UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                                    FORM 10-Q

[x]    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934

                    For the quarter ended September 30, 1998
                                       or
  Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                                   Act of 1934
                        For the transition period from to

                        Commission File Number: 001-12403

                             SUSA PARTNERSHIP, L.P.
             (Exact name of registrant as specified in its charter)

                                    Tennessee
                         (State or other jurisdiction of
                         incorporation or organization)

                                   62-1554135
                                  (IRS Employer
                             Identification Number)

                   165 Madison Avenue, Suite 1300, Memphis, TN
                    (Address of principal executive offices)

                                      38103
                                   (Zip Codes)

Registrant's telephone number, including area code: (901) 252-2000

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. ( X) Yes ( ) NO



<PAGE>
<TABLE>
                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements
                              SUSA Partnership, LP
                      Consolidated Statements of Operations
                                   (unaudited)
                  (amounts in thousands, except per unit data)
<CAPTION>
                                                       Three months      Three months        Nine months        Nine months
                                                              ended             ended              ended              ended
                                                      September 30,     September 30,      September 30,      September 30,
                                                               1998              1997               1998               1997
                                                    ----------------  ----------------   ----------------  -----------------
<S>                                                         <C>               <C>               <C>                <C>     
Property Revenues:
Rental income                                               $56,813           $41,913           $156,922           $113,267
Other income                                                  1,792             1,139              3,731              2,213
                                                    ----------------  ----------------   ----------------  -----------------

Total property revenues                                      58,605            43,052            160,653            115,480
                                                    ----------------  ----------------   ----------------  -----------------

Property Expenses:
Cost of property operations & maintenance                    15,512            10,651             40,699             28,359
Taxes                                                         4,753             3,248             13,330              9,403
General & administrative                                      2,916             1,833              7,513              4,656
Depreciation & amortization                                   7,345             5,332             21,037             14,002
                                                    ----------------  ----------------   ----------------  -----------------

Total property expenses                                      30,526            21,064             82,579             56,420
                                                    ----------------  ----------------   ----------------  -----------------

Income from property operations                              28,079            21,988             78,074             59,060

Other income (expense):
Interest expense                                            (12,363)           (4,841)           (32,105)           (11,604)
Interest income                                               2,555               386              5,635                880
                                                    ----------------  ----------------   ----------------  -----------------

Income before minority interest                              18,271            17,533             51,604             48,336
  and gain (loss) on exchange

Gain (loss) on exchange of storage facilities                     -                 -               (284)             2,569
                                                    ----------------  ----------------   ----------------  -----------------

Income before minority interest                              18,271            17,533             51,320             50,905

Minority interest                                              (166)             (130)               (31)              (250)
                                                    ----------------  ----------------   ----------------  -----------------

Net income                                                  $18,105           $17,403            $51,289            $50,655
                                                    ----------------  ----------------   ----------------  -----------------

Basic net income per unit                                     $0.58             $0.58              $1.65              $1.76
                                                    ----------------  ----------------   ----------------  -----------------

Diluted net income per unit                                   $0.58             $0.58              $1.65              $1.74
                                                    ----------------  ----------------   ----------------  -----------------

Basic weighted average units outstanding                     31,357            30,014             31,036             28,848
                                                    ----------------  ----------------   ----------------  -----------------

Diluted weighted average units outstanding                   31,451            30,235             31,161             29,070
                                                    ----------------  ----------------   ----------------  -----------------
</TABLE>

                 See Notes to Consolidated Financial Statements

                                                              1
<PAGE>
<TABLE>
                                         SUSA Partnership, LP
                                     Consolidated Balance Sheets
                               (amounts in thousands, except unit data)
<CAPTION>

                                                                       as of                     as of
                                                          September 30, 1998         December 31, 1997
                                                      -----------------------    ----------------------
                                                                 (unaudited)
Assets
<S>                                                                 <C>                       <C>     
Investments in storage facilities, at cost:
Land                                                                $421,197                  $339,939
Buildings and equipment                                            1,147,575                   902,925
                                                      -----------------------    ----------------------
                                                                   1,568,772                 1,242,864

Accumulated depreciation                                            (64,969)                  (44,955)
                                                      -----------------------    ----------------------
                                                                   1,503,803                 1,197,909

Cash & cash equivalents                                                2,614                       909
Mortgages receivable                                                  97,489                    24,541
Other assets                                                          51,601                    36,323
                                                      -----------------------    ----------------------

     Total assets                                                 $1,655,507                $1,259,682
                                                      -----------------------    ----------------------

Liabilities & partner's capital

Notes payable                                                       $600,000                  $400,000
Line of credit borrowings                                             87,012                    31,843
Mortgage notes payable                                                67,926                    42,766
Other borrowings                                                      47,443                         -
Accounts payable & accrued expenses                                   26,021                    10,785
Dividends payable                                                     17,751                         -
Rents received in advance                                             10,274                     7,690
Minority interest                                                      1,992                     2,306
                                                      -----------------------    ----------------------

     Total liabilities                                               858,419                   495,390
                                                      -----------------------    ----------------------

Commitments and contingencies

Partners' capital:
General partnership units
     27,735,870 and 27,634,790 outstanding                           681,851                   685,347
Limited partnership units
     3,727,737 and  2,828,635 outstanding                            126,943                    91,716
Notes receivable - officers                                          (11,706)                  (12,771)
                                                      -----------------------    ----------------------

     Total partners' capital                                         797,088                   764,292
                                                      -----------------------    ----------------------

     Total liabilities & partners' capital                        $1,655,507                $1,259,682
                                                      -----------------------    ----------------------
</TABLE>

                            See Notes to Consolidated Financial Statements


                                                    2
<PAGE>
<TABLE>
                                            SUSA Partnership, LP
                                    Consolidated Statements of Cash Flows
                                                 (unaudited)
                                           (amounts in thousands)
<CAPTION>
                                                                  Nine Months Ended         Nine Months Ended
                                                                 September 30, 1998        September 30, 1997
                                                             -----------------------     ---------------------

Operating activities:
<S>                                                                  <C>                        <C>          
Net income                                                           $       51,289             $      50,655

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

     Depreciation and amortization                                           21,037                    14,002
     Minority interest                                                           31                       250
     Loss (gain) on exchange of self-storage facilities                         284                    (2,569)
     Changes in assets and liabilities:
          Other assets                                                      (20,689)                  (16,305)
          Other liabilities                                                  19,596                     7,939
                                                             -----------------------     ---------------------
Net cash provided by operating activities                                    71,548                    53,972
                                                             -----------------------     ---------------------

