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 1-10913
                       -------

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

       California                                                  95-4325981
--------------------------------                     --------------------------
(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-$38,542,969  (computed  on the basis of  $16-1/4  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 3,023,371 shares
             Common Stock, $.01 Par Value - Series B 283,224 shares
             Common Stock, $.01 Par Value - Series C 802,466 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 XIX, INC.

                                     PART I.

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

     Public  Storage  Properties  XIX,  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 XIX, Ltd., a California
limited  partnership  (the  "Partnership"),   in  a  reorganization  transaction
completed on October 30, 1991.

     The Partnership offered 148,000 units of limited partnership  interest (the
"Units") to the public in April 1988;  128,980 units were subscribed and issued.
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  October 30, 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  3,257,071  shares of common  stock  Series A
("Series A shares"), 283,224 shares of common stock Series B ("Series B shares")
and 802,466  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 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 14 properties,  all of which are in operation. The
Company   believes   that  its   mini-warehouses   have   attractive   operating
characteristics.

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

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

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

     At December 31, 1996, the Company owned 14 facilities  located in 7 states:
California (5),  Colorado (2), Florida (2), Georgia (1),  Michigan (2), Ohio (1)
and Virginia (1). These facilities consist of 12  mini-warehouses,  one business
park facility and one combination mini-warehouse/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  72% of the  Company's  revenues  for  the  twelve  months  ended
December 31, 1996), are designed to offer accessible  storage space for personal
and business use at a relatively  low cost. A user rents a fully  enclosed space
which is for the user's  exclusive  use and to which only the user has access on
an  unrestricted   basis  during  business  hours.   On-site  operation  is  the
responsibility  of resident  managers who are supervised by area managers.  Some
mini-warehouses  also  include  rentable  uncovered  parking  areas for  vehicle
storage.  Leases for  mini-warehouse  space may be on a long-term or  short-term
basis,  although typically spaces are rented on a month-to-month  basis.  Rental
rates vary according to the location of the property and the size of the storage
space.

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

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

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

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

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

     COMMERCIAL PROPERTIES

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

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

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

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

                                       3
<PAGE>

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

  *  MAINTAIN HIGH  OCCUPANCY  LEVELS AND INCREASE  REALIZED  RENTS.  Subject to
     market conditions, the Company generally seeks to achieve average occupancy
     levels in excess of 90% and to  eliminate  promotions  prior to  increasing
     rental rates.  The Company has increased rental rates in many markets where
     it  has  achieved  high  occupancy   levels  and  eliminated  or  minimized
     promotions.

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

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

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

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

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

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

     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 54  employees,  18 persons who
render services on behalf of the Company on a full-time basis and 36 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 of        Net Rentable       Number of     Completion
                Location                          Parcel            Area             Spaces        Date
---------------------------------               -----------   ----------------   ------------   ---------------
CALIFORNIA
<S>                                              <C>          <C>                     <C>             <C> 
Los Angeles, Boyle Ave.                          2.75 acres   63,000 sq. ft.          572        Mar. 1989
Los Angeles, Venice Blvd. Fwy.                    .71 acres   40,000 sq. ft.          446        Jan. 1990
Oakland, San Ramon Norris Cyn (a)                3.79 acres   52,000 sq. ft.           56         May 1989
Sacramento, 57th Street                          1.17 acres   44,000 sq. ft.          493        Apr. 1989
San Diego, Market St.                            1.38 acres   98,000 sq. ft.        1,050        Apr. 1989

COLORADO
Aurora, Smokey Hill Rd.                          4.12 acres   65,000 sq. ft.          569        Aug. 1988
Jefferson County, Kipling Rd.                    3.24 acres   48,000 sq. ft.          487        Aug. 1988

FLORIDA
Ft. Lauderdale, State Road 84                    3.42 acres   57,000 sq. ft.          501        Jan. 1989
Miami, 28th Lane                                  .59 acres   63,000 sq. ft.          762        Mar. 1990

GEORGIA
Atlanta, Arcado Road                             3.96 acres   48,000 sq. ft.          400        Feb. 1988

MICHIGAN
Detroit, Enterprise Dr.                          3.56 acres   68,000 sq. ft.          589        Sep. 1988
Detroit, Sterling Heights Mound Rd.              3.39 acres   60,000 sq. ft.          557        Jan. 1989

OHIO
Cleveland, Brook Park Road                       7.19 acres   68,000 sq. ft.          583        Mar. 1988

VIRGINIA
Mini-warehouse
   Fairfax, Alban Road                           2.20 acres   68,000 sq. ft.          726        Mar. 1990
Business Park
   Fairfax, Alban Road (a)                      10.64 acres  148,000 sq. ft.           64        Oct. 1990

</TABLE>
-----------------
(a)  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 $343,000 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 72% of the Company's portfolio (based on revenues
for 1996) are mini-warehouses and the balance consists of commercial properties.
As reflected  in the table below,  the Company has  experienced  overall  stable
property operations:
<TABLE>
<CAPTION>
                                                                              For the year ended December 31,
                                                                       -------------------------------------------
                                                                         1996             1995              1994
                                                                       ---------       ---------         ---------
<S>                                                                       <C>              <C>               <C>

Weighted average occupancy level (1)                                      88%              89%               89%
Realized monthly rent per occupied
   square foot (1) (2)                                                   $.72             $.70              $.66
Operating margin: (3)
   Before reduction for depreciation expense                              59%              60%               57%
   After reduction for depreciation expense                               37%              35%               28%
</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 and depreciation by rental income.

     Additional  information  is set forth below with respect to the Oakland San
Ramon/Norris Canyon Road, San Diego/Market Street and Fairfax  County/Alban Road
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.

