SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

For the quarterly period ended March 31, 2005
                               --------------

                                       or

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

For the transition period from               to               .
                               -------------    --------------

Commission File Number:  1-8389

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

               California                               95-3551121
---------------------------------------- ---------------------------------------
     (State or other jurisdiction of     (I.R.S. Employer Identification Number)
     incorporation or organization)

701 Western Avenue, Glendale, California                91201-2349
----------------------------------------             --------------
(Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code:  (818) 244-8080.
                                                     --------------

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

                                 [X] Yes [ ] No

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

                                 [X] Yes [ ] No

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of May 9, 2005:

Common Stock, $.10 Par Value -  128,964,436 shares

Depositary Shares Each Representing 1/1,000 of a Share of Equity Stock, Series
A, $.01 Par Value - 8,753,193 depositary shares (representing 8,753.193 shares
of Equity Stock, Series A)

Equity Stock, Series AAA, $.01 Par Value - 4,289,544 shares


<PAGE>

                              PUBLIC STORAGE, INC.

                                      INDEX

                                                                          Pages

PART I.    FINANCIAL INFORMATION
           ---------------------

Item 1.    Financial Statements

           Condensed Consolidated Balance Sheets at
              March 31, 2005 and December 31, 2004                            1

           Condensed Consolidated Statements of Income for the
              Three Months Ended March 31, 2005 and 2004                      2

           Condensed Consolidated Statement of Shareholders' Equity
              for the Three Months Ended March 31, 2005                       3

           Condensed Consolidated Statements of Cash Flows
              for the Three Months Ended March 31, 2005 and 2004              4

           Notes to Condensed Consolidated Financial Statements            5-33

Item 2.    Management's Discussion and Analysis of
              Financial Condition and Results of Operations               34-58

Item 2A.   Risk Factors                                                   58-62

Item 3.    Quantitative and Qualitative Disclosures about Market Risk        63

Item 4.    Controls and Procedures                                           63

PART II.   OTHER INFORMATION (Items 3 through 5 are not applicable)
           -----------------

Item 1.    Legal Proceedings                                                 64

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds       64

Item 6.    Exhibits                                                       65-74



<PAGE>

                              PUBLIC STORAGE, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    (Amounts in thousands, except share data)


<TABLE>
<CAPTION>

                                                                                          March 31,          December 31,
                                                                                            2005                 2004
                                                                                       ----------------    ---------------
                                                                                         (Unaudited)
                                       ASSETS

<S>                                                                                     <C>                 <C>
Cash and cash equivalents....................................................           $     354,433       $     366,255
Real estate facilities, at cost:
   Land......................................................................               1,443,575           1,431,148
   Buildings.................................................................               4,115,256           4,079,602
                                                                                       ----------------    ---------------
                                                                                            5,558,831           5,510,750
   Accumulated depreciation..................................................              (1,364,593)         (1,320,200)
                                                                                       ----------------    ---------------
                                                                                            4,194,238          4,190,550
   Construction in process...................................................                  40,545             47,277
   Land held for development.................................................                   8,883              8,883
                                                                                       ----------------    ---------------
                                                                                            4,243,666          4,246,710

Investment in real estate entities...........................................                 331,256            341,304
Goodwill.....................................................................                  78,204             78,204
Intangible assets, net.......................................................                 103,034            104,685
Other assets.................................................................                  67,772             67,632
                                                                                       ----------------    ---------------
              Total assets...................................................           $   5,178,365       $  5,204,790
                                                                                       ================    ===============

                       LIABILITIES AND SHAREHOLDERS' EQUITY

Notes payable................................................................           $     117,168       $    129,519
Debt to joint venture partner................................................                  35,567             16,095
Preferred stock called for redemption........................................                  57,500             54,875
Accrued and other liabilities................................................                 139,449            145,431
                                                                                       ----------------    ---------------
         Total liabilities...................................................                 349,684            345,920
Minority interest:
   Preferred partnership interests...........................................                 225,000            310,000
   Other partnership interests...............................................                 116,454            118,903
Commitments and contingencies (Note 14)......................................                       -                  -
Shareholders' equity:
   Cumulative Preferred Stock, $0.01 par value, 50,000,000 shares authorized,
     1,685,586 shares issued (in series) and outstanding, (3,980,186 at
     December 31, 2004) at liquidation preference............................               2,179,650          2,102,150

   Common Stock, $0.10 par value, 200,000,000 shares authorized 127,969,602 shares
     issued and outstanding (128,526,450 at December 31, 2004)...............                  12,797             12,853
   Equity Stock, Series A, $0.01 par value, 200,000,000 shares authorized,
     8,753.193 shares issued and outstanding (8,776.102 at December 31, 2004)                       -                  -
   Paid-in capital...........................................................               2,444,833          2,457,568
   Cumulative net income.....................................................               2,829,284          2,732,873
   Cumulative distributions paid.............................................              (2,979,337)        (2,875,477)
                                                                                       ----------------    ---------------
         Total shareholders' equity..........................................               4,487,227          4,429,967
                                                                                       ----------------    ---------------
              Total liabilities and shareholders' equity.....................           $   5,178,365       $  5,204,790
                                                                                       ================    ===============

</TABLE>

                            See accompanying notes.
                                       1

<PAGE>


                              PUBLIC STORAGE, INC.
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                (Amounts in thousands, except per share amounts)

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                     Three Months Ended
                                                                                         March 31,
                                                                                 ----------------------------
                                                                                    2005            2004
                                                                                 -------------   ------------

Revenues:
     Rental income:
<S>                                                                              <C>             <C>
         Self-storage facilities.........................................        $   227,594     $   206,045
         Commercial properties...........................................              2,848           2,626
         Containerized storage facilities................................              3,837           4,806
     Tenant reinsurance premiums.........................................              5,916           5,963
     Interest and other income...........................................              3,555           1,357
                                                                                 -------------   ------------
                                                                                     243,750         220,797
                                                                                 -------------   ------------
Expenses:
     Cost of operations:
         Self-storage facilities.........................................             81,762          75,562
         Commercial properties...........................................              1,127           1,128
         Containerized storage facilities................................              2,742           2,774
         Tenant reinsurance..............................................              2,977           3,135
     Depreciation and amortization.......................................             47,976          46,433
     General and administrative..........................................              5,141           5,884
     Interest expense....................................................              1,663             100
                                                                                 -------------   ------------
                                                                                     143,388         135,016
                                                                                 -------------   ------------
Income from continuing operations before equity in earnings of real estate
   entities and minority interest in income..............................            100,362          85,781

Equity in earnings of real estate entities (Note 5)......................              5,678           4,057
Minority interest in income:
     Preferred partnership interests:
       Based on ongoing distributions....................................             (5,375)         (6,554)
       Special distribution and restructuring allocation (Note 9)........               (874)        (10,063)
     Other partnership interests.........................................             (4,395)         (4,003)
                                                                                 -------------   ------------
Income from continuing operations........................................             95,396          69,218
Discontinued operations (Note 3).........................................              1,015            (151)
                                                                                 -------------   ------------
Net income...............................................................        $    96,411     $    69,067
                                                                                 =============   ============
Net income allocation:
---------------------
     Allocable to preferred shareholders:
        Based on distributions paid......................................      $      40,413     $    38,042
        Based on redemptions of preferred stock..........................              1,904           3,723
     Allocable to Equity Stock, Series A.................................              5,375           5,375
     Allocable to common shareholders....................................             48,719          21,927
                                                                                 -------------   ------------
                                                                                 $    96,411     $    69,067
                                                                                 =============   ============
Per common share - basic and diluted
     Continuing operations...............................................        $      0.37     $     0.17
     Discontinued operations (Note 3)....................................               0.01              -
                                                                                 -------------   ------------
                                                                                 $      0.38     $     0.17
                                                                                 =============   ============
 Net income per depositary share of Equity Stock, Series A (basic and
 diluted)................................................................        $      0.61     $     0.61
                                                                                 =============   ============
Basic weighted average common shares outstanding.........................            128,586        127,182
                                                                                 =============   ============
Diluted weighted average common shares outstanding.......................            129,175        128,387
                                                                                 =============   ============
Weighted average shares of Equity Stock, Series A (basic and diluted)....              8,776          8,776
                                                                                 =============   ============

</TABLE>

                            See accompanying notes.
                                       2

<PAGE>

                              PUBLIC STORAGE, INC.
            CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                    (Amounts in thousands, except share data)

                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                 Cumulative                                        Cumulative Net
                                                              Preferred Stock    Common Stock    Paid-in Capital       Income
                                                              ---------------    -------------   ---------------   ---------------

<S>                                                             <C>               <C>              <C>               <C>
Balances at December 31, 2004.............................      $  2,102,150      $     12,853     $  2,457,568      $  2,732,873

Issuance of cumulative preferred stock:
   Series D (5,400 shares)..............................             135,000                 -           (4,453)                -

Redemption of cumulative preferred stock, including
redemption costs:
   Series F (2,300,000 shares)............................           (57,500)                -              (17)                -

Impact of EITF Topic D-42 on redemption of Series N and
Series O preferred units (Note 9).......................                   -                 -              874                 -

Issuance of common stock in connection with:
   Exercise of employee stock options (126,720 shares)....                 -                13            3,881                 -
   Vesting of restricted stock (4,317 shares) ............                 -                 -                -                 -

Stock based compensation expense (Note 12) ...............                 -                 -            1,071                 -

Repurchase of common stock (52,000 shares)................                 -                (5)          (2,966)                -

Stock distribution from unconsolidated real estate entities
(635,885 commonshares and 22,909 Equity Stock, Series A,
depositary shares) (Note 5)...............................                 -               (64)         (11,125)                -

Net income................................................                 -                 -                -            96,411

Cash distributions:
   Cumulative preferred stock (Note 10)...................                 -                 -                -                 -
   Equity Stock, Series A ($0.61 per depositary share)....                 -                 -                -                 -
   Common Stock ($0.45 per share).........................                 -                 -                -                 -
                                                              ---------------    -------------   ---------------   ---------------
Balances at March 31, 2005................................      $  2,179,650      $     12,797     $  2,444,833      $  2,829,284
                                                              ===============    =============   ===============   ===============

</TABLE>

<TABLE>
<CAPTION>
                                                                                      Total
                                                                  Cumulative      Shareholders'
                                                                Distributions         Equity
                                                                --------------    ---------------

<S>                                                              <C>               <C>
Balances at December 31, 2004.............................       $ (2,875,477)     $  4,429,967

Issuance of cumulative preferred stock:
   Series D (5,400 shares)..............................                    -           130,547

Redemption of cumulative preferred stock, including
redemption costs:
   Series F (2,300,000 shares)............................                  -           (57,517)

Impact of EITF Topic D-42 on redemption of Series N and
Series O preferred units (Note 9).......................                    -               874

Issuance of common stock in connection with:
   Exercise of employee stock options (126,720 shares)....                  -             3,894
   Vesting of restricted stock (4,317 shares) ............                  -                 -

Stock based compensation expense (Note 12) ...............                  -             1,071

Repurchase of common stock (52,000 shares)................                  -            (2,971)

Stock distribution from unconsolidated real estate entities
(635,885 common shares and 22,909 Equity Stock, Series A,
depositary shares) (Note 5)...............................                  -           (11,189)

Net income................................................                  -            96,411

Cash distributions:
   Cumulative preferred stock (Note 10)...................            (40,413)          (40,413)
   Equity Stock, Series A ($0.61 per depositary share)....             (5,375)           (5,375)
   Common Stock ($0.45 per share).........................            (58,072)          (58,072)
                                                                --------------    ---------------
Balances at March 31, 2005................................       $ (2,979,337)     $  4,487,227
                                                                ==============    ===============

</TABLE>

                            See accompanying notes.
                                       3

<PAGE>

                              PUBLIC STORAGE, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in thousands)

                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                           Three Months Ended
                                                                                               March 31,
                                                                                   -------------------------------------
                                                                                         2005                 2004
                                                                                   ----------------     ----------------
Cash flows from operating activities:
<S>                                                                                <C>                  <C>
  Net income..............................................................         $       96,411       $       69,067
   Adjustments to reconcile net income to net cash provided by operating
     activities:
     Loss/(Gain) on sale of assets and impact of EITF Topic D-42 included in
       equity in earnings of real estate entities (Note 5)................                 (1,265)                 943
     Depreciation and amortization........................................                 47,976               46,433
     Depreciation included in equity in earnings of real estate entities..                  8,685                8,275
     Minority interest in income..........................................                 10,644               20,620
     Depreciation and other adjustments associated with discontinued
       operations (Note 3) ...............................................                   (728)                (584)
     Other................................................................                 (3,903)               1,875
                                                                                   ----------------     ----------------
              Total adjustments...........................................                 61,409               77,562
                                                                                   ----------------     ----------------
                  Net cash provided by operating activities...............                157,820              146,629
                                                                                   ----------------     ----------------
Cash flows from investing activities:
     Payments on notes receivable, primarily from affiliate..............                      4              100,022
     Capital improvements to real estate facilities.......................                 (6,806)              (2,705)
     Net liquidation (acquisition) of investments included in other assets                 (2,168)                 298
     Construction in process..............................................                 (9,254)             (19,119)
     Acquisition of minority interests (Note 9)...........................                 (4,366)                   -
     Acquisition of real estate facilities................................                (23,751)                   -
     Acquisition of investments in real estate entities...................                 (8,561)              (8,261)
     Other investments....................................................                   (188)                (701)
                                                                                   ----------------     ----------------
                  Net cash (used in) provided by investing activities.....                (55,090)              69,534
                                                                                   ----------------     ----------------
Cash flows from financing activities:
     Principal payments on notes payable..................................                (12,076)             (26,717)
     Net proceeds from the issuance of common stock.......................                  3,894               20,342
     Net proceeds from the issuance of preferred stock....................                130,547              259,933
     Net proceeds from financing through joint venture (Note 8)...........                 19,197                    -
     Repurchase of common stock...........................................                 (2,971)              (3,967)
     Redemption of preferred units........................................                (85,000)                   -
     Redemption of preferred stock........................................                (54,892)            (230,021)
     Distributions paid to shareholders...................................               (103,860)            (100,765)
     Distributions paid to holders of preferred partnership interests.....                 (5,375)              (6,554)
     Special distribution paid to holders of preferred partnership interests
       (Note 9)...........................................................                      -               (8,000)
     Distributions paid to minority interests, net of reinvestments.......                 (4,016)              (5,612)
                                                                                   ----------------     ----------------
                  Net cash used in financing activities...................               (114,552)            (101,361)
                                                                                   ----------------     ----------------
Net (decrease) increase in cash and cash equivalents......................                (11,822)             114,802
Cash and cash equivalents at the beginning of the period..................                366,255              204,833
                                                                                   ----------------     ----------------
Cash and cash equivalents at the end of the period........................         $      354,433       $      319,635
                                                                                   ================     ================
Supplemental schedule of non-cash investing and financial activities:
     Retirement of common stock and Equity stock, Series A, received as
     a distribution from affiliated entities (Note 5):
       Common stock.......................................................         $          (64)     $             -
       Additional paid-in capital.........................................                (11,125)                   -
       Investment in real estate entities.................................                 11,189                    -

</TABLE>

                            See accompanying notes.
                                       4

<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

1.       Description of the Business
         ---------------------------

              Public Storage, Inc. (the "Company") is a California  corporation,
     which was organized in 1980. We are a fully  integrated,  self-administered
     and  self-managed  real estate  investment  trust ("REIT") whose  principal
     business  activities  include the acquisition,  development,  ownership and
     operation of self-storage  facilities which offer storage spaces for lease,
     usually on a  month-to-month  basis,  for  personal  and  business  use. In
     addition,  to a  much  lesser  extent,  we  have  interests  in  commercial
     properties,   containing   commercial  and  industrial  rental  space,  and
     interests in facilities that lease storage containers.

              We  invest  in real  estate  facilities  by  acquiring  facilities
     directly  or by  acquiring  interest  in  real  estate  entities  that  own
     facilities.  At March 31, 2005, we had direct and indirect equity interests
     in 1,471 self-storage facilities with 89.9 million net rentable square feet
     located in 37 states  operating  under the "Public  Storage"  name. We also
     have direct and indirect equity interests in approximately 19.5 million net
     rentable  square feet of  commercial  and  industrial  space  located in 10
     states.

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

              The  accompanying   unaudited  condensed   consolidated  financial
     statements  have been prepared in accordance  with United States  generally
     accepted accounting  principles for interim financial  information and with
     instructions  to Form 10-Q and Article 10 of Regulation  S-X.  Accordingly,
     they do not include all of the information and footnotes required by United
     States  generally  accepted  accounting  principles for complete  financial
     statements.  In the opinion of management,  all adjustments  (consisting of
     normal  recurring  accruals)  necessary for a fair  presentation  have been
     included.  Operating  results for the three months ended March 31, 2005 are
     not necessarily indicative of the results that may be expected for the year
     ended December 31, 2005. For further information, refer to the consolidated
     financial statements and footnotes thereto included in the Company's annual
     report on Form 10-K for the year ended December 31, 2004.

              The  condensed   consolidated  financial  statements  include  the
     accounts of the  Company  and 37  controlled  entities  (the  "Consolidated
     Entities").  Collectively,  the Company and the Consolidated Entities own a
     total of 1,440 real estate  facilities,  consisting  of 1,433  self-storage
     facilities,  three industrial  facilities used by the containerized storage
     operations and four commercial  properties.  All intercompany  transactions
     among  the  Company  and  the  Consolidated   Entities  are  eliminated  in
     consolidation.

              At March 31,  2005,  we had equity  investments  in eight  limited
     partnerships in which we do not have a controlling interest.  These limited
     partnerships collectively own 38 self-storage facilities, which are managed
     by the Company. In addition, at March 31, 2005, we own approximately 44% of
     the common equity of PS Business Parks, Inc.  ("PSB"),  which has interests
     in approximately  17.9 million net rentable square feet of commercial space
     at March 31,  2005.  We do not control  these  entities;  accordingly,  our
     investment  in  these  limited  partnerships  and  PSB  (collectively,  the
     "Unconsolidated Entities") are accounted for using the equity method.

              Certain  amounts  previously  reported have been  reclassified  to
     conform  to  the  March  31,  2005  presentation,   including  discontinued
     operations (see Note 3).

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

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

                                       5
<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

     Income Taxes
     ------------

              For all taxable years  subsequent to 1980,  the Company  qualified
     and intends to continue to qualify as a REIT,  as defined in Section 856 of
     the Internal  Revenue  Code. As a REIT, we are not taxed on that portion of
     our taxable income which is distributed to our shareholders,  provided that
     we meet certain tests. We believe we will meet these tests during 2005 and,
     accordingly,   no  provision   for  income  taxes  has  been  made  in  the
     accompanying financial statements.

     Financial Instruments
     ---------------------

              The methods  and  assumptions  used to estimate  the fair value of
     financial instruments are described below. We have estimated the fair value
     of  our  financial  instruments  using  available  market  information  and
     appropriate valuation  methodologies.  Considerable judgment is required in
     interpreting market data to develop estimates of market value. Accordingly,
     estimated  fair values are not  necessarily  indicative of the amounts that
     could be realized in current market exchanges.

              For purposes of financial statement presentation,  we consider all
     highly  liquid  financial  instruments  with an original  maturity of three
     months or less to be cash equivalents.

              Due  to  the  short  period  to  maturity  of our  cash  and  cash
     equivalents,  accounts receivable,  other financial instruments included in
     other assets,  and accrued and other  liabilities,  the carrying  values as
     presented  on the  condensed  consolidated  balance  sheets are  reasonable
     estimates of fair value. The carrying amounts of notes payable  approximate
     fair value because the  aggregate  applicable  interest  rate  approximates
     current  market rates for similar  loans and because the  relatively  short
     time until maturity reduces the effect of differing interest rates.

              Financial assets that are exposed to credit risk consist primarily
     of cash and cash equivalents,  accounts  receivable,  and notes receivable.
     Cash  and  cash  equivalents,  which  consist  of  short-term  investments,
     including   commercial  paper,  are  only  invested  in  entities  with  an
     investment grade rating.  Accounts receivable are not a significant portion
     of  total  assets  and  are  comprised  of a  large  number  of  individual
     customers.

              Included  in cash  and  cash  equivalents  at  March  31,  2005 is
     $4,481,000  ($1,984,000  at December 31,  2004) cash held by the  Company's
     captive   insurance   programs.   Insurance  and  other  regulations  place
     significant  restrictions  on our  ability  to  withdraw  these  funds  for
     purposes other than insurance  activities.  Our captive insurance  programs
     are conducted by STOR-Re Mutual Insurance  Company,  Inc.  ("STOR-Re"),  an
     association  captive  insurance  company  owned  by  the  Company  and  its
     affiliates,  which is  approximately  90.1%  owned by the  Company  and the
     Consolidated Entities, and PS Insurance Company Hawaii, Ltd. ("PSIC-H"),  a
     captive  insurer  formed on December  31,  2004 which is wholly  owned by a
     subsidiary of the Company. Other assets at March 31, 2005 include aggregate
     investments totaling $23,097,000 ($20,929,000 at December 31, 2004) in held
     to maturity debt securities owned by STOR-Re and PSIC-H stated at amortized
     cost, which approximates fair value.

                                       6
<PAGE>

                             PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

     Real Estate Facilities
     ----------------------

              Real estate facilities are recorded at cost. Costs associated with
     the acquisition,  development,  construction, renovation and improvement of
     properties  are  capitalized.  Interest,  property  taxes,  and other costs
     associated with  development  incurred during the  construction  period are
     capitalized as building cost.  Expenditures for repairs and maintenance are
     charged  to  expense  as  incurred.  Depreciation  is  computed  using  the
     straight-line  method over the estimated  useful lives of the buildings and
     improvements, which are generally from 5 to 25 years.

     Accounting for Acquisition Joint Venture
     ----------------------------------------

              In January 2004, we entered into a joint venture  partnership with
     an institutional investor for the purpose of acquiring up to $125.0 million
     of existing self-storage properties in the United States from third parties
     (the  "Acquisition  Joint  Venture").  The venture is funded  entirely with
     equity  consisting  of 30% from the Company and 70% from the  institutional
     investor.  For a six-month period  beginning 54 months after formation,  we
     have the right to acquire our joint venture  partner's  interest based upon
     the market value of the properties.  If we do not exercise our option,  our
     joint venture  partner can elect to purchase our interest in the properties
     during a six-month  period  commencing  upon  expiration  of our  six-month
     option period.  If our joint venture  partner fails to exercise its option,
     the partnership  will be liquidated and the proceeds will be distributed to
     the partners according to the joint venture agreement.

              We have  determined  that the  Acquisition  Joint Venture is not a
     variable interest entity, and we do not control this entity.  Therefore, we
     do not  consolidate  the accounts of the  Acquisition  Joint Venture on our
     financial statements.

              During the year ended  December 31, 2004,  the  Acquisition  Joint
     Venture acquired two facilities directly from third parties at an aggregate
     cost of  $9,086,000.  We account for our  investment  with respect to these
     facilities  using the equity method,  with our pro rata share of the income
     from  these  facilities  recorded  as "Equity in  earnings  of real  estate
     entities" on our income  statement.  See Note 5 for further  discussion  of
     these amounts.

              In addition,  in December 2004, we sold seven  facilities  that we
     recently acquired to the Acquisition Joint Venture for an aggregate cost of
     $22,993,000  representing  our original  cost.  During the first quarter of
     2005,  we sold an  interest  in  three  additional  facilities  that we had
     acquired  in  2004  for  an  aggregate  of  $27,424,000,  representing  the
     Acquisition Joint Venture's acquired share of our original cost. Due to our
     continuing  interest  in these  facilities  and our option to  acquire  our
     Partner's  investment as described above in Year five we are precluded from
     treating these  transactions as completed  sales of facilities  pursuant to
     Statement of Financial  Accounting  Standards No. 66, "Accounting for Sales
     of Real  Estate"  ("SFAS  66").  Therefore,  we continue  to reflect  these
     properties  and  associated   operations  on  our  condensed   consolidated
     financial statements.

              We believe  that it is likely that we will  exercise our option to
     acquire our joint venture partner's interest and, accordingly,  we consider
     the  transactions to be, in substance,  debt  financing.  Our joint venture
     partner's 70% investment in the  Acquisition  Joint Venture with respect to
     the ten  properties is therefore  reflected as a liability on our condensed
     consolidated balance sheet, "Debt to Joint Venture Partner," with our joint
     venture  partner's share of operations (an 8.5% return on their investment)
     reflected  on our  condensed  consolidated  income  statement  as  interest
     expense.  The balance of the liability is adjusted each period to equal the
     current value to the extent fair value exceeds the original  liability.  No
     such  adjustment  was required at March 31, 2005.  See Note 8 for a further
     discussion of these debt amounts.

                                       7
<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

     Evaluation of Asset Impairment
     ------------------------------

              With respect to goodwill,  we evaluate impairment annually through
     a two-step  process.  In the first step, if the fair value of the reporting
     unit to which the goodwill applies is equal to or greater than the carrying
     amount of the assets of the reporting  unit,  including  the goodwill,  the
     goodwill is considered  unimpaired and the second step is unnecessary.  If,
     however,  the fair value of the reporting unit  including  goodwill is less
     than the carrying  amount,  the second step is performed.  In this test, we
     compute the implied fair value of the goodwill  based upon the  allocations
     that would be made to the  goodwill,  other assets and  liabilities  of the
     reporting unit if a business  combination  transaction  were consummated at
     the fair value of the reporting unit. An impairment loss is recorded to the
     extent  that the  implied  fair  value  of the  goodwill  is less  than the
     goodwill's  carrying amount. No impairments of our goodwill were identified
     in our annual evaluation at December 31, 2004.

              With respect to other long-lived  assets,  we evaluate such assets
     on a quarterly  basis.  We first evaluate  these assets for  indications of
     impairment  such as a) a  significant  decrease  in the  market  price of a
     long-lived  asset, b) a significant  adverse change in the extent or manner
     in which a long-lived asset is being used or in its physical condition,  c)
     a significant  adverse change in legal factors or the business climate that
     could affect the value of the long-lived asset, d) an accumulation of costs
     significantly  in  excess  of  the  amount  originally  projected  for  the
     acquisition or construction of the long-lived asset, or e) a current-period
     operating  or cash flow loss  combined  with a history of operating or cash
     flow losses or a projection or forecast that demonstrates continuing losses
     associated with the use of the long-lived  asset.  When any such indicators
     of impairment  are noted,  we compare the carrying value of these assets to
     the future estimated  undiscounted cash flows attributable to these assets.
     If the asset's  recoverable  amount is less than the carrying  value of the
     asset, then an impairment charge is booked for the excess of carrying value
     over the asset's fair value.

              Any long-lived assets which we expect to sell or otherwise dispose
     of prior to their  previously  estimated  useful life are stated at what we
     estimate to be the lower of their estimated net realizable value (less cost
     to sell) or their carrying value. No additional impairments were identified
     from our evaluations as of March 31, 2005.

     Accounting for Stock-Based Compensation
     ---------------------------------------

              We  utilize  the Fair  Value  Method  (as  defined  in Note 12) of
     accounting  for our employee  stock options issued after December 31, 2001,
     and utilize the APB 25 Method (as  defined in Note 12) for  employee  stock
     options issued prior to January 1, 2002.  Restricted  Stock Unit expense is
     recorded  over  the  relevant  vesting  period.  See  Note  12  for a  full
     discussion  of our  accounting  policies  with  respect to  employee  stock
     options and restricted stock units.

     Other Assets
     ------------

              Other  assets  primarily   consist  of  containers  and  equipment
     associated with the  containerized  storage  operations,  assets associated
     with the truck rental business,  accounts receivable,  prepaid expenses and
     investments  held  by  STOR-Re  and  PSIC-H  (discussed  below).   Accounts
     receivable from customers are net of allowances for doubtful accounts.

              Containers  and equipment  utilized in our  containerized  storage
     business  totaled  $2,827,000 at March 31, 2005 ($4,395,000 at December 31,
     2004). The carrying  amounts are net of accumulated  depreciation and asset
     impairment  charges.  No  impairment  charges we recorded  during the three
     months  ended  March 31,  2005 with  respect to  containers  and  equipment
     utilized in the discontinued containerized storage operations.

              Included in depreciation  and  amortization  expense for the three
     months  ended  March 31, 2005 is  $1,961,000  related to other  assets,  as
     compared  to  $1,835,000   for  the  same  period  in  2004.   Included  in
     discontinued  operations  for the three  months  ended  March  31,  2004 is
     depreciation expense of $279,000 with respect to other assets (none for the
     same period in 2005).

                                       8
<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

              Other  assets  at March 31,  2005  include  aggregate  investments
     totaling $23,097,000 ($20,929,000 at December 31, 2004) in held to maturity
     debt securities owned by STOR-Re and PSIC-H stated at amortized cost, which
     approximates fair market value.

     Accrued and Other Liabilities
     -----------------------------

              Accrued and other liabilities consist primarily of trade payables,
     real and personal  property tax  accruals,  prepayments  of rents,  accrued
     interest,  and losses and loss  adjustment  liabilities  from our insurance
     programs,   as  discussed  below.   Prepaid  rent  totals  $26,483,000  and
     $26,289,000 at March 31, 2005 and December 31, 2004, respectively.

              Liabilities  for losses and loss  adjustment  expenses  include an
     amount we determine from loss reports and  individual  cases and an amount,
     based on  recommendations  from an independent  actuary that is a member of
     the American  Academy of Actuaries  using a frequency and severity  method,
     for losses incurred but not reported.  Determining the liability for unpaid
     losses  and loss  adjustment  expense  is based  upon  estimates.  While we
     believe that the amount is adequate,  the ultimate loss may be in excess of
     or less than the amounts  provided.  The methods for making such  estimates
     and for establishing the resulting liability are continually reviewed.

              STOR-Re,  which is  consolidated  with the Company,  was formed in
     1994 as an association  captive  insurance company owned by the Company and
     affiliates of the Company.  STOR-Re provides limited property and liability
     insurance  to the Company and its  affiliates  for losses  incurred  during
     policy  periods  prior to April 1, 2004,  and was  succeeded by PSIC-H with
     respect to these  insurance  activities for policy periods  following March
     31, 2004.  The Company also utilizes  other  insurance  carriers to provide
     property  and  liability  insurance  coverage  in excess of  STOR-Re's  and
     PSIC-H's  limitations  which are  described in Note 14.  STOR-Re and PSIC-H
     accrue  liabilities  for  estimated  covered  losses  and  loss  adjustment
     expense,  which at March  31,  2005  totaled  $37,454,000  ($34,192,000  at
     December 31,  2004) with  respect to insurance  provided to the Company and
     its affiliates.

              PS Insurance Company, Ltd ("PSIC"),  a wholly-owned  subsidiary of
     the Company,  reinsured  policies against claims for losses to goods stored
     by tenants in our self-storage facilities for policy periods prior to March
     31, 2004.  PSIC-H  succeeded  PSIC with  respect to these tenant  insurance
     activities  effective April 1, 2004, and these entities utilize third-party
     insurance coverage for losses from any individual event that exceeds a loss
     of $500,000,  to a maximum of  $10,000,000.  Losses  below the  third-party
     insurers'  deductible  amounts  are accrued as cost of  operations  for the
     tenant  insurance  operations.  We recorded  approximately  $1.5 million in
     accrued losses from insured  tenant claims as a result of damage  sustained
     in  hurricanes  which  occurred in the third  quarter of 2004.  The accrued
     liability  for losses and loss  adjustment  expense  with respect to tenant
     insurance  activities  totaled  $4,739,000 at March 31, 2005 ($4,898,000 at
     December 31, 2004), which includes the unpaid portion of the aforementioned
     $1.5 million in accrued losses.

