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 June 30, 2001
                               -------------

                                       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 August 9, 2001:

Common Stock, $.10 Par Value - 113,476,307 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 - 8,676,102 depositary shares  (representing  8,676.102 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
              June 30, 2001 and December 31, 2000                            1

         Condensed Consolidated Statements of Income for the
              Three and Six Months Ended June 30, 2001 and 2000              2

         Condensed Consolidated Statements of Shareholders' Equity
              for the Six Months Ended June 30, 2001                         3

         Condensed Consolidated Statements of Cash Flows
              for the Six Months Ended June 30, 2001 and 2000            4 - 5

         Notes to Condensed Consolidated Financial Statements           6 - 20

Item 2.  Management's Discussion and Analysis of
              Financial Condition and Results of Operations            21 - 34

Item 3.  Quantitative and Qualitative Disclosures about Market Risk         35

PART II. OTHER INFORMATION (Items 1, 2, 3 and 5 are not applicable)
         -----------------

Item 4.  Submission of Matters to a Vote of Security Holders           35 - 36

Item 6.  Exhibits and Reports on Form 8-K                              37 - 42

<PAGE>

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

<TABLE>
<CAPTION>
                                                                                    June 30,     December 31,
                                                                                      2001           2000
                                                                                  ------------   ------------
                                                                                  (Unaudited)
                                     ASSETS
                                     ------
<S>                                                                               <C>            <C>
Cash and cash equivalents .....................................................   $    50,761    $    89,467
Real estate facilities, at cost:
     Land .....................................................................     1,141,460      1,107,867
     Buildings ................................................................     3,157,901      3,026,550
                                                                                  ------------   ------------
                                                                                    4,299,361      4,134,417
     Accumulated depreciation .................................................      (741,418)      (668,018)
                                                                                  ------------   ------------
                                                                                    3,557,943      3,466,399
     Construction in process ..................................................       143,971        217,140
     Land held for development ................................................        29,771         21,447
                                                                                  ------------   ------------
         Total real estate ....................................................     3,731,685      3,704,986

Investment in real estate entities ............................................       459,623        448,928
Intangible assets, net ........................................................       180,361        185,017
Mortgage notes receivable from affiliates .....................................        24,239         26,238
Other assets ..................................................................        66,893         59,305
                                                                                  ------------   ------------
              Total assets ....................................................   $ 4,513,562    $ 4,513,941
                                                                                  ============   ============

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------
Notes payable .................................................................   $   149,796    $   156,003
Accrued and other liabilities .................................................       108,752        100,903
                                                                                  ------------   ------------
              Total liabilities ...............................................       258,548        256,906

Minority interest:
     Preferred operating partnership units ....................................       365,000        365,000
     Other ....................................................................       162,662        167,918

Commitments and contingencies

Shareholders' equity:
     Preferred Stock, $0.01 par value, 50,000,000 shares authorized, 11,148,000
       shares issued and outstanding, (11,141,100 at December 31, 2000) at
       liquidation preference:
           Cumulative Preferred Stock, issued in series .......................     1,327,650      1,155,150
     Common Stock, $0.10 par value, 200,000,000 shares authorized,
       113,261,141 shares issued and outstanding (123,703,874 at
       December 31, 2000) .....................................................        11,326         12,370
     Equity Stock, Series A, $0.01 par value, 200,000,000 shares
       authorized, 8,676.102 shares issued and outstanding ....................          --             --
     Class B Common Stock, $0.10 par value, 7,000,000 shares
       authorized and issued ..................................................           700            700
     Paid-in capital ..........................................................     2,302,056      2,506,736
     Cumulative net income ....................................................     1,543,469      1,387,061
     Cumulative distributions paid ............................................    (1,457,849)    (1,337,900)
                                                                                  ------------   ------------
         Total shareholders' equity ...........................................     3,727,352      3,724,117
                                                                                  ------------   ------------
              Total liabilities and shareholders' equity ......................   $ 4,513,562    $ 4,513,941
                                                                                  ============   ============
</TABLE>
                            See accompanying notes.
                                       1

<PAGE>

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

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                           For the Three Months Ended            For the Six Months Ended
                                                                    June 30,                             June 30,
                                                        --------------------------------     --------------------------------
                                                            2001               2000              2001               2000
                                                        -------------      -------------     -------------      -------------
REVENUES:
<S>                                                     <C>                <C>               <C>                <C>
   Rental income:
       Self-storage facilities..................        $    179,086       $    161,211      $    350,915       $    315,769
       Commercial properties....................               3,215              2,827             6,272              5,586
       Containerized storage facilities.........              12,183              9,240            22,256             16,789
  Equity earnings of real estate entities.......               9,814              9,155            19,086             17,431
  Interest and other income.....................               3,130              5,717             6,738              9,170
                                                        -------------      -------------     -------------      -------------
                                                             207,428            188,150           405,267            364,745
                                                        -------------      -------------     -------------      -------------
EXPENSES:
  Cost of operations:
       Self-storage facilities..................              54,599             51,272           111,073            101,629
       Commercial properties....................                 882                881             1,832              1,830
       Containerized storage facilities.........              11,055              8,648            20,528             16,502
   Depreciation and amortization................              41,323             35,744            80,945             71,778
   General and administrative...................               5,000              5,576            10,584              8,621
   Interest expense.............................               1,124              1,261             2,095              2,667
                                                        -------------      -------------     -------------      -------------
                                                             113,983            103,382           227,057            203,027
                                                        -------------      -------------     -------------      -------------

   Income before minority interest and gain on
     disposition of real estate.................              93,445             84,768           178,210            161,718

MINORITY INTEREST IN INCOME:
   Preferred partnership interests..............              (8,505)            (7,411)          (17,010)            (8,336)
   Other partnership interests..................              (3,167)            (3,054)           (6,360)            (6,518)
                                                        -------------      -------------     -------------      -------------

Income before gain on disposition of real estate              81,773             74,303           154,840            146,864
   Gain on disposition of real estate...........                   -                  -             1,568                  -
                                                        -------------      -------------     -------------      -------------

NET INCOME......................................        $     81,773       $     74,303      $    156,408       $    146,864
                                                        =============      =============     =============      =============

NET INCOME ALLOCATION:
----------------------
  Allocable to preferred shareholders...........        $     28,736       $     25,045      $     56,772       $     50,083
  Allocable to equity shareholders, Series A....               5,314              2,666             8,766              4,924
  Allocable to common shareholders..............              47,723             46,592            90,870             91,857
                                                        -------------      -------------     -------------      -------------

                                                        $     81,773       $     74,303      $    156,408       $    146,864
                                                        =============      =============     =============      =============
PER COMMON SHARE:
-----------------
  Net income per share - Basic..................              $0.40              $0.35             $0.73              $0.69
                                                        =============      =============     =============      =============
  Net income per share - Diluted................              $0.39              $0.35             $0.73              $0.69
                                                        =============      =============     =============      =============
  Net income per depositary share of Equity Stock,
     Series A - Basic and Diluted...............              $0.61              $0.61             $1.23              $1.23
                                                        =============      =============     =============      =============

  Weighted average common shares - Basic........             120,734            131,588           124,403            132,184
                                                        =============      =============     =============      =============
  Weighted average common shares - Diluted......             121,639            131,734           125,130            132,335
                                                        =============      =============     =============      =============
  Weighted average depositary shares of Equity
     Stock, Series A - Basic and Diluted........               8,676              4,353             7,156              4,028
                                                        =============      =============     =============      =============
</TABLE>
                            See accompanying notes.
                                       2
<PAGE>

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

                                   (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, 2000................   $ 1,155,150    $  12,370   $    700   $ 2,506,736


Issuance of preferred stock, net of
issuance costs:
   Series Q (6,900 shares)...................       172,500            -          -        (5,534)

Issuance of common stock:
   Exercise of stock options
   (102,160 shares)..........................             -           10          -         2,243

Repurchase of common stock
   (10,544,893 shares) ......................             -       (1,054)         -      (274,429)

Issuance of Equity Stock, Series A
(3,040.500 shares)...........................
                                                          -            -          -        72,130

Issuance of Put Option  (Note 8).............             -            -          -           910

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

Cash distributions:
   Cumulative Senior Preferred Stock ........             -            -          -             -
   Equity Stock, Series A....................             -            -          -             -
   Class B Common Stock......................             -            -          -             -
   Common Stock..............................             -            -          -             -
                                                ------------   ----------  ---------  ------------

Balances at June 30, 2001....................   $ 1,327,650    $  11,326   $    700   $ 2,302,056
                                                ============   ==========  =========  ============
</TABLE>

<TABLE>
<CAPTION>

                                                                                     Total
                                                  Cumulative     Cumulative     Shareholders'
                                                  Net Income    Distributions      Equity
                                                --------------  -------------   -------------
<S>                                             <C>             <C>             <C>
Balances at December 31, 2000................   $  1,387,061    $ (1,337,900)   $  3,724,117


Issuance of preferred stock, net of
issuance costs:
   Series Q (6,900 shares)...................               -              -         166,966

Issuance of common stock:
   Exercise of stock options
   (102,160 shares)..........................               -              -           2,253

Repurchase of common stock
   (10,544,893 shares) ......................               -              -        (275,483)

Issuance of Equity Stock, Series A
(3,040.500 shares)...........................
                                                            -              -          72,130

Issuance of Put Option  (Note 8).............               -              -             910

Net income...................................         156,408              -         156,408

Cash distributions:
   Cumulative Senior Preferred Stock ........               -        (56,772)        (56,772)
   Equity Stock, Series A....................               -         (8,766)         (8,766)
   Class B Common Stock......................               -         (2,988)         (2,988)
   Common Stock..............................               -        (51,423)        (51,423)
                                                --------------  -------------   -------------

Balances at June 30, 2001....................   $   1,543,469   $ (1,457,849)   $  3,727,352
                                                ==============  =============   =============
</TABLE>
                            See accompanying notes.
                                       3

<PAGE>

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

                                   (Unaudited)


<TABLE>
<CAPTION>

                                                                                             For the Six Months Ended
                                                                                                     June 30,
                                                                                        ---------------------------------
                                                                                            2001                2000
                                                                                        --------------     --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                     <C>                <C>
   Net income..................................................................         $     156,408      $     146,864
   Adjustments to reconcile net income to net cash provided by operating
     activities:
     Less gain on disposition of real estate...................................                (1,568)                 -
     Depreciation and amortization.............................................                80,945             71,778
     Depreciation included in equity earnings of real estate entities..........                11,214             10,130
     Minority interest in income...............................................                23,370             14,854
                                                                                        --------------     --------------
         Total adjustments.....................................................               113,961             96,762
                                                                                        --------------     --------------
             Net cash provided by operating activities.........................               270,369            243,626
                                                                                        --------------     --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Principal payments received on notes receivable from affiliates...........                 1,999              1,980
     Mortgage notes receivable from affiliates.................................                     -            (11,400)
     Capital improvements to real estate facilities............................               (12,132)            (9,182)
     Construction in process and acquisition of land held for development......               (92,720)           (93,002)
     Acquisition of minority interests.........................................               (11,053)           (28,141)
     Proceeds from the disposition of real estate facilities...................                 9,102              8,652
     Proceeds from the disposition of real estate investments..................                     -             20,276
     Acquisition of investment in real estate entities.........................               (21,909)           (49,462)
     Acquisition of real estate facilities.....................................                     -            (14,848)
                                                                                        --------------     --------------
             Net cash used in investing activities.............................              (126,713)          (175,127)
                                                                                        --------------     --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Principal payments on notes payable.......................................                (6,207)            (5,952)
     Net proceeds from the issuance of common stock............................                 2,253              3,717
     Net proceeds from the issuance of preferred stock.........................               166,966                  -
     Net proceeds from the issuance of equity stock............................                72,130             39,800
     Issuance of Put Option (Note 8)...........................................                   910                  -
     Net proceeds from the issuance of preferred partnership units.............                     -            311,800
     Repurchase of common stock................................................              (275,483)           (63,587)
     Distributions paid to shareholders........................................              (119,949)          (112,895)
     Special distribution paid to common shareholders..........................                     -            (38,076)
     Investment by minority interests..........................................                 7,480              6,593
     Distributions to holders of preferred partnership units...................               (17,010)            (8,336)
     Distributions from operations to minority interests.......................                (9,928)           (18,328)
     Net reinvestment (divestment) of minority interests.......................                  (896)             5,753
     Other.....................................................................                (2,628)            (4,162)
                                                                                        --------------     --------------
             Net cash (used in) provided by financing activities...............              (182,362)           116,327
                                                                                        --------------     --------------

Net (decrease) increase in cash and cash equivalents...........................               (38,706)           184,826
Cash and cash equivalents at the beginning of the period.......................                89,467             55,125
                                                                                        --------------     --------------
Cash and cash equivalents at the end of the period.............................         $      50,761      $     239,951
                                                                                        ==============     ==============
</TABLE>
                            See accompanying notes.
                                       4

<PAGE>

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

                                   (Unaudited)

                                   (Continued)

<TABLE>
<CAPTION>
                                                                                  For the Six Months Ended
                                                                                           June 30,
                                                                            ------------------------------------
                                                                                 2001                 2000
                                                                            ---------------     ----------------
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

<S>                                                                         <C>                 <C>
 Reduction to investment in real estate entities in connection with
   acquisition of real estate facilities............................        $            -      $         3,143

 Disposition of real estate investment in exchange for other assets:
     Investment in real estate entities.............................                     -               14,435
     Other assets...................................................                     -              (14,435)

 Real estate acquired in exchange for equity stock and reduction to
   investment in real estate entities...............................                     -              (19,017)

 Acquisition of minority interest and real estate in exchange for common stock:
     Real estate facilities.........................................                     -              (15,681)
     Minority interest..............................................                     -              (15,450)

Mortgage notes receivable forgiven in exchange for minority interest
   and real estate..................................................                     -                  350

 Real estate facilities and accumulated depreciation disposed of in
   exchange for notes receivable and minority interests.............                     -               18,769

 Minority interests acquired in exchange for  the disposition of
   real estate facilities...........................................                     -               (6,427)

 Note receivable received in exchange for the disposition of real
   estate facilities................................................                     -               (3,690)

Issuance of Equity Stock, Series A:
   In connection with special distribution to common shareholders...                     -               44,010
   In connection with acquisition of real estate facilities.........                     -                1,026

Decrease in distributions payable through the issuance of   Equity
   Stock, Series A..................................................                     -              (44,010)

Issuance of common stock :
   To acquire minority interest in consolidated real estate entities                     -                2,640

</TABLE>
                            See accompanying notes.
                                       5

<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2001

                                   (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 storage  facilities  which offer storage spaces and containers
     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.