Investing activities:
Acquisition and improvements of storage facilities                         (181,118)                 (159,247)
Proceeds from sale/exchange of storage facilities                             1,694                    10,213
Development of storage facilities                                           (43,926)                  (22,036)
Loans to Franchisees                                                        (69,177)                  (10,781)
                                                             -----------------------     ---------------------
Net cash used in investing activities                                      (292,527)                 (181,851)
                                                             -----------------------     ---------------------

Financing activities:
Net borrowings (repayments) under line of credit                             55,169                   (17,801)
Mortgage principal payments/payoffs                                          (3,121)                  (12,566)
Mortgage principal borrowings                                                   145                     1,244
General Partner distributions                                               (35,437)                  (32,686)
Proceeds from issuance of notes payable                                     198,311                    98,732
General Partner contributions                                                 1,276                    94,046
Proceeds from payoff of loan to equity investee                               7,747                         -
Payments on notes receivable                                                  3,062                     1,794
Minority investor cash contribution                                              39                       165
Minority interest distributions                                                (193)                      (96)
Limited Partner distributions                                                (4,315)                   (2,397)
                                                             -----------------------     ---------------------
Net cash provided by financing activities                                   222,683                   130,435
                                                             -----------------------     ---------------------

Net increase in cash and equivalents                                          1,704                     2,556
Cash and equivalents, beginning of period                                       909                     1,349
                                                             -----------------------     ---------------------
Cash and equivalents, end of period                                   $       2,613             $       3,905
                                                             -----------------------     ---------------------
</TABLE>

                                                       4
<PAGE>
<TABLE>

                                            SUSA Partnership, LP
                              Consolidated Statements of Cash Flows, continued
                                                 (unaudited)
                                           (amounts in thousands)

<S>                                                                   <C>                         <C>         
Supplemental schedule of non-cash activities:
 Common stock issued in exchange for notes receivable
  and contributed to Partnership in exchange for
 Partnership units                                                    $        1,997              $        358
 Common stock issued to Directors and contributed to
  Partnership in exchange for Partnership units                       $          132              $        107
 Mortgages assumed on storage facilities acquired                     $       28,135              $      5,458
 Storage facilities acquired in exchange for
  Partnership Units                                                   $       33,962              $     30,944
 Storage facilities acquired in exchange for unsecured notes          $       12,769              $          -
 Storage facilities acquired in exchange for deferred
    Partnership Unit agreement                                        $       10,785              $          -
 Storage facilities acquired through capital lease                    $       23,889              $          -
 Partnership Units exchanged for shares of
   common stock                                                       $          211              $        149
Exchange of storage facilities (net)                                  $            -              $      7,644
Minority interest in acquired facility                                $           45              $          -
                                                             -----------------------     ---------------------
</TABLE>

                               See Notes to Consolidated Financial Statements


                                                       5

<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1998
             (amounts in thousands, except share and per share data)

1.       Unaudited Interim Financial Statements

         References   to  the  Company  and  the   Partnership   refer  to  SUSA
         Partnership,  L.P.  References to the REIT refer to Storage USA,  Inc.,
         general  partner  and  holder  of  approximately  88% of  the  interest
         therein.  Interim consolidated  financial statements of the Company are
         prepared  pursuant  to the  requirements  for  reporting  on Form 10-Q.
         Accordingly,   certain   disclosures   accompanying   annual  financial
         statements  prepared in accordance with generally  accepted  accounting
         principles are omitted. In the opinion of management,  all adjustments,
         consisting  solely of normal recurring  adjustments,  necessary for the
         fair presentation of consolidated  financial statements for the interim
         periods have been included.  The current period's results of operations
         are not  necessarily  indicative  of  results  that  ultimately  may be
         achieved for the year. The interim  consolidated  financial  statements
         and notes  thereto  should be read in  conjunction  with the  financial
         statements  and notes thereto  included in the Company's  Form 10-K for
         the year  ended  December  31,  1997 as filed with the  Securities  and
         Exchange Commission.

         The  preparation of financial  statements in accordance  with generally
         accepted  accounting  principles  requires management to make estimates
         and  assumptions  that  affect the  amount  reported  in the  financial
         statements and accompanying notes. Actual results could vary from these
         estimates.

2.       Organization

         SUSA Partnership, L.P. (the "Company" and the "Partnership") was formed
         by Storage USA,  Inc.  (the "REIT"),  to acquire,  develop,  construct,
         franchise and own and operate  self-storage  facilities  throughout the
         United States.  On March 23, 1994, the REIT completed an initial public
         offering (the "IPO") of 6,325,000  shares of common stock at $21.75 per
         share.  The REIT is structured as an umbrella  partnership  real estate
         investment  trust ("UPREIT") in which  substantially  all of the REIT's
         business is conducted  through the  Partnership.  Under this structure,
         the Company is able to acquire self-storage  facilities in exchange for
         units of limited  partnership  interest in the  Partnership  ("Units"),
         permitting the sellers to at least  partially defer taxation of capital
         gains. At September 30, 1998 and 1997, respectively, the Company had an
         approximately 88% and 91% partnership interest in the Partnership.

         In 1996, the Company formed Storage USA Franchise Corp ("Franchise"), a
         Tennessee  corporation.  The  Partnership  owns 100% of the  non-voting
         common stock of Franchise. The Partnership accounts for Franchise under
         the equity method and includes its 97.5% share of the profit or loss of
         Franchise in Other Income.

3.       Investment in Storage Facilities

         The  following  table  summarizes  the  activity in storage  facilities
during the period:

       Cost:
             Balance on January 1, 1998                    $      1,242,864
             Property acquisitions                                  274,663
             Investment in development                               43,923
             Disposition of property                                 (8,721)
             Improvements and other                                  16,043
                                                   -------------------------
             Balance on September 30, 1998                 $      1,568,772
                                                   -------------------------

        Accumulated Depreciation:
             Balance on January 1, 1998                      $       44,955
             Additions during the period                             20,427
             Disposition of property                                   (413)
                                                   -------------------------
             Balance on September 30, 1998                   $       64,969
                                                   -------------------------

                                       6
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)
                               September 30, 1998
             (amounts in thousands, except share and per share data)

3.       Investment in Storage Facilities, continued

         The following pro forma  combined  results of operations of the Company
         for the nine months ended September 30, 1998 has been prepared assuming
         that the acquisition of the 56 properties acquired during the same nine
         month period had been completed as of January 1, 1998.

