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 1-10837
                       -------

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

        California                                      95-4300885
---------------------------------        --------------------------------------
(State or other jurisdiction of           (IRS Employer Identification Number)
 incorporation or organization)         

       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-$34,890,947  (computed  on the basis of
$21-3/8 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 2,136,885 shares
             Common Stock, $.01 Par Value - Series B 232,762 shares
             Common Stock, $.01 Par Value - Series C 659,494 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 XV, INC.

                                     PART I.

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

          Public Storage  Properties  XV, 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 XV, Ltd., a California
limited  partnership  (the  "Partnership"),   in  a  reorganization  transaction
completed on September 5, 1991.

          The Partnership offered 106,000 units of limited partnership  interest
(the  "Units")  to the public in  September,  1985.  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 5, 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  2,676,768 shares of
common stock Series A ("Series A shares"), 232,762 shares of common stock Series
B ("Series B shares"),  and 659,494  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 1997 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 6
states:  California (6),  Colorado (2),  Connecticut (2), Indiana (1),  Maryland
(1),  Massachusetts (1), New Jersey (1), Ohio (1), Texas (2) and Washington (2).
These facilities  consist of 18  mini-warehouses  and 1  mini-warehouse/business
park facility.

          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  96% 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 PROPERTY

          The  Company's  non-mini-warehouse  investment  is a business park and
low-rise office building.  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.

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:

*    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
 
                                      3

<PAGE>

     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  90% in 1995 to 92% in 1996.  Realized  monthly  rents  per
     square foot  increased  from $.65 in 1995 to $.67 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   property  was  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 property 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.

          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
                                       4
<PAGE>

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.

Sale or Financing
-----------------

          The  by-laws  of  the  Company  provide  that,   during  1997,  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.


                                       5
<PAGE>
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.

Proposed Merger
---------------

          In December 1996, the Company and Public Storage, Inc. ("PSI") agreed,
subject to certain conditions, to merge. Upon the merger, each outstanding share
of the  Company's  common  stock  series A (other  than shares held by PSI or by
holders of the  Company's  common stock series A ("Series A  Shareholders")  who
have properly  exercised  dissenters'  rights under  California law ("Dissenting
Shares"))  will be converted into the right to receive cash, PSI common stock or
a combination  of the two, as follows:  (i) with respect to a certain  number of
shares  of the  Company's  common  stock  series  A (not  to  exceed  20% of the
outstanding common stock series A of the Company,  less any Dissenting  Shares),
upon a Series A Shareholder's election,  $21.99 in cash, subject to reduction as
described  below or (ii) that  number  (subject  to  rounding)  of shares of PSI
common stock  determined by dividing  $21.99,  subject to reduction as described
below,  by the  average  of the per share  closing  prices on the New York Stock
Exchange of PSI common  stock during the 20  consecutive  trading days ending on
the  fifth   trading  day  prior  to  the  special   meeting  of  the  Company's
shareholders.  The consideration paid by PSI to the Series A Shareholders in the
merger will be reduced by the amount of cash  distributions  required to be paid
to the Series A  Shareholders  by the Company  prior to completion of the merger
(estimated  at  $1.23  per  share)  in  order  to  satisfy  the  Company's  REIT
distribution  requirements  ("Required REIT  Distributions").  The consideration
received by the Series A  Shareholders  in the merger,  however,  along with any
Required  REIT  Distributions,  will not be less  than  $21.99  per share of the
Company's common stock series A, which amount represents the market value of the
Company's  real  estate  assets at October  31,  1996  (based on an  independent
appraisal) and interest of the Series A Shareholders  in the estimated net asset
value of its other assets at March 31, 1997.  Additional  distributions  will be
made to the Series A  Shareholders  to cause the  Company's  estimated net asset
value  allocable to the Series A Shareholders as of the date of the merger to be
substantially equivalent to $21.99 per share. Upon the merger, each share of the
Company's  common  stock  series B and common  stock series C (other than shares
held by PSI) would be converted  into the right to receive  $12.63 in PSI common
stock  (valued as in the case of the  Company's  common stock series A) plus (i)
any  additional  distributions  equal  to the  amount  by  which  the  Company's
estimated net asset value allocable to the holders of the Company's common stock
series B and C as of the date of the  merger  exceeds  $12.63 per share and (ii)
the  estimated  Required  REIT  Distributions  payable  to  the  holders  of the
Company's  common  stock  series B of $1.23 per share.  The common  stock of the
Company  held by PSI will be canceled in the merger.  The merger is  conditioned
on, among other  requirements,  approval by the  Company's  shareholders.  It is
expected  that the  merger  will  close in the  first  half of 1997.  PSI is the
Company's  mini-warehouse  operator and owns 34.86% of the total combined shares
of the Company's common stock series A, B and C.

                                       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          Net Rentable    
            Location                  of Parcel            Area        Number of Spaces   Completion Date
------------------------------      ------------    ----------------   ----------------   --------------
CALIFORNIA
<S>                                  <C>              <C>                      <C>               <C> 
Antioch, Sunset Dr.                  3.03 acres       53,000 sq. ft.           470          Dec. 1985
Livermore, Newhope St.               2.48 acres       45,000 sq. ft.           429          Dec. 1985
Rancho Cordova, Sunrise              4.75 acres       97,000 sq. ft.           894          Jun. 1985
Sacramento, Mather Field Rd.         2.75 acres       51,000 sq. ft.           461          Apr. 1986
San Jose, Story Road                 4.39 acres       77,000 sq. ft.           626          Nov. 1985
Whittier, Whittier Blvd.             1.90 acres       44,000 sq. ft.           368          Mar. 1986

COLORADO
Aurora, Abilene                      4.63 acres       83,000 sq. ft.           630          Dec. 1985
Denver, Blake St.                    0.36 acres       33,000 sq. ft.           387           May 1986

CONNECTICUT
Berlin, Berlin Turnpike              4.10 acres       67,000 sq. ft.           626          Oct. 1986
Manchester, Tolland Turnpike         3.13 acres       67,000 sq. ft.           565          Apr. 1988

INDIANA
Evansville, Green River Rd.          3.68 acres       63,000 sq. ft.           505          Jul. 1986

MARYLAND
Gaithersburg,ChristopherAv.(1)       4.86 acres        69,000 sq. ft           482          Nov. 1987

MASSACHUSETTS
Peabody, Route 1                     3.09 acres       65,000 sq. ft.           648          Nov. 1986

NEW JERSEY
Washington, Blackhorse Pike          3.61 acres       42,000 sq. ft.           357          Jul. 1986

OHIO
Columbus, Eastland Dr.               3.97 acres       54,000 sq. ft.           469          Jul. 1985

TEXAS
Dallas, Plano Rd.                    1.77 acres       59,000 sq. ft.           558          Feb. 1986
Sugarland, Eldridge Rd.              3.99 acres       59,000 sq. ft.           618          Aug. 1986

WASHINGTON
Burien, First Ave. So.               1.86 acres       52,000 sq. ft.           460          Jun. 1986
Seattle, Aurora Ave.                 0.88 acres       48,000 sq. ft.           559          Jun. 1986

</TABLE>

----------------------------------
(1) A portion of the property has been developed as a business park.