              In 1996 and 1997, we organized Public Storage Pickup and Delivery,
     Inc.,  as a separate  corporation  and  partnership  (the  corporation  and
     partnership  are  collectively  referred to as "PSPUD") to operate  storage
     facilities that rent portable  storage  containers to customers for storage
     in  central  warehouses.  At June 30,  2001,  PSPUD  had 51  facilities  in
     operation in 14 states.

              We invest in real estate  facilities  by  acquiring  wholly  owned
     facilities or by acquiring interests in real estate entities which own real
     estate  facilities.  At June 30, 2001,  we had direct and  indirect  equity
     interests in 1,534 properties located in 38 states, including 1,376 storage
     facilities and 158 commercial  properties.  The Company operates all of the
     storage facilities under the "Public Storage" name.

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

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

              The consolidated  financial statements include the accounts of the
     Company  and  34  controlled   entities  (the   "Consolidated   Entities").
     Collectively,  the  Company  and these  entities  own a total of 1,268 real
     estate   facilities,   consisting  of  1,262  storage  facilities  and  six
     commercial properties.

              At  June  30,  2001,  we  had  equity  investments  in 11  limited
     partnerships in which we do not have a controlling interest.  These limited
     partnerships  collectively  own  114  self-storage  facilities,  which  are
     managed by the Company. In addition, we own approximately 43% of the common
     interest in PS Business Parks, Inc.  ("PSB"),  which owns and operates 13.3
     million net rentable  square feet of commercial  space at June 30, 2001. 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 June 30, 2001 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.

                                       6

<PAGE>

     Income tax
     ----------

              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 2001 and,
     accordingly,   no  provision   for  income  taxes  has  been  made  in  the
     accompanying financial statements.

     Financial instruments
     ---------------------

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

              For purposes of financial statement presentation,  we consider all
     highly liquid debt instruments 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  applicable  interest rates  approximate  market
     rates for those 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.

                                       7

<PAGE>

     Evaluation of asset impairment
     ------------------------------

              In 1995, the Financial Accounting Standards Board issued Statement
     No.  121,  "Accounting  for the  Impairment  of  Long-Lived  Assets and for
     Long-Lived Assets to be Disposed Of" which requires impairment losses to be
     recorded on  long-lived  assets.  We annually  evaluate  long-lived  assets
     (including  goodwill),  by  identifying  indicators  of  impairment  and by
     comparing the sum of the estimated  undiscounted future cash flows for each
     asset to the asset's  carrying  amount.  When  indicators of impairment are
     present  and the sum of the  undiscounted  cash  flows  is  less  than  the
     carrying value of such asset,  an impairment  loss is recorded equal to the
     difference  between the asset's current  carrying value and its value based
     upon  discounting its estimated  future cash flows.  Statement No. 121 also
     addresses  the  accounting  for  long-lived  assets that are expected to be
     disposed of. Such assets are to be reported at the lower of their  carrying
     amount or fair value,  less cost to sell. Our evaluations have indicated no
     impairment in the carrying amount of our assets.

     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 $29,817,000  and  $28,544,000 at June 30,
     2001 and December  31, 2000,  respectively.  Included in  depreciation  and
     amortization  expense for the three  months ended June 30, 2001 and 2000 is
     $1,550,000 and $1,255,000,  respectively, and $2,889,000 and $2,408,000 for
     the six months ended June 30, 2001 and 2000, respectively,  of depreciation
     of  furniture,   fixtures,  and  equipment  of  the  containerized  storage
     business.

     Intangible assets
     -----------------

              Intangible  assets are amortized  straight-line  over 25 years. At
     June 30, 2001  intangible  assets are net of  accumulated  amortization  of
     $52,365,000  ($47,709,000  at December 31, 2000).  Included in depreciation
     and  amortization  expense for the three and six months ended June 30, 2001
     and  2000  is  $2,328,000  and  $4,656,000,  respectively,  related  to the
     amortization of intangible assets.

     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.

                                       8

<PAGE>

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

              Dividends paid to our preferred  shareholders totaling $28,736,000
     and  $25,045,000  for the  three  months  ended  June 30,  2001  and  2000,
     respectively, and $56,772,000 and $50,083,000 for the six months ended June
     30,  2001 and 2000,  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 for the
     three and six  months  ended  June 30,  2001 was  allocated  net  income of
     approximately $5,314,000 and $8,766,000,  respectively,  as compared to the
     three and six months ended June 30, 2000 of  approximately  $2,666,000  and
     $4,924,000,  respectively.  The remaining $47,723,000 and $90,870,000,  for
     the three and six months ended June 30, 2001 respectively,  and $46,592,000
     and  $91,857,000,  for the  three  and  six  months  ended  June  30,  2000
     respectively, was allocated to the regular common shares.

              Basic net income per share is computed using the weighted  average
     common shares (prior to the dilutive impact of stock options  outstanding).
     Diluted net income per common share is computed using the weighted  average
     common shares outstanding  (adjusted for stock options).  Effective January
     1, 2000, the Company's 7,000,000 Class B common shares outstanding began to
     participate in distributions of the Company's  earnings.  Distributions per
     share  of  Class  B  common  stock  are  equal  to  97% of  the  per  share
     distribution  paid to the Company's  regular common shares.  As a result of
     this  participation in distribution of earnings,  for purposes of computing
     net income per common share,  the Company includes  6,790,000  (7,000,000 x
     97%) Class B common shares in the weighted average common equivalent shares
     for the three and six months ended June 30, 2000 and 2001.

     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 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.

     Recent accounting  pronouncements  and guidance - accounting for derivative
     ---------------------------------------------------------------------------
     instruments and hedging activities
     ----------------------------------

              In June 1998, the Financial  Accounting  Standards  Board ("FASB")
     issued  Statement of Financial  Accounting  Standards No. 133 ("SFAS 133"),
     Accounting for Derivative  Instruments and Hedging  Activities," as amended
     in June 2000 by Statement of Financial  Accounting Standards No. 138 ("SFAS
     138"),  "Accounting for Certain Derivative  Instruments and Certain Hedging
     Activities,"  which  requires  companies to recognize  all  derivatives  as
     either  assets  or  liabilities  in the  balance  sheet  and  measure  such
     instruments at fair value. The Company adopted SFAS 133, as amended by SFAS
     138, on January 1, 2001,  and the  adoption  had no material  impact on the
     Company's consolidated financial statements.

                                       9

<PAGE>

     Recent  accounting   pronouncements  and  guidance  -  goodwill  and  other
     ---------------------------------------------------------------------------
     intangible assets
     -----------------

              In July 2001,  the FASB issued  Statement of Financial  Accounting
     Standards No. 142 ("SFAS 142"),  "Goodwill  and Other  Intangible  Assets,"
     under which goodwill and indefinite  life  intangible  assets are no longer
     amortized but are reviewed annually for impairment.  The provisions of this
     statement are  applicable  to our fiscal year ending  December 31, 2002. We
     are  studying  this  statement  to  determine  its impact on our  financial
     statements,  and will adopt this statement in the year ending  December 31,
     2002.

3.   Business combinations
     ---------------------

              During 2000,  we acquired the remaining  ownership  interests in a
     partnership,  of  which  we are  the  general  partner,  for  an  aggregate
     acquisition cost of $81,169,000. Prior to the acquisition, we accounted for
     our investment in this partnership on the equity method.

4.   Real estate facilities
     ----------------------

              Activity in real estate facilities during 2001 is as follows:

                                                      In thousands
                                                     --------------
     Operating facilities, at cost
       Balance at December 31, 2000 ................   $ 4,134,417
       Developed facilities ........................       150,031
       Acquisition of minority interest ............         2,781
       Capital improvements ........................        12,132
                                                     --------------
       Balance at June 30, 2001 ....................     4,299,361
                                                     --------------

     Accumulated depreciation:
       Balance at December 31, 2000 ................      (668,018)
       Additions during the year ...................       (73,400)
                                                     -------------
       Balance at June 30, 2001 ....................      (741,418)
                                                     --------------
     Construction in process:
       Balance at December 31, 2000 ................       217,140
       Current development .........................        80,459
       Transfers to land held for development ......        (3,597)
       Developed facilities ........................      (150,031)
                                                     --------------
       Balance at June 30, 2001 ....................       143,971
                                                     --------------

     Land held for development:
       Balance at December 31, 2000 ................        21,447
       Acquisitions ................................        12,261
       Transfers from construction in process ......         3,597
       Dispositions ................................        (7,534)
                                                     --------------
       Balance at June 30, 2001 ....................        29,771
                                                     --------------
       Total real estate facilities at June 30, 2001   $ 3,731,685
                                                     ==============

                                       10

<PAGE>

              During the six  months  ended  June 30,  2001,  we opened 15 newly
     developed facilities having approximately  1,102,000 aggregate net rentable
     square feet and a total cost of $103.9 million. In addition,  expansions of
     existing  facilities  totaling $46.1 million were completed  during the six
     months  ended June 30,  2001.  Construction  in  process  at June 30,  2001
     consists  of 51 storage  facilities  and  expansions  of  existing  storage
     facilities.  Land held for development  consists of 13 parcels of land held
     for development.


              During the six months  ended  June 30,  2001,  we sold a parcel of
     land for  approximately  $9,102,000 cash. A gain of $1,568,000 was recorded
     on the sale.

              Our policy is to capitalize  interest  incurred on debt during the
     course of  construction  of our  self-storage  and  industrial  facilities.
     Interest  capitalized  during the three and six months  ended June 30, 2001
     was $2,109,000  and  $4,219,000,  respectively,  compared to $2,045,000 and
     $4,156,000, respectively, for the same periods in 2000.

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

              At June 30, 2001, our investment in real estate entities  consists
     of (i)  partnership  interests  in  approximately  11  partnerships,  which
     principally own self-storage  facilities and (ii) our ownership interest in
     PSB. Such 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 entities.
     During the three and six months ended June 30, 2001 we recognized  earnings
     from our investments of $9,814,000 and $19,086,000,  respectively, compared
     to  $9,155,000  and  $17,431,000  for the same period in 2000.  We received
     distributions  from our  investments of $10,117,000  and $8,727,000 for the
     six months ended June 30, 2001 and 2000, respectively.

              In April 1997, we formed a joint venture  partnership  (the "Joint
     Venture") with an institutional  investor to participate in the development
     of approximately $220 million of storage facilities.  The Joint Venture has
     a total of 47 opened  facilities  with a total cost of $232 million and was
     fully committed at December 31, 2000.

                                       11

<PAGE>

              Summarized combined financial data (based on historical cost) with
     respect to those  unconsolidated  real estate entities in which the Company
     had an ownership interest at June 30, 2001 are as follows:

<TABLE>
<CAPTION>
                                                            For the six months ended June 30, 2001
                                             ----------------------------------------------------------------------
                                              Other Equity        Development
                                              Investments        Joint Venture          PSB               Total
                                             --------------      --------------   --------------     --------------
                                                                    (Amounts in thousands)
<S>                                          <C>                 <C>              <C>                <C>
Rental income (a).....................       $      18,565       $      15,784    $      78,674      $     113,023
Other income (a)......................                 650                 302            1,898              2,850
                                             --------------      --------------   --------------     --------------
Total revenues (a)....................              19,215              16,086           80,572            115,873
                                             --------------      --------------   --------------     --------------

Cost of operations (a)................               4,200               6,287           20,846             31,333
Depreciation (a)......................               1,835               3,409           19,379             24,623
Other expenses (a)....................               2,307                  77            2,900              5,284
                                             --------------      --------------   --------------     --------------
Total expenses (a)....................               8,342               9,773           43,125             61,240
                                             --------------      --------------   --------------     --------------
Income before minority interest (a)...              10,873               6,313           37,447             54,633
Minority interest (a).................                   -                   -          (13,152)           (13,152)
                                             --------------      --------------   --------------     --------------
Net income (a)........................       $      10,873       $       6,313    $      24,295      $      41,481
                                             ==============      ==============   ==============     ==============
At June 30, 2001:
-----------------
Real estate, net (a)..................       $      66,121       $     216,181    $     947,374      $   1,229,676
Total assets (a)......................             105,684             221,012          991,062          1,317,758
Total debt (a)........................              22,574                   -           30,563             53,137
Total liabilities (a).................              31,794               3,577           62,977             98,348
Minority interest (a).................                   -                   -          307,022            307,022
Total equity (a)......................              73,890             217,435          621,063            912,388

The Company's investment (book value) at
  June 30, 2001.......................       $     127,919       $      65,231    $     266,473      $     459,623

The Company's effective average common
  ownership interest at June 30, 2001.             44%                 30%              43%

</TABLE>

(a)  Amounts represent 100% of the unconsolidated entities' balances and not the
     Company's pro-rata share.


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

              The credit agreement (the "Credit Facility") has a borrowing limit
     of $150 million and an expiration date of July 1, 2002. The expiration date
     may be extended by one year on each  anniversary  of the credit  agreement.
     Interest on outstanding  borrowings is payable monthly.  At our option, the
     rate of  interest  charged  is equal to (i) the  prime  rate or (ii) a rate
     ranging  from the London  Interbank  Offered Rate  ("LIBOR")  plus 0.40% to
     LIBOR plus 1.10%  depending on the  Company's  credit  ratings and coverage
     ratios, as defined. In addition, the Company is required to pay a quarterly
     commitment fee of 0.250% (per annum). The Credit Facility allows us, at our
     option,  to request  the group of banks to propose the  interest  rate they
     would charge on specific borrowings not to exceed $50 million;  however, in
     no case may the interest rate proposal be greater than the amount  provided
     by the Credit Facility.  At June 30, 2001, we had no borrowings on our line
     of credit.

