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, 2003
                               --------------

                                       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
     incorporation or organization)                       Identification Number)

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

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


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 12, 2003:

Common Stock, $.10 Par Value - 125,279,447 shares
-------------------------------------------------

Depositary Shares Each Representing 1/1,000 of a Share of Equity Stock, Series
------------------------------------------------------------------------------
A, $.01 Par Value - 8,776,102 depositary shares (representing 8,776.102 shares
------------------------------------------------------------------------------
of Equity Stock, Series A)
--------------------------

Equity Stock, Series AA, $.01 Par Value - 225,000 shares
--------------------------------------------------------

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, 2003 and December 31, 2002                           1

           Condensed Consolidated Statements of Income for the
              Three Months Ended March 31, 2003 and 2002                     2

           Condensed Consolidated Statement of Shareholders' Equity
              for the Three Months Ended March 31, 2003                      3

           Condensed Consolidated Statements of Cash Flows
              for the Three months Ended March 31, 2003 and 2002             4

           Notes to Condensed Consolidated Financial Statements           5-31

Item 2.    Management's Discussion and Analysis of
              Financial Condition and Results of Operations              32-55

Item 2A.   Risk Factors                                                  55-59

Item 3.    Quantitative and Qualitative Disclosures about Market Risk       59

Item 4.    Controls and Procedures                                          60

PART II.   OTHER INFORMATION (Items 2 - 4 are not applicable)
           -----------------

Item 1.    Legal Proceedings                                                61

Item 5.    Other Items                                                      62

Item 6.    Exhibits and Reports on Form 8-K                              62-68

<PAGE>

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


<TABLE>
<CAPTION>
                                                                                          March 31,          December 31,
                                                                                            2003                 2002
                                                                                       ---------------      ---------------
                                                                                         (Unaudited)
                                     ASSETS
                                     ------

<S>                                                                                     <C>                  <C>
Cash and cash equivalents....................................................           $      55,017        $     103,124
Real estate facilities, at cost:
   Land......................................................................               1,310,487            1,304,881
   Buildings.................................................................               3,687,444            3,683,645
                                                                                       ---------------      ---------------
                                                                                            4,997,931            4,988,526
   Accumulated depreciation..................................................              (1,024,002)            (987,546)
                                                                                       ---------------      ---------------
                                                                                            3,973,929            4,000,980
   Construction in process...................................................                  75,781               87,516
   Land held for development.................................................                  17,807               17,807
   Real estate facilities held for sale, net of accumulated depreciation (Note 4)              15,421                    -
                                                                                       ---------------      ---------------
                                                                                            4,082,938            4,106,303

Investment in real estate entities...........................................                 331,557              329,679
Goodwill.....................................................................                  78,204               78,204
Intangible assets, net.......................................................                 116,242              117,893
Notes receivable, including amounts due from related parties.................                  24,281               24,324
Other assets.................................................................                  76,955               84,135
                                                                                       ---------------      ---------------
              Total assets...................................................           $   4,765,194        $   4,843,662
                                                                                       ===============      ===============

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

Line of credit borrowings....................................................           $      25,000        $           -
Notes payable................................................................                  89,111              115,867
Accrued and other liabilities................................................                 129,511              129,327
                                                                                       ---------------      ---------------
         Total liabilities...................................................                 243,622              245,194
Minority interest:
   Preferred partnership interests...........................................                 285,000              285,000
   Other partnership interests...............................................                 153,401              154,499
Commitments and contingencies
Shareholders' equity:
   Cumulative Preferred Stock, $0.01 par value, 50,000,000 shares authorized,
     6,958,486 shares issued (in series) and outstanding, (9,258,486 at
     December 31, 2002) at liquidation preference............................               1,759,525            1,817,025
   Common Stock, $0.10 par value, 200,000,000 shares authorized, 124,134,290
     shares issued and outstanding (116,991,455 at December 31, 2002)........                  12,413               11,699
   Equity Stock, Series A, $0.01 par value, 200,000,000 shares authorized,
     8,776.102 shares issued and outstanding.................................                       -                    -
   Class B Common Stock, $0.10 par value, no shares are issued and outstanding
     (7,000,000 at December 31, 2002)........................................                       -                  700
   Paid-in capital...........................................................               2,374,635            2,371,194
   Cumulative net income.....................................................               2,106,646            2,030,007
   Cumulative distributions paid.............................................              (2,170,048)          (2,071,656)
                                                                                       ---------------      ---------------
         Total shareholders' equity..........................................               4,083,171            4,158,969
                                                                                       ---------------      ---------------
              Total liabilities and shareholders' equity.....................           $   4,765,194        $   4,843,662
                                                                                       ===============      ===============
</TABLE>
                            See accompanying notes.
                                       1

<PAGE>

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

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                       For the Three Months Ended
                                                                                March 31,
                                                                    ---------------------------------
                                                                         2003              2002
                                                                    ---------------- ----------------
<S>                                                                  <C>              <C>
Revenues:
     Rental income:
         Self-storage facilities..............................       $      189,571   $      188,525
         Commercial properties................................                2,846            2,956
         Containerized storage facilities.....................                9,481            8,198
     Tenant reinsurance premiums..............................                5,215            4,575
     Interest and other income................................                1,699            1,708
                                                                    ---------------- ----------------
                                                                            208,812          205,962
Expenses:
     Cost of operations:
         Self-storage facilities..............................               65,315           58,439
         Commercial properties................................                1,193            1,092
         Containerized storage facilities.....................                6,377            5,957
         Tenant reinsurance...................................                2,699            2,293
     Depreciation and amortization............................               45,920           43,399
     General and administrative...............................                4,250            4,000
     Interest expense.........................................                  453            1,102
                                                                    ---------------- ----------------
                                                                            126,207          116,282
Income before equity in earnings of real estate entities,
   minority interest in income, discontinued operations and gain
   on disposition of real estate investments..................               82,605           89,680
Equity in earnings of real estate entities (Note 6)...........                4,687            9,256
Minority interest in income:
     Preferred partnership interests..........................               (6,726)          (6,726)
     Other partnership interests..............................               (3,942)          (4,616)
                                                                    ---------------- ----------------
Income before discontinued operations and gain on disposition of
   real estate investments....................................               76,624           87,594
Discontinued operations (Note 4)..............................                    1             (139)
Gain on disposition of real estate investments................                   14                -
                                                                    ---------------- ----------------
Net income....................................................       $       76,639   $       87,455
                                                                    ================ ================
Net income allocation:
     Allocable to preferred shareholders......................       $       37,022   $       35,840
     Allocable to Equity Stock, Series A......................                5,375            5,375
     Allocable to common shareholders.........................               34,242           46,240
                                                                    ---------------- ----------------
                                                                     $       76,639   $       87,455
                                                                    ================ ================
Per common share:
     Net income per share - Basic.............................       $         0.28   $         0.38
                                                                    ================ ================
     Net income per share - Diluted...........................       $         0.27   $         0.37
                                                                    ================ ================
     Net income per depositary share of Equity Stock, Series A -
       Basic and Diluted......................................       $         0.61   $         0.61
                                                                    ================ ================
     Weighted average common shares - Basic...................              124,078          121,946
                                                                    ================ ================
     Weighted average common shares - Diluted.................              125,232          124,065
                                                                    ================ ================
     Weighted average depositary 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                       Class B Common
                                                              Preferred Stock    Common Stock         Stock        Paid-in Capital
                                                              ---------------    ---------------  ---------------  ---------------
<S>                                                             <C>               <C>              <C>               <C>
Balances at December 31, 2002.............................      $  1,817,025      $     11,699     $        700      $  2,371,194

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

Issuance of common stock:
   Exercise of Employee Stock Options (142,835 shares)....                 -                14                -             3,458
   Conversion of Class B shares into Common Stock
     (7,000,000 shares)...................................                 -               700             (700)                -

Net income................................................                 -                 -                -                 -

Cash distributions:
   Cumulative preferred stock (Note 10)...................                 -                 -                -                 -
   Equity Stock, Series A ($0.61 per share)...............                 -                 -                -                 -
   Common Stock ($0.45 per share).........................                 -                 -                -                 -
                                                              ---------------    ---------------  ---------------  ---------------
Balances at March 31, 2003................................      $  1,759,525      $     12,413     $          -      $  2,374,635
                                                              ===============    ===============  ===============  ===============
</TABLE>
<TABLE>
<CAPTION>
                                                                                                      Total
                                                              Cumulative Net      Cumulative       Shareholders'
                                                                  Income        Distributions        Equity
                                                              ---------------   ---------------   ---------------
<S>                                                            <C>               <C>               <C>
Balances at December 31, 2002.............................     $  2,030,007      $ (2,071,656)     $  4,158,969

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

Issuance of common stock:
   Exercise of Employee Stock Options (142,835 shares)....                -                 -             3,472
   Conversion of Class B shares into Common Stock
     (7,000,000 shares)...................................                -                 -                 -

Net income................................................           76,639                 -            76,639

Cash distributions:
   Cumulative preferred stock (Note 10)...................                -           (37,022)          (37,022)
   Equity Stock, Series A ($0.61 per share)...............                -            (5,375)           (5,375)
   Common Stock ($0.45 per share).........................                -           (55,995)          (55,995)
                                                              ---------------   ---------------   ---------------
Balances at March 31, 2003................................     $  2,106,646      $ (2,170,048)     $  4,083,171
                                                              ===============   ===============   ===============
</TABLE>
                            See accompanying notes.
                                       3

<PAGE>

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

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                    For the Three Months Ended
                                                                                            March 31,
                                                                               -------------------------------------
                                                                                    2003                 2002
                                                                               ----------------     ----------------
<S>                                                                             <C>                  <C>
Cash flows from operating activities:
     Net income..........................................................       $       76,639       $       87,455
     Adjustments to reconcile net income to net cash provided by operating
       activities:
         Loss (gain) included in equity in earnings of real estate
            investments (Note 6).........................................                2,130               (2,241)
         Gain on sale of real estate investments.........................                  (14)                   -
         Depreciation and amortization...................................               45,920               43,399
         Depreciation included in equity in earnings of real estate                      6,294                6,371
            entities.....................................................
         Minority interest in income.....................................               10,668               11,342
         Depreciation associated with discontinued operations (Note                        120                  598
             4)......................................................
         Other...........................................................                5,158                5,225
                                                                               ----------------     ----------------
              Total adjustments..........................................               70,276               64,694
                                                                               ----------------     ----------------
                  Net cash provided by operating activities..............              146,915              152,149
                                                                               ----------------     ----------------

Cash flows from investing activities:
     Principal payments received on mortgage notes receivable............                   43               35,021
     Business combinations (Note 3)......................................                    -             (152,327)
     Capital improvements to real estate facilities......................               (2,333)              (3,968)
     Construction in process and acquisition of land held for development              (24,184)             (22,796)
     Acquisition of minority interests...................................                    -                 (437)
     Proceeds from the disposition of land and real estate facilities....                7,713                    -
     Investment in real estate entities..................................              (10,302)              (6,861)
     Acquisition of real estate facilities...............................                    -               (5,052)
     Other investments...................................................                    -                 (397)
                                                                               ----------------     ----------------
                  Net cash used in investing activities..................              (29,063)            (156,817)
                                                                               ----------------     ----------------

Cash flows from financing activities:
     Borrowings (paydowns) on revolving line of credit...................               25,000              (25,000)
     Principal payments on notes payable.................................              (26,756)             (15,476)
     Net proceeds from the issuance of common stock......................                3,472                7,094
     Net proceeds from the issuance of preferred stock...................                    -              290,150
     Repurchase of common stock..........................................                    -                 (381)
     Redemption of preferred stock.......................................              (57,517)                   -
     Distributions paid to shareholders..................................              (98,392)             (96,260)
     Distributions paid to holders of preferred partnership units........               (6,726)              (6,726)
     Distributions paid to minority interests............................               (5,588)              (6,871)
     Investment of minority interests....................................                  548                1,072
                                                                               ----------------     ----------------
                  Net cash (used in) provided by financing activities....             (165,959)             147,602
                                                                               ----------------     ----------------

Net (decrease) increase in cash and cash equivalents.....................              (48,107)             142,934
Cash and cash equivalents at the beginning of the period.................              103,124               49,347
                                                                               ----------------     ----------------
Cash and cash equivalents at the end of the period.......................       $       55,017       $      192,281
                                                                               ================     ================

Supplemental schedule of non-cash investing and financing activities:
     Business combinations (Note 3):
         Real estate facilities..........................................       $            -       $     (330,426)
         Other assets....................................................                    -               (2,175)
         Accrued and other liabilities...................................                    -                5,232
         Minority interest...............................................                    -               14,806
         Reduction in investment in real estate entities.................                    -              160,236

</TABLE>
                            See accompanying notes.
                                       4

<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2003

                                   (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 wholly owned
     facilities or by acquiring interests in real estate entities which own
     facilities. At March 31, 2003, we had direct and indirect equity interests
     in 1,406 storage facilities located in 37 states and operating under the
     "Public Storage" name. We also have direct and indirect equity interests in
     approximately 16.1 million net rentable square feet of commercial space
     located in 12 states.

2.   Summary of Significant Account Policies

     Basis of Presentation
     ---------------------

              The consolidated financial statements include the accounts of the
     Company and 33 controlled entities (the "Consolidated Entities").
     Collectively, the Company and the Consolidated Entities own a total of
     1,379 real estate facilities, consisting of 1,370 self-storage facilities,
     six containerized storage facilities and three commercial properties. All
     intercompany transactions between the Company and any of the Consolidated
     Entities are eliminated in consolidation.

              At March 31, 2003, we had equity investments in seven limited
     partnerships in which we do not have a controlling interest. These limited
     partnerships collectively own 36 self-storage facilities, which are managed
     by the Company. In addition, we own approximately 45% of the common equity
     of PS Business Parks, Inc. ("PSB"), which owns and operates approximately
     14.5 million net rentable square feet of commercial space at March 31,
     2003. We do not control these entities. Accordingly, our investment in
     these limited partnerships and PSB (these entities are referred to
     collectively as the "Unconsolidated Entities") are accounted for using the
     equity method.

              Certain amounts previously reported have been reclassified to
     conform to the March 31, 2003 presentation, including Discontinued
     Operations (See note 4).

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

              The preparation of the consolidated financial statements in
     conformity with accounting principles generally accepted in the United
     States 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>

     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 2003 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 is 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 debt instruments with a 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 assets, and accrued and other
     liabilities, the carrying values as presented on the consolidated balance
     sheets are reasonable estimates of fair value. The carrying amount of
     mortgage notes receivable approximates fair value because the aggregate
     mortgage notes receivable's applicable interest rates approximate current
     market rates for similar loans.

              Financial assets that are exposed to credit risk consist primarily
     of cash and cash equivalents, accounts receivable, and notes receivable.
     Cash equivalents, which consist of short-term investments, including
     commercial paper, are only invested in entities with an investment grade
     rating. Notes receivable are substantially all secured by real estate
     facilities that we believe are valued in excess of the related note
     receivable. Accounts receivable are not a significant portion of total
     assets and are comprised of a large number of individual customers.

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

              Real estate facilities are recorded at cost. Costs associated with
     the acquisition, development, construction and improvement of properties
     are capitalized. Interest, property taxes, and other costs associated with
     development 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 between 5 and 25 years.

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

              In August 2001, the Financial Accounting Standards Board ("FASB")
     issued Statement of Financial Accounting Standards No. 144, "Accounting for
     the Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144"). In June
     2001, the FASB issued Statement of Financial Accounting Standards No. 142,
     "Goodwill and Other Intangible Assets" ("SFAS No. 142"). We adopted both of
     these statements effective January 1, 2002.

                                       6

<PAGE>

              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 carrying amount is less than the fair value of the reporting
     unit, 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. Our evaluation identified no such impairments in our last annual
     evaluation at December 31, 2002.

              With respect to other long-lived assets, we evaluate such assets
     on a quarterly basis. We first evaluate these assets for indicators 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. Our evaluations identified no such impairments
     at March 31, 2003.

              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 or their
     carrying value.

     Accounting for Employee Stock Options
     -------------------------------------

              We utilize the Fair Value Method (described below) of accounting
     for our employee stock options issued after December 31, 2001, and utilize
     the APB 25 Method (described below) for employee stock options issued prior
     to January 1, 2002. For the three months ended March 31, 2003, a total of
     $99,000 in compensation expense (none for the three months ended March 31,
     2002) with respect to stock options was included in general and
     administrative expense. See Note 12 for a full discussion of our accounting
     policies with respect to employee stock options.

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

              Other assets primarily consist of furniture, fixtures, equipment,
     and other such assets associated with the containerized storage operations,
     system development and computer software costs, assets associated with the
     truck rental business, accounts receivable, and prepaid expenses.
     Expenditures with respect to the containerized storage operations, system
     development and computer software costs, and truck rental business are
     included in "other investments" on the statements of cash flows. Accounts
     receivable from customers are net of allowances for doubtful accounts.

              Included in other assets with respect to the containerized storage
     business is furniture, fixtures, and equipment (net of accumulated
     depreciation) of $18,415,000 and $20,275,000 at March 31, 2003 and December
     31, 2002, respectively.

