UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-K

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
1934 [Fee Required]

For the fiscal year ended December 31, 1995

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: 1-10609

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

   California                                            95-4209511 
---------------------------------       ---------------------------------------
(State or other jurisdiction 
of incorporation or organization         (I.R.S. Employer Identification Number)

           600 North Brand Boulevard, Glendale, California 91203-1241
           ----------------------------------------------------------
               (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, $.05 Par Value                   American Stock Exchange    
---------------------------                  ----------------------------------
(Title of each class        )             (Name of 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.


                                [ X ] Yes [ ] 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 registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference in Part III of the 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
Registrant as of February 29, 1996:

Common Stock, $.05 Par Value - $20,846,000 (computed on the basis of $6-9/16 per
share which was the reported closing sale price of the Company's Common Stock on
the American Stock Exchange on February 29, 1996)

The number of shares outstanding of the registrant's  classes of common stock as
of February 29, 1996:

                 Common Stock, $.05 Par Value - 3,348,167 Shares
                 -----------------------------------------------
                       DOCUMENTS INCORPORATED BY REFERENCE

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 Registrant's 1995
fiscal year, which information is incorporated by reference into Part III.

<PAGE>


                            STORAGE PROPERTIES, INC.
                                     PART I


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

     Storage Properties,  Inc. (the "Company") is a real estate investment trust
("REIT") organized as a corporation under the laws of California in March 1989.

     Commencing  June 23,  1989,  the  Company  offered a maximum of  23,000,000
shares of its common stock (the "Shares") (including 3,000,000 Shares registered
for issuance under the Company's Dividend  Reinvestment Plan) to the public on a
best-efforts  basis at $10.00 per Share,  pursuant to the  Company's  prospectus
dated June 23, 1989 (the "Prospectus")  contained in its registration  statement
filed with the Securities and Exchange  Commission.  The offering was terminated
on  September  17,  1990  (excluding  the  offering  of Shares  pursuant  to the
Company's Dividend Reinvestment Plan which was terminated January 16, 1991). The
Company received  approximately  $32,035,790 of gross offering proceeds from the
sale of 3,203,579 Shares in connection with the offering.

     Pursuant to an Advisory  Agreement which was entered into in June 1989 (the
"Advisory Agreement"),  PS Properties Advisors,  Inc. ("PSPA") was the Company's
investment advisor through August 1995 (in August 1995, PSPA was merged into its
parent,  PSI Holdings,  Inc.  ("PSH"),  and PSH assumed all of PSPA's rights and
obligations under the Advisory Agreement). In November 1995, there were a series
of mergers  among  Public  Storage  Management,  Inc.  (which was the  Company's
mini-warehouse operator pursuant to a Management Agreement),  PSH (which was the
Company's  investment  advisor),  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 real estate  investment  trust
organized as a California  corporation.  In the PSMI Merger,  Storage  Equities,
Inc.'s  name was  changed  to Public  Storage,  Inc.  ("PSI")  and PSI  acquired
substantially all of PSMI's United States real estate operations and assumed all
of PSMI's rights and obligations under the Advisory Agreement and the Management
Agreement, thereby becoming the Company's investment advisor and the operator of
the Company's mini-warehouse  properties.  (As used herein,  the term "Advisor"
refers to PSI or PSPA, as the context  requires.) B. Wayne Hughes, the Company's
Chief Executive Officer,  and members of his family (the "Hughes Family") is the
major shareholder of PSI.

Properties

     The Company owns or has interests in seven mini-warehouse properties in six
states.

     Mini-warehouses 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.

     See Item 2 -  Properties  - for a  detailed  description  of the  Company's
properties in which the Company has an investment interest.


Property Operator
-----------------

     The Company's  mini-warehouses are managed by PSI (as successor-in-interest
to PSMI) under a Management  Agreement.  PSI has informed the Company that it is
the largest  mini-warehouse  facility  operator in the United States in terms of
both number of facilities and rentable space operated.

     Under the supervision of the Company,  PSI coordinates the operation of the
facilities,  establishes  rental policies and rates,  directs marketing activity
and the  purchase of  equipment  and  supplies,  maintenance  activity,  and the
selection and engagement of all vendors, supplies and independent contractors.

     PSI engages, 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,  Companies,  real estate  investment  trusts or other  entities  owning
facilities operated by PSI.

     In the  purchasing of services  such as  advertising  (including  broadcast
media advertising) and insurance, PSI attempts to achieve economies by combining
the resources of the various facilities that they operate.  Facilities  operated
by PSI  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 adopts  promotional  programs,  such as temporary rent reductions,  in
selected areas or for individual facilities.

     For as long as the Management  Agreement is in effect,  PSI has granted the
Company  a  non-exclusive  license  to use two PSI  service  marks  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 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.

     The  Management  Agreement may be terminated  with or without cause upon 60
days' written notice by either party.

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 PSI, 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.

Advisory Agreement
------------------

     Pursuant to the Advisory  Agreement and subject to the  directors'  overall
responsibility  for managing  and  controlling  the affairs of the Company,  PSI
advises  the  Company  with  respect  to its  investments  and  administers  its
day-to-day  operations.  The Advisory Agreement,  which was entered into in June
1989,  had an initial  five-year  period  (through June 1994);  thereafter,  the
Advisory  Agreement is automatically  renewed for successive  two-year  periods,
subject to termination, with or without cause, by a majority of the directors on
behalf of the Company,  or by the  Advisor,  upon 60 days  written  notice.  The
Advisory  Agreement  provides for the  purchase by the Company of the  Advisor's
future interest in the advisory fee upon  termination of the Advisory  Agreement
(except under certain limited circumstances).

     Under the  Advisory  Agreement,  PSI will be paid an advisory fee of 10% of
the  Company's  net cash flow,  as  defined,  beginning  when  distributions  to
shareholders  (without  regard to the  number of  shares  outstanding)  from all
sources  equal  75%  of  the  gross   offering   proceeds  and  continue   until
distributions to shareholders  from all sources equal 100% of the gross offering
proceeds;  thereafter,  PSI will be paid an advisory fee of 20% of the Company's
net cash flow and 20% of cash from sales or  refinancing.  Through  December 31,
1995,  the  Company  has made and  declared  cumulative  cash  distributions  to
shareholders  of  approximately  $16,367,000.   Accordingly,  the  Company  will
commence  paying PSI an advisory fee of 10% of the  Company's net cash flow when
$7,660,000 in additional  distributions to the Company's  shareholders have been
made.

     Net cash flow means cash funds provided to the Company from its operations,
including interest on loans to the Advisor,  without deduction for depreciation,
amortization or similar noncash expenses, but after deducting cash funds used to
pay or  establish a reserve for all cash  expenses  (other than  payments of the
advisory fee), debt payments,  capital  improvements,  tenant  improvements  and
replacements.

     Gross offering proceeds means the gross proceeds from the sale of shares to
the public through the Company's offering.

     No  amounts  have been  accrued  or paid to the  Advisor  with  respect  to
advisory fees to date as described above.

     If the Advisory Agreement is terminated without the consent of the Advisor,
the Capital Repurchase Option (as defined below) will be terminated. The Capital
Repurchase Option is the Advisor's' obligation (provided that there has not been
any substantial  liquidation of the Company'  investments  without the Advisor's
consent) to repurchase the original shares of each original shareholder (at such
shareholder's  option) for a price equal to the original contribution as reduced
by  cash  distributions  from  all  sources,  in the  event  that  the  original
shareholder  has not received cash  distributions  from all sources equal to his
original contribution by no later than June 2003.

     PSI has  informed  the  Company  that it does not  believe  it will have an
obligation with respect to the Capital Repurchase Option.

Borrowing Policies And Leveraging
---------------------------------

     The  Company's  By-Laws give the  executive  officers and  directors  broad
powers  to  cause  the  Company  to  borrow  in  furtherance  of  the  Company's
objectives.  The Company may leverage any of the properties it owns or acquires,
through  borrowings  secured  by  first or  second  mortgages  or  trust  deeds.
Leveraging  techniques  such as the foregoing would increase the funds available
for investment or distribution  and would heighten both the opportunity for gain
and the risk of loss to the Company.  Investments  in  properties on a leveraged
basis would be expected to produce a positive  cash flow only if they  generate,
at a minimum,  sufficient  cash  revenues to service the related  debt and other
cash  expenses  applicable  to the  property.  The extent to which the Company's
borrowing  powers are utilized at any time will be  determined  by the executive
officers and directors of the Company after considering such factors as the cost
of borrowed funds.

Sale Or Financing Of Investments
--------------------------------

     Investments may be disposed of or financed,  if and when, in the opinion of
the executive officers and directors,  it is in the best interest of the Company
to do so. The  determination of whether a particular  property should be sold or
otherwise disposed of will be made in the context of the Company's objectives of
generating current cash flow and providing capital  appreciation.  The executive
officers and directors  will act on the basis of their judgment as to prevailing
and  expected   future   economic  and  money  market   conditions,   and  after
consideration  of the  relevant  factors  relating  to the  investments  and the
related  tax  consequences.  The  Company  may sell  properties  to  affiliates,
provided  that any sale of a property  to an  affiliate  must be approved by the
directors, including a majority of the unaffiliated directors.

