UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

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

For the fiscal year ended December 31, 1998

                                       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 0-8667
                       ------

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


             California                                         95-3196921
------------------------------------------                ----------------------
   (State or other jurisdiction of                           (I.R.S. Employer
    incorporation or organization)                        Identification Number)

          701 Western Avenue
          Glendale, California                                      91201
------------------------------------------                ----------------------
(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:

                                      NONE

Securities registered pursuant to Section 12(g) of the Act:

                      Units of Limited Partnership Interest
                      -------------------------------------
                                (Title of class)

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

                                    Yes X No
                                       ---  ---

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

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      NONE

<PAGE>

                                     PART I

ITEM 1.  BUSINESS.

Forward Looking Statements
--------------------------

         When  used  within  this  document,  the words  "expects,"  "believes,"
"anticipates,"  "should,"  "estimates," and similar  expressions are intended to
identify "forward-looking statements" within the meaning of that term in Section
27A of the  Securities  Exchange Act of 1933, as amended,  and in Section 21F of
the Securities Exchange Act of 1934, as amended. Such forward-looking statements
involve known and unknown risks,  uncertainties,  and other  factors,  which may
cause the actual  results and  performance  of the  Partnership to be materially
different  from those  expressed or implied in the forward  looking  statements.
Such factors include the impact of competition from new and existing real estate
facilities  which could  impact  rents and  occupancy  levels at the real estate
facilities that the Partnership has an interest in; the Partnership's ability to
effectively  compete in the markets that it does  business in; the impact of the
regulatory  environment  as  well  as  national,   state,  and  local  laws  and
regulations including, without limitation, those governing Partnerships; and the
impact of general economic  conditions upon rental rates and occupancy levels at
the real estate facilities that the Partnership has an interest in.

General
-------

         Public Storage Properties,  Ltd. (the "Partnership") is a publicly held
limited  partnership formed under the California Uniform Limited Partnership Act
in November  1976.  The  Partnership  raised  $10,000,000  in gross  proceeds by
selling 20,000 units of limited partnership  interest ("Units") in an interstate
offering,  which commenced in October, 1977 and was completed in January,  1978.
The Partnership was formed to engage in the business of developing and operating
storage space for personal and business use ("mini-warehouses").

         In  1995,   there  were  a  series  of  mergers  among  Public  Storage
Management,  Inc. (which was the Partnership's  mini-warehouse operator), Public
Storage,  Inc. (which was one of the Partnership's general partners) ("old PSI")
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 ("REIT") organized as a California  corporation.  In the
PSMI Merger, Storage Equities, Inc. was renamed Public Storage, Inc. ("PSI") and
PSI acquired  substantially  all of PSMI's United States real estate  operations
and became a  co-general  partner of the  Partnership  and the  operator  of the
Partnership's mini-warehouse properties.

         The  Partnership's  general  partners  are  PSI  and  B.  Wayne  Hughes
("Hughes") (collectively referred to as the "General Partners"). Hughes has been
a general partner of the Partnership since its inception.  Hughes is chairman of
the board and chief  executive  officer of PSI,  and  Hughes and  members of his
family (the "Hughes Family") is the major shareholder of PSI.

         The  Partnership is managed,  and its investment  decisions are made by
Hughes and the executive  officers and directors of PSI. The limited partners of
the Partnership  have no right to participate in the operation or conduct of its
business and affairs.

         The  Partnership's  objectives  are to (i) maximize the  potential  for
appreciation  in  value  of  the  Partnership's  properties  and  (ii)  generate
sufficient cash flow from operations to pay all expenses,  including the payment
of interest to  Noteholders.  All of the  properties  were financed in September
1987.

         The term of the Partnership is until all properties have been sold and,
in any event, not later than December 31, 2035.

Investment in Facilities
------------------------

         At December  31,  1998,  the  Partnership  owned nine  properties.  The
Partnership purchased its last property in June 1978.

                                       2

<PAGE>

         The Partnership believes that its operating results have benefited from
favorable   industry   trends  and  conditions.   Notably,   the  level  of  new
mini-warehouse  construction  has decreased since 1988 while consumer demand has
increased.  In  addition,  in recent  years  consolidation  has  occurred in the
fragmented mini-warehouse industry.

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

         The Partnership'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 Partnership
does not intend to convert its mini-warehouses to other uses.

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

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

          *  CAPITALIZE ON "PUBLIC  STORAGE'S" NAME  RECOGNITION.  PSI, together
             with  its  predecessor,   has  more  than  20  years  of  operating
             experience  in the  mini-warehouse  business,  and  is the  largest
             operator of mini-warehouses in the United States. PSI believes that
             its  marketing and  advertising  programs  improve its  competitive
             position in the market.  PSI's in-house  Yellow Pages staff designs
             and  places   advertisements   in  approximately  700  directories.
             Commencing in early 1996, PSI began to experiment  with a telephone
             reservation  system  designed to provide  added  customer  service.
             Customers calling either PSI's toll-free telephone referral system,
             (800) 44-STORE, or a mini-warehouse  facility are directed to PSI's
             reservation  system where a trained  representative  discusses with
             the customer space requirements, price and location preferences and
             also informs the customer of other  products and services  provided
             by PSI. The telephone  reservation  system supports rental activity
             at all of the Partnership's  properties.  PSI's toll-free telephone
             referral system services approximately 175,000 calls per month from
             potential  customers  inquiring  as to the nearest  Public  Storage
             mini-warehouse.

          *  MAINTAIN HIGH OCCUPANCY LEVELS AND INCREASE REALIZED RENTS. Subject
             to market  conditions,  the Partnership  generally seeks to achieve
             average  occupancy  levels  in  excess  of  90%  and  to  eliminate
             promotions prior to increasing rental rates.  Average occupancy for

                                       3

<PAGE>

             the Partnership's mini-warehouses has decreased from 95% in 1997 to
             94% in 1998.  Realized monthly rents per square foot increased from
             $0.75  in 1997 to  $0.81 in 1998.  The  Partnership  has  increased
             rental rates in many markets where it has achieved  high  occupancy
             levels.

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

          *  PROFESSIONAL  PROPERTY  OPERATION.  There are  approximately  3,800
             persons  who  render   services  for  the  Public  Storage  system,
             primarily personnel engaged in property  operations,  substantially
             all of whom  are  employed  by a  clearing  company  that  provides
             certain  administrative and cost-sharing  services to PSI and other
             owners of properties operated by PSI.

Mini-warehouse Property Operator
--------------------------------

         The   Partnership's    mini-warehouses   are   managed   by   PSI   (as
successor-in-interest  to PSMI) under a Management  Agreement.  PSI has informed
the Partnership 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 Partnership, 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  Partnership,  employees  for the
operation  of  the  Partnership's   facilities,   including  resident  managers,
assistant managers, relief managers, and billing and maintenance personnel. Some
or all of these  employees may be employed on a part-time  basis and may also be
employed by other persons, partnerships,  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  Partnership'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  Partnership's  facilities  are  located.
Broadcast  media and other  advertising  costs are charged to the  Partnership'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 Partnership 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 Partnership  would no longer have
the right to use the  service  marks and  related  designs  except as  described
below.  The  General  Partners  believe  that the  loss of the  right to use the
service marks and related  designs could have a material  adverse  effect on the
Partnership's business.

         The Management  Agreement between the Partnership and PSI provides that
the Management  Agreement may be terminated  without cause upon 60 days' written
notice by either party.

                                       4

<PAGE>

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

         Competition  in the market areas in which the  Partnership  operates is
significant  and  affects  the  occupancy  levels,  rental  rates and  operating
expenses  of  certain  of  the  Partnership'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 Partnership believes that the significant operating and financial experience
of PSI, and the "Public Storage" name, should enable the Partnership 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  Partnership's  mini-warehouses.  The
Partnership  believes that the  availability of insurance  reduces the potential
liability of the  Partnership 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.

Employees
---------

         There are 9 persons who render services on behalf of the Partnership on
a  full-time  basis,  and 21 persons who render  services on a part-time  basis.
These persons include resident managers,  assistant  managers,  relief managers,
area managers, and administrative and maintenance personnel.  Some employees may
be  employed  on a  part-time  basis  and  may be  employed  by  other  persons,
Partnerships, REITs or other entities owning facilities operated by PSI.

ITEM 2.  PROPERTIES.

         The  following  table sets forth  information  as of December  31, 1998
about properties owned by the Partnership:

<TABLE>
<CAPTION>
                                           Net          Number     
    Location       Size of Parcel     Rentable Area    of Spaces      Date of Purchase   Completion Date
-----------------  --------------     -------------    ---------      ----------------   ---------------
CALIFORNIA
  <S>                <C>              <C>                  <C>          <C>                 <C> 
  Corona             2.82 acres       52,000 sq. ft.       471          June 29, 1978       Dec. 1978
  Fremont            3.00 acres       53,000 sq. ft.       481          Mar. 21, 1978       Nov. 1978
  Milpitas           3.46 acres       54,000 sq. ft        436          May 8, 1978         Nov. 1978
  Norco              1.66 acres       29,000 sq. ft        257          July 19, 1978       Dec. 1978
  North Hollywood    2.06 acres       38,000 sq. ft.       343          Mar. 17, 1978       Dec. 1979
  Pasadena           1.84 acres       38,000 sq. ft.       385          Feb. 24, 1978       Aug. 1978
  Sun Valley         2.72 acres       53,000 sq. ft.       477          May 30, 1978        Oct. 1978
  Wilmington         6.32 acres      133,000 sq. ft.     1,093          Apr. 18, 1978       Aug. 1978
  Whittier -                                                        
    El Monte         4.06 acres       58,000 sq. ft.       537          Nov. 29, 1977       July 1978

</TABLE>
                                                                     
         The weighted average occupancy levels for the mini-warehouse facilities
were 94% and 95% in 1998 and 1997, respectively.

