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, 2002
                               --------------

                                       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 the number of shares outstanding of each of the issuer's classes of
common stock, as of May 1, 2002:

Common Stock, $.10 Par Value - 115,867,068 shares
-------------------------------------------------

Class B Common Stock, $.10 Par Value - 7,000,000 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, 2002 and December 31, 2001                         1

              Condensed Consolidated Statements of Income for the
                  Three Months Ended March 31, 2002 and 2001                   2

              Condensed Consolidated Statements of Shareholders' Equity
                  for the Three Months Ended March 31, 2002                    3

              Condensed Consolidated Statements of Cash Flows
                  for the Three Months Ended March 31, 2002 and 2001           4

              Notes to Condensed Consolidated Financial Statements        5 - 22

Item 2.       Management's Discussion and Analysis of
                  Financial Condition and Results of Operations          23 - 40

Item 2A.      Risk Factors                                               41 - 43

PART II. OTHER INFORMATION (Items 1, 2, 4 and 5 are not applicable)
         -----------------

Item 3.       Qualitative and Quantitative Disclosures about Market Risk      44

Item 6.       Exhibits and Reports on Form 8-K                           45 - 51

<PAGE>

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

<TABLE>
<CAPTION>
                                                                                    March 31,    December 31,
                                                                                      2002           2001
                                                                                  ------------   ------------
                                       ASSETS                                     (Unaudited)
                                       ------

<S>                                                                               <C>            <C>
Cash and cash equivalents .....................................................   $   192,281    $    49,347
Real estate facilities, at cost:
   Land .......................................................................     1,277,720      1,165,111
   Buildings ..................................................................     3,547,821      3,265,943
                                                                                  ------------   ------------
                                                                                    4,825,541      4,431,054
   Accumulated depreciation ...................................................      (860,665)      (819,932)
                                                                                  ------------   ------------
                                                                                    3,964,876      3,611,122
Construction in process .......................................................        89,226        121,181
Land held for development .....................................................        30,001         30,001
                                                                                  ------------   ------------
          Total real estate ...................................................     4,084,103      3,762,304

Investment in real estate entities ............................................       321,795        479,300
Goodwill ......................................................................        78,204         78,204
Intangible assets, net ........................................................       122,846        124,497
Mortgage notes receivable, including amounts due from affiliates ..............        24,323         59,344
Other assets ..................................................................        69,695         72,883
                                                                                  ------------   ------------
              Total assets ....................................................   $ 4,893,247    $ 4,625,879
                                                                                  ============   ============

                       LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable .................................................................   $   128,076    $   143,552
Borrowings on line of credit ..................................................          --           25,000
Accrued and other liabilities .................................................        99,453         93,143
                                                                                  ------------   ------------
         Total liabilities ....................................................       227,529        261,695
Minority interest:
   Preferred partnership interests ............................................       285,000        285,000
   Other partnership interests ................................................       183,077        169,601
Commitments and contingencies
Shareholders' equity:
   Cumulative Preferred Stock, $0.01 par value, 50,000,000 shares authorized,
     11,168,500 shares issued in series and outstanding (11,156,500 at December
     31, 2001), at liquidation preference: ....................................     1,840,150      1,540,150
   Common Stock, $0.10 par value, 200,000,000 shares authorized, 115,254,809
     shares issued and outstanding (114,961,915 at December 31, 2001) .........        11,525         11,496
   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, 7,000,000 shares authorized and .....           700            700
     outstanding
   Paid-in capital ............................................................     2,322,732      2,325,898
   Cumulative net income ......................................................     1,798,724      1,711,269
   Cumulative distributions paid ..............................................    (1,776,190)    (1,679,930)
                                                                                  ------------   ------------
         Total shareholders' equity ...........................................     4,197,641      3,909,583
                                                                                  ------------   ------------
              Total liabilities and shareholders' equity ......................   $ 4,893,247    $ 4,625,879
                                                                                  ============   ============
</TABLE>
                            See accompanying notes.
                                       1

<PAGE>

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

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                         For the Three Months Ended
                                                                                                 March 31,
                                                                                    ------------------------------------
                                                                                         2002                 2001
                                                                                    ---------------      ---------------
Revenues:
<S>                                                                                 <C>                  <C>
     Rental income:
         Self-storage facilities.............................................       $      188,907       $      171,829
         Commercial properties...............................................                3,071                3,057
         Containerized storage facilities....................................               11,699               10,073
         Tenant reinsurance..................................................                4,575                    -
     Equity in earnings of real estate entities..............................                7,015                9,272
     Interest and other income...............................................                1,708                3,608
                                                                                    ---------------      ---------------
                                                                                           216,975              197,839
                                                                                    ---------------      ---------------
Expenses:
     Cost of operations:
         Self-storage facilities.............................................               58,595               56,474
         Commercial properties...............................................                1,114                  950
         Containerized storage facilities....................................                9,318                9,473
         Tenant reinsurance..................................................                2,293                    -
     Depreciation and amortization...........................................               43,997               39,622
     General and administrative..............................................                4,000                5,584
     Interest expense........................................................                1,102                  971
                                                                                    ---------------      ---------------
                                                                                           120,419              113,074
                                                                                    ---------------      ---------------
Income before minority interest and disposition gain.........................               96,556               84,765
Minority interest in income:
     Preferred partnership interests.........................................               (6,726)              (8,505)
     Other partnership interests.............................................               (4,616)              (3,193)
                                                                                    ---------------      ---------------

Income before disposition gain...............................................               85,214               73,067
Gain on disposition of real estate investments...............................                2,241                1,568
                                                                                    ---------------      ---------------

Net income...................................................................       $       87,455       $       74,635
                                                                                    ===============      ===============
Net income allocation:
     Allocable to preferred shareholders.....................................       $       35,840       $       28,036
     Allocable to equity shareholders, Series A..............................                5,375                3,452
     Allocable to common shareholders........................................               46,240               43,147
                                                                                    ---------------      ---------------
                                                                                    $       87,455       $       74,635
                                                                                    ===============      ===============
Per common share:
     Net income per common share - Basic.....................................       $        0.38        $        0.34
                                                                                    ===============      ===============
     Net income per common share - Diluted...................................       $        0.37        $        0.34
                                                                                    ===============      ===============
     Net income per depository shares of Equity Stock, Series A
      - Basic and diluted....................................................       $        0.61        $        0.61
                                                                                    ===============      ===============
     Weighted average common shares - Basic..................................              121,946              128,114
                                                                                    ===============      ===============
     Weighted average common shares - Diluted................................              124,065              128,699
                                                                                    ===============      ===============
     Weighted average depository shares of Equity Stock, Series A
      - Basic and diluted....................................................                8,776                5,636
                                                                                    ===============      ===============
</TABLE>
                            See accompanying notes.
                                       2

<PAGE>

                              PUBLIC STORAGE, INC.
            CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                    For the three months ended March 31, 2002
                    (Amounts in thousands, except share data)

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                              Cumulative
                                                                Senior                            Class B
                                                              Preferred            Common         Common        Paid-in
                                                                Stock              Stock           Stock        Capital
                                                            ---------------     ------------   ------------- --------------
<S>                                                           <C>                 <C>               <C>        <C>
Balances at December 31, 2001..........................       $1,540,150          $11,496           $700       $2,325,898

Issuance of preferred stock, net of issuance costs:
   Series T (6,000 shares).............................          150,000               -               -          (4,925)
   Series U (6,000 shares).............................          150,000               -               -          (4,925)

Issuance of Common Stock - Options exercised (303,894
   shares).............................................                -              30               -           7,064

Repurchase of common stock (11,000 shares).............                -              (1)              -            (380)

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

Cash distributions:
   Cumulative Senior Preferred Stock...................                -               -               -               -
   Equity Stock, Series A..............................                -               -               -               -
   Class B Common Stock................................                -               -               -               -
   Common Stock........................................                -               -               -               -
                                                            ---------------     ------------   ------------- --------------
Balances at March 31, 2002.............................       $1,840,150         $11,525            $700      $2,322,732
                                                            ===============     ============   ============= ==============
</TABLE>
<TABLE>
<CAPTION>

                                                                                                   Total
                                                              Cumulative       Cumulative      Shareholders'
                                                              Net Income     Distributions        Equity
                                                            --------------- ---------------   ---------------
<S>                                                           <C>            <C>                <C>
Balances at December 31, 2001..........................       $1,711,269     $(1,679,930)       $3,909,583

Issuance of preferred stock, net of issuance costs:
   Series T (6,000 shares).............................                -               -           145,075
   Series U (6,000 shares).............................                -               -           145,075

Issuance of Common Stock - Options exercised (303,894
   shares).............................................                -               -             7,094

Repurchase of common stock (11,000 shares).............                -               -              (381)

Net income.............................................           87,455               -            87,455

Cash distributions:
   Cumulative Senior Preferred Stock...................                -         (35,840)          (35,840)
   Equity Stock, Series A..............................                -          (5,375)           (5,375)
   Class B Common Stock................................                -          (3,056)           (3,056)
   Common Stock........................................                -         (51,989)          (51,989)
                                                            --------------- ---------------   ---------------
Balances at March 31, 2002.............................       $1,798,724     $(1,776,190)       $4,197,641
                                                            =============== ===============   ===============
</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,
                                                                            -----------------------------------
                                                                                 2002                 2001
                                                                            --------------       --------------
Cash flows from operating activities:
<S>                                                                         <C>                  <C>
   Net income......................................................         $      87,455        $      74,635
   Adjustments to reconcile net income to net cash provided by
     operating activities:
     Less gain on disposition of real estate investments...........                (2,241)              (1,568)
     Depreciation and amortization.................................                43,997               39,622
     Depreciation included in equity in earnings of real estate                     6,371                5,275
       entities....................................................
     Minority interest in income...................................                11,342               11,698
     Other.........................................................                 5,225              (19,362)
                                                                            --------------       --------------
         Total adjustments.........................................                64,694               35,665
                                                                            --------------       --------------
             Net cash provided by operating activities.............               152,149              110,300
                                                                            --------------       --------------

Cash flows from investing activities:
     Principal payments received on notes receivable...............                35,021                1,929
     Business combinations (Note 3)................................              (152,327)                   -
     Capital improvements to real estate facilities................                (3,968)              (4,814)
     Construction in process and acquisition of land held for
       development.................................................               (22,796)             (53,609)
     Acquisition of minority interests.............................                  (437)             (10,263)
     Acquisition of real estate facilities.........................                (5,052)                   -
     Acquisition of investments in real estate entities............                (6,861)             (11,494)
     Proceeds from the sale of real estate facilities..............                     -                9,102
     Other investments.............................................                  (397)              (3,705)
                                                                            --------------       --------------
             Net cash used in investing activities.................              (156,817)             (72,854)
                                                                            --------------       --------------

Cash flows from financing activities:
     Net (paydowns) borrowings on revolving line of credit.........               (25,000)              25,000
     Principal payments on notes payable...........................               (15,476)                (740)
     Net proceeds from the issuance of common stock................                 7,094                    -
     Net proceeds from the issuance of preferred stock.............               290,150              166,966
     Repurchase of common stock....................................                  (381)            (205,057)
     Distributions paid to shareholders............................               (96,260)             (59,445)
     Distributions paid to minority interests......................               (13,597)             (13,456)
     Net reinvestment of minority interest.........................                 1,072                  296
                                                                            --------------       --------------
              Net cash provided by (used in) financing activities..               147,602              (86,436)
                                                                            --------------       --------------

Net increase (decrease) in cash and cash equivalents...............               142,934              (48,990)
Cash and cash equivalents at the beginning of the period...........                49,347               89,467
                                                                            --------------       --------------
Cash and cash equivalents at the end of the period.................         $     192,281        $      40,477
                                                                            ==============       ==============

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 CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2002

                                   (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, 2002, we had direct and indirect equity interests
     in 1,392 self-storage facilities located in 37 states and operating under
     the "Public Storage" name. We also have direct and indirect equity
     interests in approximately 15.2 million net rentable square feet of
     commercial space.

2.   Summary of significant accounting policies
     ------------------------------------------

     Basis of presentation
     ---------------------

              The consolidated financial statements include the accounts of the
     Company and 35 controlled entities (the "Consolidated Entities").
     Collectively, the Company and the Consolidated Entities own a total of
     1,361 real estate facilities, consisting of 1,356 self-storage facilities
     and five commercial properties.