     Intangible Assets and Goodwill
     ------------------------------

              Intangible  assets  consist  of  property   management   contracts
     ($165,000,000)  and the excess of  acquisition  cost over the fair value of
     net tangible and identifiable intangible assets or "goodwill" ($94,719,000)
     acquired in business  combinations.  Our goodwill has an indeterminate life
     and,  accordingly,  is not amortized.  Our other intangibles have a defined
     life and are amortized on a straight-line basis over a 25 year period.

                                       9
<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

              Goodwill is net of  accumulated  amortization  of  $16,515,000  at
     March  31,  2005 and  December  31,  2004.  At  March  31,  2005,  property
     management  contracts are net of  accumulated  amortization  of $61,966,000
     ($60,315,000  at  December  31,  2004).   Included  in   depreciation   and
     amortization  expense for each of the three month  periods  ended March 31,
     2005 and 2004 is $1,651,000, respectively, with respect to the amortization
     of property management contracts.

     Revenue and Expense Recognition
     -------------------------------

              Rental   income,   which   is   generally   earned   pursuant   to
     month-to-month   leases  for  storage  space,   is  recognized  as  earned.
     Promotional  discounts are  recognized as a reduction to rental income over
     the  promotional  period,  which is  generally  during  the first  month of
     occupancy.  Late charges and  administrative  fees are recognized as rental
     income when  collected.  Tenant  reinsurance  premiums  are  recognized  as
     premium  revenue when  collected.  Interest income is recognized as earned.
     Equity in  earnings  of real estate  entities  is  recognized  based on our
     ownership  interest  in the  earnings  of each of the  unconsolidated  real
     estate entities.

              We accrue  for  property  tax  expense  based upon  estimates  and
     historical trends. If these estimates are incorrect,  the timing of expense
     recognition could be affected.

              Cost of operations,  general and administrative expense,  interest
     expense,  as  well  as  television,  yellow  page,  and  other  advertising
     expenditures are expensed as incurred. Accordingly, the amounts incurred in
     an  interim  period may not be  indicative  of the  amounts to be  incurred
     during a full year. Television,  yellow page, and other advertising expense
     totaled $7,571,000 and $6,844,000 for the three months ended March 31, 2005
     and 2004, respectively.

     Environmental Costs
     -------------------

              Our  policy  is  to  accrue   environmental   assessments   and/or
     remediation cost when it is probable that such efforts will be required and
     the related cost can be reasonably  estimated.  Our current  practice is to
     conduct   environmental   investigations   in   connection   with  property
     acquisitions.  Although there can be no assurance,  we are not aware of any
     environmental  contamination of any of our facilities,  which, individually
     or in the aggregate,  would be material to our overall business,  financial
     condition, or results of operations.

     Net Income per Common Share
     ---------------------------

              Distributions  paid to the  holders  of our  Cumulative  Preferred
     Stock totaled  $40,413,000 and $38,042,000 for the three months ended March
     31,  2005 and 2004,  respectively,  have been  deducted  from net income to
     arrive at net income allocable to our common shareholders.

              Emerging Issues Task Force ("EITF") Topic D-42, "The Effect on the
     Calculation  of  Earnings  per  Share  for the  Redemption  or the  Induced
     Conversion  of Preferred  Stock"  provides,  among other  things,  that any
     excess  of (1) the  fair  value  of the  consideration  transferred  to the
     holders of preferred  stock  redeemed  over (2) the carrying  amount of the
     preferred  stock should be  subtracted  from net earnings to determine  net
     earnings  available to common  stockholders  in the calculation of earnings
     per share.  At the July 31, 2003 meeting of the EITF,  the  Securities  and
     Exchange  Commission  Observer clarified that for purposes of applying EITF
     Topic D-42, the carrying amount of the preferred stock should be reduced by
     the  issuance  costs of the  preferred  stock,  regardless  of where in the
     stockholders'  equity  section  those costs were  initially  classified  on
     issuance.

              In conformity with the SEC Observer's clarification, an additional
     $1,904,000 and $3,723,000 was allocated to preferred  stockholders  for the
     three months ended March 31, 2005 and 2004, respectively, for the excess of
     the redemption amount over the carrying amount of our Cumulative  Preferred
     Stock.  It is our  policy  to  record  such  allocations  at the  time  the
     securities are called for redemption.

                                       10
<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

              Net income  allocated to our common  shareholders has been further
     allocated  among our two classes of common stock;  our regular common stock
     and our Equity Stock,  Series A. The allocation  among each class was based
     upon the two-class method.  Under the two-class method,  earnings per share
     for each  class of  common  stock are  determined  according  to  dividends
     declared  (or  accumulated)  and  participation   rights  in  undistributed
     earnings.  Under the  two-class  method,  the Equity  Stock,  Series A, was
     allocated net income of $5,375,000 for each of the three months ended March
     31, 2005 and 2004. The remaining  $48,719,000 and $21,927,000 for the three
     months ended March 31, 2005 and 2004,  respectively,  was  allocated to the
     regular common shareholders.

              Basic net income per share is computed using the weighted  average
     common shares  outstanding  (prior to the dilutive  impact of stock options
     and  restricted  stock  units  outstanding).  Diluted net income per common
     share is computed  using the weighted  average  common  shares  outstanding
     (adjusted  for the dilutive  impact of stock options and  restricted  stock
     units outstanding). Weighted average common shares excludes shares owned by
     the  Consolidated  Entities as  described  in Note 10 for the three  months
     ended  March  31,  2005 and  2004,  as these  shares  of  common  stock are
     eliminated in consolidation.

3.       Discontinued Operations
         ------------------------

              We segregate all of our disposed  components  that have operations
     that (i) can be distinguished  from the rest of the entity and (ii) will be
     eliminated  from  the  ongoing  operations  of  the  entity  in a  disposal
     transaction.

              During  2002,  2003,  and  2004,  we have  closed  a  total  of 43
     containerized  storage  facilities that were determined to be non-strategic
     (the "Closed Facilities"). As the decision was made to close each facility,
     the related assets were evaluated for  recoverability  and asset impairment
     charges were  recorded for the excess of these  assets' net book value over
     their fair value (less costs to sell), determined based upon recent selling
     prices for similar assets.  No asset  impairment  charges were recorded for
     either of the three month  periods  ended March 31, 2005 or 2004.  However,
     other shutdown costs related to the  termination of a lease  obligation was
     recorded  for the  three  months  ended  March  31,  2004 in the  amount of
     $169,000 (none for the same period in 2005).

              In the first quarter of 2005,  we sold the non-real  estate assets
     of  six  of  the  Closed  Facilities,  resulting  in  a  gain  on  sale  of
     approximately $1,143,000.

              During the fourth  quarter of 2004, we sold a commercial  property
     (the "Sold  Commercial  Facility")  to a third party and recorded a gain on
     sale of $971,000.  The  historical  operating  results of this facility are
     reported as discontinued  operations,  and are presented in the table below
     as the "Sold Commercial Facility."

                                       11

<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

              The following table summarizes the historical operations of the
Closed Facilities and the Sold Commercial Facility:

Discontinued Operations:
                                         Three Months Ended March 31,
                                       ------------------------------------
                                          2005        2004        Change
                                       ----------  ---------   ------------
                                            (Amounts in thousands)
Rental income (a):
  Closed Facilities...............      $    95      $2,602      $ (2,507)
  Sold Commercial Facility........            -          69           (69)
                                       ----------  ---------   ------------
Total rental income...............           95       2,671        (2,576)
                                       ----------  ---------   ------------
Cost of operations (a):
  Closed Facilities...............          194       2,225        (2,031)
  Sold Commercial Facility........            -          13           (13)
                                       ----------  ---------   ------------
Total cost of operations..........          194       2,238        (2,044)
                                       ----------  ---------   ------------
Depreciation expense (a):
  Closed Facilities...............           29         390          (361)
  Sold Commercial Facility........            -          25           (25)
                                       ----------  ---------   ------------
Total depreciation ...............           29         415          (386)
                                       ----------  ---------   ------------
Other items (b)...................        1,143        (169)        1,312
                                       ----------  ---------   ------------
Net discontinued operations (c)...      $ 1,015      $ (151)    $   1,166
                                       ==========  =========   ============

(a)      These  amounts  represent  the  historical  operations  of  the  Closed
         Facilities  and the  Sold  Commercial  Facility,  and  include  amounts
         previously  classified  as  rental  income,  cost  of  operations,  and
         depreciation expense in the financial statements in prior periods.

(b)      During  the  quarter  ended  March  31,  2005,  assets  of  the  Closed
         Facilities  were  sold,  resulting  in a gain on sale of  approximately
         $1,143,000.  Lease  termination  costs for the three months ended March
         31, 2004 were $169,000 with respect to the Closed Facilities.

(c)      Earnings  per share  for the three  months  ended  March 31,  2005 were
         increased  by $0.01 per share (no  impact  for the three  months  ended
         March 31, 2004) due to the impact from discontinued operations.

                                       12

<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

4.       Real Estate Facilities
         ----------------------
              Activity in real estate facilities is as follows:

                                                              Three Months Ended
                                                                March 31, 2005
                                                                (In thousands)
                                                              ------------------
Operating facilities, at cost:
   Balance at December 31, 2004........................        $    5,510,750
   Newly developed facilities opened for operations....                15,986
   Acquisition of real estate facilities...............                23,751
   Acquisition of minority interest (Note 9)...........                 1,538
   Capital improvements................................                 6,806
                                                              ------------------
   Balance at March 31, 2005...........................             5,558,831
                                                              ------------------
Accumulated depreciation:
   Balance at December 31, 2004........................            (1,320,200)
   Additions during the year...........................               (44,393)
                                                              ------------------
   Balance at March 31, 2005...........................            (1,364,593)
                                                              ------------------
Construction in process:
   Balance at December 31, 2004........................                47,277
   Current development.................................                 9,254
   Newly developed facilities opened for operations....               (15,986)
                                                              ------------------
   Balance at March 31, 2005...........................                40,545
                                                              ------------------

Land held for development:
   Balance at December 31, 2004 and March 31, 2005.....                 8,883
                                                              ------------------
Total real estate facilities at March 31, 2005.........        $    4,243,666
                                                              ==================

              During the three months ended March 31, 2005,  we opened one newly
     developed  self-storage  facility  (51,000 net rentable square feet) for an
     aggregate cost of $4,252,000.  We also completed projects to convert 47,000
     square feet of space previously used by our containerized  storage business
     into 66,000 net rentable square feet of self-storage space for an aggregate
     cost of  $1,901,000.  In addition,  we completed two expansion  projects to
     existing  self-storage  facilities  adding 83,000 net rentable square feet,
     and we recorded  adjustments of accruals for development costs with respect
     to development projects completed in prior years, for an aggregate net cost
     of $9,833,000.

              In addition,  during the three  months  ended March 31,  2005,  we
     acquired six  self-storage  facilities  from third  parties at an aggregate
     cost of $23,751,000 (391,000 net rentable square feet).

              Construction  in process at March 31, 2005  consists  primarily of
     eight  self-storage  facilities  (614,000 net rentable  square feet) and 37
     expansion  projects and various  remodeling  projects to enhance the visual
     and structural appeal of existing  self-storage  facilities  (2,294,000 net
     rentable square feet).  In addition,  we have five parcels of land held for
     development with total costs of approximately $8,883,000.

              Our policy is to capitalize  interest  incurred on debt during the
     course of construction of our self-storage facilities. Interest capitalized
     during the three  months  ended  March 31, 2005 and 2004 was  $665,000  and
     $1,125,000, respectively.

                                       13

<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

5.       Investment in Real Estate Entities
         ----------------------------------

              At March 31, 2005, our investments in real estate entities consist
     of  ownership  interests  in  eight  partnerships,  which  principally  own
     self-storage facilities, and our ownership interest in PSB. These interests
     are non-controlling  interests of less than 50% and are accounted for using
     the equity method of accounting. Accordingly, earnings are recognized based
     upon our ownership  interest in each of the  partnerships.  The  accounting
     policies of these entities are similar to the Company's.

              For the three months ended March 31, 2005, we recognized  earnings
     from our  investments  of $5,678,000 as compared to $4,057,000 for the same
     period in 2004.  For the three  months  ended  March  31,  2004,  equity in
     earnings  includes a reduction  of  $943,000  for our net pro rata share of
     PSB's  application of EITF Topic D-42, and the three months ended March 31,
     2005  includes an increase  of  $1,265,000  for our pro rata share of PSB's
     gain on sale of real estate assets. See the condensed financial information
     with  respect to PSB below for further  information  regarding  these items
     recorded by PSB.

              We received cash  distributions from our investments for the three
     months  ended  March 31,  2005 and 2004,  in the amount of  $4,537,000  and
     $5,014,000,  respectively.  In addition, during the quarter ended March 31,
     2005, we received a distribution from affiliated entities of 635,885 shares
     of our common  stock and  22,909  depositary  shares of our  Equity  Stock,
     Series A, with an aggregate  book value of  $11,189,000.  These  securities
     were retired.

              The  following  table sets forth our  investments  in real  estate
     entities  at March  31,  2005 and  December  31,  2004,  and our  equity in
     earnings of real estate  entities for the three months ended March 31, 2005
     and 2004 (amounts in thousands):

<TABLE>
<CAPTION>

                                                                                     Equity in Earnings of Real
                                                   Investments in Real Estate          Estate Entities for the
                                                           Entities at              Three Months Ended March 31,
                                                ---------------------------------   ----------------------------
                                                   March 31,        December 31,
                                                     2005               2004             2005           2004
                                                -------------     ---------------   -------------    -----------
<S>                                             <C>                <C>               <C>             <C>
               PSB (a).......................   $   285,083        $   284,564       $     4,209     $     2,524
               Acquisition Joint Venture  (b)         2,784              2,857               (15)              -
               Other Investments ............        43,389             53,883             1,484           1,533
                                                -------------     ---------------   -------------    -----------
                 Total.......................   $   331,256        $   341,304       $     5,678     $     4,057
                                                =============     ===============   =============    ===========

</TABLE>


(a)      Equity in earnings of real estate entities  includes our pro rata share
         of the net  impact of  gains/losses  on sale of assets  and  impairment
         charges relating to the impending sale of real estate assets as well as
         our pro rata share of the impact of the  application of EITF Topic D-42
         on  redemptions  of preferred  securities  recorded by PSB. Our net pro
         rata  impact  from these  items  resulted  in an  increase of equity in
         earnings of  $1,265,000  for the three months ended March 31, 2005,  as
         compared to a decrease in equity in earnings of $943,000  for the three
         months ended March 31, 2004.


(b)      In January 2004, we entered into a joint  venture  partnership  with an
         institutional  investor  for the  purpose  of  acquiring  up to  $125.0
         million of existing  self-storage  properties in the United States from
         third parties. The venture is funded entirely with equity consisting of
         30% from the Company and 70% from the institutional  investor.  Through
         March 31, 2005,  the joint  venture had acquired two  facilities  at an
         aggregate cost of $9,086,000  directly from third  parties.  We account
         for these two facilities on the equity method of  accounting;  see also
         Note 2 for further  discussion of our accounting for this joint venture
         partnership.

                                       14

<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

     Investment in PS Business Parks, Inc.
     -------------------------------------

              PS Business  Parks,  Inc. is a REIT traded on the  American  Stock
     Exchange, which controls an operating partnership  (collectively,  the REIT
     and the  operating  partnership  are  referred to as "PSB").  We have a 44%
     common  equity  interest in PSB as of March 31,  2005.  This common  equity
     interest is comprised of our ownership of 5,418,273  shares of PSB's common
     stock and 7,305,355 limited partnership units in the operating  partnership
     at both March 31, 2005 and  December 31, 2004;  these  limited  partnership
     units are convertible at our option,  subject to certain  conditions,  on a
     one-for-one  basis into PSB common  stock.  Based upon the closing price at
     March 31, 2005 ($40.30 per share of PSB common stock), the shares and units
     had a market value of  approximately  $512.8  million as compared to a book
     value of $285.1 million.

              At March 31, 2005, PSB wholly owned approximately 17.9 million net
     rentable  square  feet  of  commercial  space.  In  addition,  PSB  manages
     commercial  space  owned  by the  Company  and  the  Consolidated  Entities
     pursuant to property management agreements.

              The  following  table  sets  forth  the  condensed  statements  of
     operations  for each of the three  month  periods  ended March 31, 2005 and
     2004 (as restated for discontinued  operations),  and the condensed balance
     sheets of PSB at March 31, 2005 and December 31,  2004.  The amounts  below
     represent 100% of PSB's balances and not our pro rata share.


<TABLE>
<CAPTION>

                                                            Three Months Ended March 31,
                                                         -----------------------------------
                                                               2005               2004
                                                         ----------------    ---------------
                                                             (Amounts in thousands)
<S>                                                      <C>                 <C>
   Total revenue....................................     $       55,886      $       53,765
   Cost of operations and other operating expenses..            (17,826)            (17,207)
   Other income and expense.........................                116              (1,239)
   Depreciation and amortization....................            (19,016)            (17,404)
   Discontinued operations (a)......................              3,079                 550
   Minority interest................................             (5,146)             (6,482)
                                                         ----------------    ---------------
     Net income.....................................     $       17,093      $       11,983
                                                         ================    ===============

</TABLE>

<TABLE>
<CAPTION>

                                                             March 31,         December 31,
                                                               2005                2004
                                                         ---------------     ---------------
                                                               (Amounts in thousands)
<S>                                                      <C>                 <C>
   Total assets (primarily real estate).............     $    1,365,528      $    1,363,829
   Total debt.......................................             11,265              11,367
   Other liabilities................................             37,326              38,453
   Preferred equity and preferred minority interest.            638,600             638,600
   Common equity and common minority interest.......            678,337             675,409

</TABLE>

(a)      Included in  discontinued  operations  for the three months ended March
         31,  2005 is a net gain on  disposition  of real  estate of  $2,914,000
         (none for the same period in 2004).


     Acquisition Joint Venture
     -------------------------


              As described more fully under  "Accounting for  Acquisition  Joint
     Venture"  in  Note 2, we  formed  a  partnership  (the  "Acquisition  Joint
     Venture")  in January  2004 for the purpose of acquiring up to $125 million
     in existing  self-storage  facilities from third parties.  Through December
     31, 2004,  the  Acquisition  Joint  Venture had  acquired two  self-storage
     facilities  directly from third parties at an aggregate cost of $9,086,000,
     of which our joint venture share was  $2,930,000.  Our  investment in these
     two facilities is accounted for using the equity method of  accounting.  In
     December 2004, we sold seven facilities to the Acquisition Joint Venture as
     well as  interest in three  facilities  in the first  quarter of 2005.  Our
     accounting for these 10 facilities is described in Note 2.

                                       15

<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

              The  following  table  sets  forth  certain  condensed   financial
     information  (representing  100% of this entity's  balances and not our pro
     rata share) with respect to the two self-storage facilities acquired by the
     Acquisition  Joint  Venture that we account for using the equity  method of
     accounting:


                                                              Three Months Ended
                                                                March 31, 2005
                                                              ------------------
                                                                  (Amounts in
                                                                   thousands)
   Total revenue........................................      $          305
   Cost of operations and other expenses................                (120)
   Depreciation and amortization........................                 (66)
                                                              ------------------
     Net income.........................................      $          119
                                                              ==================


<TABLE>
<CAPTION>

                                                                At March 31,      At December 31,
                                                                   2005                2004
                                                              ---------------    ----------------
                                                                    (Amounts in thousands)
<S>                                                           <C>                 <C>
   Total assets (primarily storage facilities)..........      $        9,010      $     9,168
   Liabilities..........................................                  97               11
   Partners' equity.....................................               8,913            9,157

</TABLE>

     Other Investments
     -----------------

              The   Other   Investments   consist   primarily   of  an   average
     approximately  41% common  equity  ownership  during the three months ended
     March 31, 2005 and 2004, in seven limited partnerships  (collectively,  the
     "Other Investments") owning an aggregate of 36 storage facilities.

              The  following  table  sets  forth  certain  condensed   financial
     information  (representing 100% of these entities' balances and not our pro
     rata share) with respect to Other Investments:

<TABLE>
<CAPTION>

                                                                 Three Months Ended March 31,
                                                              -----------------------------------
                                                                    2005               2004
                                                              ----------------    ---------------
                                                                  (Amounts in thousands)
<S>                                                           <C>                 <C>
   Total revenue........................................      $        7,173      $        6,855
   Cost of operations and other expenses................              (2,508)             (2,184)
   Depreciation and amortization........................                (489)               (578)
                                                              ----------------    ---------------
     Net income.........................................      $        4,176      $        4,093
                                                              ================    ===============

</TABLE>

<TABLE>
<CAPTION>

                                                                March 31,       December 31,
                                                                  2005             2004
                                                              ----------------  ------------
                                                                  (Amounts in thousands)
<S>                                                           <C>               <C>
   Total assets (primarily storage facilities)..........      $       52,792    $    58,124
   Other liabilities....................................               1,860          1,853
   Partners' equity.....................................              50,932         56,271

</TABLE>

                                       16
<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

6.       Revolving Line of Credit
         ------------------------

              We have a revolving line of credit (the "Credit  Agreement")  with
     an aggregate limit with respect to borrowings and letters of credit of $200
     million,  that has a  maturity  date of April 1,  2007 and  bears an annual
     interest rate ranging from the London Interbank Offered Rate ("LIBOR") plus
     0.45% to LIBOR plus 1.20% depending on our credit ratings  (currently LIBOR
     plus 0.45%). In addition, we are required to pay a quarterly commitment fee
     ranging  from  0.15% per annum to 0.30% per annum  depending  on our credit
     ratings (currently the fee is 0.15% per annum).

              The  Credit  Agreement  includes  various   covenants,   the  more
     significant  of which require us to (i) maintain a balance  sheet  leverage
     ratio of less than 0.55 to 1.00, (ii) maintain certain  quarterly  interest
     and fixed-charge coverage ratios (as defined therein) of not less than 2.25
     to 1.0 and 1.5 to 1.0,  respectively,  and (iii)  maintain a minimum  total
     shareholders' equity (as defined therein).  In addition,  we are limited in
     our ability to incur  additional  borrowings  (we are  required to maintain
     unencumbered  assets with an aggregate  book value equal to or greater than
     1.5 times our unsecured  recourse  debt).  We were in  compliance  with all
     covenants of the Credit Agreement at March 31, 2005.

              At March 31, 2005 and May 6, 2005, we had undrawn  standby letters
     of credit totaling $18,693,000.  The beneficiaries of these standby letters
     of credit were  certain  insurance  companies  associated  with our captive
     insurance and tenant insurance activities.  At March 31, 2005 and at May 6,
     2005, we had no outstanding borrowings on our line of credit.

7.       Notes Payable
         -------------

              Notes payable at March 31, 2005 and December 31, 2004 consist of
the following:

<TABLE>
<CAPTION>

                                                                         Carrying Amount
                                                                 -------------------------------
                                                                   March 31,       December 31,
                                                                     2005             2004
                                                                 -------------     -------------
                                                                     (Amounts in thousands)
Unsecured senior notes:
<S>                                                              <C>               <C>
  7.66% note due January 2007.............................       $     22,400      $     33,600

Mortgage notes payable:
  7.134% and 8.75% mortgage notes secured by two real
  estate facilities with a net book value of $11.1 million,
  principal and interest payable monthly, dueat varying dates
  betweenOctober 2009 and September 2028..................              1,590             1,629

  5.05% mortgage notes (including note premium of $2.4 million)
  secured by 25 real estate facilities with a net book value
  of $97.6 million, principal and interest due monthly,  due at
  varying dates  between  October 2010 and May 2023 ......             40,730            41,470

  5.25% mortgage notes (including note premium of $4.0 million)
  secured by seven real estate facilities with a net book value
  of $91.7 million, principal and interest due monthly, due at
  varying dates between June 2011 and July 2013 ..........             52,448            52,820
                                                                 -------------     -------------
         Total notes payable..............................        $   117,168       $   129,519
                                                                 =============     =============

</TABLE>

              All of our notes  payable are fixed  rate.  The  unsecured  senior
     notes require interest and principal  payments to be paid semi-annually and
     have various restrictive covenants, all of which have been met at March 31,
     2005.

              We assumed the 5.05% and 5.25% mortgage  notes in connection  with
     property acquisitions in 2004. The stated interest rates on the notes range
     from 5.4% to 8.1% with a weighted average of approximately 6.65%. The notes
     were recorded at their estimated fair value based upon the estimated market
     rate upon  assumption  of 5.05% and 5.25%,  an aggregate  of  approximately
     $94,693,000,   as  compared   to  actual   assumed   balances   aggregating
     approximately  $88,247,000.  This premium of approximately  $6,446,000 over
     the principal  balance of the notes payable is amortized over the remaining
     term of the loans  based upon the  effective  interest  method.  During the
     three months ended March 31, 2005, $327,000 of the premium was amortized.

                                       17
<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

              At March  31,  2005,  approximate  principal  maturities  of notes
     payable are as follows:

                               Unsecured
                              Senior Notes       Mortgage Notes       Total
                             ---------------    ---------------     ----------
                                           (Amounts in thousands)
2005 (remainder of).......... $          -       $      3,155        $   3,155
2006.........................       11,200              4,539           15,739
2007.........................       11,200              4,783           15,983
2008.........................            -              5,034            5,034
2009.........................            -              5,213            5,213
Thereafter...................            -             72,044           72,044
                             ---------------    ---------------     ----------
                              $     22,400         $   94,768        $ 117,168
                             ===============    ===============     ==========
Weighted average rate........        7.7%               5.2%              5.7%
                             ===============    ===============     ==========

8.       Debt to Joint Venture Partner
         -----------------------------

              On December 31, 2004, we sold seven  self-storage  facilities that
     we had acquired in 2004 from third parties to our Acquisition Joint Venture
     for  $22,993,000,  an  amount  that was  equal to fair  value and our cost.
     During the  quarter  ended  March 31,  2005,  we sold an  interest in three
     additional  facilities for an aggregate  amount of  $27,424,000,  an amount
     equal to the acquired pro rata share of cost and market value. As described
     more fully in Note 2, we accounted  for the sale of these seven  facilities
     as financing  transactions pursuant to SFAS 66. As a result, the fair value
     of our joint venture partner's interest in these facilities ($35,567,000 at
     March 31, 2005 and  $16,095,000  at December 31, 2004) is accounted  for as
     debt on our condensed  consolidated  balance sheets. Our partner's pro rata
     share of net earnings with respect to these  properties  (an 8.5% return on
     their  investment)  is  recorded  as  interest  expense  on  our  condensed
     consolidated income statement.

              We expect that this debt will be repaid during 2008, assuming that
     we exercise our option to acquire our partner's interest in the Acquisition
     Joint Venture.

              Interest  accrued on the debt to joint venture  partner during the
     three  months  ended  March 31, 2005 was  $671,000  and  interest  paid was
     $397,000.

9.       Minority Interest
         -----------------

              In  consolidation,  we  classify  ownership  interests  in the net
     assets  of each of the  Consolidated  Entities,  other  than  our  own,  as
     minority  interest  on the  condensed  consolidated  financial  statements.
     Minority  interest in income consists of the minority  interests'  share of
     the operating results of the Consolidated Entities.

                                       18
<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

     Preferred Partnership Interests
     -------------------------------

              The following table summarizes the preferred partnership units
outstanding at March 31, 2005 and December 31, 2004:

<TABLE>
<CAPTION>

                                                          At March 31, 2005             At December 31, 2004
                     Earliest        Distribution       Units          Carrying         Units        Carrying
    Series      Redemption Date (a)      Rate        Outstanding        Amount       Outstanding      Amount
--------------  -------------------  ------------   -------------    ------------   -------------   -----------
                                                                      (Amounts in thousands)
<S>                                       <C>                  <C>      <C>                <C>       <C>
Series N......   March 17, 2005 (b)       9.500%               -       $       -           1,600     $   40,000
Series NN.....   March 17, 2010           6.400%           8,000          200,000          8,000        200,000
Series O......   March 29, 2005 (b)       9.125%               -                -          1,800         45,000
Series Z......   October 12, 2009         6.250%           1,000           25,000          1,000         25,000
                                                    -------------    ------------   -------------   -----------
Total                                                      9,000       $ 225,000          12,400     $  310,000

</TABLE>

(a)      After these dates, at our option,  we can call the units for redemption
         at the issuance amount plus any unpaid distributions. The units are not
         redeemable by the holder with the exception of the Series Z units.  The
         holders of the Series Z units have a one-time option,  exercisable five
         years  from  issuance,   to  require  us  to  redeem  their  units  for
         $25,000,000 cash plus unpaid and accrued distributions.

(b)      On March 17, 2005 we redeemed all outstanding  Series N Preferred Units
         ($40,000,000) and on March 29, 2005, we redeemed all outstanding Series
         O Preferred Units ($45,000,000),  at their carrying amount plus accrued
         distributions.

              Income  allocated  to the  preferred  minority  interests  totaled
     $6,249,000  and  $16,617,000  for the three months ended March 31, 2005 and
     2004,  respectively,  comprised of distributions paid and the allocation of
     income resulting from the application of EITF Topic D-42.

              On March 17,  2005,  we  redeemed  all  outstanding  9.5% Series N
     Preferred  Units  ($40,000,000)  and on  March  29,  2005 we  redeemed  all
     outstanding 9.125% Series O Preferred Units  ($45,000,000),  for their face
     value plus accrued distributions, for cash.

              On March 22, 2004,  certain investors who held $200 million of our
     9.5% Series N Cumulative  Redeemable  Perpetual  Preferred Units agreed, in
     exchange for a special  distribution of $8,000,000,  to exchange their 9.5%
     Series N Cumulative  Redeemable  Perpetual Preferred Units for $200 million
     of our 6.4% Series NN Cumulative  Redeemable Perpetual Preferred Units. The
     investors  also received a  distribution  for  dividends  that accrued from
     January 1, 2004 through the effective date of the exchange.

              The redemption of these Preferred Units resulted in an increase in
     income allocated to minority interests and a reduction to the Company's net
     income for the three months ended March 31, 2005 of $874,000 as a result of
     the  application  of the  SEC's  clarification  of EITF  Topic  D-42  which
     allocates the excess of the stated amount of the preferred units over their
     carrying amount to the holders of the redeemed securities. During the first
     quarter of 2004,  income  allocated to minority  interests was increased by
     $10,063,000  from  (1)  the  special  distribution  to the  holders  of the
     preferred  units   ($8,000,000)  and  (2)  the  application  of  the  SEC's
     clarification of EITF Topic D-42 ($2,063,000).

              Subject to certain  conditions,  the Series NN preferred units are
     convertible  into shares of our 6.4% Series NN Cumulative  Preferred  Stock
     and the Series Z preferred units are  convertible  into shares of our 6.25%
     Series Z Cumulative Preferred Stock.