                                       7

<PAGE>

              Included in depreciation and amortization expense for the three
     months ended March 31, 2003 and 2002 is $2,086,000 and $1,227,000,
     respectively, related to depreciation of other assets. Included in
     discontinued operations - containerized storage is depreciation expense of
     $386,000 for the three months ended March 31, 2002, (none for the three
     months ended March 31, 2003) related to depreciation of furniture,
     fixtures, and equipment of the discontinued operations of the containerized
     storage business.

              We reevaluated the historical results with respect to wear and
     functional obsolescence of the containers and other assets used in the
     containerized storage business. Based upon the results of this review, we
     decreased the estimated useful lives with respect to these assets effective
     January 1, 2003. As a result of this change, depreciation with respect to
     these assets increased $404,000 in the quarter ended March 31, 2003 as
     compared to the same period in 2002.

              Other assets at March 31, 2003 also include $13,308,000
     ($13,801,000 at December 31, 2002) in held to maturity debt securities
     owned by STOR-Re Mutual Insurance Company, Inc. ("STOR-Re") (see Note 3)
     stated at amortized cost.

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

              Accrued and other liabilities consist primarily of trade payables,
     real and personal property tax accruals, accrued interest, and losses and
     loss adjustment liabilities, as discussed below.

              STOR-Re provides limited property and liability insurance coverage
     to the Company and affiliates of the Company. This entity accrues
     liabilities for losses and loss adjustment expense, which at March 31, 2003
     totaled $22,617,000 ($22,911,000 at December 31, 2002). PS Insurance
     Company, Ltd. reinsures policies against claims for losses to goods stored
     by tenants in our self-storage facilities. This entity accrues liabilities
     for losses and loss adjustment expense, which at March 31, 2003 totaled
     $2,285,000 ($2,135,000 at December 31, 2002).

              These liabilities for losses and loss adjustment expenses include
     an amount determined from loss reports and individual cases and an amount,
     based on recommendations from an outside actuary 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 and requires considerable judgment. While we believe that the
     amount provided for is adequate, the ultimate liability may be in excess of
     or less than the amounts provided.

     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 are amortized over a 25 year period.

              Goodwill is net of accumulated amortization of $16,515,000 at
     March 31, 2003 and December 31, 2002. At March 31, 2003, property
     management contracts are net of accumulated amortization of $48,758,000
     ($47,107,000 at December 31, 2002). Included in depreciation and
     amortization expense for each of the three months ended March 31, 2003 and
     2002 is $1,651,000 with respect to the amortization of property management
     contracts.

                                       8

<PAGE>

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

              Rental income, which is generally earned pursuant to
     month-to-month leases for storage space, is recognized as earned. Tenant
     reinsurance premiums are recognized as premiums are 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, our property tax
     expense could be misstated.

              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.

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

              Dividends paid to our preferred shareholders totaling $37,022,000
     and $35,840,000 for the three months ended March 31, 2003 and 2002,
     respectively, have been deducted from net income to arrive at net income
     allocable to our common shareholders.

              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 is 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 approximately $5,375,000 for each of the three
     months ended March 31, 2003 and 2002. The remaining $34,242,000 and
     $46,240,000 for the three months ended March 31, 2003 and 2002,
     respectively, was allocated to the regular common shares.

              Basic net income per share is computed using the weighted average
     common shares (prior to the dilutive impact of stock options outstanding).
     Diluted net income per common share is computed using the weighted average
     common shares outstanding (adjusted for stock options). Weighted average
     common shares excludes shares owned by the Consolidated Entities for the
     three months ended March 31, 2003 and 2002, as these shares of common stock
     are eliminated in consolidation (Note 10).

              Distributions per share of Class B common stock are equal to 97%
     of the per share distribution paid to the Company's regular common shares.
     As a result of this participation in distribution of earnings, for purposes
     of computing net income per common share, the Company includes 6,790,000
     (7,000,000 x 97%) Class B common shares in the weighted average common
     equivalent shares for the three months ended March 31, 2002.

                                       9

<PAGE>

              As of March 31, 2002, the remaining contingency for the conversion
     of the Class B common stock into regular common stock was satisfied (see
     Note 10) and the Class B common stock converted into 7,000,000 shares of
     common stock on January 1, 2003. As a result, beginning April 1, 2002,
     7,000,000 Class B common shares are included in the weighted average common
     equivalent shares.

3.   Business Combinations

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

              On January 16, 2002, we acquired the remaining 70% interest we did
     not own in a partnership (the "Development Joint Venture"). The aggregate
     cost of this business combination was $268,209,000, consisting of our
     pre-existing investment in the Development Joint Venture of $115,131,000
     and cash of $153,078,000. This acquisition was completed in order to expand
     the Company's real estate investments. The Development Joint Venture was
     formed in April 1997 and was funded with equity capital consisting of 30%
     from the Company and 70% from an institutional investor and owns 47 storage
     facilities. Prior to January 16, 2002, we accounted for our investment in
     the Development Joint Venture using the equity method of accounting.

     STOR-Re Mutual Insurance Company, Inc. ("STOR-Re")
     --------------------------------------------------

              As a result of obtaining a controlling ownership interest,
     effective July 1, 2002 we began consolidating STOR-Re. Accordingly, the
     assets and liabilities and operating results subsequent to July 1, 2002 of
     STOR-Re are included on our financial statements. Our investment in
     STOR-Re, which was previously classified as an Other Asset, was
     consolidated and the cash, other assets, and liabilities of STOR-Re are
     included in the financial statements.

              STOR-Re was formed in 1994 as an association captive insurance
     company owned by the Company and its affiliates. STOR-Re provides limited
     property and liability insurance to the Company and its affiliates. The
     Company also utilizes other insurance carriers to provide property and
     liability coverage in excess of STOR-Re's limitations.
              Prior to July 1, 2002, the insurance premiums paid to STOR-Re were
     included in property operating expenses. After June 30, 2002, the insured
     liabilities costs incurred by STOR-Re with respect to the Company and the
     Consolidated Entities facilities are presented as property operating
     expenses. The insured liability costs incurred by STOR-Re are substantially
     equivalent to the premiums paid by the Company and its affiliates;
     accordingly, the consolidation of STOR-Re had no material impact upon the
     Company's income statement. The net operating results of STOR-Re with
     respect to its insurance services provided to the Unconsolidated Entities
     are included in "interest and other income."

              Each of the transactions indicated above has been accounted for
     using the purchase method. Accordingly, allocations of our acquisition cost
     (consisting of our preexisting investment and the cost of acquisition of
     interests acquired in connection with the transaction) was allocated to the
     net assets acquired based upon the fair value of such assets and
     liabilities assumed with respect to the transactions. Accordingly,
     allocations of the total acquisition cost to the net assets acquired were
     made based upon the fair value of such assets and liabilities assumed.

              The historical operating results of the above acquisitions prior
     to each respective acquisition date have not been included in the Company's
     historical operating results. Pro forma data (unaudited) for the three
     months ended March 31, 2002 as though the business combinations above had
     been effective as of January 1, 2002 are as follows (amounts in thousands):

                                       10

<PAGE>


                                                        For the three
                                                     months ended March
                                                          31, 2002
                                                     ------------------
       Revenues.................................       $        207,152
       Net income...............................       $         87,232
       Net income per common share (Basic)......       $           0.38
       Net income per common share (Diluted)....       $           0.37

              The pro forma data does not purport to be indicative either of
     results of operations that would have occurred had the transactions
     occurred at January 1, 2002 or the future results of operations of the
     Company. Certain pro forma adjustments were made to the combined historical
     amounts to reflect (i) expected reductions in general and administrative
     expenses, (ii) estimated increased interest expense from bank borrowings to
     finance the cash portion of the acquisition cost and (iii) estimated
     increase in depreciation expense.

4.       Discontinued Operations

              SFAS No. 144, which was adopted by the Company on January 1, 2002,
     addresses accounting for discontinued operations. The Statement requires
     the segregation of all disposed components of an entity with 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, we adopted a business plan that included the closure
     of several non-strategic containerized storage facilities (the "Closed
     Facilities"), representing components of our containerized storage
     business. The related assets of the Closed Facilities (consisting primarily
     of storage containers) were deemed not recoverable from future operations,
     and as a result an asset impairment charge for the excess of these assets'
     net book value over their fair value was recorded during the third and
     fourth quarters of 2002 totaling $6,187,000. In addition, lease termination
     costs, representing the expected remaining lease liability following
     closure of the facilities, were recorded in the amount of $2,447,000 during
     the latter half of 2002. There are no significant assets or liabilities of
     the Closed Facilities, other than the remaining lease liabilities.

              In March 2003, we adopted a business plan to exit the Knoxville,
     Tennessee market and sell the four self-storage facilities (the "Knoxville
     Facilities") that we own in this market. In addition, we decided to sell an
     industrial facility that was previously used by one of the Closed
     Facilities. As of March 31, 2003, we had listed these real estate
     facilities for sale at prices that we believe approximate their fair market
     values, and expect to complete a sale of these facilities within a year
     with estimated net proceeds from the sale in excess of each facility's
     individual book value.

              In addition, during the fourth quarter of 2002, we sold a
     commercial facility.

              In accordance with SFAS 144, the historical operations of the
     Closed Facilities (including the asset impairment and lease termination
     costs), the Knoxville Facilities, and the sold commercial facility are
     classified as discontinued operations. The rental income, cost of
     operations, and depreciation expense with respect to these facilities for
     each period presented are included in the line-item "Discontinued
     Operations" on the income statement. In addition, the net book value
     ($15,421,000, which is net of $5,161,000 in accumulated depreciation at
     March 31, 2003) of the Closed Facilities and the industrial facility
     previously used by our containerized storage operations have been
     classified as "Real estate facilities held for sale" on our March 31, 2003
     balance sheet.

                                       11

<PAGE>

              The following table summarizes the historical operations of the
     Knoxville Facilities, the Closed Facilities and the commercial property
     sold:


Discontinued Operations:                    Three months ended March 31,
------------------------               ---------------------------------------
                                           2003         2002         Change
                                       -----------   -----------   -----------
                                               (Amounts in thousands)
Rental income (a):
  Knoxville Facilities............      $     388     $    382     $       6
  Closed Facilities...............          1,533        3,501        (1,968)
  Sold commercial facility........              -          115          (115)
                                       -----------   -----------   -----------
       Total rental income........          1,921        3,998        (2,077)
                                       -----------   -----------   -----------

Cost of operations (a):
  Knoxville Facilities............            170          156            14
  Closed Facilities...............          1,630        3,361        (1,731)
  Sold commercial facility........              -           22           (22)
                                       -----------   -----------   -----------
       Total cost of operations...          1,800        3,539        (1,739)
                                       -----------   -----------   -----------

Depreciation (a):
  Knoxville Facilities............            120          119             1
  Closed Facilities...............              -          450          (450)
  Sold commercial facility........              -           29           (29)
                                       -----------   -----------   -----------
       Total depreciation ........            120          598          (478)
                                       -----------   -----------   -----------
Net discontinued operations.......      $       1     $   (139)    $     140
                                       ===========   ===========   ===========

(a)  These amounts represent the historical operations of the Knoxville
     Facilities, 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.

                                       12

<PAGE>

5.   Real Estate Facilities

              Activity in real estate facilities during 2003 is as follows:

                                                                In thousands
                                                              ----------------
Operating facilities, at cost:
   Balance at December 31, 2002........................        $    4,988,526
   Newly developed facilities opened for operation.....                35,114
   Disposition of real estate facilities...............                (7,460)
   Transfer to real estate held for sale (Note 4)......               (20,582)
   Capital improvements................................                 2,333
                                                              ----------------
   Balance at March 31, 2003...........................             4,997,931
                                                              ----------------

Accumulated depreciation:
   Balance at December 31, 2002........................              (987,546)
   Additions during the year...........................               (42,183)
   Transfer to real estate held for sale (Note 4)......                 5,161
   Disposition of real estate facilities...............                   566
                                                              ----------------
   Balance at March 31, 2003...........................            (1,024,002)
                                                              ----------------

Construction in process:
   Balance at December 31, 2002........................                87,516
   Current development.................................                24,184
   Transfer to land held for development or sale.......                  (805)
   Newly developed facilities opened for operation.....               (35,114)
                                                              ----------------
   Balance at March 31, 2003...........................                75,781
                                                              ----------------

Real estate facilities held for sale (Note 4):
   Balance at December 31, 2002........................                     -
   Transfer from land and buildings....................                20,582
   Transfer from accumulated depreciation..............                (5,161)
                                                              ----------------
   Balance at March 31, 2003...........................                15,421
                                                              ----------------

Land held for development:
   Balance at December 31, 2002........................                17,807
   Transfer from construction in process...............                   805
   Disposition of land.................................                  (805)
                                                              ----------------
   Balance at March 31, 2003...........................                17,807
                                                              ----------------

Total real estate facilities...........................        $    4,082,938
                                                              ================

              During the three months ended March 31, 2003, we opened five newly
     developed facilities (347,000 net rentable square feet) with an aggregate
     cost of $33,744,000, and incurred additional development costs amounting to
     $1,370,000 with respect to existing real estate facilities.

              During the first quarter of 2003, we sold two self-storage
     facilities and a parcel of land for an aggregate of $7,713,000 cash. The
     two self-storage facilities had been operated by the buyer pursuant to a
     lease arrangement, with the lease income with respect to these facilities
     included in "interest and other income." An aggregate gain of $14,000 was
     recorded from these sales.

              Construction in process at March 31, 2003 consists primarily of 15
     self-storage facilities (853,000 net rentable square feet) and 25 expansion
     projects to existing self-storage facilities. In addition, we have nine
     parcels of land held for development or sale with total costs of
     approximately $17,807,000.

                                       13

<PAGE>

              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, 2003 and 2002, was $1,525,000 and
     $1,846,000, respectively.

6.   Investment in Real Estate Entities

              At March 31, 2003, our investment in real estate entities consists
     of our ownership interests in seven 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, 2003 and 2002, we recognized
     earnings from our investments of $4,687,000 and $9,256,000, respectively,
     and received cash distributions totaling $2,809,000 and $6,566,000,
     respectively. Equity in earnings for the three months ended March 31, 2003
     includes a $2,130,000 reduction to equity in earnings with respect to PSB,
     representing our net pro rata share of PSB's impairment charges related to
     the impending sale of real estate offset partially by a gain on the sale of
     real estate assets. Equity in earnings for the three months ended March 31,
     2002 includes our $2,241,000 pro-rata share of PSB's gain on disposition of
     real estate investments.

              There were no investments made in the real estate entities for the
     three months ended March 31, 2003. For the three months ended March 31,
     2002, we acquired investments in the real estate entities totaling $41,000.

              The following table sets forth our investments in real estate
     entities at March 31, 2003 and December 31, 2002, and our equity in
     earnings of real estate entities for the three months ended March 31, 2003
     and 2002 (amounts in thousands):

<TABLE>
<CAPTION>
                                                                               Equity in Earnings of Real
                                            Investments in Real Estate        Estate Entities for the Three
                                                    Entities at                  Months Ended March 31,
                                          --------------------------------   ---------------------------------
                                              March 31,       December 31,
                                                2003              2002              2003             2002
                                          --------------    --------------   --------------    ---------------
<S>                                        <C>               <C>              <C>               <C>
PSB (a).............................       $    275,014      $    273,790     $      3,419      $      7,114
Development Joint Venture (b).......                  -                 -                -               223
Other investments...................             56,543            55,889            1,268             1,919
                                          --------------    --------------   --------------    ---------------
  Total.............................       $    331,557      $    329,679     $      4,687      $      9,256
                                          ==============    ==============   ==============    ===============
</TABLE>

(a)  Equity in earnings for the three months ended March 31, 2003 includes a
     $2,130,000 reduction, representing our net pro rata share of PSB's
     impairment charges related to the impending sale of real estate offset
     partially by a gain on the sale of real estate assets. Equity in earnings
     for the three months ended March 31, 2002 includes $2,241,000, representing
     our pro-rata share of PSB's gain on disposition of real estate investments.

(b)  As described in Note 3, in the first quarter of 2002 we began consolidating
     the results of the Development Joint Venture and as a result eliminated our
     investment in the three months ended March 31, 2002.

                                       14

<PAGE>

     Investment in PSB
     -----------------

              On January 2, 1997, we reorganized our commercial property
     operations into an entity now known as PS Business Parks, Inc., a REIT
     traded on the American Stock Exchange, and an operating partnership
     controlled by PS Business Parks, Inc. (collectively, the REIT and the
     operating partnership are referred to as "PSB"). The Company and certain
     partnerships in which the Company has a controlling interest have a 45%
     common equity interest in PSB as of March 31, 2003. This 45% common equity
     interest is comprised of the ownership of 5,418,273 shares of common stock
     and 7,305,355 limited partnership units in the operating partnership; 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 PSB's
     trading price at March 31, 2003 ($29.75), the shares and units had a market
     value of approximately $378.5 million as compared to a book value of $275.0
     million.

              At March 31, 2003, PSB owned and operated approximately 14.5
     million net rentable square feet of commercial space. In addition, PSB
     manages 1,196,000 net rentable square feet of commercial space owned by the
     Company and affiliated entities pursuant to property management agreements.

