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, 1997

                                       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. [ X ]

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      NONE



<PAGE>



                                     PART I

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

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,  1997,  the  Partnership  owned nine  properties.  The
Partnership purchased its last property in June 1978.

         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.


                                       2
<PAGE>


         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   160,000  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  the
          Partnership's mini-warehouses has increased from 92% in 1996 to 95% in
          1997.  Realized  monthly rents per square foot increased from $0.72 in
          1996 to $0.75 in 1997. The Partnership  has increased  rental rates in
          many  markets  where  it  has  achieved  high  occupancy   levels  and
          eliminated or minimized promotions.

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

          * Professional  property  operation.  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.


                                       3
<PAGE>


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.

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.


                                       4
<PAGE>


         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.

Year 2000 Compliance
--------------------

         PSI has completed an initial  assessment of its computer  systems.  The
majority of the computer  programs were  installed or upgraded over the past few
years and are Year 2000 compliant.  Some of the older computer programs utilized
by PSI were written without regard for Year 2000 issues and could cause a system
failure or miscalculations with possible disruption of operations. Each of these
computer  programs and systems has been  evaluated to be upgraded or replaced as
part of PSI Year 2000 project.

         The cost of the Year 2000 project  will be  allocated to all  companies
that use the PSI computer  systems.  The cost of the Year 2000 project  which is
expected to be  allocated to the Company is less than  $30,000.  The cost of new
software will be capitalized and the cost of existing  software will be expensed
as incurred.

         The  project is  expected  to be  completed  by March 31, 1999 which is
prior to any  anticipated  impact on operating  systems.  PSI believes that with
modifications to existing software and, in some instances, the conversion to new
software,  the Year 2000 issue will not pose significant  operational  problems.
However,  if such  modifications are not made, or are not completed timely,  the
Year 2000 issue could have a material impact on the operations of the Company.

         The costs of the  project  and the date on which PSI  believes  it will
complete the Year 2000  modifications  are based on management's best estimates,
which were derived utilizing numerous assumptions of future events. There can be
no guarantee  that these  estimates  will be achieved and actual  results  could
differ materially from those anticipated.

ITEM 2.       PROPERTIES.
              -----------

         The  following  table sets forth  information  as of December  31, 1997
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 95% and 92% in 1997 and 1996, respectively.


                                       5
<PAGE>


         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. Based on the assessments,  the Partnership  expensed $22,000 in
1995 for known environmental remediation requirements.

         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 14(a).

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 1997.

                                                          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, 1997, there were approximately 956 record holders of Units.

         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,                     1997          1996          1995            1994          1993
-----------------------------        -----------   ------------   -----------    -----------   -----------

<S>                                  <C>           <C>            <C>            <C>           <C>
Revenues (3)                         $ 4,337,000   $  4,007,000   $ 4,235,000    $ 4,181,000   $ 3,672,000

Depreciation and
amortization                             446,000        402,000       356,000        296,000       304,000

Interest expense                       1,252,000      1,358,000     1,520,000      1,658,000     2,171,000

Net income                             1,341,000      1,008,000     1,125,000      1,075,000       101,000

Limited partners' share                1,328,000        998,000     1,114,000      1,064,000       100,000

General partners' share                   13,000         10,000        11,000         11,000         1,000

Limited partners' per unit data (1):
  Net income                              $66.40         $49.90        $55.70         $53.20         $5.00


As of December 31,
------------------

Cash and cash equivalents            $   546,000   $     69,000   $    89,000    $   162,000   $   136,000

Total assets                         $ 5,760,000   $  5,503,000   $ 5,845,000    $ 6,418,000   $ 7,117,000

Notes payable (2)                    $14,093,000   $ 15,217,000   $16,351,000    $17,995,000   $20,005,000
-------------------------------
</TABLE>


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

       (2)  At December 31, 1993,  notes payable  included  $4,350,000 due to an
            affiliate, which was discharged in June, 1994.

       (3)  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.
              ----------------------

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

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.


                                       7
<PAGE>



         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.

         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.

         YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995:

         The  Partnership's  net  income  in 1996  was  $1,008,000  compared  to
$1,125,000  in 1995,  representing  a decrease  of  $117,000.  This  decrease is
primarily  due to a gain on sale of  marketable  securities  recognized in 1995,
partially  offset by an increase in property net operating income and a decrease
in interest expense.

