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 September 30, 2000
                               ------------------

                                       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 November 2, 2000:

Common Stock, $.10 Par Value - 124,256,974 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 - 4,353,102 depositary shares  (representing  4,353.102 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
              September 30, 2000 and December 31, 1999                        1

         Condensed Consolidated Statements of Income for the
              Three and Nine Months Ended September 30, 2000 and 1999         2

         Condensed Consolidated Statements of Shareholders' Equity
              for the Nine Months Ended September 30, 2000                    3

         Condensed Consolidated Statements of Cash Flows
              for the Nine Months Ended September 30, 2000 and 1999       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 - 35

Item 3.  Quantitative and Qualitative Disclosures about Market Risk          35

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

Item 6.  Exhibits and Reports on Form 8-K                               36 - 40

<PAGE>

                              PUBLIC STORAGE, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    (AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                            SEPTEMBER 30,         DECEMBER 31,
                                                                                2000                 1999
                                                                            --------------       --------------
                                                                             (Unaudited)
                                     ASSETS
                                     ------
<S>                                                                         <C>                  <C>
Cash and cash equivalents..........................................         $     104,599        $      55,125
Real estate facilities, at cost:
     Land..........................................................             1,089,886            1,036,958
     Buildings.....................................................             2,980,908            2,785,475
                                                                            --------------       --------------
                                                                                4,070,794            3,822,433
     Accumulated depreciation......................................              (632,074)            (533,412)
                                                                            --------------       --------------
                                                                                3,438,720            3,289,021
     Construction in process.......................................               190,582              140,764
                                                                            --------------       --------------
                                                                                3,629,302            3,429,785

Investment in real estate entities.................................               465,921              457,529
Intangible assets, net.............................................               187,342              194,326
Notes receivable from affiliates...................................                31,315               18,798
Other assets.......................................................                68,199               58,822
                                                                            --------------       --------------
              Total assets.........................................         $   4,486,678        $   4,214,385
                                                                            ==============       ==============

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------
Notes payable......................................................         $     160,723        $     167,338
Distributions payable..............................................                     -               82,086
Accrued and other liabilities......................................               106,374               89,261
                                                                            --------------       --------------
              Total liabilities....................................               267,097              338,685

Minority interest:
     Preferred operating partnership units.........................               365,000                    -
     Other.........................................................               163,406              186,600

Commitments and contingencies

Shareholders' equity:
     Preferred Stock, $0.01 par value, 50,000,000 shares authorized,
       11,141,100 shares issued and outstanding, at liquidation
       preference..................................................             1,155,150            1,155,150
     Common Stock, $0.10 par value, 200,000,000 shares authorized,
       124,285,074 shares issued and outstanding (126,697,023 at
       December 31, 1999)..........................................                12,429               12,671
     Equity Stock, Series A, $0.01 par value, 200,000,000 shares
       authorized, 4,353.102 shares issued and outstanding (none
       issued and outstanding at December 31, 1999)................                     -                    -
     Class B Common Stock, $0.10 par value, 7,000,000 shares
       authorized and issued.......................................                   700                  700
     Paid-in capital...............................................             2,490,749            2,463,193
     Cumulative net income.........................................             1,312,489            1,089,973
     Cumulative distributions paid.................................            (1,280,342)          (1,032,587)
                                                                            --------------       --------------
         Total shareholders' equity................................             3,691,175            3,689,100
                                                                            --------------       --------------
              Total liabilities and shareholders' equity...........         $   4,486,678        $   4,214,385
                                                                            ==============       ==============
</TABLE>
                            See accompanying notes.
                                       1

<PAGE>

                              PUBLIC STORAGE, INC.
            CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                             (AMOUNTS IN THOUSANDS)

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                        For the Three Months Ended           For the Nine Months Ended
                                                               September 30,                       September 30,
                                                       -------------------------------      -------------------------------
                                                           2000              1999               2000              1999
                                                       -------------     -------------      -------------     -------------
REVENUES:
   Rental income:
<S>                                                    <C>               <C>                <C>               <C>
       Self-storage facilities.................        $    168,023      $    158,596       $    483,952      $    437,370
       Commercial properties...................               2,847             2,111              8,433             5,973
       Containerized storage...................              11,045             7,387             27,834            19,263
  Equity earnings of real estate entities......               9,479             6,500             26,910            23,969
  Interest and other income....................               4,572             4,369             13,582            12,640
                                                       -------------     -------------      -------------     -------------
                                                            195,966           178,963            560,711           499,215
                                                       -------------     -------------      -------------     -------------
EXPENSES:
  Cost of operations:
       Self-storage facilities.................              54,455            47,645            156,084           133,876
       Commercial properties...................                 926               724              2,756             1,993
       Containerized storage...................               9,429             6,621             25,931            22,146
   Depreciation and amortization...............              37,731            36,640            109,509           101,565
   General and administrative..................               5,436             3,953             14,057             9,371
   Interest expense............................                 626             2,136              3,293             5,870
                                                       -------------     -------------      -------------     -------------
                                                            108,603            97,719            311,630           274,821
                                                       -------------     -------------      -------------     -------------

   Income before minority interest.............              87,363            81,244            249,081           224,394

Minority interest in income:
   Preferred operating partnership units.......              (8,018)                -            (16,354)                -
   Other.......................................              (3,693)           (4,492)           (10,211)          (12,149)
                                                       -------------     -------------      -------------     -------------

NET INCOME.....................................        $     75,652      $     76,752       $    222,516      $    212,245
                                                       =============     =============      =============     =============

NET INCOME ALLOCATION:
  Allocable to preferred shareholders..........        $     25,027      $     24,412       $     75,110      $     69,766
  Allocable to equity shareholders, Series A...               2,666                 -              7,590                 -
  Allocable to common shareholders.............              47,959            52,340            139,816           142,479
                                                       -------------     -------------      -------------     -------------
                                                       $     75,652      $     76,752       $    222,516      $    212,245
                                                       =============     =============      =============     =============

PER COMMON SHARE:
  Net income per share - Basic.................               $0.37             $0.41              $1.06             $1.13
                                                       =============     =============      =============     =============
  Net income per share - Diluted...............               $0.37             $0.40              $1.06             $1.13
                                                       =============     =============      =============     =============
  Net income per depositary share of Equity
  Stock, Series A - Basic and Diluted..........               $0.61                 -              $1.84                 -
                                                       =============     =============      =============     =============
  Weighted average common shares - Basic.......             131,084           129,041            131,815           125,561
                                                       =============     =============      =============     =============
  Weighted average common shares - Diluted.....             131,261           129,249            131,975           125,833
                                                       =============     =============      =============     =============
  Weighted average depositary shares of Equity
      Stock, Series A - Basic and Diluted......               4,353                 -              4,131                 -
                                                       =============     =============      =============     =============
</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, 1999 ..........................   $1,155,150        $12,671        $700       $2,463,193


Issuance of common stock:
   Exercise of stock options (232,598 shares) ..........            -             22           -            4,382
   Conversion of OP units (255,853 shares) .............            -             26           -            6,803

Repurchase of common stock (2,900,400 shares) ..........            -           (290)          -          (64,714)

Issuance of Equity Stock, Series A to Public (4,300.555
shares) ................................................            -              -           -           83,810

Issuance of Equity Stock, Series A to affiliate (52.547
shares) ................................................            -              -           -            1,025

Costs in connection with issuance of preferred operating
partnership units (see note 7) .........................            -              -           -           (3,750)

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

Cash distributions:
   Cumulative Senior Preferred Stock ...................            -              -           -                -
   Equity Stock, Series A ..............................            -              -           -                -
   Class B Common Stock ................................            -              -           -                -
   Common Stock ........................................            -              -           -                -
                                                           -----------       --------       -----      -----------
Balances at September 30, 2000 .........................   $1,155,150        $12,429        $700       $2,490,749
                                                           ===========       ========       =====      ===========
</TABLE>
<TABLE>
<CAPTION>

                                                                                               Total
                                                            Cumulative      Cumulative       Shareholders'
                                                            Net Income     Distributions        Equity
                                                           -----------     -------------     ------------

<S>                                                        <C>             <C>                <C>
Balances at December 31, 1999 ..........................   $1,089,973      $(1,032,587)       $3,689,100


Issuance of common stock:
   Exercise of stock options (232,598 shares) ..........            -                -             4,404
   Conversion of OP units (255,853 shares) .............            -                -             6,829

Repurchase of common stock (2,900,400 shares) ..........            -                -           (65,004)

Issuance of Equity Stock, Series A to Public (4,300.555
shares) ................................................            -                -            83,810

Issuance of Equity Stock, Series A to affiliate (52.547
shares) ................................................            -                -             1,025

Costs in connection with issuance of preferred operating
partnership units (see note 7) .........................            -                -            (3,750)

Net income .............................................      222,516                -           222,516

Cash distributions:
   Cumulative Senior Preferred Stock ...................            -          (75,110)         (75,110)
   Equity Stock, Series A ..............................            -           (7,590)          (7,590)
   Class B Common Stock ................................            -           (8,555)          (8,555)
   Common Stock ........................................            -         (156,500)        (156,500)
                                                           -----------     -------------     -------------
Balances at September 30, 2000 .........................   $1,312,489      $(1,280,342)      $3,691,175
                                                           ===========     =============     =============

</TABLE>
                            See accompanying notes.
                                       3
<PAGE>

                              PUBLIC STORAGE, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (AMOUNTS IN THOUSANDS)

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                           For the Nine Months Ended
                                                                                                 September 30,
                                                                                        ---------------------------------
                                                                                            2000               1999
                                                                                        --------------     --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                     <C>                <C>
   Net income..................................................................         $     222,516      $     212,245
   Adjustments to reconcile net income to net cash provided by operating
     activities:
     Depreciation and amortization.............................................               109,509            101,565
     Depreciation included in equity earnings of real estate entities..........                15,522             14,405
     Minority interest in income...............................................                26,565             12,149
                                                                                        --------------     --------------
         Total adjustments.....................................................               151,596            128,119
                                                                                        --------------     --------------
             Net cash provided by operating activities.........................               374,112            340,364
                                                                                        --------------     --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Principal payments received on notes receivable from affiliates...........                 2,573             28,082
     Notes receivable from affiliates..........................................               (11,400)           (30,484)
     Capital improvements to real estate facilities............................               (16,605)           (18,158)
     Construction in process...................................................              (159,403)           (76,345)
     Acquisition of minority interests.........................................               (29,700)           (27,228)
     Proceeds from the disposition of real estate facilities...................                 8,652              8,552
     Proceeds from the disposition of investments in real estate entities......                21,929                  -
     Acquisition of investment in real estate entities.........................               (63,380)           (55,190)
     Acquisition of real estate facilities.....................................               (37,756)            (6,162)
     Acquisition cost of business combinations.................................               (66,776)          (181,034)
                                                                                        --------------     --------------
             Net cash used in investing activities.............................              (351,866)          (357,967)
                                                                                        --------------     --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Principal payments on notes payable.......................................                (6,615)            (9,474)
     Net proceeds from the issuance of common stock............................                 4,404              8,182
     Net proceeds from the issuance of preferred stock.........................                     -            276,933
     Net proceeds from the issuance of equity stock............................                39,800                  -
     Net proceeds from the issuance of preferred partnership units.............               361,250                  -
     Repurchase of common stock................................................               (65,004)           (46,546)
     Distributions paid to preferred and common shareholders...................              (285,831)          (154,862)
     Investment by minority interests..........................................                15,241                  -
     Distributions from operations to minority interests.......................               (31,578)           (19,501)
     Net reinvestment (divestment) of minority interests.......................                (7,569)               880
     Other.....................................................................                 3,130             (3,466)
                                                                                        --------------     --------------
             Net cash provided by financing activities.........................                27,228             52,146
                                                                                        --------------     --------------