              The following table sets forth the condensed statements of
     operations for the three months ended March 31, 2003 and for the same
     period in 2002, and the condensed balance sheets of PSB at March 31, 2003
     and December 31, 2002. These amounts below represent 100% of PSB's balances
     and not our pro-rata share.

<TABLE>
<CAPTION>
                                                            For the three months ended March 31,
                                                            --------------------------------------
                                                                   2003              2002
                                                            ------------------  ------------------
                                                                    (Amounts in thousands)
   <S>                                                        <C>                <C>
   Total revenue........................................      $       48,469     $       48,360
   Gain on real estate investments......................               1,076              5,366
   Impairment charge with respect to impending asset                  (5,907)                 -
      sales.............................................
   Cost of operations and other expenses................             (15,393)           (15,849)
   Depreciation and amortization........................             (13,685)           (13,399)
   Discontinued operations..............................               1,946              1,068
   Minority interest....................................              (6,775)            (8,844)
                                                            ------------------  ------------------
     Net income.........................................      $        9,731     $       16,702
                                                            ==================  ==================


                                                                March 31,           December 31,
                                                                   2003                2002
                                                            ------------------  ------------------
                                                                    (Amounts in thousands)
   Total assets (primarily real estate).................      $    1,144,610     $    1,156,802
   Total debt...........................................              70,137             70,279
   Other liabilities....................................              33,214             36,902
   Minority interest....................................             384,615            385,219
   Shareholders' equity.................................             656,644            664,402

</TABLE>

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

              The Other Investments consist primarily of an average 41% common
     equity ownership, which we owned during each of the three months ended
     March 31, 2003 and 2002, in seven limited partnerships (collectively, the
     "Other Investments") owning an aggregate of 36 storage facilities. For the
     three months ended March 31, 2002, we acquired additional equity interests
     in these entities from third parties for a total of $41,000. No equity
     interests in the other investments were acquired for the three months ended
     March 31, 2003.

                                       15

<PAGE>

              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>
                                                            For the three months ended March 31,
                                                            --------------------------------------
                                                                   2003              2002
                                                            ------------------  ------------------
                                                                 (Amounts in thousands)
   <S>                                                        <C>                <C>
   Total revenue........................................      $        6,380     $        6,725
   Cost of operations and other expenses................              (2,251)            (2,425)
   Depreciation and amortization........................                (620)              (630)
                                                            ------------------  ------------------
     Net income.........................................      $        3,509     $        3,670
                                                            ==================  ==================


                                                                 March 31,        December 31,
                                                                   2003               2002
                                                            ------------------  ------------------
                                                                 (Amounts in thousands)
   Total assets (primarily storage facilities)..........      $       55,750     $       56,731
   Total debt...........................................               4,400              5,450
   Other liabilities....................................                 699              1,121
   Partners' equity.....................................              50,651             50,160

</TABLE>

7.   Revolving Line of Credit

              We have a $200 million revolving line of credit (the "Credit
     Agreement") that has a maturity date of October 31, 2004 and bears an
     annual interest rate ranging from the London Interbank Offered Rate
     ("LIBOR") plus 0.45% to LIBOR plus 1.50% depending on our credit ratings
     (currently LIBOR plus 0.45%). In addition, we are required to pay a
     quarterly commitment fee ranging from 0.20% per annum to 0.30% per annum
     depending on our credit ratings (currently the fee is 0.20% per annum). At
     March 31, 2003, we had borrowings on our line of credit totaling
     $25,000,000. As of May 13, 2003, outstanding borrowings had been reduced to
     $5,000,000.

              The Credit Agreement includes various covenants, the more
     significant of which requires us to (i) maintain a balance sheet leverage
     ratio of less than 0.50 to 1.00, (ii) maintain certain quarterly interest
     and fixed-charge coverage ratios (as defined) of not less than 2.50 to 1.0
     and 1.75 to 1.0, respectively, and (iii) maintain a minimum total
     shareholders' equity (as defined). 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
     two times our unsecured recourse debt). We were in compliance with all the
     covenants of the Credit Agreement at March 31, 2003.


                                       16

<PAGE>

8.   Notes Payable

              Notes payable at March 31, 2003 and December 31, 2002 consist of
     the following:

<TABLE>
<CAPTION>
                                                                         Carrying Amount
                                                                 -------------------------------
                                                                                   December 31,
                                                                 March 31, 2003        2002
                                                                 -------------     -------------
                                                                     (Amounts in thousands)
<S>                                                               <C>               <C>
Unsecured senior notes:
  7.08% note due November 2003............................        $   10,000        $   10,000
  7.47% note due January 2004.............................            14,600            29,300
  7.66% note due January 2007.............................            44,800            56,000

Mortgage notes payable:
  10.55% mortgage notes secured by real estate facilities,
      principal and interest payable monthly, due August 2004         17,373            18,167
  7.134% to 10.5% mortgage notes secured by real estate
      facilities, principal and interest payable monthly, due
      at varying dates between May 2004 and September 2028             2,338             2,400
                                                                 -------------     -------------
         Total notes payable..............................        $   89,111        $  115,867
                                                                 =============     =============
</TABLE>

              All of our notes payable are fixed rate. The 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, 2003 and
     December 31, 2002. The 10.55% mortgage notes consist of five notes, which
     are cross-collateralized by 19 properties and are due to a life insurance
     company. Mortgage notes payable are secured by 24 real estate facilities
     having an aggregate net book value of approximately $55.9 million at March
     31, 2003 and $56.4 million at December 31, 2002.

              At March 31, 2003, approximate principal maturities of notes
     payable are as follows:

                                Unsecured
                               Senior Notes      Mortgage debt        Total
                              --------------    --------------    --------------
                                              (in thousands)
2003 (remainder of)........    $     10,000       $    3,028         $  13,028
2004.......................          25,800           15,063            40,863
2005.......................          11,200              156            11,356
2006.......................          11,200              170            11,370
2007.......................          11,200              185            11,385
Thereafter.................               -            1,109             1,109
                              --------------    --------------    --------------
                               $     69,400       $   19,711         $  89,111
                              ==============    ==============    ==============
Weighted average rate......           7.5%            10.1%               8.1%
                              ==============    ==============    ==============

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 consolidated financial statements. Minority
     interest in income consists of the minority interests' share of the
     operating results of the Consolidated Entities.

                                       17

<PAGE>

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

              During 2000, one of our consolidated operating partnerships issued
     an aggregate $365.0 million of preferred partnership units: March 17, 2000
     - $240.0 million of 9.5% Series N Cumulative Redeemable Perpetual Preferred
     Units, March 29, 2000 - $75.0 million of 9.125% Series O Cumulative
     Redeemable Perpetual Preferred Units, and August 11, 2000 - $50.0 million
     of 8.75% Series P Cumulative Redeemable Perpetual Preferred Units.

              For each of the three months ended March 31, 2003 and 2002, the
     holders of the preferred units were paid distributions aggregating
     approximately $6,726,000 and received an equivalent allocation of minority
     interest in earnings.

              The following table summarizes the preferred partnership units
outstanding at March 31, 2003 and December 31, 2002:

                          Distribution         Units            Carrying
         Series              Rate           Outstanding           Amount
---------------------    --------------    --------------    --------------
                                             (Amounts in thousands)
Series N............          9.500%           9,600           $240,000
Series O............          9.125%           1,800             45,000
                                           --------------    --------------
Total...............                          11,400           $285,000
                                           ==============    ==============

              These preferred units are not redeemable during the first 5 years
     after issuance; thereafter, 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. Subject to certain condition, the Series
     N preferred units are convertible into shares of 9.5% Series N Cumulative
     Preferred Stock, and the Series O preferred units are convertible into
     shares of 9.125% Series O Cumulative Preferred Stock of the Company.

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

              Minority interest at March 31, 2003 and December 31, 2002, and
     minority interest in income for the three months ended March 31, 2003 and
     2002 with respect to the other partnership interests are as follows:

<TABLE>
<CAPTION>
                                                                         Minority interest in income for
                                          Minority interest at                the three months ended
                                     ------------------------------       ------------------------------
                                       March 31,       December 31,         March 31,         March 31,
 Description of Minority Interest        2003              2002               2003              2002
---------------------------------    ------------     -------------       ------------     -------------
                                                            (Amounts in thousands)
<S>                                    <C>             <C>                 <C>               <C>
Consolidated Development Joint
  Venture........................      $  73,712       $   75,432          $       743       $      307
Convertible Partnership Units...           6,232            6,274                   65               89
Other consolidated partnerships..         73,457           72,793                3,134            4,220
                                     ------------     -------------       ------------     -------------
Total other partnership interests      $ 153,401       $  154,499          $     3,942       $    4,616
                                     ============     =============       ============     =============
</TABLE>

                                       18

<PAGE>

     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 an institutional
     investor and B. Wayne Hughes ("Mr. Hughes"), chairman of the Company, to
     develop approximately $100 million of self-storage facilities and to
     purchase $100 million of the Company's Equity Stock, Series AAA (see Note
     10). In consolidation, the Equity Stock Series AAA and the related dividend
     income have been eliminated.

              At March 31, 2003, the Consolidated Development Joint Venture was
     fully committed having completed construction on 22 self-storage facilities
     for a total cost of approximately $108 million.

              The Consolidated Development Joint Venture is funded solely with
     equity capital consisting of 51% from the Company and 49% from PSAC Storage
     Investors, LLC. The accounts of the Consolidated Development Joint Venture
     are included in the Company's consolidated financial statements. The
     accounts of PSAC Storage Investors, LLC are not included in the Company's
     consolidated financial statements, as the Company has 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 PSAC Storage Investors has the right
     to cause an early termination of the partnership. If PSAC Storage Investors
     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 the Company does not exercise its option to
     acquire PSAC Storage Investors' interest, the partnership's assets will be
     sold to third parties and the proceeds distributed to the Company and PSAC
     Storage Investors in accordance with the partnership agreement. If PSAC
     Storage Investors 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 to the Company and PSAC Storage Investors in accordance with
     the partnership agreement.

              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,
     2003). 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 combined with the accumulated net income allocated to
     PSAC Storage Investors, net of cumulative distributions.

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

              As of March 31, 2003 and December 31, 2002, one of our
     Consolidated Entities had approximately 237,935 convertible 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 common shares of
     the Company at the option of the unitholder. Minority interest in income
     with respect to the Convertible Units reflects an allocation of net income
     on a per unit basis equal to diluted earnings per common share.

                                       19

<PAGE>

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

              At March 31, 2003, the Other Consolidated Partnerships reflect
     common equity interests that the Company does not own in 25 entities owning
     an aggregate of 172 real estate facilities.

              During 2002, we acquired minority interests in the Consolidated
     Entities for an aggregate cash cost of $27,544,000 and issued an aggregate
     of 1,091,608 shares ($37,904,000) of our common stock; these acquisitions
     had the effect of reducing minority interest by $25,668,000, with the
     excess of cost over underlying book value ($39,780,000) allocated to real
     estate.

              In addition, during the three months ended June 30, 2002, we
     recorded the pending sale of a partnership interest in the Consolidated
     Entities for an aggregate of $1,450,000. We recorded a loss on sale of the
     interest in the amount of $1,839,000. As a result of this pending sale,
     minority interest increased by $3,289,000. This sale is subject to
     litigation; see Note 15.

10.  Shareholders' Equity

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

              At March 31, 2003 and December 31, 2002, we had the following
     series of Cumulative Preferred Stock outstanding:

<TABLE>
<CAPTION>
                                                          At March 31, 2003                At December 31, 2002
                                                    ------------------------------   ------------------------------
                                      Dividend         Shares          Carrying          Shares          Carrying
              Series                    Rate         Outstanding        Amount         Outstanding        Amount
-----------------------------------  -----------    --------------   -------------   --------------   -------------
                                                                      (Dollar amount in thousands)
<S>                                  <C>               <C>            <C>                <C>            <C>
Series B                                  9.200%               -      $         -        2,300,000      $    57,500
Series C                              Adjustable       1,200,000           30,000        1,200,000           30,000
Series D                                  9.500%       1,200,000           30,000        1,200,000           30,000
Series E                                 10.000%       2,195,000           54,875        2,195,000           54,875
Series F                                  9.750%       2,300,000           57,500        2,300,000           57,500
Series K                                  8.250%           4,600          115,000            4,600          115,000
Series L                                  8.250%           4,600          115,000            4,600          115,000
Series M                                  8.750%           2,250           56,250            2,250           56,250
Series Q                                  8.600%           6,900          172,500            6,900          172,500
Series R                                  8.000%          20,400          510,000           20,400          510,000
Series S                                  7.875%           5,750          143,750            5,750          143,750
Series T                                  7.625%           6,086          152,150            6,086          152,150
Series U                                  7.625%           6,000          150,000            6,000          150,000
Series V                                  7.500%           6,900          172,500            6,900          172,500
                                                    --------------   -------------   --------------   -------------
Total Cumulative Preferred Stock                       6,958,486      $ 1,759,525        9,258,486      $ 1,817,025
                                                    ==============   =============   ==============   =============
</TABLE>

              On March 31, 2003, we redeemed all outstanding shares of our 9.20%
     Cumulative Preferred Stock, Series B at a redemption price of $25 per share
     for a total of $57,517,000 (including related redemption expenses).

                                       20

<PAGE>

              During 2002, we issued our Series T, Series U and Series V
     Cumulative Preferred Stock: Series T - issued on January 18, 2002, net
     proceeds of $145,075,000, Series U - issued on February 19, 2002, net
     proceeds of $145,075,000 and Series V - issued September 30, 2002, net
     proceeds of $166,866,000.

              During 2002, we redeemed our Series A and Series J Cumulative
     Preferred Stock, at par, at a total cost of $45,643,000 and $150,018,000
     (including related redemption costs), respectively.

              On August 30, 2002, in a privately negotiated transaction, we
     exchanged an aggregate of 86,000 shares (par value of $2,150,000) of our
     Preferred Stock, Series B for 86 shares (representing 86,000 depositary
     shares with a par value of $2,150,000) of our Preferred Stock, Series T.

              The Series C through Series V (collectively the "Cumulative Senior
     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, 2003, there were no
     dividends in arrears and the Debt Ratio was 1.9%.

              Except under certain conditions relating to the Company's
     qualification as a REIT, the Senior Preferred Stock is not redeemable prior
     to the following dates: Series C - June 30, 1999, Series D - September 30,
     2004, Series E - January 31, 2005, Series F - April 30, 2005, Series K -
     January 19, 2004, Series L - March 10, 2004, Series M - August 17, 2004,
     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
     and Series V - September 30, 2007. On or after the respective dates, each
     of the series of Cumulative Senior 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 K through Series V), 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, 2003, we had 8,776,102 depositary shares outstanding,
     each representing 1/1,000 of a share of Equity Stock, Series A ("Equity
     Stock A"). The Equity Stock A ranks on a parity with common stock and
     junior to the Senior 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 the 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.

                                       21

<PAGE>

              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 our
     holders of common stock on shareholder matters, but the depositary shares
     have the equivalent of one-tenth of a vote per depositary share.

     Equity Stock, Series AA
     -----------------------

              In June 1997, we contributed $22,500,000 (225,000 shares) of
     equity stock, now designated as Equity Stock, Series AA ("Equity Stock AA")
     to a partnership in which we are the general partner. The Company has a
     controlling interest in the partnership and therefore consolidates the
     accounts of the partnership. As a result, the Equity Stock AA is eliminated
     in consolidation. The Equity Stock AA 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 of ten times the amount paid
     to each common share up to a maximum of $100 per share. Quarterly
     distributions per share on the Equity Stock AA are equal to the lesser of
     (i) 10 times the amount paid per share of Common Stock or (ii) $2.20. We
     have no obligation to pay distributions on these shares if no distributions
     are paid to common shareholders.

              If the Company determines that it is necessary to maintain its
     status as a Real Estate Investment Trust, subject to certain limitations it
     may cause the redemption of shares of Equity Stock, Series AA at a price of
     $100 per share. 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, Series AA has no voting rights.

     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. We control the joint venture and consolidate the accounts of the
     joint venture, 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 (as defined below) 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 stockholders.

              Upon liquidation of the Consolidated Development Joint Venture, at
     the Company's option either a) each share of Equity Stock, Series AAA shall
     convert into 1.2 shares of our common stock or b) the Company can redeem
     the Equity Stock, Series 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 Real Estate Investment
     Trust, subject to certain limitations it may cause the redemption of shares
     of Equity Stock, Series 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, Series AAA
     has no voting rights.

                                       22

<PAGE>

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

              At March 31, 2003, entities consolidated with the Company owned
     548,732 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 the Company's legally issued and
     outstanding shares of common stock and the reported outstanding shares of
     common stock at March 31, 2003, December 31, 2002, and December 31, 2001:

<TABLE>
<CAPTION>
Reconciliation of Common Shares
--------------------------------             At March       At December     At December
Outstanding                                  31, 2003        31, 2002         31, 2001
-----------                                -------------  --------------   -------------

<S>                                        <C>              <C>             <C>
Legally issued and outstanding shares      124,683,022      117,540,187     115,499,647
Less - Shares owned by the
    Consolidated Entities that are
    eliminated in consolidation.....          (548,732)        (548,732)       (537,732)
                                           -------------  --------------   -------------
    Reported issued and outstanding
    shares..........................       124,134,290      116,991,455     114,961,915
                                           =============  ==============   =============
</TABLE>


              The Company's Board of Directors authorized the repurchase from
     time to time of up to 25,000,000 shares of the Company's common stock on
     the open market or in privately negotiated transactions. From the initial
     authorization through March 31, 2003, we have repurchased a total of
     21,497,020 shares of common stock at an aggregate cost of approximately
     $535.9 million.

