MANUFACTURERS BANK
A SUBSIDIARY OF THE SAKURA BANK, LIMITED

                                  EXHIBIT 10.7
                           NOTE MODIFICATION AGREEMENT

THIS NOTE MODIFICATION  AGREEMENT is entered into as of October 4, 1996 , by and
between  MANUFACTURERS  BANK, a California  banking  corporation  ("Bank"),  and
PUBLIC STORAGE PROPERTIES XVIII, INC.  (hereinafter  referred to as "Borrower"),
and is made with reference to the following facts and circumstances:

1.   Borrower  has made and  executed in favor of Bank a  Promissory  Note dated
     November 16, 1994, in the original principal amount of Five Million Dollars
     ($5,000,000.00) (the "Note").

2.   The  principal  sum  of  Four  Million  Seven  Hundred   Thousand   Dollars
     ($4,700,000.00),  together  with any accrued and unpaid  interest  thereon,
     remains outstanding and unpaid with respect to the Note.

3.   Borrower and Bank wish to modify the Note as set forth below.

NOW, THEREFORE, the parties agree as follows:

     3.1 Effective  upon  execution of this  agreement,  the  principal  balance
outstanding at any one time under the Note shall not exceed, after giving effect
to any credit  extension,  the sum of Six Million Five Hundred  Thousand Dollars
($6,500,000.00).

     3.2 The unpaid  principal  balance of this Note shall be paid in  quarterly
installments  of  One  Hundred  Seventy-Five  Thousand  Dollars   ($175,000.00),
commencing  on October 1, 1997,  and  continuing on the 1st day of each calendar
quarter  thereafter,  except that the unpaid  balance of principal  and interest
shall be due and payable upon maturity.

     3.3 Sections 2 and 17 are modified by deleting the date October 1, 1996 and
replacing it with the date September 30, 1997.

     3.4 Section 5 is deleted and replaced with the following:

         MATURITY. The maturity of the Note is September 30,  2002;  provided,
however,  if prior to  September 30, 1997 Maker elects to convert this Note to a
term loan, the term of such term loan shall be five years,  with an amortization
period of ten years as provided in Section 17 below.

     3.5 Borrower  shall pay Bank on demand a fee of Two  Thousand  Five Hundred
Dollars  ($2,500.00) as part of the consideration for Bank's agreement to extend
and modify Borrower's financing arrangements as set forth herein.

4.   Except as modified  herein,  the Note shall remain in full force and effect
     in accordance with its original terms and conditions.

IN WITNESS WHEREOF,  the parties have executed this Note Modification  Agreement
as of the day and year first above written.


Date:   October 4, 1996
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                                        PUBLIC STORAGE PROPERTIES XVIII, INC.,
                                        a California corporation

                                        By:  /s/David P. Singelyn
                                             Title:   Controller
                                             ---------------------------
WITNESSED BY
/s/Daniel F. Maddox
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                                        MANUFACTURERS BANK,
                                        a California banking corporation

                                        By :  /s/ Daniel F. Maddox
                                              ------------------------------
                                              Title:   Senior Vice President
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