     When the Company sells an investment,  it may take back from the buyer,  as
partial payment for the property,  a purchase money  obligation  under which the
buyer may not have personal liability.

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

     In March 1996, the Company and PSI agreed,  subject to certain  conditions,
to merge. In the merger, the Company would be merged with and into PSI, and each
outstanding  share of the  Company's  Common Stock  (3,348,167  shares) would be
converted,  at the  election of the  shareholders  of the  Company,  into either
shares of PSI common stock or with respect to up to 20% of the Company's  Common
Stock,  $7.31 in cash.  This  dollar  amount  has  been  based on the  Company's
estimated  net  asset  value as of June 30,  1996  (the  appraised  value of the
Company's real estate assets and the estimated book value of the Company's other
net assets).  The number of shares of PSI common stock will be based on dividing
this same dollar  amount by the average of the per share  closing  prices on the
New  York  Stock  Exchange  for  a  specified  period  prior  to  the  Company's
shareholders' meeting. In the event of the merger, pre-merger cash distributions
would be made to  shareholders  of the Company to cause the  Company's net asset
value as of the effective date of the merger to be  substantially  equivalent to
its  estimated  net  asset  value  as of  June  30,  1996.  If  additional  cash
distributions  are required in order to satisfy the Company's REIT  distribution
requirements,  the number of shares of PSI common stock issued in the merger and
the amount  receivable upon a cash election would be reduced on a pro rata basis
in an aggregate  amount equal to such  additional  distributions.  The merger is
conditioned on, among other requirements,  approval by PSI's board of directors,
receipt of a  satisfactory  fairness  opinion by the Company and approval by the
shareholders of the Company.  It is expected that any merger would close in June
or July  1996.  PSI owns  approximately  4 percent  of the  Common  Stock of the
Company.

Employees
---------

     As of December  31,  1995,  the Company  had 22  employees,  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.




ITEM 2. PROPERTIES

     As of December  31,  1995,  the Company has  investment  interests in seven
properties  by means of  ownership  and a  leasehold  interest.  The table below
provides details of the Company's property interests:
<TABLE>
<CAPTION>

                                                                                                              Date
                              Type of               Size           No. of          Net Rentable             Opened/
Location                      Interest             (Acres)         Spaces          Square Feet              Acquired
--------                      --------             -------         ------          -----------              --------

<S>                           <C>                       <C>             <C>              <C>                    <C>  
Las Vegas, NV                   Fee                  2.60            517              65,310                 10/89
Bedford Park, IL                Fee                  3.02            468              50,325                 11/89
Los Angeles, CA                 Fee                  1.04            547              43,700                  1/90
Silver Spring, MD               Fee                  0.73            742              57,450                 11/90
Brooklyn, NY                    Fee                  1.73            769              50,200                 11/90
Newark, CA                      Fee                  4.12            616              58,042                  06/94
Hillside, NJ                  Leasehold (a)          4.37            840              74,300                  9/90
</TABLE>

(a)  The Company owns an undivided 62.5% interest in the Hillside property.  The
     remaining 37.5% interest is owned by Partners  Preferred Yield III, Inc., a
     REIT that is an  affiliate  of PSI. The facility is on leased land which is
     leased  from an  unrelated  third  party.  The term of the lease is through
     February 2011 which includes two renewal periods of five years each.

     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 has  expensed,  as of
December 31,  1995,  an estimated  $99,000 for known  environmental  remediation
requirements.

     Additional  information  is set forth below with  respect to the  Company's
seven  properties  because  they have a book  value of at least 10% of the total
assets of the Company or have  accounted  for gross  revenues of at least 10% of
the aggregate gross revenues of the Company

     The Las  Vegas,  Nevada  property  is  located  on the west side of Eastern
Avenue  approximately  one mile east of the  University of Nevada.  The property
operates in a very  competitive  market.  At December 31, 1995,  the  property's
occupancy level was 87% 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 for the last three years (includes operations prior to the
Company's  acquisition  of the property in June 1993 through  conversion  of the
Company's First Mortgage  Convertible Loan (FMCL) secured by the property to fee
ownership):

                    Occupancy             Annual Scheduled
         Date            Rate         Rent Per Square Foot
         -------    ------------      --------------------

         1995          91%                   $7.82
         1994          95                     7.30
         1993          91                     6.65

     The  Bedford  Park,  Illinois  property  is  located at the corner of Sayre
Avenue and 79th Street which is  approximately  nine miles southwest of downtown
Chicago.  The  area  around  the  property  has  had  a  significant  supply  of
mini-warehouse  space become available at the time this property opened in 1989.
The  majority  of the  supply of  mini-warehouse  space in this  market is being
absorbed.  At December  31, 1995,  the  property's  occupancy  level was 96%. 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 for the
last three years (includes operations prior to the Company's  acquisition of the
property  in June  1993  through  conversion  of the  Company's  First  Mortgage
Convertible Loan (FMCL) secured by the property to fee ownership):

                    Occupancy             Annual Scheduled
         Date            Rate         Rent Per Square Foot
         -------    ------------      --------------------
         1995             97%             $7.94
         1994             96               7.09
         1993             94               6.54

     The Los Angeles,  California property is located at the northeast corner of
the   intersection   of  Manchester   Avenue  and  the  Harbor  (110)   Freeway,
approximately seven miles southwest of downtown Los Angeles. Competition in this
south  central  area of Los Angeles is light . The  property's  rental rates are
typically  lower than the  property  competitors.  At  December  31,  1995,  the
property's  occupancy  level  was 89%.  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  for the last  three  years  (includes
operations  prior to the  Company's  acquisition  of the  property  in June 1993
through  conversion  of the Company's  First  Mortgage  Convertible  Loan (FMCL)
secured by the property to fee ownership):

                    Occupancy             Annual Scheduled
         Date            Rate         Rent Per Square Foot
         -------    ------------      --------------------
         1995             89%            $10.46
         1994             85              10.54
         1993             86              11.61

     The  Silver  Spring,  Maryland  property  is  located  at the north side of
Burlington  Avenue,  west of Fenton Street,  approximately  one-fourth of a mile
northeast  of  Washington,  D.C. The  population  around the property is densely
populated with only one significant  competitor  located one block away.  Rental
rates at this facility have remained  competitive  with the rates offered by its
nearby competitor. At December 31, 1995, the property's occupancy level was 89%.
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 for the last three years  (includes  operations  prior to the Company's
acquisition  of the property in June 1993 through  conversion  of the  Company's
First  Mortgage   Convertible  Loan  (FMCL)  secured  by  the  property  to  fee
ownership):

                    Occupancy             Annual Scheduled
         Date            Rate         Rent Per Square Foot
         -------    ------------      --------------------
         1995             91%            $12.96
         1994             88              12.03
         1993             73              11.79

     The Brooklyn,  New York property is located at the  intersection of Emerson
Avenue and Park Avenue  approximately  eight and  one-half  miles  southeast  of
downtown  Manhattan.   The  property  consist  of  three  connected  multi-story
buildings.  The property competes with two other  competitors  within a one mile
radius of the property.  Rental rates are competitive  with the rates offered by
its competitors.  At December 31, 1995, the property's  occupancy level was 88%.
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 for the last three years  (includes  operations  prior to the Company's
acquisition of the property in December 1994 through conversion of the Company's
First  Mortgage   Convertible  Loan  (FMCL)  secured  by  the  property  to  fee
ownership):

                    Occupancy             Annual Scheduled
         Date            Rate         Rent Per Square Foot
         -------    ------------      --------------------
         1995             89%            $12.05
         1994             87              10.61
         1993             69               9.96

     The Newark,  California  property is located at the northeast corner of the
intersection  of  Jarvis  Avenue  and  Fircrest  Street  approximately  35 miles
southeast  of  San  Francisco.  The  property  consists  of  five  single  story
buildings.  There are five competitors located within a three mile radius of the
property.  The rental rates charged at this property are  consistent  with those
charged at the  competitor's  properties.  At December 31, 1995,  the property's
occupancy  level was 87%. 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 for the last two years (the  property was acquired in June
1994):

                    Occupancy             Annual Scheduled
         Date            Rate         Rent Per Square Foot
         -------    ------------      --------------------
         1995             83%             $8.95
         1994             78               8.62

     The Hillside,  New Jersey property is located at 669 Glenwood  Avenue.  The
nearest  intersection is North Union Avenue.  The property's  visibility is very
good from the Garden State  Parkway.  The property is in a  predominately  dense
residential  and light  industrial  community  with no  competitors  within  the
immediate market.  The property consists of 840 units in single story buildings.
At December 31, 1995, the property's occupancy level was 97%. 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 for the last three
years:

                    Occupancy             Annual Scheduled
         Date            Rate         Rent Per Square Foot
         -------    ------------      --------------------
         1995             98%            $13.60
         1994             96              12.91
         1993             96              12.62


ITEM 3. LEGAL PROCEEDINGS
        -----------------

     There are no material legal proceedings pending against the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
        ---------------------------------------------------

     The Company held an annual  meeting of  shareholders  on November 13, 1995.
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:

                               Number of Shares of
                                  Common Stock        
                           --------------------------
Name                       Voted For         Withheld
----                       ---------         --------

B. Wayne Hughes             2,174,755           62,777
Harvey Lenkin               2,175,105           62,427
Dann V. Angeloff            2,170,012           67,520
Vern O. Curtis              2,176,605           60,927
Berry Holmes                2,172,824           64,708
Michael M. Sachs            2,171,559           65,973
Jack D. Steele              2,172,877           64,655

                            STORAGE PROPERTIES, INC.
                                     PART II

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

Description of Shares
---------------------

     Commencing  June 23,  1989,  the  Company  offered a maximum of  23,000,000
shares of its common stock to the public on a  best-efforts  basis at $10.00 per
share. The offering was terminated on September 17, 1990 (excluding the offering
of  shares  pursuant  to the  Company's  Dividend  Reinvestment  Plan  which was
terminated  January 16, 1991). The Company received gross proceeds in connection
with the offering of  $32,035,790  representing  3,203,579  shares sold to 2,858
investors.

     The Shares began trading on the American Stock Exchange ("AMEX") on October
1, 1990.

     As of February 28, 1996, there were  approximately  1,007 holders of record
of the common stock.

Market Prices and Dividends
---------------------------

     The  following  table sets forth the high and low sales  prices on the AMEX
composite tape and dividends for 1994 and 1995:

                                      Sales Price        Cash Dividends
Year        Quarter Ended            High      Low          Declared
----        -------------            ----      ---          --------

1994        March 31              $5-1/2      $4-3/4        $.07
            June 30                4-15/16     4-3/8         .07
            September 30           5-1/8       4-1/2         .07
            December 31            5-1/2       4-11/16       .40  (1)

1995        March 31              $5-3/4      $4-3/4        $.08
            June 30                6           5-1/2         .08
            September 30           6-1/8       5-1/2         .08
            December 31            6-3/8       5-7/8         .28  (2)

   (1)  Includes a special dividend of $.32 per share
   (2)  Includes a special dividend of $.20 per share

     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 two years all  distributions  have been  classified as ordinary
income.

     Under generally accepted accounting principles, the amount of distributions
to  shareholders  exceeded  income by  $431,000  and  $277,000 in 1995 and 1994,
respectively.

     In the event  that an  Original  Shareholder,  as  defined  below,  has not
received cash distributions from all sources (including  distributions,  if any,
attributable  to the  distribution  guaranty  which  expired June 23, 1993,  and
distributions  reinvested under the Company's Dividend  Reinvestment Plan) equal
to his  Original  Contribution  by the  earlier of (i) June 23, 2003 or (ii) the
date that a notice is sent to  shareholders  seeking  shareholder  approval of a
dissolution  of  the  Company,  the  Original  Shareholder  may  require  PSI to
repurchase  his  Original  Shares for the price  described  below (the  "Capital
Repurchase   Option"),   provided  that  there  has  not  been  any  substantial
liquidation  of the  Company's  investments  without  the  consent of PSI.  Each
Original  Shareholder  desiring to exercise the Capital  Repurchase  Option must
provide  written notice to PSI during the 60-day period  following June 23, 2003
(or the date of the notice seeking  shareholder  approval for a dissolution,  as
applicable).  Upon PSI's receipt of written notice from an Original  Shareholder
of the exercise of the Capital Repurchase Option, PSI will purchase the Original
Shares of that Original Shareholder,  by June 23, 2004 (or the effective date of
the dissolution, if applicable), for a price equal to the Original Contribution,
as reduced by cash  distributions  to the Original  Shareholder from all sources
(including  distributions  reinvested  under the  Dividend  Reinvestment  Plan).
Transferees or assignees of Shares (other than  transferees by operation of law)
will not have any rights with  respect to the  Capital  Repurchase  Option.  The
burden will be on the  shareholder to prove that he is the Original  Shareholder
(or a transferee by operation of law).

     Original  Shareholders means the original  registered holders of the Shares
purchased pursuant to the Company's  offering.  Original  Contribution means $10
per Share.  Original Shares means the shares purchased pursuant to the Company's
offering, excluding Shares purchased under the Dividend Reinvestment Plan.

     PSI has  informed  the  Company  that it does not  believe  it will have an
obligation with respect to the Capital Repurchase Option.

ITEM 6. SELECTED FINANCIAL DATA
        ------------------------
<TABLE>
<CAPTION>

                                                            For the Year Ended December 31,
                                           ---------------------------------------------------------------------------
                                           (In thousands, except per share data and weighted average shares)

                                           1995              1994              1993              1992             1991 
                                           ----              ----              ----              ----             ---- 

<S>                                       <C>              <C>               <C>              <C>              <C>    
Revenues                                  $3,746           $3,557            $3,447           $ 3,634          $ 3,653
Costs and expenses                         2,436            1,792             1,074               537              583
                                           -----            -----             -----               ---              ---

Net Income                                $1,310           $1,765            $2,373           $ 3,097          $ 3,070
                                          ======           ======            ======           =======          =======

Net income per share                      $  .39         $    .53          $    .71          $    .92        $     .91
                                          ======           ======            ======           =======          =======

Distributions declared per share        $    .52         $    .61          $    .69          $   1.00         $   1.00
                                          ======           ======            ======           =======          =======

Weighted average common
  shares outstanding                   3,348,167        3,348,167         3,348,167         3,348,167        3,358,113
                                       =========        =========         =========         =========        =========


Other data: 
Net cash provided by
  operating activities                  $  2,338         $  2,373          $  3,488          $  3,245         $  2,973

Net cash (used in) provided
  by investing activities                  1,172           (1,307)            1,251               (11)              (8)

Net cash used in
  financing activities                    (2,143)          (1,105)           (2,745)           (3,348)          (3,343)

Capital expenditures to
  maintain facilities                       (144)            (152)              (10)              (11)              (8)

Depreciation and amortization                777              612               341               108              102

Funds from Operation (1)                  $2,186           $2,377            $2,714           $3,205            $3,172
                                          ======           ======            ======           ======            ======

Balance Sheet:
Total assets                            $ 28,308         $ 28,956          $ 28,361          $ 28,519         $ 28,783
Shareholders' equity                      27,002           27,433            27,710            27,647           27,898

</TABLE>
           
(1)  Funds from  operations  (FFO) is defined as net income before  depreciation
     and extraordinary or non-recurring  items. FFO is a National Association of
     Real Estate  Investment  Trusts (NAREIT) defined term by which REITs may be
     compared  and does not factor out the REIT's  requirements  to make  either
     capital  improvements  or principal  payments on debt,  if any.  NAREIT has
     recently adopted revisions to the definition of funds from operations which
     will  become  effective  in  1996.  The  most  material  impact  of the new
     guidelines  will be (I)  amortization  of deferred  financing costs will be
     treated as an expense - i.e. it will no longer be treated as an add-back to
     net  income and (ii)  certain  gains on sales of land will be  included  in
     funds from operations if deemed to be recurring. These changes will have no
     impact on the way the Company currently computes its funds from operations.
     FFO is a supplemental performance measure for equity REITs used by industry
     analysts. FFO does not take into consideration  principal payments on debt,
     capital  improvements,  distributions and other obligations of the Company.
     The only depreciation or amortization that is added to income to derive FFO
     is depreciation and amortization  directly related to physical real estate.
     All  depreciation  and  amortization  reported  by the  Company  relates to
     physical real estate and does not include any  depreciation or amortization
     related to goodwill, deferred financing costs or other intangibles.  FFO is
     not  a  substitute  for  the  Company's  net  cash  provided  by  operating
     activities  or net  income,  as a measure  of the  Company's  liquidity  or
     operating performance.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS
        -----------------------------------------------------------------------

Results of Operations
---------------------

Year ended December 31, 1995 compared to the year ended December 31, 1994
-------------------------------------------------------------------------

     The  Company's  net income for 1995 compared to 1994 reflects the impact of
converting  the  Brooklyn,  New York FMCL to a fee  interest in the  property in
December  1994  and the  operations  of a  property  acquisition  in June  1994.
Effective  December 31, 1994,  the Company  exercised  its option to acquire the
Brooklyn,  New York property in which it held a convertible note receivable from
the  Advisor.  As a result,  1995  income  includes  operating  income  from the
Brooklyn,  New York  property  compared to interest  income on the mortgage note
secured by this property.