              At March 31, 2002, we had equity investments in eight 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 44% of the common equity
     of PS Business Parks, Inc. ("PSB"), which owns and operates 14.8 million
     net rentable square feet of commercial space at March 31, 2002. We do not
     control these entities. Accordingly, our investments in these limited
     partnerships and PSB are accounted for using the equity method.

              Certain amounts previously reported have been reclassified to
     conform to the March 31, 2002 presentation.

     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.

     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 2002 and,
     accordingly, no provision for income taxes has been made in the
     accompanying financial statements.

                                       5

<PAGE>

     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 purchased 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 market
     rates for these loans.

              Financial assets that are exposed to credit risk consist primarily
     of cash and cash equivalents, accounts receivable, and notes receivable.
     Cash and cash equivalents, which consist of short-term investments,
     including commercial paper, are only invested in entities with an
     investment grade rating. 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. 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 October 2001, the Financial Accounting Standards Board (FASB)
     issued Statement No. 144, "Accounting for the Impairment or Disposal of
     Long-Lived Assets." In June 2001, the FASB issued Statement of Financial
     Accounting Standard No. 142, "Goodwill and Other Intangible Assets" ("SFAS
     142"). We adopted these statements effective January 1, 2002.

              We evaluate our long-lived assets on a quarterly basis for
     indicators of impairment. When indicators of impairment are detected in our
     evaluation, we evaluate the recoverability of such long-lived assets. We
     determine the assets' recoverable amount based upon a) the fair value of
     our goodwill or b) the estimated undiscounted cash flows of our other
     long-lived assets. An impairment charge is booked for the excess of book
     value (if any) over the asset's recoverable amount. We determine the
     recoverability of our goodwill in this manner on a quarterly basis
     regardless of the existence of indicators of impairment. The Company has
     determined at March 31, 2002 that no such impairments existed and,
     accordingly, no impairment charges have been recorded.

                                       6

<PAGE>

              Statement No. 144 also addresses the accounting for long-lived
     assets that are likely to be disposed of before the end of their previously
     estimated useful life. Such assets are to be reported at the lower of their
     carrying amount or fair value, less cost to sell. Our evaluations have
     determined that there are no such impairments at March 31, 2002.

     Other assets
     ------------

              Other assets primarily consist of furniture, fixtures, equipment,
     and other such assets associated with the containerized storage facilities
     business as well as accounts receivable, prepaid expenses, and other such
     assets of the Company. Included in other assets with respect to the
     containerized storage business is furniture, fixtures, and equipment (net
     of accumulated depreciation) of $32,876,000 and $30,699,000 at March 31,
     2002 and December 31, 2001, respectively. Included in depreciation and
     amortization expense for the three months ended March 31, 2002 and 2001 is
     $1,613,000 and $1,339,000, respectively, of depreciation of furniture,
     fixtures, and equipment of the containerized storage business.

     Intangible assets and goodwill
     ------------------------------

              The Company conforms to SFAS 142 in accounting for its goodwill
     and other intangibles. 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.

              Prior to December 31, 2001, the Company amortized its goodwill
     using the straight-line method over a 25 year life. The Company's goodwill
     has an indeterminate life and, in accordance with the provisions of SFAS
     142, amortization of goodwill ceased effective January 1, 2002. Our other
     intangibles continue to be amortized over a 25 year period.

              Goodwill is net of accumulated amortization of $16,515,000 at
     March 31, 2002 and December 31, 2001. At March 31, 2002, property
     management contracts are net of accumulated amortization of $42,154,000
     ($40,503,000 at December 31, 2001). Included in depreciation and
     amortization expense for each of the three months ended March 31, 2002 and
     2001 is $1,651,000 with respect to the amortization of property management
     contracts. In addition, $677,000 is included in depreciation and
     amortization expense for the three months ended March 31, 2001, relating to
     the amortization of goodwill.

     Revenue and expense recognition
     -------------------------------

              Property rents are 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. Advertising
     costs are expensed as incurred.

     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 costs 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.

                                       7

<PAGE>

     Net income per common share
     ---------------------------

              Dividends paid to our preferred shareholders totaling $35,840,000
     and $28,036,000 for the three months ended March 31, 2002 and 2001,
     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 approximately $5,375,000 (based on dividends paid) of net income
     and the remaining $46,240,000 was allocated to the regular common shares
     for the three months ended March 31, 2002. For the three months ended March
     31, 2001, the Equity Stock, Series A was allocated approximately $3,452,000
     (based on dividends paid) in net income and the remaining $43,147,000 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). 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 each of the three months ended March 31, 2001 and 2002.

     Stock-based compensation
     ------------------------

              In October 1995, the Financial Accounting Standards Board issued
     Statement No. 123 "Accounting for Stock-Based Compensation" which provides
     companies an alternative to accounting for stock-based compensation as
     prescribed under APB Opinion No. 25 (APB 25). Statement No. 123 encourages,
     but does not require companies to recognize expense for stock-based awards
     based on their fair value at date of grant. Statement No. 123 allows
     companies to continue to follow existing accounting rules (intrinsic value
     method under APB 25) provided that pro-forma disclosures are made of what
     net income and earnings per share would have been had the new fair value
     method been used. We have elected to adopt the disclosure requirements of
     Statement No. 123 but will continue to account for stock-based compensation
     under APB 25.

3.   Business Combinations
     ---------------------

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

              On January 16, 2002, we acquired the remaining 70% interest we did
     not own in 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.

                                       8

<PAGE>

     Other Partnerships
     ------------------

              As a result of obtaining a controlling ownership interest, we
     began to consolidate the accounts of two publicly-held limited partnerships
     owning 31 self-storage facilities in which we are the general partner,
     effective January 1, 2002. Our $45,105,000 investment at December 31, 2001
     was allocated first to the $751,000 cash held by these entities, with the
     remaining $44,354,000 allocated to the other assets, liabilities, and
     minority interests of these entities as described in the table below.
     Previously, we accounted for our investment in these entities using the
     equity method of accounting.

     PS Insurance Company
     --------------------

              On December 31, 2001, we acquired all of the capital stock of PS
     Insurance Company, Ltd. ("PS Insurance Company"), which reinsures policies
     against losses to goods stored by tenants in our self-storage facilities
     and which owned, and continues to own, 301,032 shares of the Company's
     common stock. The 301,032 shares owned by this entity are eliminated in
     consolidation.

              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
     allocations were as follows with respect to the business combinations
     completed in the three months ended March 31, 2002:

<TABLE>
<CAPTION>
                                               Development         Other
                                              Joint Venture     Partnerships        Total
                                             ---------------   --------------  ---------------
                                                          (amounts in thousands)
 2002 BUSINESS COMBINATIONS:
     <S>                                        <C>              <C>             <C>
     Real estate facilities...............      $  269,898       $   60,528      $  330,426
     Minority interests...................               -          (14,806)        (14,806)
     Other assets.........................           1,122            1,053           2,175
     Accrued and other liabilities........          (2,811)          (2,421)         (5,232)
                                             ---------------   --------------  ---------------
                                                $  268,209       $   44,354      $  312,563
                                             ===============   ==============  ===============
</TABLE>

              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 and 2001 as though the business combinations
     above had been effective at the beginning of fiscal 2001 are as follows:

                                                      For the Three Months
                                                         Ended March 31,
                                            ------------------------------------
                                                  2002                 2001
                                            ---------------      ---------------
                                            (in thousands except per share data)
Revenues...................................    $214,674           $212,267
Net income.................................    $ 87,232           $ 75,238
Net income per common share (Basic)........    $   0.38           $   0.34
Net income per common share (Diluted)......    $   0.37           $   0.34

                                       9

<PAGE>

              The pro forma data does not purport to be indicative either of
     results of operations that would have occurred had the transactions
     occurred at the beginning of fiscal 2001 or 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.   Real estate facilities
     ----------------------

              Activity in real estate facilities during 2002 is as follows:

                                                              In thousands
                                                            ---------------
Operating facilities, at cost:
  Balance at December 31, 2001....................          $    4,431,054
  Developed facilities............................                  54,751
  Property acquisitions:
     Business combinations (Note 3)...............                 330,426
     From third parties...........................                   5,052
  Acquisition of minority interests (Note 7)......                     290
  Capital improvements............................                   3,968
                                                            ---------------
  Balance at March 31, 2002.......................               4,825,541
                                                            ---------------

Accumulated depreciation:
  Balance at December 31, 2001....................                (819,932)
  Additions during the year.......................                 (40,733)
                                                            ---------------
  Balance at March 31, 2002.......................                (860,665)
                                                            ---------------

Construction in process:
  Balance at December 31, 2001....................                 121,181
  Current development.............................                  22,796
  Developed facilities............................                 (54,751)
                                                            ---------------
  Balance at March 31, 2002.......................                  89,226
                                                            ---------------

Land held for development:
  Balance at December 31, 2001 and  March 31, 2002                  30,001
                                                            ---------------
  Total real estate facilities....................          $    4,084,103
                                                            ===============

              During the three months ended March 31, 2002, we opened six newly
     developed facilities with approximately 466,000 aggregate net rentable
     square feet with an aggregate cost of $38,742,000, and expansions of
     storage facilities with an aggregate cost of $16,009,000. In addition, we
     acquired two self-storage facilities, in separate transactions, having an
     aggregate of approximately 104,000 net rentable square feet for $5,052,000
     cash.

              Construction in process at March 31, 2002 consists primarily of 33
     storage facilities and five expansion projects to existing self-storage
     facilities. In addition, we have 12 parcels of land held for development
     with total costs of approximately $30,001,000.

                                       10

<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, 2002 was $1,846,000 compared to
     $2,110,000 for the same period in 2001.

5.   Investment in real estate entities
     ----------------------------------

              At March 31, 2002, our investment in real estate entities consist
     of ownership interests in eight partnerships, which principally own
     self-storage facilities, and our ownership interest in PSB (defined below).
     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.

              During the three months ended March 31, 2002 and 2001, we
     recognized earnings from our investments of $7,015,000 and $9,272,000,
     respectively. During the three months ended March 31, 2002 and 2001,
     respectively, we received cash distributions totaling $6,566,000 and
     $3,533,000. We invested a total of $41,000 in the three months ended March
     31, 2002. In addition, we recorded our pro-rata share of PSB's gain on sale
     of real estate in the amount of $2,241,000 during the three months ended
     March 31, 2002.

              The following table sets forth our investments in real estate
     entities at March 31, 2002 and December 31, 2001, and our Equity in
     Earnings of Real Estate Entities for the three months ended March 31, 2002
     and 2001 (amounts in thousands):

<TABLE>
<CAPTION>
                                                                       Equity in Earnings of Real Estate
                                    Investments in Real Estate        Entities for the Three Months Ended
                                           Entities at                             March 31,
                                    ---------------------------       -----------------------------------
                                     March 31,      December 31,
                                       2002             2001               2002                  2001
                                    -----------     -----------       --------------       --------------
 <S>                                <C>             <C>                  <C>                 <C>
 PSB......................          $  270,206      $ 267,472            $   5,565           $   6,104
 Disposed Investments (a).                   -        160,013                  223               2,221
 Other Investments........              51,589         51,815                1,227                 947
                                    -----------     -----------       --------------       --------------
     Total................          $  321,795      $ 479,300            $   7,015           $   9,272
                                    ===========     ===========       ==============       ==============
</TABLE>

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

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

              At March 31, 2002, the Company and the Consolidated Entities have
     a 44% common equity interest in 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"). This 44% 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, 2002 ($34.75), the shares and units had a market value of
     approximately $442.1 million.

                                       11

<PAGE>

              At March 31, 2002, PSB owned and operated 14.8 million net
     rentable square feet of commercial space located in nine states. PSB also
     manages the commercial space owned by the Company and the Consolidated
     Entities.

              For the three months ended March 31, 2002 and 2001, respectively,
     we received a total of $5,072,000 and $3,175,000 in distributions from PSB.
     In addition, during the three months ended March 31, 2002, we recognized a
     gain of $2,241,000, representing our pro-rata share of PSB's gain on sale
     of real estate investments. This gain is presented as "Gain on disposition
     of real estate and real estate investments" on our condensed consolidated
     statements of income.

              The following table sets forth the condensed consolidated
     statements of operations and the condensed consolidated balance sheets of
     PSB. These amounts below represent 100% of PSB's balances and not our
     pro-rata share.

