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 1-10832
                       -------

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

         California                                            95-4336616
-------------------------------                         -----------------------
(State or other jurisdiction of                              (IRS Employer 
 incorporation or organization)                         Identification Number)

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

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

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

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

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

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


                                    Yes X No
                                        --  --

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of the Company's knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
           --

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

Common  Stock  Series A, $.01 Par  Value-$49,157,106  (computed  on the basis of
$18-7/8 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 2,775,900 shares
             Common Stock, $.01 Par Value - Series B 324,989 shares
             Common Stock, $.01 Par Value - Series C 920,802 shares
             ------------------------------------------------------

                       DOCUMENTS INCORPORATED BY REFERENCE

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


<PAGE>
                      PUBLIC STORAGE PROPERTIES XVIII, INC.

                                     PART I.

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

General
-------

     Public  Storage  Properties  XVIII,  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  XVIII,  Ltd.,  a
California  limited  partnership  (the   "Partnership"),   in  a  reorganization
transaction completed on July 26, 1991.

     The Partnership offered 148,000 units of limited partnership  interest (the
"Units") to the public in June 1987. The Partnership's general partners were PSI
Associates  II, Inc.  ("PSA"),  a  California  corporation,  and B. Wayne Hughes
("Hughes").  PSA  was  an  affiliate  of  Public  Storage  Management,  Inc.,  a
California corporation (see below).

     Effective July 26, 1991, the Partnership  transferred all of its assets and
liabilities to the Company  pursuant to a plan of  Reorganization  approved by a
majority of the limited partners.  In exchange for the Partnership's  assets and
liabilities,  the  Company  issued  3,737,374  shares of common  stock  Series A
("Series A shares"), 324,989 shares of common stock Series B ("Series B shares")
and 920,802  shares of common  stock Series C ("Series C shares") of the Company
to the Partnership.  The Partnership then made a liquidating distribution to the
limited partners by distributing 99 percent of the Series A shares (on the basis
of 25 Series A shares for each  Unit).  The  remaining 1 percent of the Series A
shares and all of the Series B shares and Series C shares  were  distributed  to
the  general  partners  in  respect  of  their  interests  in  the  Partnership.
Subsequent thereto, the Partnership was dissolved. The Company has elected to be
taxed as a REIT for Federal income tax purposes.

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

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

     The Company has acquired 18 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.

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

     At December 31, 1996, the Company owned 18 facilities  located in 9 states:
California (4),  Colorado (1),  Illinois (3),  Kentucky (1),  Louisiana (1), New
York (2),  Pennsylvania  (1),  Texas (3) and Washington  (2).  These  facilities
consist of 17 mini-warehouses and one business park facility.

                                       2
<PAGE>
     The  Company  believes  that its  operating  results  have  benefited  from
favorable   industry   trends  and  conditions.   Notably,   the  level  of  new
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  88% 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.  The
business park includes both industrial and office space. Industrial space may be
used for,  among other things,  light  manufacturing  and assembly,  storage and
warehousing,  distribution and research and development activities.  The Company
believes  that most of the office  space is  occupied  by  tenants  who are also
renting  industrial space. The remaining office space is used for general office
purposes.  A business park may also include  facilities for commercial uses such
as banks, travel agencies,  restaurants,  office supply shops,  professionals or
other tenants providing services to the public.

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

                                       3
<PAGE>
     improve its competitive position in the market. PSI's in-house Yellow Pages
     staff designs and places  advertisements  in approximately 700 directories.
     Commencing  in  early  1996,  PSI  began  to  experiment  with a  telephone
     reservation  system designed to provide added customer  service.  Customers
     calling either PSI's toll-free  telephone referral system,  (800) 44-STORE,
     or a mini-warehouse facility are directed to PSI's reservation system where
     a trained  representative  discusses with the customer space  requirements,
     price and  location  preferences  and also  informs  the  customer of other
     products  and  services  provided  by PSI.  As of December  31,  1996,  the
     telephone  reservation  system was supporting rental activity at all of the
     Company's  properties.  PSI's toll-free  telephone referral system services
     approximately 120,000 calls per month from potential customers inquiring as
     to the nearest Public Storage mini-warehouse.

   * MAINTAIN HIGH  OCCUPANCY  LEVELS AND INCREASE  REALIZED  RENTS.  Subject to
     market conditions, the Company generally seeks to achieve average occupancy
     levels in excess of 90% and to  eliminate  promotions  prior to  increasing
     rental  rates.  Average  occupancy for the  Company's  mini-warehouses  has
     increased  from  87% in 1995 to 89% in 1996.  Realized  monthly  rents  per
     occupied  square  foot  increased  from  $.84 in 1995 to $.87 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
                                       4
<PAGE>

operated by PSI and AOPPLP have historically  carried  comprehensive  insurance,
including fire, earthquake, liability and extended coverage.

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

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

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

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

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

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

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

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

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

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


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

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

Employees
---------

     As of December  31,  1996,  the Company  had 63  employees,  22 persons who
render services on behalf of the Company on a full-time basis and 41 persons who
render services on a part-time basis (5 of whom were executive officers).  These
persons include resident managers, assistant managers, relief managers, district
managers, and administrative and maintenance personnel.

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

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


                                       6
<PAGE>
ITEM 2.   PROPERTIES.
          ----------

     The following  table sets forth  information  as of December 31, 1996 about
properties owned by the Company:
<TABLE>
<CAPTION>
                                           Size          Net Rentable       Number of
              Location                   of Parcel           Area             Spaces       Completion Date
--------------------------------     --------------    ------------------    ---------    ----------------
CALIFORNIA
<S>                                    <C>             <C>                    <C>                 <C> 
Los Angeles, La Cienega Blvd.          2.00 acres      108,000 sq. ft.        1,188          Jun. 1988
Los Angeles, Olympic Blvd. (a)         1.33 acres       95,000 sq. ft.        1,277          Jun. 1987
San Diego, Lusk Blvd. II (b)           7.85 acres      140,000 sq. ft.          108          Dec. 1988
San Francisco, Foster City Blvd.       1.15 acres       35,000 sq. ft.          404          Jun. 1987

COLORADO
Denver, Evans                          2.46 acres       70,000 sq. ft.          596          Jul. 1988

ILLINOIS
Chicago, E. Hazelcrest                 4.77 acres       86,000 sq. ft.          801          Jun. 1987
Chicago, Elston                        1.22 acres       72,000 sq. ft.          849          Feb. 1988
Chicago, Old Higgins Rd.               2.87 acres       50,000 sq. ft.          456          Dec. 1987

KENTUCKY
Jefferson County, Bardstown Rd.        3.64 acres       59,000 sq. ft.          506          Mar. 1987

LOUISIANA
Metairie, Clearview                    1.01 acres       53,000 sq. ft.          575          Jun. 1987

NEW YORK
Westchester County, Pelham Bay         1.09 acres       52,000 sq. ft.          669          Aug. 1987
New York City, North Ave.              4.98 acres       69,000 sq. ft.          795          Aug. 1991

PENNSYLVANIA
Philadelphia, Ridge Ave.               2.29 acres       61,000 sq. ft.          689          Oct. 1988

TEXAS
Dallas, Irving Country Club Dr.        2.12 acres       40,000 sq. ft.          393          Oct. 1987
Dallas, Plano Alma Road                3.70 acres       78,000 sq. ft.          794          Mar. 1988
Dallas, Vilbig Rd.                     2.05 acres       54,000 sq. ft.          526          Jul. 1987

WASHINGTON
Edmonds, Highway 99                    2.52 acres       59,000 sq. ft.          680          Apr. 1987
Lynnwood, Alderwood Mall               2.89 acres       59,000 sq. ft.          611          Dec. 1988

</TABLE>
-------------------------------------
(a)  This  property is jointly  owned with an  affiliate.  The Company has a 75%
     interest in the property.
(b)  This property has been developed as a business park.