         Substantially all of the  Partnership'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
Partnership  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. Although there can be no assurances.  Based on the assessments,

                                       5

<PAGE>

the Partnership is not aware of any  environmental  contamination  of any of its
property sites which  individually  or in the aggregate would be material to the
Partnership's overall business, financial condition or results of operation.

         The properties are held subject to encumbrances  which are described in
this report under Note 7 of the Notes to the  Financial  Statements  included in
Item 8.

ITEM 3.  LEGAL PROCEEDINGS.

         No material legal proceeding is pending against the Partnership.

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

         No matters  were  submitted  to a vote of security  holders  during the
fourth quarter of 1998.

                                     PART II

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

         The Partnership has no common stock.

         The Units are not listed on any national  securities exchange or quoted
on the NASDAQ System,  and there is no established public trading market for the
Units. Secondary sales activity for the Units has been limited and sporadic. The
General Partners monitor transfers of the Units (a) because the admission of the
transferee as a substitute  limited partner  requires the consent of the General
Partners under the Partnership's  Amended and Restated Certificate and Agreement
of  Limited  Partnership,  (b) in order to ensure  compliance  with safe  harbor
provisions  to  avoid  treatment  as a  "publicly  traded  partnership"  for tax
purposes,    and   (c)    because    the    General    Partners    (and    their
predecessor-in-interest)  have purchased Units. However, the General Partners do
not  have  information   regarding  the  prices  at  which  all  secondary  sale
transactions in the Units have been effectuated.  Various organizations offer to
purchase and sell limited  partnership  interests  (including  securities of the
type such as the Units) in secondary sales  transactions.  Various  publications
such as The  Stanger  Report  summarize  and report  information  (on a monthly,
bimonthly or less frequent  basis)  regarding  secondary  sales  transactions in
certain  limited  partnership  interests,  including  the  prices at which  such
secondary sales transactions are effectuated.

         Exclusive of the General Partners'  interest in the Partnership,  as of
December 31, 1998, there were approximately 642 record holders of Units.

         In August 1998, Public Storage,  Inc. ("PSI"), a general partner of the
Partnership,  completed  a cash  tender  offer,  which  commenced  in June 1998,
pursuant to which PSI  acquired a total of 3,972  limited  partnership  units at
$460 per unit.

         Distributions to the general and limited partners of all cash available
for   distribution   (as  defined)  are  made  quarterly.   Cash  available  for
distribution  is generally  funds from  operations of the  Partnership,  without
deductions  for  depreciation,  but after  deducting  funds to pay or  establish
reserves  for all other  expenses  (other than  incentive  distributions  to the
General Partners) and capital  improvements,  plus net proceeds from any sale or
financing  of the  Partnership's  properties.  In the  fourth  quarter  of 1990,
quarterly  distributions were discontinued to enable the Partnership to increase
its reserves for  principal  repayments on the  Partnership's  note payable that
commenced in 1992.

         Reference is made to Item 6 and 7 hereof for  information on the amount
of such distributions.

                                       6

<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA.

<TABLE>
<CAPTION>

    For the Year Ended
       December 31,                       1998             1997              1996                 1995              1994
------------------------------------  -------------   ---------------   ---------------     ---------------   ---------------
                                                                                                             
<S>                                   <C>              <C>               <C>                 <C>               <C>          
Revenues (2)                          $  4,629,000     $  4,337,000      $   4,007,000       $  4,235,000      $   4,181,000
                                                                                                             
Depreciation and                                                                                             
  amortization                             498,000          446,000            402,000            356,000            296,000
                                                                                                             
Interest expense                         1,077,000        1,252,000          1,358,000          1,520,000          1,658,000
                                                                                                             
Net income                               1,622,000        1,341,000          1,008,000          1,125,000          1,075,000
                                                                                                             
Limited partners' share                  1,605,000        1,328,000            998,000          1,114,000          1,064,000
                                                                                                             
General partners' share                     17,000           13,000             10,000             11,000             11,000
                                                                                                             
Limited partners' per unit data (1):                                                                         
  Net income                                $80.25           $66.40             $49.90             $55.70             $53.20
                                                                                                             

As of December 31,                                                                                           
------------------------------------
                                                                                                             
Cash and cash equivalents             $    248,000     $    546,000      $      69,000       $     89,000      $     162,000
                                                                                                             
Total assets                          $  5,349,000     $  5,760,000      $   5,503,000       $  5,845,000      $   6,418,000
                                                                                                             
Notes payable                         $ 12,000,000     $ 14,093,000      $  15,217,000       $ 16,351,000      $  17,995,000

</TABLE>

(1)        Per unit data is based on the weighted  average number of the limited
           partnership units (20,000) outstanding during the period.

(2)        Revenues  for the year ended  December  31, 1995 and 1994,  include a
           gain on sale of marketable securities of an affiliate of $361,000 and
           $479,000 ($18.05 and $23.95 per Unit).


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

Forward Looking Statements
--------------------------

         When  used  within  this  document,  the words  "expects,"  "believes,"
"anticipates,"  "should,"  "estimates," and similar  expressions are intended to
identify "forward-looking statements" within the meaning of that term in Section
27A of the  Securities  Exchange Act of 1933, as amended,  and in Section 21F of
the Securities Exchange Act of 1934, as amended. Such forward-looking statements
involve known and unknown risks,  uncertainties,  and other  factors,  which may
cause the actual  results and  performance  of the  Partnership to be materially
different  from those  expressed or implied in the forward  looking  statements.
Such factors include the impact of competition from new and existing real estate
facilities  which could  impact  rents and  occupancy  levels at the real estate
facilities that the Partnership has an interest in; the Partnership's ability to
effectively  compete in the markets that it does  business in; the impact of the
regulatory  environment  as  well  as  national,   state,  and  local  laws  and
regulations including, without limitation, those governing Partnerships; and the
impact of general economic  conditions upon rental rates and occupancy levels at
the real estate facilities that the Partnership has an interest in.

                                        7

<PAGE>

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

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997:

         The  Partnership's  net  income  in 1998  was  $1,622,000  compared  to
$1,341,000  in 1997,  representing  an increase of  $281,000.  This  increase is
primarily a result of  increased  operating  results at the  Partnership's  real
estate facilities combined with a decrease in interest expense.

         During 1998,  property net operating income (rental income less cost of
operations,  management  fees paid to an  affiliate  and  depreciation  expense)
increased  $118,000 or 4.5% from  $2,639,000 in 1997 to $2,757,000 in 1998. This
increase is  primarily  attributable  to an  increase in rental  revenues at the
Partnership's mini-warehouse facilities partially offset by increases in cost of
operations and depreciation expense.

         Rental  income was  $4,610,000  in 1998 compared to $4,321,000 in 1997,
representing  an  increase  of  $289,000,  or 7%. This  increase  was  primarily
attributable  to  increased  rental  rates  at  the  Partnership's  real  estate
facilities.  Weighted average occupancy levels at the  mini-warehouses  were 94%
and 95% in 1998 and 1997,  respectively.  The average monthly  realized rent per
square foot at the mini-warehouses was $.81 in 1998 compared to $.75 in 1997.

         Other income  increased  from $16,000 in 1997 to $19,000 in 1998.  This
increase is primarily due to an increase in invested cash balances.

         Cost of operations (including management fees paid to an affiliate) was
$1,355,000  and  $1,236,000  in 1998 and  1997,  respectively,  representing  an
increase of $119,000,  or 10%. This increase is mainly attributable to increases
in management fees, property tax and advertising and promotion expenses.

         Interest  expense  was  $1,077,000  and  $1,252,000  in 1998 and  1997,
respectively,  representing  a decrease of  $175,000,  or 14%.  The decrease was
primarily a result of a lower average  outstanding loan balance in 1998 compared
to  1997  and  lower  interest  rates  on the  Partnership's  indebtedness.  See
Liquidity  and Capital  Resources  for a discussion  of the  refinancing  of the
Partnership's indebtedness.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996:

         The  Partnership's  net  income  in 1997  was  $1,341,000  compared  to
$1,008,000  in 1996,  representing  an increase of  $333,000.  This  increase is
primarily a result of  increased  operating  results at the  Partnership's  real
estate facilities combined with a decrease in interest expense.

         During 1997,  property net operating income (rental income less cost of
operations,  management  fees paid to an  affiliate  and  depreciation  expense)
increased  $226,000 from $2,413,000 in 1996 to $2,639,000 in 1997. This increase
is primarily attributable to an increase in rental revenues at the Partnership's
mini-warehouse  facilities  partially  offset by increases in cost of operations
and depreciation expense.

         Rental  income was  $4,321,000  in 1997 compared to $4,002,000 in 1996,
representing  an  increase  of  $319,000,  or 8%. This  increase  was  primarily
attributable to increased occupancies and rental rates at the Partnership's real
estate facilities. Weighted average occupancy levels at the mini-warehouses were
95% and 92% in 1997 and 1996,  respectively.  The average monthly  realized rent
per square  foot at the  mini-warehouses  was $.75 in 1997  compared  to $.72 in
1996.