                                                    Pro forma for the
                                                    nine months ended
                                                   September 30, 1998
                                              ------------------------

              Revenues                                      $ 178,722
              Net income                                      $53,290
              Basic net income per unit                       $  1.70
              Diluted net income per unit                     $  1.69



         The unaudited pro forma  information is not  necessarily  indicative of
         what  actual  results  of  operations  of the  Company  would have been
         assuming such  transactions  had been  completed as of January 1, 1998,
         nor does it purport to represent the results of  operations  for future
         periods.

4.       Notes Payable

         On July 13, 1998 the Company issued $100,000 of 6.95% senior  unsecured
         notes due July 1, 2006 and $100,000 of 7.45% senior unsecured notes due
         July 1, 2018  (together,  the "98 Notes").  Interest on the 98 Notes is
         payable  on July 1 and  January 1 of each year,  commencing  January 1,
         1999.  The 98 Notes  are  redeemable  at any time at the  option of the
         Partnership in whole or in part, at a redemption price equal to the sum
         of:  (a) the  principal  amount  of the 98 Notes  being  redeemed  plus
         accrued  interest or (b) a make-whole  amount as more fully  defined in
         the 98 Notes prospectus.  The 98 Notes are not subject to any mandatory
         sinking fund and are an unsecured obligation of the Partnership. The 98
         Notes contain various  covenants  restricting the amount of secured and
         unsecured  indebtedness  the Partnership  may incur.  The proceeds were
         used to repay debt incurred under the revolving lines of credit,  which
         are used to finance the acquisition of self-storage  facilities and for
         working capital.  As of September 30, 1998, the Company had issued $600
         million of senior  unsecured  notes (the  "Notes").  The combined Notes
         have a weighted  average interest rate of 7.37%. The terms of the notes
         are staggered between seven and thirty years, maturing between 2003 and
         2027.


5.       Lines of Credit, Mortgages Payable and Other Borrowings

         The Company can borrow under a $150,000  line of credit with a group of
         commercial  banks and under a $40,000  line of credit with a commercial
         bank.  These lines of credit  bear  interest  at various  spreads  over
         LIBOR.  At September 30, 1998,  $87,012 was outstanding on the lines of
         credit at a weighted  average  rate of 6.61%.  At  September  30, 1998,
         there were $59,854 of fixed rate  mortgage  notes payable and $8,072 of
         variable rate mortgage  notes  payable.  As of September 30, 1998,  the
         fixed rate mortgage  notes carried rates of interest  ranging from 6.5%
         to 11.5% with a  weighted  average  rate of 10.0%.  The  variable  rate
         mortgage notes carried rates of interest ranging from 7.9% to 9.0% with
         a  weighted  average  rate of 8.4%.  Included  in other  borrowings  at
         September 30, 1998 are $12,769 of unsecured non-interest bearing notes,
         $10,785 of  deferred  Units and $23,889 of capital  lease  obligations.
         During the nine months ended September 30, 1998, total interest paid on
         all debt was $23,361 and total interest  capitalized  for  construction
         costs was $2,420.


                                       7
<PAGE>
<TABLE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)
                               September 30, 1998
             (amounts in thousands, except share and per share data)

6.       Other Income

         Other  income for the nine  months  ended  September  30, 1998 and 1997
         consisted  primarily of revenue from fees earned for the  management of
         facilities  owned by third parties,  lock and packaging  income,  truck
         rentals,  ground  rents for  billboards  and  cellular  towers  and the
         proportionate share of earnings of Franchise.

7.       Income per Unit

         Basic and diluted  income per unit is calculated by dividing net income
         by  the  appropriate  weighted  average  shares  as  presented  in  the
         following table:
<CAPTION>
                                       Three Months Ended September 30,        Nine months ended September 30,
                                                     1998             1997                  1998            1997
                                     --------------------------------------   -----------------------------------
<S>                                                <C>              <C>                   <C>             <C>   
Basic weighted average
  units outstanding                                31,357           30,014                31,036          28,848
Dilutive effect of stock options                       94              221                   125             222
                                     --------------------------------------   -----------------------------------
Diluted weighted average
  units outstanding                                31,451           30,235                31,161          29,070
</TABLE>

8.       Recent Accounting Developments

         In June 1997, the Financial  Accounting  Standards  Board (FASB) issued
         Statement No. 131,  "Disclosures  about  Segments of an Enterprise  and
         Related  Information"  (SFAS 131),  which is effective for fiscal years
         beginning after December 15, 1997.  SFAS No. 131 establishes  standards
         for determining an entity's  operating  segments and the type and level
         of  financial  information  to be  disclosed in both annual and interim
         financial  statements.   It  also  establishes  standards  for  related
         disclosures  about  products and services,  geographic  areas and major
         customers.  The Company expects to report the following segments in its
         disclosures for the year ended December 31, 1998: Operating Properties,
         Current Year  Acquisition  Properties and Development  Properties.  The
         adoption of SFAS No. 131 is not  expected to have a material  impact on
         the financial statements of the Company.

         On  February  27,  1998,  the  AICPA  Accounting   Standards  Executive
         Committee  (AcSEC)  issued  Statement  of  Position  98-1  (SOP  98-1),
         "Accounting  for the Costs of Computer  Software  Developed or Obtained
         for Internal Use",  which is effective for fiscal years beginning after
         December   15,   1998.   SOP  98-1  sets  forth   guidelines   for  the
         capitalization of costs relating to internal-use software. The adoption
         of SOP 98-1 is not expected to have a material  impact on the financial
         statements of the Company.

         In accordance  with EITF 97-11,  "Accounting for Internal Costs Related
         to Real Estate Property Acquisitions",  the Company began expensing all
         costs of its internal  acquisitions  department  in April of 1998.  The
         adoption of EITF 97-11 did not have a material  impact on the financial
         statements of the Company.

         On June 16,  1998,  FASB  issued  Statement  No. 133,  "Accounting  for
         Derivative  Instruments and Hedging  Activities"  (SFAS 133),  which is
         effective  for fiscal years  beginning  after June 15,  1999.  SFAS 133
         establishes   accounting   and  reporting   standards  for   derivative
         instruments and hedging  activities.  Under this statement  derivatives
         are  recognized  at fair market  value and changes in fair market value
         are  recognized  as gains or  losses.  The  adoption  of SAS 133 is not
         expected to have a material  impact on the financial  statements of the
         Company.