<TABLE>
<CAPTION>

PSB
---                                                                For the three months ended
                                                                           March 31,
                                                              ----------------------------------
                                                                   2002                2001
                                                              ---------------    ---------------
                                                                  (Amounts in thousands)

   <S>                                                        <C>                <C>
   Total revenue........................................      $       50,867     $     39,475
   Gain on disposition of real estate investments.......               5,391                15
   Cost of operations and other expenses................             (16,734)          (11,956)
   Depreciation and amortization........................             (13,978)           (9,646)
   Minority interest....................................              (8,844)           (6,423)
                                                              ---------------    ---------------
     Net income.........................................      $       16,702     $     11,465
                                                              ===============    ===============

                                                                At March 31,     At December 31,
                                                                    2002               2001
                                                              ---------------    ---------------
   Total assets (primarily real estate).................      $    1,236,280     $  1,169,955
   Total debt...........................................             178,140           165,145
   Other liabilities....................................              40,833            45,188
   Preferred equity and preferred minority interests....             368,750           318,750
   Common equity and common minority interest...........             648,557           640,872

</TABLE>

     Disposed Investments
     --------------------

              As described in Note 3, effective in the first quarter of 2002, we
     began consolidating the results of the Development Joint Venture and two
     other partnerships, and as a result eliminated our preexisting investment
     of $160,236,000 ($160,013,000 at December 31, 2001). Prior to their
     respective dates of consolidation, these entities were accounted for on the
     equity method of accounting. The Company's operating results and
     investments with respect to these entities are included as the "Disposed
     Investments" in the table "Investment in Real Estate Entities".

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

              At March 31, 2002, the Other Investments consists primarily of an
     average 38% common equity ownership in eight limited partnerships
     (collectively, the "Other Investments") owning an aggregate of 36 storage
     facilities.

                                       12

<PAGE>

              During the three months ended March 31, 2002, we invested a total
     of $41,000 in the Other Investments. During the three months ended March
     31, 2002 and 2001, respectively, we received a total of $1,494,000 and
     $358,000 in distributions from the Other Investments. During the three
     months ended March 31, 2002 and 2001, we recorded income from our
     investments of $1,227,000 and $947,000, respectively.

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

<TABLE>
<CAPTION>
 Other Investments
 -----------------                                     For the three months ended
                                                                March 31,
                                                    --------------------------------
                                                        2002                2001
                                                    -------------      -------------
                                                          (Amounts in thousands)
    <S>                                             <C>                <C>
    Total revenue...........................        $      6,725       $      6,172
    Cost of operations and other expenses...              (2,425)            (2,376)
    Depreciation and amortization...........                (630)              (638)
                                                    -------------      -------------
      Net income............................        $      3,670       $      3,158
                                                    =============      =============

                                                     At March 31,     At December 31,
                                                        2002                2001
                                                    -------------      -------------
                                                          (Amounts in thousands)
    Total assets (primarily storage facilities)     $     62,183       $     61,046
    Total debt..............................               9,782             11,357
    Other liabilities.......................               1,755              1,234
    Partners' equity........................              50,646             48,456

</TABLE>

6.   Revolving line of credit
     ------------------------

              Our $200 million revolving line of credit (the "Credit Agreement")
     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 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, 2002, we had no
     borrowings on our line of credit.

              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, 2002.

7.   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.

                                       13

<PAGE>

     Preferred partnership interests
     -------------------------------

              During 2000, one of our consolidated operating partnerships issued
     in 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.

              In August 2001, we repurchased $30 million of the 9.125% Series O
     Cumulative Redeemable Perpetual Preferred Units and in October 2001, we
     repurchased all of the 8.75% Series P Cumulative Redeemable Perpetual
     Preferred Units. The units were repurchased at an amount equal to the
     original issuance price.

              For the three months ended March 31, 2002 and 2001, the holders of
     these preferred units were paid an aggregate of approximately $6,726,000
     and $8,505,000, respectively, in distributions and received an equivalent
     allocation of minority interest in earnings.

              The following table summarizes the preferred partnership units
     outstanding at March 31, 2002 and December 31, 2001:

                          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 conditions, 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
     ---------------------------

              Other partnership interests included in minority interest consists
     of the following (amounts in thousands):

<TABLE>
<CAPTION>
                                                                                       Minority interest in income for
                                                      Minority interest at             the three months ended March 31,
                                                  -----------------------------        --------------------------------
                                                   March 31,       December 31,
                 Description                         2002              2001                  2002             2001
--------------------------------------------      -----------      ------------        ---------------   --------------
<S>                                               <C>              <C>                   <C>              <C>
Consolidated Development Joint Venture......      $   80,726       $    82,879           $       307      $      112
Convertible OP Units........................           6,400             6,418                    89              88
Newly consolidated partnerships.............          15,073                 -                   856               -
Other consolidated partnerships.............          80,878            80,304                 3,364           2,993
                                                  -----------      ------------        ---------------   --------------
Total other partnership interests...........      $  183,077       $   169,601           $     4,616      $    3,193
                                                  ===========      ============        ===============   ==============
</TABLE>

                                       14

<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) whose partners include an institutional investor
     and B. Wayne Hughes ("Mr. Hughes"), chairman and chief executive officer 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 8). In consolidation, the Equity Stock, Series AAA and
     the related dividend income have been eliminated.

              At March 31, 2002, the Consolidated Development Joint Venture had
     completed construction on 21 storage facilities with a total cost of
     approximately $101.6 million and had 1 facility under construction with an
     aggregate cost incurred of approximately $6.0 million and total additional
     estimated cost to complete of approximately $0.6 million.

              The Consolidated Development Joint Venture is funded solely with
     equity capital consisting of 51% from the Company and 49% from PSAC Storage
     Investors. The accounts of the Consolidated Development Joint Venture are
     included in the Company's consolidated financial statements. The accounts
     of PSAC Storage Investors 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, net of cumulative
     distributions.

              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.

              We allocated $307,000 and $112,000 in income to minority interests
     with respect to the Consolidated Joint Venture for the three months ended
     March 31, 2002 and 2001, respectively. We paid distributions to the
     minority interests with respect to the Consolidated Joint Venture in the
     amount of $2,460,000 and $1,609,000 for the three months ended March 31,
     2002 and 2001, respectively.

     Convertible OP Units
     --------------------

              As of March 31, 2002, one of our Consolidated Entities had
     approximately 237,935 operating partnership units ("Convertible OP Units")
     outstanding, representing a limited partnership interest in the
     partnership. The Convertible OP 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
     Convertible OP Units reflects the Convertible OP Units' share of the net
     income of the Company, with net income allocated to minority interests with
     respect to weighted average outstanding Convertible OP Units on a per unit
     basis equal to diluted earnings per common share. During the three months
     ended March 31, 2002, no units were converted.

                                       15

<PAGE>

              We allocated $89,000 and $88,000 in income to minority interests
     with respect to the Convertible OP Units for the three months ended March
     31, 2002 and 2001, respectively. We paid distributions to the minority
     interests with respect to the Convertible OP Units in the amount of
     $107,000 and $52,000 for the three months ended March 31, 2002 and 2001,
     respectively.

     Newly Consolidated Partnerships
     -------------------------------

              As described in Note 3, we began consolidating the results of two
     other partnerships owning 31 properties, and as a result, minority interest
     increased by $14,806,000 in the three months ended March 31, 2002. Income
     of $856,000 was allocated to the minority interests in the Newly
     Consolidated Partnerships in the three months ended March 31, 2002.
     Distributions in the amount of $589,000 were paid to the minority interests
     in the Newly Consolidated Partnerships in the three months ended March 31,
     2002.

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

              The minority interests in the Other Consolidated Partnerships at
     March 31, 2002 reflect the common equity interests that the Company doesn't
     own in 32 entities owning an aggregate of 498 real estate facilities.

              During the three months ended March 31, 2002, we acquired minority
     interests in the Other Consolidated Partnerships for an aggregate cash cost
     of $437,000. These acquisitions had the effect of reducing minority
     interest by $147,000, with the excess of cost over underlying book value
     ($290,000) allocated to real estate.

              We allocated income to the minority interests in the Other
     Consolidated Partnerships, based upon their pro-rata interest in the
     operating results of these entities, in the amount of $3,364,000 and
     $2,993,000, respectively, for the three months ended March 31, 2002 and
     2001. Distributions were paid to the minority interests in the Other
     Consolidated Partnerships in the amount of $2,643,000 and $2,994,000 for
     the three months ended March 31, 2002 and 2001, respectively.

8.   Shareholders' equity
     --------------------

     Preferred stock
     ---------------

              At March 31, 2002 and December 31, 2001, we had the following
     series of Preferred Stock outstanding:

                                       16

<PAGE>

<TABLE>
<CAPTION>
                                          At March 31, 2002               At December 31, 2001
                                   ------------------------------    ------------------------------
                       Dividend        Shares          Carrying          Shares          Carrying
   Series               Rate        Outstanding         Amount        Outstanding         Amount
-------------        -----------   -------------     ------------    -------------     ------------
                                    (Dollar amount in thousands)      (Dollar amount in thousands)
<S>                      <C>           <C>           <C>                 <C>           <C>
Series A                 10.000%       1,825,000     $     45,625        1,825,000     $     45,625
Series B                  9.200%       2,386,000           59,650        2,386,000           59,650
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 J                  8.000%           6,000          150,000            6,000          150,000
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%           6,000          150,000                -                -
Series U                  7.625%           6,000          150,000                -                -
                                   -------------     ------------    -------------     ------------
Total Senior Preferred Stock          11,168,500     $  1,840,150       11,156,500     $  1,540,150
                                   =============     ============    =============     ============
</TABLE>

              We issued the Series T preferred stock on January 18, 2002,
     resulting in net proceeds from the issuance of approximately $145,075,000,
     and the Series U preferred stock on February 19, 2002, resulting in net
     proceeds from the issuance of approximately $145,075,000.

              The Series A through Series U preferred stock (collectively the
     "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 above, 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, 2002, there were no
     dividends in arrears and the Debt Ratio was 2.2%.

              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 A - September 30, 2002, Series B - March 31,
     2003, Series C - June 30, 1999, Series D - September 30, 2004, Series E -
     January 31, 2005, Series F - April 30, 2005, Series J - August 31, 2002,
     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 and Series U -
     February 19, 2007. On or after the respective dates, each of the series of
     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 J through Series U), plus accrued and unpaid dividends.

                                       17

<PAGE>

     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, 2002, 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:
     a) five times the per share dividend on the Common Stock or b) $2.45 per
     annum. 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 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. We have no obligation to pay distributions on
     the depositary shares if no distributions are paid to common shareholders.

     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 Common Stock
     and junior to the Senior 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 Common Stock or (ii) $2.20. We have no obligation to pay
     distributions if no distributions are paid to common shareholders.

     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 common stock and
     junior to the Senior 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 if no
     distributions are paid to common shareholders.

                                       18

<PAGE>

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

              As previously announced, 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, 2002, the
     Company has 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 participates in distributions at the rate
     of 97% of the per share distributions on the Common Stock, provided that
     cumulative distributions of at least $0.22 per quarter per share have been
     paid on the Common Stock. In addition, the Class B Common Stock will (i)
     not participate in liquidating distributions, (ii) not be entitled to vote
     (except as expressly required by California law) and (iii) automatically
     convert into Common Stock, on a share for share basis, upon the later to
     occur of FFO per common share aggregating $3.00 during any period of four
     consecutive calendar quarters or January 1, 2003.

              For these purposes, FFO means net income (loss) before (i) gain
     (loss) on early extinguishment of debt, (ii) minority interest in income
     and (iii) gain (loss) on disposition of real estate, adjusted as follows:
     (a) plus depreciation and amortization, and (b) less FFO attributable to
     minority interest. FFO per common share means FFO less preferred stock
     dividends and equity stock, Series A dividends divided by the outstanding
     weighted average shares of Common Stock assuming conversion of all
     outstanding convertible securities and the Class B Common Stock.

              For these purposes, FFO per share of Common Stock (as defined
     above) was $3.01 for the four consecutive calendar quarters ended March 31,
     2002.