     Class B Common Stock
     --------------------

              The Class B Common Stock was converted into regular common stock
     on January 1, 2003. For 2002, the Class B Common Stock participated in
     distributions at the rate of 97% of the per share distributions on the
     Common Stock.

     Dividends
     ---------

              The following table summarizes dividends declared and paid during
     the three months ended March 31, 2003:

                                       23

<PAGE>

                                     Distributions per
                                    Share or Depositary
                                           Share            Total Distributions
                                   ----------------------  ---------------------
Cumulative Preferred Stock:
   Series B......................         $0.554              $     1,323,000
   Series C......................         $0.422                      506,000
   Series D......................         $0.594                      713,000
   Series E......................         $0.625                    1,372,000
   Series F......................         $0.609                    1,401,000
   Series K......................         $0.516                    2,372,000
   Series L......................         $0.516                    2,372,000
   Series M......................         $0.547                    1,230,000
   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
                                                           ---------------------
                                                                   37,022,000
Common Stock:
   Equity Stock, Series A........         $0.613                    5,375,000
   Common........................         $0.450                   55,995,000
                                                           ---------------------
      Total Dividends............                             $    98,392,000
                                                           =====================

              The dividend rate on the Series C Preferred Stock for the first
     quarter of 2003 was equal to 6.75% per annum. The dividend rate per annum
     will be adjusted quarterly and will be equal to the highest of one of three
     U.S. Treasury indices (Treasury Bill Rate, Ten Year Constant Maturity Rate,
     or Thirty Year Constant Maturity Rate) multiplied by 110%. However, the
     dividend rate for any dividend period will neither be less than 6.75% per
     annum nor greater than 10.75%. The dividend rate for the quarter ending
     June 30, 2003 will be equal to 6.75% per annum.

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 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 segment reflects the
     operations of PS Insurance Company, Ltd., which reinsures policies against
     losses to goods stored by tenants in our self-storage facilities.

                                       24

<PAGE>

     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 accounting principles generally accepted in the United
     States and our significant accounting policies as denoted 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.

     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 income statement provides most of the information required in
     order to determine the performance of each of the Company's four segments.
     The following tables reconcile the performance of each segment, in terms of
     segment revenues and segment income, to our consolidated revenues and net
     income. It further provides detail of the segment components of the income
     statement item, "Equity in earnings of real estate entities."

              The following table reconciles the performance of each segment, in
     terms of segment revenues, to our consolidated revenues.

<TABLE>
<CAPTION>
Reconciliation of Revenues by Segment             Three Months Ended March 31,
-------------------------------------     ---------------------------------------------
                                              2003            2002           Change
                                          -------------   -------------   -------------
                                                     (Amounts in thousands)

<S>                                        <C>             <C>             <C>
Self-storage facility rentals.......       $   189,571     $   188,525     $     1,046
Commercial property rentals.........             2,846           2,956            (110)
Containerized storage rentals.......             9,481           8,198           1,283
Tenant reinsurance premiums.........             5,215           4,575             640
Interest and other income (not
  allocated to segments)............             1,699           1,708              (9)
                                          -------------   -------------   -------------
    Total revenues..................       $   208,812     $   205,962     $     2,850
                                          =============   =============   =============
</TABLE>

                                       25

<PAGE>

              The following table reconciles the performance of each segment to
     our consolidated net income. It further provides detail of the segment
     components of the income statement item, "Equity in earning of real estate
     entities."

<TABLE>
<CAPTION>
                                                  Three months ended
                                                       March 31,
                                                -----------------------
                                                   2003        2002        Change
                                                ----------- ----------- -----------
                                                     (Amounts in thousands)
  Reconciliation of Net Income by Segment:

  Self-storage
  ------------
  <S>                                            <C>         <C>          <C>
  Self-storage net operating income.........     $ 124,256   $ 130,086    $ (5,830)
  Self-storage depreciation.................       (43,274)    (41,249)     (2,025)
  Equity in earnings - storage property
     operations.............................         1,428       2,094        (666)
  Equity in earnings - depreciation
     (self-storage) ........................          (265)       (270)          5
  Discontinued operations (Note 4) .........            98         107          (9)
                                                ----------- ----------- -----------
      Total self-storage segment net income.        82,243      90,768      (8,525)
                                                ----------- ----------- -----------


  Commercial  properties
  ----------  ----------
  Commercial properties.....................         1,653       1,864        (211)
  Depreciation and amortization - commercial
     properties.............................          (625)       (699)         74
  Equity in earnings - commercial property
     operations.............................        14,700      15,423        (723)
  Equity in earnings - depreciation
     (commercial properties) ...............        (6,029)     (6,101)         72
  Discontinued operations (Note 4) .........             -          64         (64)
                                                ----------- ----------- -----------

      Total commercial property segment net
       income...............................         9,699      10,551        (852)
                                                ----------- ----------- -----------

  Containerized storage
  ---------------------
  Containerized storage net operating income         3,104       2,241         863
  Containerized storage depreciation........        (2,021)     (1,451)       (570)
  Discontinued operations (Note 4) .........           (97)       (310)        213
                                                ----------- ----------- -----------
      Total containerized storage segment net
       income...............................           986         480         506
                                                ----------- ----------- -----------

  Tenant Reinsurance
  ------------------
   Tenant reinsurance net income............         2,516       2,282         234
                                                ----------- ----------- -----------

  Other items not allocated to segments
  -------------------------------------
  Equity in earnings - general and
     administrative  and other..............        (5,147)     (1,890)     (3,257)
  Interest and other income.................         1,699       1,708          (9)
  General and administrative ...............        (4,250)     (4,000)       (250)
  Interest expense..........................          (453)     (1,102)        649
  Minority interest in income ..............       (10,668)    (11,342)        674
  Gain on disposition of real estate........            14           -          14
                                                ----------- ----------- -----------
      Total other items not allocated to segments  (18,805)    (16,626)     (2,179)
                                                ----------- ----------- -----------

       Total consolidated net income .......     $  76,639   $  87,455    $(10,816)
                                                =========== ==========- ===========
</TABLE>
                                       26

12.  Stock Options

              The Company has a 1990 Stock Option Plan (the "1990 Plan") which
     provides for the grant of non-qualified stock options. The Company has a
     1994 Stock Option Plan (the "1994 Plan"), a 1996 Stock Option and Incentive
     Plan (the "1996 Plan") and a 2000 Non-Executive/Non-Director Stock Option
     and Incentive Plan (the "2000 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 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 and the 2000 Plan also provide for the grant of restricted stock
     to officers, key employees and service providers on terms determined by an
     authorized committee of the Board of Directors; no shares of restricted
     stock have been granted.

              Accounting principles generally accepted in the United States
     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").

              Companies can change their accounting method from the APB 25
     Method to the Fair Value Method, and in doing so can elect between three
     different methods of transition. The first is the prospective method,
     whereby the Company applies the recognition provisions of the Fair Value
     Method to all stock options granted after the beginning of the fiscal year
     in which the company adopts the Fair Value Method. The second is the
     retroactive restatement method, whereby the company restates all periods
     presented to reflect compensation cost utilizing the fair value method for
     all periods. The third is the modified prospective method, where the
     company applies the Fair Value Method from the beginning of the current
     fiscal year with respect to all options which vest during the year
     regardless of when they were granted.

              For periods prior to December 31, 2001, we utilized the APB 25
     Method of accounting for employee stock options. As of January 1, 2002, we
     adopted the Fair Value Method, and have elected to use the prospective
     method of transition described above. 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, 2003, we recorded $99,000 in stock option
     compensation expense (none in the same period in 2002) 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 average value of stock options granted in the first
     quarter of 2003 was based upon an estimated life of 5 years, a risk-free
     rate of 4.3%, an expected dividend yield of 7%, and expected volatility of
     0.176.

              If we had recorded stock option expense applying the Fair Value
     Method to all awards, we would have recognized an additional $701,000 and
     $969,000 in stock option compensation expense for the three months ended
     March 31, 2003 and 2002, respectively. Diluted earnings per share would
     have been $0.27 and $0.36 for the three months ended March 31, 2003 and
     2002, respectively. Basic earnings per share would have been $0.27 and
     $0.37 for the three months ended March 31, 2003 and 2002, respectively.

                                       27

<PAGE>

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 38
     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. The Hughes Family owns approximately 37% of our
     common stock outstanding at March 31, 2003. We have a right of first
     refusal to acquire the stock or assets of the corporation engaged in the
     operation of the 38 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.

              Our personnel are engaged in the supervision and the operation of
     these 38 self-storage facilities and in providing 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 reimburse us at cost for these services.
     There may be conflicts of interest in allocating the time of our personnel
     between our properties, the Canadian properties, and certain other Hughes
     Family interests. The Company is in the process of eliminating the sharing
     of Company personnel with the Canadian entities.

     PS Business Parks, Inc.
     -----------------------

              Ronald L. Havner Jr., our vice-chairman and chief executive
     officer, is also chairman and chief executive officer of PSB. Mr. Havner's
     compensation is allocated between the Company and PSB. This allocation was
     approved by the audit committee of the Company's Board of Directors.

              Pursuant to a cost-sharing and administrative services agreement,
     PSB reimburses the Company for certain administrative services. PSB's share
     of these costs totaled approximately $85,000 for each of the three months
     ended March 31, 2003 and 2002, and were computed in accordance with a
     methodology intended to fairly allocate these costs.

              PSB manages certain of the commercial facilities owned by the
     Company pursuant to management agreements for a management fee equal to 5%
     of revenues. The Company paid a total of $140,000 and $141,000, for the
     three months ended March 31, 2003 and 2002, respectively, in management
     fees with respect to PSB's property management services.

              STOR-Re, an entity that is consolidated with the Company and is
     partially owned by PSB, provides limited property and liability insurance
     to PSB at commercial competitive rates. PSB utilizes unaffiliated insurance
     carriers to provide property and liability insurance in excess of STOR-Re's
     limitations.

              In June 2002, we sold an undeveloped parcel of land at cost to PSB
     for an aggregate of $1,100,000 cash.

                                       28

<PAGE>

     Consolidated Development Joint Venture with a partner including Mr. Hughes
     --------------------------------------------------------------------------

              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.

14.  Recent Accounting Pronouncements

              In June 2002, the Financial Accounting Standards Board issued
     Statement of Financial Accounting Standards No. 146, "Accounting for Costs
     Associated with Exit or Disposal Activities" ("FAS 146"), which is
     effective for disposal activities entered into after December 31, 2002,
     with early adoption encouraged. FAS 146 requires that a liability for costs
     associated with exit or disposal activities be recognized when the
     liability is incurred. Current accounting principles generally accepted in
     the United States result in the recognition of such liabilities at the time
     management has committed to an exit plan. The impact of this statement on
     the Company's future operating results cannot be determined at this time,
     because such impact is dependent upon the Company's future level of exit
     and disposal activities, which is unknown.

15.  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. The Company is vigorously contesting
     the claims upon which this lawsuit is based.

     Salaam, et. Al V. Public Storage, Inc. (filed February 2000)
     ------------------------------------------------------------
     (Superior Court - Los Angeles County)
     -------------------------------------

              The plaintiffs in this case are suing the Company on behalf of a
     purported class of California resident property managers who claim that
     they were not compensated for all the hours they worked. The named
     plaintiffs have indicated that their claims total less than $20,000 in
     aggregate. This maximum potential liability cannot be estimated, but can
     only be increased if a class is certified or if claims are permitted to be
     brought on behalf of the others under the California Unfair Business
     Practices Act. The plaintiffs' motion for class certification was denied in
     August 2002; the plaintiffs have appealed this denial. This denial does not
     deal with the claim under the California Unfair Business Practices Act.

                                       29

<PAGE>

              The Company is continuing to vigorously contest the claims in this
     case and intends to resist any expansion beyond the named plaintiffs on the
     grounds of lack of commonality of claims. The Company's resistance will
     include opposing the plaintiffs' appeal of the court's denial of class
     certification and opposing the claim on behalf of others under the
     California Unfair Business Practices Act. The Company cannot presently
     determine the potential damages, if any, or the ultimate outcome of this
     litigation.

     PS Insurance Company, Ltd.
     --------------------------

              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
     shareholder estimates these profits at $40 million and this excess at $27.5
     million.

              The contract to acquire PSIC was approved by the independent
     directors of the Company in March 2001 and the transaction 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 Hughes Gustavson, who in 2001 was an
     officer of the Company. The shareholder has threatened litigation against
     the Hughes family and the directors of the Company arising out of this
     transaction and an alleged 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. The
     inquiry relating to the shareholder's demand is currently ongoing.

              The Company cannot presently determine the potential damages, if
     any, or the ultimate outcome of this matter.

     Sale of Partnership Units
     -------------------------

              In February 2000, the Company entered into a settlement of
     litigation arising out of a 1997 tender offer for limited partnership units
     in two affiliated partnerships. Under the settlement agreement, the Company
     agreed to sell to the plaintiff units representing a 4% interest in each of
     the partnerships for a total payment of approximately $1,523,000. The
     plaintiff failed to tender the full purchase price at the scheduled closing
     and the settlement collapsed.

              In September 2000, the plaintiff amended its complaint to add a
     claim for breach of the settlement agreement seeking specific enforcement
     and a claim seeking damages for unfair and deceptive trade practices in
     connection with the alleged breach. By amending the complaint the Company
     believes the plaintiff elected to abandon its underlying claims in the
     litigation. The Company asserted affirmative defenses including the
     material breach by the plaintiff. Cross motions for summary judgment were
     filed by the parties. In July 2002, the court granted plaintiff's motion
     for summary judgment as to its claim for breach of the settlement agreement
     and granted the Company's motion for summary judgment to dismiss
     plaintiff's claim for unfair and deceptive trade practices.

                                       30

<PAGE>

              In March 2003, the court granted plaintiff's motion to compel the
     sale of the units to the plaintiff. The Company is considering whether to
     appeal. If the Company is compelled to sell the units to plaintiff, the
     Company would incur a loss of approximately $1,839,000, which has been
     accrued as a loss on sale of real estate investments in the Company's
     income statement during 2002.

              The Company is 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, in the aggregate,
     will have a material adverse effect upon the operations or financial
     position of the Company.

     INSURANCE AND LOSS EXPOSURE

              Our facilities have historically carried comprehensive insurance,
     including fire, earthquake, liability and extended coverage through
     STOR-Re, one of the Consolidated Entities, and insures portions of these
     risks through nationally recognized insurance carriers. STOR-Re also
     insures affiliates of the Company.

              The Company, STOR-Re, 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 $30,000,000. 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.

              PSIC reinsures policies against claims for losses to goods stored
     by tenants at our self-storage facilities. PSIC reinsures its risks with
     third-party insures from any individual event that exceeds a loss of
     $500,000 up to the policy limit of $10,000,000. Losses that are not covered
     by the third-party insurers are accrued as cost of operations of the tenant
     reinsurance operations.

     DEVELOPMENT OF REAL ESTATE FACILITIES

              We currently have 40 projects in our development pipeline,
     including 15 newly developed self-storage facilities and expansions to 25
     existing self-storage facilities, with total estimated development costs of
     $169,227,000, of which $75,781,000 has been spent at March 31, 2003.

16.  Subsequent Events

              On April 28, 2003 we acquired through a merger all of the
     remaining limited partnership interest not currently owned by the Company
     in PS Partners IV, Ltd., a partnership which is consolidated with the
     Company. The acquisition cost consisted of the issuance of approximately
     427,000 shares of our common stock and cash of approximately $10 million.

                                       31

<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 21F of the Securities Exchange Act of 1934, as amended.
Such forward-looking statements involve known and unknown risks, uncertainties,
and other factors, which may cause the actual results and performance of the
Company to be materially different from those expressed or implied in the
forward looking statements. Such factors are described in Item 1A, "Risk
Factors" and include changes in general economic conditions and in the markets
in which the Company operates and the impact of competition from new and
existing storage and commercial facilities and other storage alternatives, which
could impact rents and occupancy levels at the Company's facilities;
difficulties in the Company's ability to evaluate, finance and integrate
acquired and developed properties into the Company's existing operations and to
fill up those properties, which could adversely affect the Company's
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 the Company's
expense and reduce the Company's cash available for distribution; consumers'
failure to accept the containerized storage concept which would reduce the
Company's profitability; difficulties in raising capital at reasonable rates,
which would impede the Company's ability to grow; delays in the development
process, which could adversely affect the Company's 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

         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 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.

         Given 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 provide any assurance 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, 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.