     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 $123,000 in 1995
for known environmental remediation requirements.


                                       7
<PAGE>
     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 88% 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)                                    89%               87%              84%
Realized monthly rent per occupied square foot (1) (2)                 $.87              $.84             $.83

Operating margin (3):
     Before reduction for depreciation expense                          62%               64%              62%
     After reduction for depreciation expense:                          47%               48%              46%
</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 Los Angeles,
Olympic  Blvd.,  Los  Angeles,  La  Cienega  Blvd.  and San  Diego,  Lusk  Blvd.
properties,  because they are the only  properties with a book value of at least
10% of the total assets of the Company or that have accounted for gross revenues
of at least 10% of the aggregate gross revenues of the Company.

     LOS ANGELES,  OLYMPIC BLVD. This property is located approximately 12 miles
west of the Los  Angeles  Civic  Center on the  border  of the West Los  Angeles
office  district.  This  area,  which is known as the  Olympic  Corridor  office
district,  contains  many major  office  buildings.  Commercial  and  industrial
developments,  small shopping centers and a single-family  residential  district
are also in the neighborhood.

     The 1.33 -acre  property,  which  opened in 1987,  consists of a four-story
structure  containing  approximately  95,000  square feet of net rentable  space
divided into 1,277  individual  storage  units.  As of December 31, 1996,  1,196
units were occupied,  representing a 94% occupancy  rate. No tenant occupies 10%
or more of the rentable area.

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

                                                            Annual Scheduled
                                                                Rent Per
          Date                        Occupancy Rate           Square Foot
-----------------------               --------------        ---------------
   December 31, 1996                       94%                    $22.80
   December 31, 1995                       93                      20.04
   December 31, 1994                       92                      19.32

     LOS ANGELES,  LA CIENEGA BLVD.  This property is located less than one mile
east of the Los  Angeles  International  Airport,  near the  intersection  of La
Cienega and Century  Boulevards.  The  property is visible  both from La Cienega
Blvd.  and  southbound  traffic  on the  San  Diego  Freeway  (Interstate  405).
Interstate  405 is one of the major  freeways  in Los  Angeles  County.  Several
hotels and office  buildings are situated on Century and La Cienega  Boulevards.
Numerous office/distribution and warehouse facilities are concentrated south and
west of the property; many of these are airport-related.

                                       8
<PAGE>

     The 2.0-acre property, which opened in 1988, consists of two mini-warehouse
buildings.  There are  approximately  108,000  square feet of net rentable  area
divided into 1,188 individual  storage units. As of December 31, 1996, 749 units
were occupied, representing a 63% occupancy rate. No tenant occupies 10% or more
of the rentable area.

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


                                                            Annual Scheduled
                                                                Rent Per
          Date                        Occupancy Rate           Square Foot
-----------------------               --------------        ---------------
  December 31, 1996                       63%                     $12.24
  December 31, 1995                       52                        8.64
  December 31, 1994                       47                        8.88

     SAN DIEGO,  LUSK BLVD.  This business park is located in the fifth phase of
the Lusk/Mira Mesa Business Park,  approximately  15 miles north of downtown San
Diego. The immediate  vicinity consists  primarily of business parks designed to
provide office and research and development space. The University of California,
San Diego, is one mile to the south.  The area's  residential base includes Mira
Mesa  to  the  east  and  Penasquitos  to  the  northeast,  both  of  which  are
predominantly middle-income communities. Upper middle-income housing is found in
the surrounding cities of Del Mar, Rancho Santa Fe and La Jolla.

     The 7.85-acre  property contains  approximately  140,000 square feet of net
rentable space divided into 108 units.  The property,  which opened in 1988, was
92% occupied at December 31, 1996 by 100 tenants. No tenant occupies 10% or more
of the rentable area.

     Set forth below is a schedule  showing the occupancy  rate and the rent per
square foot for the property at the dates indicated:
                                                            Annual Scheduled
                                                                Rent Per
          Date                        Occupancy Rate           Square Foot
-----------------------               --------------        ---------------
   December 31, 1996                       92%                     $10.08
   December 31, 1995                       87                        9.60
   December 31, 1994                       93                        8.52

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

                 Year of                  Total Amt.            Percentage of
               Expiration*                 Base Rent             Total Income
               -----------              ------------             ------------
                  1997                  $1,005,000                   48.69%
                  1998                     528,000                   25.58
                  1999                     331,000                   16.03
                  2000                     121,000                    5.86
                  2001                      47,000                    2.28
               Thereafter                   32,000                    1.56
                  ----                  ----------                ----------- 
                  Total                 $2,064,000                  100.00%
                                        ==========                =========== 


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


                                       9
<PAGE>
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>                    
B. Wayne Hughes                  1,666,632          45,830                   324,989               -
                               ------------        ----------               -----------         ----------
Vern O. Curtis                   1,666,632          45,830                   324,989               -
                               ------------        ----------               -----------         ----------
Jack D. Steele                   1,666,132          46,330                   324,989               -
                               ------------        ----------               -----------         ----------


                                    Number of Shares of
                                   Common Stock Series C                         Total Common Stock
                               ------------------------------               ------------------------------
          Name                   Voted For           Withheld                 Voted For           Withheld
-----------------              ------------        ----------               -----------         ----------
B. Wayne Hughes                    920,802            -                    2,912,423             45,830
                               ------------        ----------               -----------         ----------
Vern O. Curtis                     920,802            -                    2,912,423             45,830
                               ------------        ----------               -----------         ----------
Jack D. Steele                     920,802            -                    2,911,923             46,330
                               ------------        ----------               -----------         ----------
</TABLE>


                                    PART II.

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

     The  Company's  Series A shares are  registered  under Section 12(b) of the
Securities  Exchange Act of 1934 on the American  Stock Exchange  ("AMEX"),  and
commenced  trading on  September  3, 1991 under the symbol PSW. The Series B and
Series C shares were 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  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 (including
the General  Partners' 1% interest)  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.

     In general,  the Series A shares,  Series B shares and Series C shares have
equal voting rights.  The Company's  bylaws provide that during the period prior
to the  conversion of the Series B and Series C shares into Series A shares,  in
all  shareholder  matters voted on by the  Partnership's  general  partners (the
"General  Partners") or their  successors in interest as holders of Series B and
Series C shares,  other than the  election  and removal of  directors  and other
proposals  relating to the control of the Company and its business,  the General
Partners and any  successors  in interest have agreed to vote their Series B and
Series C shares with the holders of a majority of the  outstanding  unaffiliated
Series A shares entitled to vote.