Net increase in cash and cash equivalents.....................................                 49,474             34,543
Cash and cash equivalents at the beginning of the period......................                 55,125             51,225
                                                                                        --------------     --------------
Cash and cash equivalents at the end of the period............................          $     104,599      $      85,768
                                                                                        ==============     ==============
</TABLE>
                            See accompanying notes.
                                       4

<PAGE>

                              PUBLIC STORAGE, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (AMOUNTS IN THOUSANDS)

                                   (UNAUDITED)

                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                For the Nine Months Ended
                                                                                      September 30,
                                                                            ------------------------------------
                                                                                2000                 1999
                                                                            ---------------      ---------------
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

 Business combinations:
<S>                                                                         <C>                  <C>
     Real estate facilities.........................................        $      (82,163)      $     (729,294)
     Construction in process........................................                     -              (11,449)
     Investment in real estate entities.............................                     -                 (356)
     Mortgage notes receivable......................................                     -               (6,739)
     Other assets...................................................                  (183)              (1,697)
     Accrued and other liabilities..................................                 1,177               22,387
     Minority interest..............................................                     -               32,201
     Notes payable..................................................                     -              100,000

 Reduction to investment in real estate entities in connection with:
     Business combinations..........................................                14,393               66,690
     Acquisitions of real estate facilities.........................                 3,144                    -

 Disposition of real estate investment in exchange for other assets:
     Investment in real estate entities.............................                     -                    -
     Other assets...................................................                     -               14,260

 Real estate acquired in exchange for equity stock and reduction to
    investment in real estate entities..............................                (4,169)                   -

 Acquisition of minority interest and real estate in exchange for common stock:
     Real estate facilities.........................................               (17,103)             (34,192)
     Minority interest..............................................               (19,426)             (28,661)

 Real estate facilities and accumulated depreciation disposed of in
   exchange for notes receivable, minority interests and other assets               18,769               22,677

 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)             (10,460)

Issuance of Equity Stock, Series A:
    In connection with special distribution to common shareholders..                44,010                    -
    In connection with acquisition of real estate facilities........                 1,025                    -

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

Other assets received in connection with real estate dispositions...                     -               (3,800)

Issuance of common stock :
     In connection with business combinations.......................                     -              347,223
     To acquire minority interest in consolidated real estate
     entities.......................................................                 6,829               35,625

</TABLE>
                            See accompanying notes.
                                       5

<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2000
                                   (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 September 30, 2000,  PSPUD had 40 facilities in
     operation.

              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 September 30, 2000, we had direct and indirect equity
     interests in 1,480 properties located in 38 states, including 1,351 storage
     facilities   and  129  commercial   properties.   We  operate  all  of  the
     self-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  35  controlled   entities  (the   "Consolidated   Entities").
     Collectively,  the  Company  and these  entities  own a total of 1,244 real
     estate   facilities,   consisting  of  1,238  storage  facilities  and  six
     commercial properties.

              At September  30, 2000,  we had equity  investments  in 11 limited
     partnerships in which we do not have a controlling interest.  These limited
     partnerships  collectively  own  113  self-storage  facilities,  which  are
     managed by the Company. In addition, we own approximately 41% of the common
     interest in PS Business Parks,  Inc.  ("PSB"),  which owns and operates 123
     commercial properties. We do not control these entities,  accordingly,  our
     investments in these limited  partnerships  and PSB are accounted for using
     the equity method.

     Use of estimates
     ----------------

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

     Income 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 2000 and,
     accordingly,   no  provision   for  income  taxes  has  been  made  in  the
     accompanying financial statements.

                                       6

<PAGE>

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

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

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

              Due  to  the  short  period  to  maturity  of our  cash  and  cash
     equivalents,  accounts  receivable,  other  assets,  and  accrued and other
     liabilities,  the carrying values as presented on the consolidated  balance
     sheets are reasonable estimates of fair value.

              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 and treasury  securities,  are only invested in
     entities  with  an   investment   grade  rating.   Notes   receivable   are
     substantially  all  secured by real estate  facilities  that we believe are
     valued in excess of the related note  receivable.  Accounts  receivable are
     not a  significant  portion of total  assets and are  comprised  of a large
     number of individual customers.

     Real estate facilities
     ----------------------

              Real  estate  facilities  are  recorded at cost.  Depreciation  is
     computed using the straight-line  method over the estimated useful lives of
     the buildings and improvements, which are generally between 5 and 25 years.

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

              In 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 assets, including those associated with the containerized storage
     business.  Included  in other  assets  with  respect  to the  containerized
     storage business is furniture,  fixtures, and equipment (net of accumulated
     depreciation)  of  $32,454,000  and  $34,704,000  at September 30, 2000 and
     December 31, 1999, respectively.  Included in depreciation and amortization
     expense  for  the  three  months  ended  September  30,  2000  and  1999 is
     $1,204,000 and $1,199,000,  respectively, and $3,612,000 and $3,631,000 for
     the nine  months  ended  September  30,  2000 and  1999,  respectively,  of
     depreciation  of furniture,  fixtures,  and equipment of the  containerized
     storage business.

                                       7

<PAGE>

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

              Intangible  assets  consist  of  property   management   contracts
     ($165,000,000)  and the  cost  over  the fair  value  of net  tangible  and
     identifiable  intangible assets ($67,726,000)  acquired.  Intangible assets
     are amortized straight-line over 25 years. At September 30, 2000 intangible
     assets are net of accumulated  amortization of $45,384,000  ($38,400,000 at
     December 31, 1999).  Included in depreciation and amortization  expense for
     the three and nine months ended  September  30, 2000 and 1999 is $2,328,000
     and  $6,984,000,  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 and included in cost of operations.

     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.

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

              Dividends paid to our preferred  shareholders totaling $25,027,000
     and  $24,412,000  for the three months ended  September  30, 2000 and 1999,
     respectively,  and  $75,110,000  and  $69,766,000 for the nine months ended
     September  30, 2000 and 1999,  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 nine months ended September 30, 2000 was allocated  approximately
     $2,666,000 and  $7,590,000,  respectively,  of net income and the remaining
     $47,959,000 and  $139,816,000,  respectively,  was allocated to the regular
     common shares.

              Diluted net income per common share is computed using the weighted
     average common shares outstanding (adjusted for stock options).  Commencing
     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,  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 and nine months ended  September 30, 2000.
     Weighted  average shares for the three and nine months ended  September 30,
     1999 does not include any shares with  respect to the Class B common  stock
     as these  shares did not  participate  in  distributions  of the  Company's
     earnings prior to January 1, 2000.

                                       8

<PAGE>

     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.

     Reclassifications
     -----------------

              Certain  reclassifications  have  been  made  to the  consolidated
     financial statements for 1999 in order to conform to the 2000 presentation.

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

     Affiliated partnership acquisition
     ----------------------------------

              On  September  15,  2000,  we  acquired  the  remaining  ownership
     interests  in an  affiliated  partnership,  of  which  we are  the  general
     partner,  for an aggregate  acquisition cost of $81,169,000,  consisting of
     cash of $66,776,000 and the reduction of our pre-existing investment in the
     amount of  $14,393,000.  Prior to the  acquisition,  we  accounted  for our
     investment in the partnership using the equity method of accounting.

              The  acquisition  was accounted  for using the purchase  method of
     accounting.  Accordingly,  allocations of the total acquisition cost to the
     net assets  acquired  were made based on the fair value of such  assets and
     liabilities assumed with respect to the transaction, as follows:

                                                     Total
                                               ----------------
    Real estate facilities...............      $    82,163,000
    Other assets.........................              183,000
    Accrued and other liabilities........           (1,177,000)
                                               ----------------
                                               $    81,169,000
                                               ================


     Merger with Storage Trust Realty, Inc.
     --------------------------------------

              On March 12,  1999,  we  completed  a merger  with  Storage  Trust
     Realty, Inc. ("Storage Trust").  All the outstanding stock of Storage Trust
     was exchanged for  13,009,485  shares of the Company's  common stock and an
     additional  1,011,963  shares were reserved for issuance upon conversion of
     limited partnership units in Storage Trust's operating partnership. In this
     merger, the Company acquired interests in 215 storage facilities located in
     16 states totaling approximately 12 million net rentable square feet.

              The historical  operating results of the above  transactions prior
     to each respective acquisition date have not been included in the Company's
     historical  operating  results.  Pro forma  data  (unaudited)  for the nine
     months  ended   September  30,  2000  and  1999,  as  though  the  business
     combinations  above had been  effective at the beginning of fiscal 1999 are
     as follows:

                                       9

<PAGE>

<TABLE>
<CAPTION>
   (In thousands, except per share data)              For the Nine Months Ended
--------------------------------------------   ---------------------------------------
                                               September 30, 2000   September 30, 1999
                                               ------------------   ------------------
<S>                                               <C>                  <C>
Revenues....................................      $  567,941           $  523,404
Net income..................................      $  220,878           $  214,346
Net income per common share (Basic).........      $     1.05           $     1.11
Net income per common share (Diluted).......      $     1.05           $     1.11
</TABLE>

              The pro forma  data does not  purport to be  indicative  either of
     results  of  operations  that  would  have  occurred  had the  transactions
     occurred at the beginning of fiscal 1999 or future results of operations of
     the  Company.  Certain  pro forma  adjustments  were  made to the  combined
     historical  amounts to  reflect  (i)  expected  reductions  in general  and
     administrative  expenses,  (ii) estimated  increased  interest expense from
     bank  borrowings  to finance the cash portion of the  acquisition  cost and
     (iii) estimated increase in depreciation expense.

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

              Activity in real estate facilities during 2000 is as follows:

                                                                In thousands
                                                                ------------
Operating facilities, at cost
  Balance at December 31, 1999 ..............................   $ 3,822,433
  Developed facilities ......................................       109,585
  Property acquisitions:
     Business combinations  (Note 3) ........................        82,163
     Other acquisitions .....................................        41,925
  Disposition of facilities .................................       (19,020)
  Acquisition of minority interest  (Note 7) ................        17,103
  Capital improvements ......................................        16,605
                                                                ------------
  Balance at September 30, 2000 .............................     4,070,794
                                                                ------------

Accumulated depreciation:
  Balance at December 31, 1999 ..............................      (533,412)
  Additions during the year .................................       (98,913)
  Disposition of facilities .................................           251
                                                                ------------
  Balance at September 30, 2000 .............................      (632,074)
                                                                ------------

Construction in progress:
  Balance at December 31, 1999 ..............................       140,764
  Current development .......................................       159,403
  Developed facilities ......................................      (109,585)
                                                                ------------
  Balance at September 30, 2000 .............................       190,582
                                                                ------------

  Total real estate facilities at September 30, 2000 ........   $ 3,629,302
                                                                ============

                                       10
<PAGE>


              During the nine months  ended  September  30,  2000,  we opened 18
     newly developed  facilities having  approximately  1,263,000  aggregate net
     rentable  square  feet  and a  total  cost  of  $87.5  million,  and  seven
     expansions of facilities having a total cost of $22.1 million. Construction
     in  progress  at  September  30,  2000  consists  primarily  of 41  storage
     facilities and 18 expansions of existing storage facilities.