                                       8
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)
                               September 30, 1998
             (amounts in thousands, except share and per share data)

9        Subsequent Events

         From September 30, 1998 to November 14, 1998, the Company  acquired one
         self-storage  facility for approximately  $3.8 million and acquired the
         remaining  interest  in a joint  venture  property  for  $1.9  million,
         financed  through   operating  cash  flows  and  borrowings  under  the
         available  lines of credit.  The Company has also  entered into various
         property acquisition  contracts with an aggregate cost of approximately
         $12.5 million.  These acquisitions are subject to customary  conditions
         to closing,  including  satisfactory  due  diligence,  and should close
         during the fourth quarter of 1998 and the first quarter of 1999. Should
         these contracts be terminated,  the costs incurred by the Company would
         not be material.

         On November 12, 1998 the Partnership  completed a private  placement of
         $65,000 of 8.875% Series A Cumulative  Redeemable Preferred Partnership
         Units ("Preferred  Units"). The Partnership has the right to redeem the
         Preferred  Units  after  November  1,  2003  at  the  original  capital
         contribution plus the cumulative priority return to the redemption date
         to the extent not previously  distributed.  The Units are  exchangeable
         for 8.875% Series A Preferred  Stock of The REIT, on or after  November
         1, 2008 (or  earlier  upon the  occurrence  of  certain  events) at the
         option of 51% of the holders of the Preferred  Units. The proceeds were
         used to repay debt incurred under the revolving lines of credit,  which
         are used to finance the acquisition of self-storage  facilities and for
         working capital.

10.      Commitments

         The Company is committed to lend  approximately  $66,746 to franchisees
         of  Franchise   ("Franchisees")  for  the  construction  of  franchised
         self-storage facilities, secured by the facility.

         The  Company is the  guarantor  on $15,896 of loans made by third party
         lenders to Franchisees and has committed to guarantee another $3,504.

11.      Legal Proceedings

         On  September  25, 1997,  a purported  national  class action was filed
         against the Company in the Superior  Court of the District of Columbia,
         Nelda  Perkins v.  Storage  USA,  Inc.,  Civil  Action No. CA  97-7426,
         seeking  recovery of certain  late fees paid by Company  tenants  since
         September 1994,  treble damages,  unspecified  punitive  damages and an
         injunction  against  further  assessment of similar fees. In April 1998
         the plaintiff petitioned for certification of a nationwide class, which
         certification  the Company  opposed.  On August 14, 1998,  the Superior
         Court  declined  to certify  any class,  either  nationwide  or for the
         District of Columbia.  Following the court ruling,  the Company reached
         an agreement in principle  with the plaintiff to settle and dismiss the
         plaintiff's individual claim. The terms of the settlement will not have
         material adverse effect on the Company's  financial position or results
         of operations.

                                       9
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                                  OF OPERATIONS

This Form 10-Q may  include  forward-looking  statements  within the  meaning of
Section 27A of the  Securities  Act of 1933 and  Section  21E of the  Securities
Exchange Act of 1934.  These  statements  are  identified by phrases such as the
Company "expects" or "anticipates"  and words of similar effect.  Actual results
may differ  materially from those projected.  Among the factors that could cause
such a  difference  are:  changes in the economic  conditions  in the markets in
which  the  Company  operates;   certain  of  the  Company's   competitors  with
substantially  greater financial  resources than the Company reducing the number
of suitable acquisition  opportunities offered to the Company and increasing the
price  necessary  to  consummate  the  acquisition  of  particular   facilities;
increased development of new facilities and competition in the Company's markets
resulting  in  oversupply  thereby  lowering  rental and  occupancy  rates;  the
availability  of sufficient  capital to finance the  Company's  business plan on
terms  satisfactory  to the Company;  increased costs related to compliance with
laws,  including  environmental laws; general business and economic  conditions;
and other risk factors.  Further  discussion of these risks are described in the
Company's  Annual  Report on Form 10-K for the year ended  December 31, 1997 and
other  reports  filed  from  time to  time  with  the  Securities  and  Exchange
Commission. The Company cautions readers not to place undue reliance on any such
forward-looking  statements,  which  statements are made pursuant to the Private
Securities Litigation Reform Act of 1995 and, as such, speak only as of the date
made.

The following  discussion and analysis of the consolidated  financial  condition
and results of operations of the Company should be read in conjunction  with the
Consolidated  Financial  Statements and Notes included  elsewhere in this Report
and in the Company's  Annual Report on Form 10-K for the year ended December 31,
1997.  References to the Company and the Partnership  refer to SUSA Partnership,
L.P.  References  to the REIT refer to Storage USA,  Inc.,  general  partner and
holder of approximately 88% of the interest therein.

Due to the substantial number of facilities  acquired from September 30, 1997 to
September 30, 1998,  management  believes that it is meaningful  and relevant in
understanding  the  present  and  ongoing  operations  of the Company to compare
certain information using occupancy and per square foot information.

The  following  are  definitions  of terms used  throughout  this  discussion in
analyzing the Company's business. Physical Occupancy is defined as the total net
rentable  square  feet rented as of the date  computed  divided by the total net
rentable square feet available.  Gross Potential Income is defined as the sum of
all units  available to rent at a facility  multiplied by the market rental rate
applicable to those units as of the date computed. Expected Income is defined as
the sum of the monthly rent being  charged for the rented units at a facility as
of the date  computed.  Economic  Occupancy  is defined as the  Expected  Income
divided by the Gross  Potential  Income.  Rent Per Square Foot is defined as the
annualized  result of dividing  Gross  Potential  Income on the date computed by
total net rentable  square feet available.  Direct  Property  Operating Costs is
defined as the costs incurred in the operation of a facility, such as utilities,
real estate taxes, and on-site  personnel.  Indirect Property Operating Costs is
defined  as  costs  incurred  in the  management  of  all  facilities,  such  as
accounting  personnel and management level operations  personnel.  Net Operating
Income  ("NOI") is defined  as total  property  revenues  less  Direct  Property
Operating Costs.

                                       10
<PAGE>
<TABLE>
Results of Operations- Quarter and Nine Months Ended September 30, 1998 Compared
to Quarter and Nine Months Ended September 30, 1997.