         During 1996,  property net operating income (rental income less cost of
operations,  management  fees paid to an  affiliate  and  depreciation  expense)
increased  $84,000 from  $2,329,000 in 1995 to $2,413,000 in 1996. 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  $4,002,000  in 1996 compared to $3,848,000 in 1995,
representing  an  increase  of  $154,000,  or 4%. 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
92% and 91% in 1996 and 1995,  respectively.  The average monthly  realized rent
per square  foot at the  mini-warehouses  was $.72 in 1996  compared  to $.70 in
1995.

         Other  income  decreased  from  $26,000  in 1995 to $5,000 in 1996 as a
result of a decrease in dividend income earned on marketable  securities sold in
November 1995 and lower invested cash balances in 1996 compared to 1995.

         Cost of operations (including management fees paid to an affiliate) was
$1,187,000  and  $1,163,000  in 1996 and  1995,  respectively,  representing  an
increase  of  $24,000,  or 2%.  This  increase  was  primarily  attributable  to
increases in payroll cost.

         In 1995, the  Partnership  prepaid eight months of 1996 management fees
on  its  mini-warehouse  operations  (based  on  the  management  fees  for  the
comparable period during the calendar year immediately preceding the prepayment)
discounted  at the rate of 14% per year to  compensate  for early  payment.  The
Partnership has expensed the prepaid  management fees during 1996. The amount is
included in management fees paid to affiliate in the statements of income.  As a
result  of the  prepayment,  the  Partnership  saved  approximately  $20,000  in
management  fees,  based on the management  fees that would have been payable on
rental income generated during 1996 compared to the amount prepaid.

         Interest  expense  was  $1,358,000  and  $1,520,000  in 1996 and  1995,
respectively,  representing  a decrease of  $162,000,  or 11%.  The decrease was
primarily a result of a reduction  in the average  outstanding  debt  balance in
1996 compared to 1995.


                                       8
<PAGE>



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

         Cash  flow  from  operating  activities  ($1,881,000  in 1997) has been
sufficient to meet all current obligations of the Partnership.  During 1998, the
Partnership anticipates  approximately $327,000 of capital improvements compared
to $280,000 in 1997, $228,000 in 1996 and $344,000 in 1995.

         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.

         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 (see  below).  During  1990,  the  partnership  stopped  paying
distributions to build cash and other liquid assets.

         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.  At December 31, 1997,
the outstanding balance of the mortgage note was $13,793,000.


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

         PSI has completed an initial  assessment of its computer  systems.  The
majority of the computer  programs were  installed or upgraded over the past few
years and are Year 2000 compliant.  Some of the older computer programs utilized
by PSI were written without regard for Year 2000 issues and could cause a system
failure or miscalculations with possible disruption of operations. Each of these
computer  programs and systems has been  evaluated to be upgraded or replaced as
part of PSI Year 2000 project.

         The cost of the Year 2000 project  will be  allocated to all  companies
that use the PSI computer  systems.  The cost of the Year 2000 project  which is
expected to be  allocated to the Company is less than  $30,000.  The cost of new
software will be capitalized and the cost of existing  software will be expensed
as incurred.

         The  project is  expected  to be  completed  by March 31, 1999 which is
prior to any  anticipated  impact on operating  systems.  PSI believes that with
modifications to existing software and, in some instances, the conversion to new
software,  the Year 2000 issue will not pose significant  operational  problems.
However,  if such  modifications are not made, or are not completed timely,  the
Year 2000 issue could have a material impact on the operations of the Company.

         The costs of the  project  and the date on which PSI  believes  it will
complete the Year 2000  modifications  are based on management's best estimates,
which were derived utilizing numerous assumptions of future events. There can be
no guarantee  that these  estimates  will be achieved and actual  results  could
differ materially from those anticipated.

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.


                                       9
<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

         B. Wayne Hughes, age 64, 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 61, has been employed by PSI for 20 years and became
President  and a director of PSI in November  1991.  Mr. Lenkin is a director of
the National Association of Real Estate Investment Trusts (NAREIT).

         B. Wayne Hughes,  Jr., age 38, 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 37, 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 58,  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 59, 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.


                                       10
<PAGE>



         Marvin M.  Lotz,  age 55,  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 48,  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 46,  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 36, 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 42,  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 58, 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 directors of Johns  Hopkins  University  and of the Los Angeles  County
Metropolitan  Transportation  Authority,  and a former  member  of the  board of
directors of the Metropolitan Water District of Southern California.

