UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

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

For the fiscal year ended December 31, 1996

                                       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 1-10859 
                       -------

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

       California                                               95-4300891
-------------------------------                         -----------------------
(State or other jurisdiction of                             (IRS Employer 
  incorporation or organization)                         Identification Number)
                                

    701 Western Avenue
 Glendale, California                                        91201-2349
----------------------------------------                 ----------------------
(Address of principal executive offices)                     (Zip Code)

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

           Securities registered pursuant to Section 12(b) of the Act


Common Stock Series A, $.01 par value                   American Stock Exchange
--------------------------------------          -------------------------------
     (Title of each class)                               (Name of each exchange 
                                                           on which registered)

           Securities registered pursuant to Section 12(g) of the Act
                                      None
                                 ---------------
                                (Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.


                                    Yes X No
                                       --   ---

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of the Company'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
           --

The  aggregate  market value of the voting stock held by  non-affiliates  of the
Company as of February 28, 1997:


Common Stock Series A, $.01 Par Value-$42,785,910  (computed on the basis of $19
per share which was the  reported  closing  sale price of the  Company's  Common
Stock Series A on the American Stock Exchange on February 28, 1997).

The number of shares  outstanding of the Company's classes of common stock as of
February 28, 1997:

            Common Stock, $.01 Par Value - Series A 2,776,023 shares
             Common Stock, $.01 Par Value - Series B 324,989 shares
             Common Stock, $.01 Par Value - Series C 920,802 shares
             ------------------------------------------------------
                       DOCUMENTS INCORPORATED BY REFERENCE

   (a) Information required by Part III will be included in an amendment to this
Form 10-K under cover of a Form 10-K/A  filed  within 120 days of the  Company's
1996 fiscal year, which information is incorporated by reference into Part III.


<PAGE>
                      PUBLIC STORAGE PROPERTIES XVII, INC.
                                     PART I.

ITEM 1.   BUSINESS
          --------

General
-------

          Public Storage  Properties XVII, Inc. (the "Company") is a real estate
investment trust ("REIT") organized as a California  corporation that was formed
to succeed to the business of Public Storage Properties XVII, Ltd., a California
limited  partnership  (the  "Partnership"),   in  a  reorganization  transaction
completed on September 16, 1991.

          The Partnership offered 148,000 units of limited partnership  interest
(the  "Units")  to the public in  September,  1986.  The  Partnership's  general
partners were PSI Associates II, ("PSA"), a California corporation, and B. Wayne
Hughes ("Hughes").  PSA was an affiliate of Public Storage  Management,  Inc., a
California corporation (see below).

          Effective  September 16, 1991, the Partnership  transferred all of its
assets and  liabilities  to the  Company  pursuant  to a plan of  Reorganization
approved  by  a  majority  of  the  limited   partners.   In  exchange  for  the
Partnership's  assets and  liabilities,  the Company issued  3,737,374 shares of
common stock Series A ("Series A shares"), 324,989 shares of common stock Series
B ("Series B shares"),  and 920,802  shares of common  stock Series C ("Series C
shares")  of the  Company  to  the  Partnership.  The  Partnership  then  made a
liquidating  distribution to the limited  partners by distributing 99 percent of
the  Series A shares  (on the basis of 25 Series A shares  for each  Unit).  The
remaining  1 percent  of the  Series A shares and all of the Series B shares and
Series C shares were  distributed  to the  general  partners in respect of their
interests in the Partnership. Subsequent thereto, the Partnership was dissolved.
The Company has elected to be taxed as a REIT for Federal income tax purposes.

          The Company is a finite life REIT, with a term until December 31, 2038
(the same as the predecessor  Partnership).  However,  pursuant to the Company's
by-laws, in 1999 the Company will be required to present the shareholders with a
proposal for the sale or financing of the properties and, in the case of a sale,
a liquidation of the Company,  unless the  properties  have already been sold or
financed. See "Sale or Financing" below.

          The Company's investment objectives are (as were the Partnership's) to
maximize cash flow from operations and to maximize capital appreciation.

          The Company has acquired 19 properties, all of which are in operation.
The  Company  believes  that  its  mini-warehouses   have  attractive  operating
characteristics.

          The  Company's   senior   officers  have  been   responsible  for  the
acquisition of more than 350  mini-warehouses,  the development of more than 650
mini-warehouses  and the  management of more than 1,000  mini-warehouses  during
their average 18 years of experience with the Public Storage organization.

          In  1995,  there  were  a  series  of  mergers  among  Public  Storage
Management,  Inc.  (which was the  Company's  mini-warehouse  operator),  Public
Storage, Inc. and their affiliates  (collectively,  "PSMI"),  culminating in the
November  16,  1995 merger (the "PSMI  Merger") of PSMI into  Storage  Equities,
Inc., a REIT listed on the New York Stock Exchange. In the PSMI Merger,  Storage
Equities,  Inc.  was renamed  Public  Storage,  Inc.  ("PSI")  and PSI  acquired
substantially  all of PSMI's United States real estate operations and became the
operator of the Company's mini-warehouse properties. Hughes, the Company's Chief
Executive Officer, and members of his family (the "Hughes Family") are the major
shareholders of PSI. As a result of the PSMI Merger,  PSI owns all of the shares
of the Company's common stock that was owned by PSMI or its affiliates,  and PSI
has an option to acquire all of the shares of the  Company's  common stock owned
by Hughes.

Investments in Facilities
-------------------------

          At December 31, 1996,  the Company owned 19  facilities  located in 11
states:  California  (4),  Colorado  (2),  Florida (1) Georgia (1),  Hawaii (1),
Illinois (1),  Louisiana (1),  Massachusetts  (1), New Jersey (1), Texas (5) and
Virginia (1). These facilities  consist of 16  mini-warehouses,  1 business park
and 2 combination mini-warehouse/business park facilities.

          The Company  believes that its operating  results have  benefited from
favorable   industry   trends  and  conditions.   Notably,   the  level  of  new

                                       2
<PAGE>

mini-warehouse  construction  has decreased while consumer demand has increased.
In addition,  the Company's  mini-warehouses are characterized by a low level of
capital expenditures to maintain their condition and appearance.

          MINI-WAREHOUSES

          Mini-warehouses,   which   comprise  the  majority  of  the  Company's
investments  (approximately  78% of the Company's revenues for the twelve months
ended  December 31, 1996),  are designed to offer  accessible  storage space for
personal  and  business  use at a  relatively  low  cost.  A user  rents a fully
enclosed space which is for the user's  exclusive use and to which only the user
has access on an unrestricted basis during business hours.  On-site operation is
the  responsibility  of resident  managers who are  supervised by area managers.
Some  mini-warehouses  also include rentable uncovered parking areas for vehicle
storage.  Leases for  mini-warehouse  space may be on a long-term or  short-term
basis,  although typically spaces are rented on a month-to-month  basis.  Rental
rates vary according to the location of the property and the size of the storage
space.

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

          Mini-warehouses in which the Company has invested generally consist of
three to seven  buildings  containing an aggregate of between 350 to 750 storage
spaces, most of which have between 25 and 400 square feet and an interior height
of approximately 8 to 12 feet.

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

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

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

          COMMERCIAL PROPERTIES

          The Company's  non-mini-warehouse  investments  are business parks and
low-rise office buildings. The business park includes both industrial and office
space. Industrial space may be used for, among other things, light manufacturing
and assembly, storage and warehousing, distribution and research and development
activities.  The Company  believes  that most of the office space is occupied by
tenants who are also renting  industrial  space.  The remaining  office space is
used for general office  purposes.  A business park may also include  facilities
for commercial uses such as banks, travel agencies,  restaurants,  office supply
shops, professionals or other tenants providing services to the public.

          A business  park  property is typically  divided into units ranging in
size from 600 to 5,000 square feet. Parking is open or covered, and the ratio of
spaces to rentable square feet ranges from one to four per thousand square feet,
depending upon the use of the property and its location.  Office space generally
requires a greater parking ratio than most industrial uses.

Operating Strategies
--------------------

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

                                       3
<PAGE>

  *  CAPITALIZE ON "PUBLIC  STORAGE'S" NAME RECOGNITION.  PSI, together with its
     predecessor,  has  more  than  20  years  of  operating  experience  in the
     mini-warehouse  business, and is the largest operator of mini-warehouses in
     the United States. PSI believes that its marketing and advertising programs
     improve its competitive position in the market. PSI's in-house Yellow Pages
     staff designs and places  advertisements  in approximately 700 directories.
     Commencing  in  early  1996,  PSI  began  to  experiment  with a  telephone
     reservation  system designed to provide added customer  service.  Customers
     calling either PSI's toll-free  telephone referral system,  (800) 44-STORE,
     or a mini-warehouse facility are directed to PSI's reservation system where
     a trained  representative  discusses with the customer space  requirements,
     price and  location  preferences  and also  informs  the  customer of other
     products  and  services  provided  by PSI.  As of December  31,  1996,  the
     telephone  reservation  system was supporting rental activity at all of the
     Company's  properties.  PSI's toll-free  telephone referral system services
     approximately 120,000 calls per month from potential customers inquiring as
     to the nearest Public Storage mini-warehouse.

  *  MAINTAIN HIGH  OCCUPANCY  LEVELS AND INCREASE  REALIZED  RENTS.  Subject to
     market conditions, the Company generally seeks to achieve average occupancy
     levels in excess of 90% and to  eliminate  promotions  prior to  increasing
     rental  rates.  Average  occupancy for the  Company's  mini-warehouses  has
     increased  from  88% in 1995 to 90% in 1996.  Realized  monthly  rents  per
     square foot  increased  from $.69 in 1995 to $.70 in 1996.  The Company has
     increased rental rates in many markets where it has achieved high occupancy
     levels and eliminated or minimized promotions.

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

  *  PROFESSIONAL  PROPERTY  OPERATION.  In  addition to the  approximately  150
     support  personnel  at the  Public  Storage  corporate  offices,  there are
     approximately 2,700 on-site personnel who manage the day-to-day  operations
     of  the  mini-warehouses  in  the  Public  Storage  system.  These  on-site
     personnel are supervised by 110 district managers, 15 regional managers and
     three divisional  managers (with an average of 13 years'  experience in the
     mini-warehouse  industry) who report to the president of the mini-warehouse
     property  operator (who has 12 years of experience  with the Public Storage
     organization). PSI carefully selects and extensively trains the operational
     and  support  personnel  and offers them a  progressive  career  path.  See
     "Property Operators."

Property Operators
------------------

     The Company's mini-warehouse properties are managed by PSI (as successor to
PSMI) pursuant to a Management Agreement. Through 1996, the Company's commercial
properties  were managed by Public Storage  Commercial  Properties  Group,  Inc.
("PSCPG") pursuant to a Management Agreement. PSI has a 95% economic interest in
PSCPG (represented by nonvoting  preferred stock) and the Hughes Family had a 5%
economic  interest in PSCPG  (represented by voting common stock) until December
1996,  when the  Hughes  Family  sold its  interest  to Ronald L.  Havner,  Jr.,
formerly  Senior Vice President and Chief  Financial  Officer of PSI, who became
the Chief  Executive  Officer of PSCPG.  PSCPG issued  additional  voting common
stock to two other unaffiliated investors. In January 1997, American Office Park
Properties,  L.P.  ("AOPPLP")  became the  manager of the  Company's  commercial
properties  pursuant  to  the  Management  Agreement.  AOPPLP  is  an  operating
partnership  formed  to own and  operate  business  parks  in  which  PSI has an
approximate 85% economic  interest.  The general partner of AOPPLP is PSCPG, now
known as American Office Park Properties, Inc.