                                       12

<PAGE>

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 Company relating to the consolidated operations of
     the Consolidated Entities.

              In November  1999,  we formed a second  development  joint venture
     with a joint venture partner to develop $100 million of storage  facilities
     and to purchase $100 million of the Company's Equity Stock, Series AAA. The
     joint venture is funded solely with equity  capital  consisting of 51% from
     the Company and 49% from the joint  venture  partner.  The joint venture is
     consolidated and,  accordingly,  the Equity Stock, Series AAA is eliminated
     in  consolidation.  Included in minority  interest is  $80,851,000  million
     relative to the joint venture,  primarily  representing total contributions
     received from our joint venture partners,  net of  distributions.  Minority
     interest  increased  $7,480,000  since  December  31,  2000 as a result  of
     contributions by our joint venture partner,  and decreased by $3,865,000 as
     a result of distributions to our joint venture partner.

              On March 17,  2000,  we issued  $240.0  million  of 9.5%  Series N
     Cumulative  Redeemable  Perpetual Preferred Units and on March 29, 2000, we
     issued $75.0  million of 9.125%  Series O Cumulative  Redeemable  Perpetual
     Preferred  Units,  and on August 11, 2000, we issued $50.0 million of 8.75%
     Series P  Cumulative  Redeemable  Perpetual  Preferred  Units in one of our
     operating  partnerships.  The units are not  redeemable  during the first 5
     years,  thereafter,  at our option, we can call the units for redemption at
     the  issuance  amount  plus any  unpaid  distributions.  The  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 and the
     Series P preferred  units are  convertible  into  shares of 8.75%  Series P
     Cumulative  Preferred Stock These transactions had the effect of increasing
     minority  interest by $365 million in the year ended December 31, 2000. The
     holders of these  preferred units were paid  distributions  in aggregate of
     approximately $8,505,000 and $17,010,000 for the three and six months ended
     June 30, 2001, respectively,  compared to $7,411,000 and $8,336,000 for the
     three and six months  ended June 30,  2000,  respectively,  and  received a
     corresponding  allocation  of  minority  interest  in  earnings  for  these
     periods.

              As of June 30,  2001,  there were  237,935  operating  partnership
     units ("OP Units")  outstanding  in one of the  Consolidated  Entities.  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  allocated to minority  interests
     with respect to weighted  average  outstanding OP Units on a per unit basis
     equal to diluted  earnings  per common  share.  During the six months ended
     June 30, 2001, no units were redeemed.

              In the six  months  ended  June 30,  2001,  the  Company  acquired
     interests in the Consolidated Entities for an aggregate cost of $11,053,000
     cash; these  acquisitions had the effect of reducing  minority  interest by
     $8,272,000, with the excess of cost over underlying book value ($2,781,000)
     allocated to real estate.

                                       13

<PAGE>

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

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

              At June 30,  2001 and  December  31,  2000,  we had the  following
     series of Preferred Stock outstanding:

<TABLE>
<CAPTION>
                                                          At June 30, 2001                 At December 30, 2000
                                                     ----------------------------      ----------------------------
                                      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 G                                  8.875%           6,900          172,500            6,900          172,500
Series H                                  8.450%           6,750          168,750            6,750          168,750
Series I                                  8.625%           4,000          100,000            4,000          100,000
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                -                -
                                                     ------------     -----------      -----------      -----------
Total Senior Preferred Stock                          11,148,000      $ 1,327,650       11,141,100      $ 1,155,150
                                                     ============     ===========      ===========      ===========
</TABLE>

              The  Series Q  preferred  stock was issued on  January  19,  2001,
     resulting in net proceeds from the issuance of approximately $166,966,000.

              The Series A through Series Q 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 June 30,  2001,  there  were no
     dividends in arrears and the Debt Ratio was 2.8%.

              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 G - December 31, 2000,
     Series H - January 31, 2001, Series I - October 31, 2001, Series J - August
     31, 2002,  Series K - January 19, 2004, Series L - March 10, 2004, Series M
     - August  17,  2004 and  Series  Q -  January  19,  2006.  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 G through Series M and
     Series Q), plus accrued and unpaid dividends.

                                       14

<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.

              In  April  2001,  the  Company  completed  a  public  offering  of
     2,210,500  depositary shares each representing 1/1,000 of a share of Equity
     Stock, Series A, raising net proceeds of approximately $51,836,000 million.
     In May 2001, the Company completed a direct placement of 830,000 depositary
     shares  each  representing  1/1,000 of a share of Equity  Stock,  Series A,
     raising net proceeds of approximately $20,294,000 million.

              At June 30, 2001, we had 8,676,102  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 common stock on a one for one basis. 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.

              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.  As a result of this
     contribution,  we obtained a controlling  interest in the  partnership  and
     began to  consolidate  the accounts of the  partnership  and  therefore the
     equity stock 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.

              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.

                                       15

<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.   In  the  six  months  ended  June  30,  2001,  the  Company
     repurchased a total of 10,544,893  shares,  for a total  aggregate  cost of
     approximately $275,483,000. From the initial authorization through June 30,
     2001,  the Company has  repurchased a total of 21,445,320  shares of common
     stock at an aggregate cost of approximately $534,103,000.

              During April 2001, we entered into an arrangement with a financial
     institution  whereby we sold to the  institution the right to require us to
     purchase from the institution up to 1,000,000 shares of our common stock at
     a price of $26.26 on certain dates in September  2001 and October 2001 (the
     institution's  rights are collectively  referred to hereinafter as the "Put
     Option.").  In exchange for the Put Option, the financial  institution paid
     us $910,000,  the amount of which has been  reflected as an increase to our
     paid-in capital. The outstanding put options, upon exercise, can be settled
     by us, at our option, if the price is below $26.26 on the Exercise Dates in
     September and October 2001, by (i) the issuance of additional common shares
     to the financial institution with a value equal to the difference in market
     value of the shares  subject to the exercise and $26.26 per share,  (ii) by
     payment  of cash to the  financial  institution  in an amount  equal to the
     difference in market value of the shares subject to the exercise and $26.26
     per share or (iii) by purchasing the shares from the  institution at $26.26
     per share.

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

              Commencing  January 1, 2000, 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,  (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 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 $2.72 for the four consecutive  calendar quarters ended June 30,
     2001.

                                       16

<PAGE>

     Dividends
     ---------

              The following  summarizes dividends during the first six months of
     2001:

                                            Distributions Per
                                                Share or           Total
                                            Depositary Share    Distributions
                                            -----------------  ---------------
Preferred Stock:
----------------
Series A..............................            $1.250         $2,280,000
Series B..............................            $1.150          2,744,000
Series C..............................            $0.844          1,012,000
Series D..............................            $1.188          1,426,000
Series E..............................            $1.250          2,744,000
Series F..............................            $1.219          2,802,000
Series G..............................            $1.109          7,656,000
Series H..............................            $1.056          7,130,000
Series I..............................            $1.078          4,312,000
Series J..............................            $1.000          6,000,000
Series K .............................            $1.031          4,744,000
Series L .............................            $1.031          4,744,000
Series M .............................            $1.094          2,460,000
Series Q .............................            $0.974          6,718,000
                                                               --------------
                                                                 56,772,000
Common Stock:
-------------
Equity Stock, Series A................            $1.225          8,766,000
Common (a)............................            $0.440         51,423,000
Class B Common........................            $0.427          2,988,000
                                                               --------------
   Total dividends....................                         $119,949,000
                                                               ==============

(a)  On August 9, 2001,  the Company  declared a regular  quarterly  dividend of
     $0.45 per share, an increase from the regular  quarterly  dividend of $0.22
     per share  paid in the six months  ended June 30,  2001.  In  addition,  on
     August 9, 2001, the Company  declared a special  distribution in the amount
     of $0.35 per share. The dividends declared on August 9, 2001 are payable on
     September 28, 2001.

              The  dividend  rate on the Series Q preferred  stock was  prorated
     from  January 19,  2001 (date of  issuance)  through  March 31,  2001.  The
     dividend  rate on the  Series C  Preferred  Stock for the first and  second
     quarters of 2001 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
     September 30, 2001 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, 2000.

                                       17

<PAGE>

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

<TABLE>
<CAPTION>
                                                           Three months ended                       Six months ended
                                                                 June 30,                               June 30,
                                                         ----------------------                 ----------------------
                                                            2001         2000        Change        2001         2000        Change
                                                         ---------    ---------    ---------    ---------    ---------    ----------
                                                                               (Dollar amounts in thousands)
RECONCILIATION OF REVENUES BY SEGMENT
-------------------------------------

Self storage
------------
<S>                                                      <C>          <C>           <C>         <C>          <C>            <C>
  Self storage property rentals........................  $179,086     $161,211      $17,875     $350,915     $315,769       $35,146
  Equity in earnings - self storage property operations     5,691        5,733          (42)      10,848       10,982          (134)
  Equity in earnings - depreciation (self storage) ....    (1,827)      (1,384)        (443)      (3,379)      (3,026)         (353)
                                                         ---------    ---------    ---------    ---------    ---------    ----------
      Self storage segment revenues....................   182,950      165,560       17,390      358,384      323,725        34,659
                                                         ---------    ---------    ---------    ---------    ---------    ----------
Containerized storage .................................    12,183        9,240        2,943       22,256       16,789         5,467
---------------------                                    ---------    ---------    ---------    ---------    ---------    ----------

Commercial  properties
----------------------
  Commercial property rentals..........................     3,215        2,827          388        6,272        5,586           686
  Equity in earnings - commercial property operations..    12,392       10,729        1,663       24,038       20,558         3,480
  Equity in earnings - depreciation (commercial
     properties).......................................    (4,112)      (3,714)        (398)      (7,835)      (7,104)         (731)
                                                         ---------    ---------    ---------    ---------    ---------    ----------
      Commercial properties  segment revenues..........    11,495        9,842        1,653       22,475       19,040         3,435
                                                         ---------    ---------    ---------    ---------    ---------    ----------
Other items not allocated to segments
-------------------------------------
  Equity in earnings - general and administrative and      (2,330)      (2,209)        (121)      (4,586)      (3,979)         (607)
     other.............................................
  Interest and other income............................     3,130        5,717       (2,587)       6,738        9,170        (2,432)
                                                         ---------    ---------    ---------    ---------    ---------    ----------
      Total other items not allocated to segments......       800        3,508       (2,708)       2,152        5,191        (3,039)
                                                         ---------    ---------    ---------    ---------    ---------    ----------
      Total revenues...................................  $207,428     $188,150      $19,278     $405,267     $364,745       $40,522
                                                         =========    ========-    =========    =========    =========    ==========
</TABLE>
                                       18

<PAGE>

<TABLE>
<CAPTION>
                                                           Three months ended                      Six months ended
                                                                June 30,                                June 30,
                                                         ----------------------                 ----------------------
                                                           2001          2000        Change        2001         2000        Change
                                                         ---------    ---------    ---------    ---------    ---------    ----------
                                                                               (Dollar amounts in thousands)
RECONCILIATION OF NET INCOME BY SEGMENT
---------------------------------------

Self storage
------------
<S>                                                      <C>           <C>           <C>         <C>          <C>          <C>
  Self storage properties .............................  $124,487      $109,939      $14,548     $239,842     $214,140     $25,702
  Depreciation and amortization - self storage.........   (38,923)      (33,822)      (5,101)     (76,309)     (68,144)     (8,165)
  Equity in earnings - self storage property operations     5,691         5,733          (42)      10,848       10,982        (134)
  Equity in earnings - depreciation (self-storage) ....    (1,827)       (1,384)        (443)      (3,379)      (3,026)       (353)
                                                         ---------    ---------    ---------    ---------    ---------    ----------
      Total self storage segment net income............    89,428        80,466        8,962      171,002      153,952      17,050
                                                         ---------    ---------    ---------    ---------    ---------    ----------
Containerized storage
---------------------
  Containerized storage operations.....................     1,128           592          536        1,728          287       1,441
  Containerized storage depreciation...................    (1,739)       (1,368)        (371)      (3,266)      (2,634)       (632)
                                                         ---------    ---------    ---------    ---------    ---------    ----------
      Total containerized storage segment net income...      (611)         (776)         165       (1,538)      (2,347)        809
                                                         ---------    ---------    ---------    ---------    ---------    ----------
Commercial  properties
----------------------
  Commercial properties................................     2,333         1,946          387        4,440        3,756         684
  Depreciation and amortization - commercial properties      (661)         (554)        (107)      (1,370)      (1,000)       (370)
  Equity in earnings - commercial property operations..    12,392        10,729        1,663       24,038       20,558       3,480
  Equity in earnings - depreciation (commercial
     properties) ......................................    (4,112)       (3,714)        (398)      (7,835)      (7,104)       (731)
                                                         ---------    ---------    ---------    ---------    ---------    ----------
      Total commercial property segment net income.....     9,952         8,407        1,545       19,273       16,210       3,063
                                                         ---------    ---------    ---------    ---------    ---------    ----------
Other items not allocated to segments
-------------------------------------
  Equity in earnings - general and administrative and      (2,330)       (2,209)        (121)      (4,586)      (3,979)       (607)
     other.............................................
  Interest and other income............................     3,130         5,717       (2,587)       6,738        9,170      (2,432)
  General and administrative...........................    (5,000)       (5,576)         576      (10,584)      (8,621)     (1,963)
  Interest expense.....................................    (1,124)       (1,261)         137       (2,095)      (2,667)        572
  Gain on sale of land.................................         -             -            -        1,568            -       1,568
  Minority interest in income..........................   (11,672)      (10,465)      (1,207)     (23,370)     (14,854)     (8,516)
                                                         ---------    ---------    ---------    ---------    ---------    ----------
      Total other items not allocated to segments......   (16,996)      (13,794)      (3,202)     (32,329)     (20,951)    (11,378)
                                                         ---------    ---------    ---------    ---------    ---------    ----------

      Total net income ................................   $81,773       $74,303       $7,470     $156,408     $146,864      $9,544
                                                         =========    =========    =========    =========    =========    ==========
</TABLE>
                                       19

<PAGE>

10.  Agreement to Acquire PS Insurance Company
     -----------------------------------------

              On March 15, 2001, the Company's  disinterested directors approved
     the acquisition of PS Insurance Company  ("PSIC").  PSIC is currently owned
     by B. Wayne Hughes (Chairman) and members of his family. PSIC is engaged in
     the business of reinsuring risks relating to damage,  destruction, or other
     loss of goods  stored  by  tenants  in  self-storage  facilities  owned and
     operated by the Company.  In the transaction,  the Company will acquire all
     of the  capital  stock of PSIC  from the  Hughes  family  in  exchange  for
     1,243,298 shares of the Company's  Common Stock,  subject to adjustment for
     changes  in  PSIC's  working  capital.  PSIC  owns  301,032  shares  of the
     Company's Common Stock,  which would continue to be owned by PSIC after the
     transaction.  The  transaction  (1) is conditioned  on, among other things,
     adoption of changes to California's  tax laws that would permit the Company
     to  acquire  PSIC  and (2) is  scheduled  to close on  December  31,  2001,
     although there can be no assurance.