         Other  income  increased  from $5,000 in 1996 to $16,000 in 1997.  This
increase is primarily due to an increase in invested cash balances.

         Cost of operations (including management fees paid to an affiliate) was
$1,236,000  and  $1,187,000  in 1997 and  1996,  respectively,  representing  an
increase of $49,000, or 4%. This increase is mainly attributable to increases in
management fees, property tax and advertising and promotion expenses.

         In 1995, the  Partnership  prepaid eight months of 1996 management fees
on its mini-warehouse operations discounted at the rate of 14% effective rate to
compensate for early payment. As a result, management fee expense for the twelve
months ended December 31, 1996 was $20,000 lower than it would have been without
the discounted fee structure.

                                        8

<PAGE>

         Interest  expense  was  $1,252,000  and  $1,358,000  in 1997 and  1996,
respectively,  representing  a decrease of  $106,000,  or 8%. The  decrease  was
primarily a result of a reduction  in the average  outstanding  debt  balance in
1997 compared to 1996.

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

         Cash flow from  operating  activities  of  $2,234,000  in 1998 has been
sufficient to meet all current obligations of the Partnership.  During 1999, the
Partnership anticipates  approximately $142,000 of capital improvements compared
to $439,000 in 1998 and $280,000 in 1997.

         During 1987,  the  Partnership  financed all of its  facilities  with a
$20,885,000  loan.  Proceeds of $20,202,000  were distributed to the partners in
September 1987 and are included in the 1987 distribution.

         In January 1996, the Partnership obtained a $1,500,000 loan from PSI to
repay and terminate an unsecured  note payable to Wells Fargo Bank. The PSI loan
bears  interest  at the prime rate plus 1%,  payable  monthly,  in  addition  to
monthly principal  payments of $50,000.  In March 1998, the Partnership paid the
remaining balance of the loan.

         On June 1, 1998,  the  Partnership  paid down its mortgage  note with a
third party lender by  $11,641,000.  The payment was made from cash reserves and
an $11,000,000 loan from Public Storage, Inc. The loan from Public Storage, Inc.
bears  interest at the fixed rate of 7.3% and matures June 1999.  The loan calls
for monthly payments of interest only.  Principal may be paid at anytime without
penalty.  Public Storage, Inc. has also provided the Partnership with options to
extend the loan term through June 2003. Interest paid to Public Storage, Inc. in
1998 was $317,000.

         During  October  1998,  the  Partnership  borrowed  $12,400,000  from a
commercial  bank to payoff the loan from Public  storage,  Inc. and the mortgage
note with a third party.  The loan is unsecured and bears interest at the London
Interbank  Offering Rate  ("LIBOR")  plus 0.55% (5.61% as of December 31, 1998).
The loan  requires  monthly  payments of  interest  and  matures  October  2002.
Principal  may be paid,  in whole or in part,  at any time  without  penalty  or
premium.  The loan  proceeds  were  used to pay off the  Partnership's  existing
indebtedness.

         The  Partnership  also entered into  interest  rate swap  agreements to
reduce the impact of changes in interest rates on a portion of its floating rate
debt.  The  agreement,  which covers  $5,000,000  of debt through  October 2000,
effectively  changes the interest  rate  exposure  from floating rate to a fixed
rate of 5.205%.  The second  agreement,  which covers $2,500,000 of debt through
October 2001 and  effectively  changes the interest  rate exposure from floating
rate to a fixed rate of 5.33%.  Market gains and losses on the value of the swap
are  deferred  and  included  in  income  over  the  life of the  contract.  The
Partnership  records the differences  paid or received on the interest rate swap
in interest expense as payments are made or received.

         Distributions  to the  limited  and  general  partners  for  the  years
1978-1990  aggregated  $37,832,000  including  $20,202,000  distributed  to  the
partners in 1987.

Year 2000 System Issues
-----------------------

         The Partnership utilizes PSI's information systems in connection with a
cost  sharing  and  administrative  services  agreement.  PSI has  completed  an
assessment  of  all  of its  hardware  and  software  applications  to  identify
susceptibility  to what is  commonly  referred  to as the  "Y2K  Issue"  whereby
certain computer programs have been written using two digits rather than four to
define the applicable year. Any of PSI's computer  programs or hardware with the
Y2K Issue that have date-sensitive  applications or embedded chips may recognize
a date  using "00" as the year 1900  rather  than the year  2000,  resulting  in
miscalculations or system failure causing disruptions of operations.

         PSI has two phases in its process  with respect to each of its systems;
i)  assessment,  whereby PSI  evaluates  whether the system is Y2K compliant and
identifies  the plan of  action  with  respect  to  remediating  any Y2K  issues
identified  and ii)  implementation,  whereby PSI  completes  the plan of action
prepared in the  assessment  phase and  verifies  that Y2K  compliance  has been
achieved.

         Many of PSI's critical applications,  relative to the direct management
of  properties,  have  recently  been replaced and PSI believes they are already
Year 2000  compliant.  PSI has an  implementation  in process  on the  remaining
critical  applications,  including its general ledger and related systems,  that
are believed to have Y2K issues.  PSI expects the  implementation to be complete

                                       9

<PAGE>

by June  1999.  Contingency  plans  have been  developed  for use in case  PSI's
implementations  are not  completed  on a  timely  basis.  While  PSI  presently
believes  that the impact of the Y2K Issue on its systems can be  mitigated,  if
PSI's plan for ensuring Year 2000 Compliance and the related  contingency  plans
were  to  fail,  be  insufficient,  or not be  implemented  on a  timely  basis,
Partnership operations could be materially impacted.

         Certain  of  PSI's  other  non-computer  related  systems  that  may be
impacted  by the Y2K  Issue,  such as  security  systems,  are  currently  being
evaluated,  and PSI expects  the  evaluation  to be  complete by June 1999.  PSI
expects the  implementation of any required  solutions to be complete in advance
of December 31,  1999.  PSI has not fully  evaluated  the impact of lack of Year
2000  compliance  on these  systems,  but has no reason to believe  that lack of
compliance would materially impact the Partnership's operations.

         The Partnership  exchanges electronic data with certain outside vendors
in the banking and payroll processing areas. The Partnership has been advised by
these  vendors that their  systems are or will be Year 2000  compliant,  but has
requested  a  Year  2000  compliance  certification  from  these  entities.  The
Partnership  is not aware of any other  vendors,  suppliers,  or other  external
agents with a Y2K Issue that would materially impact the  Partnership's  results
of operations,  liquidity, or capital resources. However, the Partnership has no
means of ensuring that external  agents will be Year 2000  compliant,  and there
can be no assurance that the Partnersip has identified all such external agents.
The inability of external agents to complete their Year 2000 compliance  process
in a timely  fashion  could  materially  impact the  Partnership.  The effect of
non-compliance by external agents is not determinable.

         The cost of the PSI's Year 2000 compliance  activities (which primarily
consists of the costs of new systems) to be allocated to the Partnership and the
Joint  Venture  is  estimated  at   approximately   $40,311.   These  costs  are
capitalized.  PSI's  Year  2000  compliance  efforts  have not  resulted  in any
significant deferrals in other information system projects.

         The costs of the projects and the date on which PSI and the Partnership
expect  to  achieve  Year  2000  Compliance  are based  upon  management's  best
estimates,  and were derived  utilizing  numerous  assumptions of future events.
There can be no assurance  that these  estimates  will be  achieved,  and actual
results  could  differ  materially  from  those  anticipated.  There  can  be no
assurance  that the  Partnership  or PSI has identified all potential Y2K Issues
either within the Partnership,  at PSI, or at external agents. In addition,  the
impact of the Y2K issue on governmental  entities and utility  providers and the
resultant  impact on the  Partnership,  as well as  disruptions  in the  general
economy, may be material but cannot be reasonably determined or quantified.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         The  Partnership's  interest  expense  is  sensitive  to changes in the
general level of U.S.  interest rates. In this regard,  changes in U.S. interest
rates affect the interest paid on the Partnership's debt. To mitigate the impact
of fluctuations in U.S. interest rates, the Partnership  generally maintains its
debt as fixed rate in nature by borrowing on a long-term  basis or entering into
interest  swap  transactions.  As of December  31,  1998,  the  Partnership  had
$12,000,000 of outstanding debt maturing on October, 2002. Also, the Partnership
has an interest rate swap in the notional amount of $7,500,000  through October,
2001.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The Partnership'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.

         None.

                                       10

<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP.

         The Partnership has no directors or executive officers.

         The  Partnership's  general partners are PSI and B. Wayne Hughes.  PSI,
acting  through its directors  and executive  officers and Mr. Hughes manage and
make investment decisions for the Partnership.