     Under  the  supervision  of the  Company,  PSI and  AOPPLP  coordinate  the
operation  of the  facilities,  establish  rental  policies  and  rates,  direct
marketing   activity  and  direct  the  purchase  of  equipment   and  supplies,
maintenance activity, and the selection and engagement of all vendors,  supplies
and independent contractors.

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

                                       4
<PAGE>

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

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

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

     For as long as the respective  Management  Agreement is in effect,  PSI has
granted the  Company a  non-exclusive  license to use two PSI service  marks and
related designs (and AOPPLP has granted the Company a  non-exclusive  license to
use a PSI service  mark and related  designs),  including  the "Public  Storage"
name, in conjunction with rental and operation of facilities managed pursuant to
the  Management  Agreement.   Upon  termination  of  the  respective  Management
Agreement,  the Company  would no longer have the right to use the service marks
and related designs except as described below. Management believes that the loss
of the right to use the service marks and related  designs could have a material
adverse effect on the Company's business.

     Each Management  Agreement,  as amended in February 1995, provides that (i)
the Management  Agreement will expire in February 2002 provided that in February
of  each  year  it  shall  be  automatically  extended  for  one  year  (thereby
maintaining a seven-year  term) unless either party  notifies the other that the
Management  Agreement  is not being  extended,  in which  case it expires on the
first  anniversary  of its  then  scheduled  expiration  date.  Each  Management
Agreement may also be  terminated  by either party for cause,  but if terminated
for cause by the  Company,  the  Company  retains  the rights to use the service
marks  and  related  designs  until  the  then  scheduled  expiration  date,  if
applicable, or otherwise a date seven years after such termination.

     Certain of the directors and officers of the Company are also directors and
officers of PSI.

Competition
-----------

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

Other Business Activities
-------------------------

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

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


                                       5
<PAGE>
Sale or Financing
-----------------

     The by-laws of the Company provide that, during 1999,  unless  shareholders
have previously  approved such a proposal,  the  shareholders  will be presented
with a proposal to approve or  disapprove  (a) the sale or  financing  of all or
substantially  all of the  properties and (b) the  distribution  of the proceeds
from  such  transaction  and,  in the  case of a sale,  the  liquidation  of the
Company.

Employees
---------

     As of December  31,  1996,  the Company  had 60  employees,  25 persons who
render services on behalf of the Company on a full-time basis and 35 persons who
render services on a part-time basis (5 of whom were executive officers).  These
persons include resident managers, assistant managers, relief managers, district
managers, and administrative and maintenance personnel.

Federal Income Tax
------------------

     The Company  intends to continue to operate in a manner so as to qualify as
a REIT under the Internal Revenue Code of 1986, as amended, but no assurance can
be given that the Company  will be able to continue to qualify at all times.  By
qualifying  as a REIT,  the Company  can deduct  dividend  distributions  to its
shareholders for Federal income tax purposes,  thus effectively  eliminating the
"double  taxation"  (at the  corporate and  shareholder  levels) that  typically
applies to corporate  dividends.  The Company  believes it is in compliance with
these  requirements  and,  accordingly,  no provision  for income taxes has been
made.


                                       6
<PAGE>
ITEM 2.   PROPERTIES.
          -----------
    
     The following  table sets forth  information  as of December 31, 1996 about
properties owned by the Company:
<TABLE>
<CAPTION>

                                         Size                               Number of
           Location                   of Parcel       Net Rentable Area      Spaces        Completion Date
-----------------------------        -------------    -------------------  -----------     --------------- 
CALIFORNIA
<S>                                   <C>              <C>                      <C>                <C> 
Citrus Heights, Verner                2.54 acres       65,000 sq. ft.           643           Dec. 1986
Davis, Olive                          2.14 acres       51,000 sq. ft.           626           Feb. 1987
Los Angeles, Olympic Blvd (2)         1.33 acres       95,000 sq. ft.         1,277           Jun. 1987
San Diego, Lusk Blvd. III (1)         7.22 acres      118,000 sq. ft.            45           Jul. 1989

COLORADO
Denver, Belleview                     6.97 acres       71,000 sq. ft.           760           Nov. 1987
Wheatridge, 48th Street               3.76 acres       69,000 sq. ft.           595           Nov. 1986

FLORIDA
Duval County, Timuquana               2.96 acres       55,000 sq. ft.           543           Aug. 1987

GEORGIA
Atlanta, Snapfinger Rd.               6.11 acres       61,000 sq. ft.           536           Jul. 1987

HAWAII
Honolulu, Ukee St.                    1.46 acres       45,000 sq. ft.           427           Mar. 1987

ILLINOIS
Naperville, Ogden                     2.79 acres       67,000 sq. ft.           654           Dec. 1986

LOUISIANA
Gretna, Belle Chasse Hwy.             4.03 acres       85,000 sq. ft.           798           Dec. 1986

MASSACHUSETTS
Chicopee, Jamrog Dr.                  8.20 acres       66,000 sq. ft.           568          Sept. 1987

NEW JERSEY
Berlin, Route 13                      4.18 acres       52,000 sq. ft.           449           Nov. 1986

TEXAS
Carrollton, Trinity Mills Rd. (1)     5.80 acres      112,000 sq. ft.           716           Apr. 1987
Dallas, Mockingbird                   1.13 acres       68,000 sq. ft.           916           Nov. 1986
Harris County, Louetta Rd.            2.30 acres       48,000 sq. ft.           477           Nov. 1986
Houston, Dairy Ashford                2.50 acres       58,000 sq. ft.           521           Dec. 1986
Houston, Steubner-Air                 2.53 acres       50,000 sq. ft.           460           Apr. 1987

VIRGINIA
Fairfax County, Shirley Hwy (1)       7.32 acres      189,000 sq. ft.           826           Aug. 1989
</TABLE>
------------------------------------
(1)  This property or a portion of the property has been developed as a business
     park.
(2)  The  property is owned  jointly  with an  affiliate.  The Company has a 25%
     interest in the property.

                                       7
<PAGE>
         Substantially  all of the Company's  facilities were acquired prior to
the time  that it was  customary  to  conduct  environmental  investigations  in
connection  with property  acquisitions.  During the fourth quarter of 1995, the
Company  completed  environmental  assessments of its properties to evaluate the
environmental  condition of, and  potential  environmental  liabilities  of such
properties.  These  assessments  were performed by an independent  environmental
consulting firm. Based on the assessments, the Company expensed $186,000 in 1995
for known environmental remediation requirements.

          The  Company's  properties  are operated to maximize cash flow through
the regular review of and, when warranted by market  conditions,  adjustments to
scheduled rents. Approximately 78% of the Company's portfolio (based on revenues
for 1996) are mini-warehouses and the balance consists of commercial properties.
As reflected in the table below,  the Company has experienced  overall  improved
property operations:
<TABLE>
<CAPTION>


                                                                             For the year ended December 31,
                                                                       ----------------------------------------
                                                                       1996              1995             1994
                                                                      ---------      ------------      --------
<S>                                                                     <C>               <C>              <C>
Weighted average occupancy level (1)                                    90%               88%              88%
Realized monthly rent per occupied square foot (1) (2)                 $.70              $.69             $.67

Operating margin (3):
     Before reduction for depreciation expense                          63%               65%              65%
     After reduction for depreciation expense:                          45%               45%              44%

</TABLE>
--------------
(1)  Mini-warehouse facilities only.
(2)  Realized  rent per square foot  represents  the actual  revenue  earned per
     occupied square foot.  Management  believes this is a more relevant measure
     than the posted rental rates,  since posted rates can be discounted through
     the use of promotions. Includes administrative and late fees. (3) Operating
     margin (before reduction for depreciation  expense) is computed by dividing
     rental income less cost of operations by rental  income.  Operating  margin
     (after reduction for  depreciation  expense) is computed by dividing rental
     income less cost of operations by rental income.

          Additional  information  is set forth  below  with  respect to the San
Diego/Lusk  Blvd. III and Fairfax  County/Shirley  Memorial  Highway  properties
because  they are the only  properties  with a book value of at least 10% of the
total  assets of the  Company or that have  accounted  for gross  revenues of at
least 10% of the aggregate gross revenues of the Company.

          SAN DIEGO/LUSK  BLVD. III. This property,  a business park, is located
in San Diego's North County area,  approximately  15 miles north of downtown San
Diego. The property is close to two freeways,  I-805 and I-163. Miramesa Road, a
principal  east-west  artery,  and Miramar Naval Air Station are also within the
property's market area.

          The 7.22-acre property, which was completed in 1988, consists of three
buildings  containing  118,000  square feet of net rentable area divided into 45
units.  No tenant  occupies 10% or more of the rentable area. As of December 31,
1996, the property was 100% occupied by 45 tenants.

          Set forth below is a schedule  showing the occupancy rate and the rent
per square foot for the property at the dates indicated.



                                                          Annual Realized 
                                                              Rent  Per
        Date                        Occupancy Rate           Square Foot
----------------------           --------------------     ------------------
 December 31, 1996                      100%                     $7.92
 December 31, 1995                       89                       7.38
 December 31, 1994                       90                       7.20


                                       8
<PAGE>
          A schedule  showing  total  annual base rent and  percentage  of total
income  relating  to leases  according  to their  expiration  dates is set forth
below:

          Year of                         Total Amt.            Percentage of
        Expiration*                        Base Rent             Total Income
     ---------------                 -----------------         ----------------
           1997                           $574,000                   55.30%
           1998                            294,000                   28.32
           1999                             89,000                    8.57
           2000                             46,000                    4.43
           2001                             35,000                    3.38
                                     -----------------         ----------------
           Total                        $1,038,000                  100.00%
                                     =================         ================

             --------------
             *    Assumes that none of the renewal options included in the 
                  leases will be exercised

          FAIRFAX  COUNTY/SHIRLEY  MEMORIAL HIGHWAY.  This 7.32-acre property is
located in Northern  Virginia and contains both  business park and  self-storage
facilities.  The project is located at the  entrance to the Bren Mar  Industrial
Park, across I-395 from the Shirley Industrial Park. To the north along I-395 is
one of the largest  concentrations  of high-rise  apartments and condominiums in
Northern   Virginia.   The   combination  of  both  commercial  and  residential
development  near the  property  should  provide  good tenant  bases to both the
business and self-storage facilities.

          The  property,  which  opened in 1989,  consists of nine  single-story
mini-warehouse  buildings with approximately  76,000 of net rentable square feet
divided into 776  individual  storage  units.  In addition,  there are 50 office
units containing  approximately 113,000 net rentable square feet. As of December
31, 1996, the  mini-warehouse  facility had 640 units occupied,  representing an
82%  occupancy  rate,  and the  business  park  facility  was 86% occupied by 43
tenants. No tenant occupies 10% or more of the rentable area.

          Set forth below is a schedule  showing the occupancy rate and the rent
per square  foot for the  mini-warehouse  portion of the  property  at the dates
indicated.

