SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                    FORM 10-Q

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

For the quarterly period ended March 31, 2001
                               --------------

                                       or

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

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

Commission File Number:     1-8389
                            ------


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


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

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


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




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

                                [ X ] Yes [ ] No

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of May 10, 2001:

Common Stock, $.10 Par Value - 113,586,946 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 - 7,846,102 depositary shares  (representing  7,846.102 shares
--------------------------------------------------------------------------------
of Equity Stock, Series A)
--------------------------

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

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

<PAGE>

                              PUBLIC STORAGE, INC.

                                      INDEX

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

Item 1.  Financial Statements

         Condensed Consolidated Balance Sheets at
              March 31, 2001 and December 31, 2000                             1

         Condensed Consolidated Statements of Income for the
              Three Months Ended March 31, 2001 and 2000                       2

         Condensed Consolidated Statements of Shareholders' Equity
              for the Three Months Ended March 31, 2001                        3

         Condensed Consolidated Statements of Cash Flows
              for the Three Months Ended March 31, 2001 and 2000           4 - 5

         Notes to Condensed Consolidated Financial Statements             6 - 19

Item 2.  Management's Discussion and Analysis of
              Financial Condition and Results of Operations              20 - 32

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

Item 3.  Qualitative and Quantitative Disclosures about Market Risk           33

Item 6.  Exhibits and Reports on Form 8-K                                34 - 39

<PAGE>

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


<TABLE>
<CAPTION>
                                                                                     March 31,    December 31,
                                                                                       2001           2000
                                                                                   -------------  -------------
                                     ASSETS
                                     ------


<S>                                                                                 <C>            <C>
Cash and cash equivalents .......................................................   $    40,477    $    89,467
Operating real estate facilities, at cost:
   Land .........................................................................     1,127,385      1,107,867
   Buildings ....................................................................     3,110,202      3,026,550
                                                                                   -------------  -------------
                                                                                      4,237,587      4,134,417
   Accumulated depreciation .....................................................      (703,973)      (668,018)
                                                                                   -------------  -------------
                                                                                      3,533,614      3,466,399
Construction in process .........................................................       162,546        217,140
Land held for development .......................................................        26,174         21,447
                                                                                   -------------  -------------
          Total real estate .....................................................     3,722,334      3,704,986

Investment in real estate entities ..............................................       455,147        448,928
Intangible assets, net ..........................................................       182,689        185,017
Mortgage notes receivable from affiliates .......................................        24,309         26,238
Other assets ....................................................................        63,136         59,305
                                                                                   -------------  -------------
              Total assets ......................................................   $ 4,488,092    $ 4,513,941
                                                                                   =============  =============

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

Notes payable ...................................................................   $   155,263    $   156,003
Borrowings on line of credit ....................................................        25,000           --
Accrued and other liabilities ...................................................        77,785        100,903
                                                                                   -------------  -------------
         Total liabilities ......................................................       258,048        256,906
Minority interest:
   Preferred partnership interests ..............................................       365,000        365,000
   Other ........................................................................       163,828        167,918
Commitments and contingencies
Shareholders' equity:
   Preferred Stock, $0.01 par value, 50,000,000 shares authorized, 11,148,000
     shares issued and outstanding (11,141,100 at December 31, 2000), at
     liquidation preference:
         Cumulative Preferred Stock, issued in series ...........................     1,327,650      1,155,150
   Common Stock, $0.10 par value, 200,000,000 shares authorized, 115,771,781
     shares issued and outstanding (123,703,874 at December 31, 2000) ...........        11,577         12,370
   Equity Stock, Series A, $0.01 par value, 200,000,000 shares authorized,
     5,635.602 shares issued and outstanding ....................................          --             --
   Class B Common Stock, $0.10 par value, 7,000,000 shares authorized and issued
                                                                                            700            700
   Paid-in capital ..............................................................     2,296,938      2,506,736
   Cumulative net income ........................................................     1,461,696      1,387,061
   Cumulative distributions paid ................................................    (1,397,345)    (1,337,900)
                                                                                   -------------  -------------
         Total shareholders' equity .............................................     3,701,216      3,724,117
                                                                                   -------------  -------------
              Total liabilities and shareholders' equity ........................   $ 4,488,092    $ 4,513,941
                                                                                   =============  =============
</TABLE>
                            See accompanying notes.
                                       1

<PAGE>

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

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                         For the Three Months Ended
                                                                                                 March 31,
                                                                                   -------------------------------------
                                                                                         2001                 2000
                                                                                   ----------------     ----------------
Revenues:
<S>                                                                                 <C>                  <C>
     Rental income:
         Self-storage facilities.............................................       $      171,829       $      154,558
         Commercial properties...............................................                3,057                2,759
         Containerized storage facilities....................................               10,073                7,549
     Equity in earnings of real estate entities..............................                9,272                8,276
     Interest and other income...............................................                3,608                3,453
                                                                                   ----------------     ----------------
                                                                                           197,839              176,595
                                                                                   ----------------     ----------------
Expenses:
     Cost of operations:
         Self-storage facilities.............................................               56,474               50,357
         Commercial properties...............................................                  950                  949
         Containerized storage facilities....................................                9,473                7,854
     Depreciation and amortization...........................................               39,622               36,034
     General and administrative..............................................                5,584                3,045
     Interest expense........................................................                  971                1,406
                                                                                   ----------------     ----------------
                                                                                           113,074               99,645
                                                                                   ----------------     ----------------
Income before minority interest and gain on disposition of real estate.......               84,765               76,950
Minority interest in income:
     Preferred partnership interests.........................................               (8,505)                (925)
     Other partnership interests.............................................               (3,193)              (3,464)
                                                                                   ----------------     ----------------

Income before gain on disposition of real estate.............................               73,067               72,561
Gain on disposition of real estate...........................................                1,568                    -
                                                                                   ----------------     ----------------

Net income...................................................................       $       74,635       $       72,561
                                                                                   ================     ================

Net income allocation:
---------------------
     Allocable to preferred shareholders.....................................       $       28,036       $       25,038
     Allocable to equity shareholders, Series A..............................                3,452                2,258
     Allocable to common shareholders........................................               43,147               45,265
                                                                                   ----------------     ----------------
                                                                                    $       74,635       $       72,561
                                                                                   ================     ================
Per common share:
----------------
     Net income per common share - Basic.....................................       $        0.34        $        0.34
                                                                                   ================     ================
     Net income per common share - Diluted...................................       $        0.34        $        0.34
                                                                                   ================     ================
     Net income per depository shares of Equity Stock, Series A
      - Basic and diluted....................................................       $        0.61        $        0.61
                                                                                   ================     ================
     Weighted average common shares - Basic..................................              128,114              132,781
                                                                                   ================     ================
     Weighted average common shares - Diluted................................              128,699              132,902
                                                                                   ================     ================
     Weighted average depository shares of Equity Stock, Series A
      - Basic and diluted....................................................            5,635,602            3,701,639
                                                                                   ================     ================
</TABLE>

                             See accomanying notes.
                                       2

<PAGE>

                              PUBLIC STORAGE, INC.
            CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                    For the three months ended March 31, 2001
                    (Amounts in thousands, except share data)

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                            Cumulative
                                                                              Senior                      Class B
                                                                            Preferred      Common         Common        Paid-in
                                                                              Stock         Stock          Stock        Capital
                                                                          ------------- -------------  ------------- -------------
<S>                                                                        <C>           <C>            <C>           <C>
Balances at December 31, 2000 ..........................................   $ 1,155,150   $    12,370    $       700   $ 2,506,736

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

Repurchase of common stock (7,932,093 shares) ..........................          --            (793)          --        (204,264)

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

Cash distributions:
   Cumulative Senior Preferred Stock ...................................          --            --             --            --
   Equity Stock, Series A ..............................................          --            --             --            --
   Class B Common Stock ................................................          --            --             --            --
   Common Stock ........................................................          --            --             --            --
                                                                          ------------- -------------  ------------- -------------
Balances at March 31, 2001 .............................................   $ 1,327,650   $    11,577    $       700   $ 2,296,938
                                                                          ============= =============  ============= =============
</TABLE>