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

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

                                                                                                Cash
                                                                  Sales Price                  Dividends
      Year                    Quarter Ended                   High          Low                Declared*
--------------    --------------------------               ----------    --------          ----------------
<C>               <C>                                       <C>          <C>                 <C>  
1995              March 31                                   $16-7/8          $14                 $0.28
                  June 30                                         17       14-1/4                  0.30
                  September 30                                17-5/8       15-5/8                  0.30
                  December 31                                 17-7/8       15-3/4                  0.54 (1)

1996              March 31                                       $18      $16-3/8                 $0.30
                  June 30                                     17-5/8       16-5/8                  0.30
                  September 30                                19-3/8           17                  0.30
                  December 31                                     20       18-7/8                  0.55 (2)
</TABLE>

    * No dividends were declared on Convertible Series C shares
(1)  Includes special dividend of $0.24
(2)  Includes special dividend of $0.25

     As of December 31, 1996, there were  approximately  2,078 holders of record
of the Company's Series A shares.

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

     The  Company's  credit  facility  restricts its ability to pay dividends in
excess of "Cash Flow",  as defined,  each  quarter.  Cash Flow is defined in the
credit agreement as the Company's net income plus depreciation and amortization.

     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 distributions
declared to shareholders (was less than) exceeded income by ($11,000),  $361,000
and ($478,000) during 1996, 1995 and 1994, respectively.

     Series A shares are entitled to participate  equally in distributions  when
declared  by the  Board  of  Directors  and in the  Company's  net  assets  upon
dissolution and liquidation  after repayment of the Company's  liabilities.  The
Series B shares (prior to  conversion  into Series A shares) are not entitled to
participate  in  distributions  attributable  to  sales  or  financings  of  the
properties or the  liquidation  of the Company,  but will  participate  in other
distributions  on the same  basis as the  Series A shares.  The  Series C shares
(prior to conversion  into Series A shares) are not entitled to  participate  in
any distributions, including liquidating distributions.


                                       11
<PAGE>
Repurchase of Company's common stock
------------------------------------

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

     As of February 27, 1997,  the Board of Directors has authorized the Company
to repurchase up to 1,100,000  Series A shares.  From  September 3, 1991 through
February 28, 1997,  the Company has  repurchased  961,474  Series A shares.  The
Company repurchased 3,600 Series A shares during 1996 and no additional Series A
shares between January 1, 1997 and February 28, 1997.


                                       12
<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>


                                                                    Years Ended December 31,
                                           ---------------------------------------------------------------------------
                                            1996            1995              1994               1993           1992
                                           -------        -------            ------             ------         ------
                                                             (In thousands, except per share data)
Operating data:
---------------
REVENUES:
<S>                                        <C>            <C>                <C>                <C>            <C>   
   Rental income                           $11,153        $10,473            $9,910             $9,142         $7,971
   Interest and other income                    10             17                31                 47            148
                                           -------        -------            ------             ------         ------
                                            11,163         10,490             9,941              9,189          8,119
                                            -------        -------            ------             ------         ------

EXPENSES:
   Cost of operations                        3,623          3,170             3,161              3,293          3,053
   Management fees paid to affiliates          598            617               584                536            469
   Depreciation                              1,687          1,701             1,639              1,976          2,109
   General and administrative                  276            303               321                347            397
   Environmental cost                           -             123                -                  -               -
   Interest expense                            472            410                31                 -               -
   Reorganization cost (1)                      -              -                 -                  -            (400)
                                           -------        -------            ------             ------         ------
                                             6,656          6,324             5,736              6,152          5,628
                                           -------        -------            ------             ------         ------

Net Income                                  $4,507         $4,166            $4,205             $3,037         $2,491
                                           -------        -------            ------             ------         ------

Net income per Series A share:
   Primary                                   $1.45          $1.28             $1.16              $0.76          $0.61
   Fully diluted                             $1.12          $1.01             $0.92              $0.62          $0.51

Dividends declared per share:
   Series A                                  $1.45          $1.42             $1.03              $0.82          $0.73
   Series B                                  $1.45          $1.42             $1.03              $0.82          $0.73

Weighted average Common
   shares outstanding:
    Primary- Series A                        2,776          2,897             3,341             3,622           3,684
    Fully diluted- Series A                  4,022          4,142             4,587             4,868           4,930

Other data:
-----------
Net cash provided by
  operating activities                      $6,418         $5,818            $5,766            $4,656          $4,457
Net cash used in investing activities         (470)          (361)             (171)           (3,085)           (436)
Net cash used in financing activities       (6,278)        (5,274)           (7,664)           (5,009)         (3,385)
Funds from operations (2)                    6,194          5,990             5,844             5,013           4,200
Capital expenditures
  to maintain facilities                      (470)          (361)             (171)             (260)           (236)

Balance sheet data:
-------------------
Total assets                               $54,176        $55,997           $56,817           $60,383         $62,669
Total debt                                   4,150          5,900             3,300              -                -
Shareholders' equity                        47,094         47,144            51,590            58,441          60,503
</TABLE>
                                       13
<PAGE>

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

(1)  Reorganization  costs  which  primarily  consisted  of  legal,  accounting,
     transfer  taxes,   registration  and  solicitation  fees,  represent  costs
     incurred to  reorganize  the  Partnership  into the Company.  In 1992,  the
     Company  adjusted its remaining  liability  related to the  Reorganization,
     resulting in a credit of $400,000 to  Reorganization  Cost.  The adjustment
     was  primarily a result of a reduction in transfer  taxes paid  compared to
     the estimated amounts provided.

(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.

                                       14
<PAGE>
ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
          RESULTS OF OPERATIONS.
          ---------------------------------------------------------------

RESULTS OF OPERATIONS.
----------------------

     YEAR ENDED  DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995. Net
income in 1996 was $4,507,000  compared to $4,166,000 in 1995,  representing  an
increase  of  $341,000  or 8%. Net income per fully  diluted  Series A share was
$1.12 in 1996 compared to $1.01 in 1995, representing an increase of $.11 or 11%
per share.  These  increases  are  primarily  due to an increase in property net
operating  income  partially  offset by an  increase  in  interest  expense  and
combined  with the  favorable  impact of  comparing  to expenses  for 1995 which
included a non-recurring charge for environmental  assessments and provision for
future remediation costs.

     During 1996,  property net  operating  income  (rental  income less cost of
operations,  management  fees  paid  to  affiliates  and  depreciation  expense)
increased  $260,000 from $4,985,000 in 1995 to $5,245,000 in 1996. This increase
is  primarily  attributable  to an  increase in rental  income at the  Company's
facilities offset by an increase in cost of operations.

     Rental income for the  mini-warehouse  operations  increased $560,000 or 6%
from  $9,272,000 in 1995 to $9,832,000  in 1996.  Cost of operations  (including
management fees paid to an affiliate of the Company)  increased  $409,000 or 13%
from  $3,136,000 in 1995 to $3,545,000 in 1996. The results of these changes was
a net increase in property net operating income before  depreciation  expense of
$151,000 or 2% from  $6,136,000 in 1995 to  $6,287,000 in 1996.  The increase in
rental income is mainly attributable to increases in occupancy levels and rental
rates  at a  majority  of the  Company's  properties.  The  increase  in cost of
operations is primarily due to increases in repairs and maintenance, advertising
and property tax expense.  Repairs and maintenance increased primarily due to an
increase in snow  removal and  landscaping  costs.  The increase in snow removal
costs is due to the higher than normal snow levels  experienced at the Company's
mini-warehouse   properties  located  in  the  eastern  states.  Property  taxes
increased due primarily to one-time  property tax refunds  received in 1995 from
appealing prior year tax assessments at the Company's Pelham Manor, New York and
Inglewood, California properties.