     OAKLAND SAN  RAMON/NORRIS  CANYON ROAD.  This  property is a business  park
located in San Ramon, a suburb of Oakland,  California.  The property is located
approximately 20 miles southeast of downtown  Oakland.  The area surrounding the
property includes commercial and residential developments.

     The 3.79-acre  property  contains  approximately  52,000 square feet of net
rentable  space divided into 56 units.  The property  opened in May 1989 and was
98% occupied at December 31, 1996 by 55 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 Realized
                                                           Rent Per Square
          Date                          Occupancy Rate            Foot
----------------------                  ---------------    ------------------
   December 31, 1996                           98%               $17.64
   December 31, 1995                           97                 16.50
   December 31, 1994                           97                 16.59

         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                         $716,000               56.56%
    1998                          379,000               29.94
    1999                          137,000               10.82
    2000                           34,000                2.68
                            ---------------        ------------------
   Total                       $1,266,000              100.00%
                            ===============        ==================


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


                                      8
<PAGE>
     SAN DIEGO/MARKET  STREET. This mini-warehouse is located  approximately one
mile  southeast  of downtown San Diego,  California.  The property is located on
Market Street,  one of the major east/west  streets running through downtown San
Diego. The surrounding area includes a combination of residential and commercial
developments.

     The  1.38-acre   property,   which  was   completed  in  April  1989,   has
approximately  98,000 net rentable  square feet  divided  into 1,050  units.  No
tenant  occupies 10% or more of the rentable  area. As of December 31, 1996, the
property was 78% occupied by 821 tenants.

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

                                                     Annual Scheduled
                                                     Rent Per Square
       Date                        Occupancy Rate          Foot
----------------------            ---------------    ------------------
  December 31, 1996                     78%               $9.00
  December 31, 1995                     74                 6.00
  December 31, 1994                     72                 5.88

     FAIRFAX   COUNTY/ALBAN   ROAD.  This  12.84-acre   property   includes  two
facilities,  a  mini-warehouse  and a business  park. The property is located in
Fairfax County,  Virginia,  approximately 10 miles east of Washington,  D.C. The
surrounding  area includes a  combination  of retail and office space as well as
residential developments.

     The mini-warehouse facility opened in March 1990 and contains approximately
68,000  square feet of net  rentable  space  divided  into 726 units.  No tenant
occupies  10% or more  of the  rentable  area.  As of  December  31,  1996,  the
mini-warehouse facility was 92% occupied by 665 tenants.

     Set forth below is a schedule  showing the occupancy  rate and the rent per
square foot for the property at the dates indicated:
                                                     Annual Scheduled
                                                     Rent Per Square
       Date                        Occupancy Rate          Foot
----------------------            ---------------    ------------------
  December 31, 1996                      92%              $12.12
  December 31, 1995                      84                 9.12
  December 31, 1994                      85                 8.88

     The  business  park  facility  commenced  leasing on October  31,  1990 and
contains approximately 148,000 square feet of net rentable space divided into 64
units.  As of December 31, 1996,  the business park facility was 99% occupied by
63 tenants.

     Set forth below is a schedule  showing the occupancy  rate and the rent per
square foot for the property at the dates indicated:
                                                     Annual Realized
                                                     Rent Per Square
       Date                        Occupancy Rate          Foot
----------------------            ---------------    ------------------
  December 31, 1996                        99%             $13.77
  December 31, 1995                       100                9.74
  December 31, 1994                        94                9.61

     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                        $931,000               60.57%
                1998                         334,000               21.73
                1999                         193,000               12.56
                2000                          45,000                2.92
                2001                          34,000                2.22
                                       ---------------        ---------------
               Total                      $1,537,000              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>            <C>        
B. Wayne Hughes              1,725,884           36,725             283,224               -
                         ----------------   ----------------    ---------------    ---------------
Vern O. Curtis               1,726,009           36,600             283,224               -
                         ----------------   ----------------    ---------------    ---------------
Jack D. Steele               1,726,134           36,455             283,224               -
                         ----------------   ----------------    ---------------    ---------------


                                  Number of Shares of
                                 Common Stock Series C                 Total Common Stock
                         -----------------------------------    ----------------------------------
          Name               Voted For         Withheld            Voted For           Withheld
----------------------   ----------------   ----------------    ---------------    ---------------
B. Wayne Hughes                802,466                -             2,811,574           36,725
                         ----------------   ----------------    ---------------    ---------------
Vern O. Curtis                 802,466                -             2,811,699           36,600
                         ----------------   ----------------    ---------------    ---------------
Jack D. Steele                 802,466                -             2,811,824           36,455
                         ----------------   ----------------    ---------------    ---------------
</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 November  11, 1991 under the symbol PSY.  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>

                                                              Sales Price     
                                                         ---------------------     Cash Dividends
     Year                      Quarter Ended               High         Low           Declared*
-------------    ----------------------------------      ---------   ---------     --------------
<C>              <C>                                      <C>         <C>              <C>  
1995             March 31                                 $12-3/4     $11-1/8          $0.16
                 June 30                                   13-1/4      11-5/8           0.18
                 September 30                              13-1/2      12-3/8           0.18
                 December 31                               14-1/4          13           0.48 (1)

1996             March 31                                 $14-7/8     $13-1/2          $0.18
                 June 30                                   14-3/8      13-3/4           0.18
                 September 30                              15-3/8      13-1/2           0.18
                 December 31                               16-7/8      14-3/4           0.51 (2)
</TABLE>
*  No dividends were declared on the Series C shares.
(1) Includes special dividend of $.30.
(2) Includes special dividend of $.33.

     As of December 31, 1996, there were  approximately  1,841 holders of record
of the Company's Series A shares.

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

     A principal policy of the Company is to make quarterly cash  distributions.
The Company  intends to make quarterly cash  distributions  out of funds legally
available, 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  exceeded  income by $544,000,  $1,017,000 and $350,000
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.