     Net  income  in  1995  was  $1,310,000  compared  to  $1,765,000  in  1994,
representing  a  decrease  of  $455,000.  Net  income per share was $.39 in 1995
compared to $.53 in 1994,  representing a decrease of $.14 or 26% per share. The
decrease in net income is attributable to lower earnings on property  operations
compared to the interest  income that had been earned on the Brooklyn,  New York
FMCL.

     Rental  income  increased  $918,000  or 34%  from  $2,664,000  in  1994  to
$3,582,000 in 1995. The  improvement is attributable to an increase in occupancy
levels and rental rates at the  Company's  "Same Store"  properties  (properties
owned since June 1993) and the  acquisition of an additional  properties in June
1994 and the  conversion of the Brooklyn  property to a fee interest in December
1994. The Company's  properties had weighted average occupancy levels of 91% and
90% for 1995 and 1994, respectively.

     Interest  income - affiliate  decreased  $825,000  from $841,000 in 1994 to
$16,000  in 1995 due to the  conversion  of the  Brooklyn,  New York  FMCL to an
equity  ownership in the property in December  1994.  The $16,000 earned in 1995
represents  interest  on the  balance  of the  principal  paydown  amount on the
Brooklyn, New York FMCL collected from the Advisor in February 1995.

     Interest income - other increased  $96,000 from $52,000 in 1994 to $148,000
in 1995 as a result of  increases  in interest  rates  earned and  average  cash
balances invested.

     Cost  of  operations  (including  management  fees  paid to  affiliate  and
depreciation and  amortization)  increased from $1,636,000 in 1994 to $2,192,000
in 1995  due to the  acquisition  of  additional  properties  in June  1994  and
December 1994. Cost of operations  (including  management fees paid to affiliate
and  depreciation  and  amortization)  at the Company's "Same Store"  properties
increased  slightly due to repairs and maintenance cost and management fees paid
to affiliate resulting from increased rental income.

     The  following  table  illustrates  the  operating  trends of the Company's
mini-warehouse facilities:

                                                 For the year ended December 31,
                                                 -------------------------------
                                                         1995        1994 (1)  
                                                         ----        -----

Weighted average occupancy level                            91%        90%
Realized monthly rent per occupied square foot (2)        $.88       $.87
Operating margin: (3)
      Before reduction for depreciation expense             60%        61%
      After reduction for depreciation expense              39%        39%
                                                  

-----------
(1)  Includes the  operations  of the  Brooklyn,  New York  property  before the
     Company  acquired it in  December  1994 and the  operations  of the Newark,
     California property from June 1994.
(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  margins are based on the Company's  operation of the facilities.
     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.


Management believes that the trends in property operations are due to:

     -    Increasing  occupancy  levels  resulting from decreased  levels of new
          supply in the industry and  promotion of the  Company's  facilities by
          PSI.
     -    Increasing  realized  rents per square  foot of  mini-warehouse  space
          resulting  from  increased  demand  for space  and  fewer  promotional
          discounts  of scheduled  rents  required to maintain  relatively  high
          occupancies.
     -    Increasing  revenues due to  increasing  realized  rents and occupancy
          levels offset in part by an increase in expenses (primarily management
          fees and repair and maintenance 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 has  expensed,  as of
December 31,  1995,  an estimated  $99,000 for known  environmental  remediation
requirements.

Year ended December 31, 1994 compared to the year ended December 31, 1993
-------------------------------------------------------------------------

     The Company's  income for 1994  reflects the  conversion of the majority of
its  asset  base  from  mortgages  to fee  interest  in the  properties  and the
operations of a property  acquisition in June 1994. Effective June 30, 1993, the
Company exercised its option to acquire four of five properties in which it held
convertible notes receivable from its Advisor. As a result, income for the first
six months of 1994 includes the operating income of these properties compared to
interest  income on the mortgage  notes secured by these  properties in the same
period in 1993.  The operations for the last six months of 1994 and 1993 include
the operating income of these properties.

     Net  income  in  1994  was  $1,765,000  compared  to  $2,373,000  in  1993,
representing  an  decrease  of  $608,000.  Net income per share was $.53 in 1994
compared to $.71 in 1993,  representing a decrease of $.18 or 25% per share. The
decrease in net income is attributable to lower earnings on property  operations
compared to the interest income that had been earned on the FMCLs.

     Interest income from affiliate decreased $1,156,000 from $1,997,000 in 1993
to $841,000 in 1994 as a result of the  conversion  of  $17,788,000  of FMCLs in
June 1993 to equity ownership of the facilities that had secured those FMCLs.

     Other interest  income  increased  $35,000 from 1993 to 1994 primarily as a
result of an increase in cash balances  that  resulted  from the Advisor  making
principal  paydowns of the FMCLs in June 1993 and a slight  increase in interest
rates earned on invested cash balances during 1994 compared to 1993.

     Depreciation  expense increased  $271,000 from $341,000 in 1993 to $612,000
in 1994 as a result  of a full year of  depreciation  with  respect  to the four
mini-warehouse   facilities  acquired  in  June  1993  and  a  partial  year  of
depreciation  on a  facility  acquired  in June  1994.  Depreciation  in 1995 is
expected  to  increase  as the  result  of a full  year of  depreciation  on the
facilities acquired in June 1994 and December 1994.

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

     Net cash provided by operating activities (net income plus depreciation and
amortization)  reflects the cash  generated from the Company's  business  before
distributions  to shareholders  and capital  expenditures.  Net cash provided by
operating activities has decreased from $3,488,000 in 1993 to $2,338,000 in 1995
primarily  as the result of a decrease  in net income  attributable  to earnings
from  property  operations  being lower than the  interest  income that had been
earned on the FMCLs.

     The Company's  Funds From  Operations  ("FFO") is defined  generally by the
National  Association of Real Estate  Investment Trusts ("NAREIT") as net income
before loss on early  extinguishment of debt, gain on disposition of real estate
and non-recurring  items (including  environmental  cost), plus depreciation and
amortization.  FFO for the years  ended  December  31,  1995,  1994 and 1993 was
$2,186,000, $2,377,000 and $2,714,000, respectively. NAREIT has recently adopted
revisions to the definition of funds from operations which will become effective
in 1996. The most material impact of the new guidelines will be (i) amortization
of  deferred  financing  costs will be  treated as an expense - i.e.  it will no
longer be treated as an add-back to net income and (ii)  certain  gains on sales
of land will be included  in funds from  operations  if deemed to be  recurring.
These changes will have no impact on the way the Company currently  computes its
funds from  operations.  FFO is a  supplemental  performance  measure for equity
REITs used by industry analysts. FFO does not take into consideration  principal
payments on debt, capital  improvements,  distributions and other obligations of
the Company.  The only  depreciation or amortization  that is added to income to
derive FFO is depreciation  and  amortization  directly related to physical real
estate.  All depreciation  and  amortization  reported by the Company relates to
physical  real  estate and does not  include any  depreciation  or  amortization
related to goodwill, deferred financing costs or other intangibles. FFO is not a
substitute  for the Company's  net cash provided by operating  activities or net
income, as a measure of liquidity or operating performance.

     The  following  table  summarizes  the  Company's  ability to make  capital
improvements  to maintain  its  facilities  through the use of cash  provided by
operating  activities.  The remaining  cash flow is available to the Company for
distributions  to  its  shareholders.  The  deficiency  of  cash  available  for
distributions  in 1995 and 1993 were funded  from cash  reserves  and  principal
payments received on the FMCLs.

<TABLE>
<CAPTION>
                                                                                Years ended December 31,             
                                                                         -------------------------------------------
                                                                         1995              1994               1993   
                                                                         ----              ----               ----   
<S>                                                                    <C>              <C>               <C>       
Net income                                                             $1,310,000       $1,765,000        $2,373,000
Environmental cost                                                         99,000          -                 -
Depreciation and amortization                                             777,000          612,000           341,000
                                                                          -------          -------           -------
Funds from operations (net cash provided by operating
     activities before changes in working capital components)           2,186,000        2,377,000         2,714,000
Capital improvements to maintain facilities                              (144,000)        (152,000)          (10,000)
                                                                         --------         --------           ------- 
Excess funds available for distributions to shareholders                2,042,000        2,225,000         2,704,000
Cash distributions to shareholders                                     (2,143,000)      (1,105,000)       (2,745,000)
                                                                       ----------       ----------        ---------- 
(Deficiency) excess of funds available for optional
     distributions to shareholders or for investment                  $  (101,000)     $ 1,120,000        $  (41,000)
                                                                       ===========      ===========        ========== 
</TABLE>

     For  1996,  the  Company  anticipates  approximately  $130,000  in  capital
improvements in 1996. During 1995, the Company's  property operator  commenced a
program  to enhance  the  visual  appearance  of the  mini-warehouse  facilities
managed by it. Such enhancements will include new signs, exterior color schemes,
and improvements to the rental offices. Included in the 1996 capital improvement
budget are estimated costs of $19,000 for such enhancements.