     Property net operating income before  depreciation  expense with respect to
the Company's San Diego,  California business park facility increased by $95,000
or 17% from $551,000 in 1995 to $646,000 in 1996. This increase is primarily due
to an increase  in rental  income  offset by an increase in cost of  operations.
Rental income  increased as a result of increases in occupancy levels and rental
rates. Cost of operations  increased primarily due to increases in utilities and
property taxes offset by decreases in payroll and repairs and maintenance costs.
Utilities increased as a result of increased occupancy. Property taxes increased
primarily  due to a one-time  property  tax  refund  received  at the  Company's
facility in 1995.

     Weighted  average   occupancy  levels  were  89%  for  the   mini-warehouse
facilities  and 92% for the business  park  facility in 1996 compared to 87% for
the mini-warehouse facilities and 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  $58,000 in management  fees,
based on the  management  fees that  would have been  payable  on rental  income
generated in 1996 compared to the amount prepaid.

     Interest  expense on the Company's credit facility  increased  $62,000 from
$410,000  in  1995  to  $472,000  in  1996.  This  increase  is due to a  higher
outstanding loan balance in 1996 over 1995.

     YEAR ENDED  DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994. Net
income in 1995 was  $4,166,000  compared to $4,205,000 in 1994,  representing  a
decrease of $39,000 or 1%.  This  decrease  is  primarily  due to an increase in
interest  expense on the Company's  credit facility in 1995 compared to 1994 and
environmental  costs incurred on the Company's  properties in the fourth quarter
of 1995 (see discussion below).  However,  net income per fully diluted Series A
share was $1.01 in 1995  compared to $.92 in 1994,  representing  an increase of
$.09 or 10% per share. The increase in net income per share in 1995 benefited by
the reduction in the number of Series A shares  outstanding due to the Company's
repurchase of Series A shares.
                                       15
<PAGE>

     During 1995,  property net  operating  income  (rental  income less cost of
operations,  management  fees  paid  to  affiliates  and  depreciation  expense)
increased  $459,000 from $4,526,000 in 1994 to $4,985,000 in 1995. This increase
is attributable to an increase in rental income at the Company's  mini-warehouse
and business park operations.

     Rental income for the  mini-warehouse  operations  increased $529,000 or 6%
from  $8,743,000 in 1994 to $9,272,000  in 1995.  Cost of operations  (including
management  fees paid to an affiliate of the  Company)  decreased  $28,000 or 1%
from $3,164,000 in 1994 to $3,136,000 in 1995. The results of these changes were
a net increase in property net operating income before  depreciation  expense of
$557,000 or 10% from  $5,579,000 in 1994 to $6,136,000 in 1995.  The increase in
rental  income is mainly  attributable  to an increase in  occupancy  levels and
rental rates at a majority of the Company's properties.  The decrease in cost of
operations is primarily  due to a decrease in property tax expense  offset by an
increase in payroll costs. The decrease in property taxes is mainly attributable
to a one-time tax refund received from appealing  prior year  assessments on the
Company's Pelham Manor, New York property.

     Property net operating income before  depreciation  expense with respect to
the Company's business park facility decreased by $36,000 or 6% from $587,000 in
1994 to $551,000 in 1995.  This decrease is primarily due to an increase in cost
of operations  offset by an increase in rental income as a result of an increase
in rental  rates.  The increase in cost of  operations  is due to an increase in
payroll costs and repairs and  maintenance  offset by a decrease in property tax
expense. The increase in repairs and maintenance is mainly in janitorial costs.

     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 $123,000 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  87%  for  the   mini-warehouse
facilities  and the  business  park  facility  in 1995  compared  to 84% for the
mini-warehouse facilities and 88% for the business park facility in 1994.

     Interest expense on the Company's credit facility  increased  $379,000 from
$31,000  in  1994  to  $410,000  in  1995.  This  increase  is due  to a  higher
outstanding loan balance in 1995 compared to 1994.

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

     The following table  illustrates the operating  trends for the Company's 17
mini-warehouses:
<TABLE>
<CAPTION>
                                                              Years ended December 31,
                                                           -----------------------------------
                                                            1996          1995          1994
                                                          --------      --------      --------
<S>                                                          <C>           <C>           <C>
Weighted average occupancy level                             89%           87%           84%
Realized monthly rent per occupied square foot (1)         $.87          $.84          $.83
Operating margin: (2)
     Before reduction for depreciation expense               64%           66%           64%
     After reduction for depreciation expense                50%           52%           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.

                                       16
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES.
--------------------------------

     CAPITAL STRUCTURE.  The Company's  financial profile has been characterized
by a low level of debt to total  capitalization,  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,  capital  expenditures  and principal  payments on debt.  Net cash
provided  by  operating  activities  has  increased  over  the past  years  from
$5,766,000 in 1994 to $6,418,000 in 1996.

     FFO is defined by the Company, consistent with the definition of FFO by the
National  Association of Real Estate Investment  Trusts (NAREIT),  as net income
(loss) (computed in accordance with generally  accepted  accounting  principles)
before depreciation and extraordinary or non-recurring  items. FFO for the years
ended December 31, 1996 and 1995 was $6,194,000  and  $5,990,000,  respectively.
FFO is  presented  because  the  Company,  as well as  many  industry  analysts,
consider FFO to be one measure of the performance of the Company, i.e., one that
generally  reflects changes in the Company's net operating income.  FFO does not
take  into  consideration  scheduled  principal  payments  on debt  and  capital
improvements. Accordingly, FFO is not necessarily a substitute for the Company's
cash flow or net income,  as a measure of the  Company's  liquidity or operating
performance or ability to pay distributions.  Furthermore, the NAREIT definition
of FFO does not  address  the  treatment  of certain  items and all REITs do not
treat items the same way in computing FFO. Accordingly, comparisons of levels of
FFO among REITs may not necessarily be meaningful.

     In 1994, the Company  obtained an unsecured  non-revolving  credit facility
with a bank for  borrowings up to $5,000,000  for working  capital  purposes and
general  corporate  purposes.  In 1995,  the  Company  renegotiated  its  credit
facility to increase the maximum borrowings up to $7,000,000,  change the credit
facility  from a  non-revolving  to a revolving  credit  facility and extend the
maturity date to September 30, 2001. In October 1996,  the Company  renegotiated
its credit  facility  further to reduce the maximum  borrowings  to  $6,500,000,
extend  the  conversion  date to a term loan to  October  1, 1997 and extend the
maturity  date to  September  30,  2002.  Outstanding  borrowings  on the credit
facility, at the Company's option, bear interest at either the bank's prime rate
plus .25%  (8.50% at  December  31,  1996) or the  bank's  LIBOR rate plus 2.25%
(7.87% at December 31, 1996).  The average interest rate on the Company's credit
facility  during 1996 was  approximately  8.15%.  Interest  is payable  monthly.
Principal will be payable  quarterly  beginning on October 1, 1997. On September
30, 2002,  the remaining  unpaid  principal and interest is due and payable.  At
December  31,  1996,  the  outstanding   balance  on  the  credit  facility  was
$4,150,000.  In January 1997, the Company  borrowed an additional  $1,350,000 on
its line of credit facility.