                                       20

<PAGE>

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

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

         FORWARD LOOKING STATEMENTS:  When used within this document,  the words
"expects,"  "believes,"   "anticipates,"   "should,"  "estimates,"  and  similar
expressions  are intended to identify  "forward-looking  statements"  within the
meaning of that term in Section 27A of the  Securities  Exchange Act of 1933, as
amended,  and in Section 21F of the Securities Exchange Act of 1934, as amended.
Such forward-looking statements involve known and unknown risks,  uncertainties,
and other  factors,  which may cause our actual  results and  performance  to be
materially  different  from those  expressed  or implied in the forward  looking
statements. Such factors include the impact of competition from new and existing
self-storage  and commercial  facilities  which could impact rents and occupancy
levels at our  facilities;  our  ability to  evaluate,  finance,  and  integrate
acquired and developed properties into our existing  operations;  our ability to
effectively  compete in the markets in which we do  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 Pickup and  Delivery
concept;  the  impact of  general  economic  conditions  upon  rental  rates and
occupancy levels at our facilities; and the availability of permanent capital at
attractive rates.

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

         Net income for the three  months  ended June 30,  2001 was  $81,773,000
compared to $74,303,000 for the same period in 2000,  representing a increase of
$7,470,000  or 10.1%.  The  increase in net income was  primarily  the result of
improved property  operations  combined with increased  operations from acquired
and newly developed real estate  properties  during 2000 and 2001. The impact of
these items was partially offset by increased  depreciation  expense,  resulting
primarily  from new  properties,  and an increase in the allocation of income to
minority  interests.  During 2000, the Company issued a total of $365,000,000 in
preferred operating  partnership units, and as a result,  distributions to these
unitholders increased from $7,411,000 in the three months ended June 30, 2000 to
$8,505,000  in the  same  period  in 2001.  Unlike  distributions  to  preferred
shareholders,  distributions to preferred  unitholders are presented as minority
interest in income and a reduction in net income. Primarily as a result of these
distributions,  minority  interest in income increased  $1,207,000 for the three
months ended June 30, 2001 as compared to the same period in 2000.

         During the three  months  ended June 30,  2001 and 2000,  we  allocated
$28,736,000  and  $25,045,000 of our net income (based on  distributions  paid),
respectively, to our preferred shareholders,  representing an increase of 14.7%.
This  increase is due to an additional  issuance of preferred  stock in 2001. In
addition,  during the three  months  ended June 30, 2001 and 2000,  we allocated
$5,314,000  and  $2,666,000  of our net income  (based on  distributions  paid),
respectively,  to our equity  shareholders,  representing  an increase of 99.3%.
This increase is due to additional issuances of equity stock in 2001 and 2000.

         Net  income  remaining  to  our  regular  common  shareholders,   after
allocating  net  income  to  our  preferred  and  equity  shareholders,  totaled
$47,723,000 for the three months ended June 30, 2001 compared to $46,592,000 for
the same period in 2000, representing an increase of 2.4%. Net income per common
share was $0.39 on a  diluted  basis  (based  on  121,639,000  weighted  average
diluted  common  equivalent  shares)  for the three  months  ended June 30, 2001
compared  to $0.35 per common  share on a diluted  basis  (based on  131,734,000
weighted average diluted common equivalent shares),  representing an increase of
11.4%.  The year over year  increase in net income on a per share basis  (11.4%)
was  significantly  higher  than the year over year  increase in  aggregate  net
income  allocated to the common (2.4%) due to the reduction in weighted  average
shares outstanding as a result of our share repurchase activities.

                                       21

<PAGE>

         Net  income for the six months  ended  June 30,  2001 was  $156,408,000
compared to $146,864,000 for the same period in 2000, representing a increase of
$9,544,000  or 6.5%.  The  increase  in net income was  primarily  the result of
improved  property  operations,   the  acquisition  of  additional  real  estate
investments  during 2000 and 2001 and a gain on the sale of land.  The impact of
these items was partially offset by increased  depreciation  expense,  resulting
primarily  from new property  additions,  and an increase in the  allocation  of
income to minority  interests.  As indicated above, in 2000, we issued preferred
operating partnership units, and as a result, distributions to these unitholders
increased  from  $8,336,000 in the six months ended June 30, 2000 to $17,010,000
in the same period in 2001.  Unlike  distributions  to  preferred  shareholders,
distributions  to preferred  unitholders  are presented as minority  interest in
income  and  a  reduction  in  net  income.  Primarily  as  a  result  of  these
distributions,  minority  interest in income  increased  $8,516,000  for the six
months ended June 30, 2001 as compared to the same period in 2000.

         During  the six  months  ended  June 30,  2001 and 2000,  we  allocated
$56,772,000  and  $50,083,000 of our net income (based on  distributions  paid),
respectively, to our preferred shareholders,  representing an increase of 13.4%.
This  increase is due to an additional  issuance of preferred  stock in 2001. In
addition,  during the six  months  ended June 30,  2001 and 2000,  we  allocated
$8,766,000  and  $4,924,000  of our net income  (based on  distributions  paid),
respectively,  to our equity  shareholders,  representing  an increase of 78.0%.
This increase is due to additional issuances of equity stock in 2001 and 2000.

         Net  income  remaining  to  our  regular  common  shareholders,   after
allocating  net  income  to  our  preferred  and  equity  shareholders,  totaled
$90,870,000  for the six months ended June 30, 2001 compared to $91,857,000  for
the same period in 2000,  representing  a decrease of  approximately  1.1%.  Net
income  per  common  share was $0.73 on a diluted  basis  (based on  125,130,000
weighted average diluted common equivalent shares) for the six months ended June
30,  2001  compared  to $0.69  per  common  share on a diluted  basis  (based on
132,335,000 weighted average diluted common equivalent shares),  representing an
increase of 5.8%.  The year over year 5.8% increase in net income on a per share
basis as compared to the year over year 1.1%  decrease in  aggregate  net income
allocated  to our regular  common  shareholders  results  from the  reduction in
weighted average shares outstanding due to our share repurchase activities.

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

         Rental income and cost of operations  have  increased for the three and
six months  ended June 30,  2001  compared to the same period in 2000 due to our
merger and acquisition activities throughout 2000 and 2001. As a result of these
items, the number of storage facilities  included in the consolidated  financial
statements has increased from 1,213 at June 30, 2000 to 1,262 at June 30, 2001.

         SELF-STORAGE  OPERATIONS:  The following table summarizes the operating
results (before depreciation) of (i) the 913 stabilized  self-storage facilities
that we owned as of  December  31,  1999 (the  "Consistent  Group") and (ii) all
other facilities (the "Other Facilities"):

                                       22

<PAGE>


SUMMARY OF SELF-STORAGE OPERATIONS - HISTORICAL
-----------------------------------------------

<TABLE>
<CAPTION>
                                           Three months ended                           Six months ended
                                                June 30,                                     June 30,
                                         -----------------------   Percentage        -----------------------   Percentage
                                            2001         2000        Change             2001         2000        Change
                                         ----------   ----------   ----------        ----------   ----------   ----------
                                                       (Amounts in thousands, except per square foot data)

Rental income  (a)
-------------
<S>                                      <C>          <C>            <C>             <C>          <C>             <C>
    Consistent Group.............        $ 139,270    $ 130,204      7.0%            $ 273,693    $ 255,043       7.3%
    Other Facilities.............           39,816       31,007     28.4%               77,222       60,726      27.2%
                                         ----------   ----------   ----------        ----------   ----------   ----------
                                           179,086      161,211     11.1%              350,915      315,769      11.1%
                                         ----------   ----------   ----------        ----------   ----------   ----------
Cost of Operations
------------------
    Consistent Group.............           38,160       39,547     (3.5)%              78,375       78,350       0.0%
    Other Facilities.............           16,439       11,725     40.2%               32,698       23,279      40.5%
                                         ----------   ----------   ----------        ----------   ----------   ----------
                                            54,599       51,272      6.5%              111,073      101,629       9.3%
                                         ----------   ----------   ----------        ----------   ----------   ----------

Net operating income
--------------------
    Consistent Group.............          101,110       90,657     11.5%              195,318      176,693      10.5%
    Other Facilities.............           23,377       19,282     21.2%               44,524       37,447      18.9%
                                         ----------   ----------   ----------        ----------   ----------   ----------
                                           124,487      109,939     13.2%              239,842      214,140      12.0%

Depreciation and amortization              (38,923)     (33,822)    15.1%              (76,309)     (68,144)     12.0%
                                         ----------   ----------   ----------        ----------   ----------   ----------
   Net Income                            $  85,564    $  76,117     12.4%            $ 163,533    $ 145,996      12.0%
                                         ==========   ==========   ==========        ==========   ==========   ==========
Consistent Group data
---------------------
  Gross margin........................       72.6%        69.6%      3.0%                71.4%        69.3%       2.1%
  Weighted average :
     Occupancy........................       90.7%        93.0%     (2.3)%               89.9%        92.2%      (2.3)%
     Realized annual rent per square
     foot  (b)........................      $11.40       $10.39      9.7%               $11.31       $10.27      10.1%

Number of facilities at end of period:
  Consistent group....................        913          913       -                    913          913        -
  Other Facilities....................        349          300      16.3%                 349          300       16.3%

Net rentable sq. ft. at end of period
 (in thousands):
  Consistent group....................     53,882       53,882       -                 53,882       53,882        -
  Other Facilities....................     22,483       18,362      22.4%              22,483       18,362       22.4%

</TABLE>

(a)  Rental  income  includes  late  charges and  administrative  fees.  For the
     Consistent Group, late charges and administrative fees in aggregate totaled
     $4,801,000  and  $4,712,000  for the three  months  ended June 30, 2001 and
     2000, respectively,  and $9,635,000 and $9,507,000 for the six months ended
     June 30, 2001 and 2000, respectively.

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

         The Company  experienced  accelerated  growth in the consistent group's
net  operating  income for the three and six months  ended June 30,  2001,  with
overall  net  operating  income  increasing  11.5% and 10.5%,  respectively,  as
compared to the same periods in 2000.  Rental income increased 7.0% and 7.3% for
the  three  and six  months  ended  June  30,  2001,  respectively,  and cost of
operations decreased 3.5% and was stable for the three and six months ended June
30, 2001, respectively, as compared to the same periods in 2000.

                                       23

<PAGE>

         The  increase  in  rental  income is  attributable  to a 9.7% and 10.1%
increase in realized rent per occupied  square foot for the three and six months
ended June 30,  2001,  respectively,  as compared  to the same  periods in 2000,
partially  offset by a reduction in weighted  average  occupancy  level.  Higher
realized  rent per  occupied  square foot was achieved  through more  aggressive
pricing  of our  self-storage  space.  Over the  past  several  months,  we have
increased rents charged to new tenants and have significantly  reduced the level
of discounts  offered to new  tenants.  In addition,  in many  markets,  we have
increased the level of rent charged to our existing tenant base.

         As expected,  our more  aggressive  rental rates and  reductions in the
amount of  discounts  offered have  resulted in a reduction in weighted  average
occupancy  levels  for  both the  three  and six  months  periods.  Although  we
experienced a decline of 2.3% in weighted  average  occupancy  levels during the
three and six month periods, at June 30, 2001 the decline was 1.7%.

         Consistent  Group discounts for the three and six months ended June 30,
2001 totaled $1,521,000 and $3,649,000,  respectively, as compared to $3,923,000
and $8,284,000, respectively, for the same periods in 2000.

         We believe that our ability to raise rents and thereby  increase rental
income was  facilitated by 1) more  aggressive  marketing  efforts,  including a
$622,000 increase in television  advertising  expenditures for the three and six
months ended June 30, 2001 as compared to the same  periods in 2000,  as well as
an  increase  in  the  intensity  of our  yellow  page  advertising,  and 2) the
continuing  impact of our  efforts  over the last  several  years to improve the
value of the Public Storage brand, most significantly  through the completion of
our program to enhance our visual icon and to modernize  the  appearance  of our
self-storage facilities.

         Consistent Group cost of operations  declined 3.5% in the quarter ended
June 30, 2001 as compared to the same period in 2000,  and was stable in the six
months  ended June 30, 2001 as compared to the same period in 2000.  The expense
moderation  was due to our  continued  focus upon cost control and the result of
specific  cost control  programs,  such as a trial  program  instituted  in some
markets to close the rental offices on Sunday to reduce payroll  expense.  There
can be no assurance as to the level of expenses in future periods.