The  following  table  reflects the profit and loss  statement  for the quarters
ended  September  30, 1998 and September 30, 1997 based on a percentage of total
revenues and is used in the discussion that follows:
<CAPTION>
                                                                Three Months Ended              Nine months ended
                                                                     1998          1997              1998          1997
                                                           -----------------------------   -----------------------------
REVENUES
<S>                                                                 <C>           <C>               <C>           <C>  
Rental income                                                       92.9%         96.5%             94.4%         97.3%
Other income                                                         2.9%          2.6%              2.2%          1.9%
Interest income                                                      4.2%          0.9%              3.4%          0.8%
Total income                                                       100.0%        100.0%            100.0%        100.0%

EXPENSES
Property operations                                                 25.3%         24.5%             24.5%         24.4%
Taxes                                                                7.8%          7.5%              8.0%          8.1%
General and administrative                                           4.8%          4.2%              4.5%          4.0%
Earnings before depreciation and interest (EBITDA)                  62.1%         63.8%             63.0%         63.5%
</TABLE>

Rental income  increased $14.9 million,  or 35.5% in the quarter ended September
30, 1998 and $43.7  million,  or 38.5% for the nine months ended  September  30,
1998  compared to the same  periods in 1997.  These  increases  are  primarily a
result of the Company's acquisitions.  Since September 30, 1997, the Company has
acquired 110  facilities.  These  acquired  facilities  added 6.5 million square
feet, an increase of 31.7%, bringing the total square feet of the 418 facilities
owned  by  the  Company  at  September  30,  1998  to  27.5  million.  The  1998
acquisitions  added $6.1  million in rental  income  for the  quarter  and $10.8
million  year-to-date.  The  remainder  of the  increase  in  rental  income  is
primarily  a result of  recognizing  a full  year of  rental  income on the 1997
acquisitions and the Company's  internal growth.  For the third quarter of 1998,
the 259  same-store  facilities  owned during the entire  third  quarter of 1997
provided 68.7% of the Company's  rental  income.  These  same-store  facilities'
rental income grew 6.5% over third  quarter 1997  results.  The majority of this
growth was provided by an approximate  6.2% average rate increase from $9.72 per
square foot to $10.32, which was partially offset by discounts and the timing of
rate  increases.  The  remaining  growth  was a result of  increases  in average
occupancy from 88% for the quarter ended  September 30, 1997 to 89% for the same
quarter  in  1998.  For the  nine  months  ended  September  30,  1998,  the 209
same-store  facilities  owned during the entire 1997 fiscal year,  rental income
grew 6.0% over the first nine months of 1997. An  approximate  6.7% average rate
increase from $9.91 per square foot to $10.57 and an average occupancy  increase
from 87.2% to 87.5%  provided  the majority of this  growth.  Discounts  and the
timing of rate  increases  offset these  increases.  The Company's  portfolio of
facilities as a whole had an average physical occupancy at September 30, 1998 of
86% with an average rent per square foot of $10.70.

Other  income  increased  $653  thousand  in the third  quarter of 1998 and $1.5
million in the first  nine  months of 1998 over the same  periods  in 1997.  The
increase for both periods is primarily  due to income  earned on cellular  tower
and billboard leases,  truck rentals,  income from lock and packaging  materials
and other less significant accounts.

As a  percentage  of  revenues,  cost of  property  operations  and  maintenance
increased  from 24.5% to 25.3% in the third quarter of 1998,  and 24.4% to 24.5%
in the nine months ended  September  30, 1998.  The increase as a percentage  of
revenues  is  primarily  a result  of a  change  in the  reporting  for lock and
packaging income.

Tax expense increased from $3.2 million for the quarter ended September 30, 1997
to $4.8 million for the same period in 1998.  As a percentage  of revenues,  tax
expense remained fairly  consistent,  increasing from 7.5% for the quarter ended
September  30,  1997,  to 7.8% for same the  period in 1998.  The  increase  was
primarily due to the  acquisition  of properties and the  reassessment  of owned
properties.  Tax expense as a percentage of revenues decreased from 8.1% for the
nine months ended September 30, 1997, to 8.0% for the same period in 1998.

                                       11
<PAGE>

General and  administrative  expense ("G&A") increased from $1.8 million or 4.2%
of revenues for the quarter ended September 30, 1997, to $2.9 million or 4.8% of
revenue for the quarter  ended  September  30,  1998.  For the nine months ended
September  30th,  G&A  increased  from $4.7  million or 4.0% of revenues to $7.5
million or 4.5% of revenues.  The growth in G&A reflects the Company's expansion
of its  administration,  development  and  acquisition,  management  information
systems and human  resource  departments  in connection  with its ongoing growth
strategy and increases in legal fees primarily  relating to the recently settled
litigation described in Note 11 to the Consolidated Financial Statements.

The increase in depreciation  and  amortization  expense of $2.0 million for the
quarter ended  September 30, 1998 and $7.0 million for the nine months ended the
same date  primarily  reflects  the  Company's  acquisition  or  development  of
approximately $377.9 million in depreciable assets since September 30, 1997.

Interest  expense for the quarter ended September 30, 1998, was $12.4 million as
compared to $4.8 million for the comparable period in 1997 and $32.1 million for
the nine months ended  September  30, 1998 as compared to $11.6  million for the
comparable  period in 1997.  The  increase  is  primarily  due to the  following
issuances of senior unsecured notes:

         Amount            Stated Rate      Date Issued       
         ------            -----------      -----------       
         $100 million      8.2%             June, 1997
         $100 million      7.0%             December, 1997
         $100 million      7.5%             December, 1997
         $100 million      6.95%            July, 1998
         $100 million      7.45%            July, 1998

The  remaining  interest  expense for the quarter  represents  weighted  average
borrowings of $48.2  million  under the Company's  lines of credit at a weighted
average interest rate of 6.85% and $54.9 million in weighted  average  mortgages
payable  at a  weighted  average  interest  rate of 9.75%  and $9.6  million  in
weighted  average  other  borrowings  at a weighted  average  rate of 7.5%.  The
remaining interest expense for the nine month period represents weighted average
borrowings of $78.3  million  under the Company's  lines of credit at a weighted
average  interest  rate of 6.81%,  $50.1 million in weighted  average  mortgages
payable  at a  weighted  average  interest  rate of 9.72%  and $3.2  million  in
weighted average other borrowings at a weighted average rate of 7.5%.

In the third quarter of 1997, the Company's outstanding  indebtedness  consisted
of $200  million of notes  bearing a  weighted  average  interest  rate of 7.6%,
weighted average borrowings under the Company's lines of credit of $27.1 million
at a weighted average interest rate of 7.1%, and weighted average mortgage notes
of $39.9 million at a weighted average interest rate of 9.9%. For the nine month
period  ended  September  30,  1997,  the  Company's  outstanding   indebtedness
consisted of $200 million of notes bearing a weighted  average  interest rate of
7.6%,  weighted average  borrowings under the Company's lines of credit of $37.1
million  at a weighted  average  interest  rate of 7.1%,  and  weighted  average
mortgage notes of $39.9 million at a weighted average interest rate of 9.9%.