     The  following  table  summarizes  the  Company's  ability to make  capital
improvements  to maintain  its  facilities  through the use of cash  provided by
operating activities. The remaining cash flow is available to the Company to pay
distributions to shareholders and repurchase its stock.
<TABLE>
<CAPTION>
                                                                     Years ended December 31,
                                                          ---------------------------------------------
                                                              1996             1995              1994
                                                          ----------        ----------       ----------
<S>                                                       <C>               <C>              <C>       
Net income                                                $4,507,000        $4,166,000       $4,205,000
Depreciation                                               1,687,000         1,701,000        1,639,000
Environmental cost                                                 -           123,000                -
                                                          ----------        ----------       ----------
Funds from operations
     (Net cash provided by operating activities
     before changes in working capital components)         6,194,000         5,990,000        5,844,000
Capital improvements to maintain facilities                 (470,000)         (361,000)        (171,000)
                                                          ----------        ----------       ----------
Funds available for distributions to
     shareholders and repurchase of stock                  5,724,000         5,629,000        5,673,000
Cash distributions to shareholders                        (4,467,000)       (3,789,000)      (3,635,000)
                                                          ----------        ----------       ----------
Excess funds available for principal payments,
     cash distributions to shareholders
     and repurchase of stock                              $1,257,000        $1,840,000       $2,038,000
                                                          ==========        ==========       ==========
</TABLE>
                                       17
<PAGE>

     The Company believes that its rental revenues and interest and other income
will be  sufficient  over at least the next twelve  months to meet the Company's
operating  expenses,   capital  improvements,   debt  service  requirements  and
distributions  to  shareholders.  For 1997,  the Company  anticipates  expending
approximately  $484,000 for capital  improvements.  During 1995,  the  Company's
property  operator  commenced a program to enhance the visual  appearance of the
mini-warehouse  facilities operated by it. Such enhancements  include new signs,
exterior  color  schemes,  and  improvements  to the  rental  offices.  The vast
majority of the costs associated with these  enhancements  were incurred in 1995
and 1996.

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

     On November 12, 1996, the Company's  Board of Directors  declared a regular
quarterly  distribution  per share of $0.30.  In addition,  consistent  with the
Company's  REIT  distribution  requirements,  the  Company's  Board of Directors
declared  a special  distribution  of $0.25 per  share.  The  distributions  are
payable on January 15, 1997 to shareholders of record on December 31, 1996.

     In August 1995, the Management Agreement for the mini-warehouse  facilities
was amended to provide  that upon  demand  from PSI made prior to  December  15,
1995,  the Company  agreed to prepay (within 15 days after such demand) up to 12
months of  management  fees  (based on the  management  fees for the  comparable
period  during  the  calendar  year   immediately   preceding  such  prepayment)
discounted  at the rate of 14% per year to  compensate  for  early  payment.  In
November 1995, the Company prepaid,  to PSI, 8 months of 1996 management fees at
a cost of  $329,000.  The amount has been  expensed as  management  fees paid to
affiliate during 1996.

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

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

                       Series A              Series B                  Total
                    -----------           ----------               -----------
  1986                  $86,000               $7,000                   $93,000
  1987                  652,000               56,000                   708,000
  1988                  749,000               64,000                   813,000
  1989                1,028,000               91,000                 1,119,000
  1990                1,870,000              162,000                 2,032,000
  1991                2,602,000              228,000                 2,830,000
  1992                2,686,000              237,000                 2,923,000
  1993                2,964,000              267,000                 3,231,000
  1994                3,392,000              335,000                 3,727,000
  1995                4,065,000              462,000                 4,527,000
  1996                4,023,000              473,000                 4,496,000
                    -----------           ----------               -----------
  Total             $24,117,000           $2,382,000               $26,499,000
                    ===========           ==========               ===========


     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  $24,117,000 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  $31,401,000  in
additional distributions with respect to the Series A shares have been made.
  
                                       18
<PAGE>
REIT DISTRIBUTION REQUIREMENT
-----------------------------

     The  Company  has  elected  and  intends to continue to qualify as REIT for
Federal  income tax  purposes.  As a REIT,  the Company  must meet,  among other
tests, sources of income,  share ownership,  and certain asset tests. As a REIT,
the  Company  is not  taxed  on that  portion  of its  taxable  income  which is
distributed to its shareholders provided that at least 95% of its taxable income
is so distributed to its shareholders  prior to filing the Company's tax return.
Under certain  circumstances,  the Company can rectify a failure to meet the 95%
distribution  test by  making  distributions  after  the  close of a  particular
taxable year and  attributing  those  distributions  to the prior year's taxable
income.  The Company has satisfied the REIT  distribution  requirement for 1994,
1995 and 1996 by attributing  distributions  in 1995, 1996 and 1997 to the prior
year's  taxable  income.  The extent to which the  Company  will be  required to
attribute distributions to the prior year will depend on the Company's operating
results  (taxable  income) and the level of  distributions  as determined by the
Board of  Directors.  The  primary  difference  between  book income and taxable
income is depreciation  expense. In 1996, the Company's Federal tax depreciation
was $1,199,000.

     The Company's  Board of Directors has authorized the Company to purchase up
to 1,100,000  shares of Series A common  stock.  As of December  31,  1996,  the
Company had purchased and retired 961,474 shares of Series A common stock.

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

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

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

     None. 

                                   PART III.

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

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

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

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

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

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

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

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

                                    PART IV.

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

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


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

     (c)  Exhibits:
               See  Exhibit Index contained herein.

                                       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 XVIII, INC.

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

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

<TABLE>
<CAPTION>

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


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


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


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

</TABLE>
<PAGE>
                      PUBLIC STORAGE PROPERTIES XVIII, INC.

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

<TABLE>
<CAPTION>

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

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

Financial Statements and Schedule:

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

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

         Statements of Income                                                                          F-3

         Statements of Shareholders' Equity                                                            F-4

         Statements of Cash Flows                                                                      F-5

     Notes to Financial Statements                                                                 F-6 - F-10

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

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


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


<PAGE>
                         Report of Independent Auditors





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


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


                                                                              1996                  1995
                                                                           -----------          -----------
                                     ASSETS
                                     ------
<S>                                                                           <C>                  <C>     
Cash and cash equivalents                                                     $154,000             $484,000
Rent and other receivables                                                      67,000               56,000
Prepaid expenses                                                               148,000              433,000

Real estate facilities at cost:
     Building, land improvements and equipment                              42,694,000           42,410,000
     Land                                                                   25,073,000           25,073,000
                                                                           -----------          -----------
                                                                            67,767,000           67,483,000

     Less accumulated depreciation                                         (13,960,000)         (12,459,000)
                                                                           -----------          -----------
                                                                            53,807,000           55,024,000
                                                                           -----------          -----------

Total assets                                                               $54,176,000          $55,997,000
                                                                           ===========          ===========


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

Accounts payable                                                              $884,000             $926,000
Dividends payable                                                            1,706,000            1,677,000
Advance payments from renters                                                  342,000              350,000
Note payable                                                                 4,150,000            5,900,000

Shareholders' equity:
     Series A common, $.01 par value,
         4,983,165 shares authorized,
         2,775,900 shares issued and
         outstanding (2,779,500 shares
         issued and outstanding in 1995)                                        28,000               28,000
     Convertible Series B common, $.01 par
         value, 324,989 shares authorized,
         issued and outstanding                                                  3,000                3,000
     Convertible Series C common, $.01 par
         value, 920,802 shares authorized,
         issued and outstanding                                                  9,000                9,000