<TABLE>
<CAPTION>

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

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

Repurchase of common stock (7,932,093 shares) ..........................          --            --         (205,057)

Net income .............................................................        74,635          --           74,635

Cash distributions:
   Cumulative Senior Preferred Stock ...................................          --         (28,036)       (28,036)
   Equity Stock, Series A ..............................................          --          (3,452)        (3,452)
   Class B Common Stock ................................................          --          (1,494)        (1,494)
   Common Stock ........................................................          --         (26,463)       (26,463)
                                                                          ------------- -------------  -------------
Balances at March 31, 2001 .............................................   $ 1,461,696   $(1,397,345)   $ 3,701,216
                                                                          ============= =============  =============
</TABLE>
                            See accompanying notes.
                                       3

<PAGE>

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

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                For the Three Months Ended
                                                                                        March 31,
                                                                           ------------------------------------
                                                                                2001                 2000
                                                                           ---------------      ---------------

Cash flows from operating activities:
<S>                                                                         <C>                  <C>
   Net income......................................................         $      74,635        $      72,561
   Adjustments to reconcile net income to net cash provided by
     operating activities:
     Less gain on disposition of real estate.......................                (1,568)                   -
     Depreciation and amortization.................................                39,622               36,034
     Depreciation included in equity in earnings of real estate
       entities....................................................                 5,275                5,032
     Minority interest in income...................................                11,698                4,389
                                                                           ---------------      ---------------
         Total adjustments.........................................                55,027               45,455
                                                                           ---------------      ---------------
             Net cash provided by operating activities.............               129,662              118,016
                                                                           ---------------      ---------------

Cash flows from investing activities:
     Principal payments received on notes receivable from
       affiliates..................................................                 1,929                  353
     Notes receivable from affiliates..............................                     -              (11,400)
     Capital improvements to real estate facilities................                (4,814)              (4,126)
     Construction in process and acquisition of land held for
       development.................................................               (53,609)             (44,318)
     Acquisition of minority interests.............................               (10,263)             (26,613)
     Acquisition of investments in real estate entities............               (11,494)             (37,538)
     Proceeds from the sale of real estate facilities..............                 9,102                8,638
                                                                           ---------------      ---------------
             Net cash used in investing activities.................               (69,149)            (115,004)
                                                                           ---------------      ---------------

Cash flows from financing activities:
     Borrowings on revolving line of credit........................                25,000                    -
     Principal payments on notes payable...........................                  (740)                (597)
     Net proceeds from the issuance of common stock................                     -                1,979
     Net proceeds from the issuance of preferred stock.............               166,966                    -
     Net proceeds from the issuance of equity stock................                     -               39,800
     Net proceeds from the issuance of preferred partnership units.                     -              311,800
     Repurchase of common stock....................................              (205,057)             (30,737)
     Distributions paid to shareholders............................               (59,445)             (56,380)
     Special distribution paid to common shareholders..............                     -              (38,076)
     Distributions paid to minority interests......................               (13,456)              (6,178)
     Net reinvestment (divestment) of minority interest............                   296               (1,268)
     Other.........................................................               (23,067)              (3,799)
                                                                           ---------------      ---------------
              Net cash provided by financing activities............              (109,503)             216,544
                                                                           ---------------      ---------------

Net (decrease) increase in cash and cash equivalents...............               (48,990)             219,556
Cash and cash equivalents at the beginning of the period...........                89,467               55,125
                                                                           ---------------      ---------------
Cash and cash equivalents at the end of the period.................         $      40,477        $     274,681
                                                                           ===============      ===============
</TABLE>
                            See accompanying notes.
                                       4

<PAGE>

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

                                   (Unaudited)

                                   (Continued)


<TABLE>
<CAPTION>
                                                                                    For the Three Months Ended
                                                                                             March 31,
                                                                               ------------------------------------
                                                                                   2001                    2000
                                                                               -------------          -------------
Supplemental schedule of non-cash investing and financing activities:

<S>                                                                                      <C>            <C>
Reduction to investment in real estate entities in connection
   with sale of investments......................................                        -               14,393

 Increase in other assets in connection with sale of investments.                        -              (14,393)

 Acquisition of minority interest and real estate in exchange for mortgage notes
   receivable:
     Real estate facilities......................................                        -              (14,421)
     Minority interest...........................................                        -              (12,542)

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

 Disposition of real estate facilities in exchange for note receivable and
   acquisition of minority interest:
       Real estate facilities....................................                        -               19,006
     Accumulated depreciation....................................                        -                 (251)

 Acquisition of minority interest 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)

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

Issuance of Equity Stock, Series A in connection with special
   distributions to common shareholders..........................                        -               44,010

</TABLE>
                            See accompanying notes.
                                       5

<PAGE>

                              PUBLIC STORAGE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2001

                                   (Unaudited)

1.   Description of the business
     ---------------------------

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

              In 1996 and 1997, we organized Public Storage Pickup and Delivery,
     Inc.,  as a separate  corporation  and  partnership  (the  corporation  and
     partnership  are  collectively  referred to as "PSPUD") to operate  storage
     facilities that rent portable  storage  containers to customers for storage
     in  central  warehouses.  At March 31,  2001,  PSPUD had 48  facilities  in
     operation in 14 states.

              We invest in real estate  facilities  by  acquiring  wholly  owned
     facilities or by acquiring interests in real estate entities which also own
     real  estate  facilities.  At March 31,  2001,  we had direct and  indirect
     equity interests in 1,515 properties located in 38 states,  including 1,369
     storage  facilities  and 146 commercial  properties.  The Company under the
     "Public Storage" name operates all of the storage facilities.

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

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

              The consolidated  financial statements include the accounts of the
     Company  and  34  controlled   entities  (the   "Consolidated   Entities").
     Collectively,  the  Company  and these  entities  own a total of 1,261 real
     estate   facilities,   consisting  of  1,255  storage  facilities  and  six
     commercial properties.

              At  March  31,  2001,  we had  equity  investments  in 11  limited
     partnerships in which we do not have a controlling interest.  These limited
     partnerships  collectively  own  114  self-storage  facilities,  which  are
     managed by the Company. In addition, we own approximately 42% of the common
     interest in PS Business Parks,  Inc.  ("PSB"),  which owns and operates 140
     commercial properties. We do not control these entities,  accordingly,  our
     investments in these limited  partnerships  and PSB are accounted for using
     the equity method.

              Certain  amounts  previously  reported have been  reclassified  to
     conform to the March 31, 2001 presentation.

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

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

                                       6

<PAGE>

     Income taxes
     ------------

              For all taxable years  subsequent to 1980,  the Company  qualified
     and intends to continue to qualify as a REIT,  as defined in Section 856 of
     the Internal  Revenue  Code. As a REIT, we are not taxed on that portion of
     our taxable income, which is distributed to our shareholders, provided that
     we meet certain tests. We believe we will meet these tests during 2001 and,
     accordingly,   no  provision   for  income  taxes  has  been  made  in  the
     accompanying financial statements.

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

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

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

              Due  to  the  short  period  to  maturity  of our  cash  and  cash
     equivalents,  accounts  receivable,  other  assets,  and  accrued and other
     liabilities,  the carrying values as presented on the consolidated  balance
     sheets are  reasonable  estimates  of fair value.  The  carrying  amount of
     mortgage  notes  receivable  approximates  fair value because the aggregate
     mortgage notes  receivable's  applicable  interest rates approximate market
     rates for these loans.

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

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

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

                                       7

<PAGE>

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

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

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

              Other assets primarily consist of furniture,  fixtures, equipment,
     and other such assets associated with the Containerized  storage facilities
     business as well as accounts receivable,  prepaid expenses,  and other such
     assets  of the  Company.  Included  in other  assets  with  respect  to the
     Containerized storage business is furniture,  fixtures,  and equipment (net
     of accumulated  depreciation)  of $30,817,000  and $28,544,000 at March 31,
     2001 and December  31, 2000,  respectively.  Included in  depreciation  and
     amortization  expense for the three months ended March 31, 2001 and 2000 is
     $1,339,000 and  $1,153,000,  respectively,  of  depreciation  of furniture,
     fixtures, and equipment of the Containerized storage business.