                                       32

<PAGE>

         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 our 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 cashflows, which
also involves significant judgment. We have identified no such impairments at
March 31, 2003. However, future events, or facts and circumstances that
currently exist that we have not yet identified, could cause us to conclude in
the future that our 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 LIABILITIES: As described in Note 15
to the consolidated financial statements, we retain certain risks with respect
to property perils, legal liability, and other such risks. In connection with
our retention of these risks, we accrue losses based upon our estimated level of
losses incurred using certain actuarial assumptions followed in the insurance
industry and based upon our experience. 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 accounting principles generally accepted in the United States, 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,
which we are aware of, are described in Note 15 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.

                                       33

<PAGE>

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

         Net income for the three months ended March 31, 2003 was $76,639,000
compared to $87,455,000 for the same period in 2002, representing a decrease of
$10,816,000 or 12.4%. This decrease in net income is primarily a result of a
reduction in the results of our consistent group of self-storage facilities (as
discussed below), increased depreciation expense resulting primarily from new
property additions, and a decrease in equity in earnings of real estate
entities. The decrease in equity in earnings of real estate entities is
primarily due to the reduction in earnings of PS Business Parks, Inc. ("PSB"),
an unconsolidated affiliate in which we own approximately a 45% interest at
March 31, 2003. PSB's earnings for the quarter ended March 31, 2003 were
negatively impacted due to asset impairment charges relating to the impending
sale of real estate offset partially by a gain on sale of real estate assets.
Our net pro rata share of such items in the quarter ended March 31, 2003 was a
reduction in equity in earnings approximating $2,130,000. In addition, during
the prior year's quarter ended March 31, 2002, PSB recognized a gain on the sale
of real estate of which our pro rata share was approximately $2,241,000. As a
result of these items, our equity in earnings for the first quarter of 2003 was
negatively impacted a total of $4,371,000 as compared to the first quarter of
2002.

         Net income allocable to our regular common shareholders was $34,242,000
or $0.27 per common share on a diluted basis (based on 125,232,000 weighted
average diluted common equivalent shares) for the three months ended March 31,
2003 compared to $46,240,000 or $0.37 per common share on a diluted basis (based
on 124,065,000 weighted average diluted common equivalent shares) for the same
period in 2002, representing a decrease of 25.9% in the aggregate or 27.0% on a
per share basis.

         Weighted average diluted shares increased from 124,065,000 for the
three months ended March 31, 2002 to 125,232,000 for the three months ended
March 31, 2003. This increase was due primarily to the net issuance of 1,091,608
shares during 2002 in connection with the acquisition of the remaining
partnership interests in two entities in which the Company held a partial equity
interest, as well as the issuance of an aggregate of 1,091,767 shares during
2002 and 2003 in connection with the exercise of employee stock options. This
increase was offset partially by the impact of a 965,000 share reduction in the
dilutive impact of stock options outstanding due to the exercise of employee
stock options as well as an overall decrease in our average stock price, which
impacts the weighted average calculation using the treasury stock method.

         During the three months ended March 31, 2003 and 2002, we allocated
$37,022,000 and $35,840,000 of our net income (based on distributions paid),
respectively, to our preferred shareholders, representing an increase of 3.3%.
This increase is due to the issuance of additional preferred securities
throughout 2002, offset partially by the redemption of several series of our
higher coupon preferred stock in 2002. In addition, during each of the three
months ended March 31, 2003 and 2002, we allocated $5,375,000 of our net income
to our Equity Stock, Series A shareholders.

Real Estate Operations
--------------------------------------------------------------------------------

         SELF-STORAGE OPERATIONS: Our self-storage operations are by far the
largest component of our operations, representing approximately 91% of our total
revenues generated for the three months ended March 31, 2003. 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) 1,166
self-storage facilities that are reflected in the financial statements on a
stabilized basis since January 1, 2001 (the "Consistent Group"), (ii) 95
facilities that were acquired since January 1, 2000 ( the "Acquired
Facilities"), (iii) 34 facilities that were owned prior to January 1, 2001 but
were not stabilized due primarily to expansions in their net rentable square
footage (the "Expansion Facilities") and (iv) 71 development facilities that
were opened after January 1, 1999 (the "Developed Facilities"):

                                       34

<PAGE>

<TABLE>
<CAPTION>
Self-Storage Operations Summary (excluding
discontinued operations)                             Three Months Ended March 31,
------------------------                       ----------------------------------------
                                                                            Percentage
                                                   2003          2002         Change
                                               ------------  ------------  ------------
                                                      (Dollar amounts in thousands)
<S>                                             <C>           <C>               <C>
Rental Income (a):
   Consistent Group (b)..................       $  161,285    $  165,524        (2.6)%
   Acquired Facilities (c)...............           15,502        12,815        21.0%
   Expansion Facilities (d)..............            5,006         4,998         0.2%
   Developed Facilities (e)..............            7,778         5,188        49.9%
                                               ------------  ------------  ------------
       Total rental income...............          189,571       188,525         0.6%
                                               ------------  ------------  ------------

Cost of Operations:
   Consistent Group......................           54,299        50,113         8.4%
   Acquired Facilities...................            4,795         3,594        33.4%
   Expansion Facilities..................            1,982         1,837         7.9%
   Developed Facilities..................            4,239         2,895        46.4%
                                               ------------  ------------  ------------
       Total cost of operations..........           65,315        58,439        11.8%
                                               ------------  ------------  ------------

Net Operating Income (before depreciation):
   Consistent Group......................          106,986       115,411        (7.3)%
   Acquired Facilities...................           10,707         9,221        16.1%
   Expansion Facilities..................            3,024         3,161        (4.3)%
   Developed Facilities..................            3,539         2,293        54.3%
                                               ------------  ------------  ------------
       Total net operating income........          124,256       130,086        (4.5)%
                                               ------------  ------------  ------------

Depreciation.............................          (43,274)      (41,249)        4.9%
                                               ------------  ------------  ------------
   Operating income......................       $   80,982    $   88,837        (8.8)%
                                               ============  ============  ============

Number of self-storage facilities (at end of
   period)...............................            1,366         1,344         1.6%
Net rentable square feet (at end of period -
   in thousands).........................           82,427        80,998         1.8%
</TABLE>

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

(b)  The Consistent Group includes 1,166 facilities containing 67,776,000 net
     rentable square feet that have been owned prior to December 31, 2000, and
     operated at a mature, stabilized occupancy level since December 31, 2000.

(c)  The Acquired Facilities includes 95 facilities containing 5,642,000 net
     rentable square feet that were acquired after January 1, 2000, that were
     substantially all mature, stabilized facilities at the time of their
     acquisition.

(d)  The Expansion Facilities includes 34 facilities containing 3,758,000 net
     rentable square feet (of which 817,000 square feet is industrial space
     developed for containerized storage activities). These facilities were
     owned for the entire three year period ending December 31, 2002, 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. Such construction activities can
     cause a drop in revenue levels, as existing capacity is made unavailable in
     order to accommodate construction activities. During the three years ended
     December 31, 2002 and the three months ended March 31, 2003, we completed
     construction on expansion projects to these facilities with a total cost of
     $121.5 million.

(e)  The Developed Facilities includes 71 facilities containing 5,251,000 net
     rentable square feet (of which 878,000 square feet is 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, 1999 at a total cost of $456.3
     million.

                                       35

<PAGE>

         For the three months ended March 31, 2003, we have increased the number
of facilities included in the Consistent Group pool of facilities from 1,152 at
December 31, 2002 to 1,166 facilities. The increase in the Consistent Group's
pool of facilities is comprised of the inclusion of 18 facilities that were in
the Acquired Facilities pool at December 31, 2002, offset by the reduction of
the four Knoxville facilities that are in discontinued operations (see Note 4 to
the financial statements for more information on discontinued operations).

         As a result of the change in the Consistent Group pool, the relative
weighting of markets has changed. Accordingly, comparisons should not be made
between information presented in 2002 for the Consistent Group pool of 1,152
facilities and this current pool of 1,166 facilities in order to identify trends
in occupancies, realized rents per square foot, or operating results.

         At March 31, 2003, we owned 1,166 self-storage facilities that have
operated at a stabilized level of operations since January 1, 2001. The
Consistent Group of facilities contains approximately 67,776,000 net rentable
square feet, representing approximately 82% 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, "Consistent Group." The following table sets forth
additional operating data with respect to the Consistent Group of facilities:

<TABLE>
<CAPTION>
CONSISTENT GROUP                                               Three Months Ended March 31,
----------------                                          --------------------------------------
                                                                                     Percentage
                                                             2003          2002        Change
                                                          ------------ ------------ ------------
                                                           (Dollar amounts in thousands, except
                                                                  rents per square foot)

<S>                                                        <C>          <C>               <C>
Base rental income..................................       $  164,855   $  161,404        2.1%
Promotional discounts...............................           (9,976)      (1,026)     872.3%
                                                          ------------ ------------ ------------
   Adjusted base rental income......................          154,879      160,378       (3.4)%
Late charges and administrative fees collected......            6,406        5,146       24.5%
                                                          ------------ ------------ ------------
   Total rental income..............................          161,285      165,524       (2.6)%

Cost of operations:
     Property taxes.................................           16,536       15,781        4.8%
     Direct property payroll........................           13,885       12,430       11.7%
     Cost of managing facilities....................            5,051        5,052        0.0%
     Utilities......................................            3,824        3,796        0.7%
     Repairs and maintenance........................            3,722        3,190       16.7%
     Advertising and promotion......................            3,504        2,664       31.5%
     Telephone reservation center...................            2,221        2,094        6.1%
     Property insurance.............................            1,401        1,305        7.4%
     Other..........................................            4,155        3,801        9.3%
                                                          ------------ ------------ ------------
   Total cost of operations.........................           54,299       50,113        8.4%
                                                          ------------ ------------ ------------

Net operating income before depreciation............          106,986      115,411       (7.3)%
Depreciation........................................          (35,717)     (35,034)       1.9%
                                                          ------------ ------------ ------------
Operating income....................................       $   71,269   $   80,377      (11.3)%
                                                          ============ ============ ============

Gross margin (before depreciation)..................            66.3%        69.7%       (4.9)%

Weighted average for the period:
   Square foot occupancy (a)........................            84.8%        83.5%        1.6%
   Realized annual rent per occupied square foot (b).      $    10.78   $    11.34       (4.9)%
   REVPAR (c).......................................       $     9.14   $     9.46       (3.4)%

 Weighted average at March 31:
   Square foot occupancy............................            85.3%        83.4%        2.3%
   In place annual rent per occupied square foot (d)       $    11.77   $    11.55        1.9%
   Posted annual rent per square foot (e)...........       $    11.89   $    11.26        5.6%

Total net rentable square feet (in thousands).......           67,776       67,776        0.0%
</TABLE>
                                       36

<PAGE>

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

(b)  Realized annual rent per occupied square foot is computed by annualizing
     the result of dividing adjusted base rental income by the weighted average
     occupied square footage for the period. Realized rents per square foot take
     into consideration promotional discounts, bad debt costs, credit card fees
     and other costs which reduce rental income from the contractual amounts
     due.

(c)  Annualized revenue per available square foot ("REVPAR") represents
     annualized adjusted base rental income divided by total available net
     rentable square feet.

(d)  In place annual rent per occupied square foot represents contractual rents
     per occupied square foot without reductions for promotional discounts.

(e)  Posted annual rent per square foot represents the rents charged to new
     tenants prior to any promotional discounts.

         During the first quarter of 2003, net operating income (prior to
depreciation) for the Consistent Group facilities decreased 7.3% as compared to
the same period in 2002. During the first quarter of 2003, operating income
(after depreciation) for the Consistent Group facilities decreased 11.3% as
compared to the same period in 2002. These decreases are primarily attributable
to lower adjusted base rental income due primarily to increased promotional
discounts combined with increased cost of operations.

         During fiscal 2002, we struggled with our occupancy levels that were
below the levels that were experienced in the prior year. The reduction in
occupancy level had a negative impact on our property net operating income as
well as the overall net income of the company.

         At the end of July 2002, the average occupancy level for the Consistent
Group of facilities was 85.7% as compared to 91.2% at the end of July 2001,
representing a reduction of 6.0%. Beginning in mid-August 2002 and through the
remainder of 2002, we reinstated a promotional discount program and advertised
on television in selected markets in an effort to enhance move-in activity and
improve occupancy levels. This program had a positive impact upon move-in
activity throughout the third and fourth quarters of 2002 and stabilized our
occupancy levels. By the end of December 2002, the average occupancy level for
the Consistent Group of facilities was 84.3% as compared to 85.3% at the end of
December 2001, representing a reduction of 1.2% and improvement in the negative
spread from July 2002.

         During the first quarter of 2003, we continued advertising on
television and offering promotional discounts to new incoming tenants. These
activities continued to have a positive impact on our occupancies. At the end of
March 2003, the average occupancy level for the Consistent Group of facilities
was 85.3% as compared to 83.4% at the end of March 2002, representing an
increase of 2.3%.

         The increase in occupancy levels has come at a significant cost.
Television advertising expense for the first quarter of 2003 was $1,503,000 as
compared to $540,000 in the first quarter of 2002. In addition, promotional
discounts totaled $9,976,000 for the first quarter of 2003 as compared to
$1,026,000 for the first quarter of 2002. Therefore, despite the increase in
physical occupancy, net operating income (before depreciation) for our
Consistent Group of facilities was lower in the first quarter of 2003 as
compared to the same period of 2002. This reduction was due primarily to higher
levels of advertising expense and reduced rental income caused by increased
promotional discounting.

         Total operating expenses increased 8.4%, due primarily to increases in
payroll, advertising and promotion, property tax, and repairs and maintenance
costs. Direct property payroll increased 11.7% due primarily to increased
incentives to property operating personnel. Advertising and promotion increased
31.5% primarily due to increased television advertising expense. Repairs and
maintenance cost have increased 16.7% for the three months ended March 31, 2003,
as compared to 2002, as a result of heavy snow in the Northeastern states and
costs to remedy mold issues at several facilities in Southern states.

                                       37

<PAGE>

         OUTLOOK

         We expect to continue promotional discounting and television
advertising during the remainder of 2003, though the level of such activities
cannot be estimated at this time. The up front costs of these marketing
activities, and the increases in discounts, are expected to continue to
adversely impact our operating income during 2003. We believe, however, that
these activities have and will continue to have a positive impact on our
occupancy levels. Ultimately, we believe higher occupancy levels will result in
higher rental income and allow us to begin to reduce the level of promotional
discounting and television advertising expenditures. The following table
summarizes additional selected financial data with respect to the Consistent
Group of Facilities:

<TABLE>
<CAPTION>
                                            For the three months ended
                     ----------------------------------------------------------------------
                        March 31,          June 30,         September 30,      December 31,        Full Year
                     -------------      -------------      -------------      -------------      -------------
                                      (Amounts in thousands, except for per square foot amounts)
<C>                   <C>                <C>                 <C>                 <C>               <C>
Total rental income:
2003............      $   161,285
2002............      $   165,524        $   163,441         $  168,340          $  161,470        $   658,775

Promotional discounts given:
2003............      $     9,976
2002............      $     1,026        $     5,384         $    4,725          $    7,306        $    18,441

Total cost of operations:
2003............      $    54,299
2002............      $    50,113        $    50,470         $   52,404          $   57,793        $   210,780

Television advertising expense:
2003............      $     1,503
2002............      $       540        $     1,405         $    1,934          $    3,915        $     7,794

REVPAR:
2003............      $     9.14
2002............      $     9.46         $     9.34         $     9.60          $     9.18         $     9.40

Weighted average realized annual rent per occupied square foot for the period:
2003............      $    10.78
2002............      $    11.34         $    10.82         $    11.20          $    10.81         $    11.04

Weighted  average   occupancy  levels
for the period:
2003............           84.8%
2002............           83.5%              86.3%               85.7%               85.0%              85.1%

Weighted average occupancy at April 30,
2003............                              86.6%
2002............                              85.4%
</TABLE>

         As indicated on the above table, the weighted average occupancy of the
Consistent Group facilities was 86.6% at April 30, 2003 as compared to 85.4% at
April 30, 2002, representing an increase of 1.4%. This increase, however, has
come at a significant cost, as promotional discounts and television advertising
costs are expected to be higher in quarter ended June 30, 2003 than in the same
period in 2002.

         We are continuously evaluating our call volume, reservation activity,
and move-in/move-out rates for each of our markets relative to our marketing
activities and rental rates. In addition, we are evaluating market supply and
demand factors and based upon these analyses we are continuing to adjust our
marketing activities in an effort to increase our occupancy levels and
ultimately our rental income.