              During the nine months ended  September  30, 2000, we acquired two
     commercial facilities and eight storage facilities in separate transactions
     for an aggregate  cost of  $41,925,000.  The  aggregate  cost  consisted of
     $37,756,000  cash, a reduction of  $3,144,000  in investment in real estate
     entities,  and  $1,025,000 in the issuance of the  Company's  Equity Stock,
     Series A.

              In January,  2000, we disposed of eight storage  facilities for an
     aggregate of  $18,769,000,  composed of cash  ($8,652,000),  a reduction of
     minority interests ($6,427,000), and a note receivable ($3,690,000).  There
     was no gain or loss on this transaction.

              Our policy is to capitalize  interest  incurred on debt during the
     course of construction of our real estate facilities.  Interest capitalized
     during the three and nine months ended  September  30, 2000 was  $2,672,000
     and  $6,828,000,  respectively,  compared  to  $1,285,000  and  $3,231,000,
     respectively, for the same periods in 1999.

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

              At September  30, 2000,  our  investment  in real estate  entities
     consists of (i) partnership interests in 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 nine months  ended  September  30, 2000 we  recognized
     earnings from our investments of $9,479,000 and $26,910,000,  respectively,
     compared to $6,500,000 and $23,969,000 for the same periods in 1999.

              In April  1997,  we  formed a joint  venture  partnership  with an
     institutional   investor  (the  "Joint  Venture")  to  participate  in  the
     development of approximately $220 million of storage facilities.  The Joint
     Venture  has a total of 46 opened  facilities  with a total  cost of $222.7
     million at September 30, 2000, and has one project in  development  with an
     aggregate cost incurred to date of approximately $6.0 million ($1.0 million
     estimated to complete) at September 30, 2000.

              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 September 30, 2000 are as follows:

                                       11

<PAGE>

<TABLE>
<CAPTION>
                                                           For the nine months ended September 30, 2000
                                             --------------------------------------------------------------------------
                                              Other Equity       Development
                                              Investments       Joint Venture             PSB                Total
                                             --------------      --------------      --------------      --------------
                                                                    (Amounts in thousands)
<S>                                          <C>                 <C>                 <C>                 <C>
Rental income.........................       $      30,362       $      18,342       $     107,265       $     155,969
Other income..........................               1,536                 526               5,331               7,393
                                             --------------      --------------      --------------      --------------
Total revenues........................              31,898              18,868             112,596             163,362
                                             --------------      --------------      --------------      --------------

Cost of operations....................               9,479               7,891              29,651              47,021
Depreciation..........................               3,327               4,692              26,723              34,742
Other expenses........................               2,492                 100               4,105               6,697
                                             --------------      --------------      --------------      --------------
Total expenses........................              15,298              12,683              60,479              88,460
                                             --------------      --------------      --------------      --------------
Income before minority interest.......              16,600               6,185              52,117              74,902
Minority interest ....................                   -                   -             (18,391)            (18,391)
                                             --------------      --------------      --------------      --------------
Net income............................       $      16,600       $       6,185       $      33,726       $      56,511
                                             ==============      ==============      ==============      ==============

At September 30, 2000:
----------------------
Real estate, net......................       $      69,069       $     218,060       $     830,066       $   1,117,195
Total assets..........................             101,889             222,571             923,518           1,247,978
Total liabilities.....................              44,917               3,201              58,184             106,302
Minority interest.....................                   -                   -             304,490             304,490
Total equity..........................              56,972             219,370             560,844             837,186

The Company's investment (book value) at
  September 30, 2000..................       $     146,920       $      65,811       $     253,190       $     465,921

The Company's effective average
  ownership interest at September 30,
  2000................................                46%                 30%                 42%

</TABLE>

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 September 30, 2000, we had no borrowings on our
     line of credit.

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.

                                       12

<PAGE>

              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   approximately
     $73,274,000  relative to the development joint venture,  representing total
     contributions by our joint venture partner net of distributions received by
     our joint venture  partner  since  inception of the  partnership.  Minority
     interest has  increased  $15,241,000  from December 31, 1999 as a result of
     contributions by our joint venture partner,  and decreased by $5,414,000 as
     a result of distributions to our joint venture partner.

              During 2000, one of our operating partnerships issued in aggregate
     $365.0  million of preferred  partnership  units:  March 17, 2000, - $240.0
     million of 9.5% Series N Cumulative  Redeemable  Perpetual Preferred Units,
     March 29, 2000 - $75.0  million of 9.125%  Series O  Cumulative  Redeemable
     Perpetual  Preferred  Units,  and August 11, 2000 - $50.0  million of 8.75%
     Series P Cumulative  Redeemable  Perpetual Preferred Units. These preferred
     units  are not  redeemable  during  the first 5 years,  thereafter,  at our
     option,  we can call the units for  redemption at the issuance  amount plus
     any  unpaid  distributions.  The 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,  the Series O
     preferred units are  convertible  into shares of 9.125% Series O Cumulative
     Preferred  Stock and the  Series P  preferred  units are  convertible  into
     shares of 8.75% Series P  Cumulative  Preferred  Stock of the  Company.  We
     incurred   approximately   $3,750,000  in  costs  in  connection  with  the
     issuances;  these costs were  recorded  as a reduction  to Paid in Capital.
     These transactions had the effect of increasing minority interest by $365.0
     million.  For the three and nine  months  ended  September  30,  2000,  the
     holders  of these  preferred  units  were paid in  aggregate  approximately
     $8,018,000 and $16,354,000,  respectively, in distributions and received an
     equivalent allocation of minority interest in earnings.

              In  connection  with the merger with Storage  Trust in March 1999,
     minority interest  increased by approximately  $27,009,000,  reflecting the
     fair value of operating  partnership  units ("OP Units") in Storage Trust's
     operating partnership owned by minority interests. OP Units are convertible
     on a one-for-one basis (subject to certain  limitations) into common shares
     of the Company at the option of the unitholder. Minority interest in income
     with respect to OP Units  reflects the OP Units' share of the net income of
     the Company,  with net income allocated to weighted average  outstanding OP
     Units on a per unit basis  equal to  diluted  earnings  per  common  share.
     During the nine months  ended  September  30,  2000,  277,105 OP units were
     redeemed in connection with the sale of real estate  facilities and 255,853
     OP units were  converted into shares of the Company's  common stock.  As of
     September 30, 2000, 237,934 of such units are outstanding.

              During the nine months ended September 30, 2000, minority interest
     was reduced by $6,427,000 in connection with the disposition of real estate
     facilities.  In addition,  during the nine months ended September 30, 2000,
     we acquired interests in the Consolidated Entities for an aggregate cost of
     $36,529,000,  comprised of $29,700,000 cash and issuance of common stock of
     $6,829,000; these acquisitions had the effect of reducing minority interest
     by  $19,426,000,  with  the  excess  of cost  over  underlying  book  value
     ($17,103,000) allocated to real estate.

                                       13

<PAGE>

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

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

              At September 30, 2000,  we had the  following  series of Preferred
     Stock outstanding:

                                  Dividend        Shares          Carrying
            Series                  Rate        Outstanding        Amount
----------------------------    -----------     ------------    -------------
                                          (Dollar amount in thousands)
Series A                            10.000%       1,825,000     $     45,625
Series B                             9.200%       2,386,000           59,650
Series C                         Adjustable       1,200,000           30,000
Series D                             9.500%       1,200,000           30,000
Series E                            10.000%       2,195,000           54,875
Series F                             9.750%       2,300,000           57,500
Series G                             8.875%           6,900          172,500
Series H                             8.450%           6,750          168,750
Series I                             8.625%           4,000          100,000
Series J                             8.000%           6,000          150,000
Series K                             8.250%           4,600          115,000
Series L                             8.250%           4,600          115,000
Series M                             8.750%           2,250           56,250
                                                ------------    -------------
Total Senior Preferred Stock                     11,141,100     $  1,155,150
                                                ============    =============

              The Series A through Series M 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 September  30, 2000,  there were no
     dividends in arrears and the Debt Ratio was 3.1%.

              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. 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,  Series H,  Series I, Series J, Series K, Series L and Series M),
     plus accrued and unpaid dividends.

              At September  30, 2000,  9,600  shares  (represented  by 9,600,000
     depositary  shares) of 9.5%  Series N  Cumulative  Preferred  Stock,  3,000
     shares  (represented  by 3,000,000  depositary  shares) of 9.125%  Series O
     Cumulative  Preferred  Stock,  and 2,000 shares  (represented  by 2,000,000
     depositary  shares)  of 8.75%  series P  Cumulative  Preferred  Stock  were
     reserved  for  issuance  for the  conversion  of our Series N, Series O and
     Series P Cumulative  Redeemable  Perpetual  Preferred Units  outstanding at
     September 30, 2000.

                                       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 January 2000, we issued 4,300,555  depositary shares (2,200,555
     shares as part of a special distribution  declared on November 15, 1999 and
     2,100,000 shares in a separate public offering) each  representing  1/1,000
     of a share of Equity Stock,  Series A ("Equity  Stock A"). In addition,  in
     the second  quarter of 2000, we issued 52,547  depositary  shares of Equity
     Stock A to a  related  party in  connection  with the  acquisition  of real
     estate  facilities.  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  (prorated  for the year  2000).  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, 2005.  On or after March 31, 2005,  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  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
     ------------

              During the nine  months  ended  September  30,  2000,  the Company
     issued  232,598  shares of common stock in connection  with the exercise of
     stock options and 255,853  shares in connection  with the  conversion of OP
     Units.

              As  previously   announced,   the  Company's  Board  of  Directors
     authorized the repurchase  from time to time of up to 15,000,000  shares of
     the  Company's  common stock on the open market or in privately  negotiated
     transactions. In the nine months ended September 30, 2000, we repurchased a
     total of 2,900,400  shares,  for a total  aggregate  cost of  approximately
     $65,004,000. From the initial authorization through September 30, 2000, the
     Company has repurchased a total of 10,309,227  shares of common stock at an
     aggregate cost of approximately $245,825,000.  From October 1, 2000 through
     October 27, 2000,  we  repurchased  25,000  shares at an aggregate  cost of
     approximately $0.6 million.