     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 March 31, 2001  intangible
     assets are net of accumulated  amortization of $50,037,000  ($47,709,000 at
     December 31, 2000).  Included in depreciation and amortization  expense for
     the three months ended March 31, 2001 and 2000 is $2,328,000, respectively,
     related to the amortization of intangible assets.

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

              Property  rents are  recognized  as earned.  Equity in earnings of
     real estate entities is recognized  based on our ownership  interest in the
     earnings of each of the  unconsolidated  real estate entities.  Advertising
     costs are expensed as incurred.

     Environmental costs
     -------------------

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

                                       8

<PAGE>

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

              Dividends paid to our preferred  shareholders totaling $28,036,000
     and  $25,038,000  for the  three  months  ended  March  31,  2001 and 2000,
     respectively,  have been  deducted  from net income to arrive at net income
     allocable to our common shareholders.

              Net income  allocated to our common  shareholders has been further
     allocated  among our two classes of common stock;  our regular common stock
     and our Equity Stock,  Series A. The allocation  among each class was based
     upon the two-class method.  Under the two-class method,  earnings per share
     for each  class  of  common  stock is  determined  according  to  dividends
     declared  (or  accumulated)  and  participation   rights  in  undistributed
     earnings.  Under the  two-class  method,  the  Equity  Stock,  Series A was
     allocated  approximately   $3,452,000  of  net  income  and  the  remaining
     $43,147,000 was allocated to the regular common shares for the three months
     ended March 31, 2001. For the three months ended March 31, 2000, the Equity
     Stock,  Series A was allocated  approximately  $2,258,000 in net income and
     the remaining $45,265,000 was allocated to the regular common shares.

              Basic net income per share is computed using the weighted  average
     common shares (prior to the dilutive impact of stock options  outstanding).
     Diluted net income per common share is computed using the weighted  average
     common shares outstanding  (adjusted for stock options).  Effective January
     1,  2000,  the  Company's  7,000,000  Class  B  common  shares  outstanding
     participate in distributions of the Company's  earnings.  Distributions per
     share  of  Class  B  common  stock  are  equal  to  97% of  the  per  share
     distribution  paid to the Company's  regular common shares.  As a result of
     this  participation in distribution of earnings,  for purposes of computing
     net income per common share,  the Company includes  6,790,000  (7,000,000 x
     97%) Class B common shares in the weighted average common equivalent shares
     for each of the three months ended March 31, 2000 and 2001.

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

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

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

              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.  The Company
     adopted  SFAS 133,  as  amended by SFAS 138,  on  January 1, 2001,  and the
     adoption had no material  impact on the  Company's  consolidated  financial
     statements.

                                       9

<PAGE>

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

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

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

              Activity in real estate facilities during 2001 is as follows:

                                                 In thousands
                                                --------------
Operating facilities, at cost:
  Balance at December 31, 2000 ...............   $ 4,134,417
  Developed facilities .......................        95,942
  Acquisition of minority interest (Note 7) ..         2,414
  Capital improvements .......................         4,814
                                                --------------
  Balance at March 31, 2001 ..................     4,237,587
                                                --------------

Accumulated depreciation:
  Balance at December 31, 2000 ...............      (668,018)
  Additions during the year ..................       (35,955)
                                                --------------
  Balance at March 31, 2001 ..................      (703,973)
                                                --------------

Construction in progress:
  Balance at December 31, 2000 ...............       217,140
  Current development ........................        41,348
  Developed facilities .......................       (95,942)
                                                --------------
  Balance at March 31, 2001 ..................       162,546
                                                --------------

Land held for development:
  Balance at December 31, 2000 ...............        21,447
  Acquisitions ...............................        12,261
  Dispositions ...............................        (7,534)
                                                --------------
  Balance at March 31, 2001 ..................        26,174
                                                --------------

  Total real estate facilities ...............   $ 3,722,334
                                                ==============

              During the three  months  ended March 31,  2001,  we opened  eight
     newly  developed  facilities  having  approximately  659,000  aggregate net
     rentable  square  feet  with  an  aggregate  cost  of  $62,155,000,  and 10
     expansions of storage  facilities  with an aggregate  costs of $33,787,000.
     Construction in progress at March 31, 2001 consists primarily of 30 storage
     facilities and 10 expansion projects to existing storage  facilities.  Land
     held for development  consists of 11 parcels of land held for  development.

              During  the first  quarter  of 2001,  we sold a parcel of land for
     approximately $9,102,000. A gain of $1,568,000 was recorded on this sale.

              Our policy is to capitalize  interest  incurred on debt during the
     course of construction of our self-storage facilities. Interest capitalized
     during the three  months  ended March 31, 2001 was  $2,110,000  compared to
     $2,111,000 for the same period in 2000.

                                       10

<PAGE>

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

              At March 31, 2001, our investment in real estate entities consists
     of (i)  partnership  interests  in  approximately  11  partnerships,  which
     principally own self-storage  facilities and (ii) our ownership interest in
     PSB. Such interests are non-controlling  interests of less than 50% and are
     accounted for using the equity method of accounting.  Accordingly, earnings
     are  recognized   based  upon  our  ownership   interest  in  each  of  the
     partnerships.  During the three  months  ended March 31, 2001 and 2000,  we
     recognized  earnings from our  investments  of $9,272,000  and  $8,276,000,
     respectively, and received distributions from our investments of $3,533,000
     and $4,522,000, respectively.

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

              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 March 31, 2001 are as follows:

<TABLE>
<CAPTION>
                                                               For the three months ended March 31, 2001
                                                  ------------------------------------------------------------------------
                                                         Other          Development
                                                  Equity Investments   Joint Venture          PSB              Total
                                                  ------------------ ----------------- ----------------- -----------------
                                                                         (Amounts in thousands)
<S>                                                 <C>               <C>              <C>               <C>
Rental income.............................          $    10,786       $    7,626       $    38,711       $    57,123
Other income..............................                  330              150               779             1,259
                                                  ------------------ ----------------- ----------------- -----------------
Total revenues............................               11,116            7,776            39,490            58,382
                                                  ------------------ ----------------- ----------------- -----------------

Cost of operations........................                3,269            3,199            10,591            17,059
Depreciation..............................                  916            1,696             9,646            12,258
Other expenses............................                  705                -             1,365             2,070
                                                  ------------------ ----------------- ----------------- -----------------
Total expenses............................                4,890            4,895            21,602            31,387
                                                  ------------------ ----------------- ----------------- -----------------

Net income before minority interest.......                6,226            2,881            17,888            26,995
Minority interest ........................                    -                -            (6,423)           (6,423)
                                                  ------------------ ----------------- ----------------- -----------------
Net income................................          $     6,226       $    2,881       $    11,465       $    20,572
                                                  ================== ================= ================= =================
At March 31, 2001
-----------------
Real estate, net .........................          $    66,598       $  216,707       $   859,912       $ 1,143,217
Total assets..............................              101,769          219,773           925,252         1,246,794
Total liabilities.........................               35,938            2,260            56,281            94,479
Minority interest.........................                    -                -           306,701           306,701
Total equity..............................               64,899          217,513           562,270           844,682

The Company's investment (book value) at
  March 31, 2001..........................          $  124,634        $  65,254        $   265,259       $   455,147

The Company's effective average ownership
  interest at March 31, 2001 (a)..........              44%                 30%              42%

</TABLE>

(a)  Reflects our  ownership  interest  with  respect to total  common/partners'
     equity.

                                       11

<PAGE>

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 March 31, 2001, borrowings on the line of credit
     totaled $25 million.