         The names of all directors  and executive  officers of PSI, the offices
held by each of them with PSI, and their ages and business experience during the
past five years are as follows:

       Name                                  Positions with PSI
---------------------         -------------------------------------------------
B. Wayne Hughes               Chairman of the Board and Chief Executive Officer
Harvey Lenkin                 President and Director
B. Wayne Hughes, Jr.          Vice President and Director
John Reyes                    Senior Vice President and Chief Financial Officer
Carl B. Phelps                Senior Vice President
Obren B. Gerich               Senior Vice President
Marvin M. Lotz                Senior Vice President
David Goldberg                Senior Vice President and General Counsel
A. Timothy Scott              Senior Vice President and Tax Counsel
David P. Singelyn             Vice President and Treasurer
Sarah Hass                    Vice President and Secretary
Robert J. Abernethy           Director
Dann V. Angeloff              Director
William C. Baker              Director
Thomas J. Barrack Jr.         Director
Uri P. Harkham                Director
Daniel C. Staton              Director

         B. Wayne Hughes, age 65, a general partner of the Partnership, has been
a director of PSI since its  organization in 1980 and was President and Co-Chief
Executive  Officer from 1980 until November 1991 when he became  Chairman of the
Board and sole Chief Executive  Officer.  Mr. Hughes has been active in the real
estate  investment field for over 25 years. He is the father of B. Wayne Hughes,
Jr.

         Harvey Lenkin, age 62, has been employed by PSI for 21 years and became
President and a director of PSI in November 1991. Mr. Lenkin has been a director
of PS Business Parks,  Inc.  ("PSBP"),  an affiliated REIT, since March 16, 1998
and was President of PSBP  (formerly  Public  Storage  Properties XI, Inc.) from
1990  until  March 16,  1998.  He is a member of the Board of  Governors  of the
National Association of Real Estate Investment Trusts (NAREIT).

         B. Wayne Hughes, Jr., age 39 became director of PSI in January 1998. He
has been a Vice President - Acquisitions  of PSI since 1992. He is the son of B.
Wayne Hughes.

         John Reyes, age 38, a certified public  accountant,  joined PSI in 1990
and was  Controller  of PSI from 1992 until  December  1996 when he became Chief
Financial  Officer.  He became a Vice  President  of PSI in November  1995 and a
Senior Vice President of PSI in December 1996.  From 1983 to 1990, Mr. Reyes was
employed by Ernst & Young.

         Carl B.  Phelps,  age 60,  became a  Senior  Vice  President  of PSI in
January  1998  with  overall   responsibility   for  property   acquisition  and
development.  From June 1991 until joining PSI, he was a partner in the law firm
of  Andrews & Kurth,  L.L.P.,  which  performed  legal  services  for PSI.  From
December 1982 through May 1991, his  professional  corporation  was a partner in
the law firm of Sachs & Phelps, then counsel to PSI.

         Obren B. Gerich, age 60, a certified public accountant, has been a Vice
President of PSI since 1980 and became Senior Vice  President of PSI in November
1995. He was Chief Financial Officer of PSI until November 1991.

                                       11

<PAGE>

         Marvin M.  Lotz,  age 56,  has had  overall  responsibility  for Public
Storage's  mini-warehouse  operations  since  1988.  He  became  a  Senior  Vice
President  of PSI  in  November  1995.  Mr.  Lotz  was an  officer  of PSI  with
responsibility for property acquisitions from 1983 until 1988.

         David  Goldberg,  age 49,  joined  PSI's legal  staff in June 1991.  He
became Senior Vice President and General  Counsel of PSI in November 1995.  From
December  1982  until  May  1991,  he was a  partner  in the law firm of Sachs &
Phelps, then counsel to PSI.

         A.  Timothy  Scott,  age 47,  became a Senior  Vice  President  and Tax
Counsel of PSI and Vice President and Tax Counsel of the Public Storage REITs in
November 1996.  From June 1991 until joining PSI, Mr. Scott practiced tax law as
a shareholder of the law firm of Heller,  Ehrman, White & McAuliffe,  counsel to
PSI. Prior to June 1991, his  professional  corporation was a partner in the law
firm of Sachs & Phelps, then counsel to PSI.

         David P.  Singleyn,  age 37, a certified  public  accountant,  has been
employed by PSI since 1989 and became Vice  President  and  Treasurer  of PSI in
November  1995.  From 1987 to 1989,  Mr.  Singelyn was  Controller of Winchell's
Donut Houses, L.P.

         Sarah Hass,  age 43,  became  Secretary  of PSI in February  1992.  She
became  a Vice  President  of PSI in  November  1995.  She  joined  PSI's  legal
department  in June 1991,  rendering  services on behalf of PSI. From 1987 until
May 1991, her professional  corporation was a partner in the law firm of Sachs &
Phelps,  then  counsel to PSI,  and from  April  1986  until June 1987,  she was
associated  with that  firm,  practicing  in the area of  securities  law.  From
September 1979 until  September  1985, Ms. Hass was associated with the law firm
of Rifkind & Sterling, Incorporated.

         Robert J.  Abernethy,  age 59, has been President of American  Standard
Development Company and of Self-Storage  Management  Company,  which develop and
operate mini-warehouses,  since 1976 and 1977,  respectively.  Mr. Abernethy has
been a director  of PSI since its  organization  in 1980.  He is a member of the
board of  trustees  of Johns  Hopkins  University  and a  director  of  Marathon
National Bank. Mr. Abernethy is a former member of the board of directors of the
Los Angeles County  Metropolitan  Transportation  Authority and the Metropolitan
Water District of Southern  California and a former  Planning  Commissioner  and
Telecommunications   Commissioner  and  former  Vice-Chairman  of  the  Economic
Development Commission of the City of Los Angeles.

         Dann V. Angeloff, age 63, has been President of the Angeloff Company, a
corporate  financial  advisory  firm,  since  1976.  The  Angeloff  Company  has
rendered,  and is  expected  to  continue  to  render,  financial  advisory  and
securities  brokerage services for PSI. Mr. Angeloff is the general partner of a
limited partnership that owns a mini-warehouse operated by PSI and which secures
a note  owned  by PSI.  Mr.  Angeloff  has  been a  director  of PSI  since  its
organization  in  1980.  He  is  a  director  of  Balboa  Capital   Corporation,
Compensation   Resource   Group,    Nicholas/Applegate   Growth   Equity   Fund,
Nicholas/Applegate  Mutual Funds, ReadyPac Produce, Inc., Royce Medical Company,
SupraLife International and WorldxChange Communications,  Inc. He was a director
of SPI from 1989 until June 1996.

         William C. Baker,  age 65,  became a director of PSI in November  1991.
Since January 1999, Mr. Baker has been President and Chief Executive  Officer of
Los Angeles Turf Club,  Incorporated,  which operates the Santa Anita  Racetrack
and is wholly-owned subsidiary of Magna International Inc. Since August 1998, he
has been President of Meditrust  Operating  Company,  a paired share real estate
investment trust. From November 1997 until December 1998, he was Chairman of the
Board  and Chief  Executive  Officer  of The  Santa  Anita  Companies,  Inc.,  a
wholly-owned  subsidiary of Meditrust  Operating Company which then operated the
Santa Anita Racetrack.  From August 1996 until November 1997, he was Chairman of
the Board and Chief  Executive  Officer of Santa  Anita  Operating  Company  and
Chairman of the Board of Santa Anita Realty  Enterprises,  Inc.,  the  companies
which were merged with Meditrust in November  1997.  From April 1993 through May
1995, Mr. Baker was President of Red Robin International,  Inc., an operator and
franchiser of casual dining  restaurants  in the United States and Canada.  From
January 1992 through  December 1995 he was Chairman and Chief Executive  Officer
of  Carolina   Restaurant   Enterprises,   Inc.,  a  franchisee   of  Red  Robin
International,  Inc.  Since  1991,  he has been  Chairman  of the Board of Coast
Newport Properties, a real estate brokerage company. From 1976 to 1988, he was a
principal  shareholder  and  Chairman and Chief  Executive  Officer of Del Taco,
Inc., an operator and franchiser of fast food  restaurants  in  California.  Mr.
Baker is a director of Callaway Golf Company and Meditrust Operating Company.

         Thomas J.  Barrack,  Jr., age 51,  became a director of PSI in February
1998.  Mr. Barrack has been the Chairman and Chief  Executive  Officer of Colony
Capital, Inc. since September,  1991. Colony Capital, Inc. is one of the largest
real estate investors in America, having acquired properties in the U.S., Europe
and Asia. Prior to founding Colony Capital, Inc., from 1987 to 1991, Mr. Barrack
was a principal with the Robert M. Bass Group,  Inc.,  the principal  investment
vehicle for Robert M. Bass of Fort Worth,  Texas. From 1985 to 1987, Mr. Barrack
was President of Oxford Ventures, Inc., a Canadian-based real estate development

                                       12

<PAGE>

company.  From  1984 to 1985 he was a  Senior  Vice  President  at E. F.  Hutton
Corporate  Finance in New York.  Mr.  Barrack was appointed by President  Ronald
Reagan as Deputy Under  Secretary at the U.S.  Department  of the Interior  from
1982 to 1983. Mr. Barrack currently is a director of Continental Airlines, Inc.,
Harvey's Acquisition Corp. and Kennedy-Wilson, Inc.

         Uri P.  Harkham,  age 50,  became a director of PSI in March 1993.  Mr.
Harkham  has been the  President  and Chief  Executive  Officer of the  Jonathan
Martin  Fashion  Group,  which  specializes  in  designing,   manufacturing  and
marketing  women's  clothing,  since its  organization in 1976.  Since 1978, Mr.
Harkham has been the Chairman of the Board of Harkham Properties,  a real estate
firm specializing in buying and managing fashion warehouses in Los Angeles.