          The Company, in connection with a proposed merger described in Item 1,
obtained an appraisal which stated the value of the Company's  properties  were,
on a portfolio, $56,500,000 as of October 31, 1996.

          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
 
                                      7
<PAGE>

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 $132,000 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 96% of the Company's portfolio (based on revenues
for 1996) are mini-warehouses and the balance consists of a commercial property.
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)                                    92%               90%              89%
Realized monthly rent per occupied square foot (1) (2)                $.67              $.65             $.63

Operating margin (3):
     Before reduction for depreciation expense                          64%               64%              65%
     After reduction for depreciation expense:                          48%               48%              49%
</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
Gaithersburg/Christopher  Ave.  property  because it is the only property with a
book  value of at least  10% of the  total  assets  of the  Company  or that has
accounted for gross revenues of at least 10% of the aggregate  gross revenues of
the Company.

          GAITHERSBURG/CHRISTOPHER AVE. Christopher Avenue intersects with Route
355  approximately  400 yards from this 4.86-acre site. Route 355 is the largest
traffic artery in the Gaithersburg-Rockville  region of Maryland, and is located
adjacent to an extensive commercial  development.  Gaithersburg is situated just
northwest of Washington, D.C.

          The  property,  which  opened in 1987,  consists of a  combination  of
mini-warehouse  and business park  facilities.  The  mini-warehouse  consists of
approximately  40,000 square feet of net rentable area  including 466 individual
storage units. The business park facility  consists of 29,000 square feet of net
rentable area containing 16 units.  As of December 31, 1996, the  mini-warehouse
facility  had 436  units  occupied  representing  a 94%  occupancy  rate and the
business park facility was 100% occupied by 16 tenants.  No tenant  occupies 10%
or more of the rentable area of the property.

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

                                                          Annual Scheduled
                                                             Rent Per
             Date                 Occupancy Rate           Square Foot
      -------------------         ---------------         -----------------
      December 31, 1996                94%                     $14.40
      December 31, 1995                96                       10.84
      December 31, 1994                94                       10.20

 

                                        8
<PAGE>


          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                100%                     $10.68
       December 31, 1995                 94                       10.09
       December 31, 1994                 94                        9.96

          A schedule  showing  total  annual base rent and  percentage  of total
income relating to leases  according to their  expiration dates for the business
park facility is set forth below:

                        Year of            Total Amt.      Percentage of
                      Expiration*           Base Rent       Total Income
                 ---------------------    -------------   ----------------
                        1997                 $419,000         86.75%
                        1998                   64,000         13.25
                                          -------------   ----------------
                        Total                $483,000        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                1,483,760          16,257                     232,762               -
                              -------------    -------------               ------------       -----------
Vern O. Curtis                 1,483,760          16,257                     232,762               -
                              -------------    -------------               ------------       -----------
Jack D. Steele                 1,483,760          16,257                     232,762               -
                              -------------    -------------               ------------       -----------


                                    Number of Shares of
                                   Common Stock Series C                         Total Common Stock
                              ------------------------------               ------------------------------
          Name                 Voted For           Withheld                 Voted For           Withheld
----------------------        -------------    -------------               ------------       -----------
B. Wayne Hughes                  659,494            -                      2,376,016             16,257
                              -------------    -------------               ------------       -----------
Vern O. Curtis                   659,494            -                      2,376,016             16,257
                              -------------    -------------               ------------       -----------
Jack D. Steele                   659,494            -                      2,376,016             16,257
                              -------------    -------------               ------------       -----------

</TABLE>
                                       9
<PAGE>


                                    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  20, 1991 under the symbol PSQ. 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.

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*
-----------       ---------------------             --------     ---------             ------------
<C>               <C>                                <C>          <C>                   <C>  
1995              March 31                           $16-5/8      $15-1/2                 $0.30
                  June 30                             16-7/8       16-1/2                  0.30
                  September 30                        16-5/8           16                  0.30
                  December 31                         18-1/4       16-3/8                  0.52

1996              March 31                               $18      $16-3/4                 $0.30
                  June 30                             18-3/4       17-3/4                  0.30
                  September 30                        19-5/8       17-7/8                  0.30
                  December 31                         21-1/2       19-1/4                  0.30

</TABLE>
    *  No dividends were declared on Convertible Series C shares

          As of December 31, 1996,  there were  approximately  1,096  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 annually to shareholders, 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, as determined by the Company's Board of Directors.

          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  distributions  declared  to  shareholders  by  $425,000,  $92,000  and
$1,054,000 during 1994, 1995 and 1996, respectively.

                                       10

<PAGE>


          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 900,000  Series A shares.  From  September 9, 1991
through February 28, 1997, the Company has repurchased  539,883 Series A shares.
The Company  repurchased  35,000  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                    $8,419,000        $8,019,000       $7,655,000        $7,168,000        $6,561,000
   Interest and other income            56,000            58,000           42,000            36,000            53,000
                                    ----------        ----------       ----------        ----------        ----------

                                     8,475,000         8,077,000        7,697,000         7,204,000         6,614,000
                                    ----------        ----------       ----------        ----------        ----------

EXPENSES:
   Cost of operations                3,038,000         2,889,000        2,738,000         2,621,000         2,587,000
   Depreciation                      1,315,000         1,279,000        1,233,000         1,267,000         1,383,000
   General and administrative          200,000           210,000          227,000           239,000           299,000
   Interest expense                     16,000              -                -                 -                  -
   Environmental cost (1)                 -              132,000             -                 -                  -
                                    ----------        ----------       ----------        ----------        ----------
                                     4,569,000         4,510,000        4,198,000         4,127,000         4,269,000
                                    ----------        ----------       ----------        ----------        ----------



NET INCOME                          $3,906,000        $3,567,000       $3,499,000        $3,077,000        $2,345,000
                                    ==========        ==========       ==========        ==========        ==========  

Net income per Series A share:
   Primary                               $1.69             $1.45            $1.40             $1.16             $0.83
   Fully diluted                         $1.29             $1.14            $1.09             $0.92             $0.67