7.   Minority interest
     -----------------

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

              In November  1999,  we formed a second  development  joint venture
     with a joint venture partner to develop $100 million of storage  facilities
     and to purchase $100 million of the Company's Equity Stock, Series AAA. The
     joint venture is funded solely with equity  capital  consisting of 51% from
     the Company and 49% from the joint  venture  partner.  The joint venture is
     consolidated and,  accordingly,  the Equity Stock, Series AAA is eliminated
     in  consolidation.  Included in minority interest is $80.8 million relative
     to the joint venture,  primarily  representing total contributions received
     from our joint venture partner,  net of  distributions.  Minority  interest
     increased  by   $5,221,000   since   December  31,  2000  as  a  result  of
     contributions  received  from our joint venture  partner,  and decreased by
     $1,608,000 as a result of distributions to our joint venture partner.

              On March 17,  2000,  we issued  $240.0  million  of 9.5%  Series N
     Cumulative  Redeemable  Perpetual  Preferred  Units,  on March 29, 2000, we
     issued $75.0  million of 9.125%  Series O Cumulative  Redeemable  Perpetual
     Preferred  Units,  and on August 11, 2000, we issued $50.0 million of 8.75%
     Series P  Cumulative  Redeemable  Perpetual  Preferred  Units in one of our
     operating  partnerships.  The units are not  redeemable  during the first 5
     years,  thereafter,  at our option, we can call the units for redemption at
     the  issuance  amount  plus any  unpaid  distributions.  The  units are not
     redeemable  by the  holder.  Subject  to certain  conditions,  the Series N
     preferred  units are  convertible  into shares of 9.5% Series N  Cumulative
     Preferred  Stock,  the Series O preferred units are convertible into shares
     of 9.125% Series O Cumulative Preferred Stock of the Company and the Series
     P preferred units are convertible  into shares of 8.75% Series P Cumulative
     Preferred Stock. These  transactions had the effect of increasing  minority
     interest by $365 million in the year ended  December 31, 2000.  The holders
     of these  preferred units were paid in aggregate  approximately  $8,505,000
     and $925,000 in  distributions  and received a corresponding  allocation of
     minority interest in earnings for the three months ended March 31, 2001 and
     2000, respectively.

                                       12

<PAGE>

              As of March 31,  2001,  there were 237,935  operating  partnership
     units ("OP units")  outstanding  in one of the  Consolidated  Entities.  OP
     Units  are   convertible  on  a  one-for-one   basis  (subject  to  certain
     limitations)  into  common  shares  of the  Company  at the  option  of the
     unitholder.  Minority  interest in income with respect to OP Units reflects
     the OP Units'  share of the net  income  of the  Company,  with net  income
     allocated  to  minority   interests   with  respect  to  weighted   average
     outstanding  OP Units on a per unit  basis  equal to diluted  earnings  per
     common  share.  During the three months ended March 31, 2001, no units were
     redeemed.

              In the three  months ended March 31,  2001,  the Company  acquired
     interests in the Consolidated Entities for an aggregate cost of $10,263,000
     cash; these  acquisitions had the effect of reducing  minority  interest by
     $7,849,000, with the excess of cost over underlying book value ($2,414,000)
     allocated to real estate.

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

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

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

<TABLE>
<CAPTION>
                                          At March 31, 2001               At December 30, 2000
                                    -----------------------------     ----------------------------
                       Dividend       Shares           Carrying          Shares          Carrying
      Series             Rate       Outstanding         Amount        Outstanding         Amount
-------------------  ------------   ------------     ------------     ------------    ------------
                                   (Dollar amount in thousands)      (Dollar amount in thousands)
<S>                      <C>           <C>           <C>                 <C>           <C>
Series A                 10.000%       1,825,000     $     45,625        1,825,000     $     45,625
Series B                  9.200%       2,386,000           59,650        2,386,000           59,650
Series C              Adjustable       1,200,000           30,000        1,200,000           30,000
Series D                  9.500%       1,200,000           30,000        1,200,000           30,000
Series E                 10.000%       2,195,000           54,875        2,195,000           54,875
Series F                  9.750%       2,300,000           57,500        2,300,000           57,500
Series G                  8.875%           6,900          172,500            6,900          172,500
Series H                  8.450%           6,750          168,750            6,750          168,750
Series I                  8.625%           4,000          100,000            4,000          100,000
Series J                  8.000%           6,000          150,000            6,000          150,000
Series K                  8.250%           4,600          115,000            4,600          115,000
Series L                  8.250%           4,600          115,000            4,600          115,000
Series M                  8.750%           2,250           56,250            2,250           56,250
Series Q                  8.600%           6,900          172,500                -                -
                                    ------------     ------------     ------------    ------------
Total Senior Preferred Stock          11,148,000     $  1,327,650       11,141,100     $  1,155,150
                                    ============     ============     ============    =============
</TABLE>

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

                                       13

<PAGE>

              The Series A through Series Q preferred  stock  (collectively  the
     "Senior  Preferred  Stock") have general  preference rights with respect to
     liquidation and quarterly  distributions.  Holders of the preferred  stock,
     except under certain conditions and as noted above, will not be entitled to
     vote on most matters.  In the event of a cumulative  arrearage equal to six
     quarterly dividends or failure to maintain a Debt Ratio (as defined) of 50%
     or less,  holders of all outstanding series of preferred stock (voting as a
     single  class  without  regard to series)  will have the right to elect two
     additional  members  to serve on the  Company's  Board of  Directors  until
     events  of  default  have been  cured.  At March 31,  2001,  there  were no
     dividends in arrears and the Debt Ratio was 3.5%.

              Except  under  certain   conditions   relating  to  the  Company's
     qualification as a REIT, the Senior Preferred Stock is not redeemable prior
     to the following dates: Series A - September 30, 2002, Series B - March 31,
     2003,  Series C - June 30, 1999,  Series D - September 30, 2004, Series E -
     January 31, 2005,  Series F - April 30, 2005, Series G - December 31, 2000,
     Series H - January 31, 2001, Series I - October 31, 2001, Series J - August
     31, 2002,  Series K - January 19, 2004, Series L - March 10, 2004, Series M
     - August  17,  2004 and  Series  Q -  January  19,  2006.  On or after  the
     respective  dates,  each of the  series of Senior  Preferred  Stock will be
     redeemable  at the option of the Company,  in whole or in part,  at $25 per
     share (or depositary share in the case of the Series G through Series M and
     Series Q), plus accrued and unpaid dividends.

     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.

              At March 31, 2001, we had 5,635,602 depositary shares outstanding,
     each  representing  1/1,000 of a share of Equity  Stock,  Series A ("Equity
     Stock  A").  The Equity  Stock A ranks on a parity  with  common  stock and
     junior to the Senior  Preferred  Stock with  respect to general  preference
     rights and has a  liquidation  amount which cannot exceed $24.50 per share.
     Distributions with respect to each depositary share shall be the lesser of:
     a) five times the per share  dividend  on the Common  Stock or b) $2.45 per
     annum.  Except in order to preserve the Company's federal income tax status
     as a REIT, we may not redeem the  depositary  shares before March 31, 2010.
     On or after March 31, 2010,  we may, at our option,  redeem the  depositary
     shares at $24.50 per depositary share. If the Company fails to preserve its
     federal  income  tax  status  as a  REIT,  the  depositary  shares  will be
     convertible into common stock on a one for one basis. The depositary shares
     are otherwise  not  convertible  into common  stock.  Holders of depositary
     shares  vote as a  single  class  with  our  holders  of  common  stock  on
     shareholder  matters,  but the  depositary  shares have the  equivalent  of
     one-tenth of a vote per  depositary  share.  We have no  obligation  to pay
     distributions  on the  depositary  shares if no  distributions  are paid to
     common shareholders.

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

                                       14

<PAGE>

              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.