                                       19

<PAGE>

     Dividends
     ---------

              The following summarizes dividends during the three months ended
     March 31, 2002:

                                        Distributions Per
                                            Share or
                                        Depositary Share    Total Distributions
                                        -----------------   -------------------
PREFERRED STOCK:
----------------
Series A..........................            $0.625           $  1,140,000
Series B..........................            $0.575              1,372,000
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 J..........................            $0.500              3,000,000
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..........................            $0.392              2,352,000
Series U..........................            $0.212              1,271,000
                                                            -------------------
                                                                 35,840,000
COMMON STOCK:
-------------
Equity Stock, Series A............            $0.613              5,375,000
Common............................            $0.450             51,989,000
Class B Common ...................            $0.437              3,056,000
                                                            -------------------
   Total dividends................                             $ 96,260,000
                                                            ===================

              The dividend rate on the Series T and the Series U preferred stock
     was prorated from January 18, 2002 and February 19, 2002, the respective
     dates of issuance, through March 31, 2002. The dividend rate on the Series
     C Preferred Stock for the first quarter of 2002 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, 2002 will be equal to
     6.75% per annum.

9.   Segment Information
     -------------------

              In July 1997, the FASB issued Statement of Financial Accounting
     Standards No. 131, "Disclosures about Segments of an Enterprise and Related
     Information," which establishes standards for the way that public business
     enterprises report information about operating segments. This statement is
     effective for financial statements for periods beginning after December 15,
     1997. We adopted this standard effective for the year ended December 31,
     1998. For information regarding the description of each reportable segment,
     policies relating to the measurement of segment profit or loss, and segment
     assets, refer to the consolidated financial statements and footnotes
     thereto included in the Company's annual report on Form 10-K for the year
     ended December 31, 2001.

                                       20

<PAGE>

              The following tables reconcile the performance of each segment, in
     terms of segment revenues and segment income, 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."

<TABLE>
<CAPTION>
                                                                        Three months ended
                                                                             March 31,
                                                                      ----------------------
                                                                         2002        2001       Change
                                                                      ----------  ----------   ----------
                                                                        (Dollar amounts in thousands)
RECONCILIATION OF REVENUES BY SEGMENT:
--------------------------------------
Self-storage
------------
<S>                                                                   <C>         <C>          <C>
  Self-storage property rentals..................................     $ 188,907   $  171,829   $  17,078
  Equity in earnings - self-storage property operations..........         2,094        5,157      (3,063)
  Equity in earnings - depreciation (self-storage)...............          (270)      (1,552)      1,282
                                                                      ----------  ----------   ----------
      Self-storage segment revenues..............................       190,731      175,434      15,297
                                                                      ----------  ----------   ----------

Containerized storage............................................        11,699       10,073       1,626
---------------------                                                 ----------  ----------   ----------

Tenant re-insurance..............................................         4,575            -       4,575
-------------------                                                   ----------  ----------   ----------

Commercial  properties
----------------------
  Commercial property rentals....................................         3,071        3,057          14
  Equity in earnings - commercial property operations............        15,423       11,646       3,777
  Equity in earnings - depreciation (commercial property
     operations).................................................        (6,101)      (3,723)     (2,378)
                                                                      ----------  ----------   ----------
      Commercial properties  segment revenues....................        12,393       10,980       1,413
                                                                      ----------  ----------   ----------
Other items not allocated to segments
-------------------------------------
  Equity in earnings - general and administrative and other......        (4,131)      (2,256)     (1,875)
  Interest and other income......................................         1,708        3,608      (1,900)
                                                                      ----------  ----------   ----------
      Total other items not allocated to segments................        (2,423)       1,352      (3,775)
                                                                      ----------  ----------   ----------

      Total revenues.............................................     $ 216,975   $  197,839   $  19,136
                                                                      ==========  ==========   ==========
</TABLE>

                                       21

<PAGE>

<TABLE>
<CAPTION>
                                                                     Three months ended
                                                                          March 31,
                                                                   ----------------------
                                                                      2002        2001        Change
                                                                   ----------  ----------   ----------
                                                                      (Dollar amounts in thousands)
RECONCILIATION OF NET INCOME BY SEGMENT:
----------------------------------------
Self-storage
------------
  Self-storage properties ...................................      $ 130,312   $ 115,355    $ 14,957
  Depreciation and amortization - self-storage...............        (41,368)    (37,386)     (3,982)
  Equity in earnings - self-storage property operations......          2,094       5,157      (3,063)
  Equity in earnings - depreciation (self-storage)...........           (270)     (1,552)      1,282
                                                                   ----------  ----------   ----------
      Total self-storage segment net income..................         90,768      81,574       9,194
                                                                   ----------  ----------   ----------

Containerized storage
---------------------
  Containerized storage operations...........................          2,381         600       1,781
  Containerized storage depreciation.........................         (1,901)     (1,527)       (374)
                                                                   ----------  ----------   ----------
      Total containerized storage segment net income.........            480        (927)      1,407
                                                                   ----------  ----------   ----------

Tenant re-insurance..........................................          2,282           -       2,282
-------------------

Commercial properties
---------------------
  Commercial properties......................................          1,957       2,107        (150)
  Depreciation and amortization - commercial properties......           (728)       (709)        (19)
  Equity in earnings - commercial property operations........         15,423      11,646       3,777
  Equity in earnings - depreciation (commercial properties)..         (6,101)     (3,723)     (2,378)
                                                                   ----------  ----------   ----------
      Total commercial property segment net income...........         10,551       9,321       1,230
                                                                   ----------  ----------   ----------

Other items not allocated to segments
-------------------------------------
  Equity in earnings - general and administrative and other..         (4,131)     (2,256)     (1,875)
  Interest and other income..................................          1,708       3,608      (1,900)
  General and administrative.................................         (4,000)     (5,584)      1,584
  Interest expense...........................................         (1,102)       (971)       (131)
  Gain on sale of real estate investments....................          2,241       1,568         673
  Minority interest in income................................        (11,342)    (11,698)        356
                                                                   ----------  ----------   ----------
      Total other items not allocated to segments............        (16,626)    (15,333)     (1,293)
                                                                   ----------  ----------   ----------
      Total net income ......................................      $  87,455   $  74,635    $ 12,820
                                                                   ==========  ==========   ==========

10.  Subsequent Events
     -----------------

              On April 19, 2002, the Company acquired through a merger all of
     the remaining limited partnership interest not currently owned by the
     Company in PS Partners V, Ltd., a partnership which is consolidated with
     the Company. The acquisition cost consisted of approximately 534,000 shares
     of Public Storage common stock and approximately $13 million in cash.

                                       22

<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 the Company's 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 described herein in Item 2A, "Risk
Factors", include the impact of competition from new and existing storage and
commercial facilities which could impact rents and occupancy levels at the
Company's facilities; the risk of terrorist attacks; the Company's ability to
evaluate, finance, and integrate acquired and developed properties into the
Company's existing operations; the Company's ability to effectively compete in
the markets in which it does business; 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; the acceptance by
consumers of the containerized storage concept; the impact of general economic
conditions upon rental rates and occupancy levels at the Company's facilities;
and the availability of permanent capital at attractive rates.

         CRITICAL ACCOUNTING POLICIES

         IMPAIRMENT OF LONG LIVED ASSETS: Substantially all of the Company's
assets consist of long-lived assets, including real estate, the assets
associated with the containerized storage business, goodwill, and other
intangible assets. We annually evaluate our long-lived assets for impairment.
The Company has determined at December 31, 2001 that no such impairments existed
and, accordingly, no impairment charges have been recorded. No further
indicators of impairment were detected since December 31, 2001. Future events
could cause us to conclude 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 the
Company's 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 obsolescense or other factors, could have a material
adverse impact on our financial condition or results of operations

RESULTS OF OPERATIONS
--------------------------------------------------------------------------------

         Net income for the three months ended March 31, 2002 was $87,455,000
compared to $74,635,000 for the same period in 2001, representing an increase of
$12,820,000 or 17.2%. The increase in net income was primarily the result of the
acquisition of additional real estate investments during 2001 and 2002, the
previously announced acquisition of the tenant re-insurance business, a decrease
in income allocated to minority interests due to the repurchase of preferred
operating partnership units during 2001, as well as improved property
operations. The impact of these items was partially offset by increased
depreciation expense, resulting primarily from new property additions.

         During the three months ended March 31, 2002 and 2001, we allocated
$35,840,000 and $28,036,000, respectively, of our net income (based on
distributions paid) to our preferred shareholders, representing an increase of
27.8%. This increase is due to additional issuances of preferred stock in both
the first quarter of 2002 and throughout 2001, offset partially by the
retirement of several series of our higher coupon preferred stock in 2001. In
addition, during the three months ended March 31, 2002 and 2001, we allocated
$5,375,000 and $3,452,000, respectively, of our net income (based on
distributions paid) to our Equity Stock, Series A shareholders, representing an
increase of 55.7%. This increase is due to the additional issuances of equity
stock in 2001.

                                       23

<PAGE>

         Net income remaining to our regular common shareholders, after
allocating net income to our preferred and equity shareholders, was $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 three months ended March 31,
2002 compared to $43,147,000 or $0.34 per common share on a diluted basis (based
on 128,699,000 weighted average diluted common equivalent shares) for the same
period in 2001, representing an increase of 7.2% in the aggregate or 8.8% on a
per share basis.

         Weighted average diluted shares decreased to 124,065,000 in the three
months ended March 31, 2002 from 128,699,000 shares in the same period in 2001
due to the Company's share repurchases which occurred in the first and second
quarters of 2001 (there were no significant share repurchases after May 2001).
This was offset partially by a 1.5 million share increase in the dilutive impact
of employee stock options outstanding computed using the treasury stock method,
as well as the issuance of 1.1 million shares on December 31, 2001 in connection
with the acquisition of the tenant re-insurance business.

REAL ESTATE OPERATIONS
--------------------------------------------------------------------------------

         SELF - STORAGE OPERATIONS: Our self-storage operations are by far the
largest component of our operations, representing approximately 87% of our total
revenues generated during the first quarter of 2002. As a result of significant
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) 1,154
self-storage facilities that are reflected in the financial statements on a
stabilized basis since January 1, 2000 (the "Consistent Group"), (ii) 106
facilities that were acquired after January 1, 2000 and were owned at March 31,
2002 (the "Acquired Facilities"), (iii) 38 facilities that were owned prior to
January 1, 2000 but were not stabilized, (the "Expansion Facilities"), (iv) 58
development facilities that were opened after January 1, 1998 (the "Developed
Facilities") and (v) a facility that was disposed of since January 1, 2001 (the
"Disposed Facility"):

                                       24

<PAGE>

SELF - STORAGE OPERATIONS SUMMARY:                               Three months ended March 31,
----------------------------------                            -----------------------------------
                                                                                       Percentage
                                                                 2002         2001        Change
                                                              ---------    ---------    ---------
                                                                (Dollar amounts in thousands)
Rental income (a):
------------------
<S>                                                           <C>          <C>              <C>
   Consistent Group (b)...............................        $162,513     $160,508         1.2%
   Acquired Facilities (c)............................          16,649        4,530       267.5%
   Expansion Facilities (d)...........................           4,578        4,475         2.3%
   Developed Facilities (e)...........................           5,167        2,143       141.1%
   Disposed Facility (f)..............................               -          173      (100.0)%
                                                              ---------    ---------    ---------
     Total rental income..............................         188,907      171,829         9.9%
                                                              ---------    ---------    ---------

Cost of operations:
-------------------
   Consistent Group...................................          49,025       50,012        (2.0)%
   Acquired Facilities................................           4,921        2,092       135.2%
   Expansion Facilities...............................           1,664        2,055       (19.0)%
   Developed Facilities...............................           2,985        2,225        34.2%
   Disposed Facility..................................               -           90      (100.0)%
                                                              ---------    ---------    ---------
   Total cost of operations...........................          58,595       56,474         3.8%
                                                              ---------    ---------    ---------

Net operating income (before depreciation):
-------------------------------------------
   Consistent Group...................................         113,488      110,496         2.7%
   Acquired Facilities................................          11,728        2,438       381.1%
   Expansion Facilities...............................           2,914        2,420        20.4%
   Developed Facilities...............................           2,182          (82)      NA
   Disposed Facility..................................               -           83      (100.0)%
                                                              ---------    ---------    ---------
   Total net operating income.........................         130,312      115,355        13.0%

 Depreciation.........................................          41,368       37,386        10.7%
                                                              ---------    ---------    ---------
   Operating Income...................................         $88,944      $77,969        14.1%
                                                              =========    =========    =========

Number of self-storage facilities (at end of period):            1,356        1,255         8.0%
Net rentable square feet (at end of period - in
thousands):                                                     82,146       75,505         8.8%

</TABLE>

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

(b)  The Consistent Group includes 1,154 facilities with 67,126,000 net rentable
     square feet that were owned and operated at a mature, stabilized occupancy
     level since January 1, 2000. See below for discussion of Consistent Group
     operating results.