         Dann V. Angeloff, age 62, 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 Compensation  Resource  Group,  Eagle
Lifestyle   Nutrition,    Inc.,    Nicholas/Applegate    Growth   Equity   Fund,
Nicholas/Applegate  Investment Trust, Ready Pac Produce,  Inc. and Royce Medical
Company.

         William C. Baker,  age 64,  became a director of PSI in November  1991.
Since  November  1997,  Mr.  Baker has been  Chairman  of the Board of and Chief
Executive  Officer of The Santa Anita Companies,  Inc., which operates the Santa
Anita Racetrack and is a wholly-owned subsidiary of Meditrust Operating Company.
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 50,  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
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  Roland
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.
and Virgin Entertainment Group, Ltd.


                                       11
<PAGE>


         Uri P.  Harkham,  age 49,  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 and
Australia.

         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.

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.

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

         (a) At March 10, 1998, the following  persons  beneficially  owned more
than 5% of the Units:

<TABLE>
<CAPTION>

         Title                        Name and Address                                                   Percent
        of Class                    of Beneficial Owner                Beneficial Ownership             of Class
------------------------  ----------------------------------------  --------------------------  -------------------------

<S>                       <C>                                            <C>                              <C>
Units of Limited          Public Storage, Inc.                           1,658 Units (1)                  8.3%
Partnership Interest      701 Western Ave.                               6,000 Units (2)                  30.0%
                          Glendale, California 91201

Units of Limited          B. Wayne Hughes                                6,105 Units (3)                  30.5%
Partnership Interest      Tamara L. Hughes
                          701 Western Ave.
                          Glendale, California 91201

</TABLE>


(1)   Units owned by PSI as to which PSI has sole voting and dispositive power.

(2)   Units which PSI has an option to acquire  (together with other securities)
      from BWH Marina Corporation II (a corporation  wholly-owned by Hughes) and
      as to which PSI has sole voting power  (pursuant to an irrevocable  proxy)
      and no dispositive power.

(3)   Includes (i) 25 Units owned by BWH Marina  Corporation  II, a  corporation
      wholly-owned by Hughes, as to which Hughes has sole voting and dispositive
      power,  (ii) 6,000  Units owned by BWH Marina  Corporation  II as to which
      Hughes has sole  dispositive  power and no voting power; PSI has an option
      to acquire  these Units and an  irrevocable  proxy to vote these Units and
      (iii) 80 Units owned by THG Acquisitions,  Inc. a corporation wholly-owned
      by Tamara L. Hughes,  an adult  daughter of Hughes,  as to which Tamara L.
      Hughes has sole 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. Dann V. Angeloff, a director of


                                       12
<PAGE>



PSI, beneficially owns 41 Units (0.2% of the Units). The directors and executive
officers of PSI (including Hughes), as a group (16 persons), own an aggregate of
6,084  Units,  representing  30.4%  of the  Units  (including  the  6,025  Units
beneficially owned by Hughes 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.

         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 1997, the Partnership paid fees of $259,000
to PSI pursuant to the Management Agreement.


                                       13
<PAGE>


                                     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.


                                       14
<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.

       27        Financial Data Schedule. Filed herewith.


                                       15
<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, 1998         By:    Public Storage, Inc., General Partner


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

                                       /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, 1998
--------------------------   Officer of Public Storage, Inc. (principal
B. Wayne Hughes              executive officer)


/s/ Harvey Lenkin            President and Director                             March 31, 1998
--------------------------   of Public Storage, Inc.
Harvey Lenkin


/s/ B. Wayne Hughes, Jr.     Vice President and Director                        March 31, 1998
--------------------------   of Public Storage, Inc.
B. Wayne Hughes, Jr.


/s/ John Reyes               Senior Vice President and Chief Financial          March 31, 1998
--------------------------   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, 1998
--------------------------
Robert J. Abernethy


/s/ Dann V. Angeloff         Director of Public Storage, Inc.                   March 31, 1998
--------------------------
Dann V. Angeloff


/s/ William C. Baker         Director of Public Storage, Inc.                   March 31, 1998
--------------------------
William C. Baker


                             Director of Public Storage, Inc.                   March 31, 1998
--------------------------
Thomas J. Barrack, Jr.