                                       19
<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

     Other Partnership Interests
     ---------------------------

              Income is allocated to the minority interests based upon their pro
     rata interest in the operating  results of the Consolidated  Entities.  The
     following  table sets forth the  minority  interests  at March 31, 2005 and
     December 31, 2004 as well as the income allocated to minority interests for
     the three  months  ended March 31, 2005 and 2004 with  respect to the other
     partnership interests (amounts in thousands):

<TABLE>
<CAPTION>

                                                                                    Minority Interests in Income
                                                 Minority Interest at                for the Three Months Ended
                                            ----------------------------          --------------------------------
                                             March 31,       December 31,           March 31,         March 31,
               Description                     2005              2004                  2005              2004
------------------------------------------  ------------    ------------          --------------     -------------

<S>                                          <C>             <C>                   <C>              <C>
Consolidated Development Joint Venture...    $   63,403      $    64,297           $     1,568      $       957
Convertible Partnership Units...........          6,143            6,160                    90               40
Other  minority   interests  acquired  in
 2004 and the first quarter of 2005.......            -            2,828                     -              497
Other consolidated partnerships..........        46,908           45,618                 2,737            2,509
                                            ------------    ------------          --------------     -------------
Total other partnership interests........    $  116,454      $   118,903           $     4,395      $      4,003
                                            ============    ============          ==============     =============

</TABLE>


              Distributions paid to minority interests with respect to the other
     partnership  interests  for the three  months ended March 31, 2005 and 2004
     were $4,016,000 and $5,612,000, respectively.

     Consolidated Development Joint Venture
     --------------------------------------

              In November  1999,  we formed a  development  joint  venture  (the
     "Consolidated  Development  Joint  Venture")  with a joint venture  partner
     ("PSAC  Storage  Investors,  LLC")  whose  partners  include a third  party
     institutional  investor  and B. Wayne  Hughes  ("Mr.  Hughes"),  to develop
     approximately $100 million of self-storage  facilities and to purchase $100
     million of our Equity  Stock,  Series AAA (see Note 10). At March 31, 2005,
     the  Consolidated  Development  Joint  Venture was fully  committed  having
     completed  construction on 22  self-storage  facilities for a total cost of
     $108.6 million.

              The Consolidated  Development  Joint Venture is funded solely with
     equity  capital  consisting  of 51%  from  us and  49%  from  PSAC  Storage
     Investors,  LLC. The accounts of the Consolidated Development Joint Venture
     are  included  in our  condensed  consolidated  financial  statements.  The
     accounts  of  PSAC  Storage  Investors,  LLC are  not  included  in the our
     condensed consolidated financial statements,  we have no ownership interest
     in  this  entity.   Minority  interests   primarily   represent  the  total
     contributions  received  from  PSAC  Storage  Investors  combined  with the
     accumulated  net income  allocated to PSAC Storage  Investors,  LLC, net of
     cumulative distributions.  The amounts included in our financial statements
     with respect to the minority interest in the Consolidated Development Joint
     Venture are denoted in the tables above.

              The  term of the  Consolidated  Development  Joint  Venture  is 15
     years;  however,  during the sixth year (2005) PSAC Storage Investors,  LLC
     has the right to cause an early  termination  of the  partnership.  If PSAC
     Storage  Investors,  LLC exercises this right, we then have the option, but
     not the obligation, to acquire their interest for an amount that will allow
     them to  receive  an annual  return of 10.75%.  If we do not  exercise  our
     option to acquire PSAC Storage Investors, LLC's interest, the partnership's
     assets will be sold to third parties and the proceeds  distributed  to PSAC
     Storage  Investors,  LLC,  and  us,  in  accordance  with  the  partnership
     agreement.  If PSAC Storage  Investors,  LLC does not exercise its right to
     early termination during the sixth year, the partnership will be liquidated
     15 years after its formation  with the assets sold to third parties and the
     proceeds  distributed  PSAC Storage  Investors,  LLC, and us, in accordance
     with the partnership agreement.

                                       20

<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

              PSAC Storage Investors, LLC provides Mr. Hughes with a fixed yield
     of  approximately  8.0% per  annum  on his  preferred  non-voting  interest
     (representing  an  investment of  approximately  $64.1 million at March 31,
     2005).  In addition,  Mr. Hughes  receives 1% of the remaining cash flow of
     PSAC Storage  Investors,  LLC (estimated to be less than $50,000 per year).
     If  PSAC  Storage  Investors,   LLC  does  not  elect  to  cause  an  early
     termination,  Mr. Hughes' 1% interest in residual cash flow can increase to
     10%.

              In consolidation, the Equity Stock, Series AAA, owned by the joint
     venture  and the  related  dividend  income has been  eliminated.  Minority
     interests primarily  represent the total  contributions  received from PSAC
     Storage  Investors,  LLC combined with the accumulated net income allocated
     to PSAC Storage Investors, LLC, net of cumulative distributions.

     Convertible Partnership Units
     -----------------------------

              As  of  March  31,  2005  and  December  31,  2004,   one  of  the
     Consolidated  Entities  had  approximately  237,935  convertible  operating
     partnership units ("Convertible Units") outstanding, representing a limited
     partnership  interest  in  the  partnership.   The  Convertible  Units  are
     convertible on a one-for-one  basis (subject to certain  limitations)  into
     our common  stock at the option of the  unitholder.  Minority  interest  in
     income with  respect to the  Convertible  Units  reflects  the  Convertible
     Units'  share of our net  income,  with net income  allocated  to  minority
     interests with respect to weighted average outstanding Convertible Units on
     a per unit basis equal to diluted  earnings  per common  share.  During the
     three months ended March 31, 2005 and the year ended  December 31, 2004, no
     units were converted.

     Other Consolidated Partnerships
     -------------------------------

              At March 31, 2005,  the other  consolidated  partnerships  reflect
     common  equity  interests  that  we do not  own in 24  entities  having  an
     interest in an aggregate of 123 self-storage facilities.

              In January 2005, we acquired a portion of the minority interest we
     did  not  own in  one of the  Consolidated  Entities  for an  aggregate  of
     $4,366,000 in cash. The  acquisition  resulted in the reduction of minority
     interest by $2,828,000  with the excess of cost over  underlying book value
     ($1,538,000) allocated to real estate.

              On June 30, 2004, we acquired the remaining  minority  interest we
     did  not  own in one of the  Consolidated  Entities,  for an  aggregate  of
     $24,851,000 in cash. This  acquisition had the effect of reducing  minority
     interest by $18,312,000, with the excess of cost over underlying book value
     ($6,539,000) allocated to real estate.

                                       21
<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

10.      Shareholders' Equity
         --------------------

     Cumulative Preferred Stock
     --------------------------

              At March 31, 2005 and  December  31,  2004,  we had the  following
     series of Cumulative Preferred Stock outstanding:


<TABLE>
<CAPTION>

                                                            At March 31, 2005              At December 31, 2004
                                                        ----------------------------- -----------------------------
                           Earliest
                          Redemption      Dividend        Shares        Carrying         Shares         Carrying
       Series              Date (a)          Rate        Outstanding      Amount        Outstanding       Amount
-----------------------  ------------    ------------   -------------- -------------- -------------    ------------
                                                                       (Dollar amount in thousands)
<S>                      <C>                  <C>                  <C>  <C>               <C>          <C>
Series F                 5/2/05 (b)           9.750%               -    $         -       2,300,000    $    57,500
Series Q                 1/19/06              8.600%           6,900        172,500           6,900        172,500
Series R                 9/28/06              8.000%          20,400        510,000          20,400        510,000
Series S                 10/31/06             7.875%           5,750        143,750           5,750        143,750
Series T                 1/18/07              7.625%           6,086        152,150           6,086        152,150
Series U                 2/19/07              7.625%           6,000        150,000           6,000        150,000
Series V                 9/30/07              7.500%           6,900        172,500           6,900        172,500
Series W                 10/6/08              6.500%           5,300        132,500           5,300        132,500
Series X                 11/13/08             6.450%           4,800        120,000           4,800        120,000
Series Y                 1/2/09               6.850%       1,600,000         40,000       1,600,000         40,000
Series Z                 3/5/09               6.250%           4,500        112,500           4,500        112,500
Series A                 3/31/09              6.125%           4,600        115,000           4,600        115,000
Series B                 6/30/09              7.125%           4,350        108,750           4,350        108,750
Series C                 9/13/09              6.600%           4,600        115,000           4,600        115,000
Series D                 2/28/10              6.180%           5,400        135,000               -              -

                                                        -------------- -------------- -------------    ------------
      Total Cumulative Preferred Stock                     1,685,586    $ 2,179,650      3,980,186     $ 2,102,500
                                                        ============== =============  =============    ============

</TABLE>

(a)      Except under certain conditions relating to the Company's qualification
         as a REIT, the Cumulative Preferred Stock outstanding at March 31, 2005
         are not redeemable prior to the dates indicated.  On or after the dates
         indicated,  each series of Cumulative  Senior  Preferred  Stock will be
         redeemable,  at the  option  of the  Company,  in whole or in part,  at
         $25.00 per  depositary  share (or per share in the case of the Series F
         and Series Y), plus accrued and unpaid dividends.

(b)      The Series F Cumulative  Preferred  Stock was called for  redemption on
         March 31,  2005 and was  redeemed  in May 2005  along  with the  unpaid
         distributions   from  April  1,  2005  through  the  redemption   date.
         Accordingly,  the redemption  value of $57,500,000  was classified as a
         liability at March 31, 2005.

              The  holders  of  our  Cumulative  Preferred  Stock  have  general
     preference rights with respect to liquidation and quarterly  distributions.
     Holders of the  preferred  stock,  except under certain  conditions  and as
     noted below, will not be entitled to vote on most matters.  In the event of
     a  cumulative  arrearage  equal to six  quarterly  dividends  or failure to
     maintain  a  Debt  Ratio  (as  defined)  of  50% or  less,  holders  of all
     outstanding  series of preferred  stock  (voting as a single class  without
     regard to series)  will have the right to elect two  additional  members to
     serve on the Company's Board of Directors until events of default have been
     cured.  At March 31, 2005,  there were no dividends in arrears and the Debt
     Ratio was 2.3%.

              Upon issuance of our Preferred  Stock, we classify the liquidation
     value  as  preferred  stock  on our  consolidated  balance  sheet  with any
     issuance costs recorded as a reduction to additional paid-in capital.  Upon
     redemption,  we apply EITF Topic D-42,  allocating  income to the preferred
     shareholders equal to the original issuance costs.

                                       22
<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

              During  the first  quarter of 2005,  we issued our 6.18%  Series D
     Cumulative Preferred Stock for net proceeds of $130,548,000.

              During the first  quarter of 2005,  we redeemed our 10.0% Series E
     Cumulative   Preferred  Stock  for  $54,875,000  plus  accrued  and  unpaid
     dividends.   The  Series  E  Cumulative  Preferred  Stock  was  called  for
     redemption  in  December  2004;   accordingly,   the  redemption  value  of
     $54,875,000 was classified as a liability at December 31, 2004.

              Subsequent  to March  31,  2005,  we priced a public  offering  of
     5,650,000  depositary  shares  each  representing  1/1000 of a share of our
     6.75%  Cumulative   Preferred  Stock,  Series  E,  for  gross  proceeds  of
     approximately $141.3 million. In addition,  on May 2, 2005, we redeemed our
     9.75% Series F Cumulative  Preferred Stock for $57,500,000 plus accrued and
     unpaid dividends.

     Equity Stock
     ------------

              The Company is  authorized to issue  200,000,000  shares of Equity
     Stock. The Articles of  Incorporation  provide that the Equity Stock may be
     issued  from  time to time in one or more  series  and  gives  the Board of
     Directors  broad  authority to fix the dividend  and  distribution  rights,
     conversion and voting rights,  redemption provisions and liquidation rights
     of each series of Equity Stock.

     Equity Stock, Series A
     ----------------------

              At March 31, 2005, we had 8,753,193  depositary shares outstanding
     (8,776,102 at December 31, 2004), each  representing  1/1,000 of a share of
     Equity Stock,  Series A ("Equity  Stock A"). We received and retired 22,909
     depositary shares from a distribution from affiliated entities at March 31,
     2005 (see Note 5). The Equity Stock A ranks on parity with common stock and
     junior to the Cumulative Preferred Stock with respect to general preference
     rights and has a  liquidation  amount which cannot exceed $24.50 per share.
     Distributions with respect to each depositary share shall be the lesser of:
     (i) five times the per share dividend on our common stock or (ii) $2.45 per
     annum. We have no obligation to pay  distributions on the depositary shares
     if no distributions are paid to common shareholders.

              Except in order to  preserve  the  Company's  Federal  income  tax
     status as a REIT, we may not redeem the depositary  shares before March 31,
     2010.  On or after  March 31,  2010,  we may,  at our  option,  redeem  the
     depositary  shares at $24.50 per depositary  share. If the Company fails to
     preserve its Federal  income tax status as a REIT,  the  depositary  shares
     will be  convertible at the option of the  shareholder  into .956 shares of
     common stock.  The  depositary  shares are otherwise not  convertible  into
     common  stock.  Holders of  depositary  shares vote as a single  class with
     holders of our common  stock on  shareholder  matters,  but the  depositary
     shares have the equivalent of one-tenth of a vote per depositary share.

     Equity Stock, Series AAA
     ------------------------

              In  November  1999,  we sold  $100,000,000  (4,289,544  shares) of
     Equity  Stock,  Series AAA  ("Equity  Stock AAA") to a newly  formed  joint
     venture (the  "Consolidated  Development  Joint  Venture").  We control the
     joint venture and  consolidate  its accounts,  and  accordingly  the Equity
     Stock AAA is eliminated in  consolidation.  The Equity Stock AAA ranks on a
     parity with our common stock and junior to the Cumulative  Preferred  Stock
     with respect to general  preference  rights,  and has a liquidation  amount
     equal  to 120% of the  amount  distributed  to each  common  share.  Annual
     distributions  per  share are  equal to the  lesser  of (i) five  times the
     amount paid per common share or (ii) $2.1564.  We have no obligation to pay
     distributions  on these  shares  if no  distributions  are  paid to  common
     shareholders.

                                       23
<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)
              Upon liquidation of the Consolidated Development Joint Venture, at
     the Company's option either a) each share of Equity Stock AAA shall convert
     into 1.2 shares of our common stock or b) the Company can redeem the Equity
     Stock AAA at a per share  amount  equal to 120% of the market  price of our
     common stock. In addition,  if the Company  determines that it is necessary
     to maintain  its status as a REIT,  subject to certain  limitations  it may
     cause the  redemption  of shares of Equity  Stock AAA at a per share amount
     equal to 120% of the market price of our common  stock.  The shares are not
     otherwise  redeemable  or  convertible  into  shares of any other  class or
     series of the Company's  capital stock.  Other than as required by law, the
     Equity Stock AAA has no voting rights.

     Common Stock
     ------------

              During the three months ended March 31,  2005,  we issued  131,037
     shares of common stock in  connection  with  stock-based  compensation.  In
     addition,  one of the Consolidated  Entities  acquired 52,000 shares of our
     common stock,  which were eliminated in  consolidation.  We also received a
     distribution  of  635,885  shares  of  common  stock   previously  held  by
     affiliated entities, and the shares were retired.

              At March 31, 2005,  entities  consolidated  with the Company owned
     981,432 common shares of the Company.  These shares  continue to be legally
     issued and outstanding.  In the consolidation process, these shares and the
     related  balance sheet  amounts have been  eliminated.  In addition,  these
     shares are not  included  in the  computation  of weighted  average  shares
     outstanding.   The  following  chart  reconciles  our  legally  issued  and
     outstanding  shares of common stock and the reported  outstanding shares of
     common stock at March 31, 2005 and December 31, 2004:

Reconciliation of Common Shares Outstanding      At March 31,    At December 31,
-------------------------------------------          2005              2004
                                                ---------------  ---------------

Legally issued and outstanding shares.........     128,951,034      129,455,882
Less - Shares owned by the Consolidated
    Entities that are eliminated in
    consolidation (a).........................        (981,432)        (929,432)
                                                ---------------  ---------------
Reported issued and outstanding shares........     127,969,602      128,526,450
                                                ===============  ===============

              (a) The increase in shares owned by the Consolidated Entities is
     due to the Consolidated Entities' purchase of 52,000 shares of our common
     stock during the three months ended March 31, 2005.

                                       24
<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

     Dividends
     ---------

              The following table summarizes dividends declared and paid during
the three months ended March 31, 2005:

                                     Distributions Per Share
                                      or Depositary Share    Total Distributions
                                     ----------------------- -------------------
Preferred Stock:
Series E..............................             $0.208      $      457,000
Series F..............................             $0.609           1,401,000
Series Q..............................             $0.538           3,709,000
Series R..............................             $0.500          10,200,000
Series S..............................             $0.492           2,830,000
Series T..............................             $0.477           2,900,000
Series U..............................             $0.477           2,860,000
Series V..............................             $0.469           3,234,000
Series W..............................             $0.406           2,153,000
Series X..............................             $0.403           1,935,000
Series Y..............................             $0.428             685,000
Series Z..............................             $0.391           1,758,000
Series A..............................             $0.383           1,761,000
Series B..............................             $0.445           1,937,000
Series C..............................             $0.413           1,898,000
Series D..............................             $0.129             695,000
                                                             -------------------
                                                                   40,413,000
Common Stock:
Equity Stock, Series A................             $0.613           5,375,000
Common ...............................             $0.450          58,072,000
                                                             -------------------
   Total dividends....................                         $  103,860,000
                                                             ===================

              The  dividend  rate on the common stock was $0.45 per common share
     for the three months ended March 31, 2005.  The dividend rate on the Equity
     Stock A was $0.6125 per  depositary  share for the three months ended March
     31, 2005.

11.      Segment Information
         -------------------

     Description of Each Reportable Segment
     --------------------------------------

              Our reportable segments reflect significant  operating  activities
     that are  evaluated  separately  by  management.  We have  four  reportable
     segments:   self-storage  operations,   containerized  storage  operations,
     commercial property operations and tenant reinsurance operations.

              The   self-storage   segment   comprises  the  direct   ownership,
     development  and  operation  of  traditional  storage  facilities,  and the
     ownership of equity interests in entities that own self-storage properties.
     The  containerized   storage  operations  represent  another  segment.  The
     commercial  property  segment  reflects  our  interest  in  the  ownership,
     operation and management of commercial properties. The vast majority of the
     commercial  property  operations  are conducted  through PSB, and to a much
     lesser  extent the Company and certain of its  unconsolidated  subsidiaries
     own  commercial  space,  managed by PSB,  within  facilities  that  combine
     storage and commercial  space for rent. The tenant  reinsurance  operations
     reflect a business segment which reinsures policies against losses to goods
     stored by tenants in our self-storage facilities.

     Measurement of Segment Profit or Loss
     -------------------------------------

              We evaluate  performance and allocate resources based upon the net
     segment income of each segment. Net segment income represents net income in
     conformity  with U.S.  generally  accepted  accounting  principles  and our
     significant  accounting  policies as stated in Note 2, before  interest and
     other  income,  interest  expense,  corporate  general  and  administrative
     expense,  and minority interest in income.  The accounting  policies of the
     reportable  segments  are the same as those  described  in the  Summary  of
     Significant Accounting Policies.

              Interest and other income, interest expense, corporate general and
     administrative  expense,  and minority interest in income are not allocated
     to  segments  because  management  does not utilize  them to  evaluate  the
     results of operations of each segment.

                                       25
<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

     Measurement of Segment Assets
     -----------------------------

              No segment data  relative to assets or  liabilities  is presented,
     because  management  does not consider the historical cost of the Company's
     real  estate   facilities  and  investments  in  real  estate  entities  in
     evaluating  the  performance  of  operating  management  or  in  evaluating
     alternative courses of action. The only other types of assets that might be
     allocated to individual segments are trade receivables, payables, and other
     assets  which arise in the ordinary  course of business,  but they are also
     not a significant factor in the measurement of segment performance.

     Presentation of Segment Information
     -----------------------------------

              Our  condensed   consolidated   income   statement   provides  the
     information required in order to determine the revenues of each of our four
     segments.  The following table  reconciles the performance of each segment,
     in terms of segment income, to our consolidated net income.

                                       26

<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                 Three Months Ended
                                                                     March 31,
                                                             ------------------------
                                                                2005           2004       Change
                                                             ------------  ----------   -----------
                                                              (Amounts in thousands)
Reconciliation of Net Income by Segment:

Self-storage
<S>                                                          <C>            <C>          <C>
  Self-storage net operating income.......................   $ 145,832      $130,483     $ 15,349
  Self-storage depreciation...............................     (46,235)      (44,747)      (1,488)
  Equity in earnings - self-storage property operations...       1,734         1,684           50
  Equity in earnings - depreciation (self-storage) .......        (432)         (394)         (38)
                                                             ------------  ----------   -----------
      Total self-storage segment net income...............     100,899        87,026       13,873
                                                             ------------  ----------   -----------
  Commercial  properties
  Commercial properties net operating income..............       1,721         1,498          223
  Depreciation and amortization - commercial properties...        (579)         (560)         (19)
  Equity in earnings - commercial property operations.....      17,214        17,193           21
  Equity in earnings - depreciation (commercial
     properties) .........................................      (8,253)       (7,881)        (372)
  Discontinued operations (Note 3) .......................           -            31          (31)
                                                             ------------  ----------   -----------
      Total commercial property segment net income.........     10,103        10,281         (178)
                                                             ------------  ----------   -----------
  Containerized storage
  Containerized storage net operating income..............       1,095         2,032         (937)
  Containerized storage depreciation......................      (1,162)       (1,126)         (36)
  Discontinued operations (Note 3) .......................       1,015          (182)       1,197
                                                             ------------  ----------   -----------
      Total containerized storage segment net income......         948           724          224
                                                             ------------  ----------   -----------
  Tenant Reinsurance
   Tenant reinsurance net income..........................       2,939         2,828          111
                                                             ------------  ----------   -----------
  Other items not allocated to segments
  General and administrative and other
  included in equity in earnings..........................      (4,585)       (6,545)       1,960
  Interest and other income...............................       3,555         1,357        2,198
  General and administrative..............................      (5,141)       (5,884)         743
  Interest expense........................................      (1,663)         (100)      (1,563)
  Minority interest in income.............................     (10,644)      (20,620)       9,976
                                                             ------------  ----------   -----------
      Total other items not allocated to segments              (18,478)      (31,792)      13,314
                                                             ------------  ----------   -----------
       Total consolidated net income......................   $  96,411      $ 69,067     $ 27,344
                                                             ============  ==========   ===========

</TABLE>

                                       27
<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

12.      Stock-Based Compensation
         ------------------------

      Stock Options

              We have a 1990 Stock Option Plan (the "1990 Plan") which  provides
     for the grant of non-qualified  stock options.  We have a 1994 Stock Option
     Plan (the "1994 Plan"),  a 1996 Stock Option and Incentive  Plan (the "1996
     Plan"), a 2000  Non-Executive/Non-Director  Stock Option and Incentive Plan
     (the  "2000  Plan"),  a 2001  Non-Executive/Non-Director  Stock  Option and
     Incentive Plan (the "2001 Non-Executive  Plan") and a 2001 Stock Option and
     Incentive  Plan (the "2001 Plan"),  each of which provides for the grant of
     non-qualified options and incentive stock options. (The 1990 Plan, the 1994
     Plan, the 1996 Plan and the 2000 Plan are  collectively  referred to as the
     "PSI Plans".)  Under the PSI Plans,  the Company has granted  non-qualified
     options to certain directors, officers and key employees to purchase shares
     of the Company's  common stock at a price equal to the fair market value of
     the common  stock at the date of grant.  Generally,  options  under the PSI
     Plans vest over a  three-year  period from the date of grant at the rate of
     one-third per year (options granted after, December 31, 2002 vest generally
     over a  five-year  period)  and expire (i) under the 1990 Plan,  five years
     after the date they became  exercisable  and (ii) under the 1994 Plan,  the
     1996 Plan and the 2000 Plan,  ten years  after the date of grant.  The 1996
     Plan,  the 2000 Plan,  the 2001  Non-Executive  Plan and the 2001 Plan also
     provide  for the grant of  restricted  stock (see below) to  officers,  key
     employees  and  service  providers  on terms  determined  by an  authorized
     committee of the Board of Directors.

              U.S. generally accepted  accounting  principles permit, but do not
     require, companies to recognize compensation expense for stock-based awards
     based on their  fair  value at date of grant,  which is then  amortized  as
     compensation  expense  over the vesting  period (the "Fair Value  Method").
     Companies  can also elect to  disclose,  but not  recognize  as an expense,
     stock  option  expense  when stock  options are granted to  employees at an
     exercise  price equal to the market price at the date of grant (the "APB 25
     Method").

              As of January 1, 2002, we adopted the Fair Value Method,  and have
     elected to use the prospective  method of transition,  whereby we apply the
     recognition  provisions  of the Fair  Value  Method  to all  stock  options
     granted  after the  beginning of the year in which the Company  adopts such
     method.  Accordingly,  we  recognize  compensation  expense  in our  income
     statement  using the Fair Value Method only with  respect to stock  options
     issued after January 1, 2002.

              For the three months ended March 31, 2005 and 2004,  respectively,
     we recorded  $213,000  and $119,000 in stock  option  compensation  expense
     related to options  granted after  January 1, 2002.  The fair value of each
     option grant is estimated on the date of the grant using the  Black-Scholes
     option  pricing  model.  The  estimated  per option value of 107,500  stock
     options  granted  in the  first  three  months  of 2005 was  based  upon an
     estimated life of 5 years, a risk-free rate of 3.39%, an expected  dividend
     yield of 7%, and expected volatility of 0.227.

              If we had recorded  stock option  expense  applying the Fair Value
     Method to all awards,  we would have recognized an additional  $146,000 for
     the three months ended March 31, 2004 in stock option compensation  expense
     (none for the same period in 2005).  Basic and diluted  earnings  per share
     would have been $0.17 for the three months ended March 31, 2004.

              A total of 107,500  stock  options were  granted  during the three
     months  ended March 31,  2005,  126,720  shares were  exercised,  and 4,333
     shares were forfeited.  A total of 1,418,348 stock options were outstanding
     at March 31, 2005 (1,441,901 at December 31, 2004).

                                       28
<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

     Restricted Stock Units
     ----------------------

              Restricted  stock units vest over a five-year period from the date
     of  grant  at the  rate  of  one-fifth  per  year.  The  employee  receives
     additional compensation equal to the per-share dividends received by common
     shareholders.  Upon vesting,  the employee  receives  regular common shares
     equal to the number of vested  restricted  stock units in exchange  for the
     units. The total value of each restricted stock unit grant,  based upon the
     market price of the Company's  common stock at the date of grant,  combined
     with the  estimated  payroll  taxes and other  payroll  burden  costs to be
     incurred upon vesting, is amortized over the vesting period as compensation
     expense.  Outstanding  restricted stock units are included on a one-for-one
     basis in the Company's  diluted weighted  average shares,  less a reduction
     for the treasury  stock method applied to the average  cumulative  measured
     but unrecognized compensation expense during the period.

              During the three months ended March 31, 2005,  145,000  restricted
     stock units were granted, 17,500 restricted stock units were forfeited, and
     7,195 restricted stock units vested.  This vesting resulted in the issuance
     of  4,317  shares  of  the  Company's  common  stock.  In  addition,   cash
     compensation  was paid to employees in lieu of 2,878 shares of common stock
     based upon the market  value of the stock at the date of vesting,  and used
     to settle the employees' tax liability generated by the vesting.

              At March 31, 2005,  approximately  372,345  restricted stock units
     were outstanding  (252,040 at December 31, 2004). A total of $1,018,000 and
     $534,000 in  restricted  stock  expense was  recorded  for the three months
     ended March 31, 2005 and 2004, respectively, which includes amortization of
     the fair value of the grant reflected as an increase to paid-in capital, as
     well as accrued estimated burden to be incurred upon vesting.

13.      Related Party Transactions
         --------------------------

     Relationships and transactions with the Hughes Family
     -----------------------------------------------------

              B.  Wayne  Hughes,  Chairman  of the Board,  and his  family  (the
     "Hughes Family") have ownership interests in, and operate, approximately 40
     self-storage  facilities in Canada under the name "Public Storage" pursuant
     to a  license  agreement  with the  Company.  We  currently  do not own any
     interests in these  facilities nor do we own any facilities in Canada.  The
     Hughes Family owns  approximately  36% of our common stock  outstanding  at
     March 31,  2005.  We have a right of first  refusal to acquire the stock or
     assets of the  corporation  engaged in the  operation of  approximately  40
     self-storage  facilities in Canada if the Hughes Family or the  corporation
     agrees to sell them. However, we have no interest in the operations of this
     corporation,  have no right to  acquire  this  stock or assets  unless  the
     Hughes Family  decides to sell, and receive no benefit from the profits and
     increases in value of the Canadian self-storage facilities.

              Prior to December  31,  2003,  our  personnel  were engaged in the
     supervision and the operation of these Canadian self-storage facilities and
     provided  certain  administrative  services  for the Canadian  owners,  and
     certain other  services,  primarily  tax services,  with respect to certain
     other Hughes Family  interests.  The Hughes Family and the Canadian  owners
     reimbursed  us at cost for these  services  (U.S.  $542,499 and $638,000 in
     respect of the Canadian  operations  for 2003 and 2002,  respectively,  and
     U.S.  $151,063  and  $167,930  for  other  services  during  2003 and 2002,
     respectively). There have been conflicts of interest in allocating the time
     of our  personnel  between our  properties,  the Canadian  properties,  and
     certain other Hughes Family interests. The sharing of personnel and systems
     with the Canadian entities was  substantially  discontinued by December 31,
     2003. The Canadian  entities  claim that the Company owes them  CAD$653,424
     representing  the  amount  charged to them for the  development  of certain
     systems  that they no longer  utilize.  This amount has been accrued on the
     Company's financial statements for the year ended December 31, 2004.

                                       29
<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

              The Company,  through  subsidiaries,  continues to reinsure  risks
     relating to loss of goods stored by tenants in the self-storage  facilities
     in Canada.  The  Company  had  acquired  the tenant  insurance  business on
     December 31, 2001 through its acquisition of PSIC.  During the three months
     ended  March 31,  2005 and  2004,  PSIC  received  $259,000  and  $248,000,
     respectively,   in  reinsurance  premiums   attributable  to  the  Canadian
     Facilities.  PSIC has no contractual right to provide tenant reinsurance to
     the Canadian  Facilities and there is no assurance that these premiums will
     continue.

              The   corporation   engaged  in  the  operation  of  the  Canadian
     facilities has advised us that it intends to reorganize the entities owning
     and  operating  the Canadian  facilities  and has proposed that the Company
     consent to this  reorganization,  which would impact the license  agreement
     and the right of first refusal  agreement with the Company,  and might also
     impact our ability to sell tenant insurance. The reorganization is designed
     to enhance the entities'  financial  flexibility and growth  potential.  In
     November  2004,  the Board  appointed  a special  committee,  comprised  of
     independent  directors,  to consider  the  Company's  alternatives  in this
     matter,  including  a  possible  investment  in  the  reorganized  Canadian
     entities.