Interest  income  increased  $2.2 million to $2.6 million for the quarter  ended
September  30, 1998 and $4.8  million to $5.6  million for the nine months ended
the same date.  Interest income  represents  loans to franchisees of Storage USA
Franchise,  Corp.  ("Franchisees"),  earnings on overnight  deposits and amounts
outstanding  under the 1995 Employee  Stock Purchase and Loan Plan. The increase
in  interest  income was  primarily  attributable  to  interest  earned on $97.8
million of loans made to  Franchisees  from  September 1, 1997 to September  30,
1998.  The  Company  has  committed  to  lend an  additional  $66.7  million  to
Franchisees.

During the nine months ended September 30, 1998, the Company  incurred a loss on
the exchange of a self-storage facility of $284 thousand. During the nine months
ended 1997,  the Company  recognized a $2.6 million gain in  connection  with an
exchange of several self-storage facilities.  These exchanges were accounted for
tax purposes under IRC Section 1031, and as such the gain/loss is not recognized
for income tax purposes.

                                       12
<PAGE>

Liquidity and Capital Resources

Cash  provided  from  operating  activities  grew to $71.5  million for the nine
months ended September 30, 1998 from the $54.0 million that was provided for the
nine months ended  September  30, 1997.  This increase was primarily a result of
the expansion of the Company's  portfolio.  In the twelve months since September
30, 1997 the Company has acquired  110  facilities  and placed in service  eight
development facilities.

Cash used in investing  activities of $292.5 million in the first nine months of
1998 and $181.9 million in the first nine months of 1997 was primarily  invested
in the acquisition of self-storage  facilities.  56 and 65 facilities containing
3.6 million and 4.3 million square feet, respectively were acquired in the first
nine months of 1998 and 1997, respectively.  In addition to acquisitions,  $43.9
million  and $22.0  million  was  invested  in the first nine months of 1998 and
1997,  respectively,  for  development  properties.  There  were 22  development
properties and 24 expansions in process with $51.6 million invested at September
30, 1998. The total  development  budget on these  properties is $132.1 million.
The Company also made loans to Franchisees  during the first nine months of 1998
in the amount of $69.2 million.  The Company has committed to lend an additional
$66.7 million to  Franchisees.  The Company is the  guarantor on loans  totaling
$15.9  million that were lent to  Franchisees  by third party  lenders,  and has
committed to guarantee additional loans totaling $3.5 million.  During the first
nine months of 1997,  the Company  received  $10.2 million in cash as part of an
exchange of self-storage facilities with another self-storage company.

The Company initially funds its capital requirements primarily through its lines
of credit and refinances these with long-term  capital in the form of equity and
debt  securities.  The lines bear  interest at various  spreads over LIBOR.  The
total  credit  available  under the lines of  credit  is $190  million.  Amounts
outstanding  under the lines of credit bore interest at a weighted  average rate
of 6.81% during the first nine months of 1998. The Company had net borrowings of
$55.2  million  in the first  nine  months of 1998 and net  repayments  of $17.8
million in the first nine months of 1997.

On July 13, 1998 the Company issued $100 million of 6.95% senior unsecured notes
due July 1, 2006 and $100  million of 7.45% senior  unsecured  notes due July 1,
2018. The proceeds were used to repay debt incurred under the revolving lines of
credit, which are used to finance the acquisition of self-storage facilities and
for working  capital.  As of  September  30,  1998,  the Company had issued $600
million of senior  unsecured  notes (the  "Notes").  The  combined  Notes have a
weighted  average  interest rate of 7.37%.  The terms of the notes are staggered
between seven and thirty years, maturing between 2003 and 2027.

The Company assumed $28.1 million of mortgages on facilities acquired during the
first nine  months of 1998 and $5.5  million  in the first nine  months of 1997.
During the first nine months of 1998,  $3.1 million of mortgage  notes were paid
off in the form of  periodic  loan  payments  and lump sum  payoffs,  and  $12.6
million of mortgage notes were paid off during the first nine months of 1997. At
September 30, 1998,  the Company had $59.8 million of fixed rate mortgage  notes
with a weighted average interest rate of 10.0% and $8.1 million of variable rate
mortgage  notes with a weighted  average  interest rate of 8.4%.  These mortgage
notes mature at various dates through 2021.

The Company  funded a portion of its  acquisitions  during the third  quarter of
1998 through other borrowings including $12.8 million of unsecured  non-interest
bearing  notes,  $10.8  million of deferred  units and $23.9  million of capital
lease obligations.

At September 30, 1998, the REIT had approximately  27.7 million shares of Common
Stock  outstanding.  During  the first  nine  months of 1998 and 1997,  the REIT
declared   three   quarterly   dividends  of  $0.64  and  $0.60  each   quarter,
respectively.  Total  distributions  paid to  common  stockholders  and  limited
partners in the  Partnership  equaled  approximately  $39.8 million in the first
nine months of 1998 and $35.2 million in the first nine months of 1997.

During the first nine months of 1998 and 1997,  the Company  issued 898 thousand
Units and 827 thousand  Units,  respectively,  valued at $34.0 million and $30.9
million,  respectively.  These Units were issued in  exchange  for  self-storage
facilities or entities owning  self-storage  facilities.  At September 30, 1998,
the  Company  had 3.7  million  Units  outstanding,  82  thousand  of which  are
redeemable for an amount equal to their fair market value ($2.8  million,  based
upon a price per Unit of $34.00 at September  30,  1998)  payable by the Company
either in cash or (at the Company's  option,  based upon a determination  by the
REIT's Board of Directors that the Company's  anticipated cash  requirements and
anticipated  cash flow make a lump sum payment  imprudent) by a promissory  note
payable in quarterly  installments over two years accruing interest at the prime
rate.  At September 30, 1998,  2.6 million Units held by other Limited  Partners
were redeemable, at the option of such Limited Partners, having passed the first
anniversary of their  issuance,  for amounts equal to the then fair market value
of  their  Units  ($88.9  million,  based  upon a price  per Unit of  $34.00  at
September  30,  1998)  payable  by the  Company in cash or, at the option of the
Company,  in shares of the Company's  Common Stock at the initial exchange ratio

                                       13
<PAGE>

of one share for each  Unit.  It is  anticipated  that a source of funds for any
such cash redemption will be retained cash flow or proceeds from the future sale
of  securities  of the Company or other  Company  indebtedness.  The Company has
agreed to register  under the Securities Act of 1933 any shares of the Company's
Common Stock issued upon redemption of Units.