/s/ Uri P. Harkham           Director of Public Storage, Inc.                   March 31, 1998
--------------------------
Uri P. Harkham

</TABLE>

                                       16
<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, 1997 and 1996                             F-2

For the years ended December 31, 1997, 1996 and 1995:

     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 - F11

         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, 1997 and 1996,  and the related  statements  of income,
partners' deficit and cash flows for each of the three years in the period ended
December 31, 1997. 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, 1997 and 1996,  and the results of its  operations  and its cash
flows for each of the three years in the period  ended  December  31,  1997,  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


March 24, 1998
Los Angeles, California


                                      F-1
<PAGE>


                         PUBLIC STORAGE PROPERTIES, LTD.
                                 BALANCE SHEETS
                           December 31, 1997 and 1996

<TABLE>
<CAPTION>

                                                                               1997                1996
                                                                          -------------       -------------
                                     ASSETS
                                     ------

<S>                                                                       <C>                 <C>
Cash and cash equivalents                                                 $    546,000        $     69,000
Rent and other receivables                                                      46,000              48,000

Real estate facilities, at cost:
     Building, land improvements and equipment                               8,001,000           7,721,000
     Land                                                                    2,511,000           2,511,000
                                                                          -------------       -------------
                                                                            10,512,000          10,232,000

     Less accumulated depreciation                                          (5,492,000)         (5,046,000)
                                                                          -------------       -------------
                                                                             5,020,000           5,186,000
                                                                          -------------       -------------

Other assets                                                                   148,000             200,000
                                                                          -------------       -------------

Total assets                                                              $  5,760,000        $  5,503,000
                                                                          =============       =============


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

Accounts payable                                                          $     32,000        $      5,000
Deferred revenue                                                               131,000             118,000
Notes payable                                                               14,093,000          15,217,000

Partners' deficit:
     Limited partners' deficit, $500 per unit, 20,000 units
         authorized,issued and outstanding                                  (6,308,000)         (7,304,000)
     General partners' deficit                                              (2,188,000)         (2,533,000)
                                                                          -------------       -------------

     Total partners' deficit                                                (8,496,000)         (9,837,000)
                                                                          -------------       -------------

Total liabilities and partners' deficit                                   $  5,760,000        $  5,503,000
                                                                          =============       =============
</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, 1997

<TABLE>
<CAPTION>
                                                           1997                1996                 1995
                                                      -------------       --------------       --------------
REVENUES:

<S>                                                   <C>                 <C>                  <C>
Rental income                                         $  4,321,000        $   4,002,000        $   3,848,000
Gain on sale of marketable securities of affiliate            -                   -                  361,000
Other income                                                16,000                5,000               26,000
                                                      -------------       --------------       --------------
                                                         4,337,000            4,007,000            4,235,000
                                                      -------------       --------------       --------------

COSTS AND EXPENSES:

Cost of operations                                         977,000              967,000              932,000
Management fees paid to affiliate                          259,000              220,000              231,000
Depreciation                                               446,000              402,000              356,000
Administrative                                              62,000               52,000               49,000
Environmental cost                                            -                   -                   22,000
Interest expense                                         1,252,000            1,358,000            1,520,000
                                                      -------------       --------------       --------------

                                                         2,996,000            2,999,000            3,110,000
                                                      -------------       --------------       --------------

NET INCOME                                            $  1,341,000        $   1,008,000        $   1,125,000
                                                      -------------       --------------       --------------

Limited partners' share of net income ($66.40
     per  unit in 1997, $49.90 per unit in 1996,
     and $55.70 per unit in 1995)                     $  1,328,000        $     998,000        $   1,114,000

General partners' share of net income                       13,000               10,000               11,000
                                                      -------------       --------------       --------------

                                                      $  1,341,000        $   1,008,000        $   1,125,000
                                                      =============       ==============       ==============
</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, 1997


<TABLE>
<CAPTION>
                                                                                    Unrealized Gain
                                                     Limited           General       on Marketable     Total Partners'
                                                     Partners          Partners       Securities           Deficit
                                                ---------------   ---------------  -----------------  ----------------

<S>                                             <C>               <C>               <C>               <C>
Balance at December 31, 1994                    $   (8,888,000)   $   (3,082,000)   $      227,000    $  (11,743,000)

Sale of marketable securities                         -                 -                 (227,000)         (227,000)

Net income                                           1,114,000            11,000          -                1,125,000

Equity transfer                                       (278,000)          278,000          -                 -
                                                ---------------   ---------------  -----------------  ----------------


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)
                                                ===============   ===============  =================  ===============
</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, 1997