         The following table summarizes major operating expenses with respect to
the Consistent Group:

<TABLE>
<CAPTION>
                                           Three months ended                         Six months ended
                                                June 30,                                  June 30,
                                        ---------------------------               ---------------------------
                                           2001            2000        Change        2001            2000        Change
                                        -----------     -----------  -----------  -----------     -----------  -----------
                                                                      (Amounts in thousands)
<S>                                     <C>             <C>            <C>        <C>             <C>            <C>
Payroll expense                         $   10,630      $   11,193     (5.0)%     $   21,773      $   22,403     (2.8)%
Property taxes                              10,606          10,534      0.7%          22,560          22,297      1.2%
Repairs and maintenance                      3,080           4,097    (24.8)%          5,890           7,152    (17.6)%
Advertising                                  3,196           2,335     36.9%           5,296           4,064     30.3%
Telephone reservation center costs           1,955           2,274    (14.0)%          4,197           4,381     (4.2)%
Other                                        8,693           9,114     (4.6)%         18,659          18,053      3.4%
                                        -----------     -----------  -----------  -----------     -----------  -----------
                                        $   38,160      $   39,547     (3.5)%     $   78,375      $   78,350      0.0%
                                        ===========     ===========  ===========  ===========     ===========  ===========
</TABLE>

         Cost of  operations  includes  both direct costs and  indirect  cost of
operating and managing the  facilities.  Payroll,  property  taxes,  repairs and
maintenance,  advertising  and the  telephone  reservation  center in  aggregate
account for approximately  76% of the total cost of operations.  With respect to
the  Consistent  Group of  facilities,  cost of operations for the quarter ended
June 30, 2001 decreased  approximately  3.5% compared to the same period of last
year. This decrease was primarily a result of decreases in telephone reservation
center expenses, payroll expense and repairs and maintenance partially offset by
increases in advertising  (up 36.9%).  The increase in advertising for the three
and six months ended June 30, 2001 is the result of  advertising  in  additional
yellow page directories  combined with increased rates in existing  directories,
primarily due to the expansion of the size of our ads.

                                       24

<PAGE>

         During 1999 and 2000 and the six months  ended June 30,  2001,  we have
opened 45 newly developed  facilities with a total cost of approximately  $249.6
million.  Included in the self-storage operations table above, under the caption
"Other  Facilities",  are rental income and cost of operations of $3,183,000 and
$2,238,000,  respectively,  for the  three  months  ended  June  30,  2001,  and
$5,551,000 and $4,141,000, respectively, for the six months ended June 30, 2001,
with respect to these facilities.  Included in the self-storage operations table
above,  under the  caption  "Other  Facilities",  are rental  income and cost of
operations  of $404,000 and $479,000,  respectively,  for the three months ended
June 30, 2000, and $747,000 and $893,000, respectively, for the six months ended
June 30, 2000, with respect to these facilities. We also completed expansions of
storage  facilities with aggregate costs of  approximately  $46.1 million in the
six months ended June 30, 2001.

         Due to the fill-up nature of a newly developed  self-storage  facility,
our earnings have been negatively impacted by our development activities. Unlike
many other types of real estate,  we do not pre-lease our storage space prior to
the opening of a newly developed facility.  Generally, it takes approximately 24
months for a newly developed  facility to reach a stabilized  occupancy level of
90%. At this stabilized occupancy level, operating costs represent approximately
30% of stabilized  rental revenues.  Since the operating costs are substantially
fixed  in  nature,  a newly  developed  facility  will  not  reach a  break-even
operating cash flow until it achieves an occupancy level of  approximately  30%.
At June 30, 2001, the 45 newly  developed  facilities  had an average  occupancy
level of approximately  49%. We expect that over at least the next twelve months
our  development  activities  will  continue  to have a  negative  impact to our
earnings as additional newly developed facilities are opened. See "Liquidity and
Capital Resources - Acquisition and Development of Facilities."

         COMMERCIAL PROPERTY OPERATIONS: Commercial property operations included
in the consolidated  financial  statements include commercial space owned by the
Company and Consolidated Entities. 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 Statement of Income.

         During  the  second   quarter  of  2000,  we  acquired  two  commercial
facilities  (which are expected to be converted into storage  facilities) for an
aggregate cost of  $5,930,000.  Included in commercial  property  operations are
rental income and cost of operations of $177,000 and $56,000,  respectively, for
the three months ended June 30, 2001,  and $314,000 and $127,000,  respectively,
for the six  months  ended June 30,  2001,  with  respect  to these  facilities.
Included  in  commercial  property  operations  are  rental  income  and cost of
operations of $136,000 and $21,000,  respectively,  for the three and six months
ended June 30, 2000. The following  table sets forth the  historical  commercial
property amounts included in the financial statements:

COMMERCIAL PROPERTY OPERATIONS
------------------------------

<TABLE>
<CAPTION>
                                    Three months ended                              Six months ended
                                         June 30,                                       June 30,
                                 -----------------------                         -----------------------
                                   2001           2000        Change                2001          2000         Change
                                 ---------     ---------     ---------           ---------     ---------     ---------
                                                                (Amounts in thousands)

<S>                              <C>           <C>              <C>              <C>           <C>            <C>
Rental income.............       $  3,215      $  2,827         13.7%            $  6,272      $  5,586       12.3%
Cost of operations........            882           881          0.1%               1,832         1,830        0.1%
                                 ---------     ---------     ---------           ---------     ---------     ---------

 Net operating income prior
   to depreciation........          2,333         1,946         19.9%               4,440         3,756       18.2%

Depreciation..............            661           554         19.3%               1,370         1,000       37.0%
                                 ---------     ---------     ---------           ---------     ---------     ---------

Net income................       $  1,672      $  1,392         20.1%            $  3,070      $  2,756       11.4%
                                 =========     =========     =========           =========     =========     =========
</TABLE>
                                       25

<PAGE>

         CONTAINERIZED  STORAGE FACILITIES  OPERATIONS:  At June 30, 2001, PSPUD
operated 51 facilities.  PSPUD incurred operating losses totaling  approximately
$611,000  and  $1,538,000  for the three and six  months  ended  June 30,  2001,
compared to $776,000 and $2,347,000 for the same periods in 2000:

CONTAINERIZED STORAGE FACILITIES
--------------------------------

<TABLE>
<CAPTION>
                                           Three months ended                              Six months ended
                                                June 30,                                       June 30,
                                        -------------------------                      -------------------------
                                          2001           2000           Change            2001           2000          Change
                                        ----------     ----------     ----------       ----------     ----------     ----------
                                                                       (Amounts in thousands)
<S>                                     <C>            <C>            <C>              <C>            <C>            <C>
Rental and other income .........       $  12,183      $   9,240      $ 2,943          $  22,256      $  16,789      $ 5,467
                                        ----------     ----------     ----------       ----------     ----------     ----------
Cost of operations:
  Direct operating costs.........           9,460          6,424        3,036             17,141         12,024        5,117
  Facility lease expense.........           1,595          2,224         (629)             3,387          4,478       (1,091)
                                        ----------     ----------     ----------       ----------     ----------     ----------
    Total cost of operations.....          11,055          8,648        2,407             20,528         16,502        4,026

Operating income prior to
  depreciation...................           1,128            592          536              1,728            287        1,441

  Depreciation (a)...............           1,739          1,368          371              3,266          2,634          632
                                        ----------     ----------     ----------       ----------     ----------     ----------
Operating losses.................       $    (611)     $    (776)     $   165          $  (1,538)     $  (2,347)     $   809
                                        ==========     ==========     ==========       ==========     ==========     ==========
</TABLE>

(a)  Depreciation includes $189,000 and $113,000 for the three months ended June
     30, 2001 and 2000,  respectively,  and  $377,000  and  $226,000 for the six
     months  ended June 30, 2001 and 2000,  respectively,  with  respect to real
     estate assets.

         At June 30, 2001, 21 of the 51  containerized  storage  facilities were
leased from third parties. We are currently developing 13 combination facilities
(which  includes two storage  facilities that are being converted to combination
facilities)  that combine  self-storage and  containerized  storage space in the
same  location.  These  facilities  are  expected  to  replace  8 of the  leased
facilities.  We expect  that an  increasing  part of the  containerized  storage
business will be operated  from this type of facility.  To the extent that these
developed combination facilities replace existing third-party leased facilities,
lease expense should continue to be reduced.

         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 11 limited  partnerships  at June 30,  2001.  (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 for the year ended June 30,
2001 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 storage  facilities,  which we manage.  In the
aggregate,  the Unconsolidated  Entities (including PSB) own a total of 266 real
estate facilities, 114 of which are storage facilities. The following table sets
forth the significant components of equity in earnings of real estate entities:

                                       26

<PAGE>

HISTORICAL SUMMARY
------------------

<TABLE>
<CAPTION>
                                     Three months ended                             Six months ended
                                          June 30,                                      June 30,
                                  ------------------------                      ------------------------
                                     2001          2000         Change             2001          2000        Change
                                  ----------    ----------     ----------       ----------    ----------    ----------
                                                                (Amounts in thousands)
Property operations:
<S>                               <C>           <C>            <C>              <C>           <C>           <C>
    PSB......................     $  12,392     $  10,729      $  1,663         $  24,038     $  20,558     $  3,480
    Development Joint Venture         1,512         1,087           425             2,849         1,972          877
    Other partnerships.......         4,179         4,646          (467)            7,999         9,010       (1,011)
                                  ----------    ----------     ----------       ----------    ----------    ----------
                                     18,083        16,462         1,621            34,886        31,540        3,346
                                  ----------    ----------     ----------       ----------    ----------    ----------
Depreciation:
    PSB......................        (4,112)       (3,714)         (398)           (7,835)       (7,104)        (731)
    Development Joint Venture          (504)         (467)          (37)           (1,012)         (928)         (84)
    Other partnerships.......        (1,323)         (917)         (406)           (2,367)       (2,098)        (269)
                                  ----------    ----------     ----------       ----------    ----------    ----------
                                     (5,939)       (5,098)         (841)          (11,214)      (10,130)      (1,084)
                                  ----------    ----------     ----------       ----------    ----------    ----------
Other: (a)
    PSB......................        (2,404)       (1,903)         (501)           (4,542)       (3,439)      (1,103)
    Development Joint Venture            12           (38)           50                49            15           34
    Other partnerships.......            62          (268)          330               (93)         (555)         462
                                  ----------    ----------     ----------       ----------    ----------    ----------
                                     (2,330)       (2,209)         (121)           (4,586)       (3,979)        (607)
                                  ----------    ----------     ----------       ----------    ----------    ----------

Total equity in earnings of
  real estate entities.......     $   9,814     $   9,155      $    659         $  19,086     $  17,431     $  1,655
                                  ==========    ==========     ==========       ==========    ==========    ==========
</TABLE>

(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  increase in equity in earnings  of real  estate  entities  for the
three and six months ended June 30, 2001, respectively,  as compared to the same
periods in 2000 is primarily the result of improved  operations of PSB. In April
1997, we formed a joint venture  partnership (the  "Development  Joint Venture")
with  an   institutional   investor  to  participate   in  the   development  of
approximately $220 million of storage  facilities.  The venture is funded solely
with  equity  capital  consisting  of 30%  from  the  Company  and 70%  from the
institutional  investor.  Equity in earnings from the Development  Joint Venture
reflects  our  pro  rata  share,  based  upon  our  ownership  interest,  of the
operations of the Development Joint Venture. From inception through December 31,
2000, the Development Joint Venture  developed and opened 47 storage  facilities
at  an  aggregate  cost  of  approximately  $232  million.   Generally  a  newly
constructed  facility  undergoes  an 18 to 24 month  fill-up  process  until the
facility reaches a stabilized  occupancy level of approximately 90%. For each of
the  periods  ending  June 30,  2001 and 2000,  the  majority  of the  completed
facilities  were  in the  fill-up  process  and  had not  reached  a  stabilized
occupancy  level.  We expect that our earnings with respect to our investment in
the  Development  Joint  Venture  will  continue  to  increase  as the  existing
properties continue to fill up.

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 and six months
ended June 30,  2001 as  compared  to the same  periods in 2000  primarily  as a
result of lower cash balances invested in interest bearing accounts.

                                       27

<PAGE>

         DEPRECIATION AND  AMORTIZATION:  Depreciation and amortization  expense
has increased $5,579,000 to $41,323,000 for the three months ended June 30, 2001
as  compared  to  $35,744,000  for the same  period  in 2000.  Depreciation  and
amortization  expense has increased $9,167,000 to $80,945,000 for the six months
ended June 30,  2001 as  compared  to  $71,778,000  for the same period in 2000.
These  increases are  principally  due to the  acquisition  and  development  of
additional real estate facilities during 2000 and 2001. Included in depreciation
and  amortization  expense is  amortization  expense with respect to  intangible
assets of $2,328,000  and $4,656,000 for the three and six months ended June 30,
2001 and 2000.  Included in depreciation and amortization  expense for the three
months ended June 30, 2001 and 2000 is $1,550,000 and $1,255,000,  respectively,
and  $2,889,000  and $2,408,000 for the six months ended June 30, 2001 and 2000,
respectively,  of  depreciation  of  furniture,  fixtures,  and equipment of the
portable self-storage business.

         GENERAL  AND  ADMINISTRATIVE:  General and  administrative  expense has
decreased  $576,000 to  $5,000,000  for the three  months ended June 30, 2001 as
compared to $5,576,000 for the same period in 2000.  General and  administrative
expense has increased  $1,963,000 to  $10,584,000  for the six months ended June
30,  2001 as  compared to  $8,621,000  for the same period in 2000.  General and
administrative  expense  principally  consists of state income  taxes,  investor
relations  expenses,  certain  overhead  associated  with  the  acquisition  and
development   of  real  estate   facilities,   overhead   associated   with  the
containerized  storage  business,  and certain product  research and development
activities.  The  decrease  for the quarter is due  primarily  to a reduction in
consulting,  lease  termination  expense  associated  with leased  containerized
storage facilities which were replaced by newly-developed  facilities, and other
expenses, offset partially by increased overhead associated with the acquisition
and  development  of real estate  facilities.  The year to date  increase is due
primarily to increased overhead  associated with the acquisition and development
of real estate  facilities,  costs  associated  with lease  terminations  on the
leased  containerized  storage facilities which were replaced by newly-developed
facilities, and severance as a result of employee terminations.  The increase in
the six months  ended June 30,  2001 as  compared  to 2000 of these  three items
aggregated approximately $2,579,000.