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

              As  previously   announced,   the  Company's  Board  of  Directors
     authorized the repurchase  from time to time of up to 25,000,000  shares of
     the  Company's  common stock on the open market or in privately  negotiated
     transactions.  In the quarter ended March 31, 2001, the Company repurchased
     a total of 7,932,093  shares,  for a total aggregate cost of  approximately
     $205.1 million.  From the initial authorization through March 31, 2001, the
     Company has repurchased a total of 18,832,520  shares of common stock at an
     aggregate cost of  approximately  $463.7  million.  Subsequent to March 31,
     2001,  (April 1, 2001  through  May 9, 2001) the  Company  has  repurchased
     2,229,500 shares at an aggregate cost of approximately $59.8 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,  (i) not  participate
     in  liquidating  distributions,  (ii) not be  entitled  to vote  (except as
     expressly required by California law) and (iii) automatically  convert into
     Common  Stock,  on a share for share basis,  upon the later to occur of FFO
     per common share  aggregating  $3.00 during any period of four  consecutive
     calendar quarters or January 1, 2003.

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

              For these  purposes,  FFO per share of  Common  Stock (as  defined
     above) was $2.61 for the four consecutive calendar quarters ended March 31,
     2001.

                                       15

<PAGE>

     Dividends
     ---------

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

                                         Distributions Per
                                             Share or
                                         Depositary Share    Total Distributions
                                         -----------------   -------------------
Preferred Stock:
---------------
Series A...........................            $0.625             $1,140,000
Series B...........................            $0.575              1,372,000
Series C...........................            $0.422                506,000
Series D...........................            $0.594                713,000
Series E...........................            $0.625              1,372,000
Series F...........................            $0.609              1,401,000
Series G...........................            $0.555              3,828,000
Series H...........................            $0.528              3,565,000
Series I...........................            $0.539              2,156,000
Series J...........................            $0.500              3,000,000
Series K...........................            $0.516              2,372,000
Series L ..........................            $0.516              2,372,000
Series M...........................            $0.547              1,230,000
Series Q...........................            $0.436              3,009,000
                                                             -------------------
                                                                  28,036,000
Common Stock:
------------
Equity Stock, Series A.............            $0.613              3,452,000
Common.............................            $0.220             26,463,000
Class B Common ....................            $0.213              1,494,000
                                                             -------------------
   Total dividends.................                              $59,445,000
                                                             ===================

              The  dividend  rate on the Series Q preferred  stock was  prorated
     from  January 19,  2001 (date of  issuance)  through  March 31,  2001.  The
     dividend rate on the Series C Preferred Stock for the first quarter of 2001
     was equal to 6.75% per annum.  The dividend rate per annum will be adjusted
     quarterly  and will be equal to the  highest of one of three U.S.  Treasury
     indices  (Treasury  Bill Rate,  Ten Year Constant  Maturity Rate, or Thirty
     Year Constant Maturity Rate) multiplied by 110%. However, the dividend rate
     for any  dividend  period  will  neither  be less than  6.75% per annum nor
     greater than 10.75%. The dividend rate for the quarter ending June 30, 2001
     will be equal to 6.75% per annum.

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

              In July 1997,  the FASB issued  Statement of Financial  Accounting
     Standards No. 131, "Disclosures about Segments of an Enterprise and Related
     Information," which establishes  standards for the way that public business
     enterprises report information about operating segments.  This statement is
     effective for financial statements for periods beginning after December 15,
     1997.  We adopted this standard  effective for the year ended  December 31,
     1998. For information regarding the description of each reportable segment,
     policies relating to the measurement of segment profit or loss, and segment
     assets,  refer  to the  consolidated  financial  statements  and  footnotes
     thereto  included in the Company's  annual report on Form 10-K for the year
     ended December 31, 2000.

                                       16

<PAGE>

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

<TABLE>
<CAPTION>
                                                                    Three months ended
                                                                         March 31,
                                                                 -----------------------
                                                                    2001         2000       Change
                                                                 ----------- -----------  -----------
                                                                    (Dollar amounts in thousands)
Reconciliation of Revenues by Segment:
-------------------------------------

Self storage
<S>                                                              <C>         <C>          <C>
  Self storage property rentals.............................     $  171,829  $  154,558   $   17,271
  Equity in earnings - self storage property operations.....          5,157       5,249          (92)
  Equity in earnings - depreciation (self storage)..........         (1,552)     (1,642)          90
                                                                 ----------- -----------  -----------
      Self storage segment revenues.........................        175,434     158,165       17,269
                                                                 ----------- -----------  -----------

Containerized storage.......................................         10,073       7,549        2,524
---------------------                                            ----------- -----------  -----------

Commercial  properties
----------------------
  Commercial property rentals...............................          3,057       2,759          298
  Equity in earnings - commercial property operations.......         11,646       9,829        1,817
  Equity in earnings - depreciation (commercial property
     operations)............................................         (3,723)     (3,390)        (333)
                                                                 ----------- -----------  -----------
      Commercial properties  segment revenues...............         10,980       9,198        1,782
                                                                 ----------- -----------  -----------

Other items not allocated to segments
-------------------------------------
  Equity in earnings - general and administrative and other.         (2,256)     (1,770)        (486)
  Interest and other income.................................          3,608       3,453          155
                                                                 ----------- -----------  -----------
      Total other items not allocated to segments...........          1,352       1,683         (331)
                                                                 ----------- -----------  -----------

      Total revenues........................................     $  197,839  $  176,595   $   21,244
                                                                 =========== ===========  ===========
</TABLE>
                                       17

<PAGE>

<TABLE>
<CAPTION>
                                                                     Three months ended
                                                                          March 31,
                                                                  -----------------------
                                                                      2001        2000       Change
                                                                  ----------- -----------  -----------
                                                                     (Dollar amounts in thousands)
Reconciliation of Net Income by Segment:

Self storage
<S>                                                                <C>         <C>          <C>
  Self storage properties .................................        $ 115,355   $ 104,201    $ 11,154
  Depreciation and amortization - self storage.............          (37,386)    (34,322)     (3,064)
  Equity in earnings - self storage property operations....            5,157       5,249         (92)
  Equity in earnings - depreciation (self storage).........           (1,552)     (1,642)         90
                                                                  ----------- -----------  -----------
      Total self storage segment net income................           81,574      73,486       8,088
                                                                  ----------- -----------  -----------

Containerized storage
  Containerized storage operations.........................              600        (305)        905
  Containerized storage depreciation.......................           (1,527)     (1,266)       (261)
                                                                 ----------- -----------  -----------
      Total containerized storage segment net income.......             (927)     (1,571)        644
                                                                  ----------- -----------  -----------

Commercial  properties
  Commercial properties....................................            2,107       1,810         297
  Depreciation and amortization - commercial properties....             (709)       (446)       (263)
  Equity in earnings - commercial property operations......           11,646       9,829       1,817
  Equity in earnings - depreciation (commercial properties)           (3,723)     (3,390)       (333)
                                                                  ----------- -----------  -----------
      Total commercial property segment net income.........            9,321       7,803       1,518
                                                                  ----------- -----------  -----------

Other items not allocated to segments:
  Equity in earnings - general and administrative and other           (2,256)     (1,770)       (486)
  Interest and other income................................            3,608       3,453         (76)
  General and administrative...............................           (5,584)     (3,045)     (2,539)
  Interest expense.........................................             (971)     (1,406)        435
  Gain on sale of land.....................................            1,568           -       1,568
  Minority interest in income..............................          (11,698)     (4,389)     (7,309)
                                                                  ----------- -----------  -----------
      Total other items not allocated to segments..........          (15,333)     (7,157)     (8,176)
                                                                  ----------- -----------  -----------

      Total net income ....................................        $  74,635   $  72,561    $  2,074
                                                                  =========== ===========  ===========
</TABLE>

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

              In  April  2001,  the  Company  completed  a  public  offering  of
     2,210,500  depositary shares each representing 1/1,000 of a share of Equity
     Stock, Series A, raising net proceeds of approximately $51.7 million.

              The  Company  entered  into an  arrangement  in April  2001 with a
     financial institution in which we granted the institution the right to sell
     us up to  1,000,000  shares of our  common  stock at a price of $26.26  per
     share on certain dates in September  2001 and October 2001. For this right,
     the financial institution paid us $910,000 in April 2001.