              In November  1999, we formed the  Consolidated  Development  Joint
     Venture  with  a  joint   venture   partner  whose   partners   include  an
     institutional  investor and Mr. Hughes.  This transaction is discussed more
     fully in Note 9.

              On March 31, 2005 four  partnerships  in which Mr.  Hughes and the
     Company are general partners owned shares of the Company's common stock and
     equity stock.  These  partnerships  made a pro rata  distribution  to their
     partners  of a total  of  1,125,814  shares  of  common  stock  and  71,200
     depositary shares of Equity Stock, Series A, representing substantially all
     shares of common and Equity  Stock,  Series A held by these  entities.  Mr.
     Hughes  and  members of his  family  received a total of 157,522  shares of
     common  stock and 6,290  depositary  shares of Equity  Stock,  Series A, in
     respect  of  their  general  and  limited  partnership   interests  in  the
     partnerships. The Company received and retired a total of 635,885 shares of
     common stock and 22,909 depositary shares of Equity Stock, Series A.

              Other Related Party Transactions
              --------------------------------

              Ronald L. Havner,  Jr. is our  vice-chairman  and chief  executive
     officer,  and he is chairman of the board of PSB.  Until August  2003,  Mr.
     Havner  was also the  Chief  Executive  Officer  of PSB.  For 2003 and 2004
     services, Mr. Havner was compensated by PSB, as well as by the Company.

              In December  2003, we loaned  $100,000,000  to PSB. This loan bore
     interest at the rate of 1.45% per year.  This loan,  which was fully repaid
     on March 8, 2004, was included in Notes Receivable at December 31, 2003.

              PSB  manages  certain  of the  commercial  facilities  that we own
     pursuant  to  management  agreements  for a  management  fee equal to 5% of
     revenues.  We paid a total of $145,000  and  $138,000  for the three months
     ended  March  31,  2005 and 2004,  respectively,  in  management  fees with
     respect to PSB's property management services.

              Pursuant to a cost-sharing and administrative  services agreement,
     PSB reimburses us for certain administrative services. PSB's share of these
     costs  totaled  approximately  $85,000 for each of the three month  periods
     ended March 31, 2005 and 2004.

              STOR-Re provided  limited property and liability  insurance to the
     Company,  PSB and our affiliates for losses  incurred during policy periods
     prior to April 1, 2004.

                                       30
<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

14.      Commitments and Contingencies

     LEGAL MATTERS

     Serrao v. Public Storage, Inc. (filed April 2003)
     -------------------------------------------------
     (Superior Court - Orange County)
     --------------------------------

              The  plaintiff  in this case filed a suit  against  the Company on
     behalf of a putative  class of renters who rented  self-storage  units from
     the Company.  Plaintiff alleges that the Company misrepresented the size of
     its storage units, has brought claims under California statutory and common
     law  relating  to  consumer  protection,  fraud,  unfair  competition,  and
     negligent misrepresentation,  and is seeking monetary damages, restitution,
     and declaratory and injunctive relief.

              The  claim  in this  case is  substantially  similar  to  those in
     Henriquez v. Public Storage, Inc., which was disclosed in prior reports. In
     January 2003, the plaintiff caused the Henriquez action to be dismissed.

              Based upon the uncertainty  inherent in any putative class action,
     the Company cannot presently  determine the potential  damages,  if any, or
     the ultimate  outcome of this  litigation.  On November 3, 2003,  the court
     granted the Company's  motion to strike the  plaintiff's  nationwide  class
     allegations  and to limit any putative class to California  residents only.
     The Company is vigorously  contesting the claims upon which this lawsuit is
     based including class certification efforts.

     Gustavson, et al v. Public Storage, Inc. (filed June 2003)
     ----------------------------------------------------------
     (Superior Court - Los Angeles County); Potter, et al v. Hughes, et al.
     ---------------------------------------------------------------------
     (filed December 2004) (United States District Court - Central District
     ----------------------------------------------------------------------
     of California)
     --------------

              In November  2002, a  shareholder  of the Company made a demand on
     the Board of  Directors  that  challenged  the  fairness  of the  Company's
     acquisition of PS Insurance  Company,  Ltd.  ("PSIC") and demanded that the
     Board  recover  the  profits  earned by PSIC  from  November  1995  through
     December  2001 and that the entire  purchase  price paid by the Company for
     PSIC in excess of PSIC's net assets be returned to the Company.

              The  contract  to acquire  PSIC was  approved  by the  independent
     directors of the Company in March 2001, and the  transaction  was closed in
     December 2001.  PSIC was formerly  owned by B. Wayne Hughes,  currently the
     Chairman of the Board (and in 2001 also the Chief Executive Officer) of the
     Company,  B. Wayne Hughes,  Jr.,  currently a director (and in 2001 also an
     officer) of the Company and Tamara H. Gustavson, who in 2001 was an officer
     of the Company.  In exchange for the Hughes  family's  shares in PSIC,  the
     Company  issued  to them  1,439,765  shares  of  common  stock (or a net of
     1,138,733 shares, after taking into account 301,032 shares held by PSIC).

              The  shareholder  has  threatened  litigation  against  the Hughes
     family and the directors of the Company arising out of this transaction and
     alleged a pattern of deceptive disclosures with respect to PSIC since 1995.
     In December 2002, the Board held a special  meeting to authorize an inquiry
     by its  independent  directors  to review  the  fairness  to the  Company's
     shareholders  of its  acquisition of PSIC and the ability of the Company to
     have  started  its own tenant  reinsurance  business  in 1995.  The Company
     believes  that,  prior to the  effectiveness  in 2001 of the  federal  REIT
     Modernization Act and corresponding  California legislation that authorized
     the creation and ownership of "taxable REIT subsidiaries," the ownership by
     the Company of a  reinsurance  business  relating to its tenants would have
     jeopardized  the  Company's  status as a REIT and that  other  REITs  faced
     similar concerns about tenant insurance programs.

              In June 2003, the Hughes family filed a complaint  (Gustavson,  et
     al.  v  Public  Storage,  Inc.)  for  declaratory  relief  relating  to the
     Company's  acquisition of PSIC naming the Company as defendant.  The Hughes
     family is seeking  that the court make (i) a binding  declaration  that the
     Company either is not entitled to recover profits or other moneys earned by
     PSIC from November 1995 through December 2001; or alternatively the amounts
     that the Hughes family should be ordered to surrender to the Company if the
     court  determines  that the Company is entitled to recover any such profits
     or moneys;  and (ii) a binding  declaration  either that the Company cannot
     establish that the acquisition  agreement was not just and reasonable as to

                                       31
<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

     the  Company  at the  time it was  authorized,  approved  or  ratified;  or
     alternatively  the amounts that the Hughes family  should  surrender to the
     Company,  if the  court  determines  that  the  agreement  was not just and
     reasonable  to the Company at that time.  The Hughes  family is not seeking
     any payments  from the Company.  In the event of a  determination  that the
     Hughes  family is  obligated  to pay certain  amounts to the  Company,  the
     complaint states that they have agreed to be bound by that determination to
     pay such amounts to the Company.

              In July 2003 the  Company  filed an answer to the Hughes  family's
     complaint requesting a final judicial determination of the Company's rights
     of recovery  against  the Hughes  family in respect of PSIC.  In  September
     2003, by order of the Superior Court, Justice Malcolm Lucas, a former chief
     justice of the  California  Supreme  Court,  was appointed to try the case.
     This matter is set for trial in June 2005.  We believe  that the lawsuit by
     the Hughes family will ultimately resolve matters relating to PSIC and will
     not have any  financially  adverse  effect on the  Company  (other than the
     costs and other expenses relating to the lawsuit).

              At the end of  December  2004,  the same  shareholder  referred to
     above and a second shareholder filed a shareholder's  derivative  complaint
     (Potter,  et al. v Hughes,  et al.)  naming  as  defendants  the  Company's
     directors (and two former  directors) and certain  officers of the Company.
     The  matters  alleged in the Potter  complaint  relate to PSIC,  the Hughes
     family's  Canadian   mini-warehouse   operations  and  the  Company's  1995
     reorganization.  The  Company  has filed a motion  to  dismiss  the  Potter
     complaint and believes the litigation will not have any financially adverse
     effect on the Company (other than the costs and other expenses  relating to
     the lawsuit).

     OTHER ITEMS

              We are a party to  various  claims,  complaints,  and other  legal
     actions that have arisen in the normal course of business from time to time
     that are not  described  above.  We believe  that it is  unlikely  that the
     outcome of these other pending legal proceedings  including  employment and
     tenant claims,  in the aggregate,  will have a material adverse impact upon
     our operations or financial position.

     INSURANCE AND LOSS EXPOSURE

              Our facilities have historically carried comprehensive  insurance,
     including fire, earthquake, liability and extended coverage through STOR-Re
     and PSIC-H,  our captive insurance  programs,  and insure portions of these
     risks  through  nationally  recognized  insurance  carriers.   Our  captive
     insurance programs also insure affiliates of the Company.

              The  Company,   STOR-Re,   PSIC-H,  and  its  affiliates'  maximum
     aggregate  annual  exposure for losses that are below the  deductibles  set
     forth in the third-party insurance contracts, assuming multiple significant
     events occur, is approximately $35 million. In addition,  if losses exhaust
     the third-party  insurers'  limit of coverage of $125,000,000  for property
     coverage and  $101,000,000  for general  liability,  our exposure  could be
     greater.  These limits are higher than estimates of maximum probable losses
     that could occur from individual  catastrophic events (i.e.  earthquake and
     wind damage) determined in recent engineering and actuarial studies.

              Our tenant insurance program, operating through PSIC through March
     31, 2004 and through PSIC-H  beginning  April 1, 2004,  reinsures  policies
     against  claims for losses to goods  stored by tenants at our  self-storage
     facilities.  We  reinsure  our risks  with  third-party  insurers  from any
     individual event that exceeds a loss of $500,000, up to the policy limit of
     $10,000,000.

     DEVELOPMENT OF REAL ESTATE FACILITIES

              At March 31,  2005 we have 45  projects  (2,908,000  net  rentable
     square feet) in our development  pipeline,  including eight newly developed
     self-storage   facilities  and  expansions  to  37  existing   self-storage
     facilities,  with total estimated  development costs of $206.2 million,  of
     which  $40,545,000  has been spent through March 31, 2005.  Development  of
     these facilities is subject to various risks and contingencies.

                                       32
<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2005
                                   (Unaudited)

     ACQUISITION OF REAL ESTATE FACILITIES

              As of  May  6,  2005,  we  were  under  contract  to  acquire  six
     additional  existing  self-storage  facilities  at  an  aggregate  cost  of
     approximately  $30.6 million in cash. We anticipate that these acquisitions
     will be  entirely  funded by us.  Each of these  contracts  is  subject  to
     contingencies,  and there is no assurance that any of these facilities will
     be acquired.

15.      Subsequent Events
         -----------------

              From  March  31,  2005  through  May 5,  2005,  we  acquired  four
     additional self-storage facilities (322,000 net rentable square feet) at an
     aggregate cost of approximately  $36.7 million in cash. These  acquisitions
     were entirely funded by us.

              On March 31, 2005, we called for redemption all of the outstanding
     shares (total  liquidation  value of $57.5 million) of our 9.75% Cumulative
     Preferred  Stock,  Series  F, at $25 per  share  plus  accrued  and  unpaid
     dividends. These shares were subsequently redeemed on May 2, 2005.

              On April 22,  2005,  we acquired  an interest in the  Consolidated
     Entities for an aggregate acquisition cost of approximately $32.3 million.

              On April 27, 2005, we issued our 6.75% Cumulative Preferred Stock,
     Series E. The issuance generated gross proceeds of $141,250,000.

                                       33

<PAGE>


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

         The following  discussion  and analysis  should be read in  conjunction
with our consolidated financial statements and notes thereto.

         FORWARD LOOKING STATEMENTS:  When used within this document,  the words
"expects,"  "believes,"   "anticipates,"   "should,"  "estimates,"  and  similar
expressions  are intended to identify  "forward-looking  statements"  within the
meaning of that term in Section 27A of the  Securities  Exchange Act of 1933, as
amended,  and in Section 21E of the Securities Exchange Act of 1934, as amended.
Such forward-looking statements involve known and unknown risks,  uncertainties,
and other  factors,  which may cause our actual  results and  performance  to be
materially  different  from those  expressed  or implied in the forward  looking
statements.  Such factors are  described in Item 2A, "Risk  Factors" and include
changes in general  economic  conditions and in the markets in which we operate,
the  impact  of  competition  from  new  and  existing  storage  and  commercial
facilities  and  other  storage  alternatives,  which  could  impact  rents  and
occupancy  levels at our  facilities;  difficulties  in our ability to evaluate,
finance and integrate acquired and developed  properties into our operations and
to fill up those properties, which could adversely affect our profitability; the
impact of the regulatory environment as well as national,  state, and local laws
and  regulations  including,  without  limitation,  those  governing Real Estate
Investment  Trusts,  which  could  increase  our  expense  and  reduce  our cash
available  for  distribution;  consumers'  failure to accept  the  containerized
storage  concept which would reduce our  profitability;  difficulties in raising
capital at reasonable  rates,  which would impede our ability to grow; delays in
the development  process,  which could adversely affect our  profitability;  and
economic  uncertainty  due to the  impact of war or  terrorism  could  adversely
affect our business  plan. We disclaim any  obligation  to publicly  release the
results of any  revisions to these  forward-looking  statements  reflecting  new
estimates, events or circumstances after the date of this report.

         CRITICAL ACCOUNTING POLICIES

         Management's Discussion and Analysis of Financial Condition and Results
of Operations discusses our consolidated  financial statements,  which have been
prepared in accordance with U.S. generally accepted accounting  principles.  The
preparation of financial  statements and related  disclosures in conformity with
United States generally  accepted  accounting  principles and our discussion and
analysis  of  our  financial   condition  and  results  of  operations  requires
management to make judgments,  assumptions and estimates that affect the amounts
reported in our consolidated financial statements and accompanying notes. Note 2
to our consolidated  financial statements summarizes the significant  accounting
policies  and methods  used in the  preparation  of our  consolidated  financial
statements and related disclosures.

         Management  believes the  following  are critical  accounting  policies
whose application has a material impact on our financial presentation.  That is,
they are both important to the portrayal of our financial condition and results,
and they require  management to make judgments and estimates  about matters that
are inherently uncertain.

         QUALIFICATION  AS A REIT - INCOME TAX EXPENSE:  We believe that we have
been  organized  and  operated,  and we  intend to  continue  to  operate,  as a
qualifying Real Estate Investment Trust ("REIT") under the Internal Revenue Code
and  applicable  state laws. A qualifying  REIT generally does not pay corporate
level  income  taxes  on  its  taxable   income  that  is   distributed  to  its
shareholders,  and accordingly, we do not pay or record as an expense income tax
on the share of our taxable income that is distributed to shareholders.

         We therefore  don't  estimate or accrue any Federal income tax expense.
This estimate could be incorrect,  because due to the complex nature of the REIT
qualification requirements, the ongoing importance of factual determinations and
the  possibility  of future changes in our  circumstances,  we cannot be assured
that we actually have satisfied or will satisfy the requirements for taxation as
a REIT for any  particular  taxable  year.  For any taxable year that we fail or
have failed to qualify as a REIT and applicable relief provisions did not apply,

                                       34

<PAGE>

we would be taxed at the regular  corporate  rates on all of our taxable income,
whether  or not we made or  make  any  distributions  to our  shareholders.  Any
resulting  requirement  to pay corporate  income tax,  including any  applicable
penalties or interest,  could have a material  adverse  impact on our  financial
condition or results of  operations.  Unless  entitled to relief under  specific
statutory provisions,  we also would be disqualified from taxation as a REIT for
the four taxable years following the year during which  qualification  was lost.
There can be no assurance that we would be entitled to any statutory relief.

         IMPAIRMENT  OF  LONG-LIVED  ASSETS:  Substantially  all of  our  assets
consist of long-lived assets,  including real estate, assets associated with the
containerized  storage  business,  goodwill,  and other  intangible  assets.  We
evaluate our  goodwill for  impairment  on an annual  basis,  and on a quarterly
basis evaluate other long-lived assets for impairment. As described in Note 2 to
the consolidated financial statements, the evaluation of goodwill for impairment
entails  valuation of the reporting unit to which  goodwill is allocated,  which
involves significant  judgment in the area of projecting  earnings,  determining
appropriate  price-earnings  multiples,  and discount  rates.  In addition,  the
evaluation  of other  long-lived  assets  for  impairment  requires  determining
whether indicators of impairment exist, which is a subjective process.  When any
indicators of impairment  are found,  the evaluation of such  long-lived  assets
then entails  projections of future  operating  cash flows,  which also involves
significant  judgment.  Future events, or facts and circumstances that currently
exist, that we have not yet identified, could cause us to conclude in the future
that other long lived assets are impaired.  Any resulting  impairment loss could
have a  material  adverse  impact on our  financial  condition  and  results  of
operations.

         ESTIMATED USEFUL LIVES OF LONG-LIVED  ASSETS:  Substantially all of our
assets consist of depreciable, long-lived assets. We record depreciation expense
with respect to these assets based upon their estimated useful lives. Any change
in the estimated useful lives of those assets,  caused by functional or economic
obsolescence  or other  factors,  could  have a material  adverse  impact on our
financial condition or results of operations.

         ESTIMATED  LEVEL OF RETAINED RISK AND UNPAID TENANT CLAIM  LIABILITIES:
As  described in Notes 2 and 14 to the  consolidated  financial  statements,  we
retain certain risks with respect to property perils, legal liability, and other
such risks.  In addition,  a  wholly-owned  subsidiary of the Company  reinsures
policies   against  claims  for  losses  to  goods  stored  by  tenants  in  our
self-storage facilities.  In connection with these risks, we accrue losses based
upon our estimated level of losses incurred using certain actuarial  assumptions
followed  in the  insurance  industry  and  based  on  recommendations  from  an
independent actuary that is a member of the American Academy of Actuaries. While
we believe  that the amounts of the accrued  losses are  adequate,  the ultimate
liability may be in excess of or less than the amounts provided.

         ACCRUALS  FOR  CONTINGENCIES:  We are  exposed  to  business  and legal
liability  risks with respect to events that have  occurred,  but in  accordance
with U.S. generally accepted accounting principles, we have not accrued for such
potential  liabilities  because the loss is either not probable or not estimable
or  because  we are not aware of the  event.  Future  events  and the  result of
pending  litigation could result in such potential losses becoming  probable and
estimable, which could have a material adverse impact on our financial condition
or results of operations. Some of these potential losses, of which we are aware,
are described in Note 14 to the consolidated financial statements.

         ACCRUALS FOR OPERATING EXPENSES: We accrue for property tax expense and
other operating  expenses based upon estimates and historical trends and current
and  anticipated  local and state  government  rules and  regulations.  If these
estimates and assumptions are incorrect,  our expenses could be misstated.  Cost
of operations,  interest expense, general and administrative expense, as well as
television,  yellow page,  and other  advertising  expenditures  are expensed as
incurred.  Accordingly,  the amounts  incurred  in an interim  period may not be
indicative of the amounts to be incurred in a full year.

                                       35

<PAGE>

RESULTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2005:

         Net income for the three  months  ended March 31, 2005 was  $96,411,000
compared to $69,067,000 for the same period in 2004, representing an increase of
$27,344,000.  This increase is primarily due to improved  operating results from
our  self-storage  facilities,  an increase in equity in earnings of real estate
entities,   a  gain  on  sale  of  assets  formerly  used  in  the  discontinued
containerized  storage facilities and a decrease in income allocated to minority
interests.  Equity in earnings of real estate entities increased  primarily as a
result of our $1,265,000 pro rata share of PS Business  Park's ("PSB") gain from
the sale of real estate recorded in the quarter ended March 31, 2005.

         Minority  interest in income  declined by  approximately  $10.0 million
primarily due to a reduction in redemption and  restructuring  costs  associated
with preferred  partnership  units.  We allocated  income to minority  interests
pursuant to Emerging  Issues Task Force Topic D-42 ("EITF Topic D-42")  totaling
$874,000  and  $2,063,000  for the three  months  ended March 31, 2005 and 2004,
respectively.  In  addition,  we allocated  $8.0  million to preferred  minority
interests  in the  quarter  ended  March  31,  2004  as a  result  of a  special
distribution associated with a restructuring.

         Net income allocable to our common  shareholders  (after allocating net
income to our preferred and equity  shareholders)  was  $48,719,000 or $0.38 per
common  share on a diluted  basis  for the three  months  ended  March 31,  2005
compared to  $21,927,000  or $0.17 per common  share on a diluted  basis for the
same period in 2004,  representing  an increase of $0.21 per common  share.  The
increases in net income allocable to common shareholders and earnings per common
diluted share are due primarily to the impact of the factors described above.

         For the three  months  ended  March 31,  2005 and  2004,  we  allocated
$40,413,000  and $38,042,000 of our net income,  respectively,  to our preferred
shareholders based on distributions paid. We also recorded allocations of income
to our preferred shareholders with respect to the application of EITF Topic D-42
totaling  $1,904,000  (or $0.01 per common share) and  $3,723,000  (or $0.03 per
share) for the three months ended March 31, 2005 and 2004, respectively.

         Weighted  average  diluted shares  increased from  128,387,000  for the
three  months  ended March 31, 2004 to  129,175,000  for the three  months ended
March 31, 2005 due primarily to the exercise of employee stock options.

REAL ESTATE OPERATIONS

         SELF-STORAGE  OPERATIONS:  Our  self-storage  operations are by far the
largest component of our operations, representing approximately 93% of our total
revenues  generated  for the three months  ended March 31, 2005.  As a result of
acquisitions  and  development  of  self-storage  facilities,   year  over  year
comparisons as presented on the  consolidated  statements of income with respect
to our self-storage operations are not meaningful.

         To enhance year over year comparisons,  the following table summarizes,
and the  ensuing  discussion  describes,  the  operating  results  of (i)  1,269
self-storage  facilities  that are  reflected in the  financial  statements on a
stabilized basis since January 1, 2003 (the "Same Store" facilities,  previously
referred to as the "Consistent Group" facilities),  (ii) 51 facilities that were
acquired  in  2004  and  the  first  three  months  of  2005  (  the   "Acquired
Facilities"),  (iii) 48 facilities  that were owned prior to January 1, 2003 but
were not  stabilized  due primarily to  expansions in their net rentable  square
footage (the "Expansion Facilities") and (iv) 65 newly-developed facilities that
were opened after January 1, 2001 (the "Developed Facilities"):

                                       36

<PAGE>

<TABLE>
<CAPTION>

    Self - storage operations summary:             Three Months Ended March 31,
    ----------------------------------        --------------------------------------
                                                                         Percentage
                                                  2005        2004         Changes
                                              ------------  ---------   ------------
                                                    (Dollar amounts in thousands)
 Revenues (a):
<S>                                            <C>          <C>              <C>
    Same Store Facilities (b)...........       $ 198,006    $ 188,779        4.9%
    Acquired Facilities (c).............            7,496           -           -
    Expansion Facilities (d)............            9,147       8,444        8.3%
    Developed Facilities (e)............           12,945       8,822       46.7%
                                              ------------  ----------  ------------
      Total rental income...............          227,594     206,045       10.5%
                                              ------------  ----------  ------------
 Cost of operations:
    Same Store Facilities...............           69,753      68,004        2.6%
    Acquired Facilities.................            3,428           -           -
    Expansion Facilities................            3,455       2,909       18.8%
    Developed Facilities................            5,126       4,649       10.3%
                                              ------------  ----------  ------------
    Total cost of operations............           81,762      75,562        8.2%
                                              ------------  ----------  ------------
 Net operating income (before depreciation):
    Same Store Facilities...............          128,253     120,775        6.2%
    Acquired Facilities.................            4,068           -           -
    Expansion Facilities................            5,692       5,535        2.8%
    Developed Facilities................            7,819       4,173       87.4%
                                              ------------  ----------  ------------
    Total net operating income..........          145,832     130,483       11.8%
                                              ------------  ----------  ------------
  Depreciation and amortization.........          (46,235)    (44,747)       3.3%
                                              ------------  ----------  ------------
    Operating Income....................       $  99,597    $  85,736       16.2%
                                              ============  ==========  ============
 Number of self-storage facilities (at end
 of period):.............................           1,433       1,377       4.1%

 Net rentable square feet (at end of period
 - in thousands):........................          87,425       83,285       5.0%

</TABLE>

(a)    Revenue  includes  late  charges  and  administrative  fees and is net of
       promotional discounts given. Rental income does not include retail sales,
       truck  rental  income  or  tenant  insurance  revenues  generated  at the
       facilities.

(b)    The Same Store Facilities include 1,269 facilities  containing 73,913,000
       net  rentable  square feet that have been owned prior to January 1, 2003,
       and operated at a mature,  stabilized  occupancy  level since  January 1,
       2003.

(c)    The Acquired  Facilities include 51 facilities  containing  3,500,000 net
       rentable  square feet that were acquired  after January 1, 2003, and were
       substantially  all  mature,  stabilized  facilities  at the time of their
       acquisition.

(d)    The Expansion  Facilities include 48 facilities  containing 4,132,000 net
       rentable  square feet of  self-storage  space and 611,000  square feet of
       containerized storage space. These facilities were owned since January 1,
       2003,  however,  operating  results  are not  comparable  throughout  the
       periods  presented  due  primarily  to  expansions  in their net rentable
       square feet or their  conversion into Combination  Facilities  (described
       below).  Since  January 1, 2003, we completed  construction  on expansion
       projects to these facilities with a total cost of $34.4 million.

(e)    The Developed  Facilities include 65 facilities  containing 4,852,000 net
       rentable  square feet of  self-storage  space and  417,000  net  rentable
       square  feet  of  industrial   space  initially   developed  for  use  in
       containerized   storage  activities  (see  "Containerized   Storage"  and
       "Discontinued  Operations").  These  facilities were developed and opened
       since January 1, 2001 at a total cost of $507.9 million.

Self-Storage Operations - Same Store Facilities

         We  increased  the  number of  facilities  included  in the Same  Store
Facilities from 1,194 facilities at December 31, 2004 (which were referred to as
the  "Consistent  Group"  facilities  in our 2004 Form  10-Q's and Form 10-K) to
1,269  facilities.  The increase in the Same Store pool of  facilities is due to
the inclusion of 75  facilities  which were  previously  classified as Acquired,
Developed,  or Expansion  facilities.  These facilities are included in the Same
Store Facilities because they are all stabilized and owned since January 1, 2003
and will therefore provide meaningful comparative data for 2003, 2004, and 2005.

                                       37
<PAGE>

         As a result of the change in the Same Store  Facilities,  the  relative
weighting of markets has changed.  Accordingly,  comparisons  should not be made
between  information  presented  in  2004  reports  for  the  1,194  Same  Store
Facilities (previously referred to as the "Consistent Group" facilities) and the
current 1,269 Same Store  Facilities in order to identify trends in occupancies,
realized rents per square foot, or operating results.

         The Same Store Facilities contain approximately 73,913,000 net rentable
square feet, representing approximately 85% of the aggregate net rentable square
feet of our self-storage portfolio. Revenues and operating expenses with respect
to this group of properties are set forth in the above  Self-Storage  Operations
table under the caption, "Same Store Facilities." The following table sets forth
additional operating data with respect to the Same Store Facilities:

<TABLE>
<CAPTION>

     SAME STORE FACILITIES                                     Three Months Ended March 31,
     ---------------------                                ---------------------------------------
                                                                                      Percentage
                                                             2005           2004         Change
                                                          -------------  ----------- ------------
                                                           (Amounts in thousands except weighted
                                                                      average amounts)
     Revenues:
<S>                                                       <C>            <C>               <C>
       Rental income, net of discounts................    $  189,507     $  180,610        4.9%
       Late charges and administrative fees collected.         8,499          8,169        4.0%
                                                          -------------  ----------- ------------
       Total revenues.................................       198,006        188,779        4.9%

     Cost of operations:
       Property taxes.................................        19,792         19,187        3.2%
       Payroll expense................................        21,144         20,663        2.3%
       Advertising and promotion......................         5,844          5,568        5.0%
       Utilities......................................         4,500          4,073       10.5%
       Repairs and maintenance........................         6,686          6,049       10.5%
       Telephone reservation center...................         1,752          2,760      (36.5)%
       Property insurance.............................         2,012          2,339      (14.0)%
       Other cost of managing facilities..............         8,023          7,365        8.9%
                                                          -------------  ----------- ------------
       Total cost of operations.......................        69,753         68,004        2.6%
                                                          -------------  ----------- ------------
     Net operating income before depreciation.........       128,253        120,775        6.2%
     Depreciation.....................................       (38,623)       (39,364)       1.9%
                                                          -------------  ----------- ------------
     Operating income.................................    $   89,630     $   81,411       10.1%
                                                          =============  =========== ============
     Gross margin (before depreciation)...............        64.8%          64.0%         1.3%

     Weighted average for the period:
        Square foot occupancy (a).....................        89.9%          89.7%         0.2%
        Realized annual rent per occupied square foot
          (b).........................................    $   11.41      $   10.90         4.7%
        REVPAF (c)....................................    $   10.26      $    9.77         5.0%
      Weighted average at March 31:
        Square foot occupancy.........................        89.9%          90.1%        (0.2)%
        In place annual rent per occupied square foot
           (d)........................................    $   12.37      $   12.01        3.0%
     Total net rentable square feet ..................       73,913         73,913           -

</TABLE>

(a)    Square foot occupancies  represent weighted average occupancy levels over
       the entire period.

(b)    Realized  annual  rent per  occupied  square foot is computed by dividing
       annualized  rental  income,  net of  discounts,  by the weighted  average
       occupied  square  footage for the period.  Realized rents per square foot
       takes into consideration  promotional  discounts,  bad debt costs, credit
       card fees and other costs which reduce rental income from the contractual
       amounts due. Realized rents per occupied square foot exclude late charges
       and administrative fees collected, and it is presented because we believe
       realized  rents per occupied  square foot is an important  measure of our
       operations.

(c)    Annualized rental income per available square foot ("REVPAF")  represents
       annualized  rental income,  net of discounts,  divided by total available
       net rentable square feet. REVPAF excludes late charges and administrative
       fees  collected.  REVPAF is presented  because we believe it is useful in
       evaluating our operations.

(d)    In place  annual  rent per  occupied  square foot  represents  annualized
       contractual  rents  per  occupied  square  foot  without  reductions  for
       promotional discounts and excludes late charges and administrative fees.

                                       38

<PAGE>

During the first quarter of 2005, net operating  income before  depreciation for
the Same Store Facilities increased 6.2% as compared to the same period in 2004,
due to the following:

o        REVPAF  increased  5.0% from $9.77 per square foot in the first quarter
         of 2004 to $10.26 in the same  period  in 2005.  This was  attributable
         primarily  to a 4.7%  increase  in realized  annual  rent per  occupied
         square foot and a 0.2% increase in average occupancy.

o        The impact of the increase in revenues was  partially  offset by a 2.6%
         increase in operating expenses.  This increase in cost of operations is
         primarily due to increases in most  categories  of operating  expenses,
         with the  exception of the  Telephone  Reservation  Center and Property
         Insurance, which declined.