Dividends declared per share:
   Series A                              $1.20             $1.42            $1.22             $1.01             $0.86
   Series B                              $1.20             $1.42            $1.22             $1.01             $0.86

Weighted average 
  Common shares outstanding:
     Primary - Series A              2,145,535         2,226,760        2,303,827         2,451,052         2,599,593
     Fully diluted - Series A        3,037,791         3,119,016        3,196,083         3,343,308         3,491,849

OTHER DATA:
-----------
Net cash provided by
   operating activities             $5,273,000        $4,765,000       $4,608,000        $4,377,000        $3,702,000
Net cash used in
   investing activities               (317,000)         (302,000)        (532,000)          (66,000)          (75,000)
Net cash used in
   financing activities             (4,026,000)       (4,570,000)      (4,998,000)       (4,233,000)       (3,745,000)
Capital expenditures
   to maintain facilities             (317,000)         (302,000)        (193,000)          (66,000)          (75,000)
Funds from operations (2)            5,221,000         4,978,000        4,732,000         4,344,000         3,728,000


BALANCE SHEET DATA:
-------------------
Total assets                       $39,016,000       $38,956,000      $39,648,000       $41,270,000       $42,386,000
Shareholders' equity                37,598,000        36,902,000       38,007,000        39,719,000        41,107,000

</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  $132,000  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 $3,906,000  compared to $3,567,000 in 1995,  representing
an increase of $339,000 or 10%. Net income per fully diluted  Series A share was
$1.29 in 1996 compared to $1.14 in 1995, representing an increase of $.15 or 13%
per share.  These  increases  are  primarily  due to an increase in property net
operating income 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  $215,000 from $3,851,000 in 1995 to $4,066,000 in 1996. This increase
is primarily  attributable  to an increase in rental income at a majority of the
Company's properties.

          Rental income for the mini-warehouse  operations increased $370,000 or
5% from $7,743,000 in 1995 to $8,113,000 in 1996. Cost of operations  (including
management  fees paid to an affiliate of the Company)  increased  $146,000 or 5%
from  $2,755,000 in 1995 to $2,901,000 in 1996. The results of these changes was
a net increase in property net operating income before  depreciation  expense of
$224,000 or 5% from  $4,988,000 in 1995 to  $5,212,000 in 1996.  The increase in
rental  income is  primarily  due to an  increase  in rental  rates and a slight
increase  in  occupancy  levels at a majority  of the  Company's  mini-warehouse
facilities.  The  increase in cost of  operations  is mainly due to increases in
payroll,  advertising  and property tax expense.  Property  taxes  increased due
primarily to a one-time tax refund  received in early 1995 at the  Company's San
Jose, California facility.

          Property net operating income before depreciation expense with respect
to the Company's  Gaithersburg,  Virginia  business park increased by $27,000 or
19% from $141,000 in 1995 to $168,000 in 1996. This increase is mainly due to an
increase in rental  income caused by an increase in rental rate and the property
being 100% occupied  throughout 1996. Cost of operations remained stable in 1996
compared to 1995.

          Weighted  average  occupancy  levels  were 92% for the  mini-warehouse
facilities  and 100% for the business  park facility in 1996 compared to 90% for
the mini-warehouse facilities and 93% for the business park facility 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  $39,000 in management  fees,
based on the  management  fees that  would have been  payable  on rental  income
generated in 1996 compared to the amount prepaid.

          During 1996, the Company  incurred  $16,000 in interest expense on its
line of credit facility.

          YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994.
Net income in 1995 was $3,567,000  compared to $3,499,000 in 1994,  representing
an  increase of $68,000 or 2%. Net income per fully  diluted  Series A share was
$1.14 in 1995 compared to $1.09 in 1994,  representing an increase of $.05 or 5%
per share.  This  increase is  primarily  due to an  increase  in  property  net
operating income combined with a decrease in  administrative  expense and offset
by  environmental  cost  incurred  in 1995.  Net  income  per share in 1995 also
benefited by the reduction in the number of Series A shares  outstanding  due to
the Company's repurchase of Series A shares.

          During 1995, property net operating income (rental income less cost of
operations,  management  fees  paid  to  affiliates  and  depreciation  expense)
increased  $167,000 from $3,684,000 in 1994 to $3,851,000 in 1995. This increase
is  primarily  attributable  to an  increase in rental  income at the  Company's
mini-warehouse  facilities  partially  offset by increases in cost of operations
and depreciation expense.

          Rental income for the mini-warehouse  operations increased $375,000 or
5% from $7,368,000 in 1994 to $7,743,000 in 1995. Cost of operations  (including
management  fees paid to an affiliate of the Company)  increased  $155,000 or 6%
from  $2,600,000 in 1994 to $2,755,000 in 1995. The increase in rental income is
primarily  due to slight  increases  in rental rates and  occupancy  levels at a
majority of the  Company's  mini-warehouse  facilities.  The increase in cost of
                                       14
<PAGE>

operations is mainly due to increases in payroll,  repairs and  maintenance  and
property tax expense.  Repairs and  maintenance  increased due to costs for such
items as doors, elevators,  fence and gate repairs. Property taxes increased due
to increases in tax assessments.

          Property net operating income before depreciation expense with respect
to the Company's  business park facility decreased by $8,000 or 5% from $149,000
in 1994 to $141,000 in 1995.  This  decrease is  primarily  due to a decrease in
rental income caused by a decrease in occupancy levels.

          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 $132,000 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 90% for the  mini-warehouse
facilities  and 93% for the business  park  facility in 1995 compared to 89% for
the mini-warehouse facilities and 97% for the business park facility in 1994.

Mini-warehouse Operating Trends.
--------------------------------

          The following table illustrates the operating trends for the Company's
19 mini-warehouses:
<TABLE>
<CAPTION>

                                                                                      Years ended December 31,
                                                                         --------------------------------------------
                                                                           1996              1995              1994
                                                                         --------          ---------         --------
<S>                                                                         <C>               <C>              <C>
Weighted average occupancy level                                            92%               90%              89%
Realized monthly rent per occupied  square foot (1)                       $.67              $.65             $.63
Operating margin (2)
     Before reduction for depreciation expense                              64%               64%              65%
     After reduction for depreciation expense                               49%               48%              49%
</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.

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

          CAPITAL   STRUCTURE.   The  Company's   financial   profile  has  been
characterized  by increasing net income,  increasing  cash provided by operating
activities and increasing funds from operations ("FFO").