         Daniel C. Staton, age 46, became a director of PSI on March 12, 1999 in
connection  with the merger of Storage  Trust Realty,  a real estate  investment
trust,  with PSI.  Mr.  Staton was  Chairman of the Board of Trustees of Storage
Trust  Realty from  February  1998 until March 12, 1999 and a Trustee of Storage
Trust Realty from  November 1994 until March 12, 1999. He is President of Walnut
Capital Partners,  an investment and venture capital company. Mr. Staton was the
Chief Operating Officer and Executive Vice President of Duke Realty Investments,
Inc.  from  1993  to  1997.  He has  been a  director  of Duke  Associates,  the
predecessor of Duke Realty Investments, Inc. Prior to joining Duke Associates in
1981, he was a partner and general  manager of he own moving  company,  Gate way
Van & Storage, Inc. in St. Louis, Missouri. From 1986 to 1988, Mr. Staton served
as president of the Greater  Cincinnati  Chapter of the National  Association of
Industrial and Office Parks.

         Pursuant  to Articles 16 and 22 of the  Partnership's  Certificate  and
Agreement  of  Limited  Partnership,   a  copy  of  which  is  included  in  the
Partnership's  prospectus included in the Partnership's  Registration  Statement
File No.  2-57750,  each of the General  Partners  continues  to serve until (i)
retirement,  withdrawal,  adjudication of bankruptcy, insolvency or dissolution,
or (ii) removal by a majority vote of the limited partners.

         Each  director of PSI serves until he resigns or is removed from office
by the shareholders of PSI, and may resign or be removed from office at any time
with or without cause. Each officer of PSI serves until he resigns or is removed
by the Board of Directors of PSI. Any such officer may resign or be removed from
office with or without cause.

         There  have  been no events  under  any  bankruptcy  act,  no  criminal
proceedings,  and no judgments or injunctions  material to the evaluation of the
ability of any director or executive officer of PSI during the past five years.

SECTION 16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Based on a review  of the  reports  filed  under  Section  16(a) of the
Securities Exchange Act of 1934 with respect to the units that were submitted to
the Partnership,  the Partnership  believes that with respect to the fiscal year
ended December 31, 1998, B. Wayne Hughes, Jr. And Thomas J. Barrak, Jr., each of
whom is a director of PSI, a General Partner of the Partnership,  each filed his
Initial Statement of Beneficial  Ownership of Securities on Form 3 after its due
date.

ITEM 11. EXECUTIVE COMPENSATION.

         The Partnership has no subsidiaries, directors or officers. See Item 13
for a  description  of certain  transactions  between  the  Partnership  and its
General Partners and their affiliates.

                                       13

<PAGE>

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

         (a)      At March 10, 1999, the following  persons  beneficially  owned
more than 5% of the Units:

      Title                Name and Address                             Percent
     of Class             of Beneficial Owner     Beneficial Ownership  of Class
--------------------  --------------------------  --------------------  --------
Units of Limited      Public Storage, Inc.          5,735 Units (1)       28.7%
Partnership Interest  701 Western Ave.              
                      Glendale, California 91201

Units of Limited      B. Wayne Hughes,              6,273 Units (2)       31.4%
Partnership Interest  Tamara Hughes Gustavson, 
                      PS Orangeco. Inc.
                      701 Western Ave.
                      Glendale, California 91201

(1)  Includes  (i) 5,630  Units owned by PSI as to which PSI has sole voting and
     dispositive  power,  (ii) 25 Units which PSI has an option to acquire  from
     Hughes and (iii) 80 Units  which PSI has an option to acquire  from  Tamara
     Hughes Gustavson, an adult daughter of Hughes.

(2)  Includes (i) 6,025 Units owned by BWH Marina  Corporation II, a corporation
     wholly-owned by Hughes,  as to which Hughes has sole voting and dispositive
     power; PSI has an option to acquire 25 of these Units,  (ii) 80 Units owned
     by Tamara  Hughes  Gustavson as to which Tamara  Hughes  Gustavson has sole
     voting and dispositive  power;  PSI has an option to acquie these 80 Units,
     and (iii) 168 Units owned by PS Orangeco,  Inc., a corporation which common
     stock  (representing 5% of the equity) is owned by Hughes and member of his
     family  and  whose  non-voting  preferred  stock  (representing  95% of the
     equity) is owned by PSI, and as to which Units PS Orangeco, Inc. and Hughes
     share voting and dispositive power.

         (b)      The Partnership has no officers and directors.

         The   General   Partners   (or  their   predecessor-in-interest)   have
contributed  $101,010  to  the  capital  of  the  Partnership  and  as a  result
participates  in  the   distributions   to  the  limited  partners  and  in  the
Partnership's  profits  and  losses  in the same  proportion  that  the  General
Partners'  capital  contribution  bears  to  the  total  capital   contribution.
Information  regarding  ownership  of  Units  by PSI  and  Hughes,  the  General
Partners,  is set forth under  section (a) above.  The  directors  and executive
officers of PSI (including Hughes), as a group (17 persons), beneficially own an
aggregate of 6,211 Units,  representing  31.1% of the Units (including the 6,025
Units owned by Hughes and the 168 Units owned by PS  Orangeco,  Inc. as to which
Hughes shares voting and dispositive power as set forth above).

         (c)      The  Partnership  knows  of  no  contractual arrangements, the
operation of the terms of which may at a  subsequent  date result in a change in
control  of  the  Partnership,  except  for  articles  16,  17 and  21.1  of the
Partnership's  Amended  Certificate  and Agreement of Limited  Partnership  (the
"Partnership  Agreement"),  a copy of which  is  included  in the  Partnership's
prospectus  included  in  the  Partnership's  Registration  Statement  File  No.
2-57750.  Those articles provide, in substance,  that the limited partners shall
have the right, by majority vote, to remove a general partner and that a general
partner may designate a successor with the consent of the other general  partner
and a majority of the limited partners.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The Partnership  Agreement  provides that the General  Partners will be
entitled  to  cash  incentive  distributions  in an  amount  equal  to (i) 8% of
distributions  of cash  flow from  operations  until  the  distributions  to all
partners from all sources equal their capital contributions;  thereafter, 25% of
distributions of cash flow from operations,  and (ii) 25% of distributions  from
net proceeds from sale and financing of the Partnership's  properties  remaining
after  distribution  to all  partners of any portion  thereof  required to cause
distributions to partners from all sources to equal their capital contributions.
During  1985,  the partners  received  cumulative  distributions  equal to their
capital contributions.  During 1997, there were no incentive  distributions paid
by the Partnership.

                                       14

<PAGE>

         The   Partnership   has   a   Management   Agreement   with   PSI   (as
successor-in-interest  to PSMI). Under the Management Agreement, the Partnership
pays PSI a fee of 6% of the  gross  revenues  of the  mini-warehouse  properties
operated for the Partnership. During 1998, the Partnership paid fees of $277,000
to PSI pursuant to the Management Agreement.

                                     PART IV

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

         (a)      List of Documents filed as part of the Report.

                  1.       Financial   Statements.   See   Index  to   Financial
                           Statements and Financial Statement Schedule.

                  2.       Financial Statement Schedules. See Index to Financial
                           Statements and Financial Statement Schedule.

                  3.       Exhibits: See Exhibit Index contained below.

         (b)      Reports on Form 8-K: No reports on Form 8-K were filed  during
                  the last quarter of fiscal 1996.

         (c)      Exhibits:  See Exhibit Index contained below.

                                       15

<PAGE>

                         PUBLIC STORAGE PROPERTIES, LTD.

                                  EXHIBIT INDEX
                                  (Item 14(c))

3.1      Amended  Certificate and Agreement of Limited  Partnership.  Previously
         filed with the Securities  and Exchange  Commission as Exhibit A to the
         Partnership's Prospectus included in Registration Statement No. 2-57750
         and incorporated herein by reference.

10.1     Second  Amended and Restated  Management  Agreement  dated November 16,
         1995 between the Partnership and Public Storage,  Inc. Previously filed
         with  the  Securities  and  Exchange  Commission  as an  exhibit  to PS
         Partners, Ltd.'s Annual Report on Form 10-K for the year ended December
         31, 1996 and incorporated herein by reference.

10.2     Loan documents  dated August 28, 1987 between the  Partnership  and The
         Travelers  Insurance Company.  Previously filed with the Securities and
         Exchange Commission as an exhibit to the Partnership's Annual Report on
         Form 10-K for the year ended December 31, 1993 and incorporated  herein
         by reference.

10.3     Modified loan documents dated September 1, 1993 between the Partnership
         and  The  Travelers  Insurance  Company.   Previously  filed  with  the
         Securities and Exchange  Commission as an exhibit to the  Partnership's
         Annual  Report on Form 10-K for the year ended  December  31,  1993 and
         incorporated herein by reference.

10.4     Loan documents  dated June 30, 1994 between the  Partnership  and Wells
         Fargo  Bank.   Previously   filed  with  the  Securities  and  Exchange
         Commission  as an exhibit to the  Partnership's  Annual  Report on Form
         10-K for the year ended  December 31, 1994 and  incorporated  herein by
         reference.

10.5     Loan  documents  dated  January 26, 1996  between the  Partnership  and
         Public Storage,  Inc. Previously filed with the Securities and Exchange
         Commission  as an exhibit to the  Partnership's  Annual  Report on Form
         10-K for the year ended  December 31, 1995 and  incorporated  herein by
         reference.