Operating  income for the Same Store  Facilities  increased  10.1% for the three
months  ended March 31, 2005 as compared to the same period in 2004,  due to the
factors noted above with respect to net operating income before depreciation, as
well as a reduction in depreciation expense with respect to capital expenditures
due to increases in capital expenditures  becoming fully depreciated relative to
new capital expenditures coming on-line.

ANALYSIS OF REVENUE TRENDS

         We experience  minor seasonal  fluctuations in the occupancy  levels of
self-storage  facilities with occupancies  generally higher in the summer months
than in the winter  months.  We believe that these  fluctuations  result in part
from  increased  moving  activity  during the summer.  We also  believe that our
occupancy  levels  with  respect to the Same Store  facilities  have become more
stabilized and therefore further  year-over-year  gains in occupancy levels will
be difficult to generate.

         Our growth in rental income will depend on various  factors,  including
our ability to maintain high occupancy levels,  increase rental rates charged to
both new and  existing  customers,  and to  reduce  the  amount  of  promotional
discounts  given to new tenants.  We believe that future growth in rental income
will  come  primarily  from  increases  in  average  rental  rates  and  reduced
promotional discounts rather than year-over-year increases in occupancy levels.

         Our  increase in expenses  for the three months ended March 31, 2005 as
compared  to the same  period  in 2004 was below  our  expectations  and what we
expect for the year.  The  decrease in telephone  reservation  center costs will
decline on a quarter-over-quarter basis as the year progresses.

         Property payroll also came in lower than anticipated,  in part due to a
reduction in workers  compensation  costs. We have bolstered our safety programs
over the past two years and improved our workers  compensation claims management
skills.  These  efforts are  starting to bear fruit.  While we are hopeful  that
current trends, which are very positive, will continue, we are not certain as to
when they will be fully reflected in our operating results.

         Our advertising costs will remain volatile during the remainder of 2005
and were up about 5% during the three months ended March 31, 2005 as compared to
the same period in 2004.  During the first  quarter of 2005, we dropped 10 basis
points in unit  occupancy,  as  compared  to the same  period  in 2004,  when we
improved by 40 basis points in unit occupancy.  This was partially  attributable
to  experimental  programs  designed  to  improve  the  characteristics  of  new
customers.  While we  continue to  experiment,  in April,  we utilized  our more
traditional  programs  and  generated  a higher  level of gross  move ins and an
increase in net move ins.

         There can be no assurance that we will achieve our goal of increases in
average rental rates, while sustaining our occupancy levels.

                                       39

<PAGE>

EXPENSE ANALYSIS

         Total cost of operations for the Same Store  facilities  increased 2.6%
in the first  quarter  of 2005 as  compared  to the same  period  in 2004.  This
increase is due principally to higher property tax and payroll  expense,  offset
partially  by  decreased  telephone   reservation  center  expenses.  We  expect
operating  expenses  for the  remainder  of the year ended  December 31, 2005 to
increase  at a rate  higher  than the level of growth  experienced  in the first
quarter of 2005.

The following table summarizes selected financial data with respect to the Same
Store Facilities:

<TABLE>
<CAPTION>

                                                Three Months Ended
                     -------------------------------------------------------------------------
                       March 31,          June 30,         September 30,       December 31,         Full Year
                     ---------------   ---------------     ---------------   -----------------     --------------
                                      (Amounts in thousands, except for per square foot amounts)
Total rental income:
<C>                   <C>                <C>                 <C>                 <C>               <C>
2005............      $   198,006
2004............      $   188,779        $   194,023         $  198,864          $  198,080        $   779,746

Total cost of operations:
2005............      $    69,753
2004............      $    68,004        $    66,721         $   66,196          $   67,734        $   268,655

Media advertising expense:
2005............      $     3,525
2004............      $     3,293        $     1,959         $    1,989          $    3,061        $    10,302

REVPAF:
2005............      $    10.26
2004............      $     9.77         $    10.06         $    10.32          $    10.27         $    10.11

Weighted average realized annual
 rent per occupied square foot for the period:
2005............      $    11.41
2004............      $    10.90         $    11.00         $    11.23          $    11.31         $    11.10

Weighted  average   occupancy  levels
for the period:
2005............          89.9%
2004............          89.7%              91.5%               91.9%               90.8%              91.0%

Weighted average occupancy at April 30:
2005............                              91.4%
2004............                              91.4%

Media advertising expense in April:
2005............                          $   1,483
2004............                          $     926

</TABLE>

                                       40

<PAGE>

ANALYSIS OF REGIONAL TRENDS

         The following table sets forth regional trends in our Same Store
Facilities:


            Same Store Facilities' Operating Trends by Region:
                                               Three months ended March 31,
                                                                      Percentage
                                              2005          2004        Change
                                            -----------  ----------  -----------
                                               (Dollar amounts in thousands)
Rental income:
   Southern California  (126 facilities)..  $   32,495   $   30,329       7.1%
   Northern California  (131 facilities)..      24,505       23,846       2.8%
   Texas  (151 facilities)................      17,777       17,518       1.5%
   Florida  (126 facilities)..............      19,110       17,284      10.6%
   Illinois  (88 facilities)..............      14,517       13,955       4.0%
   Georgia  (58 facilities)...............       6,693        6,218       7.6%
   All other states  (589 facilities).....      82,909       79,629       4.1%
                                            -----------  ----------  -----------
Total rental income.......................     198,006      188,779       4.9%
                                            -----------  ----------  -----------
Cost of operations:
   Southern California....................       7,602        7,393       2.8%
   Northern California....................       6,540        6,344       3.1%
   Texas..................................       8,254        8,219       0.4%
   Florida................................       6,708        6,794      (1.3)%
   Illinois...............................       6,775        6,951      (2.5)%
   Georgia................................       2,406        2,214       8.7%
   All other states.......................      31,468       30,089       4.6%
                                            -----------  ----------  -----------
Total cost of operations..................      69,753       68,004       2.6%
                                            -----------  ----------  -----------
Net operating income (before depreciation):
   Southern California....................      24,893       22,936       8.5%
   Northern California....................      17,965       17,502       2.6%
   Texas..................................       9,523        9,299       2.4%
   Florida................................      12,402       10,490      18.2%
   Illinois...............................       7,742        7,004      10.5%
   Georgia................................       4,287        4,004       7.1%
   All other states.......................      51,441       49,540       3.8%
                                            -----------  ----------  -----------
Total net operating income................  $  128,253   $  120,775       6.2%
                                            -----------  ----------  -----------
Weighted average square foot occupancy:
   Southern California....................      92.5%        90.2%        2.5%
   Northern California....................      89.4%        88.5%        1.0%
   Texas..................................      88.9%        89.6%       (0.8)%
   Florida................................      91.9%        90.6%        1.4%
   Illinois...............................      87.8%        88.0%       (0.2)%
   Georgia................................      91.1%        90.0%        1.2%
   All other states.......................      89.5%        89.9%       (0.4)%
                                            -----------  ----------  -----------
 Total weighted average occupancy.........      89.9%        89.7%        0.2%
                                            -----------  ----------  -----------

                                       41

<PAGE>

Same Store Facilities' Operating Trends by Region: (Continued)
                                             -----------------------------------
                                                  Three Months Ended March 31,
                                                                      Percentage
                                                2005          2004        Change
                                            -----------  ----------  -----------
REVPAF:
   Southern California...................       $15.89       $14.84      7.1%
   Northern California...................        13.29        12.96      2.5%
   Texas.................................         7.24         7.12      1.7%
   Florida...............................        10.16         9.13     11.3%
   Illinois..............................        10.36        10.00      3.6%
   Georgia...............................         7.57         7.02      7.8%
   All other states......................         9.40         9.03      4.1%
                                            -----------  ----------  -----------
Total REVPAF:............................       $10.26        $9.77      5.0%
                                            -----------  ----------  -----------
Realized annual rent per occupied square foot:
   Southern California...................       $17.18       $16.46      4.4%
   Northern California...................        14.86        14.65      1.4%
   Texas.................................         8.15         7.95      2.5%
   Florida...............................        11.05        10.07      9.7%
   Illinois..............................        11.80        11.36      3.9%
   Georgia...............................         8.31         7.80      6.5%
   All other states......................        10.51        10.04      4.7%
                                            -----------  ----------  -----------
Total realized annual rent per occupied
  square foot:...........................       $11.41       $10.90      4.7%
                                            -----------  ----------  -----------

                                       42

<PAGE>

Self-Storage Operations - Acquired Facilities

     The  "Acquired  Facilities,"  at  March  31,  2005,  are  comprised  of 51
self-storage facilities containing 3,500,000 net rentable square feet that were
acquired in 2004 and the first quarter of 2005. The following table  summarizes
operating data with respect to these facilities:

ACQUIRED FACILITIES
-------------------
<TABLE>
<CAPTION>

                                                             Three Months
                                                                 Ended
                                                            March 31, 2005
                                                            --------------
                                                            (Dollar amounts
                                                             in thousands)
       Rental income:
<S>                                                         <C>
           Self-storage facilities acquired in 2005....     $        500
           Self-storage facilities acquired in 2004....            6,996
                                                                -----------
             Total rental income.......................            7,496
                                                                -----------
        Cost of operations:
           Self-storage facilities acquired in 2005 ...              277
           Self-storage facilities acquired in 2004 ...            3,151
                                                                -----------
             Total cost of operations..................            3,428
                                                                -----------
        Net operating income (loss) before depreciation:
           Self-storage facilities acquired in 2005 ...              223
           Self-storage facilities acquired in 2004 ...            3,845
                                                                -----------
             Net operating income......................            4,068
         Depreciation..................................           (1,872)
                                                                -----------
           Operating Income............................     $      2,196
                                                                ===========

        Weighted average square foot occupancy during the
        period:
           Self-storage facilities acquired in 2005....             76.9%
           Self-storage facilities acquired in 2004 ...             82.9%
                                                                -----------
                                                                    82.2%
                                                               ===========

        Number of self-storage facilities (at end of
        period)........................................                51
        Net rentable square feet (in thousands, at end of
           period).....................................             3,500
        Cumulative acquisition cost (at end of period).       $   283,238

</TABLE>


     During  2004,  we  acquired  45   facilities  at  an  aggregate   cost  of
approximately  $259,487,000,  comprised  of three  facilities  acquired  for an
aggregate  of  $17.8  million,  as  well  as  the  following  larger  portfolio
acquisitions:

     o    Twenty Six facilities acquired in October 2004 from a third party for
          an aggregate cost of approximately  $102.4 million.  This acquisition
          increased our presence in the Minneapolis and Milwaukee markets,  and
          will allow us to  cost-effectively  introduce  media  advertising  in
          these  markets,  improve  our  yellow  page ad  placement,  and drive
          operational  efficiency.  In addition,  the average  rental rates and
          average occupancies of these properties,  prior to acquisition,  were
          lower  than  comparable  properties  that we  currently  own in these
          markets.

     o    Six facilities  acquired in October 2004 in Dallas from a third party
          for an aggregate of approximately $19.8 million. We believe that this
          acquisition  improved our presence in  submarkets  of Dallas where we
          were underrepresented.

     o    Ten  facilities  acquired in November 2004 in the Miami market for an
          aggregate of $119.5  million.  We believe that these  properties  are
          well-built and located in highly  desirable  submarkets in Miami. All
          of these facilities were built between 1997 and 2003.

                                      43
<PAGE>

     In January  2005,  we acquired a total of five  facilities in New York and
one facility in Illinois for an aggregate of $23,751,000 in cash.

     Revenues  and  expenses  for the 2005  acquisitions,  in the table  above,
represent the results of these  acquisitions  from the  respective  acquisition
dates through March 31, 2005.

     In addition  to the  facilities  acquired  in the quarter  ended March 31,
2005, we acquired four additional  facilities for  approximately  $36.7 million
with  322,000 net rentable  square feet between  April 1, 2005 and May 5, 2005.
Also,  at  May 6,  2005,  we are  under  contract  to  acquire  six  additional
facilities  (total  approximate  net  rentable  square  feet of  377,000) at an
aggregate cost of  approximately  $30.6  million.  These  acquisitions  will be
funded  entirely  by us.  Each of these  contracts  is subject  to  significant
contingencies,  and there is no assurance that any of these  facilities will be
acquired.

Self-Storage Operations - Expansion Facilities

     As a result primarily of expansions to existing  self-storage  facilities,
the net rentable space at certain of our  self-storage  facilities'  operations
has  changed.  Accordingly,  the  operating  results  are not  comparable.  The
operating  results  for these  facilities  are  presented  in the  Self-Storage
Operations table above under the caption,  "Expansion Facilities." Depreciation
expense with respect to these facilities  amounted to $2,134,000 and $2,080,000
for the three months ended March 31, 2005 and 2004, respectively.

     These 48 facilities  contain  approximately  4,132,000 net rentable square
feet of  self-storage  space at March 31,  2005,  and  611,000  square  feet of
industrial  space  developed  for  containerized   storage   activities  -  see
"Containerized   Storage"  and   "Discontinued   Operations".   The   aggregate
construction  costs to complete these expansions  totaled  approximately  $34.4
million since January 1, 2003.

     We expect that the Expansion Facilities will continue to provide growth to
our earnings into 2005 as we continue to fill the newly added vacant space. The
weighted  average  occupancy level of these  facilities was 81.5% and 83.1% for
the three months ended March 31, 2005 and 2004,  respectively.  The decrease in
average occupancy levels is partially attributable to the increase in available
square footage resulting from expansion of these facilities.

     We have 37 projects to repackage and expand our existing facilities,  with
an aggregate  estimated cost of $120.7 million in our  development  pipeline at
March 31, 2005, which will increase our  self-storage  space by an aggregate of
2,294,000 net rentable square feet.  These activities will result in short-term
dilution to  earnings.  However,  we believe  that  expansion  of our  existing
self-storage  facilities  in  markets  that  have  unmet  storage  demand,  and
improving our existing facilities' competitive position through enhancing their
visual and  structural  appeal,  provide  an  important  means to  improve  the
Company's  earnings.  There can be no assurance  about the future level of such
expansion  and  enhancement  opportunities,  and these  projects are subject to
contingencies.

                                      44
<PAGE>

Self-Storage Operations - Developed Facilities

     We have 48 newly developed self-storage facilities, and 17 facilities that
were developed to contain both  self-storage and  containerized  storage at the
same location  ("Combination  Facilities"),  that have not been  operating at a
stabilized  level of operations  since January 1, 2003.  These newly  developed
facilities  have  an  aggregate  of  4,852,000  net  rentable  square  feet  of
self-storage  space,  and 417,000 net rentable square feet of industrial  space
developed  originally  for  our  containerized   storage  business.   Aggregate
development  cost for these 65 facilities was  approximately  $507.9 million at
March 31,  2005.  The  operating  results of the  self-storage  facilities  and
Combination Facilities are reflected in the Self-Storage Operations table under
the caption,  "Developed  Facilities." These facilities are not included in the
"Same Store" portfolio because their operations have not been stabilized.

     The  following  table  sets  forth  the  operating  results  and  selected
operating data with respect to the Developed Facilities:

<TABLE>
<CAPTION>


DEVELOPED FACILITIES
                                                        Three Months Ended March 31,
                                                       2005         2004        Change
                                                    -----------  ------------ -----------
                                                        (Dollar amounts in thousands)
Rental income:
<S>                                                 <C>           <C>         <C>
   Self-storage facilities opened in 2005......     $        2    $       -   $        2
   Self-storage facilities opened in 2004......          1,007             9         998
   Self-storage facilities opened in 2003......          2,897         1,399       1,498
   Self-storage facilities opened in 2002 and
   2001........................................          5,152         4,237         915
   Combination facilities......................          3,887         3,177         710
                                                    -----------  ------------ -----------
     Total rental income.......................         12,945         8,822       4,123
                                                    -----------  ------------ -----------
Cost of operations:
   Self-storage facilities opened in 2005......             23             -          23
   Self-storage facilities opened in 2004......            519            93         426
   Self-storage facilities opened in 2003......            989         1,027         (38)
   Self-storage facilities opened in 2002 and
   2001........................................          1,988         2,104        (116)
   Combination facilities......................          1,607         1,425         182
                                                    -----------  ------------ -----------
     Total cost of operations..................          5,126         4,649         477
                                                    -----------  ------------ -----------
Net operating income (loss) before depreciation:
   Self-storage facilities opened in 2005......            (21)            -         (21)
   Self-storage facilities opened in 2004......            488           (84)        572
   Self-storage facilities opened in 2003......          1,908           372       1,536
   Self-storage facilities opened in 2002 and
   2001........................................          3,164         2,133       1,031
   Combination facilities......................          2,280         1,752         528
                                                    -----------  ------------ -----------
   Net operating income........................          7,819         4,173       3,646
 Depreciation..................................         (3,606)       (3,303)       (303)
                                                    -----------  ------------ -----------
   Operating income............................     $    4,213    $     870  $     3,343
                                                    ===========  ============ ===========

Weighted average square foot occupancy during the period:
   Self-storage facilities opened in 2005......           8.7%          -           -
   Self-storage facilities opened in 2004......          59.1%          7.3%      709.6%
   Self-storage facilities opened in 2003......          83.1%         51.9%       60.1%
   Self-storage facilities opened in 2002 and
   2001........................................          91.2%         87.9%        3.8%
   Combination facilities......................          73.4%         78.6%       (6.6)%
                                                    -----------  ------------ -----------
                                                         80.1%         73.8%        8.5%
                                                    ===========  ============ ===========
</TABLE>

                                      45
<PAGE>

DEVELOPED FACILITIES (Continued)
<TABLE>
<CAPTION>
                                                        Three Months Ended March 31,
                                                       2005         2004        Change
                                                    -----------  ------------ -----------
                                                        (Dollar amounts in thousands)

Square Footage:
<S>                                                       <C>           <C>          <C>
   Self-storage facilities opened in 2005......           51            -            51
   Self-storage facilities opened in 2004......          507          237           270
   Self-storage facilities opened in 2003......          994          994             -
   Self-storage facilities opened in 2002 and 2001     1,739        1,739             -
   Combination facilities - industrial space (a)         417          607          (190)
   Combination facilities - self-storage space (a)     1,561        1,248           313
                                                    -----------  ------------ -----------
                                                       5,269        4,825           444
                                                    ===========  ============ ===========
Number of facilities:
   Self-storage facilities opened in 2005......            1            -             1
   Self-storage facilities opened in 2004......            7            3             4
   Self-storage facilities opened in 2003......           14           14             -
   Self-storage facilities opened in 2002 and 2001        26           26             -
   Combination Facilities  ....................           17           17             -
                                                    -----------  ------------ -----------
                                                          65           60             5
                                                    ===========  ============ ===========

Cumulative Development Cost:
   Self-storage facilities opened in 2005......     $    4,252    $       -  $   4,252
   Self-storage facilities opened in 2004......         61,558        27,395    34,163
   Self-storage facilities opened in 2003......        107,452       107,452         -
   Self-storage facilities opened in 2002 and
   2001........................................        163,926       160,792     3,134
   Combination Facilities (a) .................        170,745       161,973     8,772
                                                    -----------  ------------ -----------
                                                    $  507,933    $ 457,612  $  50,321
                                                    ===========  ============ ===========
</TABLE>


     (a)  The  industrial  space  was  originally  developed  for  use  by  our
          containerized  storage  business.  During 2003,  2004,  and the first
          three months of 2005, we have  converted  industrial  space no longer
          used  by  the  discontinued   containerized   storage  business  into
          traditional self-storage space, at an aggregate cost of $16,568,000.

     Unlike many other forms of real  estate,  we are unable to  pre-lease  our
newly developed  facilities due to the nature of our tenants.  Accordingly,  at
the time a newly developed facility first opens for operations, the facility is
entirely vacant, generating no rental income.  Historical, we estimated that on
average it takes approximately 36 months for a newly developed facility to fill
up and reach a targeted occupancy level of approximately 90%.

     We believe that our newly  developed  facilities  are affected by the same
operating  trends  noted with  respect to our Same Store  facilities.  However,
because  such  facilities  have  to  attract  more  new  tenants  during  their
stabilization  period,  they tend to offer lower rates,  and move-in  discounts
have a more pronounced effect upon realized rents because these facilities tend
to have a higher proportion of newer tenants.

     Property operating expenses are substantially fixed,  consisting primarily
of payroll,  property taxes, utilities, and marketing costs. The rental revenue
of a newly developed  facility will generally not cover its property  operating
expenses  (excluding  depreciation) until the facility has reached an occupancy
level of approximately 30% to 35%. However, at that occupancy level, the rental
revenues  from the  facility  are still  not  sufficient  to cover the  related
depreciation  expense  and  cost of  capital  with  respect  to the  facility's
development  cost.  During  construction  of  the  self-storage   facility,  we
capitalize  interest  costs  and  include  such  cost as  part  of the  overall
development  cost of the facility.  Once the facility is opened for operations,
interest is no longer capitalized.

     The  annualized  yield on cost for these  facilities for the quarter ended
March 31, 2005,  based upon net  operating  income prior to  depreciation,  was
approximately  6.2%,  which is lower than our ultimate yield  expectations.  We
expect  these  yields  to  improve  as these  facilities  continue  to fill up.
Properties  that were developed prior to December 31, 2003, and the Combination
Facilities,  have contributed to our earnings growth, with net operating income
before depreciation  increasing  $3,095,000 in the quarter ended March 31, 2005
as  compared to the same  quarter in 2004.  This  growth was  primarily  due to
higher  occupancy levels in the quarter ended March 31, 2005 as compared to the
same period in 2004, and we expect further growth from these facilities as they
approach stabilized occupancy levels of approximately 90%.

                                      46
<PAGE>

     With  respect  to  our  Combination  Facilities,   we  have  been  steadily
converting these facilities into entirely self-storage  facilities by converting
the industrial space  previously used by our  containerized  storage  operations
into  self-storage  space.  As of  March  31,  2005,  ten of the 17  Combination
Facilities have been converted into entirely  self-storage.  The remaining seven
facilities  are  expected  to be  converted  over the next two  years.  Weighted
average square foot occupancy  levels for the  Combination  Facilities was 73.4%
for the quarter ended March 31, 2005 as compared to 78.6% for the same period in
2004, the decrease due to the addition of 313,000 additional net rentable square
feet.

     We continue to develop facilities, despite the short-term earnings dilution
experienced  during the fill-up  period,  because we believe  that the  ultimate
returns on developed facilities are favorable.  In addition,  we believe that it
is advantageous for us to continue to expand our asset base and benefit from the
resultant  increased  critical  mass,  with  facilities  that will  improve  our
portfolio's overall average construction and location quality.

     We expect that over at least the next 24 months,  the Developed  Facilities
will continue to have a negative  impact to our earnings  when also  considering
financing  costs  with  respect to the  invested  capital.  Furthermore,  the 45
expansion and newly developed facilities in our development pipeline,  described
in "Liquidity and Capital Resources - Acquisition and Development of Facilities"
that will be opened for  operation  over the next 24 months are also expected to
negatively  impact our earnings until they reach a stabilized  occupancy  level.
Our  earnings  will  continue  to be  negatively  impacted  by any future  newly
developed facilities until they reach a stabilized occupancy level.

     COMMERCIAL PROPERTY OPERATIONS:  Commercial property operations included in
our  consolidated  financial  statements  include  commercial space owned by the
Company and entities consolidated by the Company. We have a much larger interest
in commercial  properties  through our ownership  interest in PS Business  Parks
Inc. and its consolidated operating partnership (PS Business Parks, Inc. and its
consolidated  operating  partnership are hereinafter  referred to as "PSB"). Our
investment in PSB is accounted for using the equity  method of  accounting,  and
accordingly  our share of PSB's  earnings is reflected as "Equity in earnings of
real estate entities," see below.

     Our commercial  operations  are comprised of 1,040,000 net rentable  square
feet of commercial space operated at certain of the self-storage facilities, and
four stand-alone  commercial  facilities  having a total of 302,000 net rentable
square feet.

                                      47
<PAGE>

     The results of our commercial operations are provided in the table below:

Commercial Property Operations:
(excluding discontinued operations)

<TABLE>
<CAPTION>
                                               Three Months Ended March 31,
                                           ----------------------------------

                                              2005         2004       Change
                                            -----------  ----------- ---------

<S>                                         <C>          <C>         <C>
Rental income.........................      $   2,848    $   2,626   $    222
 Cost of operations...................          1,127        1,128         (1)
                                            -----------  ----------- ---------
   Net operating income...............          1,721        1,498        223

 Depreciation.........................            (579)        (560)      (19)
                                            -----------  ----------- ---------
   Operating income...................       $   1,142    $    938   $    204
                                            ===========  =========== =========
</TABLE>

     Our commercial property operations consist primarily of facilities that are
at a stabilized level of operations, and generally reflect the conditions of the
markets in which they operate.  We do not expect any  significant  growth in net
operating income from this segment of our business for the remainder of 2005.

         CONTAINERIZED STORAGE OPERATIONS:

     We have closed many of our containerized  storage facilities in 2002, 2003,
and 2004,  and have  refined our market and product  focus to twelve  facilities
located in eight densely populated markets with  above-average  rent and income.
The  operations  with respect to the  facilities  other than the twelve  ongoing
facilities are included in  "Discontinued  Operations" on our income  statement.
The  operations  of the twelve  remaining  facilities  are  included  in PSPUD's
continuing operations and are reflected on the table below:

<TABLE>
<CAPTION>

Containerized Storage:
(excluding discontinued operations)
                                               Three Months Ended March 31,
                                           ----------------------------------
                                            2005         2004         Change
                                            -----------  ----------- ---------
                                                (Amounts in thousands)
<S>                                        <C>         <C>         <C>
Rental and other income ............       $ 3,837     $  4,806    $   (969)
                                            -----------  ----------- ---------
Cost of operations:
    Direct operating costs..........         2,384        2,483         (99)
    Facility lease expense..........           358          291          67
                                            -----------  ----------- ---------
      Total cost of operations......         2,742        2,774         (32)
                                            -----------  ----------- ---------
Operating income prior to depreciation       1,095        2,032        (937)
   Depreciation expense (a).........        (1,162)      (1,126)        (36)
                                            -----------  ----------- ---------
Operating income....................       $   (67)     $   906    $   (973)
                                            ===========  =========== =========
</TABLE>

     (a)   Depreciation  expense  principally  relates to the  depreciation  of
           containers; however, depreciation expense for the three months ended
           March 31, 2005 includes $252,000,  related to real estate facilities
           compared to $257,000 for the same periods in 2004, respectively.

     Rental and other income  includes  monthly  rental charges to customers for
storage of the  containers,  service  fees  charged  for pickup and  delivery of
containers to customers'  homes and  businesses  and certain  non-core  services
which were eliminated,  such as handling and packing  customers' goods from city
to city.  Rental income decreased to $3,837,000 for the three months ended March
31, 2005 from  $4,806,000 for the same period in 2004,  primarily as a result of
the elimination of these non-core  services and a result of a decline in average
occupancy.   At  March  31,  2005,  there  were  approximately  20,300  occupied
containers in the continuing facilities.

                                      48
<PAGE>

     Direct  operating  costs  principally  includes  payroll,  equipment  lease
expense,  utilities and vehicle  expenses (fuel and insurance).  While the costs
associated with the eliminated  non-core services was reduced,  these reductions
were substantially offset by increased marketing expenditures,  primarily Yellow
Page advertising.

     There  can be no  assurance  as to the level of the  containerized  storage
business's   expansion,   level  of  gross   rentals,   level  of  move-outs  or
profitability.  We continue to evaluate the business operations,  and additional
facilities may be closed.

     TENANT  REINSURANCE  OPERATIONS:  Through a subsidiary  of the Company,  we
reinsure  policies against losses to goods stored by tenants in our self-storage
facilities.  The  tenant  reinsurance  operations  are  included  in the  income
statement under "Revenues - tenant reinsurance premiums" and "Cost of operations
- tenant reinsurance."  Revenues totaled $5,916,000 and $5,963,000 for the three
months  ended  March 31,  2005 and 2004,  respectively,  and cost of  operations
totaled $2,977,000 and $3,135,000, respectively. The tenant reinsurance business
earned net operating income of $2,939,000 and $2,828,000, respectively.

     Our tenant reinsurance revenues are dependent upon our occupancy level, the
level of move-in  activity,  the level of newly  moved in  tenants  that opt for
insurance,  and the time that such tenants  remain as insured  tenants.  For the
three  months  ended  March  31,  2005  and  2004,  approximately  33% and  36%,
respectively,  of  our  self-storage  tenant  base  had  such  policies.  Tenant
insurance expense is attributable primarily to the level of claims.

     We  have  outside  third-party  insurance  coverage  for  losses  from  any
individual  event that  exceeds a loss of $500,000,  to a limit of  $10,000,000.
Losses  below these  amounts are  accrued as cost of  operations  for the tenant
reinsurance operations.

     EQUITY IN EARNINGS OF REAL ESTATE ENTITIES: In addition to our ownership of
equity  interests  in PSB, we had general and limited  partnership  interests in
eight limited  partnerships at March 31, 2005. (PSB and the limited partnerships
are  collectively  referred  to as the  "Unconsolidated  Entities").  Due to our
limited  ownership  interest and limited  control of these  entities,  we do not
consolidate the accounts of these entities for financial reporting purposes.  We
account for such investments using the equity method.

     Equity in earnings of real estate entities for the three months ended March
31, 2005 and 2004 consists of our pro-rata share of the Unconsolidated  Entities
based upon our ownership interest for the period. The following table sets forth
the significant components of equity in earnings of real estate entities:

<TABLE>
<CAPTION>


                                                   Three Months Ended March 31,
                                                -----------------------------------
                                                  2005         2004        Change
                                                ----------  ----------   ----------
                                                      (Amounts in thousands)
Property operations:
<S>                                             <C>           <C>             <C>
  PSB                                           $17,214       $17,193         $21
  Acquisition Joint Venture..............            51             -          51
  Other investments (1)..................         1,683         1,684          (1)
                                                ----------  ----------   ----------
                                                 18,948        18,877          71
                                                ----------  ----------   ----------
Depreciation:
  PSB....................................        (8,253)       (7,881)       (372)
  Acquisition Joint Venture..............           (66)            -         (66)
  Other investments (1)..................          (366)         (394)         28
                                                ----------  ----------   ----------
                                                 (8,685)       (8,275)       (410)
                                                ----------  ----------   ----------
Other: (2)
  PSB (3)................................        (4,752)       (6,788)      2,036
  Other investments (1)..................           167           243         (76)
                                                ----------  ----------   ----------
                                                 (4,585)       (6,545)      1,960
                                                ----------  ----------   ----------

Total equity in earnings of real estate
entities..................................       $5,678        $4,057      $1,621
                                                ==========  ==========   ==========
</TABLE>
                                      49
<PAGE>

     (1)  Amounts  primarily reflect equity in earnings recorded for investments
          that have been held  consistently  throughout each of the three months
          ended March 31, 2005 and 2004.

     (2)  "Other"  reflects  our share of general  and  administrative  expense,
          interest   expense,   interest   income,   and   other   non-property;
          non-depreciation  related  operating  results of these  entities.  The
          amount of interest  expense  included  in "other" is $123,000  for the
          three  months   ended  March  31,  2005,   as  compared  to  $564,000,
          respectively, for the same periods in 2004.