     Paid-in-capital                                                        51,022,000           51,083,000
     Cumulative net income                                                  22,531,000           18,024,000
     Cumulative distributions                                              (26,499,000)         (22,003,000)
                                                                           -----------          -----------
     Total shareholders' equity                                             47,094,000           47,144,000
                                                                           -----------          -----------

Total liabilities and shareholders' equity                                 $54,176,000          $55,997,000
                                                                           ===========          ===========
</TABLE>

                             See accompanying notes.
                                       F-2

<PAGE>
<TABLE>
<CAPTION>
                      PUBLIC STORAGE PROPERTIES XVIII, 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                                         $11,153,000       $10,473,000      $9,910,000
Interest income                                            10,000            17,000          31,000
                                                      -----------       -----------      ----------
                                                       11,163,000        10,490,000       9,941,000
                                                      -----------       -----------      ----------

COSTS AND EXPENSES:

Cost of operations                                      3,623,000         3,170,000       3,161,000
Management fees paid to affiliates                        598,000           617,000         584,000
Depreciation                                            1,687,000         1,701,000       1,639,000
Administrative                                            276,000           303,000         321,000
Environmental cost                                              -           123,000               -
Interest expense                                          472,000           410,000          31,000
                                                      -----------       -----------      ----------
                                                        6,656,000         6,324,000       5,736,000
                                                      -----------       -----------      ----------
NET INCOME                                             $4,507,000        $4,166,000      $4,205,000
                                                      ===========       ===========      ==========


Primary earnings per share-Series A                         $1.45             $1.28           $1.16
                                                      ===========       ===========      ==========

Fully diluted earnings per share-Series A                   $1.12             $1.01           $0.92
                                                      ===========       ===========      ==========

Dividends declared per share:
     Series A                                               $1.45             $1.42           $1.03
                                                      ===========       ===========      ==========
     Series B                                               $1.45             $1.42           $1.03
                                                      ===========       ===========      ==========

Weighted average Common shares outstanding:
     Primary- Series A                                  2,775,900         2,896,692       3,341,062
                                                      ===========       ===========      ==========
     Fully diluted- Series A                            4,021,691         4,142,483       4,586,853
                                                      ===========       ===========      ==========
</TABLE>
                             See accompanying notes.
                                       F-3
<PAGE>
<TABLE>
<CAPTION>
                     PUBLIC STORAGE PROPERTIES XVIII, INC.
                       STATEMENTS OF SHAREHOLDERS' EQUITY
                 For each of the three years in the period ended
                                December 31, 1996


                                                                                                                    
                                                                  Convertible                 Convertible           
                                        Series A                   Series B                    Series C             
                                  Shares        Amount       Shares        Amount        Shares        Amount       
                               -------------------------------------------------------------------------------------
<S>                               <C>             <C>            <C>           <C>          <C>           <C>       
Balances at December 31, 1993     3,520,074       $36,000      324,989        $3,000         920,802       $9,000     

Net income                                                                                                            
Repurchase of shares               (492,149)       (5,000)                                                            

Cash distributions declared:
     $1.03 per share - Series A                                                                                       
     $1.03 per share - Series B                                                                                       
                                --------------------------------------------------------------------------------------

Balances at December 31, 1994     3,027,925        31,000      324,989         3,000         920,802        9,000     

Net income                                                                                                            
Repurchase of shares               (248,425)       (3,000)                                                            

Cash distributions declared:
     $1.42 per share - Series A                                                                                       
     $1.42 per share - Series B                                                                                       
                                --------------------------------------------------------------------------------------
Balances at December 31, 1995     2,779,500        28,000      324,989         3,000         920,802        9,000     

Net income                                                                                                            
Repurchase of shares                 (3,600)            -                                                             

Cash distributions declared:
     $1.45 per share - Series A                                                                                       
     $1.45 per share - Series B                                                                                       
                                --------------------------------------------------------------------------------------

Balances at December 31, 1996     2,775,900       $28,000      324,989        $3,000         920,802       $9,000     
                                ======================================================================================
</TABLE>
<TABLE>
<CAPTION>
                                                    Cumulative                           Total
                                        Paid-in         net           Cumulative      shareholders'
                                        Capital       income         distributions       equity
                                    -------------------------------------------------------------------
<S>                                    <C>             <C>          <C>               <C>
Balances at December 31, 1993          $62,489,000     $9,653,000    ($13,749,000)    $58,441,000

Net income                                              4,205,000                       4,205,000
Repurchase of shares                    (7,324,000)                                    (7,329,000)

Cash distributions declared:
     $1.03 per share - Series A                                        (3,392,000)     (3,392,000)
     $1.03 per share - Series B                                          (335,000)       (335,000)
                                    -------------------------------------------------------------------

Balances at December 31, 1994           55,165,000     13,858,000     (17,476,000)     51,590,000

Net income                                              4,166,000                       4,166,000
Repurchase of shares                    (4,082,000)                                    (4,085,000)

Cash distributions declared:
     $1.42 per share - Series A                                        (4,065,000)     (4,065,000)
     $1.42 per share - Series B                                          (462,000)       (462,000)
                                    -------------------------------------------------------------------
Balances at December 31, 1995           51,083,000     18,024,000     (22,003,000)     47,144,000

Net income                                              4,507,000                       4,507,000
Repurchase of shares                       (61,000)                                       (61,000)

Cash distributions declared:
     $1.45 per share - Series A                                        (4,023,000)     (4,023,000)
     $1.45 per share - Series B                                          (473,000)       (473,000)
                                    -------------------------------------------------------------------

Balances at December 31, 1996          $51,022,000    $22,531,000    ($26,499,000)    $47,094,000
                                    ===================================================================
</TABLE>
                             See accompanying notes.
                                       F-4

<PAGE>
<TABLE>
<CAPTION>
                     PUBLIC STORAGE PROPERTIES XVIII, INC.
                            STATEMENTS OF CASH FLOWS
                       For each of the three years in the
                         period ended December 31, 1996

                                                              1996            1995               1994
                                                          ----------        ----------       ---------- 
Cash flows from operating activities:
<S>                                                       <C>               <C>              <C>       
     Net income                                           $4,507,000        $4,166,000       $4,205,000

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

     Depreciation                                          1,687,000         1,701,000        1,639,000
     (Increase) decrease in rent and
         other receivables                                   (11,000)           (4,000)          31,000
     Increase in prepaid expenses                            (44,000)           (4,000)          (2,000)
     Amortization (payment) of prepaid
         management fees                                     329,000          (329,000)               -
     (Decrease) increase in accounts payable                 (42,000)          299,000          (62,000)
     Decrease in advance payments from renters                (8,000)          (11,000)         (45,000)
                                                          ----------        ----------       ---------- 

         Total adjustments                                 1,911,000         1,652,000        1,561,000
                                                          ----------        ----------       ---------- 

         Net cash provided by operating activities         6,418,000         5,818,000        5,766,000
                                                          ----------        ----------       ---------- 

Cash flows from investing activities:

     Additions to real estate facilities                    (470,000)         (361,000)        (171,000)
                                                          ----------        ----------       ---------- 

         Net cash used in investing activities              (470,000)         (361,000)        (171,000)
                                                          ----------        ----------       ---------- 