         INTEREST  EXPENSE:  Interest  expense was $1,124,000 and $2,095,000 for
the three and six months  ended June 30,  2001,  respectively,  as  compared  to
$1,261,000 and $2,667,000,  respectively, for the same periods in 2000. Interest
expense was net of  capitalized  interest of $2,109,000  and  $4,219,000 for the
three  and six  months  ended  June  30,  2001,  respectively,  as  compared  to
$2,045,000  and  $4,156,000,  respectively,  for the same  periods in 2000;  the
increase  in  capitalized  interest  was due to  higher  levels  of  development
activities.  Interest  expense,  prior to capitalized  interest,  decreased from
$3,306,000  for the three months ended June 30, 2000 to $3,233,000 for the three
months ended June 30, 2000 and from  $6,823,000 in the six months ended June 30,
2000 to  $6,314,000  for the six months  ended June 30, 2001.  The  decreases in
interest expense,  prior to capitalized  interest,  for the three and six months
periods are due primarily to reductions in average outstanding debt balances.

         MINORITY INTEREST IN INCOME: Minority interest in income represents the
income allocable to equity interests in the Consolidated Entities, which are not
owned by us.  Minority  interest  in income  was  $11,672,000  and  $23,370,000,
respectively,  for the three and six months  ended June 30,  2001,  compared  to
$10,465,000 and $14,854,000, respectively, for the same periods in 2000.

         On  March  17,  2000,  one  of  our  operating   partnerships  that  is
consolidated  issued  $240.0  million  of 9.5%  Series N  Cumulative  Redeemable
Perpetual  Preferred Units. On March 29, 2000 the operating  partnership  issued
$75.0 million of 9.125% Series O Cumulative Redeemable Perpetual Preferred Units
and on August  11,  2000,  issued  $50.0  million of 8.75%  Series P  Cumulative
Redeemable  Perpetual  Preferred  Units.  The issuance of preferred  partnership
units had the effect of increasing  minority  interest by $365 million.  For the
six months ended June 30,  2001and 2000, the holders of these units were paid in
aggregate   approximately   $8,505,000   and   $17,010,000,   respectively,   in
distributions  and received a corresponding  allocation of minority  interest in
earnings for the partial period in which the units were outstanding.

                                       28

<PAGE>

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

         At June 30, 2001, there were approximately 45 ownership entities owning
in aggregate  1,376 storage  facilities,  including the facilities  which we own
and/or  operate.  At June  30,  2001,  114 of  these  facilities  were  owned by
Unconsolidated Entities, entities in which we have an ownership interest and use
the equity  method for financial  statement  presentation.  The remaining  1,262
facilities are owned by the Company and the Consolidated Entities.

         The following table summarizes our investment in real estate facilities
as of June 30, 2001:

<TABLE>
<CAPTION>
                                                  Number of Facilities in which the            Net Rentable Square Footage
                                                  Company has an ownership interest                  (in thousands)
                                               ----------------------------------------  -----------------------------------------
                                               Self-Storage   Commercial                 Self-Storage  Commercial
                                                Facilities    Properties        Total    Facilities    Properties        Total
                                               ------------    ------------  ----------  ------------  ------------   ------------
<S>                                                  <C>              <C>         <C>       <C>              <C>        <C>
Wholly-owned facilities....................          642              6           648       40,258           394        40,652
Facilities owned by Consolidated Entities..          620              -           620       36,107             -        36,107
                                               ------------    ------------  ----------  ------------  ------------   ------------
    Total consolidated facilities..........        1,262              6         1,268       76,365           394        76,759
Facilities owned by Unconsolidated Entities          114            152           266        6,732        13,300        20,032
                                               ------------    ------------  ----------  ------------  ------------   ------------
    Total  facilities  in which  the  Company
      has an ownership interest............        1,376            158         1,534       83,097        13,694        96,791
                                               ============    ============  ==========  ============  ============   ============
</TABLE>

         In  order  to  evaluate  how  our  overall   portfolio  has  performed,
management  analyzes  the  operating   performance  of  a  consistent  group  of
self-storage facilities representing 945 (54.9 million net rentable square feet)
of the  1,376  self-storage  facilities  (herein  referred  to as  "Same  Store"
self-storage  facilities).  The 945  facilities  represent a pool of properties,
which have been operated under the "Public Storage" name, at a stabilized level,
by the Company since  January 1, 1994.  From time to time,  the Company  removes
facilities  from the  "Same  Store"  pool as a  result  of  expansions  or other
activities,  which make such  facilities'  results  not  comparable  to previous
periods. The Same Store group of properties includes 863 consolidated facilities
and  82  facilities  owned  by  Unconsolidated  Entities.  The  following  table
summarizes the  pre-depreciation  historical operating results of the Same Store
self-storage facilities:

SAME STORE  MINI-WAREHOUSE FACILITIES (945 FACILITIES)
------------------------------------------------------
(historical property operations)

<TABLE>
<CAPTION>
                                               Three months ended June 30,                 Six months ended June 30,
                                          ----------------------------------------   ----------------------------------------
                                             2001           2000          Change        2001           2000          Change
                                          ----------     ----------     ----------   ----------     ----------     ----------
                                                                       (Amounts in thousands)
<S>                                       <C>            <C>                <C>      <C>            <C>              <C>
Rental income (a)...................      $  145,435     $  135,834         7.1%     $  285,851     $  266,067       7.4%
Cost of operations  (b).............          39,095         40,549        (3.6)%        80,620         80,616       0.0%
                                          ----------     ----------     ----------   ----------     ----------     ----------
Net operating income................      $  106,340     $   95,285        11.6%     $  205,231     $  185,451      10.7%
                                          ==========     ==========     ==========   ==========     ==========     ==========
Gross profit margin (c).............          73.1%          70.1%          3.0%         71.8%          69.7%        2.1%

Weighted Average:
----------------
  Occupancy........................           90.8%          93.3%         (2.5)%        90.0%          92.5%       (2.5)%
   Realized annual rent per sq. ft. (d)      $11.66         $10.59         10.1%        $11.56         $10.46       10.5%

</TABLE>

(a)  Rental income includes late charges and administrative fees of $5.0 million
     and $4.9  million  for the  three  months  ended  June 30,  2001 and  2000,
     respectively  and $10.0  million and $9.8  million for the six months ended
     June 30,  2001 and 2000,  respectively.  Rental  income  for the Same Store
     facilities is  net of discounts offered to new tenants.  Discounts  totaled
     $1.6 million and $3.7 million,  respectively,  for the three and six months
     ended June 30,  2001,  respectively  as compared  to $3.9  million and $8.4
     million for the same periods in 2000.

                                       29

<PAGE>

(b)  Cost of operations consists of the following:

<TABLE>
<CAPTION>
                                           Three months ended                         Six months ended
                                                June 30,                                  June 30,
                                        ----------------------------              ----------------------------
                                            2001            2000        Change        2001            2000        Change
                                        ------------    ------------  ----------  ------------    ------------  ---------
                                                                   (Amounts in thousands)
<S>                                     <C>             <C>             <C>       <C>             <C>             <C>
Payroll expense                         $    10,871     $   11,548      (5.9)%    $    22,326     $   23,131      (3.5)%
Property taxes                               10,896          10,763      1.2%          23,314          22,927      1.7%
Repairs and maintenance                       3,196           4,258    (24.9)%          6,100           7,449    (18.1)%
Advertising                                   3,218           2,348     37.1%           5,421           4,165     30.2%
Telephone reservation center costs            1,994           2,289    (12.9)%          4,280           4,436     (3.5)%
Other                                         8,920           9,343     (4.5)%         19,179          18,508      3.6%
                                        ------------    ------------  ----------  ------------    ------------  ---------
                                        $    39,095     $   40,549      (3.6)%    $    80,620     $   80,616       0.0%
                                        ============    ============  ==========  ============    ============  =========
</TABLE>

(c)  Gross profit margin is computed by dividing  property net operating  income
     (before depreciation expense) by rental revenues.

(d)  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 Company experienced  accelerated growth in Same Store net operating
income in the quarter  ended June 30, 2001,  with overall net  operating  income
increasing  11.6% in the  quarter  ended June 30,  2001 as  compared to the same
period in 2000.  Rental income  increased 7.1% and cost of operations  decreased
3.6%.

         The increase in rental income is  attributable  to a 10.1%  increase in
realized  rent per  occupied  square foot  partially  offset by a  reduction  in
weighted  average  occupancy  level during the period.  Higher realized rent per
occupied  square  foot was  achieved  through  more  aggressive  pricing  of our
self-storage  space.  Over the past  several  months,  we have  increased  rents
charged to new tenants  and have  significantly  reduced the level of  discounts
offered to new tenants.  In addition,  in many  markets,  we have  increased the
level of rent charged to our existing tenant base.

         As expected,  our more  aggressive  rental rates and  reductions in the
amount of  discounts  offered have  resulted in a reduction in weighted  average
occupancy  levels  for  both the  three  and six  months  periods.  Although  we
experienced a decline of 2.5% in weighted  average  occupancy  levels during the
three and six month periods, by the end of the quarter the decline was 2.0%.

         We believe that our ability to raise rents and thereby  increase rental
income was facilitated by 1) more  aggressive  marketing  efforts,  including an
increase in television advertising expenditures of $631,000 in the quarter ended
June 30,  2001 as  compared to the same period in 2000 as well as an increase in
the intensity of our yellow page  advertising,  and 2) the continuing  impact of
our  efforts  over the last  several  years to  improve  the value of the Public
Storage  brand,  most  significantly  through the  completion  of our program to
enhance our visual icon and to  modernize  the  appearance  of our  self-storage
facilities.

         Cost of operations  declined 3.6% in the quarter ended June 30, 2001 as
compared  to the same  period  in 2000,  due to our  continued  focus  upon cost
control  and the  result of  specific  cost  control  programs,  such as a trial
program  instituted  in some  markets to close the  rental  offices on Sunday to
reduce payroll expense. There can be no assurance as to the level of expenses in
subsequent quarters.

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.

                                       30

<PAGE>

         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 "REIT STATUS"  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 make the minority interests' distributions,  dividend payments to
the preferred  shareholders and capital  improvements to maintain the facilities
through the use of cash provided by operating  activities.  The  remaining  cash
flow  generated  is  available to make both  scheduled  and  optional  principal
payment on debt and for reinvestment.

<TABLE>
<CAPTION>
                                                                                            For the six months ended
                                                                                                    June 30,
                                                                                            --------------------------
                                                                                               2001           2000
                                                                                            ----------      ----------
                                                                                             (Amounts in thousands)
<S>                                                                                         <C>             <C>
Net income...........................................................................       $ 156,408       $ 146,864
Less - Gain on sale of real estate...................................................          (1,568)              -
Depreciation and amortization (a)....................................................          80,945          71,778
Depreciation from Unconsolidated Entities............................................          11,214          10,130
Minority interest in income..........................................................          23,370          14,854
                                                                                            ----------      ----------
  Net cash provided by operating activities..........................................         270,369         243,626

Allocable to minority interests (Preferred OP Units)..................................        (17,010)         (8,336)
Allocable to minority interests (Common equity).......................................         (9,928)         (9,992)
                                                                                            ----------      ----------
Cash from operations allocable to the Company's shareholders.........................         243,431         225,298

Less: preferred stock dividends......................................................         (56,772)        (50,083)
Less: equity stock, Series A dividends...............................................          (8,766)         (4,924)
                                                                                            ----------      ----------
Cash from operations available to common shareholders................................         177,893         170,291

Capital improvements to maintain facilities:.........................................         (12,132)         (9,182)
Add back: minority interest share of capital improvements to maintain facilities.....             211             177
                                                                                            ----------      ----------
Cash available for principal payments on debt, common dividends and reinvestment.....         165,972         161,286

Cash distributions to common and Class B common shareholders (b).....................         (54,411)        (57,888)
                                                                                            ----------      ----------
Cash available for principal payments on debt and reinvestment.......................       $ 111,561       $ 103,398
                                                                                            ==========      ==========
</TABLE>

(a)  Depreciation  and  amortization  includes  $2,889,000 and  $2,408,000  with
     respect to non-real  estate  assets for the six months  ended June 30, 2001
     and 2000, respectively.

(b)  Cash distributions to common shareholders for the six months ended June 30,
     2001 and 2000 only  include  the  Company's  regular  common  distributions
     ($0.44  per common  share in each  period).  In August  2000,  the  Company
     declared  a special  distribution  of $0.60 per  share or  $78,763,000.  On
     August 9, 2001, the Company  declared a special  distribution  of $0.35 per
     share to be paid in September 2001, and the regular common dividend for the
     third  quarter of 2001 was  increased to $0.45 per share from the $0.22 per
     share  paid in each  quarter  in 2000 and in each  quarter in the first six
     months of 2001.  Assuming  the  Company  also  declares  a  regular  common
     dividend  of $0.45 per  common  share in the fourth  quarter  of 2001,  the
     remaining  common  distributions  for the last two  quarters  of 2001  will
     amount  to $1.25  per  share or  $150,063,000  (based  upon  common  shares
     outstanding at June 30, 2001).

         We expect to fund our growth  strategies  with cash on hand at June 30,
2001,  internally  generated  retained cash flows,  proceeds from issuing equity
securities and borrowings under our $150 million credit facility.

         Our  portfolio  of  real  estate   facilities   remains   substantially
unencumbered.  At June 30,  2001,  we had  mortgage  debt  outstanding  of $25.3
million and had  consolidated  real estate  facilities with a book value of $3.7
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.

                                       31

<PAGE>

         In January 2001, the Company  completed a public  offering of 6,900,000
depositary  shares ($25 stated  value per  depositary  share) each  representing
1/1,000 of a share of 8.6%  Cumulative  Preferred  Stock,  Series Q, raising net
proceeds of approximately  $166,966,000.  In April 2001, the Company completed a
public offering of 2,210,500  depositary shares each  representing  1/1,000 of a
share of Equity  Stock,  Series A, raising net proceeds of  approximately  $51.8
million.  In May 2001,  the  Company  completed  a direct  placement  of 830,000
depositary shares each representing  1/1,000 of a share of Equity Stock,  Series
A, raising net proceeds of approximately $20.3 million.

         DISTRIBUTION  REQUIREMENTS:  Our conservative  distribution  policy has
been the  principal  reason  for the  Company's  ability  to retain  significant
operating  cash flows which have been used to make  additional  investments  and
reduce debt. In 2000, we distributed to common and Class B common  shareholders,
in regular and in a special  distribution paid in September 2000,  approximately
56% of our cash available from operations available to common shareholders.