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  500,000  Series A shares.  From  August  1, 1994  through
February 28, 1997,  the Company has  repurchased  233,700  Series A shares.  The
Company  repurchased 68,000 Series A shares during 1996 and no additional Series
A shares between January 1, 1997 and February 28, 1997.

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

                                                                    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                            $8,452         $8,200             $7,750           $6,724          $5,599
   Interest and other income                    36             47                 24               15              27
                                           ----------   -------------    -------------   -------------     ------------
                                             8,488          8,247              7,774            6,739           5,626
                                           ----------   -------------    -------------   -------------     ------------

EXPENSES:
   Cost of operations                        3,031          2,793              2,883            2,797           2,604
   Management fees paid to affiliates          450            469                442              386             323
   Depreciation                              1,841          2,044              2,257            2,334           2,321
   General and administrative                  213            214                208              220             258
   Environmental cost                           -             343                  -               -               -
   Interest expense                             6              -                  18              124             188
                                           ----------   -------------    -------------   -------------     ------------

                                             5,541          5,863              5,808            5,861           5,694
                                           ----------   -------------    -------------   -------------     ------------

NET INCOME (LOSS)                           $2,947         $2,384             $1,966             $878            $(68)
                                           ==========   =============    =============   =============     ============  

Net income (loss) per Series A share:
   Primary                                   $0.87          $0.68              $0.55            $0.24          $(0.04)
   Fully diluted                             $0.71          $0.56              $0.45            $0.20          $(0.04)

Dividends declared per share:
   Series A                                  $1.05          $1.00              $0.66            $0.35           $0.27
   Series B                                  $1.05          $1.00              $0.66            $0.35           $0.27

Weighted average Common shares outstanding:
     Primary- Series A                       3,056          3,140              3,242            3,257           3,257
     Fully diluted- Series A                 4,142          4,226              4,328            4,343           3,257

Other data:
-----------
Net cash provided
   by operating activities                  $4,846         $4,629             $4,122           $3,330          $1,852
Net cash used in investing activities         (479)          (281)              (259)            (795)         (1,618)
Net cash (used in) provided
   by financing activities                  (4,431)        (4,373)            (3,422)          (2,454)            515
Funds from operations (1)                    4,788          4,771              4,223            3,212           2,253
Capital expenditures to
   maintain facilities                        (479)          (281)              (259)            (295)           (218)

Balance sheet data:
-------------------
Total assets                               $49,527        $51,037            $52,617          $54,167         $55,758
Total debt                                       -              -                  -            1,179           2,429
Shareholders' equity                        46,968         48,517             50,977           51,944          52,305
</TABLE>


                                       12
<PAGE>

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

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





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

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

     YEAR ENDED  DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995. Net
income in 1996 was $2,947,000  compared to $2,384,000 in 1995,  representing  an
increase  of $563,000 or 24%.  Net income per fully  diluted  Series A share was
$.71 in 1996 compared to $.56 in 1995,  representing  an increase of $.15 or 27%
per share.  These  increases  are  primarily  due to an increase in property net
operating income combined with the favorable impact of comparing to expenses for
1995 which included a  non-recurring  charge for  environmental  assessments and
provision for future remediation costs.

     During 1996,  property net  operating  income  (rental  income less cost of
operations,  management  fees  paid  to  affiliates  and  depreciation  expense)
increased  $236,000 from $2,894,000 in 1995 to $3,130,000 in 1996. This increase
is  attributable  to  an  increase  in  rental  income  at  both  the  Company's
mini-warehouse  and business  park  operations  combined  with a decrease in the
Company's depreciation expense of $203,000 from $2,044,000 in 1995 to $1,841,000
in 1996 due to certain assets being fully depreciated.

     Rental income for the  mini-warehouse  operations  increased $198,000 or 3%
from  $5,889,000 in 1995 to $6,087,000  in 1996.  Cost of operations  (including
management fees paid to an affiliate of the Company)  increased  $202,000 or 10%
from  $1,965,000 in 1995 to $2,167,000 in 1996. The results of these changes was
a net decrease in property net operating income before  depreciation  expense of
$4,000 from  $3,924,000 in 1995 to $3,920,000 in 1996. The Company's  California
and Michigan  properties  contributed  88% to the increase in rental income as a
result of increased  rental rates at all of the properties  located in those two
states.  The increase in cost of  operations  is  primarily  due to increases in
payroll, repairs and maintenance,  advertising and property tax expense. Repairs
and maintenance increased primarily as a result of increases in snow removal and
landscaping  costs.  Snow removal costs  increased due to the higher than normal
snow  levels  experienced  at the  Company's  properties  located in the eastern
states.  Property taxes increased primarily due to one-time property tax refunds
received for the Company's  Fairfax,  Virginia property and one of the Company's
Los Angeles properties in 1995.

     Property net operating income before  depreciation  expense with respect to
the  Company's  business  park  facilities  increased  by  $37,000  or  4%  from
$1,014,000 in 1995 to  $1,051,000 in 1996.  This increase is primarily due to an
increase  in  rental  income  offset  by an  increase  in  cost  of  operations.
Approximately 82% of the increase in rental income from business park operations
was generated by the Company's Virginia facility.  This increase is attributable
to  increased  rental  rates on new leases and  stipulated  increases  on leases
already in place.  The  increase in cost of  operations  is due to  increases in
payroll,   repairs  and  maintenance  and  property  tax  expense.  Repairs  and
maintenance  increased as a result of an increase in snow removal cost  incurred
by the Company's Virginia facility.

     Weighted  average   occupancy  levels  were  88%  for  the   mini-warehouse
facilities and 99% for the business park  facilities in 1996 compared to 89% for
the mini-warehouse facilities and 99% for the business park facilities in 1995.