                                                               Annual Scheduled
                                                                  Rent Per
           Date                        Occupancy Rate            Square Foot
  -----------------------          -------------------         ----------------
    December 31, 1996                       82%                     $13.92
    December 31, 1995                       76                       10.32
    December 31, 1994                       76                       10.32

          Set forth below is a schedule  showing the occupancy rate and the rent
per square foot for the business park facility at the dates indicated:

                                                               Annual Realized 
                                                                   Rent Per
          Date                        Occupancy Rate             Square Foot
  -----------------------          -------------------         ----------------
  December 31, 1996                       86%                      $11.26
  December 31, 1995                       95                        10.06
  December 31, 1994                       95                        11.03


                                       9
<PAGE>
          A schedule  showing the total annual base rent and percentage of total
income  relating  to  leases  for the  business  park  portion  of the  property
according to their expiration dates is set forth below:

       Year of                         Total Amt.            Percentage of
     Expiration*                        Base Rent             Total Income
--------------------------        -----------------         ----------------
        1997                         $1,099,000                   34.55%
        1998                            768,000                   24.14
        1999                            535,000                   16.82
        2000                            243,000                    7.64
        2001                            199,000                    6.25
     Thereafter                         337,000                   10.60
                                  -----------------         ----------------
        Total                        $3,181,000                  100.00%
                                  =================         ================

     --------------
     *    Assumes that none of the renewal options included in the leases will 
          be exercised

ITEM 3.   LITIGATION.
          -----------

          None.

Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
          ----------------------------------------------------

          The Company  held an annual  meeting of  shareholders  on December 17,
1996.  Proxies for the annual meeting were  solicited  pursuant to Regulation 14
under the  Securities  Exchange  Act of 1934.  The annual  meeting  involved the
election of  directors,  and the vote was as follows (the common Stock Series A,
Series B and Series C vote together as a single class):
<TABLE>
<CAPTION>


                                    Number of Shares of                          Number of Shares of
                                   Common Stock Series A                        Common Stock Series B
                              -------------------------------              -------------------------------
          Name                 Voted For           Withheld                 Voted For           Withheld
------------------------      -------------     -------------              ------------       ------------
<S>                              <C>                <C>                      <C>              <C>   
B. Wayne Hughes                  1,841,093          31,933                   324,989               -
                              -------------     -------------              ------------       ------------
Vern O. Curtis                   1,841,093          31,933                   324,989               -
                              -------------     -------------              ------------       ------------
Jack D. Steele                   1,841,093          31,933                   324,989               -
                              -------------     -------------              ------------       ------------


                                    Number of Shares of
                                   Common Stock Series C                         Total Common Stock
                              -------------------------------              -------------------------------
          Name                 Voted For           Withheld                 Voted For           Withheld
------------------------      -------------     -------------              ------------       ------------
B. Wayne Hughes                    920,802            -                    3,086,884             31,933
                              -------------     -------------              ------------       ------------
Vern O. Curtis                     920,802            -                    3,086,884             31,933
                              -------------     -------------              ------------       ------------
Jack D. Steele                     920,802            -                    3,086,884             31,933
                              -------------     -------------              ------------       ------------

</TABLE>

                                    PART II.

Item 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
          ---------------------------------------------------------------------

          The Company's  Series A shares are  registered  under Section 12(b) of
the Securities Exchange Act of 1934 on the American Stock Exchange ("AMEX"), and
commenced  trading on September  30, 1991 under the symbol PSV. The Series B and
Series C shares are not registered  under Section 12 of the Securities  Exchange
Act of 1934 and no public  trading  market  exists for the Series B and Series C
shares.

          The Company's  Articles of  Incorporation  provide that,  the Series B
shares and Series C shares will convert  automatically into Series A shares on a
share-for-share  basis (the "Conversion") when (A) the sum of (1) all cumulative
dividends and other  distributions from all sources with respect to the Series A
shares (including liquidating distributions,  but not including payments made to
redeem such stock other than in liquidation) and (2) the cumulative  Partnership
distributions  from all sources with respect to all Units (including the General
Partners'  1%  interest)  is equal to (B) the product of $20  multiplied  by the
number  of the  then-outstanding  "Original  Series A  shares"  ("Total  Capital
Return").  The term "Original  Series A shares" means the Series A shares issued
in the Reorganization.

                                       10
<PAGE>
Market Prices and Dividends
---------------------------

          The  following  table sets forth the high and low sales  prices on the
AMEX  composite  tape per  Series A share and  dividends  per Series A share and
Series B share for fiscal 1995 and 1996:
<TABLE>
<CAPTION>


                                                                                            
                                                                Sales Price                  Cash
                                                            ----------------------         Dividends
      Year                    Quarter Ended                  High          Low             Declared*
------------      -----------------------------             --------    ----------        -------------
<S>               <C>                                       <C>         <C>                   <C>  
1995              March 31                                   $17-1/8      $14-1/8             $0.29
                  June 30                                     17-3/8       15-7/8              0.31
                  September 30                                    18           16              0.31
                  December 31                                 17-3/8       16-1/4              0.49 (1)

1996              March 31                                       $17      $16-1/8             $0.31
                  June 30                                     17-1/2       16-5/8              0.31
                  September 30                                19-3/4           17              0.31
                  December 31                                 20-3/8       18-7/8              0.46 (2)
</TABLE>
     *   No dividends were declared on Convertible Series C shares
 (1) Includes special dividend of $0.18
 (2) Includes special dividend of $0.15

          As of December 31, 1996,  there were  approximately  1,525  holders of
record of the Company's Series A shares.

          Holders of Series A shares are entitled to receive distributions when,
as and if declared by the Board of Directors out of any funds legally  available
for that purpose.  The Company,  as a REIT, is required to distribute,  prior to
filing its tax return at least 95% of its "real estate  investment trust taxable
income,"  which,  as defined by the relevant tax  statutes and  regulations,  is
generally   equivalent   to  net  taxable   ordinary   income.   Under   certain
circumstances,  the  Company  can  rectify a failure  to meet this  distribution
requirement by paying dividends after the close of a particular taxable year.

          A  principal   policy  of  the  Company  is  to  make  quarterly  cash
distributions.  The Company intends to make quarterly cash  distributions out of
funds legally available.

          For Federal income tax purposes,  distributions  to  shareholders  are
treated as ordinary  income,  capital gains,  return of capital or a combination
thereof,  and for the past three years all distributions have been classified as
ordinary income.

          Under generally accepted accounting  principles,  the amount of income
exceeded (was less than)  distributions  declared to  shareholders  by $249,000,
$499,000 and ($164,000) during 1994, 1995 and 1996, respectively.

          All  Series  A shares  are  entitled  to  participate  equally  in the
Company's net assets upon  dissolution  and  liquidation  after repayment of the
Company's liabilities,

Repurchase of Company's common stock
------------------------------------

          If considered to be an attractive  investment  opportunity or in other
appropriate circumstances, the Company may repurchase its Series A shares out of
legally available funds, if approved by the Board of Directors.

          As of February 27, 1997,  the Board of Directors  has  authorized  the
Company to repurchase up to 1,300,000  Series A shares.  From  September 9, 1991
through February 28, 1997, the Company has repurchased  961,351 Series A shares.
The Company  repurchased  4,300  Series A shares  during 1996 and no  additional
Series A shares between January 1, 1997 and February 28, 1997.


                                       11
<PAGE>
ITEM 6.   SELECTED FINANCIAL DATA.
          -----------------------
          The  following  selected  historical  financial  information  has been
derived from the audited financial statements of the Company.
<TABLE>
<CAPTION>


                                                                  Year Ended December 31,
                                    ---------------------------------------------------------------------------------
                                         1996             1995             1994              1993             1992
                                    -----------       -----------      -----------       ----------        ----------
Operating data:
---------------
Revenues:
<S>                                 <C>               <C>              <C>               <C>               <C>       
   Rental income                    $10,894,000       $10,549,000      $10,245,000       $9,489,000        $8,991,000
   Interest and other income             15,000            26,000           37,000           30,000            25,000
                                    -----------       -----------      -----------       ----------        ----------

                                     10,909,000        10,575,000       10,282,000        9,519,000         9,016,000
                                    -----------       -----------      -----------       ----------        ----------
Expenses:
   Cost of operations                 4,051,000         3,732,000        3,582,000        3,484,000         3,546,000
   Depreciation                       1,977,000         2,047,000        2,187,000        3,184,000         3,263,000
   General and administrative           267,000           297,000          309,000          338,000           506,000
   Interest expense                     466,000           328,000            -               10,000           154,000
   Environmental cost (1)                 -               186,000            -                -                  -
                                      6,761,000         6,590,000        6,078,000        7,016,000         7,469,000
                                    -----------       -----------      -----------       ----------        ----------
Income before gain on sale
   of real estate                     4,148,000         3,985,000        4,204,000        2,503,000         1,547,000
Gain on sale of real estate                -                 -                -             567,000              -
                                    -----------       -----------      -----------       ----------        ----------

Net Income                           $4,148,000        $3,985,000       $4,024,000       $3,070,000        $1,547,000
                                    ===========       ===========      ===========       ==========        ==========

Net income per Series A share:
   Primary                                $1.33             $1.20            $1.14            $0.79             $0.36
   Fully diluted                          $1.03             $0.95            $0.91            $0.65             $0.32

Dividends declared per share:
   Series A                               $1.39             $1.40            $1.07            $1.08             $0.77
   Series B                               $1.39             $1.40            $1.07            $0.92             $0.77

Weighted average Common shares 
  outstanding:
     Primary - Series A               2,776,023         2,934,723        3,377,156        3,494,373         3,638,199
     Fully diluted - Series A         4,021,814         4,180,514        4,622,947        4,740,164         4,883,990

Other data:
-----------
Net cash provided by
   operating activities              $6,286,000        $6,019,000       $6,287,000       $5,674,000        $4,746,000
Net cash used in
   investing activities              (1,028,000)         (534,000)        (266,000)      (2,306,000)         (997,000)
Net cash used in
   financing activities              (5,481,000)       (6,897,000)      (5,235,000)      (8,321,000)       (3,968,000)
Capital expenditures
   to maintain facilities            (1,028,000)         (534,000)        (266,000)        (319,000)         (297,000)
Funds from operations (2)             6,125,000         6,218,000        6,391,000        5,687,000         4,810,000

Balance sheet data:
-------------------
Total assets                        $48,920,000       $50,277,000      $52,888,000      $54,043,000       $59,392,000
Total debt                            4,650,000         5,650,000             -                -            1,736,000
Shareholders' equity                 41,528,000        41,765,000       50,790,000       51,796,000        55,178,000
</TABLE>
                                       12
<PAGE>

ITEM 6.   SELECTED FINANCIAL DATA (CONTINUED)
          ----------------------------------

(1)  Substantially  all of the Company's  facilities  were acquired prior to the
     time that it was  customary  to  conduct  environmental  investigations  in
     connection with property  acquisitions.  During the fourth quarter of 1995,
     the  Company  completed  environmental  assessments  of its  properties  to
     evaluate  the  environmental  condition  of,  and  potential  environmental
     liabilities  of such  properties.  These  assessments  were performed by an
     independent  environmental  consulting firm. Based on the assessments,  the
     Company  expensed  $186,000  in 1995 for  known  environmental  remediation
     requirements.  Although there can be no assurance, the Company is not aware
     of any  environmental  contamination  of any of its  property  sites  which
     individually or in the aggregate would be material to the Company's overall
     business, financial condition, or results of operations.