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

              Commencing  January 1, 2000, the Class B Common Stock participates
     in distributions  at the rate of 97% of the per share  distributions on the
     Common Stock, provided that cumulative  distributions of at least $0.22 per
     quarter  per share have been paid on the Common  Stock.  The Class B Common
     Stock will (i) not  participate in liquidating  distributions,  (ii) not be
     entitled to vote (except as expressly required by California law) and (iii)
     automatically  convert into Common Stock, on a share for share basis,  upon
     the later to occur of FFO per common  share  aggregating  $3.00  during any
     period of four consecutive calendar quarters or January 1, 2003.

              For these  purposes,  FFO means net income  (loss) before (i) gain
     (loss) on early  extinguishment  of debt, (ii) minority  interest in income
     and (iii) gain (loss) on disposition  of real estate,  adjusted as follows:
     (a) plus  depreciation and  amortization,  and (b) less FFO attributable to
     minority  interest.  FFO per common  share means FFO less  preferred  stock
     dividends and Equity Stock 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 $2.58 for the four consecutive calendar quarters ended September
     30, 2000.

                                       16

<PAGE>

     Dividends
     ---------

              The following summarizes dividends during the first nine months of
     2000:

                                            Distributions
                                             Per Share or
                                              Depositary           Total
                                                Share           Distributions
                                            --------------      -------------
Series A..............................            $1.875          $3,422,000
Series B..............................            $1.725           4,116,000
Series C..............................            $1.289           1,547,000
Series D..............................            $1.782           2,137,000
Series E..............................            $1.875           4,116,000
Series F..............................            $1.828           4,205,000
Series G..............................            $1.665          11,482,000
Series H..............................            $1.584          10,694,000
Series I..............................            $1.617           6,469,000
Series J..............................            $1.500           9,000,000
Series K .............................            $1.547           7,116,000
Series L .............................            $1.547           7,116,000
Series M .............................            $1.640           3,690,000
                                                                -------------
                                                                  75,110,000
Equity Stock, Series A................            $1.840           7,590,000
Common................................            $1.260         156,500,000
Common, Series B......................            $1.222           8,555,000
                                                                -------------
   Total dividends....................                          $247,755,000
                                                                =============

              For each of the  first  three  quarters  of fiscal  2000,  we paid
     regular quarterly  distributions to our common  shareholders equal to $0.22
     per common share.  In addition to the regular  quarterly  distribution,  on
     September 29, 2000, we paid a special cash distribution of $0.60 per common
     share. This special  distribution  combined with accumulated  distributions
     paid  throughout  fiscal 2000 will enable the Company to meet its estimated
     distribution requirements to maintain its REIT status.

              At  December  31,   1999,   we  accrued   distributions   totaling
     $82,086,000  ($0.64 per share) of the common  dividend  for 1999,  of which
     $38,076,000  was paid on January 14, 2000 in cash and  $44,010,000 was paid
     in the issuance of depositary shares of Equity Stock A.

              The dividend rate on the Series C Preferred  Stock for each of the
     three   quarters   of  2000  was  equal  to  6.897%,   6.974%  and  6.750%,
     respectively,  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 December 31,
     2000 will be equal to 6.75% per annum.

10.  Segment information
     -------------------

              In July 1997,  the  Financial  Accounting  Standards  Board issued
     Statement No. 131, "Disclosures about Segments of an Enterprise and Related
     Information"  ("FAS 131"),  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.

                                       17

<PAGE>

     Description of each reportable segment
     --------------------------------------

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

              The   self-storage   segment   comprises  the  direct   ownership,
     development,  and  operation  of  traditional  storage  facilities  and the
     ownership of equity interests in entities that own storage properties.  The
     containerized   storage  operations   reflect  the  containerized   storage
     operations of PSPUD. The commercial  property segment reflects our interest
     in the ownership and operation of commercial properties.  The vast majority
     of the commercial  property  operations are conducted through PSB, and to a
     much  lesser   extent  the  Company  and  certain  of  its   unconsolidated
     subsidiaries  own  commercial  space,  managed by PSB, in  facilities  that
     combine storage and commercial space for rent.

     Measurement of segment profit or loss
     -------------------------------------

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

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

     Measurement of segment assets
     -----------------------------

              No segment data  relative to assets or  liabilities  is presented,
     because we do not evaluate performance based upon the assets or liabilities
     of the segments.  We believe that the historical cost of the Company's real
     property does not have any significant  bearing upon the performance of the
     commercial  property and storage segments.  In the same manner,  management
     believes  that the book value of  investment  in real  estate  entities  as
     having no bearing  upon the  results of those  investments.  The only other
     types of assets that might be  allocated to  individual  segments are trade
     receivables,  payables, and other assets which arise in the ordinary course
     of business,  but they are also not a significant factor in the measurement
     of segment  performance.  We perform  post-acquisition  analysis of various
     investments; however, such evaluations are beyond the scope of FAS 131.

              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."

                                       18

<PAGE>

<TABLE>
<CAPTION>
                                                           Three months ended                      Nine months ended
                                                              September 30,                           September 30,
                                                         -----------------------                -----------------------
                                                            2000         1999        Change        2000         1999         Change
                                                         ----------   ----------   ----------   ----------   ----------   ----------
                                                                                (Dollar amounts in thousands)
RECONCILIATION OF REVENUES BY SEGMENT

Self storage
------------
<S>                                                      <C>          <C>           <C>         <C>          <C>           <C>
  Self-storage property rentals........................  $ 168,023    $ 158,596     $  9,427    $ 483,952    $ 437,370     $ 46,582
  Equity in earnings - self storage property operations      5,006        4,364          642       15,988       15,483          505
  Equity in earnings - Depreciation (self storage) ....     (1,989)      (1,817)        (172)      (5,015)      (5,784)         769
                                                         ----------   ----------   ----------   ----------   ----------   ----------
      Self storage segment revenues....................    171,040      161,143        9,897      494,925      447,069       47,856
                                                         ----------   ----------   ----------   ----------   ----------   ----------

Containerized storage .................................     11,045        7,387        3,658       27,834       19,263        8,571
---------------------                                    ----------   ----------   ----------   ----------   ----------   ----------

Commercial  properties
----------------------
  Commercial property rentals..........................      2,847        2,111          736        8,433        5,973        2,460
  Equity in earnings - commercial property operations..     10,878        9,231        1,647       31,436       26,531        4,905
  Equity in earnings - Depreciation (commercial
     properties).......................................     (3,403)      (3,014)        (389)     (10,507)      (8,621)      (1,886)
                                                         ----------   ----------   ----------   ----------   ----------   ----------
      Commercial properties  segment revenues..........     10,322        8,328        1,994       29,362       23,883        5,479
                                                         ----------   ----------   ----------   ----------   ----------   ----------

Other items not allocated to segments
-------------------------------------
  Equity in earnings - general and administrative and
     other.............................................     (1,013)      (2,264)       1,251       (4,992)      (3,640)      (1,352)
  Interest and other income............................      4,572        4,369          203       13,582       12,640          942
                                                         ----------   ----------   ----------   ----------   ----------   ----------
      Total other items not allocated to segments......      3,559        2,105        1,454        8,590        9,000         (410)
                                                         ----------   ----------   ----------   ----------   ----------   ----------

      Total revenues...................................  $ 195,966    $ 178,963     $ 17,003    $ 560,711    $ 499,215     $ 61,496
                                                         ==========   ==========   ==========   ==========   ==========   ==========
</TABLE>
                                       19

<PAGE>

<TABLE>
<CAPTION>
                                                             Three months ended                      Nine months ended
                                                                September 30,                          September 30,
                                                          ----------------------                ----------------------
                                                             2000        1999       Change         2000        1999       Change
                                                          ----------  ----------  ----------    ----------  ----------  ----------
                                                                               (Dollar amounts in thousands)
RECONCILIATION OF NET INCOME BY SEGMEN

Self storage
------------
<S>                                                       <C>         <C>         <C>           <C>         <C>         <C>
  Self-storage properties .............................   $ 113,568   $ 110,951   $  2,617      $ 327,868   $ 303,494   $  24,374
  Depreciation and amortization - self storage.........     (35,957)    (35,006)      (951)      (104,122)    (96,645)     (7,477)
  Equity in earnings - self storage property operations       5,006       4,364        642         15,988      15,483         505
  Equity in earnings - depreciation (self-storage) ....      (1,989)     (1,817)      (172)        (5,015)     (5,784)        769
                                                          ----------  ----------  ----------    ----------  ----------  ----------
      Total self storage segment net income............      80,628      78,492      2,136        234,719     216,548      18,171
                                                          ----------  ----------  ----------    ----------  ----------  ----------

Containerized storage..................................
---------------------
  Containerized Storage Operations.....................       1,616         766        850          1,903      (2,883)      4,786
  Containerized Storage Depreciation...................      (1,204)     (1,199)        (5)        (3,612)     (3,631)         19
                                                          ----------  ----------  ----------    ----------  ----------  ----------
      Total containerized storage segment net income...         412        (433)       845         (1,709)     (6,514)      4,805
                                                          ----------  ----------  ----------    ----------  ----------  ----------

Commercial properties
---------------------
  Commercial properties................................       1,921       1,387        534          5,677       3,980       1,697
  Depreciation and amortization - commercial properties        (570)       (435)      (135)        (1,775)     (1,289)       (486)
  Equity in earnings - commercial property operations..      10,878       9,231      1,647         31,436      26,531       4,905
  Equity in earnings - depreciation (commercial
     properties) ......................................      (3,403)     (3,014)      (389)       (10,507)     (8,621)     (1,886)
                                                          ----------  ----------  ----------    ----------  ----------  ----------
      Total commercial property segment net income.....       8,826       7,169      1,657         24,831      20,601       4,230
                                                          ----------  ----------  ----------    ----------  ----------  ---------

Other items not allocated to segments
-------------------------------------
  Equity in earnings - general and administrative and
     other.............................................      (1,013)     (2,264)     1,251         (4,992)     (3,640)     (1,352)
  Interest and other income............................       4,572       4,369        203         13,582      12,640         942
  General and administrative...........................      (5,436)     (3,953)    (1,483)       (14,057)     (9,371)     (4,686)
  Interest expense.....................................        (626)     (2,136)     1,510         (3,293)     (5,870)      2,577
  Minority interest in income..........................     (11,711)     (4,492)    (7,219)       (26,565)    (12,149)    (14,416)
                                                          ----------  ----------  ----------    ----------  ----------  ----------
      Total other items not allocated to segments......     (14,214)     (8,476)    (5,738)       (35,325)    (18,390)    (16,935)
                                                          ----------  ----------  ----------    ----------  ----------  ----------

      Total net income ................................   $  75,652   $  76,752   $ (1,100)     $ 222,516   $ 212,245   $  10,271
                                                          ==========  ==========  ==========    ==========  ==========  ==========
</TABLE>

11.  Recently issued accounting standards
     ------------------------------------

              In June 1998,  the 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. As amended by
     Statement  of  Financial   Accounting   Standards  No.  137  ("SFAS  137"),
     "Accounting for Derivative Instruments and Hedging Activities - Deferral of
     the Effective  Date of FASB  Statement No. 133," the provisions of SFAS 133
     will require  adoption no later than the beginning of the Company's  fiscal
     year ending  December  31,  2001.  Adoption of SFAS 133, as amended by SFAS
     138,  is  not  expected  to  have  a  material   impact  on  the  Company's
     consolidated financial statements.