     In November 1995, the Management Agreement with PSMI was amended to provide
that upon demand from PSI or PSMI 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 $125,000.

REIT Distribution Requirement
-----------------------------

     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.  Under certain circumstances,  the Company can
rectify  a failure  to meet the 95%  distribution  test by making  distributions
after the close of a particular taxable year and attributing those distributions
to the  prior  year's  taxable  income.  The  Company  has  satisfied  the  REIT
distribution requirement for 1994 and 1995 by attributing  distributions in 1995
and 1996 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.

     Through  June  23,  1993,  the  Advisor   guaranteed   that  the  quarterly
distributions to shareholders (including distributions by the Company of capital
or  borrowed  funds  to  shareholders)   would  equal  $.25  per  share,   which
distribution guaranty has expired.

     On November 13, 1995, the Company's  Board of Directors  declared a regular
distribution  of $.08 per  share and a  special  distribution  of $.20 per share
which was payable on January 12, 1996 to  shareholders of record on December 29,
1995.

Collection of Note Receivable
-----------------------------

     In  connection  with a sale of  land  to an  unaffiliated  third  party  in
September  1994, the Company  received a $450,000  mortgage note. In April 1995,
the note was paid off prior to its maturity.

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

     In March 1996, the Company and PSI agreed,  subject to certain  conditions,
to merge. In the merger, the Company would be merged with and into PSI, and each
outstanding  share of the  Company's  Common Stock  (3,348,167  shares) would be
converted,  at the  election of the  shareholders  of the  Company,  into either
shares of PSI common stock or with respect to up to 20% of the Company's  Common
Stock,  $7.31 in cash.  This  dollar  amount  has  been  based on the  Company's
estimated  net  asset  value as of June 30,  1996  (the  appraised  value of the
Company's real estate assets and the estimated book value of the Company's other
net assets).  The number of shares of PSI common stock will be based on dividing
this same dollar  amount by the average of the per share  closing  prices on the
New  York  Stock  Exchange  for  a  specified  period  prior  to  the  Company's
shareholders' meeting. In the event of the merger, pre-merger cash distributions
would be made to  shareholders  of the Company to cause the  Company's net asset
value as of the effective date of the merger to be  substantially  equivalent to
its  estimated  net  asset  value  as of  June  30,  1996.  If  additional  cash
distributions  are required in order to satisfy the Company's REIT  distribution
requirements,  the number of shares of PSI common stock issued in the merger and
the amount  receivable upon a cash election would be reduced on a pro rata basis
in an aggregate  amount equal to such  additional  distributions.  The merger is
conditioned on, among other requirements,  approval by PSI's board of directors,
receipt of a  satisfactory  fairness  opinion by the Company and approval by the
shareholders of the Company.  It is expected that any merger would close in June
or July  1996.  PSI owns  approximately  4 percent  of the  Common  Stock of the
Company.


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

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


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

                                      None.

                                    PART III

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

     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 Company's 1995 fiscal year end.


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

     Incorporated by reference herein is the 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 Company's 1995 fiscal year end.


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

     Incorporated by reference herein is the 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 Company's 1995 fiscal year end.


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

     Incorporated by reference herein is the 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 Company's 1995 fiscal year end.


                                     PART IV

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


     (a)     1.     Financial Statements

                    The financial statements listed in the accompanying Index to
          Financial  Statements and Financial  Statement  Schedules are filed as
          part of this report.

             2.     Financial Statement Schedules
                    The financial statement schedules listed in the accompanying
          Index to Financial  Statements and Financial  Statement  Schedules are
          filed as part of this report.

             3.     Exhibits
                    See Exhibit Index contained herein.

     (b)     Reports on Form 8-K
                    No reports on Form 8-K were filed during the last quarter of
          the period ended December 31, 1995.

      (c)    Exhibits

                    See Exhibit Index contained herein.

<PAGE>

                            STORAGE PROPERTIES, INC.

                                  EXHIBIT INDEX

                                  (Item 14(c))


     3.1  Articles  of  Incorporation.  Previously  filed as an  exhibit  to the
          Company's  Registration Statement No. 33-24360 and incorporated herein
          by reference.

     3.2  Amended and Restated  By-Laws.  Previously  filed as an exhibit to the
          Company's  Registration Statement No. 33-24360 and incorporated herein
          by reference

     10.1 Management  Agreement  between  Storage  Properties,  Inc.  and Public
          Storage  Management,  Inc.  Previously  filed  as an  exhibit  to  the
          Company's  Registration Statement No. 33-24360 and incorporated herein
          by reference

     10.2 Amendment to Management Agreement date November 13, 1995 among Storage
          Properties,   Inc.,  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.

     10.3 Advisory Agreement between Storage Properties,  Inc. and PS Properties
          Advisors,  Inc. Previously filed as an exhibit to the Company's Annual
          Report  on  Form  10-K  for the  year  ended  December  31,  1989  and
          incorporated herein by reference.

     10.4 Master Secured Construction Loan Agreement between Storage Properties,
          Inc. and PS Properties  Advisors,  Inc. Previously filed as an exhibit
          to the  Company's  Annual  Report  on Form  10-K  for the  year  ended
          December 31, 1989 and incorporated herein by reference.

     27   Financial Data Schedule. Filed herewith.


<PAGE>

                                   SIGNATURES

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

                                               STORAGE PROPERTIES, INC.

Date:  March 26, 1996                          By:   /s/ HARVEY LENKIN
                                                    Harvey Lenkin, President

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the date indicated.

<TABLE>
<CAPTION>
      Signature                                  Title                                         Date
      ---------                                  -----                                         ----

<S>                                         <C>                                           <C>
/s/ HARVEY LENKIN                          President and Director                         March 26, 1996
-----------------
Harvey Lenkin

/s/ RONALD L. HAVNER, JR                   Vice President, Chief                          March 26, 1996
------------------------                   
Ronald L. Havner, Jr.                      Financial Officer
                                           (Principal Financial
                                           Officer)

/s/ DAVID P. SINGELYN                      Vice President, Controller                     March 26, 1996
---------------------
David P. Singelyn                          (Principal Accounting
                                           Officer)


/s/ B. WAYNE HUGHES                        Chairman of the Board                          March 26, 1996
-------------------                        
B. Wayne Hughes                            and Director
                                           (Principal Executive
                                           Officer)

/s/ DANN V. ANGELOFF                       Director                                       March 26, 1996
--------------------
Dann V. Angeloff


/s/ VERN O. CURTIS                         Director                                       March 26, 1996
------------------
Vern O. Curtis


/s/ BERRY HOLMES                           Director                                       March 26, 1996
----------------
Berry Holmes


/s/ JACK D. STEELE                         Director                                       March 26, 1996
------------------
Jack D. Steele

</TABLE>

<PAGE>
                            Storage Properties, Inc.
                                    INDEX TO
                              FINANCIAL STATEMENTS
                                       AND
                          FINANCIAL STATEMENT SCHEDULES
                                  (Item 14 (a))


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

Report of Independent Auditors                                           F-1


Financial Statements and Schedules:

      Balance Sheets as of December 31, 1995 and 1994                    F-2

      For each of the three years in the period ended December 31, 1995:

           Statements of Income                                          F-3

           Statements of Shareholders' Equity                            F-4

           Statements of Cash Flows                                      F-5


      Notes to Financial Statements                                  F-6 - F-10


Schedules for the years ended December 31, 1995, 1994 and 1993:
      III  Real Estate and Accumulated Depreciation                 F-11 - F-12
      IV   Mortgage loans on real estate                               F - 13




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
Storage Properties, Inc.


We have audited the accompanying  balance sheets of Storage Properties,  Inc. as
of  December  31,  1995  and  1994,  and  the  related   statements  of  income,
shareholders'  equity and cash  flows for each of the three  years in the period
ended  December 31, 1995.  Our audits also included the schedules  listed in the
index  at  item  14(a).  These  financial   statements  and  schedules  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements and schedules 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 Storage  Properties,  Inc. at
December 31, 1995 and 1994, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1995, in conformity
with generally accepted accounting principles. Also, in our opinion, the related
financial  statement  schedules,  when  considered  in  relation  to  the  basic
financial  statements taken as a whole,  present fairly in all material respects
the information set forth therein.