(c)  The Acquired Facilities includes 106 facilities with 6,253,000 net rentable
     square feet that were acquired through business combinations or from third
     parties after January 1, 2000 and still owned as of March 31, 2002.
     Substantially all of these facilities were mature, stabilized facilities at
     the time of their acquisition.

(d)  The Expansion Facilities includes 38 facilities with 4,425,000 net rentable
     square feet that, while owned for the periods presented, had operating
     results that were not comparable due 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. We completed construction on projects with a total cost of
     $16,009,000 in the first quarter of 2002, $84,948,000 in the year ended
     December 31, 2001, and $12,206,000 in the year ended December 31, 2000 with
     respect to these expansions

(e)  The Developed Facilities includes 58 facilities with 4,342,000 net rentable
     square feet that were developed and opened since January 1, 1998 at a total
     cost of $368.1 million. These facilities were all still owned as of March
     31, 2002.

(f) The Disposed Facility includes a facility that was disposed of during 2001,
    after being condemned by a government agency.

                                       25

<PAGE>

SELF - STORAGE OPERATIONS - CONSISTENT GROUP OF FACILITIES

         At March 31, 2002, we owned 1,154 facilities with approximately
67,126,000 net rentable square feet that operated at a stabilized level of
operations since January 1, 2000.

         We have increased the number of facilities included in the Consistent
Group of Facilities from 909 at December 31, 2001 to 1,154 facilities. The
facilities added included the more than 200 facilities acquired in the merger
with Storage Trust in 1999, other stabilized facilities acquired in 1999 through
business combinations, and newly developed facilities opened prior to January 1,
1998. We believe that the increase in the Consistent Group to 1,154 facilities
provides a more complete view of the Company's portfolio.

         As a result of the change in the Consistent Group of Facilities, the
relative weighting of markets has changed. Accordingly, comparisons should not
be made between information presented previously for the Consistent Group of
Facilities of 909 facilities and this current pool of 1,154 facilities in order
to identify trends in occupancies, realized rents per square foot, or operating
results.

         Revenues and expenses with respect to the Consistent Group properties
are set forth in the above Self-Storage Operations table. The following table
sets forth additional operating data with respect to the Consistent Group of
facilities:

<TABLE>
<CAPTION>
SELECTED OPERATING DATA FOR THE CONSISTENT GROUP
------------------------------------------------
OF FACILITIES (1,154 FACILITIES):                        Three months ended March 31,
---------------------------------                    -------------------------------------
                                                                               Percentage
                                                        2002        2001         Change
                                                     ---------   ---------     -----------
                                                     (Dollar amounts in thousands, except
                                                            rents per square foot)
Weighted average:
<S>                                                      <C>          <C>          <C>
   Occupancy (a)...............................          83.6%        88.1%        (4.5)%
   Realized annual rent per square foot (b)....         $11.59       $10.87         6.6%

Late charges and administrative fees...........          $5,061       $5,798      (12.7)%
Promotional Discounts..........................            $999       $2,633      (62.1)%

Gross margin...................................          69.8%        68.8%         1.0%

</TABLE>

(a)  Occupancies in the above table represent weighted average occupancy levels
     over the entire three-month periods. Comparisons should not be made between
     the occupancies of this Consistent Group of Facilities of 1,154 facilities
     and the occupancies for the 909 Consistent Group of Facilities presented
     previously in order to evaluate trends in occupancies.

(b)  Realized annual rent per square foot is computed by dividing annualized
     rental income, including late charges and administrative fees, by the
     weighted average occupied square footage for the period.

         As indicated on the "self-storage operations" table above, the
Consistent Group's net operating income increased 2.7% in the three months ended
March 31, 2002 as compared to the same period in 2001. Rental income increased
1.2% and cost of operations decreased 2.0%.

         The increase in rental income for the first quarter is attributable to
a 6.6% increase in realized rent per occupied square foot partially offset by a
reduction in weighted average occupancy levels during the period. Higher
realized rent per occupied square foot was achieved through more aggressive
pricing that was implemented during 2001.

         Our more aggressive rental rates and reductions in the amount of
discounts offered, which occurred primarily in the last nine months of 2001,
have resulted in a reduction in weighted average occupancy levels during the
first quarter of 2002 as compared to the same period of 2001, as indicated in
the table above. This reduction continues the trend that started in 2001.

                                       26

<PAGE>

         We are continuously evaluating the call volume to our reservation
center, our reservation activity, and move-in/move-out rates for each of our
markets relative to our marketing activities and rental rates. In addition, we
evaluate market supply and demand factors and based upon these analyses we are
continuing to adjust our marketing activities and have reduced rental rates.

         During the first quarter of 2002, some of our efforts to increase our
occupancy levels included national television advertising, promotional
activities, and discounts which took place during the latter part of March 2002
and which we expect to continue at least throughout the second quarter of 2002,
with continued increases in television advertising, discounts, and promotional
activities. No assurance can be provided as to the impact of these efforts on
our realized rents, occupancy levels, or net operating income growth.

         Cost of operations includes all direct and indirect costs of operating,
marketing and managing the facilities. The following table summarizes major
operating expenses with respect to the Consistent Group (dollar amounts in
thousands):

<TABLE>
<CAPTION>
                                                      Three months ended March 31,
                                              ------------------------------------------------
                                                                                   Percentage
                                                  2002              2001             Change
                                              ------------      ------------      ------------
<S>                                           <C>               <C>                    <C>
Property payroll expense.................     $    14,254       $   13,841             3.0%
Property taxes...........................          15,427           14,873             3.7%
Repairs and maintenance..................           2,723            3,469           (21.5)%
Advertising and promotion................           2,627            2,598             1.1%
Telephone reservation center costs.......           2,067            2,748           (24.8)%
Other expenses...........................          11,927           12,483            (4.5)%
                                              ------------      ------------      ------------
  Total cost of operations ..............     $    49,025       $   50,012            (2.0)%
                                              ============      ============      ============
</TABLE>

         As indicated previously, we began a campaign of national television
advertising in the latter part of March 2002. We anticipate an increase in
advertising and promotional costs in the second quarter of 2002 as compared to
the first quarter of 2002 as a result of these continued efforts.

SELF-STORAGE OPERATIONS - ACQUIRED FACILITIES

         As of March 31, 2002, we had 106 facilities with 6,253,000 net rentable
square feet that we acquired in 2000, 2001 and the first quarter of 2002 in
connection with third-party acquisitions and business combinations. The
operations of these facilities are included in the above table under the caption
"Acquired Facilities."

         In August 2001, we acquired one operating self-storage facility for an
aggregate cost of $3,503,000. Included in the above table for 2002, under the
caption "Acquired Facilities", are revenues of $95,000 and cost of operations of
$39,000 with respect to this facility.

         During 2002, we acquired 47 self-storage facilities in connection with
the acquisition of the Development Joint Venture (described in Note 3 to the
Company's financial statements). Included in the operating results for the first
quarter of 2002 are $6,756,000 in revenues and $2,142,000 in operating expenses,
representing the operating results of these properties from January 16, 2002
through March 31, 2002.

         Effective January 1, 2002, we began consolidating the accounts of two
partnerships (described in Note 3 to the Company's financial statements) owning
31 self-storage facilities. Included in the operating results for the first
quarter of 2002 are $4,881,000 in rental income and $1,178,000 in operating
expenses for these facilities.

         During the first quarter of 2002, we acquired two additional
self-storage facilities, in separate transactions, for an aggregate cost of
$5,052,000. Included in the operating results for the first quarter of 2002 are
$106,000 in rental income and $57,000 in operating expenses with respect to
these facilities.

                                       27

<PAGE>

         Rental income and cost of operations for the Acquired Facilities
increased significantly in the first quarter of 2002 as compared to the same
period in 2001 due to the aforementioned acquisitions of facilities.

SELF-STORAGE OPERATIONS - EXPANSION FACILITIES

         Throughout the three-year period ended December 31, 2001, the Company
has expanded certain real estate facilities that it previously owned or
converted them to facilities that combine self-storage and containerized storage
at the same location ("Combination Facilities'). Such construction activities
can cause a drop in revenue levels, as existing capacity is made unavailable in
order to accommodate construction activities. Primarily as a result of these
expansion activities, 38 of these facilities with 4,425,000 net rentable square
feet (which includes the expanded space) had results that were not comparable.
The operating results for these facilities are presented in the Self-Storage
Operations table above under the caption, "Expansion Facilities." We completed
construction on projects with a total cost of $16,009,000 in the first quarter
of 2002, $84,948,000 in the year ended December 31, 2001, and $12,206,000 in the
year ended December 31, 2000 with respect to these expansions.

SELF-STORAGE OPERATIONS - DEVELOPED FACILITIES

         Since January 1, 1998, we have opened 58 newly developed self-storage
facilities with 4,342,000 net rentable square feet and a total cost of
approximately $368.1 million. These facilities' operating results are reflected
in the Self-storage Operations table under the caption, "Developed Facilities."

         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 operation the facility is
entirely vacant generating no rental income. It takes approximately 24 months
for a newly developed facility to fill up and reach a targeted occupancy level
of approximately 90% (the "Stabilization Period"). At March 31, 2002, the
Developed Facilities had an average occupancy level of approximately 48.1%.

         Property operating expenses are substantially fixed. The rental revenue
of a newly developed facility will generally not cover its property operating
expenses (excluding depreciation) until the facility has reached an occupancy
level of approximately 30%. 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 (our blended cost of capital is approximately 9.0%). During
construction of the 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 operation 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 as a
result of our development activities by $6,178,000 and $6,734,000 for the three
months ended March 31, 2002 and 2001, respectively, primarily representing the
difference between the revenues of the Developed Facilities and the related
costs denoted above. These amounts include approximately $1,614,000 and
$1,516,000 for the three months ended March 31, 2002 and 2001, respectively, in
depreciation expense.

         We continue to develop facilities, despite the short-term earnings
dilution experienced during the Stabilization 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. Furthermore,
the 38 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.

                                       28

<PAGE>

SELF-STORAGE OPERATIONS - DISPOSED FACILITIES

         During the period from January 1, 2001 and March 31, 2002, we disposed
of one facility in connection with condemnation proceedings. No further
operations will be reflected on the Company's financial statements after March
31, 2002 with respect to this facility.

         COMMERCIAL PROPERTY OPERATIONS: Commercial property operations included
in the consolidated financial statements include commercial space owned by the
Company and Consolidated Entities, comprised of five wholly-owned commercial
facilities, as well as a portion of certain facilities that combine self-storage
and commercial space at the same location. 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" in our
condensed consolidated statements of income.

         The following table sets forth the historical commercial property
amounts included in the financial statements. We have owned substantially all of
these facilities on a stabilized basis since January 1, 2001.

<TABLE>
<CAPTION>

COMMERCIAL PROPERTY OPERATIONS                     Three months ended March 31,
------------------------------                     ----------------------------
                                                      2002              2001           Change
                                                   ----------        ----------       ---------
                                                              (Amounts in thousands)
<S>                                                 <C>              <C>                 <C>
Rental income.................................      $  3,071         $  3,057            0.5%
Cost of operations............................         1,114              950           17.3%
                                                   ----------        ----------       ---------
Net operating income prior to depreciation....         1,957            2,107           (7.1)%
  Depreciation................................          (728)            (709)           2.7%
                                                   ----------        ----------       ---------
  Net income..................................      $  1,229         $  1,398          (12.1)%
                                                   ==========        ==========       =========
</TABLE>

         CONTAINERIZED STORAGE FACILITIES OPERATIONS: At March 31, 2002, Public
Storage Pickup and Delivery ("PSPUD") operated 55 facilities. PSPUD incurred an
operating profit of $480,000 in the three months ended March 31, 2002, and an
operating loss of $927,000 in the same period in 2001, summarized as follows:

<TABLE>
<CAPTION>

CONTAINERIZED STORAGE FACILITIES                    Three months ended March 31,
--------------------------------                    ----------------------------
                                                       2002              2001           Change
                                                    ----------       -----------       ---------
                                                                (Amounts in thousands)

<S>                                                 <C>              <C>                  <C>
Rental and other income                             $  11,699        $  10,073            16.1%
Cost of Operations:
  Direct operating costs.....................           8,241            7,681             7.3%
  Facility lease expense.....................           1,077            1,792           (39.9)%
                                                    ----------       -----------       ---------
     Total cost of operations................           9,318            9,473            (1.6)%

Operating income prior to depreciation.......           2,381              600           296.8%

Depreciation (a).............................          (1,901)          (1,527)             NA
                                                    ----------       -----------       ---------
Operating income (loss)......................       $     480        $    (927)             NA
                                                    ==========       ===========       ==========
</TABLE>

(a)  Depreciation for the three months ended March 31, 2002 and 2001 includes
     $288,000 and $188,000, respectively, with respect to real estate assets.