          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 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 over the past years from  $4,608,000 in 1994
to $5,273,000 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  $5,221,000  and  $4,978,000,
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,
                                       15
<PAGE>

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 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                                               $3,906,000        $3,567,000       $3,499,000
Environmental cost                                                -           132,000                -
Depreciation                                              1,315,000         1,279,000        1,233,000
                                                         ----------        ----------       ----------
Funds from operations
     (Net cash provided by operating activities
     before changes in working capital components)        5,221,000         4,978,000        4,732,000
Capital improvements to maintain facilities                (317,000)         (302,000)        (193,000)
                                                         ----------        ----------       ----------
Funds available for distributions to
     shareholders and repurchase of stock                 4,904,000         4,676,000        4,539,000
Cash distributions to shareholders                       (3,392,000)       (3,266,000)      (2,870,000)
                                                         ----------        ----------       ----------
Excess funds available for
     cash distributions to shareholders
     and repurchase of stock                             $1,512,000        $1,410,000       $1,669,000
                                                         ==========        ==========       ==========
</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  and  distributions  to
shareholders. For 1997, the Company anticipates expending approximately $517,000
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.

          In February 1994, the Company purchased 23,000 common shares of Public
Storage,  Inc.  ("PSI"),  a publicly traded real estate  investment trust and an
affiliate of the Company, for $339,000.  The market value of these securities at
December  31, 1996 was  $713,000.  The Company  recognized  $20,000 in dividends
during 1996 and 1995.

          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  $279,000.  The  amount  has  been  expensed  as
management fees paid to affiliate during 1996.

          In January 1996, the Company  obtained an unsecured  revolving  credit
facility with a bank for borrowings up to $5,000,000.  Outstanding borrowings on
the credit facility which, at the Company's option,  bear interest at either the
bank's prime rate plus .25% or the bank's LIBOR rate plus 2.25%, will convert to
a term loan on January 1, 1998.  Interest  is payable  monthly  until  maturity.
Principal will be payable quarterly  beginning on January 1, 1998. On October 1,
2002, the remaining unpaid principal and interest is due and payable. During the
first six months of 1996, the Company borrowed and repaid $1,050,000 on its line
of credit facility.  At December 31, 1996,  there was no outstanding  balance on
the credit facility.


                                       16
<PAGE>
          On November  12, 1996,  the  Company's  Board of Directors  declared a
regular quarterly distribution per share of $0.30 payable on January 15, 1997 to
shareholders of record on December 31, 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
                            ------------      ------------      ------------
   1985                        $505,000           $44,000         $549,000
   1986                       1,071,000            94,000        1,165,000
   1987                       1,306,000           114,000        1,420,000
   1988                       1,340,000           116,000        1,456,000
   1989                       1,341,000           116,000        1,457,000
   1990                       1,640,000           143,000        1,783,000
   1991                       2,268,000           197,000        2,465,000
   1992                       2,222,000           200,000        2,422,000
   1993                       2,461,000           234,000        2,695,000
   1994                       2,790,000           284,000        3,074,000
   1995                       3,144,000           331,000        3,475,000
   1996                       2,572,000           280,000        2,852,000
                            ------------      ------------      ------------
   Totals                   $22,660,000        $2,153,000      $24,813,000
                            ============      ============      ============

          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  $22,660,000 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  $20,078,000  in
additional  distributions  with  respect to the Series A shares  have been made.

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 $1,411,000.

          The  Company's  Board of  Directors  has  authorized  the  Company  to
purchase up to 900,000 shares of Series A common stock. As of December 31, 1996,
the Company had purchased and retired 539,883 shares of Series A common stock.


                                       17
<PAGE>

PROPOSED MERGER
---------------

          In December 1996, the Company and Public Storage, Inc. ("PSI") agreed,
subject to certain conditions, to merge. Upon the merger, each outstanding share
of the  Company's  common  stock  series A (other  than shares held by PSI or by
holders of the  Company's  common stock series A ("Series A  Shareholders")  who
have properly  exercised  dissenters'  rights under  California law ("Dissenting
Shares"))  will be converted into the right to receive cash, PSI common stock or
a combination  of the two, as follows:  (i) with respect to a certain  number of
shares  of the  Company's  common  stock  series  A (not  to  exceed  20% of the
outstanding common stock series A of the Company,  less any Dissenting  Shares),
upon a Series A Shareholder's election,  $21.99 in cash, subject to reduction as
described  below or (ii) that  number  (subject  to  rounding)  of shares of PSI
common stock  determined by dividing  $21.99,  subject to reduction as described
below,  by the  average  of the per share  closing  prices on the New York Stock
Exchange of PSI common  stock during the 20  consecutive  trading days ending on
the  fifth   trading  day  prior  to  the  special   meeting  of  the  Company's
shareholders.  The consideration paid by PSI to the Series A Shareholders in the
merger will be reduced by the amount of cash  distributions  required to be paid
to the Series A  Shareholders  by the Company  prior to completion of the merger
(estimated  at  $1.23  per  share)  in  order  to  satisfy  the  Company's  REIT
distribution  requirements  ("Required REIT  Distributions").  The consideration
received by the Series A  Shareholders  in the merger,  however,  along with any
Required  REIT  Distributions,  will not be less  than  $21.99  per share of the
Company's common stock series A, which amount represents the market value of the
Company's  real  estate  assets at October  31,  1996  (based on an  independent
appraisal) and interest of the Series A Shareholders  in the estimated net asset
value of its other assets at March 31, 1997.  Additional  distributions  will be
made to the Series A  Shareholders  to cause the  Company's  estimated net asset
value  allocable to the Series A Shareholders as of the date of the merger to be
substantially equivalent to $21.99 per share. Upon the merger, each share of the
Company's  common  stock  series B and common  stock series C (other than shares
held by PSI) would be converted  into the right to receive  $12.63 in PSI common
stock  (valued as in the case of the  Company's  common stock series A) plus (i)
any  additional  distributions  equal  to the  amount  by  which  the  Company's
estimated net asset value allocable to the holders of the Company's common stock
series B and C as of the date of the  merger  exceeds  $12.63 per share and (ii)
the  estimated  Required  REIT  Distributions  payable  to  the  holders  of the
Company's  common  stock  series B of $1.23 per share.  The common  stock of the
Company  held by PSI will be canceled in the merger.  The merger is  conditioned
on, among other  requirements,  approval by the  Company's  shareholders.  It is
expected  that the  merger  will  close in the  first  half of 1997.  PSI is the
Company's  mini-warehouse  operator and owns 34.86% of the total combined shares
of the Company's common stock series A, B and C.


                                       18
<PAGE>

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
Schedule in Item 14(a).