                                       38

<PAGE>

         ANALYSIS OF REGIONAL TRENDS

         The following table sets forth regional trends in our consistent group
of facilities:

<TABLE>
<CAPTION>
Consistent Group Operating Trends by Region:
                                              Three months ended March 31,
                                         --------------------------------------
                                                                    Percentage
                                            2003         2002         Change
                                         ------------ ------------ ------------
                                          (Dollar amounts in thousands, except
                                                 rents per square foot)
Rental income:
<S>                                       <C>          <C>             <C>
   Southern California  (120
   facilities)......................      $   27,130   $   26,342      3.0%
   Northern California  (108
   facilities)......................          19,061       19,452     (2.0)%
   Texas  (140 facilities)..........          15,045       15,831     (5.0)%
   Florida  (108 facilities)........          13,632       13,937     (2.2)%
   Illinois  (82 facilities)........          12,296       13,304     (7.6)%
   Georgia  (56 facilities).........           5,701        5,903     (3.4)%
   All other states  (552 facilities)         68,420       70,755     (3.3)%
                                         ------------ ------------ ------------
Total rental income.................         161,285      165,524     (2.6)%

Cost of operations:
   Southern California..............           6,593        5,761     14.4%
   Northern California..............           5,071        4,348     16.6%
   Texas............................           6,309        5,992      5.3%
   Florida..........................           5,062        4,379     15.6%
   Illinois.........................           5,531        5,224      5.9%
   Georgia..........................           1,976        1,754     12.7%
   All other states.................          23,757       22,655      4.9%
                                         ------------ ------------ ------------
Total cost of operations............          54,299       50,113      8.4%

Net operating income (before depreciation):
   Southern California..............          20,537       20,581     (0.2)%
   Northern California..............          13,990       15,104     (7.4)%
   Texas............................           8,736        9,839    (11.2)%
   Florida..........................           8,570        9,558    (10.3)%
   Illinois.........................           6,765        8,080    (16.3)%
   Georgia..........................           3,725        4,149    (10.2)%
   All other states.................          44,663       48,100     (7.1)%
                                         ------------ ------------ ------------
Total net operating income..........      $  106,986   $  115,411     (7.3)%

Weighted average occupancy:
   Southern California..............         88.5%        86.1%        2.8%
   Northern California..............         85.5%        84.2%        1.5%
   Texas............................         84.5%        83.6%        1.1%
   Florida..........................         86.4%        84.4%        2.4%
   Illinois.........................         82.7%        82.1%        0.7%
   Georgia..........................         85.0%        82.3%        3.3%
   All other states.................         83.7%        83.0%        0.8%
                                         ------------ ------------ ------------
Total weighted average occupancy....         84.8%        83.5%        1.6%

Realized annual rent per occupied square foot:
   Southern California..............       $  15.73     $  15.83      (0.6)%
   Northern California..............          14.70        15.34      (4.2)%
   Texas............................           7.89         8.47      (6.8)%
   Florida..........................           9.65        10.23      (5.7)%
   Illinois.........................          11.63        12.74      (8.7)%
   Georgia..........................           7.87         8.67      (9.2)%
   All other states.................           9.99        10.51      (4.9)%
                                         ------------ ------------ ------------
Total realized annual rent per
  occupied square foot:.............       $  10.78     $  11.34      (4.9)%
</TABLE>
                                       39

<PAGE>

         Self-Storage Operations - Acquired Facilities

         The results of 18 facilities acquired from related parties during 2000
at a stabilized level of operations that were presented in the "Acquired
Facilities" at December 31, 2002 are now included in the Consistent Group for
the March 31, 2003 presentation. As a result, the number of facilities included
in the "Acquired Facilities" decreased from 113 at December 31, 2002 to 95 at
March 31, 2003.

         The "Acquired Facilities" at March 31, 2003 are comprised of 95
self-storage facilities containing 5,642,000 net rentable square feet that were
acquired in 2000, 2001, and 2002. These facilities were substantially all
mature, stabilized facilities at the time of their acquisition. The following
table summarizes operating data with respect to these 95 facilities:

<TABLE>
<CAPTION>
ACQUIRED FACILITIES:
                                                          Three months ended March 31,
                                                    --------------------------------------
                                                       2003          2002        Change
                                                    ------------ ------------ ------------
                                                        (Dollar amounts in thousands)
<S>                                                  <C>          <C>           <C>
Rental income (a):
   Self-storage facilities acquired in 2002 (a)      $   14,317   $   11,710    $  2,607
   Self-storage facility acquired in 2001 (b)..             131           96          35
   Self-storage facilities acquired in 2000 (c)           1,054        1,009          45
                                                    ------------ ------------ ------------
     Total rental income.......................          15,502       12,815       2,687
                                                    ------------ ------------ ------------
Cost of operations:
   Self-storage facilities acquired in 2002 (a)           4,277        3,131       1,146
   Self-storage facility acquired in 2001 (b)..              39           38           1
   Self-storage facilities acquired in 2000 (c)             479          425          54
                                                    ------------ ------------ ------------
     Total cost of operations..................           4,795        3,594       1,201
                                                    ------------ ------------ ------------
Net operating income before depreciation:
----------------------------------------
   Self-storage facilities acquired in 2002 (a)          10,040        8,579       1,461
   Self-storage facility acquired in 2001 (b)..              92           58          34
   Self-storage facilities acquired in 2000 (c)             575          584          (9)
                                                    ------------ ------------ ------------
     Net operating income......................          10,707        9,221       1,486
 Depreciation..................................          (2,891)      (2,404)       (487)
                                                    ------------ ------------ ------------
   Operating Income............................      $    7,816   $    6,817    $    999
                                                    ============ ============ ============

Weighted average square foot occupancy during the
-------------------------------------------------
period:
-------
   Self-storage facilities acquired in 2002 (a)           85.7%        82.7%       3.6%
   Self-storage facility acquired in 2001 (b)..           84.5%        50.8%      66.3%
   Self-storage facilities acquired in 2000 (c)           73.5%        63.6%      15.6%
                                                    ------------ ------------ ------------
                                                          84.6%        80.5%       5.1%
                                                    ============ ============ ============

Number of self-storage facilities (at end of                 95           88           7
period)........................................
Net rentable square feet (in thousands, at end of
   period).....................................           5,642        5,243         399
Cumulative acquisition cost (at end of period).      $  405,684   $  380,719    $ 24,965
</TABLE>

(a)  The 2002 acquisitions includes 47 properties acquired on January 16, 2002
     from an affiliated development joint venture at a total cost of
     $269,898,000, 31 properties acquired on January 1, 2002 in connection with
     business combinations with two affiliated partnerships at a total cost of
     $60,528,000, and 9 facilities acquired from third parties at a total cost
     of $30,117,000.

(b)  The 2001 acquisition was acquired from a third party at a cost of
     $3,503,300.

(c)  The 2000 acquisitions are comprised of seven facilities acquired from third
     parties at a total cost of $41,638,000.

                                       40

<PAGE>

         Rental income and cost of operations for the Acquired Facilities have
increased significantly in the three months ended March 31, 2003 as compared to
2002, due primarily to the acquisition of new facilities in 2002.

         Similar to our Consistent Group of facilities, the Acquired Facilities
have experienced operating difficulties over the past year. Marketing and
promotional strategies, as described above with respect to our Consistent Group,
will continue to be employed in 2003 to enhance the occupancy levels and rental
income of the Acquired Facilities.

         Self-Storage Operations - Expansion Facilities

         Since January 1, 2000, we expanded 34 self-storage facilities or
converted them to Combination Facilities (defined below). These activities
caused a drop in revenue levels, as existing capacity was made unavailable in
order to accommodate construction activities and, as a result, the operating
results are not comparable. At March 31, 2003, the weighted average occupancy
level was approximately 73% as compared to 66% one year earlier. 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 the expansion facilities was
$1,517,000 and $1,649,000 for the three months ended March 31, 2003 and 2002,
respectively. These 34 facilities contain approximately 3,758,000 net rentable
square feet at March 31, 2003 (which includes the expanded space, and 817,000
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
$121,510,000.

         A portion of the 817,000 net rentable square feet of industrial space
included in these facilities was previously used by the discontinued
containerized storage operations. As described under "Liquidity and Capital
Resources," we are converting a portion of this industrial space into
traditional self-storage units.

         Self-Storage Operations -Developed Facilities

         Since January 1, 1999, we have opened 54 newly developed self-storage
facilities and 17 facilities that contain both self-storage and portable
self-storage at the same location ("Combination Facilities"). These newly
developed facilities have an aggregate of 5,251,000 net rentable square feet (of
which 878,000 net square feet is industrial space developed for containerized
storage activities - see "Containerized Storage" and "Discontinued Operations").
Aggregate development cost for these 71 facilities was approximately $456.3
million. The operating results of the self-storage facilities and Combination
Facilities are reflected in the Self-Storage Operations table under the caption,
"Developed Facilities."

                                       41

<PAGE>

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

                                                Three months ended March 31,
                                           -------------------------------------
                                              2003          2002        Change
                                           -----------  -----------  -----------
                                            (Amounts in thousands, except No. of
                                                        facilities)
Rental income:
--------------
   Self-storage facilities............      $   5,636    $   3,819     $  1,817
   Combination Facilities.............          2,142        1,369          773
                                           -----------  -----------  -----------
     Total rental income..............          7,778        5,188        2,590
                                           -----------  -----------  -----------
Cost of operations:
   Self-storage facilities............          3,057        1,897        1,160
   Combination Facilities.............          1,182          998          184
                                           -----------  -----------  -----------
     Total cost of operations.........          4,239        2,895        1,344
                                           -----------  -----------  -----------
Net operating income before depreciation:
-----------------------------------------
   Self-storage facilities............          2,579        1,922          657
   Combination Facilities.............            960          371          589
                                           -----------  -----------  -----------
     Net operating income.............          3,539        2,293        1,246
 Depreciation.........................          (3,149)      (2,162)       (987)
                                           -----------  -----------  -----------
   Operating income...................       $     390    $     131    $    259
                                           ===========  ===========  ===========

Weighted average square foot occupancies
----------------------------------------
for the period:
---------------
   Self-storage facilities............          57.2%        50.3%       13.7%
   Combination Facilities.............          65.3%        39.4%       65.7%
                                           -----------  -----------  -----------
     Total............................          59.0%        47.4%       24.5%
                                           ===========  ===========  ===========

SELF-STORAGE FACILITIES, AT END OF PERIOD:
   Number of facilities...............             54           40           14
   Net rentable square feet...........          3,407         2,491         916
   Total development cost.............      $  302,118   $  206,603    $ 95,515

COMBINATION FACILITIES, AT END OF PERIOD:
   Number of facilities...............             17           16            1
   Net rentable square feet...........          1,844         1,730         114
   Total development cost.............      $  154,177   $  147,363    $  6,814

                                       42

<PAGE>

         The following table summarizes operating data for the 54 newly
developed self-storage facilities that opened since January 1, 1999:

<TABLE>
<CAPTION>
DEVELOPED  SELF-STORAGE FACILITIES:
                                                          Three Months Ended March 31,
                                                    --------------------------------------
                                                       2003          2002        Change
                                                    ------------ ------------ ------------
                                                        (Dollar amounts in thousands)
<S>                                                  <C>          <C>           <C>
Rental income:
   Self-storage facilities developed in 2003...      $        4   $        -    $        4
   Self-storage facilities developed in 2002...           1,127            7         1,120
   Self-storage facilities developed in 2001...           1,296          936           360
   Self-storage facilities developed in 2000...           2,427        2,144           283
   Self-storage facilities developed in 1999...             782          732            50
                                                    ------------ ------------ ------------
     Total rental income.......................           5,636        3,819         1,817
                                                    ------------ ------------ ------------

Cost of operations:
   Self-storage facilities developed in 2003...              75            -            75
   Self-storage facilities developed in 2002...             815           36           779
   Self-storage facilities developed in 2001...             821          673           148
   Self-storage facilities developed in 2000...           1,047          937           110
   Self-storage facilities developed in 1999...             299          251            48
                                                    ------------ ------------ ------------
     Total cost of operations..................           3,057        1,897         1,160
                                                    ------------ ------------ ------------

Net operating income before depreciation:
   Self-storage facilities developed in 2003...             (71)           -           (71)
   Self-storage facilities developed in 2002...             312          (29)          341
   Self-storage facilities developed in 2001...             475          263           212
   Self-storage facilities developed in 2000...           1,380        1,207           173
   Self-storage facilities developed in 1999...             483          481             2
                                                    ------------ ------------ ------------
   Net operating income........................           2,579        1,922           657
Depreciation...................................          (2,053)      (1,268)         (785)
                                                    ------------ ------------ ------------
   Operating income............................      $      526   $      654    $     (128)
                                                    ============ ============ ============

Weighted average square foot occupancy during the period:
   Self-storage facilities opened in 2003......            6.5%         -                -
   Self-storage facilities opened in 2002......           39.6%         1.9%       1984.2%
   Self-storage facilities opened in 2001......           54.3%        35.6%         52.5%
   Self-storage facilities opened in 2000......           81.9%        67.9%         20.6%
   Self-storage facilities opened in 1999......           90.0%        83.2%          8.2%
                                                    ------------ ------------ ------------
                                                          57.2%        50.3%        13.7%
                                                    ============ ============ ============

Number of facilities:
   Self-storage facilities developed in 2003...               5            -            5
   Self-storage facilities developed in 2002...              14            5            9
   Self-storage facilities developed in 2001...              12           12            -
   Self-storage facilities developed in 2000...              18           18            -
   Self-storage facilities developed in 1999...               5            5            -
                                                    ------------ ------------ ------------
                                                             54           40           14
                                                    ============ ============ ============
Cumulative Development Cost:
   Self-storage facilities developed in 2003...      $   33,744   $        -    $  33,744
   Self-storage facilities developed in 2002...          93,479       31,708       61,771
   Self-storage facilities developed in 2001...          66,905       66,905            -
   Self-storage facilities developed in 2000...          82,819       82,819            -
   Self-storage facilities developed in 1999...          25,171       25,171            -
                                                    ------------ ------------ ------------
                                                     $  302,118   $  206,603    $  95,515
                                                    ============ ============ ============
</TABLE>
                                       43

<PAGE>

         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. Historically, we estimated that on
average it took approximately 24 months for a newly developed facility to fill
up and reach a targeted occupancy level of approximately 90%. We believe that
the current economic environment has extended the fill-up period beyond 24
months notwithstanding our marketing efforts to enhance the fill-up process.

         Similar to our Consistent Group of facilities, the newly developed
self-storage facilities participated in promotional discounting and advertising
activities to enhance occupancy levels. During the three months ended March 31,
2003, the newly developed self-storage facilities had a weighted average
occupancy level of approximately 57.2%.

         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 reach an
occupancy level of approximately 30% to 34%. However, at that occupancy level,
the rental revenues from the facility are still not sufficient to cover 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.

         Due to the relationship between the generation of rental income and
immediate recognition of expenses upon opening of a facility, our development
activities have had a negative impact on our net income. We estimate that our
net income has been negatively impacted by approximately $7,982,000 and
$5,940,000, in the three months ended March 31, 2003 and 2002, respectively, as
a result of the difference between the revenues generated by the Developed
Facilities and the related operating costs denoted above. These amounts include
approximately $3,149,000 and $2,162,000, in the three months ended March 31,
2003 and 2002, respectively, in depreciation expense.

         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, however, to
a much lesser degree than experienced in 2002. Furthermore, the 40 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 12 - 24 months will also negatively impact
our earnings 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 PSB. Our investment
in PSB is accounted for on 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 992,000 net rentable square
feet of commercial space operated at certain of the self-storage facilities, and
three stand-alone commercial facilities having a total of 195,000 net rentable
square feet. In addition, we own an industrial building with 67,000 net rentable
square feet that was opened in 2001. This facility was previously used by the
containerized storage operations, and is now classified as "real estate
facilities held for sale" on our March 31, 2003 balance sheet.

                                       44

<PAGE>

         The following table sets forth the historical commercial property
amounts included in the financial statements:

           Commercial Property Operations
           (excluding discontinued operations):
           ------------------------------------
                                         For the three months
                                            ended March 31,
                                        -----------------------
                                           2003         2002        Change
                                        ----------   ----------   ----------
                                              (Amounts in thousands)
     Rental income  ...............        $2,846        $2,956     $(110)
     Cost of operations............         1,193         1,092       101
                                        ----------   ----------   ----------
        Net operating income.......         1,653         1,864      (211)

     Depreciation expense..........           625           699       (74)
                                        ----------   ----------   ----------
        Operating income...........        $1,028        $1,165     $(137)
                                        ==========   ==========   ==========

         The decrease in rental income for March 31, 2003 as compared to the
same period in 2002 is due primarily to a vacancy in one of the three
stand-alone commercial facilities, which caused a reduction in rental income of
approximately $138,000.

         During 2002, we sold one of our commercial facilities to a third party
for an aggregate $3.9 million in cash. The historical operations with respect to
this facility are classified as "Discontinued Operations" in our income
statement and are not included in the above table.