(2)  Funds from operations (FFO) is defined by the Company,  consistent with the
     definition  of FFO by the National  Association  of Real Estate  Investment
     Trusts  (NAREIT),  as  net  income  (loss)  (computed  in  accordance  with
     generally  accepted   accounting   principles)   before   depreciation  and
     extraordinary or non-recurring items. FFO is presented because the Company,
     as well as many  industry  analysts,  consider FFO to be one measure of the
     performance of the Company,  ie, one that generally reflects changes in the
     Company's  net  operating  income.  FFO does not  take  into  consideration
     scheduled principal payments on debt and capital improvements. Accordingly,
     FFO is not  necessarily  a substitute  for the  Company's  cash flow or net
     income as a measure of the Company's liquidity or operating  performance or
     ability to pay  distributions.  Furthermore,  the NAREIT  definition of FFO
     does not address the  treatment of certain items and all REITs do not treat
     items the same way in computing FFO. Accordingly,  comparisons of levels of
     FFO among REITs may not necessarily be meaningful.

                                       13
<PAGE>
ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
          RESULTS OF OPERATIONS.
          ---------------------------------------------------------------

Results of Operations.
----------------------

          YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995.
Net income in 1996 was $4,148,000  compared to $3,985,000 in 1995,  representing
an increase of $163,000 or 4%. Net income per fully  diluted  Series A share was
$1.03 in 1996 compared to $0.95 in 1995,  representing an increase of $.08 or 8%
per share.  These  increases  are  primarily  due to an increase in property net
operating  income  partially  offset by an  increase  in  interest  expense  and
combined  with the  favorable  impact of  comparing  to expenses  for 1995 which
included a non-recurring charge for environmental  assessments and provision for
future remediation costs.

          During 1996, property net operating income (rental income less cost of
operations,  management  fees  paid  to  affiliates  and  depreciation  expense)
increased  $96,000 from  $4,770,000 in 1995 to $4,866,000 in 1996. This increase
is primarily  attributable to an increase in rental income at both the Company's
mini-warehouse  and  business  park  facilities  combined  with  a  decrease  in
depreciation expense and offset by an increase in cost of operations.

          Rental income for the mini-warehouse  operations increased $247,000 or
3% from $8,224,000 in 1995 to $8,471,000 in 1996. Cost of operations  (including
management  fees paid to an affiliate of the Company)  increased  $233,000 or 9%
from  $2,713,000 in 1995 to $2,946,000 in 1996. The results of these changes was
a slight increase in property net operating income before  depreciation  expense
of $14,000 from $5,511,000 in 1995 to $5,525,000 in 1996. The increase in rental
income is primarily  attributable  to  increases in occupancy  levels and rental
rates at a majority of the  Company's  facilities.  The  Company's  Colorado and
California  properties  contributed  48% to the  increase in rental  income as a
result of increased  rental rates at all of the properties  located in those two
states.  The  increase  in cost of  operations  is mainly  due to  increases  in
payroll, repairs and maintenance,  advertising and property tax expense. Repairs
and maintenance costs increased primarily due to increases in snow removal costs
due to higher than normal snow levels  experienced  at the Company's  facilities
located in the eastern states as well as various other costs such as landscaping
and painting.  Property  taxes  increased due to an increase in the property tax
rate at the Company's Wheatridge, Colorado property.

          Property net operating income before depreciation expense with respect
to the  Company's  business  park  facilities  increased  by  $12,000 or 1% from
$1,306,000 in 1995 to  $1,318,000 in 1996.  This increase is primarily due to an
increase in rental  income offset by an increase in cost of  operations.  Rental
income  increased  as a result of  increases  in rental  rates at the  Company's
Fairfax,  Virginia  and San Diego,  California  facilities.  Cost of  operations
increased  mainly due to increases in property taxes and repairs and maintenance
costs.  The increase in property taxes is primarily  attributable  to a one-time
tax refund received in 1995 at the Company's San Diego, California facility.

          Weighted  average  occupancy  levels  were 90% for the  mini-warehouse
facilities and 92% for the business park  facilities in 1996 compared to 88% for
the mini-warehouse facilities and 92% for the business park facilities in 1995.

          In 1995, the Company  prepaid eight months of 1996  management fees on
its  mini-warehouse  operations (based on the management fees for the comparable
period during the calendar year immediately preceding the prepayment) discounted
at the  rate of 14% per year to  compensate  for  early  payment.  In 1996,  the
Company  expensed  the  prepaid  management  fees.  The  amount is  included  in
management  fees paid to affiliates in the statements of income.  As a result of
the  prepayment,  the Company saved  approximately  $38,000 in management  fees,
based on the  management  fees that  would have been  payable  on rental  income
generated in 1996 compared to the amount prepaid.

          Interest expense on the Company's credit facility  increased  $138,000
from  $328,000  in 1995 to $466,000  in 1996.  This  increase is due to a higher
outstanding loan balance in 1996 over 1995.

          YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994.
Net income in 1995 was $3,985,000 compared to $4,204,000 in 1994, representing a
decrease  of  $219,000  or 5%. Net income per fully  diluted  Series A share was
$0.95 in 1995 compared to $0.91 in 1994,  representing an increase of $.04 or 4%
per  share.  The  decrease  in net income is  primarily  due to an  increase  in
interest expense combined with  environmental cost incurred in 1995 offset by an
increase in property net operating income. Net income per share increased due to
the  reduction in the number of Series A shares  outstanding  as a result of the
Company's repurchase of Series A shares.

                                       14
<PAGE>
          During 1995, property net operating income (rental income less cost of
operations,  management  fees  paid  to  affiliates  and  depreciation  expense)
increased  $294,000 from $4,476,000 in 1994 to $4,770,000 in 1995. This increase
is primarily  attributable to an increase in rental income at both the Company's
mini-warehouse  and  business  park  facilities  and a decrease in  depreciation
expense.

          Rental income for the mini-warehouse  operations increased $251,000 or
3% from $7,973,000 in 1994 to $8,224,000 in 1995. Cost of operations  (including
management  fees paid to an affiliate of the Company)  increased  $109,000 or 4%
from  $2,604,000 in 1994 to $2,713,000 in 1995. The increase in rental income is
primarily  due to  increases  in rental  rates at a  majority  of the  Company's
facilities.  Rental income at the Company's  two Colorado  facilities  increased
$56,000  or 5%  and  revenues  at  the  Company's  three  California  facilities
increased $49,000,  also 5%. The increase in cost of operations is mainly due to
increases in payroll,  property taxes and management  fees paid to an affiliate.
Payroll  increased due to an increase in incentive  payroll  attributable  to an
increase in property net  operating  income.  Property  taxes  increased  due to
actual bills paid being more than amounts  estimated in 1994. Due to an increase
in rental income, management fees increased.

          Property net operating income before depreciation expense with respect
to the  Company's  business  park  facilities  increased  by  $12,000 or 1% from
$1,294,000 in 1994 to  $1,306,000 in 1995.  This increase is primarily due to an
increase in rental income  caused by an increase in rental  rates.  Rental rates
increased primarily at the Company's Fairfax, Virginia facility due to increases
in the value of leases signed by new tenants.

          Depreciation  expense  decreased  $140,000 from 1994 to 1995 partially
due to a decrease in tenant improvement write-offs.

          Substantially  all of the Company's  facilities were acquired prior to
the time  that it was  customary  to  conduct  environmental  investigations  in
connection  with property  acquisitions.  During the fourth quarter of 1995, the
Company  completed  environmental  assessments of its properties to evaluate the
environmental  condition of, and  potential  environmental  liabilities  of such
properties.  These  assessments  were performed by an independent  environmental
consulting firm. Based on the assessments, the Company expensed $186,000 in 1995
for  known  environmental  remediation  requirements.  Although  there can be no
assurance, the Company is not aware of any environmental contamination of any of
its property sites which  individually  or in the aggregate would be material to
the Company's overall business, financial condition, or results of operations.

          Weighted  average  occupancy  levels  were 88% for the  mini-warehouse
facilities and 92% for the business park  facilities in 1995 compared to 88% for
the mini-warehouse facilities and 97% for the business park facilities in 1994.

MINI-WAREHOUSE OPERATING TRENDS.
--------------------------------

          The following table illustrates the operating trends for the Company's
16 mini-warehouses:
<TABLE>
<CAPTION>
                                                              Years ended December 31,
                                                       ----------------------------------------
                                                          1996           1995            1994
                                                       -----------    ----------      ---------
<S>                                                        <C>            <C>            <C>
Weighted average occupancy level                           90%            88%            88%
Realized monthly rent per occupied
  square foot (1)                                        $.70           $.69           $.67
Operating margin (2)
     Before reduction for depreciation expense             65%            67%            67%
     After reduction for depreciation expense              49%            51%            47%

</TABLE>
-------------
(1)   Realized rent per square foot  represents  the actual  revenue  earned per
      occupied square foot.  Management believes this is a more relevant measure
      than the posted rental rates, since posted rates can be discounted through
      the use of promotions. Includes administrative and late fees.
(2)   Operating margin (before  reduction for depreciation  expense) is computed
      by  dividing  rental  income  less cost of  operations  by rental  income.
      Operating margin (after reduction for depreciation expense) is computed by
      dividing rental income less cost of operations and  depreciation by rental
      income.
                                       15

<PAGE>
LIQUIDITY AND CAPITAL RESOURCES.
--------------------------------

          CAPITAL   STRUCTURE.   The  Company's   financial   profile  has  been
characterized by a low level of debt to total capitalization and increasing cash
provided by operating activities.

          NET CASH PROVIDED BY OPERATING  ACTIVITIES AND FUNDS FROM  OPERATIONS.
The Company  believes  that  important  measures of its  performance  as well as
liquidity  are  net  cash  provided  by  operating  activities  and  funds  from
operations ("FFO").

          Net  cash   provided  by   operating   activities   (net  income  plus
depreciation)  reflects the cash  generated from the Company's  business  before
distributions  to shareholders  and capital  expenditures.  Net cash provided by
operating  activities  has  increased  from  $6,019,000 in 1995 to $6,286,000 in
1996.

          FFO is defined by the Company,  consistent  with the definition of FFO
by the National  Association of Real Estate Investment  Trusts (NAREIT),  as net
income  (loss)  (computed  in  accordance  with  generally  accepted  accounting
principles)  before  depreciation and extraordinary or non-recurring  items. FFO
for the years ended December 31, 1996 and 1995 was  $6,125,000  and  $6,218,000,
respectively.  FFO is presented  because the Company,  as well as many  industry
analysts,  consider  FFO to be one measure of the  performance  of the  Company,
i.e., one that generally reflects changes in the Company's net operating income.
FFO does not take into  consideration  scheduled  principal payments on debt and
capital improvements.  Accordingly,  FFO is not necessarily a substitute for the
Company's  cash flow or net income,  as a measure of the Company's  liquidity or
operating performance or ability to pay distributions.  Furthermore,  the NAREIT
definition  of FFO does not address the treatment of certain items and all REITs
do not treat items the same way in computing  FFO.  Accordingly,  comparisons of
levels of FFO among REITs may not necessarily be meaningful.