                                                    ERNST & YOUNG LLP


February 27, 1996,
except for footnote 8 which date
is March 4, 1996
Los Angeles, California

<PAGE>
<TABLE>
<CAPTION>

                            STORAGE PROPERTIES, INC.
                                 BALANCE SHEETS
                           December 31, 1995 and 1994


                                                                        1995                       1994     
                                                                        ----                       ----     

                                             ASSETS
                                             ------

<S>                                                                   <C>                      <C>        
Cash and cash equivalents                                             $3,608,000               $ 2,241,000

Note receivable                                                           -                        417,000

Due from affiliate                                                         -                       899,000

Other assets                                                             169,000                   237,000

Unimproved land                                                          578,000                   578,000

Real estate facilities, at cost:
  Land                                                                 7,499,000                 7,499,000
  Buildings                                                           18,419,000                18,275,000
                                                                      ----------                ----------
                                                                      25,918,000                25,774,000
  Less: accumulated depreciation                                      (1,965,000)               (1,190,000)
                                                                      ----------                ----------
                                                                      23,953,000                24,584,000
                                                                      ----------                ----------

Total assets                                                         $28,308,000               $28,956,000
                                                                     ===========               ===========


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

Accrued and other liabilities                                       $    284,000               $   109,000
Dividends payable                                                        937,000                 1,339,000
Advance payments from renters                                             85,000                    75,000

Shareholders' equity:

  Preferred stock, $.05 par value,
     10,000,000 shares authorized,
     none issued and outstanding                                           -                       -
  Common stock, $.05 par value,
     100,000,000 shares authorized,
     3,348,167 issued and outstanding                                    167,000                   167,000
  Paid-in-capital                                                     28,898,000                28,898,000
  Cumulative net income                                               14,304,000                12,994,000
  Cumulative distributions                                           (16,367,000)              (14,626,000)
                                                                      ----------                ----------
     Total shareholders' equity                                       27,002,000                27,433,000
                                                                      ----------                ----------

Total liabilities and shareholders' equity                           $28,308,000               $28,956,000
                                                                     ===========               ===========


<PAGE>

                            STORAGE PROPERTIES, INC.
                              STATEMENTS OF INCOME
        For each of the three years in the period ended December 31, 1995


                                                               1995            1994                1993   
                                                             ----------       ----------        ----------
REVENUES:

Rental income                                                $3,582,000       $2,664,000        $1,433,000
Interest income - affiliate                                      16,000          841,000         1,997,000
Interest income - other                                         148,000           52,000            17,000
                                                             ----------       ----------        ----------
                                                              3,746,000        3,557,000         3,447,000
                                                              =========        =========         =========




COSTS AND EXPENSES:

Cost of operations                                            1,200,000          864,000           472,000
Management fees paid to affiliate                               215,000          160,000            86,000
Depreciation and amortization                                   777,000          612,000           341,000
Environmental cost                                               99,000            -                 -
General and administrative                                      145,000          156,000           175,000
                                                             ----------       ----------        ----------

                                                              2,436,000        1,792,000         1,074,000
                                                             ----------       ----------        ----------

NET INCOME                                                   $1,310,000       $1,765,000        $2,373,000
                                                              =========        =========         =========



Net income per share                                         $     0.39       $     0.53        $     0.71
                                                              =========        =========         =========
Dividends declared per share                                 $     0.52       $     0.61        $     0.69
                                                              =========        =========         =========
Weighted average common shares                                3,348,167        3,348,167         3,348,167
                                                              =========        =========         =========

</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                            STORAGE PROPERTIES, INC.
                       STATEMENTS OF SHAREHOLDERS' EQUITY
              For the years ended December 31, 1995, 1994 and 1993



                                  Common                                      Cumulative      Cumulative             Total
                                  Stock        Common         Paid-in             Net        Distributions       Shareholders'
                               Outstanding     Stock          Capital           Income         Declared             Equity 
                               -----------     -----          -------           ------         --------             ------ 

<S>                              <C>            <C>          <C>               <C>            <C>               <C>             
Balances at
   December 31, 1992             3,348,167     $167,000       $28,898,000      $8,856,000     $(10,274,000)     $27,647,000

Net income                                                                      2,373,000                         2,373,000

Cash distributions declared
   ($.69 per share)                                                                             (2,310,000)      (2,310,000)
                                 ---------     --------       -----------      ----------     ------------      -----------

Balances at
   December 31, 1993             3,348,167      167,000        28,898,000      11,229,000      (12,584,000)      27,710,000

Net income                                                                      1,765,000                         1,765,000

Cash distributions declared
   ($.61 per share)                                                                             (2,042,000)      (2,042,000)
                                 ---------     --------       -----------      ----------     ------------      -----------

Balance at
    December 31, 1994            3,348,167      167,000        28,898,000      12,994,000      (14,626,000)      27,433,000

Net income                                                                      1,310,000                         1,310,000

Cash distributions declared
   ($.52 per share)                                                                             (1,741,000)      (1,741,000)
                                 ---------     --------       -----------      ----------     ------------      -----------

Balances at
   December 31, 1995             3,348,167     $167,000       $28,898,000     $14,304,000     $(16,367,000)     $27,002,000
                                 =========     ========       ===========     ===========     ============      ===========


</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                            STORAGE PROPERTIES, INC.
                            STATEMENTS OF CASH FLOWS
                       For each of the three years in the
                         period ended December 31, 1995

                                                                    1995              1994           1993    
                                                                    ----              ----           ----    

<S>                                                              <C>               <C>              <C>   
Cash flows from operating activities:

  Net income                                                     $1,310,000        $1,765,000      $2,373,000


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

  Depreciation and amortization                                     777,000           612,000         341,000
  Amortization of note premium                                        -                20,000          28,000
  Decrease in other assets                                           66,000            41,000         532,000
  (Decrease) increase in accrued and other liabilities              175,000           (68,000)        142,000
  Increase in advance payments from renters                          10,000             3,000          72,000
                                                                 ----------        ----------      ----------

    Total adjustments                                             1,028,000           608,000       1,115,000
                                                                 ----------        ----------      ----------

    Net cash provided by operating activities                     2,338,000         2,373,000       3,488,000
                                                                 ----------        ----------      ----------

Cash flows from investing activities:
  Principal payments received on mortgage loans                     417,000         1,033,000       1,261,000
  Collection of due from affiliate                                  899,000             -               -
  Proceeds from sale of land                                          -               127,000           -
  Acquisition of facility                                             -            (2,315,000)          -
  Additions to real estate facilities                              (144,000)         (152,000)        (10,000)
                                                                 ----------        ----------      ----------

    Net cash provided by (used in) investing activities           1,172,000        (1,307,000)      1,251,000
                                                                 ----------        ----------      ----------

Cash flows from financing activities:
  Dividends paid to shareholders                                 (2,143,000)       (1,105,000)     (2,745,000)
                                                                 ----------        ----------      ----------

    Net cash used in financing activities                        (2,143,000)       (1,105,000)     (2,745,000)
                                                                 ----------        ----------      ----------

Net increase (decrease) in cash and cash equivalents              1,367,000           (39,000)      1,994,000

Cash and cash equivalents at the beginning of the year            2,241,000         2,280,000         286,000
                                                                 ----------        ----------      ----------

Cash and cash equivalents at the end of the year                 $3,608,000       $ 2,241,000     $ 2,280,000
                                                                 ==========        ==========      ==========      


Supplemental schedule of non-cash
  investing and financing activities:

Acquisition of land as paydown on
  first mortgage convertible loan                         $         -             $ 1,155,000$         -       
                                                                 ==========        ==========      ==========      

Acquisition of real estate facilities in exchange
  for first mortgage convertible loans pursuant
  to purchase options                                     $           -           $ 4,566,000     $16,624,000
                                                                 ==========        ==========      ==========      

Receipt of note receivable as proceeds
  from sale of  unimproved land                           $           -          $    450,000$         -       
                                                                 ==========        ==========      ==========      
</TABLE>
<PAGE>

                            STORAGE PROPERTIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1995


1.   Description of the Company's Business
     -------------------------------------

     Storage  Properties,  Inc. (the "Company") is a California  corporation and
was organized in March 1988 and has elected to qualify as real estate investment
trust  ("REIT") for Federal  income tax purposes.  As of December 31, 1995,  the
Company's principal investments consisted of mini-warehouse  facilities operated
as  self-storage   facilities.   Mini-warehouse   facilities  are   self-storage
facilities offering space for rent, usually on a month-to-month basis.

     Pursuant to an Advisory  Agreement which was entered into in June 1989 (the
"Advisory Agreement"),  PS Properties Advisors,  Inc. ("PSPA") was the Company's
investment advisor through August 1995 (in August 1995, PSPA was merged into its
parent,  PSI Holdings,  Inc.  ("PSH"),  and PSH assumed all of PSPA's rights and
obligations under the Advisory Agreement). In November 1995, there were a series
of mergers  among  Public  Storage  Management,  Inc.  (which was the  Company's
mini-warehouse operator pursuant to a Management Agreement),  PSH (which was the
Company's  investment  advisor),  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 real estate  investment  trust
organized as a California  corporation.  In the PSMI Merger,  Storage  Equities,
Inc.'s name was changed to Public Storage,  Inc.  ("PSI") and PSI assumed all of
PSMI's rights and  obligations  under the Advisory  Agreement and the Management
Agreement, thereby becoming the Company's investment advisor and the operator of
the Company's mini-warehouse  properties.  (As used herein,  the term "Advisor"
refers to PSI or PSPA, as the context requires.)