     (3)  "Other" with respect to PSB also includes our pro-rata  share of gains
          on sale of real estate assets,  impairment charges relating to pending
          sales of real estate and the impact of PSB's  application of the SEC's
          clarification   of  EITF  Topic  D-42  on   redemptions  of  preferred
          securities.

     The increase in equity in earnings of real estate  entities is  principally
due to our $1,265,000 pro-rata share of PSB's gain on sale of real estate assets
recorded in the quarter  ended March 31, 2005, as compared to our share of PSB's
EITF D-42 charge amounting to $943,000 for the same period in 2004.

     Equity in  earnings of PSB  represents  our  pro-rata  share (an average of
approximately  44% for the three  months  ended  March 31, 2005 and 2004) of the
earnings of PSB.  Throughout  2004 and the first three months of 2005,  we owned
5,418,273 common shares and 7,305,355  operating  partnership units (units which
are convertible into common shares on a one-for-one  basis) in PSB. At March 31,
2005, PSB owned and operated 17.9 million net rentable square feet of commercial
space located in eight states.  PSB also manages  commercial  space owned by the
Company  and  affiliated  entities  at  March  31,  2005  pursuant  to  property
management agreements.

     Our future  equity  income from PSB will be dependent  entirely  upon PSB's
operating  results.  PSB's  filings and selected  financial  information  can be
accessed  through the  Securities and Exchange  Commission,  and on its website,
www.psbusinessparks.com.

     In  January  2004,  we entered  into a joint  venture  partnership  with an
institutional  investor  for the purpose of  acquiring  up to $125.0  million of
existing  self-storage  properties  in the United States from third parties (the
"Acquisition  Joint  Venture").  The  venture  is funded  entirely  with  equity
consisting of 30% from us and 70% from the institutional  investor. As described
more fully in Note 2 to the  Consolidated  Financial  Statements for the quarter
ended March 31, 2005,  our pro-rata share of earnings with respect to two of the
facilities acquired directly from third parties by the Acquisition Joint Venture
in 2004, at an aggregate cost of $9,086,000, are reflected in Equity in Earnings
in the table above. Our investment in the Acquisition Joint Venture with respect
to these two  facilities  was  approximately  $2,930,000.  Our future  equity in
earnings with respect to the  Acquisition  Joint Venture will be dependent  upon
the level of earnings generated by these two properties.

     The "Other  Investments" are comprised  primarily of our equity in earnings
from seven limited partnerships,  for which we held an approximately  consistent
level of equity  interest  throughout  2004 and the first three  months of 2005.
These limited  partnerships were formed by the Company during the 1980's. We are
the  general  partner in each  limited  partnership,  and  manage  each of these
facilities for a management fee that is included in "Interest and Other Income."
The limited partners  consist of numerous  individual  investors,  including the
Company,  which  throughout  the 1990's  acquired  units of limited  partnership
interests in these limited partnerships in various transactions.

     Our  future  earnings  with  respect  to the  "Other  investments"  will be
dependent  upon the operating  results of the 36  self-storage  facilities  that
these  entities  own. The  operating  characteristics  of these  facilities  are
similar to those of the Company's  self-storage  facilities,  and are subject to
the same operational  issues as the Consistent Group of self-storage  facilities
as discussed above. See Note 5 to the consolidated  financial statements for the
operating  results of these  entities  for the three months ended March 31, 2005
and 2004.

Other Income and Expense Items
-------------------------------

     INTEREST AND OTHER INCOME:  Interest and other income  includes (i) the net
operating results from our third party property management operations,  (ii) the
net operating  results from our merchandise sales and consumer truck rentals and
(iii) interest income principally from cash reserves.

                                      50
<PAGE>

     Interest and other income was  $3,555,000  for the three months ended March
31, 2005, respectively,  as compared to $1,357,000,  respectively,  for the same
periods in 2004. This increase is due to higher interest income on cash balances
due to higher average interest rates.

     As discussed  more fully in "Liquidity  and Capital  Resources"  below,  at
March 31, 2005, we had cash balances totaling  approximately $354 million, which
includes significant  proceeds from recent equity issuances.  These balances are
typically  invested in short-term  low-risk  securities that, during the quarter
ended March 31, 2005,  earned a nominal yield.  The future level of interest and
other income will be partially  dependent  upon the timing of our  investment of
these  unused  offering  proceeds  and the  level of  interest  earned  on these
short-term investments.

     DEPRECIATION AND  AMORTIZATION:  Depreciation and amortization  expense was
$47,976,000 for the three months ended March 31, 2005, respectively, as compared
to  $46,433,000  for the same period in 2004. The increase in  depreciation  and
amortization  for the three  months ended March 31, 2005 as compared to the same
period in 2004 is due primarily to increased  depreciation with respect to newly
developed  and  acquired   facilities,   offset  partially  by  a  reduction  in
depreciation with respect to maintenance capital expenditures.

     Included in depreciation expense with respect to our real estate facilities
was  $44,364,000  for the three months ended March 31,  2005,  respectively,  as
compared to $42,947,000 for the same period in 2004, respectively.  The increase
in depreciation and amortization  with respect to real estate facilities for the
three  months ended March 31, 2005 as compared to the same period in 2004 is due
primarily to an increase in  depreciation  with respect to newly  developed  and
acquired  facilities.  Depreciation  expense  with  respect to other  assets was
$1,961,000 for the three months ended March 31, 2005, respectively,  as compared
to $1,835,000 for the same period in 2004,  respectively.  Depreciation  expense
also includes $1,651,000 for each of the three months, respectively, ended March
31,  2005  and  2004,  relating  to  the  amortization  of  property  management
contracts.

     Depreciation  and  amortization  for the three  months ended March 31, 2005
with respect to developed and acquired real estate  facilities opened during the
first three months of 2005  amounted to  approximately  $123,000.  We expect the
quarterly depreciation and amortization expense with respect to these facilities
for quarters beginning with second quarter of 2005 will approximate $200,000.

     GENERAL  AND  ADMINISTRATIVE:   General  and  administrative   expense  was
$5,141,000  for the three months ended March 31, 2005, as compared to $5,884,000
for the same period in 2004,  representing a decrease of approximately $743,000.
General and administrative  expense principally  consists of state income taxes,
investor  relation expenses and corporate and executive  salaries.  In addition,
general and administrative  expense includes expenses that vary depending on the
Company's activity levels in certain areas, such as overhead associated with the
acquisition  and  development  of real estate  facilities,  employee  severance,
stock-based compensation and product research and development expenditures.

     The  decrease in general and  administrative  expense for the three  months
ended March 31, 2005 as compared to the same period in 2004 is primarily  due to
reduced employee  termination  costs, which amounted to $610,000 for the quarter
ended  March 31,  2004  ($181,000  for the same  period  in 2005),  as well as a
$450,000 reduction in estimated legal liabilities in the quarter ended March 31,
2005. These impacts were partially offset by an increase in restricted stock and
stock option expense of approximately $578,000 due to the granting of additional
restricted  stock units and stock  options.  Restricted  stock and stock  option
expense  amounted to  approximately  $1,231,000  for the quarter ended March 31,
2005,  and is expected to  approximate  that  quarterly  amount in the remaining
quarters of 2005 assuming no further  grants of restricted  stock units or stock
options.

     INTEREST  EXPENSE:  Interest  expense was  $1,663,000  and $100,000 for the
three months ended March 31, 2005 and 2004,  respectively.  Interest capitalized
during the three  months  ended March 31, 2005 was  $665,000,  respectively,  as
compared to  $1,125,000  for the same periods in 2004.  The increase in interest
expense is due to a reduction in capitalized  interest due to lower  development
balances, combined with higher interest expense associated with a) $94.7 million
in  debt  assumed,  at an  average  interest  rate  of  approximately  5.2%,  in
connection with property acquisitions in 2004, b) $16.1 million in debt to joint
venture partner incurred on December 31, 2004, and $19.2 million in similar debt
incurred in the quarter ended March 31, 2005, all at an average interest rate of
8.5%, as described more fully in Note 8 to the consolidated financial statements
for the quarter ended March 31, 2005. See also Note 7 for a schedule of our debt
balances, principal repayment requirements, and average interest rates.

                                      51
<PAGE>

     MINORITY  INTEREST IN INCOME:  Minority  interest in income  represents the
income  allocable to equity  interests in Consolidated  Entities,  which are not
owned by the Company. The following table summarizes minority interest in income
for the three months ended March 31, 2005 and 2004:

<TABLE>
<CAPTION>

                                                    Three Months Ended March 31,
                                                -------------------------------------
                                                  2005           2004          Change
                                                ------------  ------------  ------------
                                                       (Amounts in thousands)
Preferred partnership interests:
<S>                                              <C>           <C>          <C>
     Ongoing distributions (b)..........         $  5,375      $    6,554   $    (1,179)
     Special Distribution and EITF
      Topic D-42 (a)...................            10,063         (9,189)            874
Consolidated Development Joint Venture (c)          1,568             957            611
Convertible Partnership Units (d).......               90              40             50
Acquired minority interests (e) ........                -             497           (497)
Other minority interests (f)............            2,737           2,509            228
                                                ------------  ------------  ------------
    Total minority interests in income..        $  10,644      $   20,620     $   (9,976)
                                                ============  ============  ============
</TABLE>

(a)   As  described  more fully  below,  holders of $200 million of our Series N
      preferred  partnership  units  agreed to a  restructuring  which  included
      reducing  their  distribution  rate  from 9.5% to 6.4% in  exchange  for a
      special distribution of $8,000,000.  This special  distribution,  combined
      with  $2,063,000 in costs  incurred at the time the units were  originally
      issued that were charged  against income in accordance with the Securities
      and Exchange Commissions clarification of EITF Topic D-42, are included in
      minority  interest in income for the three months ended March 31, 2004, as
      are  $874,000 in such  original  issuance  cost with  respect to our first
      quarter of 2005 redemptions of preferred units.

(b)   The decrease in ongoing  distributions  is due to the reduction in rate on
      $200  million  of the  preferred  partnership  units  from  9.5% to  6.4%,
      effective March 22, 2004, the redemption of $40 million of our 9.5% Series
      N Preferred Units on March 17, 2005 and $45 million of our 9.125% Series O
      Preferred  units on March  29,  2005.  These  impacts  were  offset by the
      issuance  of $25  million  of our  6.25%  Cumulative  Series  Z  Perpetual
      Preferred  Units  in the  connection  with an  acquisition  in the  fourth
      quarter of 2004.

(c)   These amounts  reflect income  allocated to the minority  interests in the
      Consolidated  Development Joint Venture.  Included in minority interest in
      income is $859,000 in  depreciation  expense  for the three  months  ended
      March 31, 2005, respectively,  as compared to $963,000 for the same period
      in 2004.

(d)   These  amounts   reflect  the  minority   interests   represented  by  the
      Convertible  Partnership  Units (see Note 8 to the consolidated  financial
      statements).  Included  in  minority  interest  in  income is  $87,000  in
      depreciation   expense  for  the  three   months  ended  March  31,  2005,
      respectively, as compared to $85,000 for the same period in 2004.

(e)   These amounts  reflect  income  allocated to minority  interests  that the
      Company  acquired in 2004 and the first  quarter of 2005 and are no longer
      outstanding at March 31, 2005.  Included in minority interest in income is
      $137,000 in depreciation expense for the three months ended March 31, 2004
      (none for the same period in 2005).

(f)   These amounts  reflect  income  allocated to minority  interests that were
      outstanding  consistently throughout the three months ended March 31, 2005
      and  2004.  Included  in  minority  interest  in  income  is  $374,000  in
      depreciation   expense  for  the  three   months  ended  March  31,  2005,
      respectively, as compared to $390,000 for the same period in 2004.

     During the first  quarter of 2005,  we acquired a minority  interest for an
aggregate  acquisition  cost  of  $4,366,000.  The  income  allocated  to  these
interests are included in the "acquired minority interests" in the table above.

     On March 22,  2004,  certain  investors  who hold $200  million of our 9.5%
Series N Cumulative Redeemable Perpetual Preferred Units agreed, in exchange for
a special distribution of $8,000,000, to a reduction in the distribution rate on
their preferred units from 9.50% per year to 6.40% per year, and an extension of
the call date for  these  securities  to March  17,  2010.  The  investors  also
received  their  distribution  that  accrued  from  January 1, 2004  through the
effective date of the exchange.

                                      52
<PAGE>

     As a result of this  agreement,  income  allocable  to  minority  interests
increased,  and the Company's net income  decreased  $10,063,000  due to (1) the
$8,000,000  cash  payment  to the  holders  of the  preferred  units and (2) the
application of the SEC Observer's recent  clarification of EITF Topic D-42, "The
Effect on the  Calculation  of Earnings per Share for the  Redemption or Induced
Conversion of Preferred Stock" totaling $2,063,000,  which represents the excess
of the $200 million  stated  amount of the preferred  units over their  carrying
amount.

     The   increase  in  minority   interest  in  income  with  respect  to  the
Consolidated  Development  Joint  Venture is due to an  increase  in income with
respect to the properties owned by this entity. We expect that minority interest
in income  with  respect to the  Consolidated  Development  Joint  Venture  will
continue to increase as the properties owned by this entity,  substantially  all
of which are newly  developed  facilities  in the  fill-up  stage,  continue  to
stabilize their operations and increase the earnings of this entity.

     As  described  more  fully  in  Note 9 to our  March  31,  2005,  financial
statements,  during 2005, PSAC Storage Investors, LLC, our joint venture partner
with respect to the Development  Joint Venture,  has the right to cause an early
termination of the  partnership.  If PSAC Storage  Investors,  LLC exercises its
option,  one of two scenarios may  transpire:  (i) the properties in the venture
will be sold and the  partnership  liquidated in accordance with the partnership
agreement or (ii) we may exercise our option to acquire our  partner's  interest
in the  partnership.  We  estimate  the value of our  Partner's  interest  to be
approximately $105 million in November 2005.

     The acquired minority interests reflect earnings allocated to interests the
Company  didn't own in one of the  Consolidated  Entities,  acquired on June 30,
2004,  for an aggregate of $24,851,000 in cash, as well as interests we acquired
in the first quarter of 2005 for an aggregate  acquisition cost of $4,366,000 in
cash.  The income  allocated to these  interests  are included in the  "acquired
minority interests" in the table above.

     On April  22,  2005,  we  acquired  an  additional  interest  in one of the
Consolidated  Entities for cash totaling  $32,280,000.  During the quarter ended
March  31,  2005,  we had  allocated  $574,000  in  income  to these  interests,
including  $129,000 in  depreciation  expense,  which was included in the "other
minority interests" in the table above.

     Other minority  interests  reflect income  allocated to minority  interests
that have  maintained a  consistent  level of interest  throughout  2004 and the
three months ended March 31, 2005,  comprised of investments in the Consolidated
Entities described in Note 8 to the Company's financial statements. The level of
income  allocated  to  these  interests  in the  future  is  dependent  upon the
operating results of the storage  facilities that these entities own, as well as
any minority interests that the Company acquires in the future.

     DISCONTINUED OPERATIONS:  During the third quarter of 2004, we entered into
an  agreement  to sell one of our  commercial  facilities  located  in West Palm
Beach,  Florida. The facility sale closed on October 28, 2004 (see Footnote 15 -
"Subsequent  Events").  This  facility is  referred  to as the "Sold  Commercial
Facility".

     As described more fully in Note 3 to the consolidated financial statements,
during 2002,  2003 and 2004, we  implemented a business plan which  included the
closure of 43 of 55 containerized  storage facilities that were open at December
31,  2001.  The  43  facilities  are  hereinafter  referred  to as  the  "Closed
Facilities."

     The current and prior period  operations for the Sold  Commercial  Facility
and Closed Facilities have been  reclassified  into the line-item  "Discontinued
Operations" on our consolidated income statement.

                                      53
<PAGE>

     The  following  table  summarizes  the  historical  operations  of the Sold
Commercial Facility and the Closed Facilities:

DISCONTINUED OPERATIONS:
------------------------

<TABLE>
<CAPTION>

                                            Three Months Ended March 31,
                                       ---------------------------------------
                                          2005        2004          Change
                                       -----------  -----------  -------------
                                          (Amounts in thousands)
Rental income:
<S>                                     <C>          <C>         <C>
  Closed Facilities...............      $    95      $2,602      $ (2,507)
  Sold Commercial Facility........            -          69           (69)
                                       -----------  -----------  -------------
Total rental income...............           95       2,671        (2,576)
                                       -----------  -----------  -------------

Cost of operations:
  Closed Facilities...............          194       2,225        (2,031)
  Sold Commercial Facility........            -          13           (13)
                                       -----------  -----------  -------------
Total cost of operations..........          194       2,238        (2,044)
                                       -----------  -----------  -------------

Depreciation expense:
  Closed Facilities...............           29         390          (361)
  Sold Commercial Facility........            -          25           (25)
                                       -----------  -----------  -------------
Total depreciation ...............           29         415          (386)
                                       -----------  -----------  -------------

Other items ......................        1,143        (169)        1,312
                                       -----------  -----------  -------------

Net discontinued operations ......      $ 1,015      $ (151)    $   1,166
                                       ===========  ===========  =============
</TABLE>

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

     We believe that our  internally  generated  net cash  provided by operating
activities  will  continue to be  sufficient  to enable us to meet our operating
expenses,  capital improvements,  debt service requirements and distributions to
shareholders for the foreseeable future.

     Operating as a real estate investment trust ("REIT"), our ability to retain
cash flow for  reinvestment is restricted.  In order for us to maintain our REIT
status, a substantial  portion of our operating cash flow must be distributed to
our  shareholders  (see  "Requirement  to Pay  Distributions"  below).  However,
despite the significant distribution requirements, we have been able to retain a
significant  amount of our operating cash flow. The following  table  summarizes
our ability to fund distributions to the minority interest, capital improvements
to maintain our facilities,  and  distributions to our shareholders  through the
use of cash provided by operating activities.  The remaining cash flow generated
is available to make both principal payments on debt and for reinvestment.

<TABLE>
<CAPTION>

                                                                          Three Months Ended March 31,
                                                                        ----------------------------------
                                                                            2005                   2004
                                                                        ------------------  --------------
                                                                             (Amounts in thousands)
<S>                                                                      <C>                <C>
Net cash provided by operating activities.......................         $    157,820       $    146,629

Allocable to minority interest (Preferred Units) - ongoing
distributions...................................................               (5,375)            (6,554)
Allocable to minority interest (Preferred Units) - special
distribution (a)................................................                    -             (8,000)
Allocable to minority interest (common equity)..................               (5,715)            (5,578)
                                                                        ------------------  --------------
Cash from operations allocable to our shareholders..............              146,730            126,497

Capital improvements to maintain our facilities.................               (6,806)            (2,705)
 Add back:  minority interest share of capital improvements to
    maintain facilities.........................................                   58                 44
                                                                        ------------------  --------------
 Remaining operating cash flow available for distributions to our
    shareholders................................................              139,982            123,836

Distributions paid:
  Preferred stock dividends.....................................              (40,413)           (38,042)
  Equity Stock, Series A dividends..............................               (5,375)            (5,375)
  Distributions to Common shareholders..........................              (58,072)           (57,348)
                                                                        ------------------  --------------
Cash available for principal payments on debt and reinvestment..         $     36,122       $     23,071
                                                                        ==================  ==============
</TABLE>
                                      54
<PAGE>

(a)   The $8 million special  distribution was paid to a unitholder of our 9.5%
      Series N Cumulative  Redeemable  Perpetual Preferred Units in conjunction
      with a March 22, 2004  agreement  that,  among other things,  lowered the
      distribution rate from 9.5% to 6.4%.

     Our  financial  profile is  characterized  by a low level of debt to total
capitalization  and a  conservative  dividend  payout ratio with respect to the
common  stock.  We expect to fund our  growth  strategies  with cash on hand at
March 31, 2005,  internally  generated  retained  cash flows and proceeds  from
issuing equity securities.  In general,  our current strategy is to continue to
finance our growth with permanent  capital;  either common or preferred equity.
We have in the past used our $200 million line of credit as temporary  "bridge"
financing and repaid those  amounts with  internally  generated  cash flows and
proceeds from the placement of permanent capital.  At March 31, 2005, we had no
outstanding borrowings under our $200 million bank line of credit.

     Over  the  past  three  years,  we have  funded  substantially  all of our
acquisitions with permanent capital (both common and preferred securities).  We
have elected to use preferred securities as a form of leverage despite the fact
that the  dividend  rates of our  preferred  securities  exceed the  prevailing
market  interest  rates on  conventional  debt.  We have  chosen this method of
financing  for  the  following  reasons:  (i)  under  the  REIT  structure,   a
significant  amount of  operating  cash  flow  needs to be  distributed  to our
shareholders, making it difficult to repay debt with operating cash flow alone,
(ii) our perpetual  preferred stock has no sinking fund requirement or maturity
date  and does not  require  redemption,  all of  which  eliminate  any  future
refinancing risks, (iii) after the end of a non-call period, we have the option
to redeem the  preferred  stock at any time,  which  enabled us to  effectively
refinance  higher  coupon  preferred  stock with new  preferred  stock at lower
rates, (iv) preferred stock does not contain onerous  covenants,  thus allowing
us to maintain  significant  financial  flexibility,  and (v)  dividends on the
preferred stock can be applied to our REIT distribution requirements.

     Our credit ratings on each of our series of Cumulative Preferred Stock are
"Baa2" by Moody's and "BBB+" by Standard & Poor's.

     Our   portfolio   of  real   estate   facilities   remains   substantially
unencumbered.  At March 31, 2005,  we had mortgage  debt  outstanding  of $94.8
million (which encumbers 34 facilities with a book value of $200.4 million) and
unsecured  debt in the  amount  of $22.4  million.  We also  have Debt to Joint
Venture  Partner  amounting  to $35.6  million  with respect to ten real estate
facilities with an aggregate book value of $49.4 million.

     We believe that our size and  financial  flexibility  enables us to access
capital when appropriate.

     RECENT ISSUANCE OF PREFERRED  STOCK AND PROJECTED  REDEMPTION OF PREFERRED
SECURITIES:  One of our  financing  objectives  over the past several years has
been to reduce our  average  cost of  capital  with  respect  to our  preferred
securities.  Accordingly,  we have redeemed  higher rate  preferred  securities
outstanding  and have  financed  the  redemption  with cash on-hand or from the
proceeds from the issuance of lower rate preferred securities.

     Over the past three years we have funded  substantially  all of our growth
with permanent capital (both common and preferred securities).  We have elected
to use  preferred  securities  as a form of leverage  despite the fact that the
dividend  rates  of our  preferred  securities  exceed  the  prevailing  market
interest  rates on  conventional  debt. We have chosen this method of financing
for the following reasons:  (i) under the REIT structure,  a significant amount
of operating cash flow needs to be distributed  to our  shareholders  making it
difficult  to repay debt with  operating  cash flow alone,  (ii) our  perpetual
preferred stock has no sinking fund requirement,  or maturity date and does not
require redemption,  all of which eliminate any future refinancing risks, (iii)
after the end of a non-call period,  we have the option to redeem the preferred
stock at any time,  which during 2001  through  2004 enabled us to  effectively
refinance  higher  coupon  preferred  stock with new  preferred  stock at lower
rates, (iv) preferred stock does not contain onerous  covenants,  thus allowing
us to maintain  significant  financial  flexibility,  and (v)  dividends on the
preferred stock can be applied to our REIT distribution requirements.

                                      55
<PAGE>

     We believe that our size and  financial  flexibility  enables us to access
capital when  appropriate.  Since the beginning of 2004 through May 6, 2005, we
have raised  approximately $743 million of our Cumulative  Preferred Stock, and
used  approximately  $514  million  of these  net  proceeds  in order to redeem
higher-coupon preferred securities.

     REQUIREMENT TO PAY DISTRIBUTIONS: We estimate the distribution requirement
with  respect  to  our  Preferred  Stock  outstanding  at  May  6,  2005  to be
approximately   $169.3   million  per  year.  We  estimate  that  the  annual
distribution requirement with respect to the preferred partnership units May 6,
2005 to be approximately $14.4 million per year.

     During each of the three  months  ended  March 31, 2005 and 2004,  we paid
cash dividends totaling  $5,375,000 to the holders of our Equity Stock,  Series
A. With respect to the depositary shares of Equity Stock,  Series A, we have no
obligation  to pay  distributions  if no  distributions  are paid to the common
shareholders.  To the extent that we do pay common  distributions  in any year,
the holders of the depositary shares receive annual  distributions equal to the
lesser of (i) five times the per share  dividend  on the  common  stock or (ii)
$2.45. The depositary  shares are  non-cumulative,  and have no preference over
our common stock either as to dividends or in liquidation.  With respect to the
Equity  Stock,  Series A  outstanding  at March 31, 2005, we estimate the total
regular  distribution for the second quarter of 2005 to be  approximately  $5.4
million.

     During the three months ended March 31, 2005, we paid  dividends  totaling
$58,072,000  ($0.45 per common share) to the holders of our common stock. Based
upon shares  outstanding at May 6, 2005 and a quarterly  distribution  of $0.45
per share,  which was  declared  by the Board of  Directors  on May 5, 2005 and
payable on June 30, 2005,  we estimate a dividend  payment  with respect to our
common stock of approximately $58.3 million for the second quarter of 2005.

     CAPITAL IMPROVEMENT REQUIREMENTS:  For 2005, we budgeted approximately $50
million for capital improvements. During the three months ended March 31, 2005,
we  incurred  capital  improvements  of  approximately  $6.8  million.  Capital
improvements  include  major repairs or  replacements  to the  facilities  that
maintain  the  facilities'  existing  operating  condition  and visual  appeal.
Capital  improvements  do not  include  costs  relating to the  development  or
expansion of facilities,  or expenditures  associated with improving the visual
and structural appeal of our existing self-storage facilities.

     DEBT  SERVICE  REQUIREMENTS:  We do not  believe  we have any  significant
refinancing  risks with  respect to our debt,  all of which is fixed  rate.  At
March 31, 2005, we had total outstanding debt of approximately  $152.7 million.
See Note 7 to the consolidated  financial statements for approximate  principal
maturities of such borrowings.

     We anticipate  that our retained  operating  cash flow will continue to be
sufficient to enable us to make scheduled principal payments. It is our current
intention to fully  amortize our debt as opposed to refinance  debt  maturities
with additional debt.

     ACQUISITION  AND  DEVELOPMENT OF REAL ESTATE  FACILITIES:  During 2005, we
will continue to seek to acquire additional  self-storage facilities from third
parties;  however,  it is  difficult  to  estimate  the  amount of third  party
acquisitions we will  undertake.  For 2005, we do not anticipate that our joint
venture  partnerships  will fund additional  acquisitions from third parties or
developments, all of which we expect to be funded entirely by the Company.
                                      56
<PAGE>

     In 2005 through May 6, 2005, we have acquired ten self-storage  facilities
from third parties for an aggregate of approximately  $60.5 million.  At May 6,
2005,  we are  under  contract  to  acquire  six  additional  facilities  at an
aggregate cost of approximately  $30.6 million.  Each of these  acquisitions is
subject to significant contingencies,  and there can be no assurance that these
facilities will be acquired.

     On January 18, 2005, we acquired an interest in the  Consolidated  Entities
for cash  totaling  $4,366,000.  In  addition,  on April 22,  2005,  in a single
transaction we acquired an additional interest in the Consolidated  Entities for
an aggregate of $32.3 million.

     As  described  more  fully  in  Note 9 to our  March  31,  2005,  financial
statements,  during 2005, PSAC Storage Investors, LLC, our joint venture partner
with respect to the  Consolidated  Development  Joint Venture,  has the right to
cause an early termination of the partnership.  If PSAC Storage  Investors,  LLC
exercises its option, one of two scenarios may transpire:  (i) the properties in
the venture will be sold and the  partnership  liquidated in accordance with the
partnership  agreement  or  (ii) we may  exercise  our  option  to  acquire  our
partner's  interest in the  partnership.  We estimate the value of our Partner's
interest to be approximately $105 million in November 2005.

     At  March  31,  2005  we  have a  development  "pipeline"  of 45  projects
consisting of self-storage  facilities,  conversion of space at facilities that
was  previously  used for  containerized  storage  and  expansions  to existing
self-storage  facilities  with an  aggregate  estimated  cost of  approximately
$206.2  million.  At March 31, 2005,  we have acquired the land for 42 of these
projects,  which  have an  aggregate  estimated  cost of  approximately  $191.3
million,  and  costs  incurred  as of March  31,  2005 of  approximately  $40.1
million.  The remaining  facilities represent identified sites where we have an
agreement  in  place to  acquire  the  land,  generally  within  one  year.  We
anticipate  that the development of these projects will be funded solely by the
Company.

     The  development  and fill-up of these  storage  facilities  is subject to
significant contingencies such as obtaining appropriate governmental approvals.
We  estimate  that the amount  remaining  to be spent of  approximately  $165.7
million  will be incurred  over the next 24 months.  The  following  table sets
forth certain information with respect to our development pipeline.

<TABLE>
<CAPTION>

DEVELOPMENT PIPELINE SUMMARY (AS OF MARCH 31, 2005)

                                                    Number     Net        Total estimated  Costs incurred
                                                      of     rentable      development         through         Costs to
                                                   projects   sq. ft.        cost              3/31/05         complete
                                                 ----------  ----------  -------------     ----------------  ---------------
                                                              (Amounts in thousands, except numbers of projects)
  Facilities currently under construction:
<S>                                                    <C>        <C>      <C>              <C>              <C>
    Self-storage facilities                            4          283      $   28,478       $   13,809       $   14,669
    Expansions and other enhancements to
     existing self-storage facilities                  9          476          22,746            6,445           16,301
                                                 ----------  ----------  -------------     ----------------  ---------------
                                                      13          759          51,224           20,254           30,970

  Facilities awaiting  construction,  where land
     is acquired:
    Self-storage facilities                            3          271          46,211           17,957           28,254
    Expansions and other enhancements to
     existing self-storage facilities                 26        1,774          93,914            1,936           91,978
                                                 ----------  ----------  -------------     ----------------  ---------------
                                                      29        2,045         140,125           19,893          120,232

  Self-storage facilities awaiting
    construction, where land has not yet been
    acquired                                           3          104          14,875             398            14,477
                                                 ----------  ----------  -------------     ----------------  ---------------
  Total Development Pipeline                          45        2,908      $  206,224       $   40,545       $  165,679
                                                 ==========  ==========  =============     ================  ===============
</TABLE>

     Included  in  the  35  "expansions  and  other  enhancements  of  existing
self-storage  facilities"  are 18 projects  associated  with the  conversion of
industrial  space,  previously used by the discontinued  containerized  storage
operations,  into self-storage space. The total amount of self-storage space to
come on line from these 18 conversions is approximately  1,323,000 net rentable
square feet of traditional  self-storage  space at a cost of $48,355,000.  Also
included are enhancements which, while they do not add significant  incremental
square  footage,  improve  the visual  and  structural  appeal of our  existing
self-storage facilities.
                                      57
<PAGE>

     REPURCHASES  OF  THE  COMPANY'S  COMMON  STOCK:  The  Company's  Board  of
Directors  authorized  the  repurchase  from  time to time of up to  25,000,000
shares  of our  common  stock on the open  market  or in  privately  negotiated
transactions.  For the three months ended March 31, 2005, we repurchased 52,000
shares of our common stock for approximately $2,971,000.