          The Company has an unsecured revolving credit facility with a bank for
borrowings up to $7,500,000 for working capital  purposes and general  corporate
purposes.  Outstanding  borrowings  on the  credit  facility,  at the  Company's
option,  bear  interest  at either  the bank's  prime  rate plus .25%  (8.50% at
December  31,  1996) or the bank's  LIBOR rate plus 2.25% (7.87% at December 31,
1996).  The average  interest rate on the Company's  credit facility during 1996
was approximately 8.15%.  Principal will be payable quarterly beginning on April
1, 1997 and interest is payable monthly until maturity.  On January 1, 2002, the
remaining  unpaid  principal  and interest is due and  payable.  At December 31,
1996, the outstanding balance on the credit facility was $4,650,000.  In January
1997,  the  Company  borrowed  an  additional  $1,100,000  on its line of credit
facility.

          The following table  summarizes the Company's  ability to make capital
improvements  to maintain  its  facilities  through the use of cash  provided by
operating activities. The remaining cash flow is available to the Company to pay
distributions to shareholders and repurchase its stock.
<TABLE>
<CAPTION>

                                                                        Years ended December 31,
                                                           -----------------------------------------------                          
                                                                1996             1995              1994
                                                           -------------     ------------     ------------
<S>                                                         <C>               <C>              <C>       
Net income                                                  $4,148,000        $3,985,000       $4,204,000
Environmental cost                                                   -           186,000                -
Depreciation                                                 1,977,000         2,047,000        2,187,000
                                                           -------------     ------------     ------------
Funds from operations
     (Net cash provided by operating activities
     before changes in working capital components)           6,125,000         6,218,000        6,391,000
Capital improvements to maintain facilities                 (1,028,000)         (534,000)        (266,000)
                                                           -------------     ------------     ------------
Funds available for distributions to
     shareholders and repurchase of stock                    5,097,000         5,684,000        6,125,000
Cash distributions to shareholders                          (4,408,000)       (4,021,000)      (3,980,000)
                                                           -------------     ------------     ------------
Excess funds available for
     principal payments, cash distributions to
     shareholders and repurchase of stock                     $689,000        $1,663,000       $2,145,000
                                                           =============     ============     ============
</TABLE>
          The Company  believes that its rental  revenues and interest and other
income  will be  sufficient  over at least  the next  twelve  months to meet the
Company's operating expenses,  capital  improvements,  debt service requirements

                                    16

<PAGE>
and distributions to shareholders.  For 1997, the Company anticipates  expending
approximately  $785,000 for capital  improvements.  During 1995,  the  Company's
property  operator  commenced a program to enhance the visual  appearance of the
mini-warehouse  facilities  managed by it. Such enhancements  include new signs,
exterior  color  schemes,  and  improvements  to the  rental  offices.  The vast
majority of the costs associated with these  enhancements  were incurred in 1995
and 1996.

          The Company believes its geographically diverse portfolio has resulted
in a relatively stable and predictable investment portfolio.

          On November  12, 1996,  the  Company's  Board of Directors  declared a
regular quarterly distribution per share of $0.31. In addition,  consistent with
the Company's REIT distribution  requirements,  the Company's Board of Directors
declared  a special  distribution  of $0.15 per  share.  The  distributions  are
payable on January 15, 1997 to shareholders of record on December 31, 1996.

         In  August  1995,  the  Management  Agreement  for  the  mini-warehouse
facilities  was  amended  to  provide  that upon  demand  from PSI made prior to
December  15,  1995,  the  Company  agreed to prepay  (within 15 days after such
demand) up to 12 months of management fees (based on the management fees for the
comparable   period  during  the  calendar  year   immediately   preceding  such
prepayment)  discounted  at the rate of 14% per  year to  compensate  for  early
payment.  In  November  1995,  the  Company  prepaid,  to PSI,  8 months of 1996
management  fees  at a cost  of  $298,000.  The  amount  has  been  expensed  as
management fees paid to affiliate during 1996.

DISTRIBUTIONS
-------------

          The Company has established a conservative  distribution  policy.  The
aggregate  amount of dividends paid or accrued to the  shareholders in each year
since inception of the Company were as follows:

                                Series A         Series B           Total
                              -------------     -----------     ------------
            1986                $902,000           $79,000         $981,000
            1987               1,495,000           131,000        1,626,000
            1988               1,495,000           129,000        1,624,000
            1989               2,242,000           195,000        2,437,000
            1990               2,242,000           195,000        2,437,000
            1991               2,239,000           195,000        2,434,000
            1992               2,787,000           250,000        3,037,000
            1993               3,747,000           299,000        4,046,000
            1994               3,604,000           351,000        3,955,000
            1995               4,029,000           455,000        4,484,000
            1996               3,860,000           452,000        4,312,000
                             --------------     -----------     ------------
            Totals           $28,642,000        $2,731,000      $31,373,000
                             ==============     ===========     ============

          The Convertible  Series B shares and Convertible  Series C shares will
convert  automatically  into  Series A shares on a  share-for-share  basis  (the
"Conversion")  when  (A) the  sum of (1)  all  cumulative  dividends  and  other
distributions  from  all  sources  paid  with  respect  to the  Series  A shares
(including liquidating distributions,  but not including payments made to redeem
such  stock  other  than in  liquidation)  and (2)  the  cumulative  Partnership
distributions  from all sources with respect to all units equals (B) the product
of $20  multiplied  by the  number of the then  outstanding  "Original  Series A
shares". The term "Original Series A shares" means the Series A shares issued in
the Reorganization. Through December 31, 1996, the Company has made and declared
cumulative cash  distributions of approximately  $28,642,000 with respect to the
Series A shares. Accordingly, assuming no repurchases or redemptions of Series A
shares after  December  31,  1996,  Conversion  will occur when  $26,878,000  in
additional  distributions  with  respect to the Series A shares  have been made.

                                       17
<PAGE>
REIT DISTRIBUTION REQUIREMENT
-----------------------------

          The Company has elected and intends to continue to qualify as REIT for
Federal  income tax  purposes.  As a REIT,  the Company  must meet,  among other
tests, sources of income,  share ownership,  and certain asset tests. As a REIT,
the  Company  is not  taxed  on that  portion  of its  taxable  income  which is
distributed to its shareholders provided that at least 95% of its taxable income
is so distributed to its shareholders  prior to filing the Company's tax return.
Under certain  circumstances,  the Company can rectify a failure to meet the 95%
distribution  test by  making  distributions  after  the  close of a  particular
taxable year and  attributing  those  distributions  to the prior year's taxable
income.  The Company has satisfied the REIT  distribution  requirement for 1994,
1995 and 1996 by attributing  distributions  in 1995, 1996 and 1997 to the prior
year's  taxable  income.  The extent to which the  Company  will be  required to
attribute distributions to the prior year will depend on the Company's operating
results  (taxable  income) and the level of  distributions  as determined by the
Board of  Directors.  The  primary  difference  between  book income and taxable
income is depreciation  expense. In 1996, the Company's Federal tax depreciation
was $1,459,000.

          The  Company's  Board of  Directors  has  authorized  the  Company  to
purchase up to  1,300,000  shares of Series A common  stock.  As of December 31,
1996,  the Company had purchased and retired  961,351  shares of Series A common
stock.


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

          Company's   financial   statements  are  included   elsewhere  herein.
Reference is made to the Index to Financial  Statements and Financial  Statement
Schedules in Item 14(a).

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
          FINANCIAL DISCLOSURE.
          ----------------------------------------------------------------

         None.

                                    PART III.

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
          ------------------------------------------------

          Incorporated by reference herein is information required by this item,
which is to be included in an  amendment  on Form 10-K/A to this Form 10-K filed
within 120 days of the end of the Registrant's 1996 fiscal year.

ITEM 11.  EXECUTIVE COMPENSATION.
          ----------------------

          Incorporated by reference herein is information required by this item,
which is to be included in an  amendment  on Form 10-K/A to this Form 10-K filed
within 120 days of the end of the Registrant's 1996 fiscal year.

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

          Incorporated by reference herein is information required by this item,
which is to be included in an  amendment  on Form 10-K/A to this Form 10-K filed
within 120 days of the end of the Registrant's 1996 fiscal year.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
          -----------------------------------------------

          Incorporated by reference herein is information required by this item,
which is to be included in an  amendment  on Form 10-K/A to this Form 10-K filed
within 120 days of the end of the Registrant's 1996 fiscal year.

                                    PART IV.

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

     (a)  List of Documents filed as part of the Report.
          1.   Financial  Statements:  See  Index to  Financial  Statements  and
               Financial Statement Schedule.
          2.   Financial Statement Schedules:  See Index to Financial Statements
               and Financial Statement Schedule.
          3.   Exhibits: See Exhibit Index contained herein.

     (b)  Reports on Form 8-K filed  during the last quarter of the period ended
          December 31, 1996:
                None.

     (c)  Exhibits:
                See  Exhibit Index contained herein.

                                       18
<PAGE>
                                 SIGNATURES

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


                                          PUBLIC STORAGE PROPERTIES XVII, INC.

Dated: March 27, 1997                      By:/s/ Harvey Lenkin
                                              ---------------------------
                                              Harvey Lenkin, President

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

       Signature                                  Capacity                                 Date
-------------------------             ---------------------------------------         -------------------
<S>                                   <C>                                               <C> 
/s/ B. Wayne Hughes                   Chairman of the Board, Chief Executive            March 27, 1997
-------------------------               Officer and Director
B. Wayne Hughes                         (Principal Executive Officer)
                                    


/s/ Vern O. Curtis                    Director                                          March 27, 1997
-------------------------
Vern O. Curtis


/s/ Jack D. Steele                    Director                                          March 27, 1997
-------------------------
Jack D. Steele


/s/ David P. Singelyn                 Vice President and Chief Financial Officer        March 27, 1997
---------------------                   (Principal Financial Officer and
David P. Singelyn                       Principal Accounting Officer)

</TABLE>

<PAGE>
                      PUBLIC STORAGE PROPERTIES XVII, INC.

                                    INDEX TO
                              FINANCIAL STATEMENTS
                                       AND
                          FINANCIAL STATEMENT SCHEDULE
                                  (Item 14 (a))

<TABLE>
<CAPTION>

                                                                                                       Page
                                                                                                   References
                                                                                                   ----------

<S>                                                                                                  <C>
Report of Independent Auditors                                                                         F-1

Financial Statements and Schedule:

     Balance Sheets as of December 31, 1996 and 1995                                                   F-2

     For each of the three years in the period ended December 31, 1996:

         Statements of Income                                                                          F-3

         Statements of Shareholders' Equity                                                            F-4

         Statements of Cash Flows                                                                      F-5

     Notes to Financial Statements                                                                 F-6 - F-10

Schedule for the years ended December 31, 1996, 1995 and 1994:

     III  Real Estate and Accumulated Depreciation                                                F-11 - F-12
</TABLE>


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


<PAGE>
                         Report of Independent Auditors





The Board of Directors and Shareholders
Public Storage Properties XVII, Inc.