         During  the six  months  ended June 30,  2001,  we paid cash  dividends
totaling $56,772,000 to the holders of our Senior Preferred Stock and $8,766,000
to the holders of Equity Stock,  Series A. This includes $6,718,000 with respect
to the Series Q preferred  stock,  which reflects a payment for a partial period
from  the  date  of  issuance.  We  estimate  the  regular  annual  distribution
requirements with respect to Senior Preferred Stock outstanding at June 30, 2001
to be approximately $114.9 million (with total distributions estimated at $114.2
million for fiscal 2001). With respect to the Equity Stock, Series A outstanding
at June 30, 2001, we estimate the regular distribution to be approximately $21.3
million ($19.4 million for fiscal 2001).

         During the six months ended June 30, 2000, we paid  dividends  totaling
$139,974,000  to the  holders  of our  common  stock  which  includes  a special
distribution  of  approximately  $0.64  per  share or  $82,086,000  declared  in
November  1999.  The  special  distribution  was paid on January 14, 2000 to our
common  shareholders and consisted of $38,076,000 in cash and $44,010,000 in the
issuance of depositary shares of Equity Stock, Series A.

         On August 9, 2001, the Company declared a special distribution of $0.35
per share to be paid in September  2001, and the regular common dividend for the
third  quarter of 2001 was increased to $0.45 per share from the $0.22 per share
paid in each  quarter  in 2000 and in each  quarter  in the first six  months of
2001. Assuming the Company also declares a dividend of $0.45 per common share in
the fourth quarter of 2001, the remaining common  distributions for the last two
quarters  of 2001 will  amount to $1.25 per share or  $150,063,000  (based  upon
common shares outstanding at June 30, 2001).

         During the six months ended June 30, 2001, we paid  $17,010,000  to the
holders of our preferred  operating  partnership units, which were issued in the
year ended December 31, 2000.  The total annual  distribution  requirement  with
respect  to  the  preferred   operating   partnership   units  is  estimated  at
$34,020,000.

         CAPITAL  IMPROVEMENT  REQUIREMENTS:   During  2001,  we  have  budgeted
approximately $26,800,000 for capital improvements.  During the six months ended
June 30, 2001, we incurred capital improvements of approximately $12,132,000.

                                       32

<PAGE>

         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 June 30,  2001,  we had total  outstanding  notes  payable  of  $149,796,000.
Approximate  principal  maturities  of notes  payable  at June  30,  2001 are as
follows:

                                   Unsecured
                                 Senior Notes    Mortgage debt       Total
                                   ----------     ------------     -----------
                                              (Amounts in thousands)

2001 (remainder of)..........      $   4,750      $     1,453      $    6,203
2002.........................         24,450            3,530          27,980
2003.........................         35,900            3,585          39,485
2004.........................         25,800           15,063          40,863
2005.........................         11,200              156          11,356
Thereafter...................         22,400            1,509          23,909
                                   ----------     ------------     -----------
                                   $ 124,500      $    25,296      $  149,796
                                   ==========     ============     ===========
Weighted average rate........           7.4%            10.3%            7.9%
                                   ==========     ============     ===========

         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.  For the quarter  ended June 30, 2001,  the
Company  repurchased  a  total  of  2,612,800  shares  at an  aggregate  cost of
approximately  $70.4 million.  From the initial  authorization  through June 30,
2001, the Company repurchased a total of 21,445,320 shares of common stock at an
aggregate cost of approximately $534.1 million.

         DEVELOPMENT OF SELF-STORAGE  FACILITIES:  At June 30, 2001, the Company
and its second  development  joint venture  partnership  have a "pipeline" of 51
projects  that are in  construction  or are  expected  to begin  contruction  by
December  2002,  which  includes new and expansion  self-storage  facilities and
facilities that combine containerized storage and self-storage space in the same
location.  These 51 projects have total estimated costs of approximately  $342.2
million,  of which $144.0 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.  We estimate that the amount
remaining to be spent of  approximately  $198.2  million on these 51 projects in
the pipeline will be incurred over the next 30 months.

         We have acquired the land for 32 of the projects in the pipeline, which
have an aggregate  estimated cost of $212.8  million and costs incurred  through
June 30, 2001 of  approximately  $138.4  million.  The  remaining 19  facilities
represent  identified sites as to which we have an agreement in place to acquire
the land, generally within one year. However,  there can be no assurance that we
will complete the development of these facilities.

         With respect to the facilities that combine  containerized  storage and
self-storage space in the same location, the identification of appropriate sites
and the entitlement  process of those sites have been  substantially  completed.
The Company anticipates that the cost of development of self-storage  facilities
in 2002 and  beyond  will be  reduced  to less  than $125  million  per year and
therefore our development staff has been reduced accordingly.

         In addition to the  projects in the  pipeline,  at June 30,  2001,  the
Company had approximately $29.8 million of land held for development.

                                       33

<PAGE>

         The following table sets forth our development  pipeline and a range of
estimated opening dates for these projects:

<TABLE>
<CAPTION>
                                             Number    Total Estimated       Total Cost        Estimated time
                                               of          Cost of         Incurred through  Frames of Facility
                                           Facilities    Development        June 30, 2001         Openings
                                           ----------  ----------------    -----------------  ---------------
<S>                                            <C>        <C>                 <C>              <C>      <C>
Development - land acquired at 6/30/01
--------------------------------------
Self-storage facilities...............         17         $   109,258         $   66,609      Q3 '01 - Q4 `02
Expansions of existing self-storage
    facilities........................          5              18,489             10,877      Q3 '01 - Q4 `01
Combination facilities................         10              85,020             60,915      Q3 '01 - Q4 `02
                                           ----------  ----------------    -----------------
     Total............................         32             212,767            138,401
                                           ----------  ----------------    -----------------
Potential  development  -  land  to  be
---------------------------------------
acquired after 6/30/01
----------------------
Self-storage facilities - development
    starts estimated by 12/31/01......          5              36,584              2,745      Q1 '02 - Q4 `02
Self-storage facilities - development
    starts estimated after 12/31/01...         13              89,810              2,371      Q4 '02 - Q4 `03
Combination facility..................          1               2,997                454           Q4 `03
                                           ----------  ----------------    -----------------
     Total............................         19             129,391              5,570
                                           ----------  ----------------    -----------------
     Totals...........................         51         $   342,158         $  143,971
                                           ==========  ================    =================
</TABLE>

         REIT STATUS:  We believe that 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 we  continue  to qualify as a REIT,  we will not be
taxed,  with  certain  limited  exceptions,   on  the  taxable  income  that  is
distributed  to our  shareholders,  provided  that at least  90% of our  taxable
income is so  distributed  prior to filing of our tax return.  We have satisfied
the REIT distribution requirement since 1980.

         FUNDS FROM  OPERATIONS:  Total funds from operations or "FFO" increased
to $240,542,000  for the six months ended June 30, 2001 compared to $222,890,000
for the same  period  in 2000.  FFO  available  to  common  shareholders  (after
deducting  preferred  stock  dividends  but  before  deducting  Equity  Stock  A
dividends)  increased  to  $183,770,000  for the six months  ended June 30, 2001
compared to  $172,807,000  for the same period in 2000.  FFO means 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.

                                       34

<PAGE>

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

         To limit our  exposure  to market  risk,  we  principally  finance  our
operations and growth with permanent equity capital, consisting of either common
or  preferred  stock.  At June  30,  2001,  our  debt as a  percentage  of total
shareholders' equity (based on book values) was 4.0%.

         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 G - December  31, 2000,  Series H - January 31, 2001,  Series I - October
31, 2001,  Series J - August 31, 2002,  Series K - January 19, 2004,  Series L -
March 10, 2004,  Series M - August 17, 2004 and Series Q - January 19, 2006.  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 G through  Series M and  Series Q),
plus accrued and unpaid dividends.

         Our market risk  sensitive  instruments  include notes  payable,  which
totaled  $149.8  million at June 30, 2001.  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 June 30, 2001.

         During  April 2001,  the Company  entered  into an  arrangement  with a
financial  institution in which we granted the  institution the right to sell us
up to  1,000,000  shares of our  common  stock at a price of $26.26 per share on
certain dates in September  2001 and October  2001.  See Note 8 to the Company's
June 30, 2001 consolidated financial statements for further information.

PART II.  OTHER INFORMATION

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

         The Company  held an annual  meeting of  shareholders  on May 10, 2001.
Proxies for the annual  meeting were  solicited  pursuant to Regulation 14 under
the Securities  Exchange Act of 1934. The annual meeting  involved the following
three matters:

         A.  Election of Directors:

<TABLE>
<CAPTION>
                                      Total Common Stock                    Total Equity Stock, Series A
                            -----------------------------------------    -------------------------------------------
          Name               Total Votes For     Total Votes Withheld    Total Votes For        Total Votes Withheld
--------------------        -----------------    --------------------    ----------------       --------------------
<S>                               <C>                   <C>                   <C>                    <C>
B. Wayne Hughes                   90,875,646            13,304,475            525,320.0              4,236.2
Harvey Lenkin                     90,887,314            13,292,807            525,373.1              4,183.1
Marvin M. Lotz                    90,891,741            13,288,380            525,371.4              4,184.8
B. Wayne Hughes, Jr.              90,885,853            13,294,268            525,354.2              4,202.0
Robert J. Abernethy              101,987,719             2,192,402            525,285.6              4,270.6
Dann V. Angeloff                 101,974,734             2,205,387            525,283.6              4,272.6
William C. Baker                 101,981,110             2,199,011            525,245.5              4,310.7
Thomas J. Barrack, Jr.            87,828,660            16,351,461            524,576.5              4,979.7
Uri P. Harkham                   101,982,376             2,197,745            525,382.9              4,173.3
Daniel C. Staton                 101,987,710             2,192,411            525,388.9              4,167.3

</TABLE>

         There was no solicitation in opposition to the management's nominees to
the Board of Directors listed in the proxy statement.

                                       35

<PAGE>

         B. Adoption of amendment to the  certificates of  determination  of the
Equity  Stock,  Series A, to extend the date on or after which  Public  Storage,
Inc.  may  redeem the Equity  Stock,  Series A from March 31,  2005 to March 31,
2010.

<TABLE>
<CAPTION>
                                              For                Against            Abstain             No Vote
                                          ------------          ---------          ---------         -----------

Votes cast with respect with the proposal for the amendment to the certificates
of determination of the Equity Stock, Series A, to extend the date on or after
which Public Storage, Inc. may redeem the Equity Stock, Series A from March 31,
2005 to March 31, 2010.

<S>                                       <C>                   <C>                <C>               <C>
Common Stock                              95,784,472.0          671,736.0          566,280.0         7,157,633.0
Equity Stock, Series A                       297,283.9           12,265.8            5,099.7           214,906.8
Total Common Stock and Equity
   Stock, Series A                        96,081,755.9          684,001.8          571,379.7         7,372,539.8

</TABLE>

         C. Approval of adoption of the Public  Storage,  Inc. 2001 Stock Option
and Incentive Plan in the form of Exhibit B to the Proxy  Statement  dated March
7, 2001.

<TABLE>
<CAPTION>
                                              For                Against            Abstain             No Vote
                                          ------------       ------------          ---------            -------
Votes cast with respect to the adoption of the Public Storage, Inc. 2001 Stock
Option and Incentive Plan in the form of Exhibit B to the Proxy Statement dated
March 7, 2001.
<S>                                       <C>                <C>                   <C>
Common Stock                              92,182,425.0       11,288,516.0          709,180.0                 -
Equity Stock, Series A                       502,211.0           20,165.2            7,180.0                 -
Total Common Stock and Equity             92,684,636.0       11,308,681.2          716,360.0                 -
   Stock, Series A

</TABLE>

                                       36

<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  1/1,000th  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  1/1,000th  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.

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.

                                       37

<PAGE>

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.

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.

                                       38

<PAGE>

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 herewith.

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

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

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

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

3.37     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.

3.38     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.

3.39     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.

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.

                                       39

<PAGE>

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  1/1000th  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  1/1000th  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  1/1000th  of a Share of  8-5/8%
         Cumulative  Preferred  Stock,  Series  I  and  incorporated  herein  by
         reference.

10.14    Limited  Partnership  Agreement  of PSAF  Development  Partners,  L. P.
         between  PSAF  Development,  Inc. and the Limited  Partner  dated as of
         April 10, 1997.  Filed with  Registrant's  Form 10-Q for the  quarterly
         period ended March 31, 1997 and incorporated herein by reference.

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

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

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

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

                                       40

<PAGE>

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.

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.

                                       41

<PAGE>

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.

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

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

(b)      Reports on Form 8-K.

         The  Company  filed a Current  Report  on form 8-K dated  April 5, 2001
         (filed  April 6,  2001),  pursuant  to Item 5, in  connection  with the
         Company's public offering of depositary shares each representing 1/1000
         of a share of Equity Stock, Series A in April 2001.

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

                                       42

<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: August 13, 2001

                           PUBLIC STORAGE, INC.


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

                                       43

<PAGE>
                                                                    Exhibit 3.32
                           CERTIFICATE OF AMENDMENT OF
                         CERTIFICATE OF DETERMINATION OF
                            EQUITY STOCK, SERIES A OF
                              PUBLIC STORAGE, INC.,
                            a California corporation


         Harvey Lenkin and David Goldberg certify that:

         1. They are  the  President  and  Secretary,  respectively,  of  Public
Storage, Inc., a California corporation (the "Corporation").

         2. Clause (1) of Section (c) of the  Certificate  of  Determination  of
Equity Stock, Series A of the Corporation is amended to read as follows:

         "(1) Except as provided in clause (9) of this  Section  (c), the shares
of this Series are not  redeemable  prior to March 31,  2010.  On and after such
date, the shares of this Series are redeemable at the option of the Corporation,
by resolution of the Board of Directors,  in whole or in part, from time to time
upon not less than 30 nor more than 60 days' notice,  at a cash redemption price
of $24,500 per share, subject to adjustment as provided in clause (1) of Section
(e)."