     From the initial  authorization through May 6, 2005, we have repurchased a
total  of  22,169,720   shares  of  common  stock  at  an  aggregate   cost  of
approximately $565.1 million.

ITEM 2A.   RISK FACTORS
-----------------------

     In  addition to the other  information  in our Form 10-Q and our Form 10-K
for the year ended December 31, 2004, you should consider the following factors
in evaluating the Company:

THE  HUGHES  FAMILY  COULD  CONTROL US AND TAKE  ACTIONS  ADVERSE TO OTHER
SHAREHOLDERS.

     At  May  6,  2005,  the  Hughes  family  owned  approximately  36%  of our
outstanding  shares of common  stock.  Consequently,  the Hughes  family  could
control matters  submitted to a vote of our  shareholders,  including  electing
directors,  amending our  organizational  documents,  dissolving  and approving
other extraordinary transactions,  such as a takeover attempt, even though such
actions may not be favorable to the other common shareholders.

PROVISIONS IN OUR ORGANIZATIONAL DOCUMENTS MAY PREVENT CHANGES IN CONTROL.

     Restrictions in our organizational  documents may further limit changes in
control. Unless our Board of Directors waives these limitations, no shareholder
may own more than (1) 2.0% of our outstanding shares of our common stock or (2)
9.9% of the  outstanding  shares of each  class or series of our  preferred  or
equity stock. Our organizational documents in effect provide, however, that the
Hughes  family may  continue to own the shares of our common stock held by them
at the time of the 1995 reorganization.  These limitations are designed, to the
extent  possible,  to avoid a concentration  of ownership that might jeopardize
our  ability  to  qualify  as a real  estate  investment  trust or REIT.  These
limitations,  however,  also may make a change of  control  significantly  more
difficult (if not impossible) even if it would be favorable to the interests of
our public shareholders. These provisions will prevent future takeover attempts
not  approved  by our  board of  directors  even if a  majority  of our  public
shareholders deem it to be in their best interests because they would receive a
premium  for their  shares  over the  shares'  then  market  value or for other
reasons.

WE WOULD INCUR ADVERSE TAX CONSEQUENCES IF WE FAIL TO QUALIFY AS A REIT.

     You will be subject to the risk that we may not  qualify as a REIT.  REITs
are subject to a range of complex organizational and operational  requirements.
As a REIT, we must  distribute  at least 90% of our REIT taxable  income to our
shareholders.  Other  restrictions  apply to our  income and  assets.  Our REIT
status is also dependent upon the ongoing  qualification of PSB as a REIT, as a
result of our substantial ownership interest in that company.

     For any  taxable  year that we fail to  qualify  as a REIT and the  relief
provisions do not apply,  we would be taxed at the regular  corporate  rates on
all of our  taxable  income,  whether or not we make any  distributions  to our
shareholders.  Those  taxes  would  reduce  the  amount of cash  available  for
distribution to our shareholders or for reinvestment.  As a result, our failure
to qualify  as a REIT  during any  taxable  year could have a material  adverse
effect  upon  us and  our  shareholders.  Furthermore,  unless  certain  relief
provisions apply, we would not be eligible to elect REIT status again until the
fifth  taxable  year that  begins  after  the  first  year for which we fail to
qualify.
                                      58
<PAGE>
WE MAY PAY SOME TAXES, REDUCING CASH AVAILABLE FOR SHAREHOLDERS.

     Even if we  qualify as a REIT for  Federal  income  tax  purposes,  we are
required to pay some federal, state and local taxes on our income and property.
Several  corporate  subsidiaries  of the Company  have elected to be treated as
"taxable  REIT  subsidiaries"  of the Company for Federal  income tax  purposes
since January 1, 2001. A taxable REIT subsidiary is a fully taxable corporation
and is  limited  in its  ability  to deduct  interest  payments  made to us. In
addition,  we will be subject to a 100%  penalty tax on some  payments  that we
receive if the  economic  arrangements  among our  tenants,  our  taxable  REIT
subsidiaries and us are not comparable to similar  arrangements among unrelated
parties.  To the extent  that the  Company or any taxable  REIT  subsidiary  is
required to pay Federal, state or local taxes, we will have less cash available
for distribution to shareholders.

WE WOULD INCUR A CORPORATE LEVEL TAX IF WE SELL CERTAIN ASSETS.

     We will generally be subject to a corporate  level tax on any net built-in
gain if  before  November  2005 we sell any of the  assets we  acquired  in the
November 1995 reorganization.

WE HAVE BECOME INCREASINGLY DEPENDENT UPON AUTOMATED PROCESSES AND THE INTERNET
AND ARE FACED WITH SECURITY SYSTEM RISKS.

     We have become  increasingly  centralized  and  dependent  upon  automated
information technology processes. As a result, we could be severely impacted by
a catastrophic occurrence, such as a natural disaster or a terrorist attack. In
addition, a portion of our business operations are conducted over the internet,
increasing the risk of viruses that could cause system failures and disruptions
of operations.  Experienced  computer  programmers may be able to penetrate our
network security and misappropriate our confidential information, create system
disruptions or cause shutdowns.

WE AND OUR SHAREHOLDERS ARE SUBJECT TO FINANCING RISKS.

     Debt increases the risk of loss. In making real estate investments, we may
borrow money,  which increases the risk of loss. At March 31, 2005, our debt of
$152.7 million was 2.9% of our total assets.

     Certain securities have a liquidation preference over our common stock and
Equity Stock, Series A. If we liquidated,  holders of our preferred  securities
would be entitled to receive  liquidating  distributions,  plus any accrued and
unpaid  distributions,  before any distribution of assets to the holders of our
common stock and Equity Stock,  Series A. Holders of preferred  securities  are
entitled  to  receive,   when  declared  by  our  board  of   directors,   cash
distributions  in  preference  to holders of our common stock and Equity Stock,
Series A.

SINCE OUR BUSINESS CONSISTS PRIMARILY OF ACQUIRING AND OPERATING REAL ESTATE, WE
ARE SUBJECT TO REAL ESTATE OPERATING RISKS.

     The value of our  investments  may be  reduced  by  general  risks of real
estate  ownership.  Since we derive  substantially  all of our income from real
estate  operations,  we are  subject  to  the  general  risks  of  owning  real
estate-related assets, including:

o     lack of demand for rental spaces or units in a locale;

o     changes in general economic or local conditions;

o     natural disasters, such as earthquakes;

o     potential terrorist attacks;

o     changes in supply of or demand for similar or competing  facilities in an
      area;

o     the impact of environmental protection laws;

o     changes in interest rates and  availability  of permanent  mortgage funds
      which  may  render  the sale or  financing  of a  property  difficult  or
      unattractive;

o     changes in tax, real estate and zoning laws; and

o     tenant claims.

                                      59
<PAGE>

     In addition,  we self-insure certain of our property loss,  liability,  and
workers  compensation risks that other real estate companies may use third-party
insurers  for.  This  results in a higher risk of losses that are not covered by
third-party  insurance  contracts,  as described in Note 15 to our  consolidated
financial statements at March 31, 2005 under "Insurance and Loss Exposure."

     There is significant  competition among  self-storage  facilities and from
other storage alternatives. Most of our properties are self-storage facilities,
which  generated  93% of our revenue for the three months ended March 31, 2005.
Local market  conditions will play a significant  part in how competition  will
affect us.  Competition in the market areas in which many of our properties are
located from other  self-storage  facilities and other storage  alternatives is
significant and has affected the occupancy  levels,  rental rates and operating
expenses of some of our  properties.  Any increase in availability of funds for
investment in real estate may accelerate  competition.  Further  development of
self-storage   facilities  may  intensify   competition   among   operators  of
self-storage facilities in the market areas in which we operate.

     We may incur significant environmental costs and liabilities.  As an owner
and  operator  of real  properties,  under  various  federal,  state  and local
environmental  laws,  we are  required to clean up spills or other  releases of
hazardous or toxic substances on or from our properties.  Certain environmental
laws impose liability whether or not the owner knew of, or was responsible for,
the presence of the hazardous or toxic substances. In some cases, liability may
not be limited to the value of the property.  The presence of these substances,
or the failure to properly remediate any resulting contamination,  whether from
environmental  or microbial  issues,  also may adversely  affect the owner's or
operator's  ability to sell,  lease or operate its  property or to borrow using
its property as collateral.

     We have  conducted  preliminary  environmental  assessments of most of our
properties (and intend to conduct these assessments in connection with property
acquisitions)  to  evaluate  the  environmental  condition  of,  and  potential
environmental  liabilities  associated with, our properties.  These assessments
generally  consist  of an  investigation  of  environmental  conditions  at the
property (not including soil or groundwater sampling or analysis), as well as a
review of available  information regarding the site and publicly available data
regarding  conditions at other sites in the vicinity.  In connection with these
property assessments, our operations and recent property acquisitions,  we have
become aware that prior  operations or  activities  at some  facilities or from
nearby  locations  have or may have  resulted in  contamination  to the soil or
groundwater at these facilities.  In this regard, some of our facilities are or
may be the subject of federal or state  environment  investigations or remedial
actions. We have obtained,  with respect to recent acquisitions,  and intend to
obtain with  respect to pending or future  acquisitions,  appropriate  purchase
price adjustments or  indemnifications  that we believe are sufficient to cover
any related  potential  liability.  Although we cannot  provide any  assurance,
based on the preliminary  environmental  assessments,  we believe we have funds
available to cover any liability from environmental  contamination or potential
contamination  and we are not aware of any  environmental  contamination of our
facilities material to our overall business,  financial condition or results of
operation.

     There  has been an  increasing  number of claims  and  litigation  against
owners and  managers of rental  properties  relating to moisture  infiltration,
which can result in mold or other property damage.  When we receive a complaint
concerning moisture  infiltration,  condensation or mold problems and/or become
aware that an air quality concern exists, we implement  corrective  measures in
accordance  with guidelines and protocols we have developed with the assistance
of outside  experts.  We seek to work  proactively  with our tenants to resolve
moisture  infiltration  and  mold-related  issues,  subject to our  contractual
limitations  on liability  for such claims.  However,  we can make no assurance
that material legal claims relating to moisture  infiltration  and the presence
of, or exposure to, mold will not arise in the future.

                                      60
<PAGE>

     Delays in  development  and  fill-up of our  properties  would  reduce our
profitability.  Since  January  1,  2001,  we have  opened  48 newly  developed
self-storage  facilities  and  17  facilities  that  combine  self-storage  and
containerized  storage space at the same location,  with aggregate  development
costs of $507.9 million.  In addition,  at March 31, 2005 we had 44 projects in
development  that are expected to be completed  in  approximately  the next two
years.  These  44  projects  have  total  estimated  costs of  $203.5  million.
Construction  delays due to  weather,  unforeseen  site  conditions,  personnel
problems,  and other factors, as well as cost overruns,  would adversely affect
our  profitability.  Delays in the rent-up of newly  developed  facilities as a
result  of  competition  or other  factors  would  also  adversely  impact  our
profitability.

     Property  taxes can increase and cause a decline in yields on  investments.
Each of our  properties is subject to real property  taxes.  These real property
taxes may  increase  in the  future as  property  tax  rates  change  and as our
properties are assessed or reassessed by tax  authorities.  Such increases could
adversely impact our profitability.

     We must  comply  with the  Americans  with  Disabilities  Act and fire and
safety  regulations,  which  can  require  significant  expenditures.  All  our
properties  must  comply  with the  Americans  with  Disabilities  Act and with
related regulations (the "ADA"). The ADA has separate  compliance  requirements
for "public accommodations" and "commercial facilities," but generally requires
that buildings be made accessible to persons with  disabilities.  Various state
laws impose similar  requirements.  A failure to comply with the ADA or similar
state  laws could  result in  government  imposed  fines on us and the award of
damages to individuals  affected by the failure.  In addition,  we must operate
our properties in compliance  with numerous local fire and safety  regulations,
building  codes,  and  other  land  use  regulations.   Compliance  with  these
requirements can require us to spend substantial  amounts of money, which would
reduce cash otherwise  available for distribution to  shareholders.  Failure to
comply with these  requirements could also affect the marketability of our real
estate facilities.

     Any  failure  by  us  to  manage   acquisitions   and  other   significant
transactions  successfully could negatively impact our financial results. As an
increasing part of our business, we acquire other self-storage  facilities.  We
also  evaluate  from  time to time  other  significant  transactions.  If these
facilities are not properly  integrated into our system,  our financial results
may suffer.

     We incur  liability from employment  related  claims.  From time to time we
must resolve employment related claims by corporate level and field personnel.

WE HAVE NO INTEREST IN CANADIAN SELF-STORAGE FACILITIES OWNED BY THE HUGHES
FAMILY.

     B. Wayne  Hughes,  Chairman  of the Board,  and his  family  (the  "Hughes
Family")  have   ownership   interests  in,  and  operate,   approximately   40
self-storage facilities in Canada under the name "Public Storage." We currently
do not own any interests in these  facilities  nor do we own any  facilities in
Canada.  We have a right of first refusal to acquire the stock or assets of the
corporation  engaged in the operation of the self-storage  facilities in Canada
if the Hughes family or the corporation agrees to sell them.  However,  we have
no ownership  interest in the operations of this corporation,  have no right to
acquire  their stock or assets unless the Hughes  family  decides to sell,  and
receive no benefit  from the profits  and  increases  in value of the  Canadian
self-storage facilities.

     Company  personnel have been engaged in the  supervision and the operation
of these properties and have provided certain  administrative  services for the
Canadian  owners,  and certain other  services,  primarily  tax services,  with
respect to certain  other Hughes  Family  interests.  The Hughes Family and the
Canadian  owners have reimbursed us at cost for these services in the amount of
$542,499  with  respect  to the  Canadian  operations  and  $151,063  for other
services during 2003 (in United States  dollars).  There have been conflicts of
interest in allocating time of our personnel  between Company  properties,  the
Canadian properties,  and certain other Hughes Family interests. The sharing of
Company personnel with the Canadian  entities was  substantially  eliminated by
December 31, 2003.

     The Company, through subsidiaries, continues to reinsure risks relating to
loss of goods stored by tenants in the self-storage  facilities in Canada.  The
Company had acquired the tenant insurance business on December 31, 2001 through
its acquisition of PSIC.  During the three months ended March 31, 2005, and the
full  years  ended  December  31,  2004  and  2003,  PSIC  received   $259,000,
$1,069,000, and $1,017,000,  respectively, in reinsurance premiums attributable
to the Canadian  Facilities.  PSIC has no  contractual  right to provide tenant
reinsurance  to the Canadian  Facilities  and there is no assurance  that these
premiums will continue.

                                      61
<PAGE>

     The corporation  engaged in the operations of the Canadian  facilities has
advised us that it intends to reorganize the entities  owning and operating the
Canadian  facilities  and  has  proposed  that  the  Company  consent  to  this
reorganization, which would impact the license agreement and the right of first
refusal agreement with the Company.  The  reorganization is designed to enhance
the entities' financial flexibility and growth potential. In November 2004, the
Board appointed a special  committee,  comprised of independent  directors,  to
consider  the  Company's  alternatives  in this  matter,  including  a possible
investment in the reorganized Canadian entities.

OUR CONTAINERIZED STORAGE BUSINESS HAS INCURRED OPERATING LOSSES.

     Public  Storage  Pickup &  Delivery  ("PSPUD")  was  organized  in 1996 to
operate a containerized  storage business.  We own all of the economic interest
of PSPUD.  Since PSPUD will  operate  profitably  only if it can succeed in the
relatively new field of containerized  storage, we cannot provide any assurance
as to its  profitability.  PSPUD  incurred an operating  loss of $10,058,000 in
2002, and generated  operating profits of $2,543,000 in 2003,  $684,000 in 2004
and  $920,000 for the three  months  ended March 31,  2005.  Since 2002,  PSPUD
closed or consolidated  all but 12 facilities that were deemed not strategic to
our business plan.

INCREASES IN INTEREST RATES MAY ADVERSELY AFFECT THE PRICE OF OUR COMMON STOCK.

     One of the factors  that  influences  the market price of our common stock
and our other securities is the annual rate of distributions that we pay on the
securities,  as compared with interest rates. An increase in interest rates may
lead  purchasers  of REIT shares to demand higher  annual  distribution  rates,
which could  adversely  affect the market  price of our common  stock and other
securities.

TERRORIST ATTACKS AND THE POSSIBILITY OF WIDER ARMED CONFLICT MAY HAVE AN
ADVERSE IMPACT ON OUR BUSINESS AND OPERATING RESULTS AND COULD DECREASE THE
VALUE OF OUR ASSETS.

     Terrorist  attacks and other acts of  violence or war,  such as those that
took place on September 11, 2001,  could have a material  adverse impact on our
business and operating  results.  There can be no assurance that there will not
be further  terrorist  attacks  against the United States or its  businesses or
interests.  Attacks or armed  conflicts that directly impact one or more of our
properties could  significantly  affect our ability to operate those properties
and thereby impair our operating  results.  Further,  we may not have insurance
coverage for losses  caused by a terrorist  attack.  Such  insurance may not be
available,  or if it is  available  and we  decide  to  obtain  such  terrorist
coverage,  the cost for the insurance may be significant in relationship to the
risk  overall.  In  addition,  the adverse  effects  that such violent acts and
threats  of future  attacks  could  have on the  United  States  economy  could
similarly  have a  material  adverse  effect on our  business  and  results  of
operations.  Finally,  further  terrorist acts could cause the United States to
enter into a wider armed conflict,  which could further impact our business and
operating results.

2003 TAX LEGISLATION COULD ADVERSELY AFFECT THE PRICE OF OUR STOCK.

     Tax legislation enacted in 2003 generally reduces the maximum tax rate for
dividends payable to individuals to 15% through 2008.  Dividends paid by REITs,
however,  generally  continue to be taxed at the normal rate  applicable to the
individual  recipient,  rather than the preferential  rates applicable to other
dividends.  Although this legislation does not adversely affect the taxation of
REITs or  dividends  paid by REITs,  the more  favorable  rates  applicable  to
regular  corporate  dividends  could cause  investors  who are  individuals  to
perceive investments in REITs to be relatively less attractive than investments
in the  stocks  of  non-REIT  corporations  that  pay  dividends,  which  could
adversely affect the value of the stock of REITs, including our common stock.

DEVELOPMENTS IN CALIFORNIA MAY HAVE AN ADVERSE IMPACT ON OUR BUSINESS.

     We are headquartered  in, and approximately  one-quarter of our properties
are located in,  California.  California is facing serious budgetary  problems.
Action that may be taken in response to these problems,  such as an increase in
property taxes on commercial  properties,  could adversely  impact our business
and results of  operations.  In  addition,  we could be  adversely  impacted by
efforts to reenact  legislation  mandating  medical  insurance for employees of
California businesses and members of their families

                                      62
<PAGE>

ITEM 3.  QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
-------------------------------------------------------------------

     To  limit  our  exposure  to  market  risk,  we  principally  finance  our
operations  and growth with  permanent  equity  capital,  consisting  of either
common or preferred stock. At March 31, 2005, our debt as a percentage of total
shareholders' equity (based on book values) was 3.4%.

     Our preferred stock is not redeemable at the option of the holders. Except
under certain conditions relating to the Company's qualification as a REIT, the
Preferred Stock is not redeemable by the Company prior to the following  dates:
Series Q - January 19, 2006,  Series R - September 28, 2006, Series S - October
31, 2006, Series T - January 18, 2007, Series U - February 19, 2007, Series V -
September 30, 2007,  Series W - October 6, 2008,  Series X - November 13, 2008,
Series Y - January  2,  2009,  Series Z - March 5,  2009,  Series A - March 31,
2009,  Series B - June 30,  2009,  Series C - September  13,  2009,  Series D -
February  28, 2010 and Series E - April 27,  2010.  On or after the  respective
dates,  each of the series of Preferred  Stock will be redeemable at the option
of the Company,  in whole or in part, at $25 per share (or depositary  share in
the case of the Series Q through Series X, Series Z and Series A through Series
E), plus accrued and unpaid dividends through the redemption date.

     Our market risk sensitive instruments include notes payable, which totaled
$152.7  million at March 31, 2005.  All of the Company's debt bears interest at
fixed rates. See Note 7 to the consolidated  financial  statements at March 31,
2005 for  approximate  principal  maturities  of the notes payable at March 31,
2005.

ITEM 4.  CONTROLS AND PROCEDURES
--------------------------------

     The Company maintains disclosure controls and procedures that are designed
to ensure  that  information  required to be  disclosed  in reports the Company
files and submits  under the Exchange Act, is recorded,  processed,  summarized
and  reported  within  the  time  periods  specified  in  accordance  with  SEC
guidelines  and  that  such   information  is  communicated  to  the  Company's
management,  including its Chief Executive Officer and Chief Financial Officer,
to allow timely decisions regarding required disclosure based on the definition
of "disclosure controls and procedures" in Rules 13a-15(e) of the Exchange Act.
In designing and evaluating the disclosure controls and procedures,  management
recognized  that any controls and  procedures,  no matter how well designed and
operated,  can provide  only  reasonable  assurance  of  achieving  the desired
control  objectives  and  management  necessarily  was  required  to apply  its
judgment in evaluating the cost-benefit  relationship of possible  controls and
procedures in reaching that level of reasonable  assurance.  Also,  the Company
has  investments in certain  unconsolidated  entities.  As the Company does not
control or manage these entities,  its disclosure  controls and procedures with
respect to such entities are substantially more limited than those it maintains
with respect to its consolidated subsidiaries.

     As of the end of the fiscal  quarter  covered by this report,  the Company
carried out an evaluation,  under the supervision and with the participation of
the Company's  management,  including the Company's Chief Executive Officer and
the Company's Chief Financial  Officer,  of the effectiveness of the design and
operation of the Company's  disclosure controls and procedures (as such term is
defined in Rules 13a - 15(e) and 15d - 15(e) under the  Securities  Act of 1934
as amended) as of the end of the period covered by this report. Based upon this
evaluation,  the Company's Chief Executive  Officer and Chief Financial Officer
concluded that, as of the end of such period, the Company's disclosure controls
and procedures were effective.

     There have not been any changes in our  internal  control  over  financial
reporting (as such term is defined in Rules  13a-15(f) and 15d-15(f)  under the
Exchange Act) during the fiscal  quarter to which this report relates that have
materially  affected,  or are  reasonably  likely  to  materially  affect,  our
internal control over financial reporting.

                                      63
<PAGE>
PART II.   OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS
           -----------------

     The  information set forth under the heading "Legal Matters" in Note 14 to
the  Consolidated  Financial  Statements in this Form 10-Q is  incorporated  by
reference in this Item 1.

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
           -----------------------------------------------------------

     On  June  12,  1998,  we  announced  that  the  Board  of  Directors  (the
"Directors")  authorized the  repurchase  from time to time of up to 10,000,000
shares  of the  Company's  common  stock on the  open  market  or in  privately
negotiated  transactions.  On  subsequent  dates the  Directors  increased  the
repurchase  authorization,  the last being  April 13,  2001,  when the Board of
Directors increased the repurchase authorization to 25,000,000 shares.

     The  following   table  contains   information   regarding  the  company's
repurchase of its common stock during the quarter.

<TABLE>
<CAPTION>

ISSUER PURCHASES OF EQUITY SECURITIES:
                                                                         Total Number of      Maximum Number of
                                                                       Shares Purchased as     Shares that May
                                        Total Number                     Part of Publicly     Yet Be Purchased
                                         of Shares     Average Price    Announced Plans or   Under the Plans or
Period Covered                           Purchased     Paid per Share        Programs             Programs
-------------------------------------  -------------- ---------------- -------------------- --------------------

<S>                                                <C>   <C>                  <C>                  <C>
January 1 through January 31, 2005                 -     $     -              22,117,720           2,882,280

February 1 through February 28, 2005               -           -              22,117,720           2,882,280

March 1 through March 31, 2005                52,000          57.13           22,169,720           2,830,280
                                       -------------- ---------------- -------------------- --------------------
    Total                                     52,000     $    57.13
                                       ============== ================

</TABLE>

     See  Notes  9,  10 and 15 to the  consolidated  financial  statements  for
additional  information on repurchases  and  redemptions of equity  securities.

                                      64
<PAGE>
ITEM 6.    EXHIBITS
           ---------

3.1   Restated Articles of Incorporation.  Filed with Registrant's Registration
      Statement No. 33-54557 and incorporated herein by reference.

3.2   Certificate  of  Determination  for the 10% Cumulative  Preferred  Stock,
      Series A. Filed with Registrant's Registration Statement No. 33-54557 and
      incorporated herein by reference.

3.3   Amendment  to  Certificate  of  Determination   for  the  10%  Cumulative
      Preferred Stock,  Series A. Filed with the Registrant's Form 10-Q for the
      quarterly  period  ended  March  31,  2004  and  incorporated  herein  by
      reference.

3.4   Certificate of Determination  for the 9.20%  Cumulative  Preferred Stock,
      Series B. Filed with Registrant's Registration Statement No. 33-54557 and
      incorporated herein by reference.

3.5   Amendment  to  Certificate  of  Determination  for the  9.20%  Cumulative
      Preferred Stock, Series B. Filed with Registrant's Registration Statement
      No. 33-56925 and incorporated herein by reference.

3.6   Amendment  to  Certificate  of  Determination  for the  9.20%  Cumulative
      Preferred Stock Series B. Filed with the  Registrant's  Form 10-Q for the
      quarterly  period  ended  June  30,  2004  and  incorporated   herein  by
      reference.

3.7   Certificate of Determination for the 8.25%  Convertible  Preferred Stock.
      Filed  with   Registrant's   Registration   Statement  No.  33-54557  and
      incorporated herein by reference.

3.8   Certificate of Determination for the Adjustable Rate Cumulative Preferred
      Stock,  Series C.  Filed with  Registrant's  Registration  Statement  No.
      33-54557 and incorporated herein by reference.

3.9   Amendment  to  Certificate  of  Determination  for  the  Adjustable  Rate
      Cumulative  Preferred Stock Series C. Filed with  Registrant's  Form 10-Q
      for the quarterly period ended September 30, 2004 and incorporated herein
      by reference.

3.10  Certificate of Determination  for the 9.50%  Cumulative  Preferred Stock,
      Series D.  Filed with  Registrant's  Form  8-A/A  Registration  Statement
      relating  to  the  9.50%  Cumulative   Preferred  Stock,   Series  D  and
      incorporated herein by reference.

3.11  Amendment  to  Certificate  of  Determination  of  Preferences  of  9.50%
      Cumulative  Preferred  Stock,  Series D. Filed with  Registrant's  Annual
      Report on Form 10-K for the year ended December 31, 2004 and incorporated
      herein by reference.

3.12  Certificate  of  Determination  for the 10% Cumulative  Preferred  Stock,
      Series E.  Filed with  Registrant's  Form  8-A/A  Registration  Statement
      relating to the 10% Cumulative Preferred Stock, Series E and incorporated
      herein by reference.

3.13  Amendment  to  Certificate  of  Determination   for  the  10%  Cumulative
      Preferred Stock, Series E. Filed with Registrant's Current Report on Form
      8-K dated April 25, 2005 and incorporated herein by reference.

3.14  Certificate of Determination  for the 9.75%  Cumulative  Preferred Stock,
      Series F.  Filed with  Registrant's  Form  8-A/A  Registration  Statement
      relating  to  the  9.75%  Cumulative   Preferred  Stock,   Series  F  and
      incorporated herein by reference.

3.15  Registration Statement No. 33-63947 and incorporated herein by reference.

                                      65
<PAGE>

3.16  Certificate  of  Amendment  of  Articles  of  Incorporation.  Filed  with
      Registrant's  Registration Statement No. 33-63947 and incorporated herein
      by reference.

3.17  Certificate of Determination for the 8-7/8%  Cumulative  Preferred Stock,
      Series G.  Filed with  Registrant's  Form  8-A/A  Registration  Statement
      relating to the Depositary Shares Each Representing 1/1,000 of a Share of
      8-7/8% Cumulative  Preferred Stock,  Series G and incorporated  herein by
      reference.

3.18  Certificate of Determination  for the 8.45%  Cumulative  Preferred Stock,
      Series H.  Filed with  Registrant's  Form  8-A/A  Registration  Statement
      relating to the Depositary Shares Each Representing 1/1,000 of a Share of
      8.45%  Cumulative  Preferred Stock,  Series H and incorporated  herein by
      reference.

3.19  Certificate of Determination for the Convertible  Preferred Stock, Series
      CC. Filed with  Registrant's  Registration  Statement  No.  333-03749 and
      incorporated herein by reference.

3.20  Certificate  of  Correction  of  Certificate  of  Determination  for  the
      Convertible   Participating  Preferred  Stock.  Filed  with  Registrant's
      Registration   Statement  No.  333-08791  and   incorporated   herein  by
      reference.

3.21  Certificate  of  Determination  for 8-5/8%  Cumulative  Preferred  Stock,
      Series I.  Filed with  Registrant's  Form  8-A/A  Registration  Statement
      relating to the Depositary Shares Each Representing 1/1,000 of a Share of
      8-5/8% Cumulative  Preferred Stock,  Series I and incorporated  herein by
      reference.

3.22  Certificate  of  Amendment  of  Articles  of  Incorporation.  Filed  with
      Registrant's Registration Statement No. 333-18395 and incorporated herein
      by reference.

3.23  Certificate  of  Determination  for  Equity  Stock,  Series A. Filed with
      Registrant's  Form 10-Q for the quarterly  period ended June 30, 1997 and
      incorporated herein by reference.

3.24  Certificate  of  Determination  for Equity  Stock,  Series AA. Filed with
      Registrant's  Form 10-Q for the quarterly period ended September 30, 1999
      and incorporated herein by reference.

3.25  Certificate  Decreasing Shares Constituting Equity Stock, Series A. Filed
      with  Registrant's Form 10-Q for the quarterly period ended September 30,
      1999 and incorporated herein by reference.

3.26  Certificate  of  Determination  for  Equity  Stock,  Series A. Filed with
      Registrant's  Form 10-Q for the quarterly period ended September 30, 1999
      and incorporated herein by reference.

3.27  Certificate of Determination for 8% Cumulative Preferred Stock, Series J.
      Filed with Registrant's Form 8-A/A Registration Statement relating to the
      Depositary Shares Each  Representing  1/1,000 of a Share of 8% Cumulative
      Preferred Stock, Series J and incorporated herein by reference.

3.28  Certificate of Correction of Certificate of  Determination  for the 8.25%
      Convertible   Preferred  Stock.  Filed  with  Registrant's   Registration
      Statement No. 333-61045 and incorporated herein by reference.

3.29  Certificate  of  Determination  for 8-1/4%  Cumulative  Preferred  Stock,
      Series K.  Filed with  Registrant's  Form  8-A/A  Registration  Statement
      relating to the Depositary Shares Each Representing 1/1,000 of a Share of
      8-1/4% Cumulative  Preferred Stock,  Series K and incorporated  herein by
      reference.

3.30  Certificate  of  Determination  for 8-1/4%  Cumulative  Preferred  Stock,
      Series L.  Filed with  Registrant's  Form  8-A/A  Registration  Statement
      relating to the Depositary Shares Each Representing 1/1,000 of a Share of
      8-1/4% Cumulative  Preferred Stock,  Series L and incorporated  herein by
      reference.