We have audited the  accompanying  balance sheets of Public  Storage  Properties
XVII,  Inc. as of  December  31, 1996 and 1995,  and the related  statements  of
income,  shareholders'  equity and cash flows for each of the three years in the
period ended December 31, 1996. Our audits also included the schedule  listed in
the  index at item  14(a).  These  financial  statements  and  schedule  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Public Storage Properties XVII,
Inc. at December 31, 1996 and 1995,  and the results of its  operations  and its
cash flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.  Also, in our opinion,
the related  financial  statement  schedule,  when considered in relation to the
basic  financial  statements  taken as a whole,  presents fairly in all material
respects the information set forth therein.







                                                        ERNST & YOUNG LLP


February 18, 1997
Los Angeles, California

                                      F-1
<PAGE>
<TABLE>
<CAPTION>
                      PUBLIC STORAGE PROPERTIES XVII, INC.
                                 BALANCE SHEETS
                           December 31, 1996 and 1995


                                                                              1996                  1995
                                                                          -----------          -----------
                                     ASSETS
                                     ------

<S>                                                                           <C>                  <C>     
Cash and cash equivalents                                                     $214,000             $437,000
Rent and other receivables                                                     110,000               43,000
Prepaid expenses                                                               147,000              399,000

Real estate facilities at cost:
     Building, land improvements and equipment                              44,615,000           43,686,000
     Land                                                                   22,837,000           22,837,000
                                                                           -----------          -----------
                                                                            67,452,000           66,523,000

     Less accumulated depreciation                                         (19,003,000)         (17,125,000)
                                                                           -----------          -----------
                                                                            48,449,000           49,398,000
                                                                           -----------          -----------

Total assets                                                               $48,920,000          $50,277,000
                                                                           ===========          ===========


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

Accounts payable                                                            $1,022,000           $1,033,000
Dividends payable                                                            1,426,000            1,522,000
Advance payments from renters                                                  294,000              307,000
Note payable                                                                 4,650,000            5,650,000

Shareholders' equity:
     Series A common, $.01 par value,
         4,983,165 shares authorized,
         2,776,023 shares issued and
         outstanding (2,780,323 shares
         issued and outstanding in 1995)                                        28,000               28,000
     Convertible Series B common,
         $.01 par value, 324,989 shares
         authorized, issued and outstanding                                      3,000                3,000
     Convertible Series C common,
         $.01 par value, 920,802 shares
         authorized, issued and outstanding                                      9,000                9,000

     Paid-in-capital                                                        51,769,000           51,842,000
     Cumulative net income                                                  21,092,000           16,944,000
     Cumulative distributions                                              (31,373,000)         (27,061,000)
                                                                           -----------          -----------

     Total shareholders' equity                                             41,528,000           41,765,000
                                                                           -----------          -----------

Total liabilities and shareholders' equity                                 $48,920,000          $50,277,000
                                                                           ===========          ===========

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


                      PUBLIC STORAGE PROPERTIES XVII, INC.
                              STATEMENTS OF INCOME
                       For each of the three years in the
                         period ended December 31, 1996


                                                              1996                  1995                  1994
                                                          ----------            ----------            ----------
REVENUES:
<S>                                                      <C>                   <C>                   <C>        
Rental income                                            $10,894,000           $10,549,000           $10,245,000
Interest income                                               15,000                26,000                37,000
                                                          ----------            ----------            ----------

                                                          10,909,000            10,575,000            10,282,000
                                                          ----------            ----------            ----------


COSTS AND EXPENSES:

Cost of operations                                         3,460,000             3,123,000             2,992,000
Management fees paid to affiliates                           591,000               609,000               590,000
Depreciation                                               1,977,000             2,047,000             2,187,000
Interest expense                                             466,000               328,000                 2,000
Environmental cost                                                 -               186,000                     -
Administrative                                               267,000               297,000               307,000
                                                          ----------            ----------            ----------
                                                           6,761,000             6,590,000             6,078,000
                                                          ----------            ----------            ----------

NET INCOME                                                $4,148,000            $3,985,000            $4,204,000
                                                         ===========           ===========           ===========


Primary earnings per share-Series A                           $1.33                 $1.20                 $1.14
                                                         ===========           ===========           ===========

Fully diluted earnings per share-Series A                     $1.03                 $0.95                 $0.91
                                                         ===========           ===========           ===========

Dividends declared per share:
     Series A                                                 $1.39                 $1.40                 $1.07
                                                         ===========           ===========           ===========
     Series B                                                 $1.39                 $1.40                 $1.07
                                                         ===========           ===========           ===========


Weighted average Common shares outstanding:
     Primary Series A                                      2,776,023             2,934,723             3,377,156
                                                         ===========           ===========           ===========
     Fully diluted-Series A                                4,021,814             4,180,514             4,622,947
                                                         ===========           ===========           ===========

</TABLE>
                            See accompanying notes.
                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                     PUBLIC STORAGE PROPERTIES XVII, INC.
                       STATEMENTS OF SHAREHOLDERS' EQUITY
                 For each of the three years in the period ended
                                December 31, 1996

                                                                    Convertible                 Convertible          
                                         Series A                    Series B                     Series C           
                                   Shares        Amount        Shares        Amount        Shares         Amount     
                                 ------------------------------------------------------------------------------------
<S>                               <C>             <C>          <C>            <C>           <C>            <C>       
Balances at December 31, 1993     3,406,873       $34,000      324,989        $3,000        920,802        $9,000    

Net income                                                                                                           
Repurchase of shares                (82,825)       (1,000)                                                           

Cash distributions declared:
   $1.07 per share - Series A                                                                                        
   $1.07 per share - Series B                                                                                        
                                 ------------------------------------------------------------------------------------

Balances at December 31, 1994     3,324,048        33,000      324,989         3,000        920,802         9,000    

Net income                                                                                                           
Repurchase of shares               (543,725)       (5,000)                                                           

Cash distributions declared:
   $1.40 per share - Series A                                                                                        
   $1.40 per share - Series B                                                                                        
                                -------------------------------------------------------------------------------------

Balances at December 31, 1995     2,780,323        28,000      324,989         3,000        920,802         9,000    

Net income                                                                                                           
Repurchase of shares                 (4,300)            -                                                            

Cash distributions declared:
   $1.39 per share - Series A                                                                                        
   $1.39 per share - Series B                                                                                        
                                -------------------------------------------------------------------------------------

Balances at December 31, 1996     2,776,023       $28,000      324,989        $3,000        920,802        $9,000    
                                =====================================================================================
</TABLE>
<TABLE>
                                                     Cumulative                         Total
                                       Paid-in           net         Cumulative     shareholders'
                                       Capital         income       distributions      equity
                                 ------------------------------------------------------------------
<S>                                  <C>              <C>          <C>               <C>        
Balances at December 31, 1993        $61,617,000      $8,755,000   ($18,622,000)     $51,796,000

Net income                                             4,204,000                       4,204,000
Repurchase of shares                  (1,254,000)                                     (1,255,000)

Cash distributions declared:
   $1.07 per share - Series A                                        (3,604,000)      (3,604,000)
   $1.07 per share - Series B                                          (351,000)        (351,000)
                                 ------------------------------------------------------------------

Balances at December 31, 1994         60,363,000      12,959,000    (22,577,000)      50,790,000

Net income                                             3,985,000                       3,985,000
Repurchase of shares                  (8,521,000)                                     (8,526,000)

Cash distributions declared:
   $1.40 per share - Series A                                        (4,029,000)      (4,029,000)
   $1.40 per share - Series B                                          (455,000)        (455,000)
                                -------------------------------------------------------------------

Balances at December 31, 1995         51,842,000      16,944,000    (27,061,000)      41,765,000

Net income                                             4,148,000                       4,148,000
Repurchase of shares                     (73,000)                                        (73,000)

Cash distributions declared:
   $1.39 per share - Series A                                        (3,860,000)      (3,860,000)
   $1.39 per share - Series B                                          (452,000)        (452,000)
                                -------------------------------------------------------------------

Balances at December 31, 1996        $51,769,000     $21,092,000   ($31,373,000)     $41,528,000
                                ===================================================================
</TABLE>
                            See accompanying notes.
                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                      PUBLIC STORAGE PROPERTIES XVII, INC.
                            STATEMENTS OF CASH FLOWS
                       For each of the three years in the
                         period ended December 31, 1996

                                                                      1996             1995             1994
                                                                  ----------       ----------        ----------
Cash flows from operating activities:
   <S>                                                            <C>              <C>               <C>       
     Net income                                                   $4,148,000       $3,985,000        $4,204,000


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

     Depreciation                                                  1,977,000        2,047,000         2,187,000
     (Increase) decrease in rent and
         other receivables                                           (67,000)         (13,000)           25,000
     Increase in prepaid expenses                                    (46,000)          (3,000)           (5,000)
     Amortization (payment) of prepaid management fees               298,000         (298,000)                -
     (Decrease) increase in accounts payable                         (11,000)         327,000           (89,000)
     Decrease in advance payments from renters                       (13,000)         (26,000)          (35,000)
                                                                  ----------       ----------        ----------

         Total adjustments                                         2,138,000        2,034,000         2,083,000
                                                                  ----------       ----------        ----------

         Net cash provided by operating activities                 6,286,000        6,019,000         6,287,000
                                                                  ----------       ----------        ----------

Cash flows from investing activities:

     Additions to real estate facilities                          (1,028,000)        (534,000)         (266,000)
                                                                  ----------       ----------        ----------

         Net cash used in investing activities                    (1,028,000)        (534,000)         (266,000)
                                                                  ----------       ----------        ----------

Cash flows from financing activities:

     (Payments) proceeds from note payable to bank                (1,000,000)       5,650,000                 -
     Distributions paid to shareholders                           (4,408,000)      (4,021,000)       (3,980,000)
     Purchase of Company Series A
         common stock                                                (73,000)      (8,526,000)       (1,255,000)
                                                                  ----------       ----------        ----------

         Net cash used in financing activities                    (5,481,000)      (6,897,000)       (5,235,000)
                                                                  ----------       ----------        ----------

Net (decrease) increase in cash and cash equivalents                (223,000)      (1,412,000)          786,000

Cash and cash equivalents at the beginning of the year               437,000        1,849,000         1,063,000
                                                                  ----------       ----------        ----------

Cash and cash equivalents at the end of the year                    $214,000         $437,000        $1,849,000
                                                                  ==========       ==========        ==========
</TABLE>
                            See accompanying notes.
                                      F-5
<PAGE>
                      PUBLIC STORAGE PROPERTIES XVII, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1996

1.       DESCRIPTION OF BUSINESS

                  Public  Storage  Properties  XVII,  Inc. (the  "Company") is a
         California  corporation  which has  elected to qualify as a real estate
         investment trust ("REIT") for Federal income tax purposes.  The Company
         succeeded to the business of Public Storage  Properties XVII, Ltd. (the
         "Partnership")  in a  reorganization  transaction  which was  effective
         September 16, 1991 (the "Reorganization").

                  The  Company   owns  and   operates   primarily   self-storage
         facilities and, to a lesser extent, business park facilities containing
         commercial or industrial spaces.

                  The term of the Company is until all properties have been sold
         and, in any event,  not later than December 31, 2038. The bylaws of the
         Company provide that, during 1999, unless  shareholders have previously
         approved such a proposal,  the  shareholders  will be presented  with a
         proposal to approve or  disapprove  (a) the sale or financing of all or
         substantially  all of the  properties and (b) the  distribution  of the
         proceeds  from  such  transaction  and,  in the  case  of a  sale,  the
         liquidation of the Company.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Basis of Presentation:

                  Certain  prior year  amounts have been  reclassified  in order
         to conform with the 1996 presentation.