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

          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:
               A form 8-K dated December 5, 1996 was filed on  December 6, 1996,
               which  reported  that the Company and PSI had agreed,  subject to
               certain conditions, to merge.

     (c)  Exhibits:
               See  Exhibit Index contained herein.

                                       19
<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 XV, 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>
<TABLE>
<CAPTION>

                       PUBLIC STORAGE PROPERTIES XV, INC.

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


                                                                                                    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 XV, Inc.


We have audited the accompanying balance sheets of Public Storage Properties XV,
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 XV,
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 XV, INC.
                                 BALANCE SHEETS
                           December 31, 1996 and 1995

  
                                                                              1996                 1995
                                                                          ------------         ------------
                                     ASSETS
                                     ------
<S>                                                                         <C>                    <C>     
Cash and cash equivalents                                                   $1,755,000             $825,000
Marketable securities of affiliate
     at market value (cost of $339,000)                                        713,000              437,000
Rent and other receivables                                                      88,000               42,000
Prepaid expenses                                                               164,000              358,000

Real estate facilities at cost:
     Building, land improvements and equipment                              32,137,000           31,919,000
     Land                                                                   16,992,000           16,992,000
                                                                          ------------         ------------
                                                                            49,129,000           48,911,000

     Less accumulated depreciation                                         (12,833,000)         (11,617,000)
                                                                          ------------         ------------
                                                                            36,296,000           37,294,000
                                                                          ------------         ------------
Total assets                                                               $39,016,000          $38,956,000
                                                                          ============         ============

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


Accounts payable                                                              $442,000             $491,000
Dividends payable                                                              711,000            1,251,000
Advance payments from renters                                                  265,000              312,000

Shareholders' equity:
     Series A common, $.01 par value,
         3,569,024 shares authorized,
         2,136,885 shares issued and
         outstanding (2,171,885 shares
         issued and outstanding in 1995)                                        21,000               22,000
     Convertible Series B common,
         $.01 par value, 232,762 shares
         authorized, issued and outstanding                                      2,000                2,000
     Convertible Series C common,
         $.01 par value, 659,494 shares
         authorized, issued and outstanding                                      7,000                7,000

     Paid-in-capital                                                        39,231,000           39,864,000
     Cumulative net income                                                  22,776,000           18,870,000
     Unrealized gain in marketable securities                                  374,000               98,000
     Cumulative distributions                                              (24,813,000)         (21,961,000)
                                                                          ------------         ------------

     Total shareholders' equity                                             37,598,000           36,902,000
                                                                          ------------         ------------

Total liabilities and shareholders' equity                                 $39,016,000          $38,956,000
                                                                          ============         ============
</TABLE>
                             See accompanying notes.
                                       F-2

<PAGE>
<TABLE>
<CAPTION>


                       PUBLIC STORAGE PROPERTIES XV, 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                                          $8,419,000        $8,019,000        $7,655,000
Dividends from marketable securities of affiliate          20,000            20,000            20,000
Interest income                                            36,000            38,000            22,000
                                                       ----------        ----------        ----------

                                                        8,475,000         8,077,000         7,697,000
                                                       ----------        ----------        ----------

COSTS AND EXPENSES:

Cost of operations                                      2,575,000         2,407,000         2,278,000
Management fees paid to affiliates                        463,000           482,000           460,000
Depreciation                                            1,315,000         1,279,000         1,233,000
Environmental cost                                              -           132,000                 -
Administrative                                            200,000           210,000           227,000
Interest expense                                           16,000                 -                 -
                                                       ----------        ----------        ----------

                                                        4,569,000         4,510,000         4,198,000
                                                       ----------        ----------        ----------

NET INCOME                                             $3,906,000        $3,567,000        $3,499,000
                                                       ==========        ==========        ==========
Primary earnings per share-Series A                         $1.69             $1.45             $1.40
                                                       ==========        ==========        ==========
Fully diluted earnings per share-Series A                   $1.29             $1.14             $1.09
                                                       ==========        ==========        ==========

Dividends declared per share:
     Series A                                               $1.20             $1.42             $1.22
                                                       ==========        ==========        ==========
     Series B                                               $1.20             $1.42             $1.22
                                                       ==========        ==========        ==========

Weighted average Common shares outstanding:
     Primary Series A                                   2,145,535         2,226,760         2,303,827
                                                       ==========        ==========        ==========
     Fully diluted-Series A                             3,037,791         3,119,016         3,196,083
                                                       ==========        ==========        ==========

</TABLE>
                             See accompanying notes.
                                       F-3

<PAGE>
<TABLE>
<CAPTION>
                       PUBLIC STORAGE PROPERTIES XV, INC.
                       STATEMENTS OF SHAREHOLDERS' EQUITY
                 For each of the three years in the period ended
                                December 31, 1996
                                                                                                           
                                     Series A           Convertible Series B     Convertible Series C      
                                  Shares      Amount       Shares      Amount      Shares       Amount     
                                 --------------------------------------------------------------------------
<S>                               <C>           <C>          <C>           <C>       <C>          <C>      
Balances at December 31, 1993     2,382,835     $24,000      232,762       $2,000    659,494      $7,000   

Net income                                                                                                 
Repurchase of shares              (135,350)     (1,000)                                                    

Unrealized loss in   
  marketable securities                                                                                    

Cash distributions declared:   
   $1.22 per share - Series A                                                                              
   $1.22 per share - Series B                                                                              
                                 --------------------------------------------------------------------------
Balances at December 31,1994     2,247,485      23,000      232,762        2,000    659,494       7,000    

Net income                                                                                                 
Repurchase of shares               (75,600)     (1,000)                                                    

Unrealized gain in   
   marketable securities                                                                                   

Cash distributions declared:   
   $1.42 per share - Series A                                                                              
   $1.42 per share - Series B                                                                              
                                 --------------------------------------------------------------------------
Balances at December 31,1995     2,171,885      22,000      232,762        2,000    659,494       7,000    

Net income                                                                                                 
Repurchase of shares               (35,000)     (1,000)                                                    

Unrealized gain in   
   marketable securities                                                                                   

Cash distributions declared:   
   $1.20 per share - Series A                                                                              
   $1.20 per share - Series B                                                                              
                                ---------------------------------------------------------------------------
Balances at December 31,1996     2,136,885     $21,000      232,762       $2,000    659,494      $7,000    
                                ===========================================================================
</TABLE>
<TABLE>
<CAPTION>

                                                Cumulative                     Unrealized      Total
                                    Paid-in         net        Cumulative     gain (loss)   shareholders'
                                     Capital       income     distributions   in securities    equity
                                 ----------------------------------------------------------------------
<S>                                 <C>           <C>             <C>                 <C>  <C>        
Balances at December 31, 1993       $43,294,000   $11,804,000     ($15,412,000)       $0   $39,719,000