         PSPUD's operations improved by $1,407,000, with an improvement from a
loss of $927,000 in the first quarter of 2001 to a profit of $480,000 for the
first quarter of 2002. Approximately half of this improvement is attributable to
reductions in lease expense described below. No assurance can be made regarding
PSPUD's level of gross rentals, level of move-outs, or ongoing profitability.

                                       29

<PAGE>

         The decrease in facility lease expense for the three months ended March
31, 2002 as compared to the same period in 2001 is attributable to our
development of facilities that combine self-storage and containerized storage
space in the same location ("Combination Facilities"), with certain leased
facilities being replaced by wholly-owned facilities. As a result of the opening
of these newly developed combination facilities throughout 2001 and 2002, leased
facilities decreased from 25 at December 31, 2000 to 16 at March 31, 2002. This
development program will be substantially complete following completion of one
combination facility that is in process at March 31, 2002.

         TENANT REINSURANCE OPERATIONS: As previously announced, on December 31,
2001, the Company acquired PS Insurance Company, Ltd. ("PS Insurance").
Effective January 1, 2002, the operations of PS Insurance Company, Ltd, are
included in the income statement under "Revenues - tenant reinsurance" and "Cost
of operations - tenant reinsurance." The tenant reinsurance business earned
$4,575,000 in revenues and incurred $2,293,000 in expenses, for a net operating
profit of $2,282,000 for the three months ended March 31, 2002.

         EQUITY IN EARNINGS OF REAL ESTATE ENTITIES: In addition to our
ownership of equity interests in PSB, we had general and limited partnership
interests in eight limited partnerships at March 31, 2002. PSB and the limited
partnerships are collectively referred to as the "Unconsolidated Entities." Due
to our limited ownership interest and 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 consists of our pro rata
share of the Unconsolidated Entities based upon our ownership interest for the
period. Similar to the Company, the Unconsolidated Entities (other than PSB)
generate substantially all of their income from their ownership of self-storage
facilities, which we manage. PSB is an equity real estate investment trust
specializing in the ownership, management, acquisition, development and
redevelopment of business parks containing principally office "flex" space. In
the aggregate, at March 31, 2002 the Unconsolidated Entities own a total of 36
storage facilities and PSB has interest 14.8 million net rentable square feet of
commercial space located in nine states. The following table sets forth the
significant components of equity in earnings of real estate entities:

HISTORICAL SUMMARY                           Three months ended
------------------                                  March 31,
                                           ------------------------    Dollar
                                              2002         2001        Change
                                           ----------    ----------   ----------
                                                 (Amounts in thousands)
Property operations:
  PSB................................      $  15,423     $  11,646    $   3,777
  Development Joint Venture..........            288         1,337       (1,049)
  Other investments..................          1,806         3,820       (2,014)
                                           ----------    ----------   ----------
                                              17,517        16,803          714
                                           ----------    ----------   ----------
Depreciation:
  PSB................................         (6,101)       (3,723)      (2,378)
  Development Joint Venture..........            (65)         (508)         443
  Other investments..................           (205)       (1,044)         839
                                           ----------    ----------   ----------
                                              (6,371)       (5,275)      (1,096)
                                           ----------    ----------   ----------
Other: (a)
  PSB................................         (4,449)       (2,138)      (2,311)
  Development Joint Venture..........              -            37          (37)
  Other investments..................            318          (155)         473
                                           ----------    ----------   ----------
                                              (4,131)       (2,256)      (1,875)
                                           ----------    ----------   ----------

Total equity in earnings of real estate
entities.............................      $   7,015     $   9,272    $  (2,257)
                                           ==========    ==========   ==========

(a)  "Other" reflects our share of general and administrative expense, interest
     expense, interest income, and other non-property, non-depreciation related
     operating results of these entities.

         The decrease in equity in earnings of real estate entities is due
primarily to a $1,999,000 decrease caused by the consolidation of the
Development Joint Venture and two additional partnerships in the quarter ended
March 31, 2002.

                                       30

<PAGE>

         On January 16, 2002, we acquired our Partner's 70% ownership interest
in the Development Joint Venture. 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. Effective January 1, 2002 (see Note 3 to the Company's financial
statements), we began consolidating the operating results of two other
partnerships and no longer record equity in these entity's earnings with respect
to our investments in these partnerships. Included in equity in earnings for the
three months ended March 31, 2001 is $2,222,000 with respect to these three
partnerships as compared to $223,000 for the same period in 2002. No further
equity in earnings will be recorded with respect to these partnerships for
periods after their respective dates of consolidation.

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 in the three months ended March
31, 2002 as compared to the same period in 2001 primarily as a result of lower
interest rates earned on outstanding invested cash balances.

         This decrease also includes a reduction in property management
operations. Beginning in the first quarter of 2002, the Company began
consolidating the operations of the Development Joint Venture and two other
partnerships, as described in Note 3 to the Company's financial statements. As a
result, property management operations with respect to the 78 self-storage
properties owned by these entities will no longer be recorded after their
respective dates of consolidation. At March 31, 2002, the Company manages 31
facilities for third parties and 36 facilities on behalf of the Unconsolidated
Entities for a fee, and the net results of these operations are included in
"Interest and Other Income."

         DEPRECIATION AND AMORTIZATION: Depreciation and amortization expense
has increased $4,375,000 to $43,997,000 for the three months ended March 31,
2002 as compared to $39,622,000 for the same period in 2001. These increases are
principally due to the acquisition and development of additional real estate
facilities during 2001 and 2002. Amortization expense with respect to intangible
assets totaled $1,651,000 and $2,328,000 for the three months ended March 31,
2002 and 2001, respectively. Included in depreciation and amortization expense
for the three months ended March 31, 2002 and 2001 is $1,613,000 and $1,339,000,
respectively, of depreciation of furniture, fixtures, and equipment of the
containerized storage business.

         GENERAL AND ADMINISTRATIVE: General and administrative expense for the
three months ended March 31, 2002 decreased to $4,000,000 as compared to
$5,584,000 for the same period in 2001. 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, and overhead associated with the containerized storage business.
Depreciation expense with respect to real estate increased from $35,955,000 for
the three months ended March 31, 2001 to $40, 733,000 for the same period in
2002. The decrease in general and administrative expense is due to decreased
expenses associated with lease terminations on leased containerized storage
facilities which were replaced by newly-developed facilities, decreased
severance costs, and decreased overhead relating to the development of
self-storage facilities, offset by increases in other areas. These three areas
accounted for an approximately $1.9 million decrease in general and
administrative costs for the three months ended March 31, 2002 as compared to
the same period last year.

         INTEREST EXPENSE: Interest expense was $1,102,000 and $971,000 for the
three months ended March 31, 2002 and 2001, respectively. Capitalized interest
expense totalled $1,846,000 and $2,110,000 for the three months ended March 31,
2001 and 2000, respectively. In addition, the Company incurred $295,000 in
interest on borrowing on its line of credit in the three months ended March 31,
2002 as compared to $4,000 for the same period in 2001. The increase in interest
expense in 2002 compared to 2001 is principally the result of a reduction in the
amount of capitalized interest and an increase in interest expense on the
Company's line of credit, offset by lower interest expense on notes payable due
to principal payments.

                                       31

<PAGE>

         MINORITY INTEREST IN INCOME - PREFERRED: Minority interest in income -
preferred represents the income allocable to holders of our preferred
partnership units. During 2000, one of our operating partnerships issued $365
million of preferred operating partnership units. For the three months ended
March 31, 2002 and 2001, the holders of these preferred units were paid in
aggregate approximately $6,726,000 and $8,505,000, respectively, in
distributions and received a corresponding allocation of minority interest in
earnings. The decrease in the three months ended March 31, 2002 as compared to
the same period in 2001 is due to our repurchase, during the latter half of
2001, of $80 million of these preferred operating partnership units.

         MINORITY INTEREST IN INCOME - COMMON EQUITY: Minority interest in
income - common equity represents the income allocable to equity interests in
the Consolidated Entities which are not owned by the Company, other than
preferred unitholders. Minority interest in income - common equity increased
from $3,193,000 for the three months ended March 31, 2001 to $4,616,000 for the
three months ended March 31, 2002. These minority interests include depreciation
of $2,255,000 for the three months ended March 31, 2002 and $1,758,000 for the
same period in 2001. Income allocated to the minority interests is summarized as
follows (in thousands):


                                     Minority interest in income for
                                     the three months ended March 31,
            Description                   2002             2001
----------------------------------   --------------     -------------
Consolidated Development Joint
  Venture........................      $       307      $      112
Convertible OP Units............                89              88
Other consolidated partnerships..            4,220           2,993
                                     --------------     -------------
Total other partnership interests      $     4,616      $    3,193
                                     ==============     =============

         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 $746,000 and $377,000,
respectively, in depreciation expense for the three months ended March 31, 2002
and 2001. 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 increase in "Other Consolidated Partnerships" to $4,220,000 for the
three months ended March 31, 2002 from $2,993,000 for the same period in 2001
includes the consolidation of two partnerships (described in Note 3 to the
Company's financial statements) effective January 1, 2002. A total of $856,000
in income was allocated to the minority interests with respect to these two
newly consolidated partnerships (including $120,000 in depreciation expense) in
the three months ended March 31, 2002.

         On April 19, 2002, the Company acquired through a merger all of the
remaining limited partnership interest not currently owned by the Company in PS
Partners V, Ltd., a partnership which is consolidated with the Company. The
acquisition cost consisted of approximately 534,000 shares of Public Storage
common stock and approximately $13 million in cash. Minority interest in income
for the three months ended March 31, 2002 with respect to these interests was
approximately $464,000 (including $272,000 in depreciation expense).

SUPPLEMENTAL PROPERTY DATA AND TRENDS
--------------------------------------------------------------------------------

         At March 31, 2002, there were approximately 43 ownership entities
owning in aggregate 1,392 storage facilities, including the facilities which we
own and/or operate. At March 31, 2002, 36 of these facilities were owned by the
Unconsolidated Entities, entities in which we have an ownership interest and use
the equity method for financial statement presentation. The remaining 1,356
facilities are owned by the Company and the Consolidated Entities.

                                       32

<PAGE>

         The following table summarizes our investment in real estate facilities
as of March 31, 2002:

<TABLE>
<CAPTION>
                                                                          Net Rentable Square
                                                                          Footage of Storage
                                                       Number of             Facilities
                                                    Storage Facilities     (in thousands)
                                                   --------------------   --------------------
Consolidated facilities:
<S>                                                           <C>                <C>
   Wholly-owned by the company.................               806                50,452
   Owned by Controlled Entities................               550                31,694
                                                   --------------------   --------------------
                                                            1,356                82,146
Facilities owned by Unconsolidated Entities....                36                 2,186
                                                   --------------------   --------------------
 Total  facilities  in which  the  Company  has
   an ownership interest.......................             1,392                84,332
                                                   ====================   ====================
</TABLE>

         In addition to the Company's interest in storage facilities noted
above, the Company and the Consolidated Entities own five commercial facilities
with an aggregate of 385,000 net rentable square feet. The Company and the
entities it controls also have a 44% common interest in PSB, which at March 31,
2002 owned and operated 14.8 million net rentable square feet of commercial
space.

SAME STORE OPERATING RESULTS

         The Company derives substantially all of its revenues from the
ownership and management of self-storage facilities. In order to evaluate the
performance of the Company's overall storage facility portfolio, management
analyzes the operating performance of a consistent group of self-storage
facilities.

         We have increased the number of facilities included in the "Same Store"
pool from 945 at December 31, 2001 to 1,260 facilities (which at March 31, 2002
includes 32 facilities that are owned by unconsolidated entities in which the
Company has an interest).