10.6     Loan  documents  dated  January 27, 1997  between the  Partnership  and
         Public Storage,  Inc. Previously filed with the Securities and Exchange
         Commission  as an exhibit to the  Partnership's  Annual  Report on Form
         10-K for the year ended  December 31, 1996 and  incorporated  herein by
         reference.

10.7     Loan  documents  dated  January 27, 1998  between the  Partnership  and
         Public  Storage,  Inc.  Filed  herewith.   Previously  filed  with  the
         Securities and Exchange  Commission as an exhibit to the  Partnership's
         Annual  Report on Form 10-K for the year ended  December  31,  1997 and
         incorporated herein by reference.

10.8     Credit   Agreement  dated  October  23,  1998  between  Public  Storage
         Properties,  Ltd.  and First  Union  Bank.  Previously  filed  with the
         Securities and Exchange  Commission as an exhibit to the  Partnership's
         Quarterly  Report on Form 10-Q for the quarter ended September 30, 1998
         and incorporated herein by reference.

10.9     Interest Rate Swap  Confirmation  dated October 26, 1998 by and between
         Public Storage  Properties,  Ltd. and first Union National Bank expires
         on October 23, 2001.  Previously filed with the Securities and Exchange
         Commission as an exhibit to the Partnership's  Quarterly Report on Form
         10-Q for the quarter ended September 30, 1998 and  incorporated  herein
         by reference.

10.10    Interest Rate Swap  Confirmation  dated October 27, 1998 by and between
         Public Storage  Properties,  Ltd. and first Union National Bank expires
         on October 23, 2000.  Previously filed with the Securities and Exchange
         Commission as an exhibit to the Partnership's  Quarterly Report on Form
         10-Q for the quarter ended September 30, 1998 and  incorporated  herein
         by reference.

27       Financial Data Schedule. Filed herewith.

                                       16

<PAGE>

                                   SIGNATURES

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

                                 PUBLIC STORAGE PROPERTIES, LTD.
                                 a California Limited Partnership

Dated: March 31, 1999            By: Public Storage, Inc., General Partner


                                     By: /s/ B. Wayne Hughes
                                         --------------------------------------
                                         B. Wayne Hughes, Chairman of the Board


                                 By: /s/ B. Wayne Hughes
                                     --------------------------------------
                                     B. Wayne Hughes, General Partner


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

<TABLE>
<CAPTION>

            Signature                           Capacity                                 Date
----------------------------     -------------------------------------------     --------------------

<S>                              <C>                                                 <C>                                           
/s/ B. Wayne Hughes              Chairman of the Board and Chief Executive           March 31, 1999
----------------------------     Officer of Public Storage, Inc. (principal
B. Wayne Hughes                  executive officer)


/s/ Harvey Lenkin                President and Director                              March 31, 1999
----------------------------     of Public Storage, Inc.
Harvey Lenkin


/s/ B. Wayne Hughes, Jr.         Vice President and Director                         March 31, 1999
----------------------------     of Public Storage, Inc.
B. Wayne Hughes, Jr.


/s/ John Reyes                   Senior Vice President and Chief Financial           March 31, 1999
----------------------------     Officer of Public Storage, Inc.
John Reyes                       (principal financial officer and principal
                                 accounting officer)


/s/ Robert J. Abernethy          Director of Public Storage, Inc.                    March 31, 1999
----------------------------
Robert J. Abernethy


/s/ Dann V. Angeloff             Director of Public Storage, Inc.                    March 31, 1999
----------------------------
Dann V. Angeloff


/s/ William C. Baker             Director of Public Storage, Inc.                    March 31, 1999
----------------------------
William C. Baker


                                 Director of Public Storage, Inc.
----------------------------
Thomas J. Barrack, Jr.


/s/ Uri P. Harkham               Director of Public Storage, Inc.                    March 31, 1999
----------------------------
Uri P. Harkham


                                 Director of Public Storage, Inc.
----------------------------
Daniel C. Staton

</TABLE>

                                       17

<PAGE>

                         PUBLIC STORAGE PROPERTIES, LTD.
                                    INDEX TO
                              FINANCIAL STATEMENTS
                                       AND
                          FINANCIAL STATEMENT SCHEDULE
                                  (Item 14 (a))

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

Report of Independent Auditors                                            F-1

Financial Statements and Schedule:

Balance Sheets as of December 31, 1998 and 1997                           F-2

For the years ended December 31, 1998, 1997 and 1996:

     Statements of Income                                                 F-3

     Statements of Partners' Deficit                                      F-4

     Statements of Cash Flows                                             F-5

Notes to Financial Statements                                       F-6 - F-9


Schedule:

     III - Real Estate and Accumulated Depreciation               F-10 - F-11

         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 Partners
Public Storage Properties, Ltd.

We have audited the  accompanying  balance sheets of Public Storage  Properties,
Ltd. as of December  31, 1998 and 1997,  and the related  statements  of income,
partners' deficit and cash flows for each of the three years in the period ended
December 31, 1998. Our audits also included the schedule  listed in the index at
item 14(a).  These financial  statements and schedule are the  responsibility of
the  Partnership's  management.  Our  responsibility is to express an opinion on
these financial statements and schedule based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Public Storage Properties, Ltd.
at December 31, 1998 and 1997,  and the results of its  operations  and its cash
flows for each of the three years in the period  ended  December  31,  1998,  in
conformity with generally accepted accounting principles.  Also, in our opinion,
the related  financial  statement  schedule,  when considered in relation to the
basic  financial  statements  taken as a whole,  presents fairly in all material
respects the information set forth therein.





                                                               ERNST & YOUNG LLP


February 26, 1999
Los Angeles, California

                                      F-1

<PAGE>

                        PUBLIC STORAGE PROPERTIES, LTD.
                                 BALANCE SHEETS
                           December 31, 1998 and 1997

<TABLE>
<CAPTION>
                                                                                   1998                  1997
                                                                            -----------------     ----------------

                                     ASSETS
                                     ------


<S>                                                                         <C>                   <C>            
Cash and cash equivalents                                                   $       248,000       $       546,000
Rent and other receivables                                                           36,000                46,000

Real estate facilities, at cost:
     Building, land improvements and equipment                                    8,440,000             8,001,000
     Land                                                                         2,511,000             2,511,000
                                                                            -----------------     ----------------
                                                                                 10,951,000            10,512,000

     Less accumulated depreciation                                               (5,990,000)           (5,492,000)
                                                                            -----------------     ----------------
                                                                                  4,961,000             5,020,000

Other assets                                                                        104,000               148,000
                                                                            -----------------     ----------------

Total assets                                                                $     5,349,000       $     5,760,000
                                                                            =================     ================

                        LIABILITIES AND PARTNERS' DEFICIT
                        ---------------------------------

Accounts payable                                                            $        96,000       $        32,000
Deferred revenue                                                                    127,000               131,000
Note payable to affiliate                                                             -                   300,000
Mortgage note                                                                         -                13,793,000
Note payable to commercial bank                                                  12,000,000                 -

Partners' deficit:
     Limited partners' deficit, $500 per unit, 20,000 units
       authorized, issued and outstanding                                        (5,104,000)           (6,308,000)
     General partners' deficit                                                   (1,770,000)           (2,188,000)
                                                                            -----------------     ----------------

     Total partners' deficit                                                     (6,874,000)           (8,496,000)
                                                                            -----------------     ----------------

Total liabilities and partners' deficit                                     $     5,349,000       $     5,760,000
                                                                            =================     ================

</TABLE>
                            See accompanying notes.
                                      F-2

<PAGE>

                         PUBLIC STORAGE PROPERTIES, LTD.
                              STATEMENTS OF INCOME
                       For each of the three years in the
                         period ended December 31, 1998

<TABLE>
<CAPTION>

                                                              1998                     1997                     1996
                                                       ------------------       ------------------       ------------------       
REVENUES:

<S>                                                    <C>                      <C>                      <C>              
Rental income                                          $       4,610,000        $       4,321,000        $       4,002,000
Other income                                                      19,000                   16,000                    5,000
                                                       ------------------       ------------------       ------------------       

                                                               4,629,000                4,337,000                4,007,000
                                                       ------------------       ------------------       ------------------       
COSTS AND EXPENSES:

Cost of operations                                             1,078,000                  977,000                  967,000
Management fees paid to affiliate                                277,000                  259,000                  220,000
Depreciation                                                     498,000                  446,000                  402,000
Administrative                                                    77,000                   62,000                   52,000
Interest expense                                               1,077,000                1,252,000                1,358,000
                                                       ------------------       ------------------       ------------------       

                                                               3,007,000                2,996,000                2,999,000
                                                       ------------------       ------------------       ------------------       

NET INCOME                                             $       1,622,000        $       1,341,000        $       1,008,000
                                                       ==================       ==================       ==================       

Limited partners' share of net income ($80.25 per
     unit in 1998, $66.40 per unit in 1997, and
     $49.90 per unit in 1996)                          $       1,605,000        $       1,328,000        $         998,000

General partners' share of net income                             17,000                   13,000                   10,000
                                                       ------------------       ------------------       ------------------       
                                                       $       1,622,000        $       1,341,000        $       1,008,000
                                                       ==================       ==================       ==================       
</TABLE>
                            See accompanying notes.
                                      F-3

<PAGE>

                         PUBLIC STORAGE PROPERTIES, LTD.
                         STATEMENTS OF PARTNERS' DEFICIT
                       For each of the three years in the
                         period ended December 31, 1998