                                       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 that it does  business in; 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   September  30,  2000  was
$75,652,000 compared to $76,752,000 for the same period in 1999,  representing a
decrease of $1,100,000 or 1.4%.  The decrease in net income was primarily due to
an increased allocation of income to minority interests.  During the nine months
ended  September 30, 2000, we issued  approximately  $365.0 million in preferred
operating  partnership units.  Unlike  distributions to preferred  shareholders,
distributions  to preferred  unitholders  are presented as minority  interest in
income and a  reduction  to the  Company's  net  income.  As a result,  minority
interest in income increased $8,018,000 for the three months ended September 30,
2000 as compared to the same period in 1999.

         Net  income  for  the  nine  months  ended   September   30,  2000  was
$222,516,000 compared to $212,245,000 for the same period in 1999,  representing
an increase of $10,271,000 or 4.8%. The increase in net income was primarily the
result of improved  property  operations,  additional  real estate  investments,
reduced  operating  losses  from the  containerized  storage  business,  and the
acquisition  of  additional  real  estate   investments  during  1999  and  2000
(including  the  acquisition  of Storage  Trust).  The impact of these items was
offset  partially by an increased  allocation  of income to minority  interests.
Minority  interest in income  increased  $16,354,000  in the nine  months  ended
September  30,  2000 as  compared  to the same period in 1999 as a result of the
aforementioned issuance of $365.0 million of preferred partnership units.

         Net income  allocable to common  shareholders  was $47,959,000 or $0.37
per common  share on a diluted  basis  (based on  131,261,000  weighted  average
diluted common equivalent shares) for the three months ended September 30, 2000.
For the same period in 1999,  net income  allocable to common  shareholders  was
$52,340,000  or $0.40 per common share on a diluted basis (based on  129,249,000
weighted average diluted common equivalent  shares).  The decrease in net income
per common share reflects the inclusion of 6,790,000  common  equivalent  shares
related to the  Company's  Class B common  shares in 2000,  but not in 1999,  as
described  more fully below.  The decrease in net income per share also includes
increased  dilution from  uninvested  proceeds  from the  Company's  issuance of
fixed-rate preferred securities, increased dilution from development activities,
increased general and  administrative  expense,  and the impact of the Company's
issuance of the Equity Stock,  Series A. These factors were offset  partially by
improved property operations and reduced operating losses from the containerized
storage business.

                                       21

<PAGE>

         Net income  allocable to common  shareholders was $139,816,000 or $1.06
per common  share on a diluted  basis  (based on  131,975,000  weighted  average
diluted common equivalent  shares) for the nine months ended September 30, 2000.
For the same period in 1999,  net income  allocable to common  shareholders  was
$142,479,000  or $1.13 per common share on a diluted basis (based on 125,833,000
weighted average diluted common equivalent  shares).  The decrease in net income
per common share reflects the inclusion of 6,790,000  common  equivalent  shares
related to the  Company's  Class B common  shares in 2000,  but not in 1999,  as
described  more fully below.  The decrease in net income per share also includes
increased  dilution from  uninvested  proceeds  from the  Company's  issuance of
fixed-rate preferred securities, increased dilution from development activities,
and the impact of the Company's  issuance of the Equity  Stock,  Series A. These
factors  were offset  partially  by  improved  property  operations  and reduced
operating losses from the containerized storage business.

         In  computing  net income  allocable  to common  shareholders  for each
period,  aggregate  dividends paid to the holders of the Equity Stock,  Series A
and preferred  equity  securities  have been deducted in determining  net income
allocable to the common shareholders.

         Commencing  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  distributions  of  earnings,  for purposes of
computing  net income per common share,  the Company 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.  Weighted  average
diluted  shares for the three and nine months ended  September 30, 1999 does not
include any shares with  respect to the Class B common stock as these shares did
not participate in distributions  of the Company's  earnings prior to January 1,
2000.

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

         Rental income and cost of operations  have  increased for the three and
nine months ended  September 30, 2000 compared to the same period in 1999 due to
our merger, development, and acquisition activities throughout 1999 and 2000. As
a result of these items,  the number of facilities  included in the consolidated
financial  statements  has  increased  from 951 at December 31, 1998 to 1,244 at
September 30, 2000.

         SELF-STORAGE  OPERATIONS:  The following table summarizes the operating
results (before depreciation) of (i) the 946 stabilized  self-storage facilities
(56.1  million net  rentable  square feet) that we owned as of December 31, 1998
(the "Consistent Group") and (ii) all other facilities for which operations were
not reflected in the Company's  financial  statements  throughout  the three and
nine months  ended  September  30, 2000 and the same periods in 1999 (the "Other
Facilities"):

                                       22

<PAGE>

SUMMARY OF SELF-STORAGE OPERATIONS

<TABLE>
<CAPTION>
                                           Three months ended                          Nine months ended
                                             September 30,                               September 30,
                                         -----------------------                     -----------------------
                                                                   Percentage                                  Percentage
                                           2000         1999         Change            2000         1999         Change
                                         ----------   ----------   ----------        ----------   ----------   ----------
                                                       (Amounts in thousands, except per square foot data)

Rental income (a)
<S>                                      <C>          <C>            <C>             <C>          <C>             <C>
    Consistent Group.............        $ 139,264    $ 134,519      3.5%            $ 404,577    $ 389,961       3.7%
    Other Facilities.............           28,759       24,077     19.4%               79,375       47,409      67.4%
                                         ----------   ----------   ----------        ----------   ----------   ----------
                                           168,023      158,596      5.9%              483,952      437,370      10.7%
                                         ----------   ----------   ----------        ----------   ----------   ----------

Cost of Operations
    Consistent Group.............           41,514       38,270      8.5%              122,777      115,785       6.0%
    Other Facilities.............           12,941        9,375     38.0%               33,307       18,091      84.1%
                                         ----------   ----------   ----------        ----------   ----------   ----------
                                            54,455       47,645     14.3%              156,084      133,876      16.6%
                                         ----------   ----------   ----------        ----------   ----------   ----------

Net operating income
    Consistent Group.............           97,750       96,249      1.6%              281,800      274,176       2.8%
    Other Facilities.............           15,818       14,702      7.6%               46,068       29,318      57.1%
                                         ----------   ----------   ----------        ----------   ----------   ----------
                                           113,568      110,951      2.4%              327,868      303,494       8.0%

Depreciation and amortization               33,629       32,678      2.9%               97,138       89,661       8.3%
                                         ----------   ----------   ----------        ----------   ----------   ----------
   Operating income                      $  79,939    $  78,273      2.1%            $ 230,730    $ 213,833       7.9%
                                         ==========   ==========   ==========        ==========   ==========   ==========
Consistent Group data
  Gross margin........................       70.2%        71.6%     (1.2)%               69.7%        70.3%      (0.6)%
  Weighted average :
     Occupancy........................       92.7%        93.1%     (0.4)%               92.3%        92.3%         -
     Realized annual rent per square
     foot.(b).........................      $10.35        $9.93      4.2%               $10.05        $9.67       3.9%
     Scheduled annual rent per square
     foot.............................      $11.50       $10.32     11.4%               $11.03       $10.30       7.1%

Number of facilities at end of period:
  Consistent group....................         946          946        -                   946          946         -
  Other Facilities....................         292          255     14.5%                  292          255      14.5%

Net rentable sq. ft. at end of period
 (in thousands):
  Consistent group....................      56,050       56,050        -                56,050       56,050         -
  Other Facilities....................      17,835       15,087     18.2%               17,835       15,087      18.2%

</TABLE>

(a)  Rental  income  includes  late  charges and  administrative  fees.  For the
     Consistent Group late charges and administrative  fees in aggregate totaled
     $5,141,000 and $5,077,000 for the three months ended September 30, 2000 and
     1999,  respectively,  and  $14,969,000  and $15,042,000 for the nine months
     ended September 30, 2000 and 1999, respectively.

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

         Rental income for the Consistent Group facilities for the quarter ended
September  30,  2000 was  approximately  3.5% higher than the same period in the
prior year.  Over the past  several  months we have  increased  scheduled  rents
(rental rates charged to new  customers)  throughout  the  portfolio.  Scheduled
rental rates for the  Consistent  Group of facilities  are  approximately  11.4%
higher  than they were last  year.  We are  currently  evaluating  the impact of
higher  rental rates to our move-in  activity.  In addition,  we are  evaluating
market  supply  and demand  factors  and based on these  analysis  we may adjust
rental rates further, either increasing or decreasing them.

                                       23

<PAGE>

         As  indicated  above,  the  scheduled  rental rates are the rates being
charged to new  customers,  however,  the rental  rates  charged to our existing
customer base, is on average,  less than the current  scheduled  rates.  For the
three months ended September 30, 2000, the average realized rate per square foot
was  approximately  $10.35 or 11.1% below current  scheduled  rents.  Our rental
agreements are generally on a month-by-month  basis giving us the flexibility to
increase  rates to our existing  customers.  During the second quarter of fiscal
2001, we anticipate  implementing  higher rental rates to our existing  customer
base.  The amount of  increase  will  depend on a number of factors  and may not
result in rental rates equal to the level of scheduled  rental rates.  There can
be no  assurance  that  higher  rental  rates  will  not  adversely  affect  our
occupancies.

         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  77% of the total cost of operations.  With respect to
the  Consistent  Group of  facilities,  cost of operations for the quarter ended
September 30, 2000 increased  approximately  8.5% compared to the same period of
last year.  This  increase  was  primarily a result of  increases in repairs and
maintenance  (up  37.6%),  yellow  page  advertising  (up 24.5%)  and  telephone
reservation  center expenses (up 20.8%). The increase in yellow page advertising
is the result of expansion  into other  yellow page  directories  combined  with
increased rates in existing  directories,  primarily due to the expansion of the
size of our ads. The increase in the telephone  reservation  center is primarily
due to the opening of our new center in Plano, Texas.

         During fiscal 1999 and for the nine months ended September 30, 2000, we
have opened 24 newly  developed  facilities  with a total cost of  approximately
$115.6  million.   Included  in  the  above  table,  under  the  caption  "Other
Facilities",  are revenues of $1,457,000  and  $2,426,000 for the three and nine
months  ended  September  30,  2000,  respectively,  and cost of  operations  of
$924,000 and $1,839,000 for the three and nine months ended  September 30, 2000,
respectively,  with respect to these facilities. We also completed expansions of
storage facilities of $22.1 million in the nine months ended September 30, 2000.

         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  September  30,  2000,  the 24  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."

         During the nine months ended  September 30, 2000, the Company  acquired
eight self-storage facilities for an aggregate cost of $35,995,000.  Included in
the above table, under the caption "Other Facilities",  are revenues of $772,000
and  $1,101,000  for the  three  and  nine  months  ended  September  30,  2000,
respectively,  and cost of operations of $199,000 and $294,000 for the three and
nine months  ended  September  30,  2000,  respectively,  with  respect to these
facilities.