                                       18

<PAGE>

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

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

                                       19

<PAGE>

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

         The following  discussion  and analysis  should be read in  conjunction
with the Company's consolidated financial statements and notes thereto.

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

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

         Net income for the three  months  ended March 31, 2001 was  $74,635,000
compared to $72,561,000 for the same period in 2000, representing an increase of
$2,074,000  or 2.9%.  The  increase  in net income was  primarily  the result of
improved  property  operations,  a gain on the  sale of  land in  2001,  and the
acquisition of additional  real estate  investments in 2000 and 2001. The impact
of these items was offset by increased minority interest in income. During March
and  August  2000,  we issued a total of  $365,000,000  in  preferred  operating
partnership units, and as a result distributions to these unitholders  increased
from $925,000 in the three months ended March 31, 2000 to $8,505,000 in the same
period in 2001. Unlike distributions to preferred shareholders, distributions to
preferred  unitholders  are  presented  as  minority  interest  in income  and a
reduction in net income. Primarily as a result of these distributions,  minority
interest in income  increased  $7,309,000  for the three  months ended March 31,
2001 as compared to the same period in 2000.

         Net income  allocable to common  shareholders  was $43,147,000 or $0.34
per common  share on a diluted  basis  (based on  128,699,000  weighted  average
common  equivalent  shares) for the three months  ended March 31, 2001.  For the
same period in 2000, net income allocable to common shareholders was $45,265,000
or $0.34 per common  share on a diluted  basis  (based on  132,902,000  weighted
average common equivalent shares).

         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  from  net  income  in
determining net income allocable to the common shareholders.

         The Company's  outstanding  7,000,000 Class B common shares participate
in distributions of the Company's  earnings.  Distributions per share of Class B
common  stock  are  equal  to 97% of the  per  share  distribution  paid  to the
Company's  regular  common  shares.  As  a  result  of  this   participation  in
distribution of earnings, for purposes of computing net income per common share,
the Company  includes  6,790,000  (7,000,000 x 97%) Class B common shares in the
weighted  average common  equivalent  shares in the three months ended March 31,
2001 and 2000.

                                       20

<PAGE>

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

         Rental  income  and cost of  operations  have  increased  for the three
months  ended  March 31,  2001  compared  to the same  period in 2000 due to our
acquisition  and  development  activities  during 2000 and 2001.  As a result of
these   activities,   the  number  of  facilities   included  in  the  Company's
consolidated  financial statements has increased from 1,209 at March 31, 2000 to
1,261 at March 31, 2001.

         SELF-STORAGE  OPERATIONS:  The following table summarizes the operating
results (before  depreciation)  of (i) the 914  self-storage  facilities that we
owned and were stabilized as of December 31, 1999 (the  "Consistent  Group") and
(ii) all  other  facilities  for  which  operations  were not  reflected  in the
Company's financial statements  throughout the three months ended March 31, 2001
and the same period in 2000 (the "Other Facilities"):

<TABLE>
<CAPTION>
Self-storage operations
-----------------------                         Three months ended
                                                     March 31,
                                              ------------------------  Percentage
                                                2001          2000         Change
                                              -----------  -----------  -----------
                                              (Dollar amounts in thousands, except
                                                    per square foot amounts)
Rental income (a)
<S>                                           <C>          <C>               <C>
  Consistent Group.......................     $  134,621   $  125,031        7.7%
  Other Facilities.......................         37,208       29,527       26.0%
                                              -----------  -----------  -----------
                                                 171,829      154,558       11.2%
                                              -----------  -----------  -----------
Cost of operations
  Consistent Group.......................         40,268       38,840        3.7%
  Other Facilities.......................         16,206       11,517       40.7%
                                              -----------  -----------  -----------
                                                  56,474       50,357       12.1%
                                              -----------  -----------  -----------
Net operating income
  Consistent Group.......................         94,353       86,191        9.5%
  Other Facilities.......................         21,002       18,010       16.6%
                                              -----------  -----------  -----------
                                                 115,355      104,201       10.7%
                                              -----------  -----------  -----------

Depreciation expense                             (37,386)     (34,322)       8.9%
                                              -----------  -----------  -----------

Net income                                    $   77,969   $   69,879       11.6%
                                              ===========  ===========  ===========
Consistent group data
---------------------
  Gross margin...........................         70.1%        68.9%         1.2%
  Weighted average :
     Occupancy...........................         89.1%        91.4%        (2.3%)
     Realized annual rent per square foot        $10.81        $9.76        10.8%
     (b).................................
     Scheduled annual rent per square foot       $12.11       $10.51        15.2%

Number of facilities:
  Consistent group.......................          914          914          -
  Other Facilities.......................          341          291         17.2%

Net rentable sq. ft.(in thousands):
  Consistent group.......................       53,899       53,899          -
  Other Facilities.......................       21,606       17,924         20.5%

</TABLE>

(a)  Rental  income  includes  late  charges and  administrative  fees.  For the
     Consistent Group, late charges and administrative fees in aggregate totaled
     $4,839,000 and $4,801,000 for the three month periods ending March 31, 2001
     and 2000, respectively.

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

                                       21

<PAGE>

         Rental  income  is a  function  of a number of  factors.  The four most
significant factors include:  (a) changes in rental rates charged to new tenants
(scheduled  rent),  (b) changes in rental rates  charged to our existing  tenant
base,  (c) the amount of discounts  allowed to new  tenants,  and (d) changes in
occupancy levels.

         Throughout 2000 and, to a lesser extent,  in the first quarter of 2001,
we have  aggressively  increased  scheduled  rents  (rental rates charged to new
customers)  throughout the portfolio.  Scheduled rental rates for the Consistent
Group of  facilities  are  approximately  15.1% higher as of March 31, 2001 than
they were at the same time last year.

         Effective  February 1, 2001, we began to implement  higher rental rates
to our existing customer base in selected markets. The amount of increase varied
depending on a number of factors and did not result in an increase of historical
rental rates to the level of scheduled rental rates.  Accordingly,  at March 31,
2001,  the rental rates  charged to our existing  customer  base is, on average,
less than the  current  scheduled  rates.  For the first  quarter  of 2001,  the
average realized  annualized rental rate per square foot was approximately $1.44
or 11.8% lower than the scheduled rent per square foot at March 31, 2001.

         Over the past several years, as part of our marketing efforts,  we have
offered  various forms of discounts to new tenants.  These  discounts  generally
were in the  form of  reductions  to a new  tenant's  base  rent.  Over the past
several months, we have significantly reduced the amount of discounts offered to
new tenants. For the Consistent Group of facilities discounts totaled $2,129,000
and $4,374,000 for the three months ended March 31, 2001 and 2000, respectively.

         As expected,  our more  aggressive  rental rates and  reductions in the
amount of discounts offered have resulted in a reduction in the weighted average
occupancy  levels.  For the  quarter  ended  March 31,  2001,  weighted  average
occupancy levels for the Consistent Group of facilities was 89.1% as compared to
91.4% for the same period in 2000. We are implementing and evaluating  marketing
strategies  designed  to  improve  occupancy  levels.  However,  there can be no
assurance that such activities will result in higher occupancy levels.