Net income                                          3,499,000                                3,499,000
Repurchase of shares                 (2,127,000)                                            (2,128,000)

Unrealized loss in   
  marketable securities                                                           (9,000)       (9,000)

Cash distributions declared:   
   $1.22 per share - Series A                                      (2,790,000)              (2,790,000)
   $1.22 per share - Series B                                        (284,000)                (284,000)
                              --------------------------------------------------------------------------

Balances at December 31,1994        41,167,000    15,303,000      (18,486,000)   (9,000)    38,007,000

Net income                                         3,567,000                                 3,567,000
Repurchase of shares                (1,303,000)                                             (1,304,000)

Unrealized gain in   
   marketable securities                                                         107,000       107,000

Cash distributions declared:   
   $1.42 per share - Series A                                      (3,144,000)              (3,144,000)
   $1.42 per share - Series B                                        (331,000)                (331,000)
                                 ----------------------------------------------------------------------

Balances at December 31,1995        39,864,000    18,870,000      (21,961,000)    98,000    36,902,000

Net income                                         3,906,000                                 3,906,000
Repurchase of shares                  (633,000)                                               (634,000)

Unrealized gain in   
   marketable securities                                                         276,000       276,000

Cash distributions declared:   
   $1.20 per share - Series A                                      (2,572,000)              (2,572,000)
   $1.20 per share - Series B                                        (280,000)                (280,000)
                                -----------------------------------------------------------------------
Balances at December 31,1996       $39,231,000   $22,776,000     ($24,813,000)  $374,000   $37,598,000
                                =======================================================================
</TABLE>
                             See accompanying notes.
                                       F-4
<PAGE>
<TABLE>
<CAPTION>


                       PUBLIC STORAGE PROPERTIES XV, 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                                                   $3,906,000       $3,567,000        $3,499,000
     Adjustments to reconcile net income to net
         cash provided by operating activities:


     Depreciation                                                  1,315,000        1,279,000         1,233,000
     (Increase) in rent and other receivables                        (46,000)          (1,000)          (10,000)
     Increase in prepaid expenses                                    (85,000)          (5,000)                -
     Amortization (payment) of prepaid management fees               279,000         (279,000)                -
     (Decrease) increase in accounts payable                         (49,000)         195,000           (78,000)
     (Decrease) increase in advance payments from renters            (47,000)           9,000           (36,000)
                                                                  ----------       ----------        ----------

         Total adjustments                                         1,367,000        1,198,000         1,109,000
                                                                  ----------       ----------        ----------

         Net cash provided by operating activities                 5,273,000        4,765,000         4,608,000
                                                                  ----------       ----------        ----------

Cash flows from investing activities:


     Purchase of marketable securities of affiliate                        -                -          (339,000)
     Additions to real estate facilities                            (317,000)        (302,000)         (193,000)
                                                                  ----------       ----------        ----------

         Net cash used in investing activities                      (317,000)        (302,000)         (532,000)
                                                                  ----------       ----------        ----------

Cash flows from financing activities:

     Distributions paid to shareholders                           (3,392,000)      (3,266,000)       (2,870,000)
     Borrowing on credit facility                                  1,050,000                -                 -
     Repayment of borrowing on credit facility                    (1,050,000)               -                 -
     Purchase of Company Series A common stock                      (634,000)      (1,304,000)       (2,128,000)
                                                                  ----------       ----------        ----------

         Net cash used in financing activities                    (4,026,000)      (4,570,000)       (4,998,000)
                                                                  ----------       ----------        ----------

Net increase (decrease) in cash and cash equivalents                 930,000         (107,000)         (922,000)

Cash and cash equivalents at the beginning of the year               825,000          932,000         1,854,000
                                                                  ----------       ----------        ----------

Cash and cash equivalents at the end of the year                  $1,755,000         $825,000          $932,000
                                                                  ==========       ==========        ===========

Supplemental schedule of non-cash
     investing and financing activities:

     (Increase) decrease in fair value of
         marketable securities of affiliate                        $(276,000)       $(107,000)           $9,000
                                                                  ==========       ==========        ===========
     Unrealized gain (loss) on
         marketable securities of affiliate                         $276,000         $107,000           $(9,000)
                                                                  ==========       ==========        ===========
</TABLE>


                             See accompanying notes.
                                       F-5

<PAGE>
                       PUBLIC STORAGE PROPERTIES XV, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1996

1.       DESCRIPTION OF BUSINESS

               Public  Storage   Properties  XV,  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 XV, Ltd. (the
          "Partnership")  in a  reorganization  transaction  which was effective
          September 5, 1991 (the "Reorganization").

               The Company owns and operates primarily  self-storage  facilities
          and,  to  a  lesser  extent,  a  business  park  facility   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 1997, 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. See Proposed Merger - Note 6.

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
          $16,000 in interest cost in 1996.

          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, a
          business  park  facility.   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.

               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.

                                      F-6
<PAGE>


2.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

          Real Estate Facilities (continued):

               At  December  31,  1996,  the  basis  of real  estate  facilities
          (excluding land) for Federal income tax purposes (after adjustment for
          accumulated depreciation of $14,643,000) is $16,003,000.

          Revenue Recognition:

               Property rents are recognized as earned.

          Investment in affiliate:

               In February 1994, the Company  purchased  23,000 common shares of
          Public Storage, Inc. (PSI), a publicly traded REIT and an affiliate of
          the Company, for $339,000. The Company has designated its portfolio of
          marketable  securities as being  available for sale.  Accordingly,  at
          December 31, 1996 and 1995,  the Company has  recorded the  marketable
          securities at fair value,  based upon the closing  quoted price of the
          securities  at  December  31,  1996  and  1995,  and  has  recorded  a
          corresponding   unrealized   gain  totaling   $276,000  and  $107,000,
          respectively,  in shareholders' equity. The Company recognized $20,000
          in dividends in 1996, 1995 and 1994.

          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 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 $132,000 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.


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 property
          was  operated by Public  Storage  Commercial  Properties  Group,  Inc.
          ("PSCPG") pursuant to a Management  Agreement which provides for a fee
          equal to 5% of the facility's monthly gross revenue (as defined).