2.   Summary of Significant Accounting Policies
     ------------------------------------------

     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.

     Revenue Recognition
     -------------------
     Property rents are recognized as earned.

     Cash and Cash Equivalents
     -------------------------
     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.

     Depreciation and Amortization
     -----------------------------
     The Company's buildings are depreciated on the straight-line basis over the
their estimated useful lives of 25 years.  One of the Company's  buildings which
is situated on leased  premises is depreciated on the  straight-line  basis over
the term of the related ground lease which approximates its useful life.

     At  December  31,  1995,  the basis of real estate  facilities  for Federal
income  tax  purposes  (after   adjustment  for   accumulated   depreciation  of
$1,184,000) is $25,395,000.

     Net Income per Share
     --------------------
     Net income per share is computed  using the weighted  average common shares
outstanding during the periods presented.

2.   Summary of Significant Accounting Policies (continued)
     -----------------------------------------------------

     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 has  expensed,  as of
December 31,  1995,  an estimated  $99,000 for known  environmental  remediation
requirements.  Although  there can be no assurance,  the Company is not aware of
any environmental contamination of any of it's property sites which individually
or in the  aggregate  would  be  material  to the  Company's  overall  business,
financial condition, or results of operations.

3.   First Mortgage Convertible Loans
     --------------------------------

     During 1994, the Company had one First Mortgage  Convertible  Loan ("FMCL")
made to the Advisor.  The FMCL was comprised of a nonrecourse  loan secured by a
first  priority deed of trust on a property that was developed and operated as a
self-storage  facility (the "Brooklyn Property") together with a purchase option
which entitled the Company to purchase the Brooklyn  Property  during the period
from June 23, 1993 to June 23, 1995 by converting the FMCL into equity ownership
in the Brooklyn Property.

     The FMCL bore  interest at 12.25% per annum and had a maturity date of June
23,  1998.  Accrued  interest  was  payable  quarterly  during the Debt  Service
Guaranty  period  which ended June 23,  1993  (except  where  extended by PSI as
described below). After expiration of the Debt Service Guaranty, interest on the
FMCL  would  have  been  payable  quarterly  out of net  property  cash flow (as
defined) of the Brooklyn Property plus any remaining interest reserve.

     The  Advisor  had  recourse  liability  for payment of interest on the FMCL
during the Debt Service  Guaranty  period.  In  addition,  if at the end of June
1993, the annualized net cash flow from the Brooklyn  Property for the preceding
six months was less than four percent of the original principal of the FMCL, the
Advisor  was  obligated  to either (i) prepay all or a portion of the FMCL in an
amount such that  annualized  net cash flow from the  Brooklyn  Property for the
preceding six months  provided a four percent yield  ("Paydown  Amount") or (ii)
extend the Debt Service  Guaranty through June 1994. Under the original terms of
the FMCL, if the Debt Service  Guaranty was extended  through June 1994, and the
Brooklyn Property had not achieved the specified performance level by the end of
June 1994, the Advisor would have been obligated to prepay the Paydown Amount on
the FMCL.

     In June 1993,  the Advisor  extended the Debt Service  Guaranty on the FMCL
secured by the Brooklyn Property through June 1994. In May 1994, the Advisor and
the Company agreed to extend the Debt Service  Guaranty to December 31, 1994. In
consideration  of the  extension  of the  Debt  Service  Guaranty,  the  Advisor
transferred to the Company  unimproved land with an appraised value (based on an
independent  appraisal) of $1,155,000 which was applied to reduce the balance of
the FMCL  secured  by the  Brooklyn  Property.  The  Paydown  Amount on the FMCL
secured by the Brooklyn Property was determined to be $1,899,000 (in addition to
the paydown on the FMCL made in June 1994 through the transfer of the unimproved
land),  based on the annualized net cash flow from the Brooklyn Property for the
six months ending  December 31, 1994. In December  1994, the Advisor paid to the
Company  $1,000,000  towards  the  Paydown  Amount  on the FMCL  secured  by the
Brooklyn Property. The balance of $899,000 was reported as Due from Affiliate at
December  31,  1994.  In February  1995,  the  $899,000  balance was paid to the
Company by the  Advisor in addition  to accrued  interest  of $197,000  that was
included in Other Assets at December 31, 1994.  Effective December 31, 1994, the
Company  exercised  its  purchase  option with  respect the  Brooklyn  Property,
thereby  converting  the  FMCL to  equity  ownership.  The  Company's  aggregate
purchase price for the Brooklyn  Property was $4,558,000.  The total acquisition
cost of the facility of $4,566,000 includes the above purchase price plus $8,000
of unamortized premium on the FMCL. Effective January 1, 1995, the Company began
operating and receiving all operating  cash flow from the Brooklyn  Property and
the Advisor has no further obligation with respect to the converted FMCL.

4.   Real Estate Facilities
     ----------------------

     The Company has an undivided 62.5% interest in a mini-warehouse facility in
Hillside,  New Jersey.  The remaining 37.5% interest in the property is owned by
an  affiliate  of PSI.  The  facility is located on land which is leased from an
unrelated party,  however, the Company pays its share of property taxes ($69,000
in 1995,  $69,000 in 1994 and $67,000 in 1993). The term of the lease is through
February 28, 2011 which includes two renewal option periods of 5 years each.

     Future minimum lease  payments (the Company's  62.5% share) with respect to
this lease are as follows:

                1996                                 $    68,000
                1997                                      70,000
                1998                                      70,000
                1999                                      70,000
                2000                                      73,000
                Thereafter                               792,000
                                                         -------

                                                      $1,143,000
                                                      ==========

     Included in cost of  operations  for each of the years ended  December  31,
1995,  1994 and 1993 is $66,000,  $58,000 and $58,000 in rent expense related to
this lease.

5.   Note Receivable
     ---------------

     In September  1994,  the Company sold to an  unaffiliated  party 50% of the
unimproved  land  received  from the Advisor for  $577,000.  The Company did not
realize any gain or loss on the sale. The Company received  $127,000 in cash and
a mortgage  note  receivable  for  $450,000.  The note bore  interest  at 9% and
provided  for monthly  principal  and interest  payments of $14,000  through the
maturity of the note in September  1997.  The note was paid off in full in April
1995.

6.   Shareholders' Equity
     --------------------

     PSI has an  obligation  (provided  that there has not been any  substantial
liquidation  of the Company's  investments  without PSI's consent) to repurchase
the original shares of each original shareholder (at such shareholder's  option)
for a price equal to the original  contribution as reduced by cash distributions
from all sources,  in the event that the original  shareholder  has not received
cash  distributions  from all sources equal to his original  contribution  by no
later than June 2003 (the "Capital Repurchase Option") (see Note 7. Advisory and
Management Contracts and Obligations).

     For Federal income tax purposes, all distributions declared by the Board of
Directors in 1995, 1994 and 1993 were ordinary income.

7.   Advisory and Management Contracts and Obligations
     --------------------------------------------------

     Pursuant to the Advisory Agreement, PSI advises the Company with respect to
its investments and administers the daily operations of the Company.

     The Company has a Management  Agreement with PSI (as  successor-in-interest
to Public  Storage  Management,  Inc.).  Under the terms of the  agreement,  PSI
operates the mini-warehouse  facilities for a fee equal to 6% of the facilities'
monthly gross revenue (as defined).


7.   Advisory and Management Contracts and Obligations (continued)
     -------------------------------------------------------------

     In November 1995, the Management Agreement was amended to provide that upon
demand from PSI or PSMI 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 $125,000.  The amount is included in
other assets in the Balance  Sheet at December 31, 1995 and will be amortized as
management fee expense in 1996.

     PSI will be paid an  Advisory  Fee of 10% of the  Company's  net cash  flow
beginning when  distributions  to shareholders  (without regard to the number of
shares  outstanding)  from all  sources  is equal to 75% of the  gross  offering
proceeds and continuing  until  distributions  to shareholders  from all sources
equal  100% of the  gross  offering  proceeds;  thereafter,  PSI will be paid an
Advisory Fee of 20% of net cash flow and 20% of cash from sales or  refinancing.
Gross offering  proceeds for which this  computation  is based are  $32,036,000.
Through  December 31, 1995,  the Company has made and declared  cumulative  cash
distributions to shareholders of  approximately  $16,367,000.  Accordingly,  the
Company will  commence  paying PSI an advisory fee of 10% of the  Company's  net
cash  flow  when  $7,660,000  in  additional   distributions  to  the  Company's
shareholders have been made.

     The Advisory Agreement had an initial five-year period (through June 1994);
thereafter,  the Advisory  Agreement  is  automatically  renewed for  successive
two-year periods,  subject to termination,  with or without cause, by a majority
of the  directors  on behalf of the  Company,  or by PSI,  upon 60 days  written
notice. The Advisory Agreement provides for the purchase by the Company of PSI's
future interest in the Advisory Fee upon  termination of the Advisory  Agreement
(except under certain limited circumstances).