     In 1995, the Company  prepaid eight months of 1996  management  fees on its
mini-warehouse  operations  (based  on the  management  fees for the  comparable
period during the calendar year immediately preceding the prepayment) discounted
at the  rate of 14% per year to  compensate  for  early  payment.  In 1996,  the
Company  expensed  the  prepaid  management  fees.  The  amount is  included  in
management  fees paid to affiliates in the statements of income.  As a result of
the  prepayment,  the Company saved  approximately  $33,000 in management  fees,
based on the  management  fees that  would have been  payable  on rental  income
generated in 1996 compared to the amount prepaid.

     During 1996, the Company incurred $6,000 in interest expense on its line of
credit facility.

     YEAR ENDED  DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994. Net
income in 1995 was $2,384,000  compared to $1,966,000 in 1994,  representing  an
increase  of $418,000 or 21%.  Net income per fully  diluted  Series A share was
$.56 in 1995 compared to $.45 in 1994,  representing  an increase of $.11 or 24%
per share.  This  increase is  primarily  due to an  increase  in  property  net
operating  income at the  Company's  facilities  offset by  environmental  costs
incurred  on the  Company's  properties  in the  fourth  quarter  of  1995  (see
discussion  below).  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.


                                       14
<PAGE>

     During 1995,  property net  operating  income  (rental  income less cost of
operations,  management  fees  paid  to  affiliates  and  depreciation  expense)
increased  $726,000 from $2,168,000 in 1994 to $2,894,000 in 1995. This increase
is  attributable  to  an  increase  in  rental  income  at  both  the  Company's
mini-warehouse  and business  park  operations  and a decrease in the  Company's
depreciation expense of $213,000 from $2,257,000 in 1994 to $2,044,000 in 1995.

     Rental income for the  mini-warehouse  operations  increased $355,000 or 6%
from  $5,534,000 in 1994 to $5,889,000  in 1995.  Cost of operations  (including
management  fees paid to an affiliate of the  Company)  decreased  $66,000 or 3%
from  $2,031,000 in 1994 to $1,965,000 in 1995. The results of these changes was
a net increase in property net operating income before  depreciation  expense of
$421,000 or 12% from  $3,503,000 in 1994 to  $3,924,000  in 1995.  The Company's
California  and Michigan  properties  contributed  57% to the increase in rental
income primarily as a result of an increase in rental rates at a majority of the
properties in those two states. The decrease in cost of operations is mainly due
to a decrease  in  property  tax  expense  offset by  increases  in payroll  and
management  fees (as a result of increased  revenues).  The decrease in property
taxes is due to a one-time  personal  property tax refund of $17,000 received on
behalf of the Company's  Fairfax,  Virginia property in June 1995 and an $80,000
tax refund  received from  appealing a prior period tax assessment on one of the
Company's Los Angeles properties in September 1995.

     Property net operating income before  depreciation  expense with respect to
the Company's business park facilities increased by $91,000 or 10% from $923,000
in 1994 to $1,014,000 in 1995.  This increase is primarily due to an increase in
rental income offset by a slight  increase in cost of operations.  Approximately
96% of the increase in rental income from business park operations was generated
by the Company's Virginia facility. This increase is attributable to an increase
in occupancy levels and rental rates caused by scheduled  escalations in leases.
The increase in cost of  operations  is due to increases in payroll  expense and
utilities  offset by a  decrease  in  property  tax  expense.  The  increase  in
utilities is  primarily  due to an increase in  electrical  costs at the Fairfax
facility primarily as a result of increased occupancy.

     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 $343,000 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  89%  for  the   mini-warehouse
facilities and 99% for the business park  facilities in 1995 compared to 89% for
the mini-warehouse facilities and 97% for the business park facilities in 1994.

     During 1994, the Company  incurred  $18,000 in interest expense on its term
loan.  No such  expense was incurred in 1995 since the Company paid off its term
loan prior to maturity in May 1994.

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

     The following table  illustrates the operating  trends for the Company's 13
mini-warehouses:
<TABLE>
<CAPTION>

                                                                          For the year ended December 31,
                                                                     ------------------------------------------
                                                                       1996              1995             1994
                                                                     ----------       ---------        --------
<S>                                                                     <C>              <C>               <C>
Weighted average occupancy level                                        88%              89%               89%
Realized monthly rent per occupied
     square foot (1)                                                  $.72             $.70              $.66
Operating margin: (2)
     Before reduction for depreciation expense                          64%              67%               63%
     After reduction for depreciation expense                           42%              44%               44%

</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.
  

                                     15
<PAGE>
(2)   Operating margin (before  reduction for depreciation  expense) is computed
      by  dividing  rental  income  less cost of  operations  by rental  income.
      Operating margin (after reduction for depreciation expense) is computed by
      dividing rental income less cost of operations and  depreciation by rental
      income.

Liquidity and Capital Resources.
--------------------------------

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

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

     Net cash provided by operating  activities  (net income plus  depreciation)
reflects the cash generated from the Company's business before  distributions to
shareholders,  capital  expenditures  and principal  payments on debt.  Net cash
provided  by  operating  activities  has  increased  over  the past  years  from
$4,122,000 in 1994 to $4,846,000 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 $4,788,000  and  $4,771,000,  respectively.
FFO is  presented  because  the  Company,  as well as  many  industry  analysts,
consider FFO to be one measure of the performance of the Company, i.e., one that
generally  reflects changes in the Company's net operating income.  FFO does not
take  into  consideration  scheduled  principal  payments  on debt  and  capital
improvements. Accordingly, FFO is not necessarily a substitute for the Company's
cash flow or net income,  as a measure of the  Company's  liquidity or operating
performance or ability to pay distributions.  Furthermore, the NAREIT definition
of FFO does not  address  the  treatment  of certain  items and all REITs do not
treat items the same way in computing FFO. Accordingly, comparisons of levels of
FFO among REITs may not necessarily be meaningful.