                                      F-7
<PAGE>


3.        RELATED PARTY TRANSACTIONS (CONTINUED)

               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  property 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
          $279,000.  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
          $22,660,000 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   $20,078,000   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                           $32,437,000       $32,956,000
          Convertible Series B                 1,346,000         1,029,000
          Convertible Series C                 3,815,000         2,917,000
                                            -------------      -------------
          Total                              $37,598,000       $36,902,000
                                            =============      =============

               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 900,000 shares of the Company's  Series A common stock.
          As of December 31, 1996, the Company had purchased and retired 539,883
          shares of Series A common  stock,  of which  35,000  and  75,600  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

               In January  1996,  the Company  obtained an  unsecured  revolving
          credit   facility  with  a  bank  for  borrowings  up  to  $5,000,000.
          Outstanding  borrowings on the credit facility which, at the Company's
          option, bear interest at either the bank's prime rate plus .25% or the
          bank's  LIBOR rate plus 2.25%,  will convert to a term loan on January
          1, 1998. Interest is payable monthly until maturity. Principal will be
          payable  quarterly  beginning on January 1, 1998.  On October 1, 2002,
          the remaining unpaid principal and interest is due and payable.

               During the first six months of 1996,  the  Company  borrowed  and
          repaid  $1,050,000  on its line of credit  facility.  At December  31,
          1996, there was no outstanding balance on the 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.

6.        PROPOSED MERGER

               In December 1996, the Company and Public  Storage,  Inc.  ("PSI")
          agreed, subject to certain conditions, to merge. Upon the merger, each
          outstanding  share of the Company's  common stock series A (other than
          shares held by PSI or by holders of the Company's  common stock series
          A ("Series A Shareholders")  who have properly  exercised  dissenters'
          rights under California law  ("Dissenting  Shares")) will be converted
          into the right to receive cash,  PSI common stock or a combination  of
          the two, as follows: (i) with respect to a certain number of shares of
          the  Company's  common  stock  series  A  (not  to  exceed  20% of the
          outstanding common stock series A of the Company,  less any Dissenting
          Shares),  upon a  Series A  Shareholder's  election,  $21.99  in cash,
          subject to reduction as described  below or (ii) that number  (subject
          to  rounding)  of shares of PSI common  stock  determined  by dividing
          $21.99, subject to reduction as described below, by the average of the
          per share closing  prices on the New York Stock Exchange of PSI common
          stock  during  the 20  consecutive  trading  days  ending on the fifth
          trading day prior to the special


                                      F-9
<PAGE>



6.        PROPOSED MERGER (CONTINUED)

          meeting of the Company's  shareholders.  The consideration paid by PSI
          to the  Series A  Shareholders  in the  merger  will be reduced by the
          amount  of cash  distributions  required  to be paid to the  Series  A
          Shareholders  by  the  Company  prior  to  completion  of  the  merger
          (estimated at $1.23 per share) in order to satisfy the Company's  REIT
          distribution   requirements   ("Required  REIT  Distributions").   The
          consideration  received  by the Series A  Shareholders  in the merger,
          however, along with any Required REIT Distributions,  will not be less
          than $21.99 per share of the  Company's  common  stock series A, which
          amount represents the market value of the Company's real estate assets
          at October 31, 1996 (based on an  independent  appraisal) and interest
          of the Series A  Shareholders  in the estimated net asset value of its
          other assets at March 31, 1997. Additional  distributions will be made
          to the Series A  Shareholders  to cause the  Company's  estimated  net
          asset value  allocable to the Series A Shareholders  as of the date of
          the merger to be  substantially  equivalent to $21.99 per share.  Upon
          the merger,  each share of the  Company's  common  stock  series B and
          common  stock  series  C  (other  than  shares  held by PSI)  would be
          converted into the right to receive $12.63 in PSI common stock (valued
          as in the case of the  Company's  common  stock series A) plus (i) any
          additional  distributions  equal to the amount by which the  Company's
          estimated  net asset value  allocable to the holders of the  Company's
          common  stock  series  B and C as of the  date of the  merger  exceeds
          $12.63 per share and (ii) the estimated  Required  REIT  Distributions
          payable to the holders of the Company's common stock series B of $1.23
          per  share.  The  common  stock  of the  Company  held by PSI  will be
          canceled  in the merger.  The merger is  conditioned  on,  among other
          requirements,  approval by the Company's shareholders.  It is expected
          that the  merger  will  close in the  first  half of 1997.  PSI is the
          Company's  mini-warehouse  operator  and  owns  34.86%  of  the  total
          combined shares of the Company's common stock series A, B and C.

7.        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                                       $2,035,000       $2,117,000       $2,152,000       $2,171,000
    
           Expenses                                        1,149,000        1,109,000        1,157,000        1,154,000
                                                        --------------    ------------    ------------      ----------
           Net income                                       $886,000       $1,008,000         $995,000       $1,017,000
                                                        ==============    ============    ============      ===========
           Primary earnings per share -Series A                $0.38            $0.43            $0.44            $0.44
                                                        ==============    ============    ============      ===========
           Fully diluted earnings per share-Series A           $0.29            $0.33            $0.33            $0.34
                                                        ==============    ============    ============      ===========
    
    
                                                                               Three months ended
                                                        ---------------------------------------------------------------
                                                         March 1995        June 1995       Sept. 1995        Dec. 1995
                                                        --------------    ------------    ------------      -----------
           Revenues                                       $1,941,000       $2,009,000       $2,086,000       $2,041,000
    
           Expenses                                        1,039,000        1,076,000        1,123,000        1,272,000
                                                        --------------    ------------    ------------      -----------
           Net Income                                       $902,000         $933,000         $963,000         $769,000
                                                        ==============    ============    ============      ===========
           Primary earnings per share-Series A                 $0.37            $0.38            $0.40            $0.30
                                                        ==============    ============    ============      ===========
           Fully diluted earnings per share-Series A           $0.29            $0.30            $0.30            $0.25
                                                        ==============    ============    ============      ===========
</TABLE>
                                      F-10
<PAGE>
<TABLE>
<CAPTION>
                       PUBLIC STORAGE PROPERTIES XV, INC.
                           SCHEDULE III - REAL ESTATE
                          AND ACCUMULATED DEPRECIATION