     The  Capital  Repurchase  Option  (see Note 6.  Shareholders'  Equity) is a
recourse  obligation  of PSI.  PSI has  informed  the  Company  that it does not
believe that it will have an obligation  with respect to the Capital  Repurchase
Option.

8.   Subsequent Event
     ----------------

     In March 1996, the Company and PSI agreed,  subject to certain  conditions,
to merge. In the merger, the Company would be merged with and into PSI, and each
outstanding  share of the  Company's  Common Stock  (3,348,167  shares) would be
converted,  at the  election of the  shareholders  of the  Company,  into either
shares of PSI common stock or with respect to up to 20% of the Company's  Common
Stock,  $7.31 in cash.  This  dollar  amount  has  been  based on the  Company's
estimated  net  asset  value as of June 30,  1996  (the  appraised  value of the
Company's real estate assets and the estimated book value of the Company's other
net assets).  The number of shares of PSI common stock will be based on dividing
this same dollar  amount by the average of the per share  closing  prices on the
New  York  Stock  Exchange  for  a  specified  period  prior  to  the  Company's
shareholders' meeting. In the event of the merger, pre-merger cash distributions
would be made to  shareholders  of the Company to cause the  Company's net asset
value as of the effective date of the merger to be  substantially  equivalent to
its  estimated  net  asset  value  as of  June  30,  1996.  If  additional  cash
distributions  are required in order to satisfy the Company's REIT  distribution
requirements,  the number of shares of PSI common stock issued in the merger and
the amount  receivable upon a cash election would be reduced on a pro rata basis
in an aggregate  amount equal to such  additional  distributions.  The merger is
conditioned on, among other requirements,  approval by PSI's board of directors,
receipt of a  satisfactory  fairness  opinion by the Company and approval by the
shareholders of the Company.  It is expected that any merger would close in June
or July  1996.  PSI owns  approximately  4 percent  of the  Common  Stock of the
Company.

9.   Quarterly results (unaudited)
     ----------------------------

     The following is a summary of unaudited quarterly results of operations:
<TABLE>
<CAPTION>

                                                                          Three months ended              
                                            ---------------------------------------------------------------
                                              March             June           September        December
                                            31, 1995          30, 1995         30, 1995         31, 1995   
                                            --------          --------         --------         --------   

<S>                                         <C>               <C>              <C>               <C>      
     Revenues                               $ 907,000         $ 931,000        $ 970,000         $ 938,000

     Expenses                                 582,000           574,000          581,000           699,000
                                              -------           -------          -------           -------

     Net income                             $ 325,000         $ 357,000        $ 389,000         $ 239,000
                                            =========         =========        =========         =========

     Net income per share                   $    0.10         $    0.10        $    0.12         $    0.07
                                            =========         =========        =========         =========

     Distribution declared per share        $    0.08         $    0.08        $    0.08         $    0.28
                                            =========         =========        =========         =========


                                                                        Three months ended      
                                            --------------------------------------------------------------          
                                              March             June           September        December
                                            31, 1994          30, 1994         30, 1994         31, 1994   
                                            --------          --------         --------         --------   

     Revenues                               $ 812,000         $ 848,000        $ 946,000         $ 951,000

     Expenses                                 418,000           408,000          478,000           488,000

     Net income                             $ 394,000         $ 440,000        $ 468,000         $ 463,000
                                            =========         =========        =========         =========

     Net income per share                   $    0.12         $    0.13        $    0.14         $    0.14
                                            =========         =========        =========         =========

     Distribution declared per share        $    0.07         $    0.07        $    0.07      $       0.40
                                            =========         =========        =========         =========

</TABLE>
<PAGE>


                            Storage Properties, Inc.

             Schedule III - Real Estate and Accumulated Depreciation
<TABLE>


                                                                              Cost
                                                                          subsequent to        Gross Carrying Amount
                                                  Initial Cost             Acquisition          at December 31, 1995         
                                             ---------------------                           -----------------------             
Description                Encumbrance       Land        Buildings        (Improvements)     Land         Buildings        Total   
-----------                -----------       ----        ---------        --------------     ----         ---------        -----  
<S>                         <C>            <C>           <C>               <C>           <C>            <C>            <C>        

4425 S. Eastern Avenue
Las Vegas, Nevada               -         $1,111,000    $ 3,003,000        $  9,000       $1,111,000    $ 3,012,000     $ 4,123,000

6990 W. 79th Street
Bedford Park, Illinois          -            392,000      2,221,000          26,000          392,000      2,247,000       2,639,000

365 Manchester Avenue
Los Angeles, California         -          1,323,000      2,353,000          18,000        1,323,000      2,371,000       3,694,000

7800 Fenton Street
Silver Spring, Maryland         -          2,178,000      4,044,000          14,000        2,178,000      4,058,000       6,236,000

669 Glenwood Avenue
Hillside, New Jersey            -             -           2,096,000          30,000           -           2,126,000       2,126,000

35360  Fircrest
Newark, California              -            579,000      1,736,000         218,000          579,000      1,954,000       2,533,000

72 Emerson Place
Brooklyn, New York              -          1,916,000      2,650,000           1,000        1,916,000      2,651,000       4,567,000
                                           ---------      ---------           -----        ---------      ---------       ---------

Total                           -         $7,499,000    $18,103,000        $316,000       $7,499,000    $18,419,000     $25,918,000
                                          ==========    ===========        ========       ==========    ===========     ===========

</TABLE>
<TABLE>
<CAPTION>


                            Storage Properties, Inc.

             Schedule III - Real Estate and Accumulated Depreciation

                           
                           
                           
                                Accumulated          Date
Description                    Depreciation        Acquired       
-----------                    ------------        --------       
<S>                              <C>             <C>               

4425 S. Eastern Avenue
Las Vegas, Nevada                $ 300,000       June 1993

6990 W. 79th Street
Bedford Park, Illinois             224,000       June 1993

365 Manchester Avenue
Los Angeles, California            236,000       June 1993

7800 Fenton Street
Silver Spring, Maryland            410,000       June 1993

669 Glenwood Avenue
Hillside, New Jersey               550,000      Sept. 1990

35360  Fircrest
Newark, California                 138,000       June 1994

72 Emerson Place
Brooklyn, New York                 107,000       Dec. 1994
                                   -------           

Total                           $1,965,000
                                ==========

</TABLE>
<PAGE>

                            Storage Properties, Inc.

                           Real Estate Reconciliation

                            Schedule III (continued)



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

<TABLE>

                                      COST

                                             1995                1994              1993
                                          -----------         -----------      ------------


<S>                                       <C>                 <C>              <C>         
Balance at the beginning of the period    $25,774,000         $18,741,000      $  2,107,000


Additions during the period
         Acquisitions                           -               6,881,000        16,624,000
         Improvements                         144,000             152,000            10,000

Deductions during the period                    -                   -                   -     
                                          -----------         -----------      ------------
Balance at the close of the period        $25,918,000         $25,774,000       $18,741,000
                                          ===========         ===========      ============




                     ACCUMULATED DEPRECIATION RECONCILIATION

                                            1995                  1994              1993      
                                          -----------         -----------      ------------

Balance at the beginning of the period    $1,190,000             $580,000         $242,000

Additions during the period

         Depreciation                        775,000              610,000          338,000

Deductions during the period                    -                   -                -     
                                          -----------         -----------      ------------

Balance at the close of the period         $1,965,000           $1,190,000         $580,000
                                          ===========         ===========      ============

</TABLE>

(b)  The aggregate cost of the real estate for Federal income tax purposes is
     $25,395,000.

<PAGE>
                            Storage Properties, Inc.

                   Schedule IV - Mortgage Loans on Real Estate

                                December 31, 1995



Activity in Mortgage Loans Receivable is as follows:

<TABLE>



                                              1995              1994                1993      
                                           -----------         -----------      ------------

<S>                                     <C>                    <C>                <C>        
Balance at Beginning of period          $         -            $7,640,000         $25,553,000

Additions during period:
         New mortgage loans                       -                 -                   -

Deductions during period:
         Amortization of premium                  -               (21,000)            (28,000)
         Collection of principal                  -            (2,155,000)         (1,261,000)
         Other (1)                                -            (5,464,000)        (16,624,000)
                                        -----------            ----------         ----------- 

Balance at end of period                $        -             $        -          $ 7,640,000
                                        ===========             ==========         ===========

</TABLE>

(1)  In June 1993 the Company  exercised its purchase  options on the Las Vegas,
     Nevada;  Bedford,  Illinois;  Los Angeles,  California;  and Silver Spring,
     Maryland properties by converting its investment in the respective mortgage
     loans into equity ownership of the four properties.

     In December 1994 the Company exercised its purchase option on the Brooklyn,
     New York  property by converting  its  investment in the mortgage note into
     equity ownership of the property.

<PAGE>