<TABLE>
<CAPTION>
                                                                                              Total Partners'
                                                   Limited Partners     General Partners          Deficit
                                                  -------------------  -------------------  -------------------  

<S>                                                <C>                  <C>                  <C>              
Balance at December 31, 1995                       $     (8,052,000)    $     (2,793,000)    $    (10,845,000)

Net income                                                  998,000               10,000            1,008,000

Equity transfer                                            (250,000)             250,000               -
                                                  -------------------  -------------------  -------------------  

Balance at December 31, 1996                             (7,304,000)          (2,533,000)          (9,837,000)

Net income                                                1,328,000               13,000            1,341,000

Equity transfer                                            (332,000)             332,000               -
                                                  -------------------  -------------------  -------------------  

Balance at December 31, 1997                             (6,308,000)          (2,188,000)          (8,496,000)

Net income                                                1,605,000               17,000            1,622,000

Equity transfer                                            (401,000)             401,000               -
                                                  -------------------  -------------------  -------------------  
Balance at December 31, 1998                       $     (5,104,000)   $      (1,770,000)    $     (6,874,000)
                                                  ===================  ===================  ===================  
</TABLE>
                            See accompanying notes.
                                      F-4

<PAGE>

                         PUBLIC STORAGE PROPERTIES, LTD.
                            STATEMENTS OF CASH FLOWS
                       For each of the three years in the
                         period ended December 31, 1998

<TABLE>
<CAPTION>

                                                                           1998              1997              1996
                                                                      ---------------   ---------------   ---------------   
Cash flows from operating activities:

     <S>                                                              <C>               <C>               <C>           
     Net income                                                       $    1,622,000    $    1,341,000    $    1,008,000

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

     Depreciation                                                            498,000           446,000           402,000
     Decrease (increase) in rent and other receivables                        10,000             2,000            (6,000)
     Amortization of prepaid management fees                                     -                 -             138,000
     Amortization of prepaid loan fees                                       110,000            33,000            33,000
     Decrease (increase) in other assets                                     (66,000)           19,000           (17,000)
     Increase (decrease) in accounts payable                                  64,000            27,000           (72,000)
     (Decrease) increase in deferred revenue                                  (4,000)           13,000           (14,000)
                                                                      ---------------   ---------------   ---------------   

         Total adjustments                                                   612,000           540,000           464,000
                                                                      ---------------   ---------------   ---------------   

         Net cash provided by operating activities                         2,234,000         1,881,000         1,472,000
                                                                      ---------------   ---------------   ---------------   
Cash flows from investing activities:

     Additions to real estate facilities                                    (439,000)         (280,000)         (228,000)
                                                                      ---------------   ---------------   ---------------   

         Net cash used in investing activities                              (439,000)         (280,000)         (228,000)
                                                                      ---------------   ---------------   ---------------   
Cash flows from financing activities:

    Proceeds from note payable to affiliate                               11,000,000            -                 -
    Principal payments on note payable to affiliate                      (11,300,000)         (600,000)         (130,000)
    Proceeds from note payable to commercial bank                         12,400,000            -                 -
    Principal payments on note payable to commercial bank                   (400,000)           -                 -
    Principal payments on mortgage note payable                          (13,793,000)         (524,000)       (1,134,000)
                                                                      ---------------   ---------------   ---------------   
         Net cash used in financing activities                            (2,093,000)       (1,124,000)       (1,264,000)
                                                                      ---------------   ---------------   ---------------   

Net (decrease) increase in cash and cash equivalents                        (298,000)          477,000           (20,000)

Cash and cash equivalents at the beginning of the year                       546,000            69,000            89,000
                                                                      ---------------   ---------------   ---------------   

Cash and cash equivalents at the end of the year                      $      248,000    $      546,000    $       69,000
                                                                      ===============   ===============   ===============   
</TABLE>
                            See accompanying notes.
                                      F-5

<PAGE>

                         PUBLIC STORAGE PROPERTIES, LTD.
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998


1.       DESCRIPTION OF PARTNERSHIP

                  Public Storage Properties, Ltd. (the "Partnership") was formed
         with the  proceeds of a public  offering.  The general  partners in the
         Partnership  are Public  Storage,  Inc.  ("PSI")  and B.  Wayne  Hughes
         ("Hughes"). The Partnership owns nine mini-warehouse facilities located
         in California.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PARTNERSHIP MATTERS

         Mini-Warehouse Facilities:
         --------------------------

                  Cost of land includes appraisal fees and legal fees related to
         acquisition  and  closing  costs.  Buildings,   land  improvements  and
         equipment  reflect costs incurred through December 31, 1998 and 1997 to
         develop  mini-warehouse  facilities which provide  self-service storage
         spaces for lease,  usually on a  month-to-month  basis,  to the general
         public.  The buildings and equipment are depreciated on a straight-line
         basis over estimated useful lives of 25 and 5 years, respectively.

                  In 1995,  the  Financial  Accounting  Standards  Board  issued
         Statement of Financial  Accounting  Standards No. 121,  "Accounting for
         the  Impairment of Long-Lived  Assets and for  Long-Lived  Assets to be
         Disposed of"  ("Statement  121").  Statement  121  requires  impairment
         losses to be recorded on  long-lived  assets  used in  operations  when
         indicators of impairment  are present and the  undiscounted  cash flows
         estimated  to be  generated  by those  assets are less than the assets'
         carrying  amount.  Statement  121 also  addresses  the  accounting  for
         long-lived  assets that are expected to be disposed of. The Partnership
         has not  identified  any assets  which  indicate an  impairment  in the
         carrying value of the asset is present.

         Allocation of Net Income:
         -------------------------

                  The general  partners' share of net income consists of amounts
         attributable  to  their  1%  capital  contribution  and  an  additional
         percentage  of cash flow (as  defined)  which  relates  to the  general
         partners' share of cash  distributions  as set forth in the Partnership
         Agreement  (Note 4).  All  remaining  net  income is  allocated  to the
         limited partners.

                  Per unit data is based on the weighted  average  number of the
         limited partnership units (20,000) outstanding during the period.

         Cash and Cash Equivalents:
         --------------------------

                  For financial  statement purposes,  the Partnership  considers
         all highly liquid investments purchased with a maturity of three months
         or less to be cash equivalents.

         Other Assets:
         -------------

                  Included in other  assets are  deferred  financing  costs.  In
         1993,   the   Partnership   incurred   deferred   financing   costs  of
         approximately  $246,000  in  connection  with the  modification  of its
         mortgage  note  payable  (Note 7). In October  1998 the  mortgage  note
         payable was paid in full. The remaining  balance of the financing costs
         were fully amortized in 1998.

         Use of Estimates:
         -----------------

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

                                      F-6

<PAGE>

2.       SUMMARY OF  SIGNIFICANT  ACCOUNTING  POLICIES AND  PARTNERSHIP  MATTERS
         (CONTINUED)

         Environmental Cost:
         -------------------

                  Substantially  all  of  the   Partnership's   facilities  were
         acquired   prior  to  the  time  that  it  was   customary  to  conduct
         environmental  investigations in connection with property acquisitions.
         During 1995, the Partnership 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.  Although
         there  can  be no  assurance,  the  Partnership  is  not  aware  of any
         environmental   contamination  of  any  of  its  property  sites  which
         individually or in the aggregate would be material to the Partnership's
         overall business, financial condition or results of operations.

         Segement Reporting:
         -------------------

                  Effective  January 1, 1998, the  Partnership  adopted SFAS No.
         131,   "Disclosure   about   Segments  of  an  Enterprise  and  Related
         Information."  SFAS No. 131  established  standards  for the way public
         business  enterprises  report  information about operating  segments in
         annual financial  statements and requires that those enterprises report
         selected  information  about  operating  segments in interim  financial
         reports.   SFAS  No.  131  also   establishes   standards  for  related
         disclosures  about  products and services,  geographic  areas and major
         customers.  The Partnership only has one reportable  segment as defined
         within  SFAS No.  131,  therefore  the  adoption of SFAS No. 131 had no
         effect on the Partnership's disclosure.

         Derivatives:
         ------------

                  In June 1998, the Financial  Accounting Standards Board issued
         Statement No. 133,  Accounting for Derivative  Instruments  and Hedging
         Activities,  which is required to be adopted in years  beginning  after
         June 15, 1999.  Management does not anticipate that the adoption of the
         new  Statement  will  have a  significant  effect  on  earnings  or the
         financial position of the Partnership.

3.       CASH DISTRIBUTIONS

                  The  Partnership  Agreement  requires that cash  available for
         distribution  (cash flow from all sources less cash  necessary  for any
         obligations  or  capital  improvement  needs) be  distributed  at least
         quarterly.  Cash  distributions  have been  suspended  since the fourth
         quarter of 1990 for debt service payments.

4.       PARTNERS' DEFICIT

                  The general partners have a 1% interest in the Partnership. In
         addition,   the   general   partners   have  an  8%  interest  in  cash
         distributions  attributable to operations  (exclusive of  distributions
         attributable to sale and financing  proceeds until the limited partners
         recover  all of their  initial  investment).  Thereafter,  the  general
         partners have a 25% interest in all cash distributions  (including sale
         and financing proceeds). In 1985, the limited partners recovered all of
         their initial  investment.  All subsequent cash distributions are being
         made 25.75%  (including  the 1% interest)  to the general  partners and
         74.25%  to  the  limited   partners.   Transfers  of  equity  are  made
         periodically to conform the partners' equity accounts to the provisions
         of the  Partnership  Agreement.  These  transfers have no effect on the
         results of operations or distributions to partners.