     The Company has an  unsecured  revolving  credit  facility  with a bank for
borrowings up to $6,000,000 for working  capital  purposes and to repurchase the
Company's  stock.  Outstanding  borrowings on the credit  facility which, at the
Company's option, bear interest at either the bank's prime rate plus .25% or the
bank's  LIBOR  rate plus  2.25%,  will  convert to a term loan on April 1, 1997.
Interest is payable monthly until maturity.  Principal will be payable quarterly
beginning on April 1, 1997. On January 1, 2002, the remaining  unpaid  principal
and interest is due and payable.  During the first quarter of 1996,  the Company
borrowed  and repaid  $450,000 on its line of credit  facility.  At December 31,
1996, there was no outstanding balance on the credit facility.

     The  following  table  summarizes  the  Company's  ability to make  capital
improvements  to maintain  its  facilities  and make  principal  payments on its
outstanding debt 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                                                        $2,947,000       $2,384,000        $1,966,000
Environmental cost                                                         -          343,000                 -
Depreciation                                                       1,841,000        2,044,000         2,257,000
                                                                  ----------       ----------        ----------
Funds from operations
     (Net cash provided by operating activities
     before changes in working capital components)                 4,788,000        4,771,000         4,223,000
Capital improvements to maintain facilities                         (479,000)        (281,000)         (259,000)
Principal payments on outstanding debt                                     -                -        (1,179,000)
                                                                  ----------       ----------        ----------
Funds available for distributions to
     shareholders and repurchase of stock                          4,309,000        4,490,000         2,785,000
Cash distributions to shareholders                                (3,426,000)      (2,930,000)       (1,626,000)
                                                                  ----------       ----------        ----------
Excess funds available for principal payments, cash
     distributions to shareholders and repurchase of stock          $883,000       $1,560,000        $1,159,000
                                                                  ==========       ==========        ==========
</TABLE>

     The Company believes that its rental revenues and interest and other income
will be  sufficient  over at least the next twelve  months to meet the Company's
operating expenses, capital improvements and distributions to shareholders.  For
1997,  the Company  anticipates  expending  approximately  $492,000  for capital

                                       16
<PAGE>

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 $0.18.  In addition,  consistent  with the
Company's  REIT  distribution  requirements,  the  Company's  Board of Directors
declared  a special  distribution  of $0.33 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  $207,000.  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
                       -------------    ------------     ------------
  1987                   $140,000           $11,000         $151,000
  1988                    630,000            55,000          685,000
  1989                    651,000            57,000          708,000
  1990                    651,000            57,000          708,000
  1991                    651,000            57,000          708,000
  1992                    879,000            76,000          955,000
  1993                  1,140,000            99,000        1,239,000
  1994                  2,129,000           187,000        2,316,000
  1995                  3,118,000           283,000        3,401,000
  1996                  3,194,000           297,000        3,491,000
                       -------------    ------------     ------------
  Total               $13,183,000        $1,179,000      $14,362,000
                      ==============    ============     ============

     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  $13,183,000 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  $47,284,000  in
additional  distributions  with  respect to the Series A shares  have been made.
Such amount exceeds the balance in shareholders' equity at December 31, 1996.

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%

                                       17
<PAGE>

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 $1,126,000.

     The Company's  Board of Directors has authorized the Company to purchase up
to 500,000 shares of Series A common stock. As of December 31, 1996, the Company
had purchased and retired 233,700 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.  


                                       18
<PAGE>

                                   SIGNATURES

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


                                           PUBLIC STORAGE PROPERTIES XIX, 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 XIX, 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-9

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

     III  Real Estate and Accumulated Depreciation                                                  F-10 - F-11
</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 XIX, Inc.


We have audited the  accompanying  balance sheets of Public  Storage  Properties
XIX,  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 XIX,
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 XIX, INC.
                                 BALANCE SHEETS
                           December 31, 1996 and 1995
 
  
                                                                                1996                  1995
                                                                             ----------           ----------
                                     ASSETS
                                     ------
<S>                                                                          <C>                  <C>       
Cash and cash equivalents                                                    $1,232,000           $1,296,000
Rent and other receivables                                                      115,000               26,000
Prepaid expenses                                                                113,000              286,000

Real estate facilities at cost:
     Building, land improvements and equipment                               43,916,000           43,525,000
     Land                                                                    17,791,000           17,791,000
                                                                             ----------           ----------
                                                                             61,707,000           61,316,000

     Less accumulated depreciation                                          (13,640,000)         (11,887,000)
                                                                             ----------           ----------
                                                                             48,067,000           49,429,000
                                                                             ----------           ----------

Total assets                                                                $49,527,000          $51,037,000
                                                                            ===========          ===========


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

Accounts payable                                                               $644,000             $662,000
Dividends payable                                                             1,686,000            1,621,000
Advance payments from renters                                                   229,000              237,000

Shareholders' equity:
     Series A common, $.01 par value,
         4,342,762 shares authorized,
         3,023,371 shares issued and
         outstanding (3,091,371 shares
         issued and outstanding in 1995)                                         30,000               31,000
     Convertible Series B common, $.01 par
         value, 283,224 shares authorized,
         issued and outstanding                                                   3,000                3,000
     Convertible Series C common, $.01 par
         value, 802,466 shares authorized,
         issued and outstanding                                                   8,000                8,000

     Paid-in-capital                                                         53,652,000           54,656,000
     Cumulative net income                                                    7,637,000            4,690,000
     Cumulative distributions                                               (14,362,000)         (10,871,000)
                                                                             ----------           ----------

     Total shareholders' equity                                              46,968,000           48,517,000
                                                                             ----------           ----------

Total liabilities and shareholders' equity                                  $49,527,000          $51,037,000
                                                                            ===========          ===========