On  November  12, 1998 the  Partnership  completed  a private  placement  of $65
million of 8.875% Series A Cumulative  Redeemable  Preferred  Partnership  Units
("Preferred Units"). The Partnership has the right to redeem the Preferred Units
after November 1, 2003 at the original capital  contribution plus the cumulative
priority return to the redemption date to the extent not previously distributed.
The Units are  exchangeable  for 8.875% Series A Preferred Stock of The REIT, on
or after November 1, 2008 (or earlier upon the occurrence of certain  events) at
the option of 51% of the holders of the Preferred  Units. The proceeds were used
to repay debt incurred  under the revolving  lines of credit,  which are used to
finance the acquisition of self-storage facilities and for working capital.

On September  18, 1998,  the Company  received $7.7 million in proceeds from the
payoff of a construction loan to a joint venture. The loan was refinanced with a
third party lender.

As a general matter, the Company anticipates utilizing its lines of credit as an
interim  source of funds to acquire  and  develop  self-storage  facilities  and
repaying  the  credit  lines with  longer-term  debt or equity  when  management
determines that market conditions are favorable.  Under joint shelf registration
statements filed with the Securities and Exchange  Commission,  the REIT and the
Partnership  could issue up to $900 million of securities at September 30, 1998,
including up to $650 million of common stock, preferred stock, depositary shares
and  warrants of the REIT and up to $250 million of  unsecured,  non-convertible
senior debt securities of the  Partnership.  The decline in the real estate debt
and equity markets in 1998 may impair the ability of the Company to access these
markets on favorable terms,  which could adversely impact the Company's  ability
to maintain its historical external growth activity. The Company is pursuing the
use of operational and development  joint ventures and other related  strategies
to generate  additional cash funding.  The Company believes that the combination
of cash flow from operating activities,  borrowings under its credit facilities,
issuances of Units and issuances of Preferred  Units, as described  above,  will
provide the Company with the necessary  liquidity and capital  resources to meet
all existing cash  requirements  and  commitments of the Company  through fiscal
year 1999.  See "Forward  Looking  Statements and Risk Factors" in the Company's
annual  report on Form 10-K for further  description  of the risks  relating to,
among other things, acquisition and development activity and fluctuations in the
capital markets and their effect on the Company's proposed operating strategy.

From  September  30,  1998 to  November  14,  1998,  the  Company  acquired  one
self-storage  facility for approximately $3.8 million and acquired the remaining
interest  in a  joint  venture  property  for  $1.9  million,  financed  through
operating cash flows and  borrowings  under the available  lines of credit.  The
Company has also entered into various  property  acquisition  contracts  with an
aggregate cost of approximately $12.5 million. These acquisitions are subject to
customary  conditions to closing,  including  satisfactory  due  diligence,  and
should  close during the fourth  quarter of 1998 and the first  quarter of 1999.
Should these  contracts be  terminated,  the costs incurred by the Company would
not be material.

The Company has capitalized  approximately $2.2 million for regularly  scheduled
improvements during the nine months ended September 30, 1998 and $4.3 million to
conform  facilities  acquired to Company  standards.  For the year,  the Company
expects to incur  approximately  $3.4  million  for  scheduled  maintenance  and
repairs and approximately $5.7 million to conform facilities acquired since 1994
to Company standards.

Several  covenants under the $150 million line of credit with The First National
Bank of Chicago and various  other  commercial  banks have been modified for the
third and  fourth  quarters  of 1998.  The limit for the ratio of  "consolidated
total  indebtedness to total tangible assets" has been increased from no greater
than 45% to no  greater  than 50% and the limit  for the ratio of  "unencumbered
assets to consolidated  senior  unsecured  indebtedness has been lowered from no
less than 2.25x to no less than 2.00x.  The Company  expects to renegotiate  the
line  of  credit  with  the  bank  group  prior  to  the   expiration  of  these
modifications.

The REIT's Board of Directors has modified the  Company's  internal debt policy,
limiting total  indebtedness to the lesser of 50% of total assets or that amount
that will  sustain a minimum  level of debt service  coverage.  The debt service
coverage  ratio has been  reduced to a ratio of 2.5:1 from 3.0:1.  The  modified
policy becomes effective during the fourth quarter of 1998.

                                       14
<PAGE>
<TABLE>
Funds From Operations ("FFO")

The Company  believes that FFO should be considered in conjunction  with its net
income and cash flows to  facilitate  a clear  understanding  of its  results of
operations.  FFO is defined as net income, computed in accordance with generally
accepted accounting principles, excluding gains (losses) from debt restructuring
and sales of property, plus depreciation and amortization, and after adjustments
for unconsolidated partnerships and joint ventures. FFO should not be considered
an  alternative  to net income as a measure of the Company's  performance  or to
cash flows as a measure of liquidity.


The  following  table  illustrates  the  components of the Company's FFO for the
three months and nine months ended September 30, 1998 and September 30, 1997.
<CAPTION>
                                                        Three Months Ended                   Nine Months Ended
                                                    September 30,    September 30,       September 30,   September 30,
in thousands                                                 1998             1997                1998            1997
-----------------------------------------------------------------------------------------------------------------------

<S>                                                    <C>               <C>                <C>              <C>      
Net income                                             $   18,105        $  17,403          $   51,289       $  50,655

Gain (loss) on sale of assets                                   -                -                 284         (2,569)

Depreciation of revenue producing assets                    6,943            5,095              19,852          13,328
-----------------------------------------------------------------------------------------------------------------------

Consolidated FFO                                       $   25,048        $  22,498          $   71,425       $  61,414
</TABLE>

The REIT, in order to qualify as a REIT, is required to distribute a substantial
portion of its net income as dividends to its shareholders.  While the Company's
goal is to  generate  and  retain  sufficient  cash flow to meet its  operating,
capital,  and debt service needs,  the REIT's  dividend  requirements  generally
require  the  Company  to utilize  its bank lines of credit to finance  property
acquisitions and development and major capital improvements.  For the year ended
December 31, 1997, distributions were approximately 83.0% of the REIT's FFO.

Inflation

The Company does not believe that  inflation had or will have a direct effect on
its  operations.  Substantially  all of the leases at the  facilities  allow for
monthly  rental  increases  that  provide the Company  with the  opportunity  to
achieve increases in rental income as each lease matures.

Seasonality

The  Company's  revenues  typically  have been  higher  in the third and  fourth
quarters primarily because the Company increases its rental rates on most of its
storage  units  at  the  beginning  of  May,  and  to a  lesser  extent  because
self-storage  facilities tend to experience  greater  occupancy  during the late
spring and early fall months due to the greater  incidence of residential  moves
during  those  periods.  The  Company  believes  that  its  tenant  mix,  rental
structure,  and expense  structure  provide  adequate  protection  against undue
fluctuations in cash flows and net revenues during off-peak  seasons.  Thus, the
Company  does not expect  seasonality  to  materially  affect  distributions  to
shareholders.