                  Concurrent with the financing of the Partnership's  properties
         in 1987 (Note 7), the Partnership made a special distribution  totaling
         $20,202,000 to the partners. This special distribution had no effect on
         the Partnership's taxable income, however, resulted in a deficit in the
         limited and general partners' equity accounts.

                                      F-7

<PAGE>

5.       RELATED PARTY TRANSACTIONS

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

                  In November  1995,  the  Management  Agreement  was amended to
         provide  that upon demand  from PSI or PSMI made prior to December  15,
         1995,  the  Partnership  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.  

                  See footnote 7, on related party note payable.

6.       TAXES BASED ON INCOME

                  Taxes based on income are the responsibility of the individual
         partners and,  accordingly,  the Partnership's  financial statements do
         not reflect a provision for such taxes.

                  Unaudited  taxable net income was  $1,763,000,  $1,553,000 and
         $1,122,000  for the  years  ended  December  31,  1998,  1997 and 1996,
         respectively.  The difference between taxable net income and net income
         is primarily related to depreciation  expense resulting from difference
         in depreciation methods.

7.       NOTES PAYABLE

                  Notes  payable at December  31,  1998 and 1997  consist of the
         following:

<TABLE>
<CAPTION>
                                                                      1998               1997
                                                                 ---------------    ---------------   
<S>                                                              <C>                <C>                                            
8.25% mortgage note payable to an insurance  company 
with principal and interest of $141,000 due monthly.             $      -           $    13,793,000

Unsecured note payable to affiliate, bearing interest at 
the prime rate plus 1%, payable monthly, and requiring 50,000
principal payments; remaining principal due July 1, 1998.               -                   300,000

Unsecured  note  payable to a commercial  bank bearing
interest at the London  Interbank  Offering Rate ("LIBOR) 
plus 0.55%. The loan requires monthly payments of 
interest and matures October 2002.                                    12,000,000             -
                                                                 ---------------    ---------------   

                                                                 $    12,000,000    $    14,093,000
                                                                 ===============    ===============   

</TABLE>

                  During 1987,  the  Partnership  financed all of its properties
         with a  $20,885,000,  nonrecourse  note  secured  by the  Partnership's
         properties  which was scheduled to mature in 1994.  In September  1993,
         the  Partnership  and the lender modified the terms of the note whereby
         (i)  the  Partnership  was  required  to  make a  $5,000,000  principal
         repayment,  (ii) the interest rate was reduced from 10.25% to 8.25% per
         annum,  and (iii) the maturity date was extended from September 1, 1994
         to September 1, 2001.

                  In January 1996 the  Partnership  obtained a  $1,510,000  loan
         from PSI to  repay  and  terminate  the  unsecured  note  payable  to a
         commercial  financial  bank.  The PSI loan bears  interest at the prime
         rate  plus 1%,  payable  monthly,  in  addition  to  monthly  principal
         payments of $50,000.  In March 1998, the Partnership paid the remaining
         balance of the loan.

                                      F-8

<PAGE>

7.       NOTES PAYABLE (CONTINUED)

                  On June 1, 1998, the  Partnership  paid down its mortgage note
         with a third  party  lender by  $11,641,000.  The payment was made from
         cash reserves and an  $11,000,000  loan from Public  Storage,  Inc. The
         loan from Public Storage, Inc. bears interest at the fixed rate of 7.3%
         and matures June 1999. The loan calls for monthly  payments of interest
         only. Principal may be paid at anytime without penalty. Public Storage,
         Inc. has also provided the Partnership  with options to extend the loan
         term through June 2003.  Interest paid to Public Storage,  Inc. in 1998
         was $317,000.

                  During October 1998, the Partnership borrowed $12,400,000 from
         a commercial bank to payoff the loan from Public storage,  Inc. and the
         mortgage  note  with a third  party.  The loan is  unsecured  and bears
         interest at the London  Interbank  Offering Rate  ("LIBOR")  plus 0.55%
         (5.61% as of December 31, 1998).  The loan requires monthly payments of
         interest and mature October 2002. Principal may be paid, in whole or in
         part,  at any time without  penalty or premium.  The loan proceeds were
         used to pay off the Partnership's existing indebtedness.

                  The   Partnership   also  entered  into   interest  rate  swap
         agreements  to reduce  the impact of  changes  in  interest  rates on a
         portion  of  its  floating  rate  debt.  The  agreement,  which  covers
         $5,000,000  of debt  through  October  2000,  effectively  changes  the
         interest  rate  exposure  from floating rate to a fixed rate of 5.205%.
         The second  agreement,  which covers $2,500,000 of debt through October
         2001 and  effectively  changes the interest rate exposure from floating
         rate to a fixed rate of 5.33%.  Market gains and losses on the value of
         the swap are  deferred  and  included  in  income  over the life of the
         contract.  The Partnership  records the differences paid or received on
         the  interest  rate swap in interest  expense as  payments  are made or
         received. The unrealized loss of the interest rate swaps if required to
         be liquidated at December 31, 1998 was approximatley $3,000.

                  The estimated fair value of the Partnership's notes payable as
         of December 31, 1998 are their current outstanding balances. This value
         is based on notes currently  available with similar terms and remaining
         maturities.

                  Interest  paid  on the  notes  was  $933,000,  $1,219,000  and
         $1,325,000  for the  years  ended  December  31,  1998,  1997 and 1996,
         respectively.

                                      F-9

<PAGE>

                         Public Storage Properties, Ltd.
             Schedule III - Real Estate and Accumulated Depreciation

<TABLE>
<CAPTION>
                                                                                                   
                                                         Initial Cost                              
                                                 ----------------------------                      
                                                                                      Costs 
                                                                  Building,      Subsequent to     
                                                                  Land Imp &      construction     
         Description             Encumbrances        Land         Equipment      (Improvements)    
-----------------------       -----------------  -------------  -------------    -------------     
                                                                                                   
<S>                            <C>               <C>            <C>              <C>               
Corona                         $         -       $    155,000   $    757,000     $    186,000      
                                                                                                   
Fremont                                  -            112,000        741,000          301,000      
Milpitas                                 -            198,000        649,000          174,000      
Norco                                    -             95,000        456,000           88,000      
North Hollywood                          -            314,000        553,000          192,000      
Pasadena                                 -            327,000        515,000          217,000      
Sun Valley                               -            329,000        611,000          256,000      
Wilmington                               -            815,000      1,336,000          437,000      
Whittier - El Monte                      -            166,000        763,000          208,000      
                              -----------------  -------------  -------------    -------------     
                               $  12,000,000(1)  $  2,511,000   $  6,381,000     $  2,059,000      
                              =================  =============  =============    =============                                     
</TABLE>

<TABLE>
<CAPTION>
                                        Gross Carrying Amount
                                        at December 31, 1998
                              -----------------------------------------
                              
                                              Building,
                                             Land Imp &                      Accumulated        Date
         Description              Land        Equipment        Total        Depreciation      Completed
-----------------------       ------------  -------------   ------------   --------------     ---------
                                                                          
<S>                           <C>           <C>             <C>             <C>                 <C>  
Corona                        $   155,000   $    943,000    $ 1,098,000     $    665,000        12/78
                                                                          
Fremont                           112,000      1,042,000      1,154,000          750,000        11/78
Milpitas                          198,000        823,000      1,021,000          573,000        11/78
Norco                              95,000        544,000        639,000          392,000        12/78
North Hollywood                   314,000        745,000      1,059,000          470,000        12/79
Pasadena                          327,000        732,000      1,059,000          524,000        08/78
Sun Valley                        329,000        867,000      1,196,000          655,000        10/78
Wilmington                        815,000      1,773,000      2,588,000        1,279,000        08/78
Whittier - El Monte               166,000        971,000      1,137,000          682,000        07/78
                              ------------  -------------   -----------    --------------    
                              $ 2,511,000   $  8,440,000    $ 10,951,000    $  5,990,000
                              ============  =============   ============   ==============                                  
</TABLE>

(1)      All  nine   properties  are  encumbered  by  a  promissory   note.  The
         $12,000,000 listed above is the principal balance remaining on the note
         at December 31, 1998.

                                      F-10

<PAGE>

                         Public Storage Properties, Ltd.

                           Real Estate Reconciliation

                            Schedule III (continued)


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

                                      COST

                                               1998         1997         1996
                                           -----------  -----------  -----------

Balance at the beginning of the period     $10,512,000  $10,232,000  $10,004,000

Additions during the period

    Improvements                               439,000      280,000      228,000

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

Balance at the close of the period         $10,951,000  $10,512,000  $10,232,000
                                           ===========  ===========  ===========


                     ACCUMULATED DEPRECIATION RECONCILIATION

                                               1998         1997         1996
                                           -----------  -----------  -----------
Balance at the beginning of the period      $5,492,000   $5,046,000   $4,644,000

Additions during the period

    Depreciation                               498,000      446,000      402,000
                                           -----------  -----------  -----------

Balance at the close of the period          $5,990,000   $5,492,000   $5,046,000
                                           ===========  ===========  ===========

(b)  The aggregate  depreciable cost of real estate (excluding land) for Federal
     income tax purposes is $3,202,000 (unaudited).

                                      F-11