</TABLE>
                             See accompanying notes.
                                       F-2
<PAGE>
<TABLE>
<CAPTION>
                      PUBLIC STORAGE PROPERTIES XIX, INC.
                              STATEMENTS OF INCOME
                       For each of the three years in the
                         period ended December 31, 1996

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

REVENUES:

<S>                                                        <C>                   <C>                  <C>       
Rental income                                              $8,452,000            $8,200,000           $7,750,000
Interest income                                                36,000                47,000               24,000
                                                           ----------            ----------           ----------
                                                            8,488,000             8,247,000            7,774,000
                                                           ----------            ----------           ----------


COSTS AND EXPENSES:

Cost of operations                                          3,031,000             2,793,000            2,883,000
Management fees paid to affiliates                            450,000               469,000              442,000
Depreciation                                                1,841,000             2,044,000            2,257,000
Administrative                                                213,000               214,000              208,000
Environmental cost                                                  -               343,000                    -
Interest expense                                                6,000                     -               18,000
                                                           ----------            ----------           ----------
                                                            5,541,000             5,863,000            5,808,000
                                                           ----------            ----------           ----------

NET INCOME                                                 $2,947,000            $2,384,000           $1,966,000
                                                           ==========            ==========           ==========


Primary earnings per share-Series A                            $0.87                 $0.68                $0.55
                                                           ==========            ==========           ==========

Fully diluted earnings per share-Series A                      $0.71                 $0.56                $0.45
                                                           ==========            ==========           ==========

Dividends declared per share:
     Series A                                                  $1.05                 $1.00                $0.66
                                                           ==========            ==========           ==========
     Series B                                                  $1.05                 $1.00                $0.66
                                                           ==========            ==========           ==========

Weighted average Common shares outstanding:
     Primary- Series A                                      3,055,821             3,140,396            3,241,888
                                                           ==========            ==========           ==========
     Fully diluted- Series A                                4,141,511             4,226,086            4,327,578
                                                           ==========            ==========           ==========
</TABLE>
                             See accompanying notes.
                                       F-3
<PAGE>
<TABLE>
<CAPTION>

                       PUBLIC STORAGE PROPERTIES XIX, 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     3,257,071       $33,000       283,224       $3,000         802,466       $8,000     

Net income                                                                                                            
Repurchase of shares                (55,700)       (1,000)                                                            

Cash distributions declared:
   $0.66 per share - Series A                                                                                         
   $0.66 per share - Series B                                                                                         
                                --------------------------------------------------------------------------------------

Balances at December 31, 1994     3,201,371        32,000       283,224        3,000         802,466        8,000     

Net income                                                                                                            
Repurchase of shares               (110,000)       (1,000)                                                            

Cash distributions declared:
   $1.00 per share - Series A                                                                                         
   $1.00 per share - Series B                                                                                         
                                --------------------------------------------------------------------------------------

Balances at December 31, 1995     3,091,371        31,000       283,224        3,000         802,466        8,000     

Net income                                                                                                            
Repurchase of shares                (68,000)       (1,000)                                                            

Cash distributions declared:
   $1.05 per share - Series A                                                                                         
   $1.05 per share - Series B                                                                                         
                                --------------------------------------------------------------------------------------

Balances at December 31, 1996     3,023,371       $30,000       283,224       $3,000         802,466       $8,000     
                                ======================================================================================
</TABLE>
<TABLE>
<CAPTION>

                                                  Cumulative                         Total
                                    Paid-in           net         Cumulative     shareholders'
                                    Capital         income       distributions      equity
                                ----------------------------------------------------------------
<S>                               <C>                <C>         <C>             <C>        
Balances at December 31, 1993     $56,714,000        $340,000    ($5,154,000)    $51,944,000

Net income                                          1,966,000                      1,966,000
Repurchase of shares                 (616,000)                                      (617,000)

Cash distributions declared:
   $0.66 per share - Series A                                     (2,129,000)     (2,129,000)
   $0.66 per share - Series B                                       (187,000)       (187,000)
                                ----------------------------------------------------------------

Balances at December 31, 1994      56,098,000       2,306,000     (7,470,000)     50,977,000

Net income                                          2,384,000                      2,384,000
Repurchase of shares               (1,442,000)                                    (1,443,000)

Cash distributions declared:
   $1.00 per share - Series A                                     (3,118,000)     (3,118,000)
   $1.00 per share - Series B                                       (283,000)       (283,000)
                                ----------------------------------------------------------------

Balances at December 31, 1995      54,656,000       4,690,000    (10,871,000)     48,517,000

Net income                                          2,947,000                      2,947,000
Repurchase of shares               (1,004,000)                                    (1,005,000)

Cash distributions declared:
   $1.05 per share - Series A                                     (3,194,000)     (3,194,000)
   $1.05 per share - Series B                                       (297,000)       (297,000)
                                ----------------------------------------------------------------

Balances at December 31, 1996     $53,652,000      $7,637,000   ($14,362,000)    $46,968,000
                                ================================================================
</TABLE>
                            See accompanying notes.
                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                       PUBLIC STORAGE PROPERTIES XIX, 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                                                  $2,947,000       $2,384,000        $1,966,000

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

     Depreciation                                                 1,841,000        2,044,000         2,257,000
     (Increase) decrease in rent and
         other receivables                                          (89,000)          (3,000)            1,000
     (Increase) decrease in prepaid expenses                        (34,000)           2,000            (8,000)
     Amortization (payment) of prepaid management fees              207,000         (207,000)                -
     (Decrease) increase in accounts payable                        (18,000)         421,000           (79,000)
     Decrease in advance payments from renters                       (8,000)         (12,000)          (15,000)
                                                                 ----------       ----------        ----------

         Total adjustments                                        1,899,000        2,245,000         2,156,000
                                                                 ----------       ----------        ----------

         Net cash provided by operating activities                4,846,000        4,629,000         4,122,000
                                                                 ----------       ----------        ----------