<TABLE>
<CAPTION>

                                                                       1997              1996              1995
                                                                  --------------    --------------    --------------
Cash flows from operating activities:

     <S>                                                          <C>               <C>               <C>
     Net income                                                   $    1,341,000    $    1,008,000    $    1,125,000

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

     Depreciation                                                        446,000           402,000           356,000
     Gain on sale of marketable securities                                -                 -               (361,000)
     Decrease (increase) in rent and other receivables                     2,000            (6,000)           21,000
     Amortization (payment) of prepaid management fees                    -                138,000          (138,000)
     Amortization of prepaid loan fees                                    33,000            33,000            33,000
     Decrease (increase) in other assets                                  19,000           (17,000)           (2,000)
     Increase (decrease) in accounts payable                              27,000           (72,000)           47,000
     Increase (decrease) in deferred revenue                              13,000           (14,000)           (4,000)
                                                                  --------------    --------------    --------------

         Total adjustments                                               540,000           464,000           (48,000)
                                                                  --------------    --------------    --------------

         Net cash provided by operating activities                     1,881,000         1,472,000         1,077,000
                                                                  --------------    --------------    --------------

Cash flows from investing activities:

     Proceeds from sale of marketable securities                          -                 -                708,000
     Additions to real estate facilities                                (280,000)         (228,000)         (344,000)
                                                                  --------------    --------------    --------------

         Net cash (used in) provided by investing activities            (280,000)         (228,000)          364,000
                                                                  --------------    --------------    --------------

Cash flows from financing activities:

    Principal (payments) proceeds on note payable to affiliate          (600,000)         (130,000)          130,000
    Principal payments on note payable                                  (524,000)       (1,134,000)       (1,644,000)
                                                                  --------------    --------------    --------------
         Net cash used in financing activities                        (1,124,000)       (1,264,000)       (1,514,000)
                                                                  --------------    --------------    --------------

Net increase (decrease) in cash and cash equivalents                     477,000           (20,000)          (73,000)

Cash and cash equivalents at the beginning of the year                    69,000            89,000           162,000
                                                                  --------------    --------------    --------------

Cash and cash equivalents at the end of the year                  $      546,000    $       69,000    $       89,000
                                                                  ==============    ==============    ==============

</TABLE>

                            See accompanying notes.
                                      F-5
<PAGE>


                         PUBLIC STORAGE PROPERTIES, LTD.
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1997

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, 1997 and 1996 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
         adopted  Statement  121 in 1996 and the  adoption  had no effect on the
         Partnership's financial statements.

         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.


                                      F-6
<PAGE>

                         PUBLIC STORAGE PROPERTIES, LTD.
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1997


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

         Gain on Sale of Marketable Securities:
         --------------------------------------

                  The Partnership held marketable securities in PSI. In November
         1995, the Partnership  sold its 39,911 shares of PSI common stock,  and
         recognized  a gain  totaling  $361,000  on the  sale.  The  Partnership
         recognized $26,000 in dividends in 1995.

         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).  Amortization  of deferred  financing
         costs  of  $33,000  relating  to the  pre-modified  mortgage  loan  was
         expensed in each of the years 1997, 1996 and 1995, respectively, and is
         included in interest expense.

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

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

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

                  Substantially  all  of  the   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. Based on the
         assessments,  the  Partnership  expensed  $22,000  in  1995  for  known
         environmental  remediation  requirements.  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.

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.


                                      F-7
<PAGE>


                         PUBLIC STORAGE PROPERTIES, LTD.
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1997


4.       PARTNERS' DEFICIT (CONTINUED)

                  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.

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' monthly 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.  In  December  1995,  the  Partnership
         prepaid,  to  PSI,  8  months  of  1996  management  fees  at a cost of
         $138,000.  The amount is included in other assets in the Balance  Sheet
         at December 31, 1995. The amount was amortized as management  fees paid
         to affiliate during 1996.

                  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.

                  Taxable net income was  $1,553,000,  $1,122,000 and $1,209,000
         for the years ended December 31, 1997, 1996 and 1995, 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,  1997 and 1996  consist of the
         following:

                                                   1997               1996
                                              ---------------    ---------------

8.25% mortgage note payable to an
insurance company with principal and
interest of $141,000 due monthly;
remaining principal due September, 2001.      $    13,793,000    $    14,317,000

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            900,000
                                              ---------------    ---------------

                                              $    14,093,000    $    15,217,000
                                              ===============    ===============

                                      F-8
<PAGE>


                         PUBLIC STORAGE PROPERTIES, LTD.
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1997


7.       NOTES PAYABLE (CONTINUED)

                  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.