                                       15
<PAGE>

Year 2000 Compliance

Many computer programs process transactions using two digits for the year of the
transaction rather than four digits (i.e. "98" for the year 1998).  Systems that
process  Year 2000  transactions  with the year "00" may  encounter  significant
processing inaccuracies or inoperability. The Company's failure to address these
systems  could  result  in  material  adverse  effect on the  operations  of the
Company.

The Company is carrying out its plan to ensure that all of its computer  systems
are Year 2000 ("Y2K")  compliant.  The Company has three phases to its Y2K plan.
Phase one included  determining  the scope of the issue,  assigning  responsible
parties and proposing  solutions to the issue.  This phase was completed in July
1998.  Phase  two  includes  researching  and  testing  all of the  systems  and
documenting their Y2K compliance.  The Company has substantially  completed this
phase and estimates finishing by the end of the first quarter of 1999. The third
phase involves  implementing  the necessary  changes,  if any, by the end of the
second quarter of 1999.

The Company has grouped all of its systems  into three  categories  based on the
critical nature of those systems; critical,  moderate and minimal. All critical,
moderate and minimal  systems have been  documented  as Y2K  compliant  with the
following exceptions.  The job costing system used by the Company in 1997 is not
Y2K  compliant  but is being  phased  out for other  reasons.  New  construction
projects are being  accounted  for on a product that is Y2K  compliant  and jobs
that were started  under the old software  will  continue to be accounted for on
the old system  until  completion  of those  projects,  which is estimated to be
between late 1998 and early 1999. The phone system in the Company's Columbia, MD
regional  office is not Y2K compliant but will be replaced with a system that is
Y2K complaint in late November primarily for reasons unrelated to the Y2K issue.
The gate and security systems on some of the Company's  self-storage  properties
have not been  documented  as being  Y2K  compliant,  however,  the  Company  is
planning on using only three gate and  security  vendors  going  forward and all
three of those vendors have represented that they are Y2K compliant.  Once these
vendors are tested,  the Company is planning on replacing all non-compliant gate
and security systems. This consolidation of gate systems was planned for reasons
other than the Y2K issue.  The Company has solicited its key vendors,  including
financial  institutions,  to determine  their state of readiness with respect to
Y2K issues and is currently following up with vendors who did not reply.
Those vendors who are not prepared for the Y2K issues will be replaced.

Under the worst case scenario,  the Company will have the ability to operate its
self-storage facilities manually for a limited period of time.

Because the Company has invested in new technology over the past few years, most
systems were Y2K compliant at the onset of this plan.  The Company's  management
has spent time investigating the Y2K matter and other than the cost of this time
has only  incurred  minor  expenses  for  off-the-shelf  software  to aid in the
testing.  The  systems  the  Company  has found not to be  compliant  are in the
process of being replaced for operational  reasons not related to the Y2K issue.
At this phase of the  investigation,  the Company does not anticipate  incurring
any costs outside of personnel  time directly  related to the Y2K issue but will
not know for  certain  until  all  systems  are  documented.  As such,  with the
information  currently  available,  the Company  anticipates that conforming its
systems to be Y2K  compliant  will not have a material  impact on its  financial
results.

Y2K  costs  and the date on  which  the Y2K  modifications  are  expected  to be
completed are based on management's best estimates, which were derived utilizing
numerous  assumptions  of future events  including the  availability  of certain
resources, third party modifications and other factors. However, there can be no
assurances that these estimates will be achieved and actual results could differ
materially from those expected.

Recent Accounting Developments

See Note 8 "Recent  Accounting  Developments"  in the Notes to the  Consolidated
Financial Statements.

Legal Proceedings

On September 25, 1997, a purported  national  class action was filed against the
Company in the  Superior  Court of the District of  Columbia,  Nelda  Perkins v.
Storage USA, Inc., Civil Action No. CA 97-7426, seeking recovery of certain late
fees paid by Company tenants since September 1994,  treble damages,  unspecified
punitive damages and an injunction  against further  assessment of similar fees.
In April 1998 the plaintiff  petitioned for certification of a nationwide class,
which  certification the Company opposed. On August 14, 1998, the Superior Court
declined  to  certify  any  class,  either  nationwide  or for the  District  of
Columbia.  Following  the court  ruling,  the Company  reached an  agreement  in
principle  with the plaintiff to settle and dismiss the  plaintiff's  individual
claim.  The terms of the settlement will not have material adverse effect on the
Company's financial position or results of operations.

                                       16
<PAGE>
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

         Not Applicable


                                       17
<PAGE>
                           Part II- OTHER INFORMATION

Item 1. Legal Proceedings

         Information  regarding  legal  proceedings  is  incorporated  herein by
reference to Part 1, Item 2,  Management's  Discussion and Analysis of Financial
Condition and Results of Operations-Legal Proceedings.

Item 2. Changes in Securities and Use of Proceeds

         During the nine months ended September 30, 1998, the Company has issued
units of limited  partnership  interest  ("Units")  in exchange  for interest in
self-storage  facilities.  The  date,  amount  and  value of the  issuances  are
summarized in the following table:

Date of                             Units         Approximate
Issuance                           Issued               Value
--------------------------------------------------------------
March 11, 1998                     36,013       $   1,408,000
March 31, 1998                    669,693       $  25,658,000
May 15, 1998                       12,413        $    479,000
July 31, 1998                     125,689       $   4,692,000
September 1, 1998                  39,544       $   1,280,000
September 25, 1998                 14,622        $    445,000
                           -----------------------------------
Total                             897,974       $  33,962,000


The Units were issued in private placements exempt from registration pursuant to
Section 4(2) of the  Securities  Act of 1933 to various  owners of  self-storage
facilities. Beginning one year after their issuance, each Unit is redeemable for
cash  equal to the  market  value of one  share of  Common  Stock at the time of
redemption or, at the Company's option, one share of Common Stock.

Item 3. Defaults Upon Senior Securities

         None

Item 4. Submission of Matters to a Vote of Security Holders.

         None

Item 5. Other Information

         None

Item 6. Exhibits and Reports on Form 8-K.

         a.       Exhibit 27 - Financial Data Schedule

         b.       Reports on Form 8-K

                  None

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<PAGE>
                                   SIGNATURES


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                           Dated:   November 16, 1998

                                    SUSA PARTNERSHIP, L.P.
                                    By Storage USA, Inc.,
                                    General Partner


                           By:      /s/ Christopher P. Marr
                                    Christopher P. Marr
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)




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