Cash flows from investing activities:

     Additions to real estate facilities                           (479,000)        (281,000)         (259,000)
                                                                 ----------       ----------        ----------

         Net cash used in investing activities                     (479,000)        (281,000)         (259,000)
                                                                 ----------       ----------        ----------

Cash flows from financing activities:

     Distributions paid to shareholders                          (3,426,000)      (2,930,000)       (1,626,000)
     Payments on note payable to Bank                                     -                -        (1,179,000)
     Borrowing on credit facility                                   450,000                -                 -
     Repayment of borrowing on credit facility                     (450,000)               -                 -
     Purchase of Company Series Acommon stock                    (1,005,000)      (1,443,000)         (617,000)
                                                                 ----------       ----------        ----------

         Net cash used in financing activities                   (4,431,000)      (4,373,000)       (3,422,000)
                                                                 ----------       ----------        ----------

Net (decrease) increase in cash and
         cash and cash equivalents                                  (64,000)         (25,000)          441,000

Cash and cash equivalents at
         the beginning of the year                                1,296,000        1,321,000           880,000
                                                                 ----------       ----------        ----------

Cash and cash equivalents at
         the end of the year                                     $1,232,000       $1,296,000        $1,321,000
                                                                 ==========       ==========        ==========


</TABLE>
                            See accompanying notes.
                                      F-5
<PAGE>


                       PUBLIC STORAGE PROPERTIES XIX, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1996


1.       DESCRIPTION OF BUSINESS

                  Public  Storage  Properties  XIX,  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  XIX, Ltd. (the
         "Partnership")  in a  reorganization  transaction  which was  effective
         October 30, 1991 (the "Reorganization").

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

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

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Basis of Presentation:

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

         Income Taxes:

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

         Statements of Cash Flows:

                  For purposes of financial statement presentation,  the Company
         considers all highly liquid debt instruments  purchased with a maturity
         of three months or less to be cash equivalents. The Company paid $6,000
         and $25,000 in interest costs during 1996 and 1994, respectively.

         Real Estate Facilities:

                  Cost of land  includes  appraisal  and legal  fees  related to
         acquisition  and  closing  costs.  Buildings,   land  improvements  and
         equipment  reflect costs incurred through December 31, 1996 and 1995 to
         develop  primarily  mini-warehouse  facilities  and to a lesser extent,
         business  park  facilities.   The  mini-warehouse   facilities  provide
         self-service  storage  spaces  for lease,  usually on a  month-to-month
         basis,  to  the  general  public.   The  buildings  and  equipment  are
         depreciated on the  straight-line  basis over estimated useful lives of
         25 and 5 years, respectively.  Included in depreciation is depreciation
         of tenant  improvements  on the Company's  business park  facilities of
         $176,000, $416,000 and $618,000 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)

                  At December  31,  1996,  the basis of real  estate  facilities
         (excluding land) for Federal income tax purposes (after  adjustment for
         accumulated depreciation of $7,879,000) is $33,751,000.

         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  $343,000 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  properties  were  operated  by  Public  Storage  Commercial
         Properties Group,  Inc.  ("PSCPG")  pursuant to a Management  Agreement
         which provides for a fee equal to 5% of the  facilities'  monthly gross
         revenue (as defined).

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

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

                                      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 $207,000.  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
         $13,183,000 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   $47,284,000   in   additional
         distributions  with respect to the Series A shares have been made. Such
         amount  exceeds the  balance in  shareholders'  equity at December  31,
         1996.

               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                                   $46,957,000      $48,506,000
         Convertible Series B                             3,000            3,000
         Convertible Series C                             8,000            8,000
                                                   ------------     ------------
         Total                                      $46,968,000      $48,517,000
                                                   ============     ============

               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 500,000 shares of the Company's  Series A common stock.
          As of December 31, 1996, the Company had purchased and retired 233,700
          shares of Series A stock,  of which 68,000 and 110,000 were  purchased
          and retired in 1996 and 1995, respectively.

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

5.        NOTE PAYABLE TO BANK

               The Company has an unsecured  revolving  credit  facility  with a
          bank for borrowings up to $6,000,000 for working capital  purposes and
          to  repurchase  the  Company's  stock.  Outstanding  borrowings on the
          credit  facility  which,  at the  Company's  option,  bear interest at
          either the bank's  prime rate plus .25% or the bank's  LIBOR rate plus
          2.25%,  will  convert  to a term loan on April 1,  1997.  Interest  is
          payable  monthly until maturity.  Principal will be payable  quarterly
          beginning on April 1, 1997. On January 1, 2002,  the remaining  unpaid
          principal and interest is due and payable.

               During the first quarter of 1996, the Company borrowed and repaid
          $450,000 on its line of credit  facility.  At December 31, 1996, there
          was no outstanding balance on the credit facility.

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

6.       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                                      $2,045,000      $2,121,000      $2,157,000       $2,165,000
                                                         ----------      ----------      ----------       ----------
           Expenses                                       1,375,000       1,363,000       1,358,000        1,445,000
                                                         ----------      ----------      ----------       ----------
           Net income                                      $670,000        $758,000        $799,000         $720,000
                                                         ==========      ==========      ==========       ==========
           Primary earnings per share- Series A               $0.20           $0.23           $0.25            $0.19
                                                         ==========      ==========      ==========       ==========
           Fully diluted earnings per share- Series A         $0.16           $0.18           $0.20            $0.17
                                                         ==========      ==========      ==========       ==========