         The 315 facilities added to the Same Store pool for 2002 had enough
operating history as stabilized facilities managed by Public Storage, and in
which Public Storage had an interest in to provide meaningful comparative
information for 2000, 2001, and 2002. The facilities added included the more
than 200 facilities acquired in the merger with Storage Trust in 1999, other
facilities acquired prior to January 1, 2000, and newly developed facilities
opened prior to January 1, 1998. We believe that the increase in the Same Store
pool to 1,260 facilities provides a more complete view of the Company's
portfolio.

         As a result of the change in the Same Store pool, the relative
weighting of markets has changed. Accordingly, comparisons should not be made
between information presented previously for the Same Store pool of 945
facilities and this current pool of 1,260 facilities in order to identify trends
in occupancies, realized rents per square foot, or operating results.

         The following table summarizes the pre-depreciation historical
operating results of the Same Store self-storage facilities:

                                       33

<PAGE>

SAME STORE SELF-STORAGE FACILITIES
----------------------------------           Three months ended
(historical property operations)                 March 31,
                                           ----------------------    Percentage
                                             2002         2001         Change
                                           ---------    ---------    ----------
                                                  (Amounts in thousands,
                                               except rent per square foot)

Rental income (1) (2)...............       $ 180,986    $ 178,729        1.3%
Cost of operations  (2).............          54,004       55,156       (2.1)%
                                           ---------    ---------    ----------
Net operating income (2)............       $ 126,982    $ 123,573        2.8%
                                           =========    =========    ==========

Gross profit margin.................           70.2%        69.1%       1.1%

Weighted Average:
  Occupancy (3).....................           83.6%        88.2%      (4.6)%
  Annualized realized rent per sq. ft
     for the period (4).............       $   11.85    $   11.12       6.6%

1.   Rental income includes late charges and administrative fees that in the
     aggregate totaled $5,564,000 and $6,371,000 for the three months ended
     March 31, 2002 and 2001, respectively. Rental income is net of discounts
     offered to new tenants. Discounts totaled $1,102,000 and $2,943,000 for the
     three months ended March 31, 2002 and 2001, respectively.

2.   Historical property operations excludes the sale of locks, boxes, and
     packing supplies, tenant re-insurance revenues and truck rental revenues.

3.   Occupancies indicated in the above table represent the weighted average
     physical occupancy levels over the entire three month periods. Comparisons
     should not be made between the occupancies of this Same Store pool of 1,260
     facilities and what was previously presented for the 945 Same Store
     facilities in order to evaluate trends in occupancies.

4.   Realized annual rent per square foot is computed by annualizing rental
     income including late charges and administrative fees divided by weighted
     average occupied square footage for the period.

         The increase in rental income for the first quarter is attributable to
a 6.6% increase in realized rent per occupied square foot partially offset by a
reduction in weighted average occupancy levels during the period. Higher
realized rent per occupied square foot was achieved through more aggressive
pricing that was implemented during 2001, offset partially by reduced occupancy
levels.

         Our more aggressive rental rates and reductions in the amount of
discounts offered, which occurred primarily in the last nine months of 2001,
have resulted in a reduction in weighted average occupancy levels during the
first quarter of 2002 as compared to the same period of 2001, as indicated in
the table above. This reduction continues the trend that started in 2001.

         We are continuously evaluating the call volume to our reservation
center, our reservation activity, and move-in/move-out rates for each of our
markets relative to our marketing activities and rental rates. In addition, we
evaluate market supply and demand factors and based upon these analyses we are
continuing to adjust our marketing activities and have reduced rental rates.

         During the first quarter of 2002, some of our efforts to increase our
occupancy levels included national television advertising, promotional
activities, and discounts which took place during the latter part of March 2002
and which we expect to continue at least throughout the second quarter of 2002,
with continued increases in television advertising, discounts, and promotional
activities. No assurance can be provided as to the impact of these efforts on
our realized rents, occupancy levels, or net operating income growth.

                                       34

<PAGE>

         Cost of operations includes all direct and indirect costs of operating,
marketing and managing the facilities, and is analyzed as follows:

<TABLE>
<CAPTION>
                                                      Three months ended
                                                          March 31,
                                                -----------------------------
                                                   2002              2001               Change
                                                -----------       -----------         -----------
                                                   (Amounts in thousands)
<S>                                             <C>               <C>                     <C>
Payroll expense                                 $    15,641       $    15,159             3.2%
Property taxes                                       17,018            16,446             3.5%
Repairs and maintenance                               3,049             3,830           (20.4)%
Advertising                                           2,830             2,851            (0.7)%
Telephone  reservation center costs                   2,264             3,010           (24.8)%
Other                                                13,202            13,860            (4.7)%
                                                -----------       -----------         -----------
                                                $    54,004       $    55,156            (2.1)%
                                                ===========       ===========         ===========
</TABLE>

         The decrease in operating expenses is attributable to reductions in
repairs and maintenance, and telephone reservation center expenses for the
quarter ended March 31, 2002, offset partially by an increase in television
advertising described above.

         The following table summarizes Same Store operating trends by region
for the three months ended March 31, 2002 and 2001 (Dollar amounts in
thousands):


<TABLE>
<CAPTION>
                 Northern    Southern                                          Other
                 California  California    Texas      Florida     Illinois     states       Total
                 ----------  ----------    --------   --------    --------     --------   ---------
Rental income:
--------------
      <S>         <C>          <C>         <C>         <C>        <C>           <C>       <C>
           2002   $22,682      $30,408     $16,222     $15,827    $13,900       $81,947   $180,986
           2001   $23,359      $29,655     $15,765     $15,359    $13,666       $80,925   $178,729
       % change     (2.9)%       2.5%        2.9%        3.0%       1.7%         1.3%        1.3%

Cost of operations:
-------------------
           2002    $4,986       $6,684      $6,047      $4,945     $5,492       $25,850    $54,004
           2001    $5,028       $6,545      $6,160      $5,138     $5,780       $26,505    $55,156
       % change     (0.1)%       2.1%       (1.8)%      (3.8)%     (5.0)%       (2.5)%      (2.1)%

Net operating income:
---------------------
           2002   $17,696      $23,724     $10,175     $10,882     $8,408       $56,097   $126,982
           2001   $18,331      $23,110      $9,605     $10,221     $7,886       $54,420   $123,573
       % change     (3.5)%       2.7%        5.9%        6.5%       6.6%         3.1%        2.8%

Weighted avg. occupancy:
------------------------
           2002     84.2%       86.3%        83.6%       84.4%      81.9%       83.0%        83.6%
           2001     93.1%       92.0%        88.0%       86.0%      87.1%       86.9%        88.2%
       % change     (8.9)%      (5.7)%      (4.4)%      (1.6)%     (5.2)%       (3.9)%      (4.6)%

Weighted avg. annualized realized rents per occupied sq. ft.:
-------------------------------------------------------------
           2002     $15.74     $15.95        $8.87      $10.79      $13.08      $10.82       $11.85
           2001     $14.65     $14.59        $8.21      $10.29      $12.09      $10.23       $11.12
       % change      7.4%        9.3%        8.0%        4.9%       8.2%         5.8%        6.6%

Number of facilities:
---------------------
                      127         143         142         123         86           639       1,260

</TABLE>

                                       35

<PAGE>

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 used to
make distributions to our shareholders (see "Requirement to Pay Distributions"
below). However, despite the significant distribution requirements, we have been
able to retain a significant amount of our operating cash flow. The following
table summarizes our ability to fund distributions to the minority interest,
capital improvements to maintain our facilities, and distributions to our
shareholders through the use of cash provided by operating activities. The
remaining cash flow generated is available to make both scheduled and optional
principal payments on debt and for reinvestment.

<TABLE>
<CAPTION>
                                                                              For the three months ended
                                                                                        March 31,
                                                                                 2002           2001
                                                                              ----------       ---------
                                                                                (Amount in thousands)

<S>                                                                            <C>             <C>
Net cash provided by operating activities.............................         $152,149        $110,300

Allocable to minority interests (Preferred Units).....................           (6,726)         (8,505)
Allocable to minority interests (common equity).......................           (6,871)         (4,951)
                                                                              ----------       ---------

Cash from operations allocable to our shareholders....................          138,552          96,844

Capital improvements to maintain our facilities:
  Storage facilities..................................................           (3,758)         (4,676)
  Commercial properties...............................................             (210)           (138)
  Add back: minority interest share of capital improvements to maintain
    facilities........................................................              179              73
                                                                              ----------       ---------
Remaining operating cash flow available for distributions to our                134,763          92,103
   shareholders.......................................................

Distributions paid:
  Preferred stock dividends...........................................          (35,840)        (28,036)
  Equity Stock, Series A dividends....................................           (5,375)         (3,452)
  Distributions to Common and Class B shareholders (a)................          (55,045)        (27,957)
                                                                              ----------       ---------

Cash available for principal payments on debt and reinvestment........          $38,503         $32,658
                                                                              ==========       =========
</TABLE>

         (a)  Distributions to common shareholders include the Company's regular
              common distribution of $0.45 and $0.22 per common share for the
              three months ended March 31, 2002 and 2001, respectively.

         Our financial profile is characterized by a low level of debt to total
capitalization, increasing net income, increasing cash flow from operations, 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, 2002, internally
generated retained cash flows, and proceeds from issuing equity securities. In
general, our current strategy is to continue to finance our growth with
permanent capital; either common or preferred equity. We have in the past used
our $200 million line of credit as temporary "bridge" financing, and repaid
those amounts with internally generated cash flows and proceeds from the
placement of permanent capital. As of March 31, 2002, we had no outstanding
borrowings on the line of credit.

                                       36

<PAGE>

         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 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, 2002, we had mortgage debt outstanding of $23.0
million and unsecured debt in the amount of $105.1 million, and had consolidated
real estate facilities with a book value of $4.1 billion. We have not financed
our acquisitions with debt and generally our borrowing has increased through the
assumption of pre-existing debt on acquired real estate facilities.

         We believe that our size and financial flexibility enables us to access
capital when appropriate. During 2001 and in the first quarter of 2002, we
raised a total of $1.1 billion through the issuance of preferred securities, and
$74.8 million through the issuance of our Equity Stock, Series A. In 2001, we
redeemed for cash $441.3 million in cumulative preferred stock and $80.0 million
in preferred operating partnership units, allowing us to take advantage of
favorable rate spreads.

         We have completed in the first quarter of 2002, or anticipate the
following issuances and redemptions of equity during 2002:

o    On January 18, 2002, we completed a public offering of 6,000,000 depositary
     shares ($25 stated value per depositary share) each representing 1/1,000 of
     a share of 7.625% Cumulative Preferred Stock, Series T, raising net
     proceeds of approximately $145.1 million.

o    On February 19, 2002, we completed a public offering of 6,000,000
     depositary shares ($25 stated value per depositary share) each representing
     1/1,000 of a share of 7.625% Cumulative Preferred Stock, Series U, raising
     net proceeds of approximately $145.1 million.

o    It is our intent to call for redemption our 10% Senior Preferred Stock
     Series A, which becomes redeemable on September 30, 2002. The aggregate
     redemption amount for this security is $25 per share or approximately $45.6
     million, plus accrued dividends.

         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 times 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 to our shareholders prior to filing of the Company's
tax return. We have satisfied the REIT distribution requirement since 1980.

                                       37

<PAGE>

         During the three months ended March 31, 2002 and 2001, we paid cash
dividends totaling $35,840,000 and $28,036,000, respectively, to the holders of
our Senior Preferred Stock. The amounts paid in 2002 include an aggregate of
$3,623,000 with respect to the Series T and Series U Preferred Stock, which
reflects a payment for a partial period from the date of their respective
issuances. We estimate the regular annual distribution requirements with respect
to our Preferred Stock outstanding at March 31, 2002 to be approximately $151.7
million, which includes $4.6 million for our Senior Preferred Stock, Series A,
which we anticipate redeeming on September 30, 2002.

         During the three months ended March 31, 2002 and 2001, we paid cash
dividends totaling $6,726,000 and $8,505,000, respectively, to the holders of
our preferred operating partnership units. The fiscal 2002 distribution
requirement with respect to the preferred operating partnership units
outstanding at March 31, 2002 is estimated at $26.9 million.

         During the three months ended March 31, 2002 and 2001, we paid cash
dividends totaling $5,375,000 and $3,452,000, respectively, to the holders of
Equity Stock, Series A. With respect to the Equity Stock, Series A outstanding
at March 31, 2002, 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.

         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.