Cash flows from financing activities:

     Distributions paid to shareholders                   (4,467,000)       (3,789,000)      (3,635,000)
     (Payments) proceeds from note payable to Bank        (1,750,000)        2,600,000        3,300,000
     Purchase of Company Series A
         common stock                                        (61,000)       (4,085,000)      (7,329,000)
                                                          ----------        ----------       ---------- 

         Net cash used in financing activities            (6,278,000)       (5,274,000)      (7,664,000)
                                                          ----------        ----------       ---------- 

Net (decrease) increase in
     cash and cash equivalents                              (330,000)          183,000       (2,069,000)

Cash and cash equivalents at
     the beginning of the year                               484,000           301,000        2,370,000
                                                          ----------        ----------       ---------- 

Cash and cash equivalents at
     the end of the year                                    $154,000          $484,000         $301,000
                                                          ==========        ==========       ========== 
</TABLE>

                             See accompanying notes.
                                       F-5

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

1.       DESCRIPTION OF BUSINESS

              Public  Storage  Properties  XVIII,  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 XVIII, Ltd. (the
         "Partnership") in a reorganization transaction which was effective July
         26, 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 1999, unless  shareholders have previously
         approved such a proposal,  the  shareholders  will be presented  with a
         proposal to approve or  disapprove  (a) the sale or financing of all or
         substantially  all of the  properties and (b) the  distribution  of the
         proceeds  from  such  transaction  and,  in the  case  of a  sale,  the
         liquidation of the Company.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Basis of Presentation:

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

         Income Taxes:

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

         Statements of Cash Flows:

              For  purposes of  financial  statement  presentation,  the Company
         considers all highly liquid debt instruments  purchased with a maturity
         of  three  months  or less to be cash  equivalents.  The  Company  paid
         $472,000,  $410,000 and $31,000 in interest costs during 1996, 1995 and
         1994, respectively.

         Real Estate Facilities:

              Cost  of  land  includes  appraisal  and  legal  fees  related  to
         acquisition  and  closing  costs.  Buildings,   land  improvements  and
         equipment  reflect costs incurred through December 31, 1996 and 1995 to
         develop primarily  mini-warehouse  facilities and to a lesser extent, 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.  Included in depreciation is depreciation
         of tenant  improvements  on the  Company's  business  park  facility of
         $80,000, $40,000 and $40,000 in 1996, 1995 and 1994, 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 $9,929,000) is $30,287,000.

         Revenue Recognition:

              Property rents are recognized as earned.

         Net Income Per Share:

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

              Net income per share is presented  on a primary and fully  diluted
         basis. Primary earnings per share represents the Series A shareholders'
         rights 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  (Series  C
         shareholders  are not entitled to cash  distributions)  by the weighted
         average number of  outstanding  Series A shares (Note 4). Fully diluted
         earnings per share assumes  conversion of the Convertible  Series B and
         Series C shares into Series A shares.

         Use of Estimates:

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

         Environmental Cost:

              Substantially all of the Company's  facilities were acquired prior
         to  the  time  that  it  was   customary   to   conduct   environmental
         investigations  in connection  with property  acquisitions.  During the
         fourth quarter of 1995, the Company completed environmental assessments
         of its  properties  to evaluate  the  environmental  condition  of, and
         potential   environmental   liabilities  of  such   properties.   These
         assessments were performed by an independent  environmental  consulting
         firm. Based on the assessments,  the Company expensed  $123,000 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).

              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.

                                      F-7
<PAGE>
3.       RELATED PARTY TRANSACTIONS (CONTINUED)


              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
         $329,000.  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  $24,117,000
         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 $31,401,000 in additional distributions with
         respect to the Series A shares have been made.

              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                            $42,232,000      $43,539,000
       Convertible Series B                  1,268,000          940,000
       Convertible Series C                  3,594,000        2,665,000
                                           -----------      -----------
       Total                               $47,094,000      $47,144,000
                                           ===========      ===========

              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.

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

              The  Company's  Board of Directors has  authorized  the Company to
         purchase up to 1,100,000 shares of the Company's Series A common stock.
         As of December 31, 1996, the Company had purchased and retired  961,474
         shares of  Series A common  stock,  of which  3,600  and  248,425  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 1994, the Company  obtained an unsecured  non-revolving  credit
         facility  with a bank  for  borrowings  up to  $5,000,000  for  working
         capital purposes and general corporate  purposes.  In 1995, the Company
         renegotiated its credit facility to increase the maximum  borrowings up
         to $7,000,000,  change the credit  facility from a  non-revolving  to a
         revolving credit facility and extend the maturity date to September 30,
         2001. In October 1996,  the Company  renegotiated  its credit  facility
         further to reduce the  maximum  borrowings  to  $6,500,000,  extend the
         conversion  date to a term  loan to  October  1,  1997 and  extend  the
         maturity  date to September  30, 2002.  Outstanding  borrowings  on the
         credit facility,  at the Company's option,  bear interest at either the
         bank's  prime rate plus .25% (8.50% at December 31, 1996) or the bank's
         LIBOR rate plus 2.25% (7.87% at December 31, 1996). Interest is payable
         monthly.  Principal  payments  of  $175,000  will be payable  quarterly
         beginning on October 1, 1997.  On September  30,  2002,  the  remaining
         unpaid principal and interest is due and payable.

              At  December  31,  1996,  the  outstanding  balance  on the credit
         facility  was  $4,150,000.  In January  1997,  the Company  borrowed an
         additional $1,350,000 on its line of credit facility.

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

6.       LEASE AGREEMENTS

              Leases relating to the Company's  business park facility  includes
         long-term non-cancelable operating leases. As of December 31, 1996, the
         minimum lease amounts receivable under such non-cancelable  leases were
         as follows:

                              Year                              Amount
                       ----------------                  ---------------
                             1997                             $1,005,000
                             1998                                528,000
                             1999                                331,000
                             2000                                121,000
                             2001                                 47,000
                             Thereafter                           32,000
                                                         ---------------
                             Total                            $2,064,000
                                                         ===============


                                      F-9
<PAGE>
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                                      $2,648,000      $2,777,000      $2,864,000     $2,874,000
                                                         ----------      ----------      ----------     ----------
           Expenses                                       1,625,000       1,456,000       1,757,000      1,818,000
                                                         ----------      ----------      ----------     ----------
           Net income                                    $1,023,000      $1,321,000      $1,107,000     $1,056,000
                                                         ==========      ==========      ==========     ==========
           Primary earnings per share- Series A               $0.33           $0.44           $0.37          $0.31
                                                         ==========      ==========      ==========     ==========
           Fully diluted earnings per share- Series A         $0.25           $0.33           $0.28          $0.26
                                                         ==========      ==========      ==========     ==========

                                                                            Three months ended
                                                         ---------------------------------------------------------
                                                         March 1995      June 1995       Sept. 1995     Dec. 1995
                                                         ----------      ----------      ----------     ----------
           Revenues                                      $2,525,000      $2,614,000      $2,688,000     $2,663,000
                                                         ----------      ----------      ----------     ----------
           Expenses                                       1,469,000       1,356,000       1,636,000      1,863,000
                                                         ----------      ----------      ----------     ----------
           Net income                                    $1,056,000      $1,258,000      $1,052,000       $800,000
                                                         ==========      ==========      ==========     ==========
           Primary earnings per share- Series A               $0.32           $0.40           $0.33          $0.23
                                                         ==========      ==========      ==========     ==========
         