         As described in Note 3 to the  financial  statements,  on September 15,
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,
consisting  of  cash  of  $66,776,000  and  the  reduction  of our  pre-existing
investment in the amount of $14,393,000.  Included in the above table, under the
caption  "Other  Facilities",  are  revenues of $484,000  for the three and nine
months  ended  September  30,  2000,  respectively,  and cost of  operations  of
$114,000 for the three and nine months ended  September 30, 2000,  respectively,
with respect to these facilities.

                                       24

<PAGE>

         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."

         During the nine months  ended  September  30,  2000,  we  acquired  two
commercial   facilities  (which  are  expected  to  be  converted  into  storage
facilities)  for an aggregate cost of  $5,930,000.  Included  within  commercial
property  operations  with respect to these  facilities was revenues of $222,000
and  $651,000  for  the  three  and  nine  months  ended   September  30,  2000,
respectively  and cost of  operations  of $67,000 and $166,000 for the three and
nine months ended  September 30, 2000,  respectively.  The following  table sets
forth the  historical  commercial  property  amounts  included in the  financial
statements:

COMMERCIAL PROPERTY OPERATIONS

<TABLE>
<CAPTION>
                                    Three months ended                             Nine months ended
                                      September 30,                                  September 30,
                                 -----------------------                         -----------------------
                                   2000           1999         Change              2000          1999         Change
                                 ---------     ---------     ---------           ---------     ---------     ---------
                                                              (Amounts in thousands)

<S>                              <C>           <C>              <C>              <C>           <C>            <C>
Rental income.............       $  2,847      $  2,111         34.9%            $  8,433      $  5,973       41.2%
Cost of operations........            926           724         27.9%               2,756         1,993       38.3%
                                 ---------     ---------     ---------           ---------     ---------     ---------

 Net operating income.....          1,921         1,387         38.5%               5,677         3,980       42.6%

Depreciation expense......            570           435         31.0%               1,775         1,289       37.7%
                                 ---------     ---------     ---------           ---------     ---------     ---------

Operating income..........       $  1,351      $    952         41.9%            $  3,902      $  2,691       45.0%
                                 =========     =========     =========           =========     =========     =========

</TABLE>

         CONTAINERIZED   STORAGE   OPERATIONS:   At  September  30,  2000,   our
containerized  storage  business  operated 40  facilities.  For the three months
ended  September  30,  2000,  the  containerized  storage  operations  generated
operating  income of $412,000  compared to an operating loss of $433,000 for the
same period in 1999.  For the nine months ended  September 30, 2000 and 1999, we
experienced operating losses of $1,709,000 and $6,514,000, respectively.

CONTAINERIZED STORAGE

<TABLE>
<CAPTION>
                                           Three months ended                             Nine months ended
                                             September 30,                                  September 30,
                                        -----------------------                         -----------------------
                                          2000           1999         Change             2000           1999         Change
                                        ---------     ---------     ---------           ---------     ---------     ---------
                                                                       (Amounts in thousands)
<S>                                     <C>          <C>            <C>                <C>            <C>            <C>
Rental and other income .........       $  11,045    $   7,387      $  3,658           $  27,834      $  19,263      $ 8,571
                                        ---------     ---------     ---------           ---------     ---------     ---------
Cost of operations:
  Direct operating costs.........           7,289        4,364         2,925              19,312         14,583        4,729
  Facility lease expense.........           2,140        2,257          (117)              6,619          7,563         (944)
                                        ---------     ---------     ---------           ---------     ---------     ---------
    Total cost of operations.....           9,429        6,621         2,808              25,931         22,146        3,785

Operating income (loss) prior to
  depreciation...................           1,616          766           850               1,903         (2,883)       4,786

  Depreciation ..................           1,204        1,199             5              3,612          3,631          (19)
                                        ---------     ---------     ---------           ---------     ---------     ---------
Operating income (losses)........       $     412    $    (433)     $    845           $  (1,709)     $  (6,514)     $ 4,805
                                        =========     =========     =========           =========     =========     =========
</TABLE>

                                       25

<PAGE>

         Rental and other income  includes  monthly  rental charges to customers
for storage of the  containers  and service fees charged for pickup and delivery
of  containers  to customers'  homes.  For the three months ended  September 30,
2000, rental income increased to $11,045,000 compared to $7,387,000 for the same
period in 1999  principally  as a result in  increases in the number of occupied
containers.  At September 30, 2000,  there were  approximately  64,300  occupied
containers compared to 56,000 containers at September 30, 1999.

         At September 30, 2000, 28 of the 40  containerized  storage  facilities
are leased  from third  parties.  We are  currently  developing  38  combination
facilities  (which  includes 14 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 25 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.

         Although  the  containerized  storage  facilities  generated  operating
income in the quarter  ended  September  30,  2000,  the  containerized  storage
operations may adversely  impact the Company's  future  earnings and cash flows.
There  can  be no  assurance  as to  the  level  of  the  containerized  storage
business's   expansion,   level  of  gross   rentals,   level  of  move-outs  or
profitability.

         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 September 30, 2000. (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 September
30, 2000  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 236 real
estate facilities, 113 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                            Nine months ended
                                        September 30,                                September 30,
                                  ------------------------                      ------------------------
                                     2000          1999         Change             2000          1999        Change
                                  ----------    ----------     ----------       ----------    ----------    ----------
                                                                (Amounts in thousands)
Property operations:
<S>                               <C>           <C>            <C>              <C>           <C>           <C>
    PSB......................     $  10,878     $   9,231      $   1,647        $  31,436     $  26,531     $   4,905
    Development Joint Venture         1,197           690            507            3,169         1,605         1,564
    Other partnerships.......         3,809         3,674            135           12,819        13,878        (1,059)
                                  ----------    ----------     ----------       ----------    ----------    ----------
                                     15,884        13,595          2,289           47,424        42,014         5,410
                                  ----------    ----------     ----------       ----------    ----------    ----------

Depreciation:
    PSB......................        (3,403)       (3,014)          (389)         (10,507)       (8,621)       (1,886)
    Development Joint Venture          (479)         (335)          (144)          (1,407)         (900)         (507)
    Other partnerships.......        (1,510)       (1,482)           (28)          (3,608)       (4,884)        1,276
                                  ----------    ----------     ----------       ----------    ----------    ----------
                                     (5,392)       (4,831)          (561)         (15,522)      (14,405)       (1,117)
                                  ----------    ----------     ----------       ----------    ----------    ----------
Other: (1)
    PSB......................        (1,678)       (1,479)          (199)          (5,117)       (3,362)       (1,755)
    Development Joint Venture            65             8             57               80            51            29
    Other partnerships.......           600          (793)         1,393               45          (329)          374
                                  ----------    ----------     ----------       ----------    ----------    ----------
                                     (1,013)       (2,264)         1,251           (4,992)       (3,640)       (1,352)
                                  ----------    ----------     ----------       ----------    ----------    ----------

Total equity in earnings of
  real estate entities.......     $   9,479     $   6,500      $   2,979        $  26,910     $  23,969     $   2,941
                                  ==========    ==========     ==========       ==========    ==========    ==========
</TABLE>

(1)  "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.

         Equity in earnings of PSB represents our pro rata share  (approximately
42% ownership) of earnings of PS Business  Parks,  Inc., a publicly  traded real
estate  investment  trust.  As of  September  30, 2000,  we owned  approximately
5,370,000 common shares and 7,354,000  operating  partnership units (units which
are convertible in common shares on a one-for-one basis) in PSB.

         Equity in  earnings  with  respect  to the  Development  Joint  Venture
represents  our pro rata share of the  operating  results  of an  unconsolidated
joint venture  formed in April 1997 in which we have a 30%  ownership  interest.
The joint  venture was formed for the purpose of developing  approximately  $220
million of  self-storage  facilities.  As of September 30, 2000, 46 of the joint
venture's 47 properties are completed and operating,  substantially all of which
are in the fill-up process and have not reached stabilized occupancy levels.

         During the first nine months of fiscal 2000,  we  acquired  controlling
interests in certain  entities.  As a result of our  ownership  and control,  we
began  to  consolidate  the  accounts  of  these  entities  into  our  financial
statements.  Since we no longer  account  for our  investment  using the  equity
method,  equity  in  earnings  with  respect  to the  "Other  partnerships"  has
decreased  for the nine months ended  September 30, 2000 as compared to the same
period in the prior year.

                                       27

<PAGE>

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  increased in the three and nine months
ended  September 30, 2000 as compared to the same periods in 1999 as a result of
higher cash balances invested in interest bearing accounts. Higher cash balances
are primarily due to our issuance of preferred  operating  partnership  units in
2000.

         DEPRECIATION AND  AMORTIZATION:  Depreciation and amortization  expense
has increased $1,091,000 to $37,731,000 for the three months ended September 30,
2000 as compared to $36,640,000  for the same period in 1999.  Depreciation  and
amortization  expense has  increased  $7,944,000  to  $109,509,000  for the nine
months ended September 30, 2000 as compared to $101,565,000  for the same period
in 1999.  These  increases are  principally due to the acquisition of additional
real estate  facilities  during  1999 and 2000.  Included  in  depreciation  and
amortization  expense is amortization  expense with respect to intangible assets
of $2,328,000 and  $6,984,000 for the three and nine months ended  September 30,
2000 and 1999.  Included in depreciation and amortization  expense for the three
months  ended  September  30,  2000  and  1999  is  $1,204,000  and  $1,199,000,
respectively,  and $3,612,000 and $3,631,000 for the nine months ended September
30, 2000 and 1999,  respectively,  of depreciation of furniture,  fixtures,  and
equipment of the containerized storage business.

         GENERAL  AND  ADMINISTRATIVE:  General and  administrative  expense has
increased $1,483,000 to $5,436,000 for the three months ended September 30, 2000
as  compared  to   $3,953,000   for  the  same  period  in  1999.   General  and
administrative  expense has  increased  $4,686,000 to  $14,057,000  for the nine
months ended September 30, 2000 as compared to $9,371,000 for the same period in
1999. The increase includes an expansion in our product research and development
efforts,  as  well  as  costs  associated  with  lease  terminations  on  leased
containerized   storage   facilities  which  were  replaced  by  newly-developed
facilities, and increased consulting fees. The total amount of such expenses was
approximately  $2,208,000  and  $3,979,000  for the three and nine months ending
September 30, 2000 as compared to $662,000 and $912,000,  respectively,  for the
same periods in 1999.

         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  $11,711,000  and  $26,565,000,
respectively,  for the three and nine months ended September 30, 2000,  compared
to $4,492,000 and $12,149,000, respectively, for the same periods in 1999.

         In November 1999, we formed a joint venture partnership for the purpose
of  developing  approximately  $100 million of  self-storage  facilities  and to
purchase  $100 million of our Equity Stock,  Series AAA. The venture,  which has
been  consolidated,  is funded solely with equity capital consisting of 51% from
us and 49% from the joint venture partner.  Minority interest in income includes
approximately $167,000 of income allocated to our joint venture partner.