         The net  effect of  increasing  rental  rates  charged  to both new and
existing customers combined with a reduction in occupancy levels has resulted in
a 7.7%  increase in rental  income.  We are currently  evaluating  the impact of
higher rental rates on our move-in and move-out  activity.  In addition,  we are
evaluating  market supply and demand  factors and based on these analyses we may
adjust rental rates further, either increasing or decreasing them

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

<TABLE>
<CAPTION>
                                                     Three Months Ended
                                                       March 31, 2001
                                                -------------------------------
                                                     2001              2000             Change
                                                -------------     -------------     -------------
<S>                                             <C>               <C>                   <C>
Payroll expense                                 $  11,157,000     $  11,225,000         (0.6%)
Property taxes                                     11,964,000        11,773,000          1.6%
Repairs and maintenance                             2,813,000         3,057,000         (8.0%)
Advertising                                         2,102,000         1,730,000         21.5%
Telephone reservation center costs                  2,244,000         2,109,000          6.4%
Other                                               9,988,000         8,946,000         11.6%
                                                -------------     -------------     -------------
                                                $  40,268,000     $  38,840,000          3.7%
                                                =============     =============     =============
</TABLE>

                                       22

<PAGE>

         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  75% of the total cost of operations.  With respect to
the  Consistent  Group of  facilities,  cost of operations  for the three months
ended March 31, 2001 increased approximately 3.7% compared to the same period of
last year.  This increase was primarily a result of increases in advertising (up
21.5%) and telephone  reservation  center expenses (up 6.4%) partially offset by
decreases  in payroll  expense  and  repairs and  maintenance.  The  increase in
advertising is the result of advertising in additional  yellow page  directories
combined  with  increased  rates in existing  directories,  primarily due to the
expansion of the size of our ads.


         During  fiscal 1999 and 2000 and the three months ended March 31, 2001,
we have opened 38 newly developed  facilities with a total cost of approximately
$207.8 million. Included in the self-storage operations table, under the caption
"Other  Facilities",  are rental income and cost of operations of $2,368,000 and
$1,903,000,  respectively,  for the  three  months  ended  March 31,  2001,  and
$343,000 and $414,000,  respectively, for the three months ended March 31, 2000,
with  respect  to these  facilities.  We also  completed  expansions  of storage
facilities  with  aggregate  costs of  approximately  $33.8 million in the three
months ended March 31, 2001.

         Due to the fill-up nature of a newly developed  self-storage  facility,
our earnings have been negatively impacted by our development activities. Unlike
many other types of real estate,  we do not pre-lease our storage space prior to
the opening of a newly developed facility.  Generally, it takes approximately 24
months for a newly developed  facility to reach a stabilized  occupancy level of
90%. At this stabilized occupancy level, operating costs represent approximately
30% of stabilized  rental revenues.  Since the operating costs are substantially
fixed  in  nature,  a newly  developed  facility  will  not  reach a  break-even
operating cash flow until it achieves an occupancy level of  approximately  30%.
At March 31, 2001, the 38 newly  developed  facilities had an average  occupancy
level of approximately  36%. We expect that over at least the next twelve months
our  development  activities  will  continue  to have a  negative  impact to our
earnings as additional newly developed facilities are opened. See "Liquidity and
Capital Resources - Acquisition and Development of Facilities."

         COMMERCIAL PROPERTY OPERATIONS: Commercial property operations included
in the consolidated  financial  statements include commercial space owned by the
Company and Consolidated Entities. Our investment in PSB is accounted for on the
equity method of  accounting,  and  accordingly  our share of PSB's  earnings is
reflected  as "Equity in  earnings  of real estate  entities"  in our  condensed
consolidated Statement of Income.

         During  the  second   quarter  of  2000,  we  acquired  two  commercial
facilities  (which are expected to be converted into storage  facilities) for an
aggregate cost of $5,930,000.  Included within  commercial  property  operations
with  respect  to these  facilities  were  revenues  and cost of  operations  of
$137,000 and $71,000,  respectively,  for the three months ended March 31, 2001,
respectively.  The following table sets forth the historical commercial property
amounts included in the financial statements:

<TABLE>
<CAPTION>
Commercial Property Operations                     Three months ended March 31,
------------------------------                     ----------------------------
                                                      2001               2000            Change
                                                   -----------       -----------       -----------
                                                              (Amounts in thousands)
<S>                                                 <C>              <C>                 <C>
Rental income...............................        $  3,057         $  2,759            10.8%
Cost of operations..........................             950              949             -
                                                   -----------       -----------       -----------
Net operating income prior to depreciation..           2,107            1,810            16.4%
  Depreciation................................          (709)            (446)           58.9%
                                                   -----------       -----------       -----------
  Net income..................................      $  1,398          $  1,364            2.5%
                                                   ===========       ===========       ===========
</TABLE>

         CONTAINERIZED STORAGE FACILITIES  OPERATIONS:  At March 31, 2001, PSPUD
operated 48 facilities.  PSPUD incurred operating losses totaling  approximately
$927,000  and  $1,571,000  in the three  months  ended  March 31, 2001 and 2000,
respectively, summarized as follows:

                                       23

<PAGE>

<TABLE>
<CAPTION>
Containerized storage facilities
--------------------------------
                                                   Three months ended March 31,
                                                   ----------------------------
                                                       2001            2000              Change
                                                   -----------      -----------       -----------
                                                                (Amounts in thousands)

<S>                                                 <C>              <C>               <C>
Rental and other income                             $  10,073        $   7,549         $   2,524
Cost of Operations:
  Direct operating costs.....................           7,681            5,600             2,081
  Facility lease expense.....................           1,792            2,254              (462)
                                                   -----------      -----------       -----------
     Total cost of operations................           9,473            7,854             1,619

Operating income (loss) prior to depreciation             600             (305)              905

Depreciation (a).............................          (1,527)          (1,266)             (261)
                                                   -----------      -----------       -----------
Operating losses.............................       $    (927)       $  (1,571)        $     644
                                                   ===========      ===========       ===========
</TABLE>

(a)  Depreciation   for  the  three  months  ended  March  31,  2001  and  2000,
     respectively,  includes  $188,000 and $113,000  with respect to real estate
     assets.

         At March 31, 2001, 22 of the 48 containerized  storage  facilities were
leased from third parties. We are currently developing 17 combination facilities
(which  includes 4 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  7 of the  leased
facilities.  We expect  that an  increasing  part of the  containerized  storage
business will be operated  from this type of facility.  To the extent that these
developed combination facilities replace existing third-party leased facilities,
lease expense should continue to be reduced.

         EQUITY  IN  EARNINGS  OF  REAL  ESTATE  ENTITIES:  In  addition  to our
ownership  of equity  interests  in PSB, we had general and limited  partnership
interests in 11 limited  partnerships  at March 31,  2001.  (PSB and the limited
partnerships are collectively referred to as the "Unconsolidated Entities.") Due
to our  limited  ownership  interest  and control of these  entities,  we do not
consolidate the accounts of these entities for financial reporting purposes, and
account for such investments using the equity method.

         Equity in earnings of real estate entities for the year ended March 31,
2001 consists of our pro rata share of the  Unconsolidated  Entities  based upon
our   ownership   interest  for  the  period.   Similar  to  the  Company,   the
Unconsolidated  Entities  (other than PSB) generate  substantially  all of their
income  from their  ownership  of storage  facilities,  which we manage.  In the
aggregate,  the Unconsolidated  Entities (including PSB) own a total of 254 real
estate facilities, 114 of which are storage facilities. The following table sets
forth the significant components of equity in earnings of real estate entities:

                                       24

<PAGE>

<TABLE>
<CAPTION>
Historical summary
------------------
                                                   Three months ended
                                                       March 31,
                                              ---------------------------    Dollar
                                                  2001          2000         Change
                                              ------------- ------------- -------------
                                                         (Amounts in thousands)
Property operations:
<S>                                            <C>           <C>          <C>
  PSB....................................      $  11,646     $   9,829    $   1,817
  Development Joint Venture..............          1,337           885          452
  Other investments......................          3,820         4,364         (544)
                                              ------------- ------------- -------------
                                                  16,803        15,078        1,725
                                              ------------- ------------- -------------
Depreciation:
  PSB....................................         (3,723)       (3,390)        (333)
  Development Joint Venture..............           (508)         (461)         (47)
  Other investments......................         (1,044)       (1,181)         137
                                              ------------- ------------- -------------
                                                  (5,275)       (5,032)        (243)
                                              ------------- ------------- -------------
Other: (a)
  PSB....................................         (2,138)       (1,536)        (602)
  Development Joint Venture..............             37            53          (16)
  Other investments......................           (155)         (287)         132
                                              ------------- ------------- -------------
                                                  (2,256)       (1,770)        (486)
                                              ------------- ------------- -------------