                                                                             Three months ended
                                                        ------------------------------------------------------------
                                                        March 1995       June 1995       Sept. 1995       Dec. 1995
                                                         ----------      ----------      ----------       ----------
           Revenues                                      $1,997,000      $2,051,000      $2,116,000       $2,083,000
                                                         ----------      ----------      ----------       ----------
           Expenses                                       1,442,000       1,410,000       1,272,000        1,739,000
                                                         ----------      ----------      ----------       ----------
           Net income                                      $555,000        $641,000        $844,000         $344,000
                                                         ==========      ==========      ==========       ==========
           Primary earnings per share- Series A               $0.16           $0.19           $0.25            $0.08
                                                         ==========      ==========      ==========       ==========
           Fully diluted earnings per share- Series A         $0.13           $0.15           $0.20            $0.08
                                                         ==========      ==========      ==========       ==========
</TABLE>

                                       F-9
<PAGE>
<TABLE>
<CAPTION>
                       PUBLIC STORAGE PROPERTIES XIX, 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>       
    2/88      Lilburn / Arcado                   -             $357,000    $1,244,000          $68,000  
    3/88      Parma / Brookpark Road             -              636,000     1,603,000           28,000  
    1/89      Davie / State Road 84              -            1,011,000     2,149,000           98,000  
    9/88      Allen Park / Enterprise            -              490,000     1,662,000           19,000  
    8/88      Aurora / Smokey Hill               -              918,000     1,487,000           50,000  
    4/89      San Diego / 16th Street            -            2,349,000     3,168,000          150,000  
    1/89      Sterling Heights / Mound           -              538,000     1,604,000            8,000  
    3/89      Los Angeles / Boyle Ave            -            1,127,000     2,207,000           49,000  
    8/88      Littleton / Kipling                -              569,000     1,018,000           26,000  
    4/89      Sacramento / 57th Street           -              604,000     1,301,000           32,000  
    1/90      Los Angeles / Burchard             -            1,531,000     2,603,000           48,000  
    3/90      Miami Sw 28th Lane                 -            1,389,000     2,845,000          106,000  

Business Parks:
    5/89      San Ramon/ Norris Canyon           -            2,470,000     3,695,000        1,423,000  

Combination:
     (1)      Fairfax / Alban Rd                 -            3,802,000    11,425,000        3,800,000  
                                          --------------------------------------------------------------
                                                 -          $17,791,000   $38,011,000       $5,905,000  
                                          ==============================================================
</TABLE>
<TABLE>
<CAPTION>
                                                                                                                             
                                           Gross Carrying Amount At December 31, 1996                      
                                           ------------------------------------------                      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>       
    2/88      Lilburn / Arcado                  $357,000      $1,312,000     $1,669,000         ($440,000)    5-25 Years
    3/88      Parma / Brookpark Road             636,000       1,631,000      2,267,000          (570,000)    5-25 Years
    1/89      Davie / State Road 84            1,011,000       2,247,000      3,258,000          (710,000)    5-25 Years
    9/88      Allen Park / Enterprise            490,000       1,681,000      2,171,000          (500,000)    5-25 Years
    8/88      Aurora / Smokey Hill               918,000       1,537,000      2,455,000          (502,000)    5-25 Years
    4/89      San Diego / 16th Street          2,349,000       3,318,000      5,667,000          (986,000)    5-25 Years
    1/89      Sterling Heights / Mound           538,000       1,612,000      2,150,000          (470,000)    5-25 Years
    3/89      Los Angeles / Boyle Ave          1,127,000       2,256,000      3,383,000          (694,000)    5-25 Years
    8/88      Littleton / Kipling                569,000       1,044,000      1,613,000          (355,000)    5-25 Years
    4/89      Sacramento / 57th Street           604,000       1,333,000      1,937,000          (412,000)    5-25 Years
    1/90      Los Angeles / Burchard           1,531,000       2,651,000      4,182,000          (698,000)    5-25 Years
    3/90      Miami Sw 28th Lane               1,389,000       2,951,000      4,340,000          (786,000)    5-25 Years

Business Parks:
    5/89      San Ramon/ Norris Canyon         2,470,000       5,118,000      7,588,000        (2,317,000)    5-25 Years

Combination:
     (1)      Fairfax / Alban Rd               3,802,000      15,225,000     19,027,000        (4,200,000)    5-25 Years
                                          -----------------------------------------------------------------
                                             $17,791,000     $43,916,000    $61,707,000      ($13,640,000)
                                          =================================================================
</TABLE>
 (1) Completion dates for  mini-warehouse and business park were 3/90 and 10/90,
     respectively.
                                      F-10
<PAGE>
<TABLE>
<CAPTION>
                       PUBLIC STORAGE PROPERTIES XIX, 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                         $61,316,000          $61,173,000          $61,236,000

Additions during the period:

   Improvements                                                    479,000              281,000              259,000

Deductions during the period:                                      (88,000)            (138,000)            (322,000)
                                                         ----------------------------------------------------------------

Balance at the close of the period                             $61,707,000          $61,316,000          $61,173,000
                                                         ================================================================



                     ACCUMULATED DEPRECIATION RECONCILIATION


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

Balance at the beginning of the period                         $11,887,000           $9,981,000           $8,046,000

Additions during the period:

   Depreciation                                                  1,839,000            2,044,000            2,234,000

Deductions during the period:                                      (86,000)            (138,000)            (299,000)
                                                         ----------------------------------------------------------------

Balance at the close of the period                             $13,640,000          $11,887,000           $9,981,000
                                                         ================================================================


</TABLE>


(b) The aggregate  depreciable cost of real estate (excluding land) for Federal
    income tax purposes is $41,630,000.

                                      F-11
<PAGE>



                       PUBLIC STORAGE PROPERTIES XIX, 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      Credit  Agreement  between the  Company and Wells Fargo Bank  National
          Association   dated  January  1,  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, 1991 and
          incorporated herein by reference.

10.5      Revolving  Credit and Term Loan  Agreement  between  the  Company  and
          Manufacturers Bank dated December 22, 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.

27        Financial Data Schedule. Filed herewith.