respects, the financial position of the Company as of December 31, 1995 and
1994, the results of its operations and its cash flows for the years ended
December 31, 1995 and 1994, the results of the Predecessor's operations and its
cash flows for the period from January 1, 1994 to March 1, 1994 and for the year
ended December 31, 1993 in conformity with generally accepted accounting
principles.






Deloitte & Touche LLP

Seattle, Washington
February 2, 1996



                                      25

<PAGE>

                                      SIGNATURE

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this Annual
Report on Form 10-K/A to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Seattle, State of Washington, on the 9th day of
October, 1996.

                            SHURGARD STORAGE CENTERS, INC.

                            By:  /s/ HARRELL BECK
                               ---------------------------
                               Harrell Beck
                               Senior Vice President, Treasurer,
                               Chief Financial Officer