                                                                                                                 
                                                                  Initial Cost                             
                                                              ----------------------        Costs          
                                                                         Bldg., Land   subsequent to       
    Date                                                                    Imp &       construction       
  Completed           Description           Encumbrances       Land       Equipment    (Improvements)      
-----------------------------------------------------------------------------------------------------------
 Mini-warehouses:
    <S>      <C>                                <C>            <C>           <C>               <C>         
    12/85     Livermore / S Frontage Rd          -             $773,000      $896,000          $39,000     
     2/86     Garland / Plano                    -              950,000     1,327,000           31,000     
    11/85     San Jose / Story Rd                -            2,579,000     1,209,000          135,000     
    12/85     Aurora / Abilene Rd                -            2,231,000     1,699,000          110,000     
    12/85     Antioch / Sunset Drive             -              543,000     1,166,000           55,000     
     6/86     Rancho Cordova / Sunrise           -            1,255,000     1,787,000          167,000     
    10/86     Berlin / Wilbur Cross              -              456,000     2,453,000           76,000     
     3/86     Whittier/ Whittier Blvd            -              601,000     1,314,000           58,000     
    11/86     Peabody / Newbury St.              -              688,000     2,885,000          121,000     
     5/86     Denver / Blake                     -            1,030,000     1,006,000          123,000     
     7/86     Evansville / Green River Rd        -              346,000     1,150,000           42,000     
     6/86     Burien / First Ave                 -              395,000     1,432,000           50,000     
     4/86     Rancho Cordova / Mather            -              773,000     1,232,000           57,000     
     8/86     Sugar Land / Eldridge              -              556,000     1,156,000           80,000     
     7/85     Columbus / Eastland Drive          -              230,000     1,132,000           29,000     
     7/86     Sicklerville / Blackhorse Pike     -              303,000     1,047,000           58,000     
     6/86     Seattle / Aurora                   -              530,000     1,349,000           65,000     
     4/88     Manchester/Tolland Turnpike        -              707,000     2,036,000           60,000     

  Combinations:
    11/87     Gaithersburg/Christopher Av        -            2,046,000     4,139,000          366,000   
                                          ---------------------------------------------------------------
                                                 -          $16,992,000   $30,415,000       $1,722,000   
                                          ===============================================================
</TABLE>
<TABLE>
                                                                                                          
                                              Gross Carrying Amount At December 31, 1996                    Life on Which
                                              -------------------------------------------                   Depreciation in
                                                           Bldg., Land                                      Latest Income
    Date                                                      Imp &                        Accumulated      Statements is
  Completed           Description              Land         Equipment        Total         Depreciation        Computed
---------------------------------------------------------------------------------------------------------------------------
 Mini-warehouses:
   <S>       <C>                               <C>             <C>          <C>                  <C>         <C>            
    12/85     Livermore / S Frontage Rd         $773,000        $935,000     $1,708,000         ($414,000)    5-25 years
     2/86     Garland / Plano                    950,000       1,358,000      2,308,000          (583,000)    5-25 years
    11/85     San Jose / Story Rd              2,579,000       1,344,000      3,923,000          (617,000)    5-25 years
    12/85     Aurora / Abilene Rd              2,231,000       1,809,000      4,040,000          (807,000)    5-25 years
    12/85     Antioch / Sunset Drive             543,000       1,221,000      1,764,000          (535,000)    5-25 years
     6/86     Rancho Cordova / Sunrise         1,255,000       1,954,000      3,209,000          (832,000)    5-25 years
    10/86     Berlin / Wilbur Cross              456,000       2,529,000      2,985,000          (989,000)    5-25 years
     3/86     Whittier/ Whittier Blvd            601,000       1,372,000      1,973,000          (553,000)    5-25 years
    11/86     Peabody / Newbury St.              688,000       3,006,000      3,694,000        (1,168,000)    5-25 years
     5/86     Denver / Blake                   1,030,000       1,129,000      2,159,000          (441,000)    5-25 years
     7/86     Evansville / Green River Rd        346,000       1,192,000      1,538,000          (495,000)    5-25 years
     6/86     Burien / First Ave                 395,000       1,482,000      1,877,000          (580,000)    5-25 years
     4/86     Rancho Cordova / Mather            773,000       1,289,000      2,062,000          (541,000)    5-25 years
     8/86     Sugar Land / Eldridge              556,000       1,236,000      1,792,000          (489,000)    5-25 years
     7/85     Columbus / Eastland Drive          230,000       1,161,000      1,391,000          (476,000)    5-25 years
     7/86     Sicklerville / Blackhorse Pike     303,000       1,105,000      1,408,000          (433,000)    5-25 years
     6/86     Seattle / Aurora                   530,000       1,414,000      1,944,000          (582,000)    5-25 years
     4/88     Manchester/Tolland Turnpike        707,000       2,096,000      2,803,000          (711,000)    5-25 years

  Combinations:
    11/87     Gaithersburg/Christopher Av      2,046,000       4,505,000      6,551,000        (1,587,000)    5-25 years
                                          -----------------------------------------------------------------
                                             $16,992,000     $32,137,000    $49,129,000      ($12,833,000)
                                          =================================================================
</TABLE>

                                      F-11
<PAGE>
                       PUBLIC STORAGE PROPERTIES XV, INC.
                           REAL ESTATE RECONCILIATION
                            SCHEDULE III (CONTINUED)


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

                              COSTS RECONCILIATION

<TABLE>
<CAPTION>

                                                                            Years Ended December 31,
                                                         ----------------------------------------------------------------
                                                                 1996                 1995                 1994
                                                         ----------------------------------------------------------------

<S>                                                          <C>                  <C>                  <C>        
Balance at the beginning of the period                       $48,911,000          $48,633,000          $48,541,000

Additions during the period:

     Improvements                                                317,000              302,000              193,000

Deductions during the period                                     (99,000)             (24,000)            (101,000)
                                                         ----------------------------------------------------------------

Balance at the close of the period                           $49,129,000          $48,911,000          $48,633,000
                                                         ================================================================


                     ACCUMULATED DEPRECIATION RECONCILIATION


                                                                            Years Ended December 31,
                                                         ----------------------------------------------------------------
                                                                 1996                 1995                 1994
                                                         ----------------------------------------------------------------

Balance at the beginning of the period                        $11,617,000          $10,362,000           $9,230,000

Additions during the period:

     Depreciation                                               1,276,000            1,271,000            1,233,000

Deductions during the period                                      (60,000)             (16,000)            (101,000)
                                                         ----------------------------------------------------------------

Balance at the close of the period                            $12,833,000          $11,617,000          $10,362,000
                                                         ================================================================

</TABLE>

(b) The aggregate  depreciable cost of real estate  (excluding land) for Federal
    income tax purposes is $30,646,000.

                                      F-12

<PAGE>
                       Public Storage Properties XV, Inc.

                                  EXHIBIT INDEX

                                  (Item 14(c))

2         Agreement and Plan of Reorganization among PSI, the Company and Public
          Storage  Properties XIV, Inc. dated December 5, 1996. Filed with PSI's
          Registration  Statement  No.  333-22665  and  incorporated  herein  by
          reference.

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  January  8, 1996.  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.

27        Financial Data Schedule. Filed herewith.