         On March 17, 2000,  one of our  operating  partnerships  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 nine months ended September 30, 2000,
these  preferred  units  were paid in  aggregate  approximately  $16,354,000  in
distributions  and received a corresponding  allocation of minority  interest in
earnings for the partial  period in which the units were  outstanding.  On March
30, 2000, we acquired the remaining minority interest in one of our consolidated
partnerships.  The aggregate cost of the  acquisition  was  approximately  $23.6
million in cash.  Minority  interest in income for the three  months ended March
31,  2000,  includes  income  allocated  to  these  interests  of  approximately
$602,000.

                                       28

<PAGE>

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

         At September 30, 2000, there were  approximately 46 ownership  entities
owning in aggregate 1,351 storage facilities,  including the facilities which we
own and/or operate. At September 30, 2000, 113 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  1,238
facilities are owned by the Company and Consolidated Entities.

         The following table summarizes our investment in real estate facilities
as of September 30, 2000:

<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....................          618              6           624       37,813           394        38,207
Facilities owned by Consolidated Entities..          620              -           620       36,072             -        36,072
                                                ----------    ----------      -------    ----------    ----------      --------
    Total consolidated facilities..........        1,238              6         1,244       73,885           394        74,279
Facilities owned by Unconsolidated Entities          113            123           236        6,657        12,105        18,762
                                                ----------    ----------      -------    ----------    ----------      --------
    Total  facilities  in which  the  Company
      has an ownership interest............        1,351            129         1,480       80,542        12,499        93,041
                                                ==========    ==========      =======    ==========    ==========      ========
</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 950 (55.3 million net rentable square feet)
of the  1,351  self-storage  facilities  (herein  referred  to as  "Same  Store"
self-storage  facilities).  The 950  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 885 consolidated facilities
and  65  facilities  owned  by  Unconsolidated  Entities.  The  following  table
summarizes the  pre-depreciation  historical operating results of the Same Store
self-storage facilities:

                                       29

<PAGE>

SAME STORE STORAGE FACILITIES (950 FACILITIES)
----------------------------------------------
(historical property operations)

<TABLE>
<CAPTION>
                                     Three months ended September 30,           Nine months ended September 30,
                                  ----------------------------------------   ----------------------------------------
                                     2000            1999        Change         2000           1999          Change
                                  -----------     -----------  -----------   -----------     -----------  -----------
                                                               (Amounts in thousands)
<S>           <C>                 <C>             <C>               <C>      <C>             <C>              <C>
Rental income (1)...........      $  140,891      $  135,752        3.8%     $  408,961      $  392,899       4.1%
Cost of operations (includes
  an imputed 6% property
  management fee) (2).......          47,473          44,923        5.7%        141,731         134,750       5.2%
                                  -----------     -----------  -----------   -----------     -----------  -----------
Net operating income........      $   93,418      $   90,829        2.9%     $  267,230      $  258,149       3.5%
                                  ===========     ===========  ===========   ===========     ===========  ===========

Gross profit margin (3).....          66.3%           66.9%        (0.6)%        65.3%           65.7%        (0.4)%

Weighted Average:
----------------
  Occupancy during the
     period.................          93.0%           93.4%        (0.4)%        92.7%           92.6%         0.1%
   Annualized realized rent
     per sq. ft. for period.(4)      $10.95          $10.51         4.2%        $10.63          $10.23         3.9%
   Annualized scheduled rent
     per sq. ft. for period (4)      $11.79          $10.50        12.3%        $11.28          $10.49         7.5%

</TABLE>

1.   Rental  income  includes  late  charges  and  administrative  fees  that in
     aggregate  totaled  $5,165,000  and  $5,070,000  for the three months ended
     September 30, 2000 and 1999, respectively,  and $15,005,000 and $15,013,000
     for the nine months ended September 30, 2000 and 1999, respectively.

2.   Cost of operations  includes  both direct and indirect  costs of ownership,
     management and operation of the properties.  Cost of operations  includes a
     6% management fee on all facilities,  including those  facilities  owned by
     the  Company  for  which  no fee is  paid.  The  5.7%  increase  in cost of
     operations for the three months ended September 30, 2000 as compared to the
     same period in 1999 includes increases in advertising and promotion, repair
     and maintenance expense, and payroll.

3.   Gross profit margin is computed by dividing  property net operating  income
     (before depreciation  expense) by rental revenues.  The gross profit margin
     includes  an  imputed  6%  property  management  fee;  the  actual  cost of
     management is somewhat less.

4.   Realized rent per square foot represents the actual revenue (including late
     charges  and   administrative   fees)  earned  per  occupied  square  foot.
     Management  believes  this is a more  relevant  measure than the  scheduled
     rental rates,  since scheduled  rates can be discounted  through the use of
     promotions.

         Scheduled  rental rates are the rates being  charged to new  customers,
however,  the rental rates charged to our existing customer base, is on average,
less than the current  scheduled rates. For the three months ended September 30,
2000, the average realized rate per square foot was approximately $10.95 or 7.7%
below current scheduled rents (excluding late charges and  administrative  fees,
which are not included in scheduled  rents, the average realized rate per square
foot was approximately  $10.55 or 11.8%  below currently  scheduled rents).  Our
rental  agreements  are  generally  on a  month-by-month  basis  giving  us  the
flexibility  to  increase  rates to our  existing  customers.  During the second
quarter of fiscal 2001,  we anticipate  implementing  higher rental rates to our
existing  customer  base.  The  amount of  increase  will  depend on a number of
factors  and may not  result in  rental  rates  equal to the level of  scheduled
rental  rates.  There can be no  assurance  that  higher  rental  rates will not
adversely affect our occupancies.

         Cost of  operations  includes  both  direct  costs  and an  imputed  6%
management fee. Payroll,  property taxes,  repairs and maintenance,  advertising
and the telephone  reservation center in aggregate account for approximately 66%
of the total cost of operations. With respect to the Same Store facilities, cost
of operations for the quarter ended  September 30, 2000 increased  approximately
5.7%  compared to the same period of last year.  This  increase was  primarily a
result  of  increases  in  repairs  and  maintenance  (up  36.2%),  yellow  page
advertising (up 21.8%) and telephone reservation center expenses (up 20.5%). The
increase in yellow page advertising is the result of expansion into other yellow
page  directories  combined  with  increased  rates  in  existing   directories,
primarily  due to the  expansion  of the size of our ads.  The  increase  in the

                                       30

<PAGE>

telephone  reservation  center is primarily due to the opening of our new center
in Plano, Texas.

LIQUIDITY AND CAPITAL RESOURCES
--------------------------------------------------------------------------------

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

         Operating as a real estate  investment  trust ("REIT"),  our ability to
retain cash flow for reinvestment is restricted. In order for us to maintain our
REIT status,  a substantial  portion of our operating  cash flow must be used to
make  distributions  to our  shareholders  (see "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
payments on debt and for reinvestment.

<TABLE>
<CAPTION>
                                                                                            For the nine months ended
                                                                                                  September 30,
                                                                                            --------------------------
                                                                                               2000           1999
                                                                                            ----------      ----------
                                                                                             (Amounts in thousands)
<S>                                                                                         <C>             <C>
Net income...........................................................................       $ 222,516       $ 212,245
Depreciation and amortization........................................................         109,509         101,565
Less:  Depreciation with respect to non-real estate assets...........................          (3,612)         (3,631)
Depreciation from Unconsolidated Entities............................................          15,522          14,405
Minority interest in income..........................................................          26,565          12,149
                                                                                            ----------      ----------
  Net cash provided by operating activities..........................................         370,500         336,733

Distributions to Minority Interests:
   Preferred operating partnership units.............................................         (16,354)              -
   Other.............................................................................         (15,224)        (19,501)
                                                                                            ----------      ----------
Cash from operations allocable to the Company's shareholders.........................         338,922         317,232

Less: preferred stock dividends......................................................         (75,110)        (69,766)
Less: equity stock, Series A dividends...............................................          (7,590)              -
                                                                                            ----------      ----------
Cash from operations available to common shareholders................................         256,222         247,466

Capital improvements to maintain facilities..........................................         (16,605)        (18,158)
Add back: minority interest share of capital improvements to maintain facilities.....             385             888
                                                                                            ----------      ----------
Funds available for principal payments on debt, common dividends and reinvestment....         240,002         230,196

Cash distributions to common shareholders (A)........................................        (165,055)        (85,096)
                                                                                            ----------      ----------

Funds available for principal payments on debt and reinvestment (A)..................       $  74,947      $  145,100
                                                                                            ==========      ==========
</TABLE>

(A)  Cash distributions for both periods include regular common distributions of
     $0.22 per share per quarter as well as special  distributions,  as follows.
     For the nine months ended September 30, 2000, a special distribution in the
     amount of $0.60  per  common  share (an  aggregate  of $78.7  million)  was
     declared and paid. The amounts for the nine months ended September 30, 1999
     do not reflect  any special  distribution,  as a special  distribution  was
     declared  on  November  15, 1999 in the amount of $0.65 per share in Equity
     Stock A or $0.62 in cash (an  aggregate of $82.1  million) and reflected in
     distributions  for the fourth  quarter of 1999.  The Company has declared a
     regular  distribution  payable on December 29, 2000 at $0.22 per share, and
     does not expect to make any additional  special  distributions  in calendar
     2000. However, assuming a continuation of the Company's increasing level of
     taxable  income  in 2001  and  beyond,  the  Company  expects  that it will
     continue to make a combination of regular and special distributions in cash
     or securities throughout each year at a rate comparable to or exceeding the
     amounts paid and declared in 2000 and 1999.

                                       31

<PAGE>


         We expect to fund our growth  strategies with cash on hand at September
30, 2000, internally generated retained cash flows, proceeds from issuing equity
securities and borrowings under our $150 million credit  facility.  We intend to
repay amounts  borrowed under the credit facility from  undistributed  operating
cash flow or, as market conditions permit and are determined to be advantageous,
from the public or private placement of equity securities.

         Our  portfolio  of  real  estate   facilities   remains   substantially
unencumbered.  At September 30, 2000, we had mortgage debt  outstanding of $27.1
million and had  consolidated  real estate  facilities with a book value of $3.6
billion.  We have not  financed our  acquisitions  with debt and  generally  our
borrowings  have  increased  through  the  assumption  of  pre-existing  debt on
acquired  real estate  facilities,  including  $100  million in debt  assumed in
connection with the merger with Storage Trust.

         During the first  quarter of 2000,  one of our  operating  partnerships
issued $240.0 million of 9.5% Series N Cumulative Redeemable Perpetual Preferred
Units  (issued  March 17, 2000) and $75.0  million of 9.125% Series O Cumulative
Redeemable  Perpetual  Preferred Units (issued March 29, 2000). During the third
quarter  of 2000,  the  partnership  issued  $50.0  million  of  8.75%  Series P
Cumulative  Redeemable  Perpetual  Preferred Units (issued August 11, 2000). 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,  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 of the Company.

         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.