         Income Taxes:

                  The  Company has and intends to continue to qualify as a REIT,
         as defined in Section 856 of the Internal Revenue Code (the Code). As a
         REIT,  the Company is not taxed on that  portion of its taxable  income
         which is  distributed  to its  shareholders  provided  that the Company
         meets the  requirements  of the Code.  The  Company  believes  it is in
         compliance with these requirements and,  accordingly,  no provision for
         income taxes has been made.

         Statements of Cash Flows:

                  For purposes of financial statement presentation,  the Company
         considers all highly liquid debt instruments  purchased with a maturity
         of  three  months  or less to be cash  equivalents.  The  Company  paid
         $472,000, $328,000 and $2,000 in interest costs in 1996, 1995 and 1994,
         respectively.

         Real Estate Facilities:

                  Cost of land  includes  appraisal  and legal  fees  related to
         acquisition  and  closing  costs.  Buildings,   land  improvements  and
         equipment  reflect costs incurred through December 31, 1996 and 1995 to
         develop  primarily  mini-warehouse  facilities  and to a lesser extent,
         business  park  facilities.   The  mini-warehouse   facilities  provide
         self-service  storage  spaces  for lease,  usually on a  month-to-month
         basis,  to  the  general  public.   The  buildings  and  equipment  are
         depreciated on the  straight-line  basis over estimated useful lives of
         25 and 5 years, respectively.  Included in depreciation is depreciation
         of tenant  improvements  on the Company's  business park  facilities of
         $162,000, $188,000 and $138,000 in 1996, 1995 and 1994, respectively.

              Included in  buildings  in 1996 is $147,000 in costs  incurred for
         the expansion of the Company's Sacramento, California facility.

                                      F-6
<PAGE>

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Real Estate Facilities (continued):

                  In 1995,  the  Financial  Accounting  Standards  Board  issued
         Statement of Financial  Accounting Standards No. 121 ("Statement 121"),
         "Accounting for the Impairment of Long-Lived  Assets and for Long-Lived
         Assets to be Disposed of." Statement 121 requires  impairment losses to
         be recorded on long-lived  assets used in operations when indicators of
         impairment are present and the undiscounted  cash flows estimated to be
         generated  by those assets are less than the assets'  carrying  amount.
         Statement 121 also addresses the accounting for long-lived  assets that
         are expected to be disposed of. The Company  adopted  Statement  121 in
         1996 and based on current circumstances, such adoption did not have any
         effect on the financial statements.

                  At December  31,  1996,  the basis of real  estate  facilities
         (excluding land) for Federal income tax purposes (after  adjustment for
         accumulated depreciation of $13,197,000) is $29,464,000.

         Revenue Recognition:

                  Property rents are recognized as earned.

         Net Income Per Share:

                  Net income per share is based on net  income  attributable  to
         each series of common  shares and the weighted  average  number of such
         shares outstanding during the periods presented.

                  Net  income  per share is  presented  on a  primary  and fully
         diluted  basis.  Primary  earnings  per share  represents  the Series A
         shareholders' right to distributions out of the respective period's net
         income,  which is calculated by dividing net income after reduction for
         distributions  to the  Convertible  Series B shareholders  (Convertible
         Series C shareholders  are not entitled to cash  distributions)  by the
         weighted average number of outstanding  Series A shares (Note 4). Fully
         diluted earnings per share assumes conversion of the Convertible Series
         B and Series C shares into Series A shares.

         Use of Estimates:

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

         Environmental Cost:

                  Substantially  all of the Company's  facilities  were acquired
         prior  to the  time  that it was  customary  to  conduct  environmental
         investigations  in connection  with property  acquisitions.  During the
         fourth quarter of 1995, the Company completed environmental assessments
         of its  properties  to evaluate  the  environmental  condition  of, and
         potential   environmental   liabilities  of  such   properties.   These
         assessments were performed by an independent  environmental  consulting
         firm. Based on the assessments,  the Company expensed  $186,000 in 1995
         for known environmental remediation requirements. Although there can be
         no   assurance,   the  Company  is  not  aware  of  any   environmental
         contamination of any of its property sites which individually or in the
         aggregate  would  be  material  to  the  Company's   overall  business,
         financial condition, or results of operations.


                                      F-7
<PAGE>

3.       RELATED PARTY TRANSACTIONS

                  The Company has a Management  Agreement  with Public  Storage,
         Inc.   ("PSI")   pursuant   to  which  PSI   operates   the   Company's
         mini-warehouse  facilities  for a fee  equal  to 6% of the  facilities'
         monthly  gross  revenue  (as  defined).  Through  1996,  the  Company's
         commercial  properties  were  operated  by  Public  Storage  Commercial
         Properties Group,  Inc.  ("PSCPG")  pursuant to a Management  Agreement
         which provides for a fee equal to 5% of the  facilities'  monthly gross
         revenue (as defined).

                  PSI has a 95%  economic  interest  in  PSCPG  (represented  by
         nonvoting  preferred  stock) and B. Wayne Hughes,  the Company's  Chief
         Executive Officer,  and members of his family (the "Hughes Family") had
         a 5% economic  interest in PSCPG  (represented  by voting common stock)
         until  December 1996 when the Hughes Family sold its interest to Ronald
         L. Havner,  Jr.,  formerly  Senior Vice  President and Chief  Financial
         Officer of PSI, who became the Chief Executive Officer of PSCPG.  PSCPG
         issued  additional  voting  common  stock  to  two  other  unaffiliated
         investors.

                  In  January  1997,  American  Office  Park  Properties,   L.P.
         ("AOPPLP") became the operator of the Company's  commercial  properties
         pursuant  to  the   Management   Agreement.   AOPPLP  is  an  operating
         partnership  formed to own and operate  business parks in which PSI has
         an approximate 85% economic interest.  The general partner of AOPPLP is
         PSCPG, now known as American Office Park Properties, Inc.

                  Each  Management  Agreement,  as  amended  in  February  1995,
         provides that the agreement  will expire in February 2002 provided that
         in February  of each year it shall be  automatically  extended  for one
         year  (thereby  maintaining  a  seven-year  term)  unless  either party
         notifies the other that the Management Agreement is not being extended,
         in which case it expires on the first anniversary of its then scheduled
         expiration  date. Each  Management  Agreement may also be terminated by
         either party for cause, but if terminated for cause by the Company, the
         Company retains the rights to use the service marks and related designs
         until the then scheduled expiration date, if applicable, or otherwise a
         date seven years after such termination.

                  In   August   1995,   the   Management   Agreement   for   the
         mini-warehouse  facilities was amended to provide that upon demand from
         PSI made prior to  December  15,  1995,  the  Company  agreed to prepay
         (within 15 days after such demand) up to 12 months of  management  fees
         (based on the  management  fees for the  comparable  period  during the
         calendar year immediately preceding such prepayment)  discounted at the
         rate of 14% per year to compensate for early payment. In November 1995,
         the Company prepaid, to PSI, 8 months of 1996 management fees at a cost
         of $298,000.  The amount has been expensed as  management  fees paid to
         affiliate during 1996.

4.       SHAREHOLDERS' EQUITY

                  Series A shares are entitled to all distributions of cash from
         sale or refinancing and participate ratably with the Convertible Series
         B shares in distributions of cash flow from operations. The Convertible
         Series C shares  (prior to  conversion  into Series A shares)  will not
         participate in any distributions.

                  The  Convertible  Series B  shares  and  Convertible  Series C
         shares  will   convert   automatically   into  Series  A  shares  on  a
         share-for-share  basis (the  "Conversion")  when (A) the sum of (1) all
         cumulative dividends and other distributions from all sources paid with
         respect to the Series A shares  (including  liquidating  distributions,
         but not  including  payments  made to redeem  such stock  other than in
         liquidation) and (2) the cumulative Partnership  distributions from all
         sources  with  respect  to all  units  equals  (B) the  product  of $20
         multiplied  by the number of the then  outstanding  "Original  Series A
         shares".  The term "Original Series A shares" means the Series A shares
         issued in the  Reorganization.  Through  December 31, 1996, the Company
         has made and declared  cumulative cash  distributions  of approximately
         $28,642,000 with respect to the Series A shares. Accordingly,  assuming
         no  repurchases  or  redemptions  of Series A shares after December 31,
         1996,   Conversion   will  occur   when   $26,878,000   in   additional
         distributions with respect to the Series A shares have been made.



                                      F-8
<PAGE>
4.       SHAREHOLDERS' EQUITY (CONTINUED)

              Assuming  liquidation  of the  Company  at its net  book  value at
         December 31, 1996 and 1995,  each Series of common shares would receive
         the following as a liquidating distribution:

                                                     1996              1995
                                                -------------    ------------
          Series A                               $36,990,000      $38,385,000
          Convertible Series B                     1,184,000          881,000
          Convertible Series C                     3,354,000        2,499,000
                                                -------------    ------------
          Total                                  $41,528,000      $41,765,000
                                                =============    ============

              The Series A shares,  Convertible  Series B shares and Convertible
         Series  C  shares  have  equal  voting  rights.   The  holders  of  the
         Convertible  Series B and  Convertible  Series C shares  have agreed to
         vote along with the majority of the unaffiliated  Series A shareholders
         on matters other than control of the Company and its business.

                  The Company's Board of Directors has authorized the Company to
         purchase up to 1,300,000 shares of the Company's Series A common stock.
         As of December 31, 1996, the Company had purchased and retired  961,351
         shares of  Series A common  stock,  of which  4,300  and  543,725  were
         purchased and retired in 1996 and 1995, respectively.

              For Federal income tax purposes, all distributions declared by the
         Board of Directors in 1996, 1995 and 1994 were ordinary income.

5.       NOTE PAYABLE TO BANK

                  The Company has an unsecured  revolving credit facility with a
         bank for borrowings up to $7,500,000 for working  capital  purposes and
         general  corporate  purposes.  Outstanding  borrowings  on  the  credit
         facility at the  Company's  option,  bear interest at either the bank's
         prime rate plus .25% (8.50% at December  31,  1996) or the bank's LIBOR
         rate plus 2.25% (7.87% at December  31,  1996).  Principal  payments of
         $240,000  will be  payable  quarterly  beginning  on April 1,  1997 and
         interest is payable  monthly until  maturity.  On January 1, 2002,  the
         remaining unpaid principal and interest is due and payable.

                  At December 31, 1996,  the  outstanding  balance on the credit
         facility  was  $4,650,000.  In January  1997,  the Company  borrowed an
         additional $1,100,000 on its line of credit facility.

                  Under  covenants  of the credit  facility,  the Company is (1)
         required to  maintain a ratio of debt to net worth (as  defined) of not
         more than .5 to 1.0, (2) required to maintain a REIT cash flow coverage
         ratio (as  defined)  measured on a  year-to-date  basis for each fiscal
         quarter  of not less than 1.2 to 1.0 and (3)  required  to  maintain  a
         dividend  cash flow  coverage  ratio (as  defined)  measured on a year-
         to-date  basis for each fiscal  quarter of not less than 1.0 to 1.0. As
         of December 31, 1996, the Company was in compliance  with the covenants
         of the credit facility.