              The estimated fair value of the Partnerhsip's  notes payable as of
         December 31, 1997 are their current outstanding balances.  This value
         is based on notes  currently available with similar terms and remaining
         maturities.


                  The principal repayment schedule of the above notes payable as
         of December 31, 1997, is as follows:

          1998                                     $     869,000
          1999                                           618,000
          2000                                           671,000
          2001                                        11,935,000
                                                   -------------
                                                   $  14,093,000
                                                   =============

                  Interest  paid on the notes  was  $1,219,000,  $1,325,000  and
         $1,488,000  for the  years  ended  December  31,  1997,  1996 and 1995,
         respectively.


                                      F-9
<PAGE>


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

<TABLE>
<CAPTION>

                                                                                  Gross Carrying Amount
                                       Initial Cost                               at December 31, 1997
                                  -----------------------     Costs       ------------------------------------
                                                Building,  Subsequent to               Building,
                                               Land Imp &  construction                Land Imp &             Accumulated       Date
    Description     Encumbrances      Land      Equipment (Improvements)     Land      Equipment      Total   Depreciation Completed
------------------- ------------  ----------  ----------- -------------- ----------   ----------  ------------ -----------  --------

<S>                    <C>        <C>          <C>          <C>          <C>          <C>          <C>           <C>           <C>
Corona                 $   -      $  155,000   $  757,000   $  163,000   $  155,000   $  920,000   $ 1,075,000   $  616,000    12/78
Fremont                    -         112,000      741,000      232,000      112,000      973,000     1,085,000      689,000    11/78
Milpitas                   -         198,000      649,000      155,000      198,000      804,000     1,002,000      529,000    11/78
Norco                      -          95,000      456,000       69,000       95,000      525,000       620,000      368,000    12/78
North Hollywood            -         314,000      553,000       80,000      314,000      633,000       947,000      428,000    12/79
Pasadena                   -         327,000      515,000      191,000      327,000      706,000     1,033,000      473,000    08/78
Sun Valley                 -         329,000      611,000      229,000      329,000      840,000     1,169,000      591,000    10/78
Wilmington                 -         815,000    1,336,000      382,000      815,000    1,718,000     2,533,000    1,164,000    08/78
Whittier - El Monte        -         166,000      763,000      119,000      166,000      882,000     1,048,000      634,000    07/78
                    ------------  ----------  ----------- -------------  ----------   ----------  ------------ ------------
                   $13,793,000(1) $2,511,000   $6,381,000   $1,620,000   $2,511,000   $8,001,000   $10,512,000   $5,492,000
                    ============  ==========  =========== =============  ==========   ==========  ============ ============
</TABLE>

(1)  All nine  properties are encumbered by a promissory  note. The  $13,793,000
     listed above is the principal balance remaining on the note at December 31,
     1997.

                                      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:

<TABLE>
<CAPTION>

                                      COST

                                                               1997              1996               1995
                                                          -------------      -------------      -------------

<S>                                                       <C>                <C>                <C>
Balance at the beginning of the period                    $  10,232,000      $  10,004,000      $   9,660,000

Additions during the period

    Improvements                                                280,000            228,000            344,000

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

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


                     ACCUMULATED DEPRECIATION RECONCILIATION

                                                                1997               1996                 1995
                                                          -------------      -------------      -------------
Balance at the beginning of the period                    $   5,046,000      $   4,644,000      $   4,288,000

Additions during the period

    Depreciation                                                446,000            402,000            356,000

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

Balance at the close of the period                        $   5,492,000      $   5,046,000      $   4,644,000
                                                          =============      =============      =============

</TABLE>


(b)  The aggregate  depreciable cost of real estate (excluding land) for Federal
     income tax purposes is $8,001,000.