         During  the  nine  months  ended   September  30,  2000  and  1999,  we
distributed  to common  shareholders  approximately  64.4% and 34.4% of our cash
available  from  operations  allocable  to  common  shareholders,  respectively.
Distributions for both periods include regular common distributions of $0.22 per
share per quarter. In addition,  for the nine months ended September 30, 2000, a
special  distribution  in the amount of $0.60 per common share (an  aggregate of
$78.4  million)  was  declared  and paid.  The amounts for the nine months ended
September  30,  1999 do not  reflect  any  special  distribution,  as a  special
distribution  was  declared  in  November  1999 in the amount of $0.65 in Equity
Stock A or $0.62 in cash (an  aggregate of $82.1 million was paid in the form of
cash and our  Equity  Stock A) and  reflected  in  distributions  for the fourth
quarter of 1999.

         The Company has declared a regular distribution payable on December 29,
2000 at $0.22 per  common  share,  and does not  expect  to make any  additional
special  distributions  in calendar  2000.  However,  we expect to increase  our
common distribution in 2001 and beyond from the level of our regularly quarterly
distribution  level of $0.22 per common  share  assuming a  continuation  of our
increasing level of taxable income. These increased distributions will be in the
form of special distributions of cash or securities,  an increase in the regular
quarterly common distribution, or a combination thereof.

         During the nine months ended September 30, 2000, we paid cash dividends
totaling $75,110,000 to the holders of our Senior Preferred Stock and $7,590,000
to the holders of Equity Stock,  Series A. We estimate the regular  distribution
requirements for fiscal 2000 with respect to Senior Preferred Stock  outstanding
at September 30, 2000 to be  approximately  $100.2 million.  With respect to the
Equity Stock,  Series A, the prorated annual  distribution for 2000 (assuming at
least $0.49 is paid per common share) is approximately $10.3 million.

         During the nine months  ended  September  30, 2000,  we paid  dividends
totaling  $247,141,000  to the  holders of our  common  stock  which  includes a
special  distribution of approximately  $82,086,000  related to fiscal 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. As of  September  30,  2000 we paid  cash
dividends totaling $156,500,000 to common shareholders and $8,555,000 to Class B
common  shareholders.  Distributions with respect to the classes of common stock
will be determined based upon our REIT  distribution  requirements  after taking
into consideration distributions to the Company's preferred shareholders.

                                       32

<PAGE>

         PREFERRED OPERATING PARTNERSHIP UNIT DISTRIBUTION REQUIREMENTS: For the
three and nine months ended  September 30, 2000, the holders of these  preferred
units  were  paid  in  aggregate   approximately   $8,018,000  and  $16,354,000,
respectively,  in distributions,  which represented a pro rated dividend for the
period the units were  outstanding.  We  estimate  that the annual  distribution
requirement  for  the  preferred  operating  partnership  units  outstanding  at
September 30, 2000 will be approximately $34.0 million.

         CAPITAL  IMPROVEMENT  REQUIREMENTS:   During  2000,  we  have  budgeted
approximately  $26.5  million for capital  improvements.  During the nine months
ended  September 30, 2000, we incurred  capital  improvements  of  approximately
$16,605,000.

         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 September 30, 2000, we had total  outstanding  notes payable of $160,723,000.
Approximate  principal  maturities of notes payable at September 30, 2000 are as
follows:

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

2000 (remainder of)..........      $   4,375      $       382      $    4,757
2001.........................          9,500            2,910          12,410
2002.........................         24,450            3,530          27,980
2003.........................         35,900            3,585          39,485
2004.........................         25,800           15,063          40,863
Thereafter...................         33,600            1,628          35,228
                                 ------------    -------------   ------------
                                   $ 133,625      $    27,098      $  160,723
                                 ============    =============   ============
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  15,000,000  shares of the  Company's  common  stock on the open market or in
privately negotiated transactions.  In the quarter ended September 30, 2000, the
Company  repurchased a total of 60,300  shares,  for a total  aggregate  cost of
approximately $1.4 million. From the initial authorization through September 30,
2000, the Company repurchased a total of 10,309,227 shares of common stock at an
aggregate cost of  approximately  $245.8  million.  From October 1, 2000 through
October 27, 2000, the Company  repurchased 25,000 shares at an aggregate cost of
approximately $0.6 million.

         ACQUISITION  AND  DEVELOPMENT OF  FACILITIES:  In the nine months ended
September 30, 2000, we have acquired two commercial facilities and eight storage
facilities at an aggregate cost of approximately $41.9 million. In addition,  on
September  15,  2000,  we  acquired  the  remaining  ownership  interests  in an
affiliated  partnership,  of which we are the general partner,  for an aggregate
acquisition  cost of  $81,169,000,  consisting  of cash of  $66,776,000  and the
reduction of our  pre-existing  investment  in the amount of  $14,393,000.  This
affiliated partnership owned 13 self-storage facilities.

         As  previously  announced,  in April  1997,  we formed a joint  venture
partnership with an  institutional  investor for the purpose of developing up to
$220 million of self-storage facilities. The joint venture is funded solely with
equity  capital  consisting  of 30%  from  us and  70%  from  the  institutional
investor.  Our  share of the cost of the real  estate in the  joint  venture  is
approximately $68.6 million at September 30, 2000.

         As  of  September  30,  2000,   the  joint  venture  had  46  operating
facilities,  with 2,787,000 net rentable square feet and total development costs
of approximately  $222.7 million. As of September 30, 2000, the joint venture is
developing  one additional  project  (approximately  93,000 net rentable  square
feet) that was in  process,  with  total  costs  incurred  of $6.0  million  and
estimated remaining costs to complete of $1.0 million.

         In November 1999, we formed a second joint venture  partnership for the
development  of  approximately  $100  million of  self-storage  facilities.  The
venture is funded solely with equity  capital  consisting of 51% from us and 49%
from the joint venture  partner.  At September 30, 2000, the second  development
joint venture was committed to develop 14 facilities  (approximately 932,000 net

                                       33

<PAGE>

rentable  sq. ft.) with an estimated  development  cost of  approximately  $64.4
million,  of which 10  facilities  (approximately  632,000 net rentable sq. ft.)
were  completed at an  aggregate  cost of  approximately  $45.3  million.  As of
September 30, 2000,  the second  development  joint  venture is developing  four
additional projects  (approximately  300,000 net rentable square feet) that were
in process,  with total costs incurred of $11.6 million and estimated  remaining
costs to complete of $7.6 million.  We have  submitted 10 additional  facilities
for approval with total estimated costs of approximately  $47.4 million; we have
incurred  approximately $20.9 million through September 30, 2000 with respect to
these 10 projects.  Upon  approval,  these  projects will be  transferred to the
joint venture and the joint venture partner will contribute its 49% share.

         We  currently  have  a  development   "pipeline"  of  94  self  storage
facilities,  combination  facilities,  and  expansions  to existing self storage
facilities  with an aggregate  estimated  cost of  approximately  $533  million.
Approximately  $191 million of development  cost is incurred as of September 30,
2000.  We have  acquired  the  land  for 59 of  these  projects,  which  have an
aggregate estimated cost of approximately $335 million, and costs incurred as of
September 30, 2000 of approximately $185 million.

         The development  and fill-up of these storage  facilities is subject to
significant  contingencies.  However,  we  estimate  that  the  total  remaining
spending of these projects of  approximately  $342 million will be incurred over
the next 24 - 28 months. 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 Incurred     Estimated Time
                                       of            Cost of         through September   Frames of Facility
                                    Facilities    Development            30, 2000             Openings
                                    ----------  ---------------    --------------------  ------------------
Development  - Land  Acquired  at
---------------------------------
9/30/00
-------
<S>                                     <C>       <C>                     <C>               <C>      <C>
Self-storage facilities........         22        $127,214,000            $73,137,000      Q4 `00 - Q4 `01
Expansions of existing
    self-storage facilities....         18          51,568,000             20,094,000      Q4 `00 - Q4 `01
Combination facilities.........         19         155,798,000             91,830,000      Q4 `00 - Q4 `01
                                    ----------  ---------------    --------------------
     Total.....................         59         334,580,000            185,061,000
                                    ----------  ---------------    --------------------
Potential  Development - Land to
--------------------------------
be Acquired After 9/30/00
-------------------------
Self-storage facilities -
    development starts estimated
    by 6/30/01.................         22        $131,641,000             $4,428,000
Self-storage facilities -
    development starts estimated
    after 6/30/01..............          3          24,642,000                201,000       After Q2 `02
Expansions of existing
    self-storage facilities....          5          10,143,000                184,000      Q1 `02 - Q2 `02
Combination facilities.........          5          32,035,000                708,000      Q1 `02 - Q2 `02
                                    ----------  ---------------    --------------------
     Total.....................         35         198,461,000              5,521,000
                                    ----------  ---------------    --------------------
     Totals....................         94        $533,041,000           $190,582,000
                                    ==========  ===============    ====================
</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  95% of our  taxable
income is so  distributed  prior to filing of our tax return.  We have satisfied
the REIT distribution requirement since 1980.

                                       34

<PAGE>

         FUNDS FROM  OPERATIONS:  Total funds from operations or "FFO" increased
to  $338,922,000  for the nine  months  ended  September  30,  2000  compared to
$317,232,000  for the same period in 1999. FFO available to common  shareholders
(after  deducting  preferred stock dividends but before deducting Equity Stock A
dividends)  increased to  $263,812,000  for the nine months ended  September 30,
2000 compared to $247,466,000  for the same period in 1999. 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.

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 September  30, 2000,  our debt as a percentage of total
shareholders' equity (based on book values) was 4.4%.

         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 and Series M - August 17, 2004. On or after the respective dates,
each of the  series of Senior  Preferred  Stock  will be  redeemable  at the our
option,  in whole or in part, at $25 per share (or depositary  share in the case
of the Series G, Series H, Series I, Series J, Series K, Series L and Series M),
plus accrued and unpaid dividends.

         Our preferred  operating  partnership  units are not  redeemable by the
holders.  Five years after issuance, we can call the units for redemption at the
issuance amount plus any unpaid distributions.

         Our market risk  sensitive  instruments  include notes  payable,  which
totaled $160.7 million at September 30, 2000. 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 September 30, 2000.

                                       35

<PAGE>

PART II.  OTHER INFORMATION

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.

                                       36

<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  1/1000 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.

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

                                       37

<PAGE>

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

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

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

3.35     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.

3.36     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.

3.37     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.

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,
         1997 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

                                       38

<PAGE>

         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  and Plan of  Reorganization  between  Registrant  and Public
         Storage  Properties XX, Inc. dated as of December 13, 1997.  Filed with
         Registrant's  Registration  Statement No.  333-49247  and  incorporated
         herein by reference.

10.17    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.

10.18    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.

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

10.20    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.

10.21    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.

                                       39
<PAGE>

10.22    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.

10.23    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.

10.24    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.

10.25    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.

10.26    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.

10.27    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.

10.28    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.

10.29    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.

10.30    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 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.

10.31    Amendment to Amended and Restated  Agreement of Limited  Partnership of
         PSA Institutional  Partners, L.P. among PS Texas Holdings, Ltd. and the
         Limited Partners dated as of 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.

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

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

27.      Financial Data Schedule. Filed herewith.

(b)      Reports on Form 8-K

         None.

                                       40

<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: November 6, 2000

                        PUBLIC STORAGE, INC.


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

                                       41