           Fully diluted earnings per share- Series A         $0.25           $0.30           $0.26          $0.20
                                                         ==========      ==========      ==========     ==========

</TABLE>
                                      F-10
<PAGE>
<TABLE>
<CAPTION>
                      PUBLIC STORAGE PROPERTIES XVIII, 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>      
    6/87      Metairie / Sanford St              -             $876,000    $1,540,000          $38,000  
    3/87      Louisville / Bardstown Road        -              419,000     1,120,000           35,000  
    6/87      East Hazel Crest/ Halstead II      -              662,000     1,730,000           55,000  
    4/87      Edmonds / Highway 99               -            1,151,000     1,329,000           94,000  
    6/87      Foster City / Triton Dr            -              883,000     1,262,000           48,000  
    2/88      Chicago/N Elston (Cortland)        -              555,000     2,817,000           68,000  
    10/88     Philadelphia / Ridge Ave           -              343,000     2,842,000           69,000  
    7/87      Dallas / Vilbig Rd                 -              319,000     1,179,000           79,000  
    8/87      Pelham Manor / Spring Road         -            2,942,000     1,723,000          128,000  
    10/87     Irving / N Country Club Dr.        -              247,000       928,000           45,000  
    5/87      Elk Grove / Touhy                  -              450,000     1,248,000           51,000  
    6/88      Inglewood / La Cienega             -            4,035,000     3,754,000           64,000  
    7/88      Denver / Evans                     -            1,622,000     1,642,000          178,000  
    3/88      Plano / Alma                       -            1,452,000     1,765,000          105,000  
    12/88     Lynnwood /Alderwood Mall           -              348,000     1,881,000           75,000  
    6/87      Los Angeles / Olympic Blvd         -            2,753,000     2,145,000        2,883,000  
    8/91      Staten Island / North              -            1,049,000     2,905,000          567,000  
              Stream

Business Park:

    12/88     San Diego / Lusk II                -            3,558,000     5,580,000        2,131,000  
                                          --------------------------------------------------------------
                                                 -          $23,664,000   $37,390,000       $6,713,000  
                                          ==============================================================

</TABLE>
<TABLE>
<CAPTION>
                                                                                                             
                                            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>       
    6/87      Metairie / Sanford St              $876,000      $1,578,000     $2,454,000         ($611,000)    5-25 Years
    3/87      Louisville / Bardstown Road         419,000      $1,155,000      1,574,000          (455,000)    5-25 Years
    6/87      East Hazel Crest/ Halstead II       663,000       1,784,000      2,447,000          (670,000)    5-25 Years
    4/87      Edmonds / Highway 99              1,151,000       1,423,000      2,574,000          (540,000)    5-25 Years
    6/87      Foster City / Triton Dr             883,000       1,310,000      2,193,000          (496,000)    5-25 Years
    2/88      Chicago/N Elston (Cortland)         555,000       2,885,000      3,440,000          (952,000)    5-25 Years
    10/88     Philadelphia / Ridge Ave            343,000       2,911,000      3,254,000          (827,000)    5-25 Years
    7/87      Dallas / Vilbig Rd                  319,000       1,258,000      1,577,000          (462,000)    5-25 Years
    8/87      Pelham Manor / Spring Road        2,942,000       1,851,000      4,793,000          (725,000)    5-25 Years
    10/87     Irving / N Country Club Dr.         247,000         973,000      1,220,000          (388,000)    5-25 Years
    5/87      Elk Grove / Touhy                   450,000       1,299,000      1,749,000          (438,000)    5-25 Years
    6/88      Inglewood / La Cienega            4,035,000       3,818,000      7,853,000        (1,256,000)    5-25 Years
    7/88      Denver / Evans                    1,622,000       1,820,000      3,442,000          (685,000)    5-25 Years
    3/88      Plano / Alma                      1,452,000       1,870,000      3,322,000          (633,000)    5-25 Years
    12/88     Lynnwood /Alderwood Mall            348,000       1,956,000      2,304,000          (502,000)    5-25 Years
    6/87      Los Angeles / Olympic Blvd        4,161,000       3,620,000      7,781,000          (816,000)    5-25 Years
    8/91      Staten Island / North             1,049,000       3,472,000      4,521,000          (733,000)    5-25 Years
              Stream

Business Park:

    12/88     San Diego / Lusk II               3,558,000       7,711,000     11,269,000        (2,771,000)    5-25 Years
                                          ------------------------------------------------------------------
                                              $25,073,000     $42,694,000    $67,767,000      ($13,960,000)
                                          ==================================================================

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

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


                              COSTS RECONCILIATION

                                                                            Years Ended December 31,
                                                         ----------------------------------------------------------------
                                                                 1996                 1995                 1994
                                                         ----------------------------------------------------------------
<S>                                                            <C>                  <C>                  <C>        
Balance at the beginning of the period                         $67,483,000          $67,273,000          $67,235,000

Additions during the period:

  Improvements                                                     470,000              361,000              171,000

Deductions during the period:                                     (186,000)            (151,000)            (133,000)
                                                         ----------------------------------------------------------------

Balance at the close of the period                             $67,767,000          $67,483,000          $67,273,000
                                                         ================================================================



                     ACCUMULATED DEPRECIATION RECONCILIATION

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

Balance at the beginning of the period                         $12,459,000          $10,909,000           $9,403,000

Additions during the period:

  Depreciation                                                   1,681,000            1,701,000            1,639,000

Deductions during the period:                                     (180,000)            (151,000)            (133,000)
                                                         ----------------------------------------------------------------

Balance at the close of the period                             $13,960,000          $12,459,000          $10,909,000
                                                         ================================================================

(b) The aggregate  depreciable cost of real estate (excluding land) for Federal
    income tax purposes is $40,216,000.

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

                                  EXHIBIT INDEX
                                  (Item 14(c))

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

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

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

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

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

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

10.3      Amendment to Amended Management Agreement dated August 8, 1995 between
          the Company,  Public Storage  Management,  Inc. and Storage  Equities,
          Inc.  Previously filed with the 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      Non-revolving  Credit and Term Loan Agreement  between the Company and
          Manufacturers Bank dated November 16, 1994.  Previously filed with the
          Securities  and  Exchange  Commission  as an exhibit to the  Company's
          Annual  Report on Form 10-K for the year ended  December  31, 1994 and
          incorporated herein by reference.

10.5      Modification of Non-revolving  Credit and Term Loan Agreement  between
          the Company and  Manufacturers  Bank dated April 26, 1995.  Previously
          filed with the Securities and Exchange Commission as an exhibit to the
          Company's  Annual Report on Form 10-K for the year ended  December 31,
          1995 and incorporated herein by reference.

10.6      Modification of Non-revolving  Credit and Term Loan Agreement  between
          the Company and  Manufacturers  Bank dated June 20,  1995.  Previously
          filed with the Securities and Exchange Commission as an exhibit to the
          Company's  Annual Report on Form 10-K for the year ended  December 31,
          1995 and incorporated herein by reference.

10.7      Modification of Non-revolving  Credit and Term Loan Agreement  between
          the  Company  and  Manufacturers  Bank dated  October  4, 1996.  Filed
          herewith.

27        Financial Data Schedule. Filed herewith.