                                      F-9
<PAGE>

6.       QUARTERLY RESULTS (UNAUDITED)

              The  following  is a summary  of  unaudited  quarterly  results of
         operations:
<TABLE>
<CAPTION>

                                                                            Three months ended
                                                      -----------------------------------------------------------
                                                       March 1996       June 1996      Sept. 1996      Dec. 1996
                                                      ------------     -----------    -----------     -----------

<S>                                                     <C>             <C>            <C>             <C>       
           Revenues                                     $2,639,000      $2,744,000     $2,775,000      $2,751,000

           Expenses                                      1,721,000       1,603,000      1,732,000       1,705,000
                                                      ------------     -----------    -----------     -----------

           Net income                                     $918,000      $1,141,000     $1,043,000      $1,046,000
                                                      ============     ===========    ===========     ===========

           Primary earnings per share-Series A               $0.29           $0.38          $0.34           $0.32
                                                      ============     ===========    ===========     ===========

           Fully diluted earnings per share-Series A         $0.23           $0.28          $0.26           $0.26
                                                      ============     ===========    ===========     ===========


                                                                            Three months ended
                                                      -----------------------------------------------------------
                                                       March 1995      June 1995      Sept. 1995      Dec. 1995
                                                      ------------     -----------    -----------     -----------

           Revenues                                     $2,566,000      $2,634,000     $2,722,000      $2,653,000

           Expenses                                      1,540,000       1,555,000      1,646,000       1,849,000
                                                      ------------     -----------    -----------     -----------

           Net Income                                   $1,026,000      $1,079,000     $1,076,000        $804,000
                                                      ============     ===========    ===========     ===========
           Primary earnings per share-Series A               $0.30           $0.33          $0.34          $0.23
                                                      ============     ===========    ===========     ===========
           Fully diluted earnings per share-Series A         $0.24           $0.26          $0.25          $0.20
                                                      ============     ===========    ===========     ===========
</TABLE>
                                      F-10
<PAGE>
<TABLE>
<CAPTION>
                      PUBLIC STORAGE PROPERTIES XVII, INC.
                           SCHEDULE III - REAL ESTATE
                          AND ACCUMULATED DEPRECIATION
                                                                                                          
                                                                  Initial Cost              Costs         
                                                           --------------------------   subsequent to     
                                                                         Bldg., Land     construction     
    Date                                                                    Imp &       (Improvements)    
  Completed           Description           Encumbrances       Land       Equipment          (1)          
----------------------------------------------------------------------------------------------------------

Mini-warehouses:
    <S>      <C>                               <C>           <C>           <C>                <C>         
    11/86     Dallas/E Mockingbird Lake          -           $1,962,000    $2,631,000         $317,000    
    11/86     Wheat Ridge/West 48th Av           -              726,000     1,341,000           38,000    
    11/86     Berlin / 55 Harker Ave             -              490,000     1,257,000           52,000    
    12/86     Gretna / Belle Chase Hwy           -              729,000     1,994,000           42,000    
    11/86     Houston / Louetta Road             -              557,000       969,000           84,000    
    12/86     Sacramento / Verner                -              829,000     1,577,000          232,000    
    12/86     Houston / South Dairy              -              785,000     1,033,000           59,000    
    12/86     Naperville / Ogden II              -              472,000     1,697,000           51,000    
    3/87      Honolulu / Ukee                    -            1,164,000     1,517,000          132,000    
    2/87      Davis / Olive                      -              480,000     1,168,000           37,000    
    7/87      Decatur /Snapfinger Woods          -              317,000     1,423,000           77,000    
    8/87      Jacksonville / Timuquana           -              304,000     1,217,000           74,000    
    9/87      Chicopee / Jamrog                  -              623,000     1,606,000           31,000    
    4/87      Houston/Veteran Memorial           -              553,000       964,000           71,000    
    11/87     Littleton / Belleview              -            1,092,000     1,616,000           34,000    

Business Parks:

    7/89      San Diego / Lusk III               -            3,270,000     3,345,000        2,040,000    

Combinations:

    4/87      Carrollton / Trinity Mills         -            2,109,000     2,510,000          357,000    
    8/89      Fairfax / Bren Mar                 -            4,998,000     8,258,000        3,667,000    
    2/87      Los Angeles / Olympic              -            2,753,000     2,145,000       (2,424,000)   
                                          ----------------------------------------------------------------

                                                 -          $24,213,000   $38,268,000       $4,971,000    
                                          ================================================================

</TABLE>
<TABLE>
                                                       Gross Carrying Amount
                                                       At December 31, 1996                                     Life on Which
                                             ---------------------------------------------                     Depreciation in
                                                               Bldg., Land                                      Latest Income
    Date                                                         Imp &                        Accumulated       Statement is
  Completed           Description               Land          Equipment         Total         Depreciation        Computed
----------------------------------------------------------------------------------------------------------------------------

Mini-warehouses:
    <S>      <C>                              <C>             <C>            <C>              <C>             <C>       
    11/86     Dallas/E Mockingbird Lake       $1,962,000      $2,948,000     $4,910,000       ($1,061,000)    5-25 years
    11/86     Wheat Ridge/West 48th Av           726,000       1,379,000      2,105,000          (554,000)    5-25 years
    11/86     Berlin / 55 Harker Ave             490,000       1,309,000      1,799,000          (508,000)    5-25 years
    12/86     Gretna / Belle Chase Hwy           729,000       2,036,000      2,765,000          (823,000)    5-25 years
    11/86     Houston / Louetta Road             557,000       1,053,000      1,610,000          (418,000)    5-25 years
    12/86     Sacramento / Verner                829,000       1,809,000      2,638,000          (665,000)    5-25 years
    12/86     Houston / South Dairy              785,000       1,092,000      1,877,000          (445,000)    5-25 years
    12/86     Naperville / Ogden II              472,000       1,748,000      2,220,000          (697,000)    5-25 years
    3/87      Honolulu / Ukee                  1,164,000       1,649,000      2,813,000          (641,000)    5-25 years
    2/87      Davis / Olive                      480,000       1,205,000      1,685,000          (487,000)    5-25 years
    7/87      Decatur /Snapfinger Woods          317,000       1,500,000      1,817,000          (533,000)    5-25 years
    8/87      Jacksonville / Timuquana           304,000       1,291,000      1,595,000          (497,000)    5-25 years
    9/87      Chicopee / Jamrog                  623,000       1,637,000      2,260,000          (596,000)    5-25 years
    4/87      Houston/Veteran Memorial           553,000       1,035,000      1,588,000          (401,000)    5-25 years
    11/87     Littleton / Belleview            1,092,000       1,650,000      2,742,000          (600,000)    5-25 years

Business Parks:

    7/89      San Diego / Lusk III             3,270,000       5,385,000      8,655,000        (2,919,000)    5-25 years

Combinations:

    4/87      Carrollton / Trinity Mills       2,109,000       2,867,000      4,976,000        (1,341,000)    5-25 years
    8/89      Fairfax / Bren Mar               4,998,000      11,925,000     16,923,000        (5,461,000)    5-25 years
    2/87      Los Angeles / Olympic            1,377,000       1,097,000      2,474,000          (356,000)    5-25 years
                                          -----------------------------------------------------------------

                                             $22,837,000     $44,615,000    $67,452,000      ($19,003,000)
                                          =================================================================
</TABLE>
 (1) Reduction in costs at the Los  Angeles\Olympic  facility is due to the sale
     of 50% of the Company's interest in the property in 1993.
                                      F-11
<PAGE>
<TABLE>
<CAPTION>

                      PUBLIC STORAGE PROPERTIES XVII, INC.
                           REAL ESTATE RECONCILIATION
                            SCHEDULE III (CONTINUED)


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

                              COSTS RECONCILIATION

                                                                            Years Ended December 31,
                                                         ----------------------------------------------------------------

                                                                 1996                 1995                 1994
                                                         ----------------------------------------------------------------

<S>                                                           <C>                  <C>                  <C>        
Balance at the beginning of the period                        $66,523,000          $66,176,000          $66,106,000

Additions during the period:

  Improvements                                                  1,028,000              534,000              266,000

Deductions during the period                                      (99,000)            (187,000)            (196,000)
                                                         ----------------------------------------------------------------

Balance at the close of the period                            $67,452,000          $66,523,000          $66,176,000
                                                         ================================================================


                     ACCUMULATED DEPRECIATION RECONCILIATION

                                                                            Years Ended December 31,
                                                         ----------------------------------------------------------------
                                                                 1996                 1995                 1994
                                                         ----------------------------------------------------------------
Balance at the beginning of the period                        $17,125,000          $15,265,000          $13,274,000

Additions during the period:

  Depreciation                                                  1,972,000            2,033,000            2,187,000

Deductions during the period                                      (94,000)            (173,000)            (196,000)
                                                         ----------------------------------------------------------------

Balance at the close of the period                            $19,003,000          $17,125,000          $15,265,000
                                                         ================================================================


 (b) The aggregate  depreciable cost of real estate (excluding land) for Federal
     income tax purposes is $42,661,000.

</TABLE>
                                      F-12
<PAGE>
                      PUBLIC STORAGE PROPERTIES XVII, INC.

                                  EXHIBIT INDEX
                                  (Item 14(c))

3.1       Articles of  Incorporation.  Previously  filed with the Securities and
          Exchange  Commission as an exhibit to the  Company's  Annual Report on
          Form 10-K for the year ended December 31, 1991 and incorporated herein
          by reference.

3.2       Certificate  of  Amendment  of Articles of  Incorporation.  Previously
          filed with the Securities and Exchange Commission as an exhibit to the
          Company's  Annual Report on Form 10-K for the year ended  December 31,
          1992 and incorporated herein by reference.

3.3       Amended and Restated Bylaws.  Previously filed with the Securities and
          Exchange  Commission as an exhibit to the  Company's  Annual Report on
          Form 10-K for the year ended December 31, 1991 and incorporated herein
          by reference.

3.4       Amendments to Bylaws Adopted on July 30, 1992.  Previously  filed with
          the Securities and Exchange  Commission as an exhibit to the Company's
          Annual  Report on Form 10-K for the year ended  December  31, 1992 and
          incorporated herein by reference.

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

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

10.3      Amendment to Amended Management Agreement dated August 8, 1995 between
          the Company,  Public Storage  Management,  Inc. and Storage  Equities,
          Inc.  Previously  filed with Securities and Exchange  Commission as an
          exhibit to the Company's  Quarterly Report on form 10-Q for the period
          ended September 30, 1995 and incorporated herein by reference.

10.4      Revolving credit agreement between the Company and Manufacturers  Bank
          dated  February 24, 1995.  Previously  filed with the  Securities  and
          Exchange  Commission as an exhibit to the  Company's  Annual Report on
          Form 10-K for the year ended December 31, 1994 and incorporated herein
          by reference.

10.5      Amendment  to  Revolving  Credit  Agreement  between  the  Company and
          Manufacturers Bank dated September 14, 1995. Previously filed with the
          Securities  and  Exchange  Commission  as an exhibit to the  Company's
          Annual  Report on Form 10-K for the year ended  December  31, 1995 and
          incorporated herein by reference.

10.6      Amendment  to  Revolving  Credit  Agreement  between  the  Company and
          Manufacturers Bank dated February 7, 1997. Filed herewith.

27        Financial Data Schedule. Filed herewith.