         3. The  foregoing  amendment  was approved by the Board of Directors of
the Corporation.

         4. The  foregoing  amendment  was approved by the required  vote of the
shareholders of the Corporation entitled to vote, in accordance with Section 902
of the General  Corporation  Law of California.  The total number of outstanding
shares entitled to vote with respect to the foregoing  amendment was 120,287,574
shares of Common  Stock,  5,635.602  shares of Equity  Stock,  Series A, 225,000
shares of Equity  Stock,  Series AA and  4,289,544.236  shares of Equity  Stock,
Series  AAA.  None  of the  Convertible  Participating  Preferred  Stock  or the
Convertible  Preferred  Stock,  Series CC is  outstanding.  The number of shares
voting  in  favor  of the  foregoing  amendment  equaled  or  exceeded  the vote
required.  The  required  vote was (i) a  majority  of the  voting  power of the
outstanding shares of Common Stock and Equity Stock, Series A voting together as
a class (Equity Stock,  Series A having 100 votes per share), (ii) a majority of
the  outstanding  shares of Equity  Stock,  Series A and (iii) a majority of the
outstanding shares of Equity Stock, Series A, Equity Stock, Series AA and Equity
Stock, Series AAA voting together as a class.

         We further declare under penalty of perjury under the laws of the State
of  California  that the  matters  set  forth in this  Certificate  are true and
correct of our own knowledge.

Date:  May 10, 2001




                                   /s/ Harvey Lenkin
                                   -----------------
                                   Harvey Lenkin, President




                                   /s/ David Goldberg
                                   ------------------
                                   David Goldberg, Secretary

<PAGE>

                              PUBLIC STORAGE, INC.
          EXHIBIT 11 - STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE



<TABLE>
<CAPTION>
                                                                       For the three months ended    For the six months ended
                                                                               June 30,                        June 30,
                                                                        -----------------------       -----------------------
Earnings Per Share:                                                         2001        2000             2001         2000
---------------------------------------------------------------------   ----------   ----------       ----------   ----------
                                                                             (Amounts in thousands, except per share data)
<S>                                                                     <C>          <C>              <C>          <C>
Net income ..........................................................   $  81,773    $  74,303        $ 156,408    $ 146,864

Less: Preferred Stock dividends:
   10% Cumulative Preferred Stock, Series A .........................      (1,140)      (1,140)          (2,280)      (2,280)
   9.20% Cumulative Preferred Stock, Series B .......................      (1,372)      (1,372)          (2,744)      (2,744)
   Adjustable Rate Preferred Stock, Series C ........................        (506)        (524)          (1,012)      (1,041)
   9.50% Cumulative Preferred Stock, Series D .......................        (713)        (713)          (1,426)      (1,426)
   10.0% Cumulative Preferred Stock, Series E .......................      (1,372)      (1,372)          (2,744)      (2,744)
   9.75% Cumulative Preferred Stock, Series F .......................      (1,401)      (1,401)          (2,802)      (2,802)
   8.875% Cumulative Preferred Stock, Series G ......................      (3,828)      (3,828)          (7,656)      (7,656)
   8.45% Cumulative Preferred Stock, Series H .......................      (3,565)      (3,565)          (7,130)      (7,130)
   8.625% Cumulative Preferred Stock, Series I ......................      (2,156)      (2,156)          (4,312)      (4,312)
   8.00% Cumulative Preferred Stock, Series J .......................      (3,000)      (3,000)          (6,000)      (6,000)
   8.25% Cumulative Preferred Stock, Series K .......................      (2,372)      (2,372)          (4,744)      (4,744)
   8.25% Cumulative Preferred Stock, Series L .......................      (2,372)      (2,372)          (4,744)      (4,744)
   8.75% Cumulative Preferred Stock, Series M .......................      (1,230)      (1,230)          (2,460)      (2,460)
   8.60% Cumulative Preferred Stock, Series Q .......................      (3,709)        --             (6,718)        --
                                                                        ----------   ----------       ----------   ----------
       Total preferred dividends ....................................     (28,736)     (25,045)         (56,772)     (50,083)
                                                                        ----------   ----------       ----------   ----------
                                                                        $  53,037    $  49,258        $  99,636    $  96,781
                                                                        ==========   ==========       ==========   ==========
Allocation of net income allocable to common shareholders to classes:
     Net income allocable to shareholders of the
       Equity Stock, Series A .......................................       5,314        2,666            8,766        4,924
     Net income allocable to shareholders of common
       stock ........................................................      47,723       46,592           90,870       91,857
                                                                        ----------   ----------       ----------   ----------
                                                                        $  53,037    $  49,258        $  99,636    $  96,781
                                                                        ==========   ==========       ==========   ==========
Weighted average common shares outstanding:
   Basic - weighted average common shares
     outstanding ....................................................     120,734      131,588          124,403      132,184
   Effect of dilutive stock options - based on
     treasury stock method using average market .....................
     price                                                                    905          146              727          151
                                                                        ----------   ----------       ----------   ----------
   Diluted weighted average common shares
     outstanding (1) ................................................     121,639      131,734          125,130      132,335
                                                                        ==========   ==========       ==========   ==========
Basic earnings per common share .....................................   $    0.40    $    0.35        $    0.73    $    0.69
                                                                        ==========   ==========       ==========   ==========
Diluted earnings per common share (a) (b) ...........................   $    0.39    $    0.35        $    0.73    $    0.69
                                                                        ==========   ==========       ==========   ==========
</TABLE>

(a)  Diluted net income per common share is computed using the weighted  average
     common shares outstanding (adjusted for stock options).  Commencing January
     1,  2000,  the  7,000,000  Class  B  common  shares  outstanding  began  to
     participate in  distributions of our earnings.  Distributions  per share of
     Class B common stock are equal to 97% of the per share distribution paid to
     our  regular  common  shares.   As  a  result  of  this   participation  in
     distribution  of earnings,  for purposes of computing net income per common
     share,  we began to  include  6,790,000  (7,000,000  x 97%)  Class B common
     shares in the  weighted  average  common  equivalent  shares  for the three
     months ended March 31, 2000.

(b)  There are no additional  potentially  dilutive or anti-dilutive  securities
     for the  three or six  months  ended  June 30,  2001  and 2000  within  the
     definitions  of  Statement  of  Financial  Accounting  Standards  No.  128,
     "Earnings per Share." Accordingly,  there is no separate  presentation of a
     determination of the impact of conversion of anti-dilutive securities (a)

                                   Exhibit 11

<PAGE>


                              PUBLIC STORAGE, INC.
               EXHIBIT 12 - STATEMENT RE: COMPUTATION OF RATIO OF
                            EARNINGS TO FIXED CHARGES

<TABLE>
<CAPTION>
                                                                        Six Months Ended
                                                                            June 30,
                                                                  -----------------------------
                                                                      2001             2000
                                                                  ------------     ------------

<S>                                                               <C>              <C>
Net income                                                        $   156,408      $   146,864
   Add: Minority interest in income.......................             23,370           14,854
   Less: Minority interests in income which do not have fixed
     charges..............................................             (4,846)          (5,054)
                                                                  ------------     ------------

Income from continuing operations.........................            174,932          156,664
   Interest expense.......................................              2,095            2,667
                                                                  ------------     ------------
Total Earnings Available to Cover Fixed Charges...........        $   177,027      $   159,331
                                                                  ============     ============

Total Fixed Charges - Interest expense (including capitalized
   interest)..............................................        $     6,314      $     6,823
                                                                  ============     ============
Preferred Stock dividends.................................        $    56,772      $    50,083
Preferred OP unit distributions...........................             17,010            8,336
                                                                  ------------     ------------

Total Preferred Distributions.............................        $    73,782      $    58,419
                                                                  ============     ============
Total Combined Fixed Charges and Preferred
   distributions..........................................        $    80,096      $    65,242
                                                                  ============     ============
Ratio of Earnings to Fixed Charges........................              28.04x           23.35x
                                                                  ============     ============
Ratio of Earnings to Combined Fixed Charges and Preferred
    distributions.........................................               2.21x            2.44x
                                                                  ============     ============
</TABLE>

<TABLE>
<CAPTION>

                                                                                      For the Year Ended December 31,
                                                                  ------------------------------------------------------------------
                                                                      2000         1999          1998          1997         1996
                                                                  ------------ ------------  ------------  ------------ ------------
                                                                                  (Amounts in thousands, except ratios)
<S>                                                               <C>          <C>           <C>           <C>          <C>
Net income                                                        $   297,088  $   287,885   $   227,019   $   178,649  $   153,549
   Add: Minority interest in income.......................             38,356       16,006        20,290        11,684        9,363
   Less: Minority interests in income which do not have fixed
     charges..............................................            (10,549)     (13,362)      (15,853)      (10,375)      (8,273)
                                                                  ------------ ------------  ------------  ------------ ------------

Income from continuing operations.........................            324,895      290,529       231,456       179,958      154,639
   Interest expense.......................................              3,293        7,971         4,507         6,792        8,482
                                                                  ------------ ------------  ------------  ------------ ------------
Total Earnings Available to Cover Fixed Charges...........        $   328,188  $   298,500   $   235,963   $   186,750  $   163,121
                                                                  ============ ============  ============  ============ ============

Total Fixed Charges - Interest expense (including capitalized
   interest)..............................................        $    13,071  $    12,480   $     7,988   $     9,220  $    10,343
                                                                  ============ ============  ============  ============ ============
Preferred Stock dividends.................................        $   100,138  $    94,793   $    78,375   $    88,393  $    68,599
Preferred OP unit distributions...........................             24,859            -             -             -            -
                                                                  ------------ ------------  ------------  ------------ ------------

Total Preferred Distributions.............................        $   124,997  $    94,793   $    78,375   $    88,393  $    68,599
                                                                  ============ ============  ============  ============ ============
Total Combined Fixed Charges and Preferred
   distributions..........................................        $   138,068  $   107,273   $    86,363   $    97,613  $    78,942
                                                                  ============ ============  ============  ============ ============
Ratio of Earnings to Fixed Charges........................              25.11x       23.92x        29.54x        20.25x       15.77x
                                                                  ============ ============  ============  ============ ============
Ratio of Earnings to Combined Fixed Charges and Preferred
    distributions.........................................               2.38x        2.78x         2.73x         1.91x        2.07x
                                                                  ============ ============  ============  ============ ============
</TABLE>


                                   Exhibit 12

<PAGE>

<TABLE>
<CAPTION>
                                                                            Six Months Ended
                                                                                June 30,
                                                                      ---------------------------
                                                                          2001            2000
                                                                      -----------     -----------

Supplemental disclosure of Ratio of Earnings before Interest, Taxes,
--------------------------------------------------------------------
Depreciation and Amortization ("EBITDA") to fixed charges:
----------------------------------------------------------

<S>                                                                   <C>             <C>
EBITDA.........................................................       $  243,431      $  225,298
Add back preferred minority OP unit distributions..............           17,010           8,336
Interest expense...............................................            2,095           2,667
                                                                      -----------     -----------
Adjusted EBITDA available to cover fixed charges...............       $  262,536      $  236,301
                                                                      ===========     ==========-
Total Fixed Charges - Interest expense (including capitalized
    interest)..................................................       $    6,314      $    6,823
                                                                      ===========     ==========-
Preferred Stock dividends......................................       $   56,772      $   50,083
Preferred OP unit distributions................................           17,010           8,336
                                                                      -----------     -----------
Total Preferred Distributions..................................       $   73,782      $   58,419
                                                                      ===========     ==========-
Total Combined Fixed Charges and Preferred Distributions.......       $   80,096      $   65,242
                                                                      ===========     ==========-
Ratio of EBITDA to Fixed Charges...............................           41.58x          34.63x
                                                                      ===========     ==========-
Ratio of EBITDA to Combined Fixed Charges and Preferred
    Distributions..............................................            3.28x           3.62x
                                                                      ===========     ==========-
</TABLE>

<TABLE>
<CAPTION>

                                                                                     For the Year Ended December 31,
                                                                      --------------------------------------------------------------
                                                                          2000       1999          1998         1997         1996
                                                                      ----------- -----------  -----------  -----------  -----------

Supplemental disclosure of Ratio of Earnings before Interest, Taxes,
--------------------------------------------------------------------
Depreciation and Amortization ("EBITDA") to fixed charges:
----------------------------------------------------------

<S>                                                                   <C>         <C>          <C>          <C>          <C>
EBITDA.........................................................       $  456,956  $  433,877   $  340,680   $  273,628   $  224,508
Add back preffered minority OP unit distributions..............           24,859           -            -            -            -
Interest expense...............................................            3,293       7,971        4,507        6,792        8,482
                                                                      ----------- -----------  -----------  -----------  -----------
Adjusted EBITDA available to cover fixed charges...............       $  485,108  $  441,848   $  345,187   $  280,420   $  232,990
                                                                      =========== ===========  ===========  ===========  ===========
Total Fixed Charges - Interest expense (including capitalized
    interest)..................................................        $  13,071   $  12,480   $    7,988   $    9,220   $   10,343
                                                                      =========== ===========  ===========  ===========  ===========
Preferred Stock dividends......................................       $  100,138  $   94,793   $   78,375   $   88,393   $   68,599
Preferred OP unit distributions................................           24,859           -            -            -            -
                                                                      ----------- -----------  -----------  -----------  -----------
Total Preferred Distributions..................................       $  124,997  $   94,793   $   78,375   $   88,393   $   68,599
                                                                      =========== ===========  ===========  ===========  ===========
Total Combined Fixed Charges and Preferred Distributions.......       $  138,068  $  107,273   $   86,363   $   97,613   $   78,942
                                                                      =========== ===========  ===========  ===========  ===========
Ratio of EBITDA to Fixed Charges...............................           37.11x      35.40x       43.21x       30.41x       22.53x
                                                                      =========== ===========  ===========  ===========  ===========
Ratio of EBITDA to Combined Fixed Charges and Preferred
    Distributions..............................................            3.51x       4.12x        4.00x        2.87x        2.95x
                                                                      =========== ===========  ===========  ===========  ===========
</TABLE>

                                   Exhibit 12