3.31  Certificate of Determination for 8.75% Cumulative Preferred Stock, Series
      M. Filed with Registrant's Form 8-A/A Registration  Statement relating to
      the  Depositary  Shares  Each  Representing  1/1,000  of a Share of 8.75%
      Cumulative   Preferred  Stock,   Series  M  and  incorporated  herein  by
      reference.

                                      66
<PAGE>

3.32  Certificate  of  Determination  for Equity Stock,  Series AAA. Filed with
      Registrant's  Current  Report on Form 8-K  dated  November  15,  1999 and
      incorporated herein by reference.

3.33  Certificate of Determination for 9.5% Cumulative  Preferred Stock, Series
      N. Filed with Registrant's  Annual Report on Form 10-K for the year ended
      December 31, 1999 and incorporated herein by reference.

3.34  Certificate  of  Determination  for 9.125%  Cumulative  Preferred  Stock,
      Series O. Filed with  Registrant's  Quarterly Report on Form 10-Q for the
      quarterly  period  ended  June  30,  2000  and  incorporated   herein  by
      reference.

3.35  Certificate of Determination for 8.75% Cumulative Preferred Stock, Series
      P.  Filed  with  Registrant's  Quarterly  Report  on  Form  10-Q  for the
      quarterly  period  ended  June  30,  2000  and  incorporated   herein  by
      reference.

3.36  Certificate  of  Determination  for 8.600%  Cumulative  Preferred  Stock,
      Series,  Q. Filed with  Registrant's  Form 8-A/A  Registration  Statement
      relating to the Depositary Shares Each Representing 1/1,000 of a Share of
      8.600% Cumulative  Preferred Stock,  Series Q and incorporated  herein by
      reference.

3.37  Amendment to Certificate  of  Determination  for Equity Stock,  Series A.
      Filed with  Registrant's  Quarterly Report on Form 10-Q for the quarterly
      period ended June 30, 2001 and incorporated herein by reference.

3.38  Certificate  of  Determination  for 8.000%  Cumulative  Preferred  Stock,
      Series  R.  Filed  with  Registrant's  Form  8-A  Registration  Statement
      relating to the Depositary Shares Each Representing 1/1,000 of a Share of
      8.000% Cumulative  Preferred Stock,  Series R and incorporated  herein by
      reference.

3.39  Certificate  of  Determination  for 7.875%  Cumulative  Preferred  Stock,
      Series  S.  Filed  with  Registrant's  Form  8-A  Registration  Statement
      relating to the Depositary Shares Each Representing 1/1,000 of a Share of
      7.875% Cumulative  Preferred Stock,  Series S and incorporated  herein by
      reference.

3.40  Certificate  of  Determination  for 7.625%  Cumulative  Preferred  Stock,
      Series  T.  Filed  with  Registrant's  Form  8-A  Registration  Statement
      relating to the Depositary Shares Each Representing 1/1,000 of a Share of
      7.625% Cumulative  Preferred Stock,  Series T and incorporated  herein by
      reference.

3.41  Certificate  of  Determination  for 7.625%  Cumulative  Preferred  Stock,
      Series  U.  Filed  with  Registrant's  Form  8-A  Registration  Statement
      relating to the Depositary Shares Each Representing 1/1,000 of a Share of
      7.625% Cumulative  Preferred Stock,  Series U and incorporated  herein by
      reference.

3.42  Amendment to Certificate of Determination for 7.625% Cumulative Preferred
      Stock,  Series T. Filed with  Registrant's  Quarterly Report on Form 10-Q
      for the quarterly period ended September 30, 2002 and incorporated herein
      by reference.

3.43  Certificate  of  Determination  for 7.500%  Cumulative  Preferred  Stock,
      Series  V.  Filed  with  Registrant's  Form  8-A  Registration  Statement
      relating to the Depositary Shares Each Representing 1/1,000 of a Share of
      7.500% Cumulative  Preferred Stock,  Series V and incorporated  herein by
      reference.

3.44  Certificate  of  Determination  for 6.500%  Cumulative  Preferred  Stock,
      Series  W.  Filed  with  Registrant's  Form  8-A  Registration  Statement
      relating to the Depositary Shares Each Representing 1/1,000 of a Share of
      6.500% Cumulative  Preferred Stock,  Series W and incorporated  herein by
      reference.

3.45  Certificate  of  Determination  for 6.450%  Cumulative  Preferred  Stock,
      Series  X.  Filed  with  Registrant's  Form  8-A  Registration  Statement
      relating to the Depositary Shares Each Representing 1/1,000 of a Share of
      6.450% Cumulative  Preferred Stock,  Series X and incorporated  herein by
      reference.

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3.46  Certificate of Determination  for the 6.85%  Cumulative  Preferred Stock,
      Series Y. Filed with the Registrant's  Form 10-Q for the quarterly period
      ended March 31, 2004 and incorporated herein by reference.

3.47  Certificate  of  Determination  for 6.250%  Cumulative  Preferred  Stock,
      Series  Z.  Filed  with  Registrant's  Form  8-A  Registration  Statement
      relating to the Depositary Shares Each Representing 1/1,000 of a Share of
      6.250% Cumulative  Preferred Stock,  Series Z and incorporated  herein by
      reference.

3.48  Certificate  of  Determination  for 6.125%  Cumulative  Preferred  Stock,
      Series  A.  Filed  with  Registrant's  Form  8-A  Registration  Statement
      relating to the Depositary Shares Each Representing 1/1,000 of a Share of
      6.125% Cumulative  Preferred Stock,  Series A and incorporated  herein by
      reference.

3.49  Certificate of Determination for 6.40% Cumulative Preferred Stock, Series
      NN.  Filed  with  Registrant's  Quarterly  Report  on Form  10-Q  for the
      quarterly  period  ended  March  31,  2004  and  incorporated  herein  by
      reference.

3.50  Certificate  of  Determination  for 7.125%  Cumulative  Preferred  Stock,
      Series  B.  Filed  with  Registrant's  Form  8-A  Registration  Statement
      relating to the Depositary Shares Each Representing 1/1,000 of a Share of
      7.125% Cumulative  Preferred Stock,  Series B and incorporated  herein by
      reference.

3.51  Certificate of Determination for 6.60% Cumulative Preferred Stock, Series
      C. Filed with  Registrant's Form 8-A Registration  Statement  relating to
      the  Depositary  Shares  Each  Representing  1/1,000  of a Share of 6.60%
      Cumulative   Preferred  Stock,   Series  C  and  incorporated  herein  by
      reference.

3.52  Certificate of Determination for 6.18% Cumulative Preferred Stock, Series
      D. Filed with  Registrant's Form 8-A Registration  Statement  relating to
      the  Depositary  Shares  Each  Representing  1/1,000  of a Share of 6.18%
      Cumulative   Preferred  Stock,   Series  D  and  incorporated  herein  by
      reference.

3.53  Certificate of Determination for 6.75% Cumulative Preferred Stock, Series
      E. Filed with  Registrant's Form 8-A Registration  Statement  relating to
      the  Depositary  Shares  Each  Representing  1/1,000  of a Share of 6.75%
      Cumulative   Preferred  Stock,   Series  E  and  incorporated  herein  by
      reference.

3.54  Bylaws, as amended.  Filed with Registrant's  Registration  Statement No.
      33-64971 and incorporated herein by reference.

3.55  Amendment  to Bylaws  adopted  on May 9, 1996.  Filed  with  Registrant's
      Registration   Statement  No.  333-03749  and   incorporated   herein  by
      reference.

3.56  Amendment  to Bylaws  adopted on June 26, 1997.  Filed with  Registrant's
      Registration   Statement  No.  333-41123  and   incorporated   herein  by
      reference.

3.57  Amendment to Bylaws adopted on January 6, 1998.  Filed with  Registrant's
      Registration   Statement  No.  333-41123  and   incorporated   herein  by
      reference.

3.58  Amendment to Bylaws adopted on February 10, 1998. Filed with Registrant's
      Current  Report  on Form 8-K dated  February  10,  1998 and  incorporated
      herein by reference.

3.59  Amendment  to Bylaws  adopted on March 4, 1999.  Filed with  Registrant's
      Current Report on Form 8-K dated March 4, 1999 and incorporated herein by
      reference.

3.60  Amendment to Bylaws adopted on May 6, 1999. Filed with  Registrants' Form
      10-Q for the quarterly period ended June 30, 1999 and incorporated herein
      by reference.

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3.61  Amendment to Bylaws adopted on November 7, 2002. Filed with  Registrant's
      Quarterly  Report on Form 10-Q for the quarterly  period ended  September
      30, 2002 and incorporated herein by reference.

3.62  Amendment  to Bylaws  adopted  on May 8, 2003.  Filed  with  Registrant's
      Quarterly  Report on Form 10-Q for the  quarterly  period ended March 31,
      2003 and incorporated herein by reference.

3.63  Amendment to Bylaws  adopted on August 5, 2003.  Filed with  Registrant's
      Quarterly  Report on Form 10-Q for the  quarterly  period  ended June 30,
      2003 and incorporated herein by reference.

3.64  Amendment to Bylaws  adopted on March 11, 2004.  Filed with  Registrant's
      Annual  Report  on Form 10-K for the year  ended  December  31,  2003 and
      incorporated herein by reference.

10.1  Second Amended and Restated Management  Agreement by and among Registrant
      and the entities listed therein dated as of November 16, 1995. Filed with
      PS  Partners,  Ltd.'s  Annual  Report  on Form  10-K for the  year  ended
      December 31, 1996 and incorporated herein by reference.

10.2  Amended  Management  Agreement  between  Registrant  and  Public  Storage
      Commercial  Properties  Group,  Inc. dated as of February 21, 1995. Filed
      with Registrant's  Annual Report on Form 10-K for the year ended December
      31, 1994 and incorporated herein by reference.

10.3  Loan Agreement between  Registrant and Aetna Life Insurance Company dated
      as of July 11, 1988. Filed with  Registrant's  Current Report on Form 8-K
      dated July 14, 1988 and incorporated herein by reference.

10.4  Amendment to Loan Agreement  between  Registrant and Aetna Life Insurance
      Company  dated as of September 1, 1993.  Filed with  Registrant's  Annual
      Report on Form 10-K for the year ended December 31, 1993 and incorporated
      herein by reference.

10.5  Second  Amended and Restated  Credit  Agreement by and among  Registrant,
      Wells Fargo  Bank,  National  Association,  as agent,  and the  financial
      institutions  party  thereto  dated as of February 25,  1997.  Filed with
      Registrant's Registration Statement No. 333-22665 and incorporated herein
      by reference.

10.6  Note  Assumption  and  Exchange  Agreement  by and among  Public  Storage
      Management, Inc., Public Storage, Inc., Registrant and the holders of the
      notes dated as of November 13, 1995. Filed with Registrant's Registration
      Statement No. 33-64971 and incorporated herein by reference.

10.7* Registrant's  1990 Stock  Option  Plan.  Filed with  Registrant's  Annual
      Report on Form 10-K for the year ended December 31, 1994 and incorporated
      herein by reference.

10.8* Registrant's  1994 Stock  Option  Plan.  Filed with  Registrant's  Annual
      Report on Form 10-K for the year ended December 31, 1997 and incorporated
      herein by reference.

10.9* Registrant's   1996  Stock  Option  and   Incentive   Plan.   Filed  with
      Registrant's  Annual Report on Form 10-K for the year ended  December 31,
      2000 and incorporated herein by reference.

10.10 Deposit  Agreement dated as of December 13, 1995, among  Registrant,  The
      First National Bank of Boston, and the holders of the depositary receipts
      evidencing the Depositary Shares Each Representing  1/1,000 of a Share of
      8-7/8% Cumulative Preferred Stock, Series G. Filed with Registrant's Form
      8-A/A  Registration  Statement  relating  to the  Depositary  Shares Each
      Representing  1/1,000 of a Share of 8-7/8%  Cumulative  Preferred  Stock,
      Series G and incorporated herein by reference.

10.11 Deposit  Agreement dated as of January 25, 1996,  among  Registrant,  The
      First national Bank of Boston, and the holders of the depositary receipts
      evidencing the Depositary Shares Each Representing  1/1,000 of a Share of
      8.45% Cumulative  Preferred Stock, Series H. Filed with Registrant's Form
      8-A/A  Registration  Statement  relating  to the  Depositary  Shares Each
      Representing  1/1,000  of a Share of 8.45%  Cumulative  Preferred  Stock,
      Series H and incorporated herein by reference.

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<PAGE>

10.12*Employment  Agreement between  Registrant and B. Wayne Hughes dated as of
      November 16, 1995. Filed with Registrant's Annual Report on Form 10-K for
      the year ended December 31,1995 and incorporated herein by reference.

10.13 Deposit  Agreement dated as of November 1, 1996,  among  Registrant,  The
      First National Bank of Boston, and the holders of the depositary receipts
      evidencing the Depositary Shares Each Representing  1/1,000 of a Share of
      8-5/8% Cumulative Preferred Stock, Series I. Filed with Registrant's Form
      8-A/A  Registration  Statement  relating  to the  Depositary  Shares Each
      Representing  1/1,000 of a Share of 8-5/8%  Cumulative  Preferred  Stock,
      Series I and incorporated herein by reference.

10.14 Limited Partnership Agreement of PSAF Development Partners,  L.P. between
      PSAF  Development,  Inc.  and the Limited  Partner  dated as of April 10,
      1997.  Filed with  Registrant's  Form 10-Q for the quarterly period ended
      June 30, 1997 and incorporated herein by reference.

10.15 Deposit Agreement dated as of August 28, 1997 among Registrant, The First
      National  Bank of  Boston,  and the  holders of the  depositary  receipts
      evidencing the Depositary Shares Each Representing  1/1,000 of a Share of
      8% Cumulative  Preferred Stock,  Series J. Filed with  Registrant's  Form
      8-A/A  Registration  Statement  relating  to the  Depositary  Shares Each
      Representing  1/1,000 of a Share of 8% Cumulative Preferred Stock, Series
      J and incorporated herein by reference.

10.16 Agreement of Limited  Partnership of PS Business Parks,  L.P. dated as of
      March 17, 1998. Filed with PS Business Parks,  Inc.'s Quarterly Report on
      Form 10-Q for the quarterly  period ended June 30, 1998 and  incorporated
      herein by reference.

10.17 Deposit  Agreement  dated  as  of  January  19,  1999  among  Registrant,
      BankBoston,  N.A. and the holders of the depositary  receipts  evidencing
      the  Depositary  Shares  Each  Representing  1/1,000 of a Share of 8-1/4%
      Cumulative  Preferred Stock, Series K. Filed with Registrant's Form 8-A/A
      Registration   Statement   relating   to  the   Depositary   Shares  Each
      Representing  1/1,000 of a Share of 8-1/4%  Cumulative  Preferred  Stock,
      Series K and incorporated herein by reference.

10.18 Agreement and Plan of Merger among Storage Trust Realty,  Registrant  and
      Newco Merger  Subsidiary,  Inc. dated as of November 12, 1998. Filed with
      Registrant's Registration Statement No. 333-68543 and incorporated herein
      by reference.

10.19 Amendment  No. 1 to  Agreement  and Plan of Merger  among  Storage  Trust
      Realty,  Registrant,   Newco  Merger  Subsidiary,  Inc.  and  STR  Merger
      Subsidiary,  Inc. dated as of January 19, 1999.  Filed with  registrant's
      Registration   Statement  No.  333-68543  and   incorporated   herein  by
      reference.

10.20 Amended and Restated  Agreement of Limited  Partnership  of Storage Trust
      Properties,  L.P.,  dated as of March 12, 1999.  Filed with  Registrant's
      Form 10-Q for the quarterly  period ended June 30, 1999 and  incorporated
      herein by reference.

10.21*Storage Trust Realty 1994 Share Incentive Plan.  Filed with Storage Trust
      Realty's  Annual Report on Form 10-K for the year ended December 31, 1997
      and incorporated herein by reference.

10.22*Amended and Restated  Storage Trust Realty Retention Bonus Plan effective
      as of November 12, 1998. Filed with Registrant's  Registration  Statement
      No. 333-68543 and incorporated herein by reference.

10.23 Deposit   Agreement  dated  as  of  March  10,  1999  among   Registrant,
      BankBoston,  N.A. and the holders of the depositary  receipts  evidencing
      the  Depositary  Shares  Each  Representing  1/1,000 of a Share of 8-1/4%
      Cumulative  Preferred Stock, Series L. Filed with Registrant's Form 8-A/A
      Registration   Statement   relating   to  the   Depositary   Shares  Each
      Representing  1/1,000 of a Share of 8-1/4%  Cumulative  Preferred  Stock,
      Series L and incorporated herein by reference.

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<PAGE>

10.24 Note  Purchase   Agreement  and  Guaranty   Agreement   with  respect  to
      $100,000,000 of Senior Notes of Storage Trust Properties, L.P. Filed with
      Storage  Trust  Realty's  Annual  Report on Form 10-K for the year  ended
      December 31, 1996 and incorporated herein by reference.

10.25 Deposit   Agreement  dated  as  of  August  17,  1999  among  Registrant,
      BankBoston,  N.A. and the holders of the depositary  receipts  evidencing
      the  Depositary  Shares  Each  Representing  1/1,000  of a Share of 8.75%
      Cumulative  Preferred Stock, Series M. Filed with Registrant's Form 8-A/A
      Registration   Statement   relating   to  the   Depositary   Shares  Each
      Representing  1/1,000  of a Share of 8.75%  Cumulative  Preferred  Stock,
      Series M and incorporated herein by reference.

10.26 Limited Partnership Agreement of PSAC Development Partners, L.P. among PS
      Texas Holdings,  Ltd., PS Pennsylvania  Trust and PSAC Storage Investors,
      L.L.C. dated as November 15, 1999. Filed with Registrant's Current Report
      on Form 8-K dated November 15, 1999 and incorporated herein by reference.

10.27 Agreement of Limited Liability Company of PSAC Storage Investors,  L.L.C.
      dated as of November 15, 1999. Filed with Registrant's  Current Report on
      Form 8-K dated November 15, 1999 and incorporated herein by reference.

10.28 Deposit  Agreement  dated  as  of  January  14,  2000  among  Registrant,
      BankBoston,  N.A. and the holders of the depositary  receipts  evidencing
      the  Depositary  Shares  Each  Representing  1/1,000 of a Share of Equity
      Stock,   Series  A.  Filed  with  Registrant's  Form  8-A/A  Registration
      Statement relating to the Depositary Shares Each Representing  1/1,000 of
      a Share of Equity Stock, Series A and incorporated herein by reference.

10.29 Amended  and   Restated   Agreement   of  Limited   Partnership   of  PSA
      Institutional  Partners,  L.P.  among PS  Texas  Holdings,  Ltd.  and the
      Limited  Partners  dated as of March 29,  2000.  Filed with  Registrant's
      Annual  Report  on Form 10-K for the year  ended  December  31,  1999 and
      incorporated herein by reference.

10.30 Amended  and   Restated   Agreement   of  Limited   Partnership   of  PSA
      Institutional  Partners,  L.P.  among PS  Texas  Holdings,  Ltd.  and the
      Limited  Partners  dated as of August 11, 2000.  Filed with  Registrant's
      Quarterly  Report on Form 10-Q for the  quarterly  period  ended June 30,
      2000 and incorporated herein by reference.

10.31*Registrant's 2000  Non-Executive/Non-Director  Stock Option and Incentive
      Plan. Filed with  Registrant's  Registration  Statement No, 333-52400 and
      incorporated herein by reference.

10.32 Deposit  Agreement dated as of January 19, 2001 among  Registrant,  Fleet
      National Bank and the holders of the depositary  receipts  evidencing the
      Depositary  Shares  Each  Representing  1/1,000  of  a  Share  of  8.600%
      Cumulative  Preferred Stock, Series Q. Filed with Registrant's Form 8-A/A
      Registration   Statement   relating   to  the   Depositary   Shares  Each
      Representing  1/1,000 of a Share of 8.600%  Cumulative  Preferred  Stock,
      Series Q and incorporated herein by reference.

10.33*Registrant's 2001  Non-Executive/Non-Director  Stock Option and Incentive
      Plan. Filed with  Registrant's  Registration  Statement No. 333-59218 and
      incorporated herein by reference.

10.34*Registrant's   2001  Stock  Option  and   Incentive   Plan.   Filed  with
      Registrant's Registration Statement No. 333-59218 and incorporated herein
      by reference.

10.35 Deposit Agreement dated as of September 28, 2001 among Registrant,  Fleet
      National Bank and the holders of the depositary  receipts  evidencing the
      Depositary  Shares  Each  Representing  1/1,000  of  a  Share  of  8.000%
      Cumulative  Preferred Stock,  Series R. Filed with  Registrant's Form 8-A
      Registration   Statement   relating   to  the   Depositary   Shares  Each
      Representing  1/1,000 of a Share of 8.000%  Cumulative  Preferred  Stock,
      Series R and incorporated herein by reference.

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10.36 Deposit  Agreement dated as of October 31, 2001 among  Registrant,  Fleet
      National Bank and the holder of the  depositary  receipts  evidencing the
      Depositary  Shares  Each  Representing  1/1,000  of  a  Share  of  7.875%
      Cumulative  Preferred Stock,  Series S. Filed with  Registrant's Form 8-A
      Registration   Statement   relating   to  the   Depositary   Shares  Each
      Representing  1/1,000 of a Share of 7.875%  Cumulative  Preferred  Stock,
      Series S and incorporated herein by reference.

10.37 Credit  Agreement  by and among  Registrant,  Wells Fargo Bank,  National
      Association, as agent, and the financial institutions party thereto dated
      as of November 1, 2001. Filed with Registrant's  Quarterly Report on Form
      10-Q for the quarterly  period ended September 30, 2001 and  incorporated
      herein by reference.

10.38 Deposit  Agreement  dated  as  of  January  18,  2002  among  Registrant,
      Equiserve  Trust Company N.A. and the holders of the depositary  receipts
      evidencing the Depositary Shares Each Representing  1/1,000 of a Share of
      7.625% Cumulative Preferred Stock, Series T. Filed with Registrant's Form
      8-A  Registration  Statement  relating  to  the  Depositary  Shares  Each
      Representing  1/1,000 of a Share of 7.625%  Cumulative  Preferred  Stock,
      Series T and incorporated herein by reference.

10.39 Deposit  Agreement  dated  as of  February  19,  2002  among  Registrant,
      Equiserve  Trust Company N.A. and the holders of the depositary  receipts
      evidencing the Depositary Shares Each Representing  1/1,000 of a Share of
      7.625% Cumulative Preferred Stock, Series U. Filed with Registrant's Form
      8-A  Registration  Statement  relating  to  the  Depositary  Shares  Each
      Representing  1/1,000 of a Share of 7.625%  Cumulative  Preferred  Stock,
      Series U and incorporated herein by reference.

10.40 Deposit  Agreement  dated as of  September  30,  2002  among  Registrant,
      Equiserve  Trust Company N.A. and the holders of the depositary  receipts
      evidencing the Depositary Shares Each Representing  1/1,000 of a Share of
      7.500% Cumulative Preferred Stock, Series V. Filed with Registrant's Form
      8-A  Registration  Statement  relating  to  the  Depositary  Shares  Each
      Representing  1/1,000 of a Share of 7.500%  Cumulative  Preferred  Stock,
      Series V and incorporated herein by reference.

10.41*Employment  Agreement  between  Registrant  and Harvey Lenkin dated as of
      August 5, 2003. Filed with Registrant's Quarterly Report on Form 10-Q for
      the  quarterly  period  ended June 30,  2003 and  incorporated  herein by
      reference.

10.42 Deposit Agreement dated as of October 6, 2003 among Registrant, Equiserve
      Inc.,  Equiserve  Trust  Company N.A.  and the holders of the  depositary
      receipts evidencing the Depositary Shares Each Representing  1/1,000 of a
      Share  of  6.500%  Cumulative  Preferred  Stock,  Series  W.  Filed  with
      Registrant's Form 8-A Registration  Statement  relating to the Depositary
      Shares  Each  Representing  1/1,000  of  a  Share  of  6.500%  Cumulative
      Preferred Stock, Series W and incorporated herein by reference.

10.43 Deposit  Agreement  dated  as of  November  13,  2003  among  Registrant,
      Equiserve  Inc.,  Equiserve  Trust  Company  N.A.  and the holders of the
      depositary  receipts  evidencing the Depositary  Shares Each Representing
      1/1,000 of a Share of 6.450% Cumulative  Preferred Stock, Series X. Filed
      with  Registrant's  Form  8-A  Registration  Statement  relating  to  the
      Depositary  Shares  Each  Representing  1/1,000  of  a  Share  of  6.450%
      Cumulative   Preferred  Stock,   Series  X  and  incorporated  herein  by
      reference.

10.44 Deposit Agreement dated as of March 5, 2004 among  Registrant,  Equiserve
      Inc.,  Equiserve  Trust  Company N.A.  and the holders of the  depositary
      receipts evidencing the Depositary Shares Each Representing  1/1,000 of a
      Share  of  6.250%  Cumulative  Preferred  Stock,  Series  Z.  Filed  with
      Registrant's Form 8-A Registration  Statement  relating to the Depositary
      Shares  Each  Representing  1/1,000  of  a  Share  of  6.250%  Cumulative
      Preferred Stock, Series Z and incorporated herein by reference.

                                      72
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10.45 Limited Partnership Agreement of PSAF Acquisition Partners,  L.P. between
      PS Texas Holdings,  Ltd. and the Limited Partner dated as of December 18,
      2003.  Filed with  Registrant's  Annual  Report on Form 10-K for the year
      ended December 31, 2003 and incorporated herein by reference.

10.46 Second Amendment to Amended and Restated Agreement of Limited Partnership
      of PSA Institutional Partners, L.P. among PS Texas Holdings, Ltd. and the
      Limited  Partners  dated as of March 22,  2004.  Filed with  Registrant's
      Quarterly  Report on Form 10-Q for the  quarterly  period ended March 31,
      2004 and incorporated herein by reference.

10.47 Second Amendment to Credit Agreement by and among Registrant, Wells Fargo
      Bank,  National  Association,  as agent,  and the financial  institutions
      party  thereto  dated as of  March  25,  2004.  Filed  with  Registrant's
      Quarterly  Report on Form 10-Q for the  quarterly  period ended March 31,
      2004 and incorporated herein by reference.

10.48 Deposit Agreement dated as of March 31, 2004 among Registrant,  Equiserve
      Inc.,  Equiserve  Trust  Company N.A.  and the holders of the  depositary
      receipts evidencing the Depositary Shares Each Representing  1/1,000 of a
      Share  of  6.125%  Cumulative  Preferred  Stock,  Series  A.  Filed  with
      Registrant's Form 8-A Registration  Statement  relating to the Depositary
      Shares  Each  Representing  1/1,000  of  a  Share  of  6.125%  Cumulative
      Preferred Stock, Series A and incorporated herein by reference.

10.49 Deposit Agreement dated as of June 30, 2004 among  Registrant,  Equiserve
      Inc.,  Equiserve  Trust  Company N.A.  and the holders of the  depositary
      receipts evidencing the Depositary Shares Each Representing  1/1,000 of a
      Share  of  7.125%  Cumulative  Preferred  Stock,  Series  B.  Filed  with
      Registrant's Form 8-A Registration  Statement  relating to the Depositary
      Shares  Each  Representing  1/1,000  of  a  Share  of  7.125%  Cumulative
      Preferred Stock, Series B and incorporated herein by reference.

10.50 Deposit  Agreement  dated as of  September  13,  2004  among  Registrant,
      Equiserve  Inc.,  Equiserve  Trust  Company  N.A.  and the holders of the
      depositary  receipts  evidencing the Depositary  Shares Each Representing
      1/1,000 of a Share of 6.60% Cumulative  Preferred Stock,  Series C. Filed
      with  Registrant's  Form  8-A  Registration  Statement  relating  to  the
      Depositary  Shares  Each  Representing   1/1,000  of  a  Share  of  6.60%
      Cumulative   Preferred  Stock,   Series  C  and  incorporated  herein  by
      reference.

10.51 Amended  and   Restated   Agreement   of  Limited   Partnership   of  PSA
      Institutional  Partners,  L.P.  among PS  Texas  Holdings,  Ltd.  and the
      Limited  Partners dated as of October 12, 2004.  Filed with  Registrant's
      Quarterly  Report on Form 10-Q for the quarterly  period ended  September
      30, 2004 and incorporated herein by reference.

10.52 Deposit  Agreement  dated  as of  February  28,  2005  among  Registrant,
      Equiserve  Inc.,  Equiserve  Trust  Company  N.A.  and the holders of the
      depositary  receipts  evidencing the Depositary  Shares Each Representing
      1/1,000 of a Share of 6.18% Cumulative  Preferred Stock,  Series D. Filed
      with  Registrant's  Form  8-A  Registration  Statement  relating  to  the
      Depositary  Shares  Each  Representing   1/1,000  of  a  Share  of  6.18%
      Cumulative   Preferred  Stock,   Series  D  and  incorporated  herein  by
      reference.

10.53*Form of 2001 Stock Option and Incentive Plan  Non-qualified  Stock Option
      Agreement.  Filed with Registrant's Quarterly Report on Form 10-Q for the
      quarterly  period ended  September  30, 2004 and  incorporated  herein by
      reference.

1054* Form of  Restricted  Stock Unit  Agreement.  Filed with the  Registrant's
      Quarterly  Report on Form 10-Q for the quarterly  period ended  September
      30, 2004 and incorporated herein by reference.

10.55*Form of 2001 Stock  Option and  Incentive  Plan  Outside  Director  Stock
      Option Agreement.  Filed with Registrant's  Quarterly Report on Form 10-Q
      for the quarterly period ended September 30, 2004 and incorporated herein
      by reference.

10.56*Form of  Indemnification  Agreement with Executive  Officers.  Filed with
      Registrant's  Annual Report on Form 10-K for the year ended  December 31,
      2004 and incorporated herein by reference.

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<PAGE>

10.57 Deposit Agreement dated as of April 27, 2005 among  Registrant,  Equiserve
      Inc.,  Equiserve  Trust  Company N.A.  and the holders of the  depositary
      receipts evidencing the Depositary Shares Each Representing  1/1,000 of a
      Share  of  6.75%  Cumulative   Preferred  Stock,  Series  E.  Filed  with
      Registrant's Form 8-A Registration  Statement  relating to the Depositary
      Shares Each Representing 1/1,000 of a Share of 6.75% Cumulative Preferred
      Stock, Series E and incorporated herein by reference.

11    Statement Re: Computation of Earnings per Share. Filed herewith.

12    Statement Re:  Computation of Ratio of Earnings to Fixed  Charges.  Filed
      herewith.

31.1  Certification  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
      Filed herewith.

31.2  Certification  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
      Filed herewith.

31.3  Certification  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
      Filed herewith.

32    Certification  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
      Filed herewith.

---------------------------------

*     Compensatory benefit plan or arrangement or management contract.

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<PAGE>


                                   SIGNATURES

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

                                 DATED:     May 10, 2005

                                 PUBLIC STORAGE, INC.

                                 By:        /s/  John Reyes
                                            ------------------
                                            John Reyes
                                            Senior Vice President and Chief
                                            Financial Officer Principal
                                            financial officer and duly
                                            authorized officer)

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