         During the three months ended March 31, 2002 we paid dividends totaling
$55,045,000 ($0.45 per common share) to the holders of our common stock and
Class B common stock. Based upon shares outstanding at May 1, 2002 and a
quarterly distribution of $0.45 per share which was declared by the Board of
Directors on May 9, 2002 and payable on June 28, 2002, we estimate a dividend
with respect to our common stock and Class B common stock of $55.2 million for
the second quarter of 2002.

         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 to our shareholders prior to filing the Company's tax
return. Accordingly, for the remainder of 2002, distributions with respect to
the Common Stock and Equity Stock, Series A will be determined based upon our
estimated REIT taxable income taking into consideration distributions to the
preferred shareholders. We anticipate that, at a minimum, quarterly
distributions per common share will remain at $0.45 per common share (regular
quarterly common distributions were increased from $0.22 per common share during
the first two quarters of 2001). Over the past several years, in addition to the
regular quarterly dividends paid to our common shareholder, we also paid special
distributions. These special distributions were necessary to meet our
distribution requirements in order to maintain our REIT tax status. The need to
make a special distribution in 2002 is not determinable at this time and will
depend in large part on our 2002 taxable income relative to the distributions
being paid to all of our shareholders.

         CAPITAL IMPROVEMENT REQUIREMENTS: For 2002, we have budgeted
approximately $31 million for capital improvements. During the three months
ended March 31, 2002, we incurred capital improvements of approximately $4.0
million.

         DEBT SERVICE REQUIREMENTS: We do not believe we have any significant
refinancing risks with respect to our notes payable, all of which is fixed rate.
At March 31, 2002, we had total outstanding notes payable of approximately
$128.1 million. Approximate principal maturities of notes payable at March 31,
2002 are as follows:

                                       38

<PAGE>

<TABLE>
<CAPTION>
                                      Unsecured
                                     Senior Notes        Mortgage debt          Total
                                    -------------      ---------------        -----------
                                                  (amounts in thousands)
<S>                                 <C>                <C>                     <C>
2002 (remainder of)..........       $       9,750      $       2,754           $  12,504
2003.........................              35,900              3,585              39,485
2004.........................              25,800             15,063              40,863
2005.........................              11,200                156              11,356
2006.........................              11,200                170              11,370
Thereafter...................              11,200              1,298              12,498
                                    -------------      ---------------        -----------
                                    $     105,050      $      23,026          $  128,076
                                    =============      ===============        ===========
Weighted average rate........               7.5%              10.2%                 8.0%
                                    =============      ===============        ===========
</TABLE>

         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, and owns 47 storage facilities opened since
1997. On April 19, 2002, the Company acquired through a merger all of the
remaining limited partnership interest not currently owned by the Company in PS
Partners V, Ltd., a partnership which is consolidated with the Company. The
acquisition cost consisted of approximately 534,000 shares of Public Storage
common stock and approximately $13 million in cash.

         ACQUISITION OF SELF-STORAGE FACILITIES FROM THIRD PARTIES: In the first
quarter of 2002, we acquired two self-storage facilities from third parties for
an aggregate acquisition cost of $5,052,000. During 2000 and 2001, we acquired
an aggregate of 15 real estate facilities, substantially all of which were
self-storage facilities, for an aggregate of $70.6 million. Our low level of
third-party acquisitions in recent years is not indicative of either the supply
of facilities offered for sale or our ability to finance the acquisitions, but
is primarily due to prices sought by sellers and our lack of desire to pay such
prices. During the remainder of 2002, we will continue to seek to acquire
additional self-storage facilities from third parties, however, it is difficult
to estimate the level of third-party acquisitions.

         DEVELOPMENT OF SELF-STORAGE FACILITIES: In November 1999, we formed a
second joint venture partnership for the development of approximately $100
million of self-storage facilities. The venture is funded solely with equity
capital consisting of 51% from us and 49% from the joint venture partner, and
has substantially completed its development activities. At March 31, 2002, the
second development joint venture owned 21 facilities (approximately 1,339,000
net rentable square feet) with an estimated development cost of approximately
$108.2 million. As of March 31, 2002, the second development joint venture is
developing one additional project (approximately 74,000 net rentable square
feet) that was completed in April 2002 with a total cost of $6.6 million.

         The Company anticipates that the cost of development of self-storage
facilities for the year ended December 31, 2002 and beyond will be approximately
$125 million to $150 million per year.

         At March 31, 2002, the Company has a "pipeline" of 38 identified
projects (including the one project noted above being developed by the second
development joint venture) comprised of new and expansion self-storage
facilities. Total estimated costs with respect to these facilities is
approximately $259.1 million, of which $89.2 million has been spent, with
opening dates estimated through the fourth quarter of 2003. 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 $170 million on these 38 projects in the
pipeline will be incurred over approximately the next 24 months.

         We have acquired the land for 24 of the projects in the pipeline, which
have an aggregate estimated cost of $158.7 million and costs incurred through
March 31, 2002 of approximately $84.1 million. The remaining 14 facilities
represent identified sites where we have an agreement in place to acquire the
land, generally within one year. However, there are no assurances that we will
acquire and/or development the land.

                                       39

<PAGE>

         The following table sets forth our development pipeline and a range of
estimated opening dates for these projects (Dollar amounts in thousands):

<TABLE>
<CAPTION>
                                             Number      Total Estimated       Total Cost         Estimated time
                                               of           Cost of        Incurred through     Frames of Facility
                                           Facilities      Development       March 31, 2002          Openings
                                           ----------    ---------------   ----------------     ------------------
Development - land acquired at 3/31/02
--------------------------------------
<S>                                            <C>        <C>                 <C>                 <C>      <C>
Self-storage facilities...............         19         $   138,082         $   81,122         Q2 '02 - Q2 `03
Expansions of existing self-storage
    facilities........................          5              20,658              2,961         Q2 '02 - Q1 `03
                                           ----------    ---------------   ----------------
     Total............................         24             158,740             84,083
                                           ----------    ---------------   ----------------
Potential development - land to be
----------------------------------
acquired after 3/31/02
----------------------
Self-storage facilities...............         14             100,379              5,143         Q1 '03 - Q4 `03
                                           ----------    ---------------   ----------------
     Totals...........................         38         $   259,119         $   89,226
                                           ==========    ===============   ================
</TABLE>

         REPURCHASES OF THE COMPANY'S COMMON STOCK: As previously announced, 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, 2002, the Company has 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 the Company's common stock since May 2001.

         FUNDS FROM OPERATIONS: Total funds from operations or "FFO" increased
to $131,714,000 for the three months ended March 31, 2002 compared to
$114,867,000 for the same period in 2001. FFO available to common shareholders
(after deducting preferred stock dividends) was $90,499,000 for the three months
ended March 31, 2002 compared to $83,379,000 for the same period in 2001. FFO is
defined as net income or (loss) (computed in accordance with generally accepted
accounting principles) before: (i) gain or (loss) on early extinguishment of
debt, (ii) minority interest in income and (iii) gain or (loss) on the
disposition of real estate, adjusted as follows: (a) plus depreciation and
amortization (including our pro-rata share of depreciation and amortization of
unconsolidated equity interests and amortization of assets acquired in a merger,
including property management agreements and goodwill), and (b) less FFO
attributable to minority interest.

         FFO is a supplemental performance measure for equity REITs as defined
by the National Association of Real Estate Investment Trusts, Inc. ("NAREIT").
The NAREIT definition does not specifically address the treatment of minority
interest in the determination of FFO or the treatment of the amortization of
property management agreements and goodwill. In our case, FFO represents amounts
attributable to our shareholders after deducting amounts attributable to the
minority interests and before deductions for the amortization of property
management agreements and goodwill. FFO is presented because management, as well
as many industry analysts, consider FFO to be one measure of our performance and
it is used in establishing the terms of the Class B Common Stock. FFO does not
take into consideration capital improvements, scheduled principal payments on
debt, distributions and our other obligations. Accordingly, FFO is not a
substitute for cash flow or net income (as discussed above) as a measure of our
liquidity or operating performance. FFO is not comparable to similarly entitled
items reported by other REITs that do not define it exactly as we have defined
it.

                                       40

<PAGE>

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, 2001, you should consider the following factors
in evaluating the Company:

THE HUGHES FAMILY COULD CONTROL US.

         At March 31, 2002, the Hughes family owned approximately 34.1% of our
outstanding shares of common stock (approximately 37.9% upon conversion of our
class B 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.

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 a 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 REIT. These limitations, however,
also 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.

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 Public Storage have elected to be treated as
"taxable REIT subsidiaries" of Public Storage 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 Public Storage or any taxable REIT subsidiary is
required to pay federal, state or local taxes, we will have less cash available
for distribution to shareholders.

                                       41

<PAGE>

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 a
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, 2002, our debt
of $128.1 million was approximately 2.6% 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    changes in supply of or demand for similar or competing facilities
              in an area;

         o    potential terrorist attacks;

         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.

         There is significant competition among self-storage facilities. Most of
our properties are self-storage facilities, which generated 87% of our total
revenues during the first quarter of 2002. Competition in the market areas in
which many of our properties are located is significant and has affected the
occupancy levels, rental rates and operating expenses of some of our properties.
Any increase in availability of funds for investment in real estate may
accelerate competition. Further development of self-storage facilities may
intensify competition among operators of self-storage facilities in the market
areas in which we operate.

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

                                       42

<PAGE>

         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.

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

         The Hughes family owns and operates self-storage facilities in Canada.
We have a right of first refusal to acquire the stock or assets of the
corporation engaged in these operations if the Hughes family or the corporation
agree to sell them. However, we have no interest in the operations of that
corporation and no right to acquire that stock or assets unless the Hughes
family decides to sell.

OUR PORTABLE SELF-STORAGE BUSINESS HAS INCURRED OPERATING LOSSES.

         Public Storage Pickup & Delivery was organized in 1996 to operate a
portable self-storage business. We own all of the economic interest of Pickup &
Delivery. Since Pickup & Delivery 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. Pickup & Delivery incurred operating losses
of $5,135,000 in 2000 and $2,218,000 in 2001. Pickup & Delivery had an operating
profit totaling approximately $480,000 for the three months ended March 31, 2002
as compared to an operating loss of $927,000 for the same period in 2001.

                                       43

<PAGE>

PART II.  OTHER INFORMATION

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, 2002, our debt as a percentage of total
shareholders' equity (based on book values) was 3.1%.

         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 A - September
30, 2002, Series B - March 31, 2003, Series C - June 30, 1999, Series D -
September 30, 2004, Series E - January 31, 2005, Series F - April 30, 2005,
Series J - August 31, 2002, 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 and
Series U - February 19, 2007. On or after the respective dates, each of the
series of Senior Preferred Stock will be redeemable at our option, in whole or
in part, at $25 per share (or depositary share in the case of the Series J
through Series U), plus accrued and unpaid dividends.

         Our market risk sensitive instruments include notes payable, which
totaled $128.1 million at March 31, 2002. Substantially all of the Company's
notes payable bear interest at fixed rates. See "Item 2 - Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources" for approximate principal maturities of the
notes payable as of March 31, 2002.

                                       44

<PAGE>

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 Registration'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 Registration'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.

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.

                                       45

<PAGE>

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     Certification 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     Certification 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     Certification 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     Certification 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     Certification 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.

                                       46

<PAGE>

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

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

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

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

3.41     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.

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

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

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

                                     47

<PAGE>

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.

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.

                                       48

<PAGE>

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, Bank
         Boston, 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.

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.

                                       49

<PAGE>

10.25    Deposit Agreement dated as of August 17, 1999 among Registrant, Bank
         Boston, 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.

                                       50

<PAGE>

10.36    Deposit Agreement dated as of October 31, 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 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.

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.

--------------------
*        Compensatory benefit plan.
**       Management contract.


(b)      Reports on Form 8-K:

         During the quarter ended March 31, 2002, the Company filed (1) a
         Current Report on form 8-K, dated January 15, 2002 (filed January 16,
         2002), pursuant to Item 5, in connection with the Company's public
         offering in January 2002 of depositary shares, each representing
         1/1,000 of a share of 7.625% Cumulative Preferred Stock, Series T, and
         (2) a Current Report on form 8-K, dated February 13, 2002 (filed
         February 14, 2002), pursuant to Item 5, in connection with the
         Company's public offering in February 2002 of depositary shares, each
         representing 1/1,000 of a share of 7.624% Cumulative Preferred Stock,
         Series U.

                                       51

<PAGE>

                                   SIGNATURES


Pursuant to the requirements 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, 2002

                             PUBLIC STORAGE, INC.


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

                                       52