                                      F-11

<PAGE>


Exhibit 10.7
                                 PROMISSORY NOTE

$249,909.03                                                 Glendale, California
                                                                January 27, 1998


         FOR VALUE RECEIVED,  the undersigned  PUBLIC STORAGE  PROPERTIES,  LTD.
("Borrower")  promises to pay to the order of PUBLIC STORAGE, INC. ("Lender") at
its offices at 701 Western Avenue,  Glendale,  California 91201 or at such other
place as the holder hereof may  designate,  in lawful money of the United States
of America and in immediately  available funds, the principal sum of $249,909.03
with  interest  thereon at a rate per annum  (computed on the basis of a 360-day
year,  actual  days  elapsed)  1.0% above the Prime Rate in effect  from time to
time.  The  "Prime  Rate"  is a  base  rate  that  Wells  Fargo  Bank,  National
Association  ("Bank"),  from time to time  establishes  and which  serves as the
basis upon which  effective  rates of interest are calculated for those loans by
Bank matching reference  thereto.  Each change in the rate of interest hereunder
shall become  effective  on the date each Prime Rate change is announced  within
Bank.

         Interest  accrued  on this Note shall be payable on the 1st day of each
month,  commencing  February 1, 1998 and on June 30,  1998.  Principal  shall be
payable  on the  1st day of each  month  in  installments  of  $50,000.00  each,
commencing  February 1, 1998 and  continuing up to and  including  July 1, 1998,
with a final  installment  consisting of all remaining  unpaid principal due and
payable  in full on June 30,  1998.  Each  payment  made on this  Note  shall be
credited  first,  to any  interest  then  due  and  second,  to the  outstanding
principal  balance  hereof.  All  prepayments of principal on this Note shall be
applied on the most remote principal installment or installments then unpaid.

         From and after the maturity  date of this Note, or such earlier date as
all  principal  owing  hereunder  becomes  due and  payable by  acceleration  or
otherwise,  the outstanding  principal  balance of this Note shall bear interest
until paid in full at an  increased  rate per annum  (computed on the basis of a
360-day year,  actual days elapsed)  equal to 4% above the rate of interest from
time to time applicable to this Note.

         The  occurrence of any of the following  shall  constitute an "Event of
Default" under this Note:

         1.   The failure to pay any  principal  or interest,  or other  amount,
              when due hereunder or under any  contract,  instrument or document
              executed in connection with this Note.

         2.   The  filing of a  petition  by or  against  any  Borrower,  or any
              general  partner  in  Borrower  (with  each such  general  partner
              referred  to  herein  as  a  "Third  Party   Obligor")  under  any
              provisions  of the  Bankruptcy  Reform  Act Title 11 of the United
              States Code, as amended or recodified  from time to time, or under
              any  similar  or other law  relating  to  bankruptcy,  insolvency,
              reorganization  or other relief for debtors:  the appointment of a
              receiver,  trustee,  custodian or liquidator of or for any part of
              the assets or property  of  Borrower  or any Third Party  Obligor;
              Borrower or any Third Party  Obligor  becomes  insolvent,  makes a
              general  assignment  for the benefit of  creditors or is generally
              not paying its debts as they become due; or any attachment or like
              levy on any property of Borrower or any Third Party Obligor.

         3.   The  dissolution  or  liquidation  of  Borrower or any Third Party
              Obligor which is a corporation.

         4.   Any default in the payment or  performance of any  obligation,  or
              any  defined  event  of  default,  under  any  provisions  of  any
              contract,  instrument or document  pursuant to which  Borrower has
              incurred  any   obligation  for  borrowed   money,   any  purchase
              obligation,  or any other  liability  of any kind to any person or
              entity, including the holder.

         5.   Any sale or transfer of all of a  substantial  or material part of
              the assets of Borrower.

         6.   Any  violation or breach of any provision of, or any defined event
              of default under, any addendum to this Note or any loan agreement,
              guaranty,  security  agreement,  deed of trust  or other  document
              executed in connection with or securing this Note.


<PAGE>


         Soon the  occurrence of any Event of Default,  the holder of this Note,
at the  holder's  option,  may  declare  the  sums  of  principal  and  interest
outstanding  hereunder to be immediately due and payable.  Borrower shall pay to
Lender the amount of any expenses, including legal fees, incurred as a result of
an Event of Default and any such amount not paid upon demand by Lender, shall be
added to, and thereafter bear interest as herein provided as part of, principal.

         IN WITNESS  WHEREOF,  the  undersigned has executed this Note as of the
date first written above.

                                          PUBLIC STORAGE PROPERTIES, LTD.

                                          By:      Public Storage, Inc.
                                                   ----------------------------
                                                   General Partner


                                          By:      /s/ John Reyes
                                                   ----------------------------
                                                   John Reyes
                                                   Senior Vice President and
                                                   Chief Financial Officer