         CONTAINERIZED STORAGE OPERATIONS: In August 1996, Public Storage Pickup
& Delivery ("PSPUD"), a subsidiary of the Company, made its initial entry into
the containerized storage business through its acquisition of a single facility
operator located in Irvine, California. At March 31, 2003, PSPUD operated 33
facilities in 12 states, which are located in major markets in which we have
significant market presence with respect to our traditional self-storage
facilities. During 2002, we reevaluated our operational strategy and closed, or
are in the process of closing, 22 of the 55 containerized storage facilities
that were open at January 1, 2002 (22 facilities herein referred to as the
"Closed Facilities"). The operations with respect to the Closed Facilities,
including historical operating results for previous periods, are not included in
the table below and instead are included in Discontinued Operations. PSPUD's
operations, which exclude the Closed Facilities, are reflected on the table
below:


Containerized storage
(excluding discontinued operations):
------------------------------------
                                              For the three months
                                                 ended March 31,
                                            -----------------------
                                              2003          2002        Change
                                            ----------   ----------   ----------
                                              (Dollar amounts in thousand)
Rental and other income ............          $9,481       $8,198      $1,283
                                            ----------   ----------   ----------
Cost of operations:
    Direct operating costs..........           5,757        5,291         466
    Facility lease expense..........             620          666         (46)
                                            ----------   ----------   ----------
       Total cost of operations.....           6,377        5,957         420
                                            ----------   ----------   ----------
    Operating income prior to
      depreciation..................           3,104        2,241         863
Depreciation expense (a)............          (2,021)      (1,451)       (570)
                                            ----------   ----------   ----------
Operating income....................          $1,083         $790        $293
                                            ==========   ==========   ==========

(a)  Depreciation expense principally relates to the depreciation related to the
     containers, however, depreciation expense for the three months ended March
     31, 2003 and 2002 includes $390,000 and $224,000, respectively, with
     respect to real estate facilities.

                                       45

<PAGE>

         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. Rental income increased to $9,481,000 for the
three months ended March 31, 2003, as compared to $8,198,000 for the same period
in 2002 primarily as a result of higher per container rents and an increase in
the number of occupied containers. At March 31, 2003, there were approximately
48,128 occupied containers in the 33 facilities that are reflected in these
"ongoing" operations. We continue to evaluate the business operations, and
additional facilities may be closed.

         Direct operating costs principally includes payroll, equipment lease
expense, utilities and vehicle expenses (fuel and insurance).

         Depreciation expense with respect to the containers and other non-real
estate assets of the containerized storage operations increased $404,000 due
primarily to reduced estimated useful lives of the containers and other assets
of the containerized storage operations. We reevaluated the historical results
with respect to wear and functional obsolescence of these assets. Based upon the
results of this review, we decreased the estimated useful lives with respect to
these assets effective January 1, 2003. We expect that the ongoing depreciation
with respect to the containerized storage operations will remain at the level
experienced in the first quarter of 2003.

         At March 31, 2003, nine of the 33 containerized storage facilities are
leased from third parties. The remaining 24 facilities were operated in
facilities owned by the Company, comprised of 19 Combination Facilities with an
aggregate of 994,000 square feet of industrial space (this square footage is a
component of the total net rentable square footage of the Expansion Facilities
and the Developed Facilities in the table above) and five industrial facilities
having an aggregate of 420,000 net rentable square feet.

         The containerized storage operations may continue to adversely impact
our future earnings and cash flows. 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.

         See "Discontinued Operations" below for a discussion of operating
results of the Closed Facilities.

         TENANT REINSURANCE OPERATIONS: On December 31, 2001, we acquired PS
Insurance Company, Ltd. ("PS Insurance") from a related party. PS Insurance
reinsures policies against losses to goods stored by tenants in our self-storage
facilities. The operations of PS Insurance are included in the income statement
under "Revenues - tenant reinsurance premiums" and "Cost of operations - tenant
reinsurance." For the three months ended March 31, 2003 and 2002, the tenant
reinsurance business earned $5,215,000 and $4,575,000, respectively, in revenues
and incurred $2,699,000 and $2,293,000, respectively, in operating expenses,
generating a net operating profit of $2,516,000 and $2,282,000, respectively.

         The level of tenant reinsurance revenues is largely dependent upon our
occupancy level and move-in activity. As of March 31, 2003, approximately 38% of
our self-storage tenant base have such policies. New insurance business comes
from tenants who sign up for insurance as they move into our self-storage
facilities.

         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 recorded 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 seven limited partnerships at March 31, 2003 (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,
and account for such investments using the equity method.

         Equity in earnings of real estate entities for the three months ended
March 31, 2003 and 2002 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:

                                       46

<PAGE>

Historical summary:                            Three Months Ended
                                                    March 31,
                                             ------------------------    Dollar
                                                2003         2002        Change
                                             -----------   ----------   --------
                                                     (Amounts in thousands)
Property operations:
  PSB                                         $14,700       $15,423       $(723)
  Disposed investments (1)...............           -           288        (288)
  Other investments (2)..................       1,428         1,806        (378)
                                             -----------   ----------   --------
                                               16,128        17,517      (1,389)
                                             -----------   ----------   --------
Depreciation:
  PSB....................................      (6,029)       (6,101)         72
  Disposed investments (1)...............           -           (65)         65
  Other investments (2)..................        (265)         (205)        (60)
                                             -----------   ----------   --------
                                               (6,294)       (6,371)         77
                                             -----------   ----------   --------
Other: (3)
  PSB (4)................................      (5,252)       (2,208)     (3,044)
  Disposed investments (1)...............           -             -           -
  Other investments (2)..................         105           318        (213)
                                             -----------   ----------   --------
                                               (5,147)       (1,890)     (3,257)
                                             -----------   ----------   --------

Total equity in earnings of real estate
entities.................................      $4,687        $9,256     $(4,569)
                                             ===========   ==========   ========

(1)  Amounts include our pro rata share of the earnings for the Development
     Joint Venture. On January 16, 2002, we acquired a controlling interest in
     this partnership and began to consolidate the operations of this
     partnership, and no longer account for our interest in this partnership
     using the equity method (see Note 3 to the consolidated financial
     statements).

(2)  Amounts include equity in earnings recorded for investments that have been
     held consistently throughout each of the three months ended March 31, 2003
     and 2002.

(3)  "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.

(4)  "Other" with respect to PSB for the three months ended March 31, 2003
     includes a $2,130,000 reduction to equity in earnings, representing our net
     pro-rata share of PSB's impairment charges related to the impending sale of
     real estate partially offset by a gain on the sale of real estate assets.
     Amounts for the three months ended March 31, 2002 include our $2,241,000
     pro-rata share of PSB's gain on disposition of real estate investments.

         The decrease in equity in earnings of real estate entities is primarily
due to the reduction in earnings of PSB. PSB's earnings for the quarter ended
March 31, 2003 were negatively impacted due to asset impairment charges relating
to the impending sale of real estate offset partially by a gain on sale of real
estate assets. Our net pro rata share of such items in the quarter ended March
31, 2003 was a reduction in equity in earnings approximating $2,130,000. In
addition, during the prior year's quarter ended March 31, 2002, PSB recognized a
gain on the sale of real estate of which our pro rata share was approximately
$2,241,000. As a result of these items, our equity in earnings for the first
quarter of 2003 was negatively impacted a total of $4,371,000 as compared to the
first quarter of 2002.

         Equity in earnings of PSB represents our pro rata share (an average of
approximately 44% for the quarter ended March 31, 2003 and 2002) of the earnings
of PSB. As of March 31, 2003, 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, 2003, PSB owned and operated 14.5
million net rentable square feet of commercial space located in nine states. PSB
also manages approximately 1,196,000 net rentable square feet of commercial
space owned by the Company and affiliated entities at March 31, 2003 pursuant to
property management agreements.

                                       47

<PAGE>

         Accordingly, 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.

         On January 16, 2002, we acquired the remaining 70% ownership interest
in the Development Joint Venture for cash totaling approximately $153,078,000.
As a result, we began consolidating the operating results of the Development
Joint Venture and no further equity in earnings will be recorded with respect to
this entity for periods after January 16, 2002. Our earnings with respect to
this entity is included in the table above in the line-item "Disposed
Investments."

         The "Other Investments" includes our equity in earnings with respect to
our pro-rata share of earnings with respect to seven limited partnerships, for
which we held an approximately consistent level of equity interest during each
of the three months ended March 31, 2003 and 2002. These limited partnerships
were formed by the Company during the 1980's. The Company is the general partner
in each limited partnership, and manages 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
(2,186,000 net rentable square feet) 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 6 to
the consolidated financial statements for the operating results of these
entities for the months ended March 31, 2003 and 2002.

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

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

         Interest and other income has decreased from $1,708,000 in the three
months ended March 31, 2002 to $1,699,000 for the three months ended March 31,
2003. This represents a decrease in interest on outstanding cash balances due to
reductions in the interest rates on outstanding balances and a reduction in
property management operations due to the consolidation of the Development Joint
Venture as described in Note 3 to the financial statements, offset partially by
improved operating results on our merchandise and truck rental operations.

         DEPRECIATION AND AMORTIZATION: Depreciation and amortization expense
has increased $2,521,000 to $45,920,000 for the three months ended March 31,
2003 as compared to $43,399,000 for the same period in 2002. Included in
depreciation expense with respect to our real estate facilities was $42,183,000
and $40,521,000 for the three months ended March 31, 2003 and 2002,
respectively. The increase in such depreciation is principally the result of
property acquisitions and newly developed facilities opened for operations.
Included in depreciation and amortization expense for the three months ended
March 31, 2003 and 2002 is $2,086,000 and $1,227,000, respectively, with respect
to other assets, principally depreciation of equipment and containers associated
with the containerized storage operations, which have increased as discussed in
Containerized Storage Operations above. Included in depreciation and
amortization expense for each of the three months ended March 31, 2003 and 2002
is $1,651,000 with respect to the amortization of property management contracts.

         GENERAL AND ADMINISTRATIVE: General and administrative expense for the
three months ended March 31, 2003 increased 6.3% to $4,250,000 as compared to
$4,000,000 for the same period in 2002. General and administrative expense
principally consists of state income taxes, investor relation expenses, certain
overhead associated with the acquisition and development of real estate
facilities, corporate payroll, and overhead associated with the containerized
storage business.

                                       48

<PAGE>

         Beginning January 1, 2002, we began to expense the fair value of stock
options in accordance with Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("FAS 123"). As indicated by FAS 123,
the estimated fair value of stock options issued after January 1, 2002 will be
expensed over their vesting period. The total of such expense included in
general and administrative expense was approximately $99,000 for the three
months ended March 31, 2003 (none in the same period of 2002). Based upon stock
options granted between January 1, 2002 and March 31, 2003, the total expected
annual expense for 2003 is approximately $395,000. In addition, pro-forma
disclosures of the impact of stock options issued prior to January 1, 2002
(which are not expensed per the transition provisions of FAS 123) are presented
in Note 12 to the financial statements. The impact of stock option expense will
continue to increase in the future to the extent that additional stock options
are granted.

         INTEREST EXPENSE: Interest expense was $453,000 and $1,102,000 for the
three months ended March 31, 2003 and 2002, respectively. Capitalized interest
expense totaled $1,525,000 and $1,846,000 for the three months ended March 31,
2003 and 2002, respectively. The decrease in interest expense in 2003 compared
to 2002 is principally the result of lower interest expense on notes payable due
to scheduled principal repayments and a $295,000 reduction in interest on line
of credit borrowings, offset by a reduction in capitalized interest from
$1,846,000 in the three months ended March 31, 2002 to $1,525,000 for the three
months ended March 31, 2003.

         MINORITY INTEREST IN INCOME: Minority interest in income represents the
income allocable to equity interests in the Consolidated Entities, which are not
owned by the Company. The following table summarizes minority interest in income
for the three months ended March 31, 2003 and 2002 (amounts in thousands):

                                             Minority Interest in Income for the
                                                 Three Months Ended March 31,
                                             -----------------------------------
                Description                        2003               2002
-------------------------------------------- ------------------- ---------------
Preferred partnership interests............    $        6,726     $        6,726
Consolidated Development Joint Venture (a).               743                307
Convertible Partnership Units (b)..........                65                 89
Acquired minority interests (c) ...........                 -                901
Other minority interests (d)...............             3,134              3,319
                                             ------------------- ---------------
Total minority interests in income.........    $       10,668     $       11,342
                                             =================== ===============

(a)  These amounts reflect income allocated to the minority interests in the
     Consolidated Development Joint Venture. Included in minority interest in
     income is $851,000 and $746,000 in depreciation expense for the three
     months ended March 31, 2003 and 2002, respectively.

(b)  These amounts reflect the minority interests represented by the Convertible
     Partnership Units (see Note 9 to the consolidated financial statements).
     Included in minority interest is $97,000 and $85,000 in depreciation
     expense for the three months ended March 31, 2003 and 2002, respectively.

(c)  These amounts reflect income allocated to minority interests that the
     Company acquired since December 31, 2001 and are no longer outstanding at
     March 31, 2003. Included in minority interests is $606,000 in depreciation
     expense for the three months ended March 31, 2002.

(d)  These amounts reflect income allocated to minority interests that were
     outstanding consistently throughout the three months ended March 31, 2003
     and 2002. Included in minority interest in income is $698,000 and $818,000
     in depreciation expense for the three months ended March 31, 2003 and 2002,
     respectively.

                                       49

<PAGE>

         Minority interest in income - preferred partnership interests
represents the income allocable to holders of our preferred partnership units.
Throughout the periods ending March 31, 2003 and 2002, we had outstanding
$240,000,000 of our 9.5% Series N Cumulative Redeemable Perpetual Preferred
Units which were issued on March 17, 2000, and $45,000,000 of our 9.125% Series
O Cumulative Redeemable Perpetual Preferred Units which were issued on March 29,
2000. For each of the three months ended March 31, 2003 and 2002, the holders of
these preferred units were paid aggregate distributions of approximately
$6,726,000 and received a corresponding allocation of minority interest in
earnings. We estimate that during the year ended March 31, 2003 the preferred
units will be allocated $26,904,000 in income. These preferred units are not
redeemable during the first 5 years; thereafter, at our option, we can call the
units for redemption at the issuance amount plus any unpaid distributions.

         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. Included in minority interest in
income for the Consolidated Development Joint Venture is depreciation expense of
$851,000 and $746,000 for the three months ended March 31, 2003 and 2002,
respectively. 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 increase their occupancy to a
stabilized occupancy level and increase the earnings of this entity.

         The acquired minority interests reflects interests in the consolidated
entities that the Company acquired since January 1, 2002 and are therefore no
longer outstanding. There will be no further income allocated to these
interests.

         Other minority interests reflect income allocated to minority interests
that have maintained a consistent level of interest throughout the three months
ended March 31, 2003 and 2002, comprised of investments in the Consolidated
Entities and the Convertible Partnership Units described in Note 9 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. On April 28, 2003, we acquired all of the remaining
limited partnership interest not currently owned by the Company in PS Partners
IV, Ltd., a partnership which is consolidated with the Company, for an aggregate
of $23,351,000. Included in minority interest in income for the three months
ended March 31, 2003 and 2002, with respect to these interests was approximately
$359,000 and $393,000, respectively, including $143,000 and $174,000,
respectively, in depreciation expense. Upon acquisition of these interests, no
further income will be allocated to these interests.

         DISCONTINUED OPERATIONS: During the first quarter of 2003, we entered
into a business plan to exit the Knoxville, Tennessee market, and listed our
four self-storage facilities (the "Knoxville Facilities") in this market for
sale. Accordingly, the operations of these four facilities for current and prior
periods has been reclassified into the line-item "Discontinued Operations" on
our income statement.

         During 2002, we adopted a business plan that included the closure of
several non-strategic containerized storage facilities (the "Closed
Facilities"), representing components of our containerized storage business. The
related assets of the Closed Facilities (consisting primarily of storage
containers) were deemed not recoverable from future operations, and as a result
an asset impairment charge for the excess of these assets' net book value over
their fair value was recorded in the latter half of 2002 totaling $6,187,000. In
addition, lease termination costs, representing the expected remaining lease
liability following closure of the facilities, were recorded in the amount of
$2,447,000 during the latter half of 2002. Also, during 2002, we sold one of our
commercial facilities to a third party.

                                       50

<PAGE>

         The following table summarizes the historical operations of the
Knoxville Facilities, the Closed Facilities, and the sold commercial facility:

Discontinued Operations:                    Three months ended March 31,
-------------------------              ---------------------------------------
                                          2003          2002         Change
                                       -----------   -----------   -----------
                                               (Amounts in thousands)
Rental income (a):
  Knoxville Facilities............      $     388     $    382     $       6
  Closed Facilities...............          1,533        3,501        (1,968)
  Sold commercial facility........              -          115          (115)
                                       -----------   -----------   -----------
       Total rental income........          1,921        3,998        (2,077)
                                       -----------   -----------   -----------

Cost of operations (a):
  Knoxville Facilities............            170          156            14
  Closed Facilities...............          1,630        3,361        (1,731)
  Sold commercial facility........              -           22           (22)
                                       -----------   -----------   -----------
       Total cost of operations...          1,800        3,539        (1,739)
                                       -----------   -----------   -----------

Depreciation (a):
  Knoxville Facilities............            120          119             1
  Closed Facilities...............              -          450          (450)
  Sold commercial facility........              -           29           (29)
                                       -----------   -----------   -----------
       Total depreciation ........            120          598          (478)
                                       -----------   -----------   -----------
Net discontinued operations.......      $       1     $   (139)    $     140
                                       ===========   ===========   ===========

(a)  These amounts represent the historical operations of the Knoxville
     Facilities, the Closed Containerized Operations 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.

         Many of the Closed Facilities are in the process of closing which may
take up to several months to complete. We expect that these facilities will
continue to generate operating losses until final closure.

         GAIN (LOSS) IN DISPOSITION OF REAL ESTATE: In the three months ended
March 31, 2003, we sold two real estate facilities and a parcel of land for an
aggregate of $7,713,000 in cash, and recorded a gain on disposition of real
estate of $14,000.

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 fund principal payments on debt and reinvestment
opportunities.

                                       51

<PAGE>

<TABLE>
<CAPTION>
                                                                   For the three months ended
                                                                              March 31,
                                                                  ---------------------------------
                                                                      2003                2002
                                                                  --------------     --------------

                                                                       (amounts in thousands)
<S>                                                                <C>                <C>
Net cash provided by operating activities..................        $    146,915       $    152,149

Allocable to minority interest (Preferred Units)...........              (6,726)            (6,726)
Allocable to minority interest (common equity).............              (5,588)            (6,871)
                                                                  --------------     --------------
Cash from operations allocable to our shareholders.........             134,601            138,552

Capital improvements to maintain our facilities............              (2,333)            (3,968)
 Add back:  minority interest share of capital improvements
    to maintain facilities.................................                  57                179
                                                                  --------------     --------------

 Remaining operating cash flow available for distributions to
    our shareholders.......................................             132,325            134,763

Distributions paid:
  Preferred stock dividends................................             (37,022)           (35,840)
  Equity Stock, Series A dividends.........................              (5,375)            (5,375)
  Distributions to Common and Class B shareholders (a).....             (55,995)           (55,045)
                                                                  --------------     --------------

Cash available for principal payments on debt and reinvestment     $     33,933       $     38,503
                                                                  ==============     ==============
</TABLE>

(a)  The 7,000,000 shares of Class B common stock converted into 7,000,000
     regular common shares on January 1, 2003.

         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, 2003, 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 borrowings with internally generated cash flows and proceeds from the
placement of permanent capital. At March 31, 2003, we had borrowings on our line
of credit totaling $25,000,000. As of May 13, 2003, outstanding borrowings had
been reduced to $5,000,000.

         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 in 2002 and 2001 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
by each of the three major credit agencies are "Baa2" by Moody's and BBB+ by
both Standard & Poor's and Fitch IBCA.

         Our portfolio of real estate facilities remains substantially
unencumbered. At March 31, 2003, we had mortgage debt outstanding of $19.7
million and unsecured long-term debt in the amount of $69.4 million, and had
unencumbered real estate facilities with a book value of approximately $3.9
billion.

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

                                       52

<PAGE>

          REQUIREMENT TO PAY DISTRIBUTIONS: We have operated, and intend to
continue to operate, in such a manner as to qualify as a REIT under the Internal
Revenue Code of 1986, but no assurance can be given that we will at all time so
qualify. To the extent that the Company continues to qualify as a REIT, we will
not be taxed, with certain limited exceptions, on the taxable income that is
distributed to our shareholders, provided that at least 90% of our taxable
income is so distributed prior to filing of the Company's tax return. We have
satisfied the REIT distribution requirement since 1980.

         During the three months ended March 31, 2003 and 2002, we paid cash
dividends totaling $37,022,000 and $35,840,000, respectively, to the holders of
our Senior Preferred Stock. We estimate the regular annual distribution
requirements with respect to our Preferred Stock outstanding at March 31, 2003
to be approximately $142.8 million, which excludes $1.3 million for our Senior
Preferred Stock, Series B, which we redeemed in March 2003.

         During each of the three months ended March 31, 2003 and 2002, we paid
cash dividends totaling $6,726,000 to the holders of our preferred partnership
units. The annual distribution requirement with respect to the preferred
partnership units outstanding at March 31, 2003, is estimated at $26.9 million.

         During each of the three months ended March 31, 2003 and 2002, 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 noncumulative, 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, 2003, we estimate the total
annual regular distribution to be approximately $21.5 million assuming that
dividends of at least $0.49 per share per year are paid to the common
shareholders.

         During the three months ended March 31, 2003, we paid dividends
totaling $55,995,000 ($0.45 per common share) to the holders of our common
stock. Based upon shares outstanding at March 31, 2003 and a quarterly
distribution of $0.45 per share, which was declared by the Board of Directors on
May 8, 2003 and payable on June 30, 2003, we estimate dividend payments with
respect to our common stock of approximately $55.9 million for the second
quarter of 2003.

         We anticipate that quarterly distributions per common share will remain
at $0.45 per common share during 2003. We have, in the past, paid special
distributions which were necessary to meet our distribution requirements in
order to maintain our REIT tax status. It is unlikely that any special
distribution will be required to enable the Company to meet its distribution
requirements in 2003.

         CAPITAL IMPROVEMENT REQUIREMENTS: For 2003, we have budgeted
approximately $30 million for capital improvements. During the three months
ended March 31, 2003, we incurred capital improvements of approximately $2.3
million.

         DEBT SERVICE REQUIREMENTS: We do not believe we have any significant
refinancing risks with respect to our notes payable, all of which are fixed
rate. At March 31, 2003, we had total outstanding notes payable of approximately
$89.1 million. See Note 8 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
schedule principal payments. It is our current intention to fully amortize our
debt as opposed to refinance debt maturities with additional debt.

         ACQUISITION OF INTERESTS IN SELF-STORAGE FACILITIES: On January 16,
2002, we acquired the remaining 70% interest in the Development Joint Venture
for approximately $153,078,000 in cash. The Development Joint Venture was formed
in April 1997 with equity capital consisting of 30% from the Company and 70%
from an institutional investor, which owns 47 storage facilities opened since
1997. This transaction was principally financed with the capital raised through
the issuance of our 7.625% Cumulative Preferred Stock, Series T.

                                       53

<PAGE>

         On April 28, 2003 we acquired through a merger all of the remaining
limited partnership interest not currently owned by the Company in PS Partners
IV, Ltd., a partnership which is consolidated with the Company. The acquisition
cost consisted of the issuance of approximately 427,000 shares of our common
stock and cash of approximately $10 million.

         DEVELOPMENT OF SELF-STORAGE FACILITIES: We anticipate that the cost of
development of self-storage facilities for the year ended December 31, 2003 and
beyond will be approximately $75 million per year. We have utilized two
development joint ventures in the past 5 years; we acquired our partner's
interest in January 2002 for one of the development joint ventures, and the
other joint venture is fully committed. However, we believe that it is unlikely
that we will form a development joint venture to fund our current pipeline
described below.

         We currently have a development "pipeline" of 40 self-storage
facilities, combination facilities, and expansions to existing self-storage
facilities with an aggregate estimated cost of approximately $169.2 million.
Approximately $75.8 million of development cost has been incurred as of March
31, 2003. We have acquired the land for 39 of these projects, which have an
aggregate estimated cost of approximately $165.0 million, and costs incurred as
of March 31, 2003 of approximately $75.8 million. The remaining facility
represents an identified site 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 $93.4 million
will be incurred over the next 18 - 24 months. The following table sets forth
certain information with respect to our development pipeline.

<TABLE>
<CAPTION>
DEVELOPMENT PIPELINE SUMMARY
                                                                          Total
                                                 Number      Net        estimated     Costs incurred
                                                   of     rentable     development        through         Costs to
                                                projects   sq. ft.        costs           3/31/03         complete
                                                --------- --------    -------------   ---------------   ------------
                                                                            (Amounts in thousands)
   <S>                                             <C>         <C>      <C>              <C>              <C>
   Facilities currently under construction:
    Self-storage facilities                        13          768      $  109,230       $   62,741       $   46,489
    Expansions to existing self-storage
     facilities                                     7          288          22,547            6,229           16,318
                                                --------- --------    -------------   ---------------   ------------
                                                   20        1,056         131,777           68,970           62,807
   Facilities  awaiting  construction,  where
     land is acquired:
    Self-storage facilities                         1           44           5,562            1,306            4,256
    Expansions of existing self-storage
     facilities                                    18          500          27,612            5,319           22,293
                                                --------- --------    -------------   ---------------   ------------
                                                   19          544          33,174            6,625           26,549
    Facility awaiting construction, where
     land has not yet been acquired                 1           41           4,276              186            4,090
                                                --------- --------    -------------   ---------------   ------------
         Total Development Pipeline                40        1,641      $  169,227       $   75,781       $   93,446
                                                ========= ========    =============   ===============   ============
</TABLE>

         Included in "expansions of existing self-storage facilities" are 16
projects associated with the conversion of industrial space, previously used by
the discontinued containerized facility operations, into self-storage space.

         In addition to the above projects, we have 9 parcels of land held for
development with total costs of approximately $17,807,000 at March 31, 2003.
These parcels will either be developed or sold.

                                       54

<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.
From the initial authorization through March 31, 2003, we have repurchased a
total of 21,497,020 shares of common stock at an aggregate cost of approximately
$535.9 million. There have been no substantial repurchases of our common stock
since May 2002.

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, 2002, you should consider the following factors
in evaluating the Company:

THE HUGHES FAMILY COULD CONTROL US.

         At March 31, 2003, the Hughes family owned approximately 37% 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 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. As a
REIT, we must distribute at least 90% of our REIT taxable income to our
shareholders, which include not only holders of our common stock and equity
stock but also holders of our preferred stock. Failure to pay full dividends on
the preferred stock would prevent us from paying dividends on our common stock
and could jeopardize our qualification as a REIT.

         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.

                                       55

<PAGE>

WE MAY PAY SOME TAXES.

         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 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, 2003, our debt
of $114.1 million was approximately 2.4% 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    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; and

         o    changes in tax, real estate and zoning laws.

                                       56

<PAGE>

         There is significant competition among self-storage facilities and from
other storage alternatives. Most of our properties are self-storage facilities,
which generated 91% of our revenue for the three months ended March 31, 2003.
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. As discussed in
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Self-Storage Operations, the revenues of the Consistent Group of
facilities declined 2.6% in the three months ended March 31, 2003 as compared to
2002. Such competition could have been a factor in this decline.

         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, 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.

         Delays in development and fill-up of our properties would reduce our
profitability: During 2002 and 2003, the Company opened a total of five newly
developed self-storage facilities at a total cost of approximately $33,744,000,
and at March 31, 2003 the Company had 40 projects in development that are
expected to begin construction generally by September 30, 2003. These 40
projects have total estimated costs of $169,227,000. Construction delays due to
weather, unforeseen site conditions, personnel problems, and other factors, as
well as cost overruns, would adversely affect the Company's profitability.
Delays in the rent-up of newly developed facilities as a result of competition
or other factors would also adversely impact the Company's 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 the Company's profitability.

                                       57

<PAGE>

         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 accomodations" 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.

WE HAVE NO INTEREST IN CANADIAN SELF-STORAGE FACILITIES OWNED BY THE HUGHES
FAMILY AND HAVE POTENTIAL CONFLICTS OF INTEREST WITH RESPECT TO SERVICES
PROVIDED TO THE HUGHES FAMILY

         B. Wayne Hughes, Chairman of the Board, and his family (the "Hughes
Family") have ownership interests in, and operate, approximately 38 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. The
Hughes Family owns approximately 37% of our common stock outstanding at March
31, 2003. We have a right of first refusal to acquire the stock or assets of the
corporation engaged in the operation of the 38 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.

         Our personnel are engaged in the supervision and the operation of these
38 self-storage facilities and in providing 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 reimburse us at cost for these services. There may be conflicts
of interest in allocating the time of our personnel between our properties, the
Canadian properties, and certain other Hughes Family interests. The Company is
in the process of eliminating the sharing of Company personnel with the Canadian
entities.

OUR PORTABLE SELF-STORAGE BUSINESS HAS INCURRED OPERATING LOSSES.

         Public Storage Pickup & Delivery ("PSPUD") was organized in 1996 to
operate a portable self-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 portable self-storage, we cannot provide any assurance
as to its profitability. PSPUD incurred operating losses of $10,058,000 in 2002
and generated a profit of $986,000 for the three months ended March 31, 2003.
PSPUD closed 22 facilities that were deemed not strategic to the Company's
business plan during 2002.

         The operating loss for 2002 includes a write-down for impaired assets
totaling $6,937,000 ($750,000 of which relates to continuing operations) and
lease termination charges of $2,447,000.

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 U.S. 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.

                                       58

<PAGE>

PRESIDENT BUSH'S PROPOSED TAX CUT COULD ADVERSELY AFFECT THE PRICE OF OUR STOCK.

         President Bush has proposed a tax reduction package that would, among
other things, substantially reduce or eliminate the taxation of dividends paid
by corporations other than REITs. If the double taxation of corporate dividends
were to be eliminated or reduced, certain of the relative tax advantage of being
a REIT would be eliminated or reduced, which may have an adverse effect on the
price of our stock. This adverse effect may take place prior to the adoption of
any tax cut based upon the market's perception of the likelihood of
implementation of such a provision.

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, 2003, our debt as a percentage of total
shareholders' equity (based on book values) was 2.8%.

         Our preferred stock is not redeemable by the holders. Except under
certain conditions relating to our qualification as a REIT, we may not redeem
the Senior Preferred Stock prior to the following dates: Series C - June 30,
1999, Series D - March 31, 2004, Series E - January 31, 2005, Series F - April
30, 2005, Series K - January 19, 2004, Series L - March 10, 2004, Series M -
August 17, 2004, 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 and Series V - March 31, 2007. On or after the respective dates, each
of the series of Senior Preferred Stock will be redeemable (The Series C is
presently redeemable) at our option, in whole or in part, at $25 per share (or
depositary share in the case of the Series K through Series V), plus accrued and
unpaid dividends.

         Our market risk sensitive instruments include notes payable, which
totaled $114.1 million at March 31, 2003. Substantially all of the Company's
notes payable bear interest at fixed rates. See Note 8 to the consolidated
financial statements at March 31, 2003 for approximate principal maturities of
the notes payable at March 31, 2003.

                                       59

<PAGE>

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 Rule 13a-14(c) 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. 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.

         Within 90 days prior to the date of 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. Based upon this
evaluation, the Company's Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures were effective.
There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect the internal controls subsequent
to the date of the Company's evaluation.

                                       60

<PAGE>

PART II.   OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         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 misrepresents 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. The Company is vigorously contesting the claims upon
     which this lawsuit is based.

         PS Insurance Company, Ltd.
         --------------------------

         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
     shareholder estimates these profits at $40 million and this excess at $27.5
     million.

         The contract to acquire PSIC was approved by the independent directors
     of the Company in March 2001 and the transaction 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 Hughes Gustavson, who in 2001 was an officer of the
     Company. The shareholder has threatened litigation against the Hughes
     family and the directors of the Company arising out of this transaction and
     an alleged 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. The inquiry
     relating to the shareholder's demand is currently ongoing.

         The Company cannot presently determine the potential damages, if any,
or the ultimate outcome of this matter.

     The Company is also a party to the actions described under "Item 3. Legal
Proceedings" in the Company's 2002 annual report on Form 10-K. Except as
described above, there have been no material developments in the actions
described in the Company's 2002 annual report on Form 10-K.

     The Company is a party to various claims, complaints, and other legal
actions that have arisen in the normal course of business from time to time. The
Company believes that the outcome of these other pending legal proceedings, in
the aggregate, will not have a material adverse effect upon the operations or
financial portion of the Company.

                                       61

<PAGE>

ITEM 5.  OTHER ITEMS

     On May 8, 2003, the board of directors of the Company amended the Company's
Bylaws (i) to decrease the authorized number of directors from 11 to 10 and (ii)
to eliminate a provision requiring that a majority of the directors not be
affiliated with the "Advisor." This provision is no longer applicable because
the Advisor was merged through one or more intermediaries into the Company in
1995.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) 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      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.

3.4      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.

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

3.6      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.

3.7      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.

3.8      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.

3.9      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.

3.10     Certificate of Determination for the Convertible Participating
         Preferred Stock. Filed with Registrant's Registration Statement No.
         33-63947 and incorporated herein by reference.

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

3.12     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.

3.13     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.

                                       62

<PAGE>

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

3.15     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.

3.16     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.

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

3.18     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.

3.19     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.

3.20     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.

3.21     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.

3.22     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.

3.23     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.

3.24     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.

3.25     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.

3.26     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.

3.27     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.

3.28     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.

3.29     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 March 31, 2000 and incorporated herein by
         reference.

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3.30     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.

3.31     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.

3.32     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.

3.33     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.

3.34     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.

3.35     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.

3.36     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.

3.37     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.

3.38     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.

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

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

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

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

3.43     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.

3.44     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.

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<PAGE>

3.45     Amendment to Bylaws adopted on May 6, 1999. Filed with Registrants'
         Form 10-Q for the quarterly period ended March 31, 1999 and
         incorporated herein by reference.

3.46     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.

3.47     Amendment to Bylaws adopted on May 8, 2003. Filed herewith.

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 March 31, 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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<PAGE>

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, Fleet
         National Bank 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, Fleet
         National Bank 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,
         Fleet National Bank 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.

11       Statement Re: Computation of Ratio of Earnings Per Share. Filed
         herewith.

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

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

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

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

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

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

         *        Compensatory benefit plan.

         **       Management contract.

(b) Reports on Form 8-K

         The Company filed a Current Report on from 8-K dated May 8, 2003 (filed
         May 9, 2003), pursuant to Item 7, furnishing its press release
         announcing its results for the quarter ended March 31, 2003.

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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 15, 2003

                                 PUBLIC STORAGE, INC.

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

                                       69