Total equity in earnings of real estate
entities.................................      $   9,272     $   8,276    $     996
                                              ============= ============= =============
</TABLE>

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

         The  increase  in 2001  equity  in  earnings  of real  estate  entities
compared to 2000 is  principally  the result of improved  operations  of PSB. In
April  1997,  we formed a joint  venture  partnership  (the  "Development  Joint
Venture") with an  institutional  investor to participate in the  development of
approximately $220 million of storage  facilities.  The venture is funded solely
with  equity  capital  consisting  of 30%  from  the  Company  and 70%  from the
institutional  investor.  Equity in earnings from the Development  Joint Venture
reflects  our  pro  rata  share,  based  upon  our  ownership  interest,  of the
operations of the Development  Joint Venture.  Since inception through March 31,
2001,  the  Development  Joint  Venture  has  developed  and  opened 47  storage
facilities with an aggregate cost of approximately  $232 million.  Generally the
construction  period  takes  nine to 12  months  followed  by an 18 to 24  month
fill-up  process  until  the newly  constructed  facility  reaches a  stabilized
occupancy level of  approximately  90%. For each of the periods ending March 31,
2001 and 2000,  the  majority of the  completed  facilities  were in the fill-up
process and had not reached a  stabilized  occupancy  level.  We expect that our
earnings with respect to our  investment in the  Development  Joint Venture will
continue to increase as the existing properties continue to fill up.

OTHER INCOME AND EXPENSE ITEMS
--------------------------------------------------------------------------------

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

         Interest and other income has increased in the three months ended March
31, 2001 as compared to the same period in 2000  primarily as a result of higher
cash balances invested in interest bearing accounts.

                                       25

<PAGE>

         DEPRECIATION AND  AMORTIZATION:  Depreciation and amortization  expense
has  increased  $3,588,000 to  $39,622,000  for the three months ended March 31,
2001 as compared to $36,034,000 for the same period in 2000. These increases are
principally  due to the  acquisition  and  development of additional real estate
facilities during 2000 and 2001. Amortization expense with respect to intangible
assets  totaled  $2,328,000  for the three months ended March 31, 2001 and 2000.
Included in  depreciation  and  amortization  expense for the three months ended
March  31,  2001  and  2000  is  $1,339,000  and  $1,153,000,  respectively,  of
depreciation of furniture,  fixtures, and equipment of the containerized storage
business.

         GENERAL AND ADMINISTRATIVE:  General and administrative expense for the
three  months  ended  March 31,  2001  increased  to  $5,584,000  as compared to
$3,045,000  for the  same  period  in 2000.  General  and  administrative  costs
principally consists of state income taxes, investor relation expenses,  certain
overhead  associated  with  the  acquisition  and  development  of  real  estate
facilities, and overhead associated with the containerized storage business. The
increase in general and  administrative  expense is principally due to increased
overhead  associated  with  the  acquisition  and  development  of  real  estate
facilities, costs associated with lease terminations on the leased containerized
storage  facilities  which were  replaced  by  newly-developed  facilities,  and
severance as a result of employee terminations.  These three areas accounted for
approximately $2,070,000 of the increase in general and administrative expense.

         INTEREST  EXPENSE:   Interest  expense  was  $971,000  and  $1,406,000,
respectively,  for the three months ended March 31, 2001 and 2000.  The decrease
in  interest  expense in 2001  compared to 2000 is  principally  the result of a
reduction in notes payable due to principal payments.  In addition, in the first
quarter of 2000, the Company incurred approximately $200,000 in interest expense
on short-term borrowings; interest expense incurred in the first quarter of 2001
relative to short-term borrowings was approximately $3,000. Capitalized interest
expense total  $2,110,000  and  $2,111,000,  respectively,  for the three months
ended March 31, 2001 and 2000.

         MINORITY INTEREST IN INCOME: Minority interest in income represents the
income allocable to equity interests in the Consolidated Entities, which are not
owned by the  Company.  Minority  interest in income for the three  months ended
March 31, 2001 was  $11,698,000  compared to  $4,389,000  for the same period in
2000.

         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 three months ended March 31, 2001 and
2000, the holders of these preferred units were paid in aggregate  approximately
$8,505,000  and  $925,000,   respectively,   in  distributions  and  received  a
corresponding allocation of minority interest in earnings for the partial period
in which the units were outstanding.

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

         At March 31,  2001,  there were  approximately  45  ownership  entities
owning in aggregate 1,369 storage facilities,  including the facilities which we
own and/or operate. At March 31, 2001, 114 of these facilities were owned by the
Unconsolidated Entities, entities in which we have an ownership interest and use
the equity  method for financial  statement  presentation.  The remaining  1,255
facilities are owned by the Company and the Consolidated Entities.

                                       26

<PAGE>


         The following table summarizes our investment in real estate facilities
as of March 31, 2001:

<TABLE>
<CAPTION>
                                                  Number of Facilities in which the            Net Rentable Square Footage
                                                  Company has an ownership interest                  (in thousands)
                                               ----------------------------------------  ----------------------------------------
                                               Self-Storage   Commercial                 Self-Storage   Commercial
                                                Facilities    Properties       Total     Facilities     Properties       Total
                                               ------------   ------------   ----------  ------------   ------------   ----------
<S>                                                  <C>              <C>         <C>       <C>              <C>        <C>
Wholly-owned facilities....................          640              6           646       39,662           394        40,056
Facilities owned by Consolidated Entities..          615              -           615       35,843             -        35,843
                                               ------------   ------------   ----------  ------------   ------------   ----------
    Total consolidated facilities..........        1,255              6         1,261       75,505           394        75,899
Facilities owned by Unconsolidated Entities          114            140           254        6,732        12,600        19,332
                                               ------------   ------------   ----------  ------------   ------------   ----------
    Total  facilities  in which  the  Company
      has an ownership interest............        1,369            146         1,515       82,237        12,994        95,231
                                               ============   ============   ==========  ============   ============   ==========
</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 946 (55.0 million net rentable square feet)
of the  1,369  self-storage  facilities  (herein  referred  to as  "Same  Store"
self-storage  facilities).  The 946  facilities  represent a pool of properties,
which have been operated under the "Public  Storage" name, at a stabilized level
(i.e.,  the portfolio  does not include  properties in fill-up),  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 864 consolidated facilities and 82 facilities owned
by Unconsolidated  Entities. The following table summarizes the pre-depreciation
historical operating results of the Same Store self-storage facilities:

Same Store self-storage facilities
----------------------------------
(historical property operations)            Three months ended
                                                 March 31,
                                          -----------------------   Percentage
                                             2001         2000         Change
                                          ----------   ----------   ----------
                                                  (Amounts in thousands,
                                               except rent per square foot)

Rental income (a)...................      $  140,615   $  130,425       7.8%
Cost of operations  (b).............          41,578       40,105       3.7%
                                          ----------   ----------   ----------
Net operating income................      $   99,037   $   90,320       9.7%
                                          ==========   =========-   ==========

Gross profit margin (c).............           70.4%        69.3%       1.1%

Weighted Average:
  Occupancy.........................           89.2%        91.7%      (2.5)%
  Realized annual rent per sq. ft (d)         $11.05        $9.94      11.2%
  Scheduled annual rent per sq. ft..          $12.45       $10.71      16.2%

(a)  Rental  income  includes  late  charges  and  administrative  fees  that in
     aggregate  totaled $5.0 million and $4.9 million for the three months ended
     March 31, 2001 and 2000, respectively.

(b)  Cost of operations consists of the following:

                                       27

<PAGE>

<TABLE>
<CAPTION>
                                                      Three months ended
                                                           March 31,
                                                ------------------------------
                                                    2001              2000              Change
                                                ------------      ------------       ------------
                                                            (Amounts in thousands)
<S>                                             <C>               <C>                    <C>
Payroll expense                                 $    11,468       $    11,598            (1.1)%
Property taxes                                       12,428            12,174             2.1%
Repairs and maintenance                               3,392             3,427            (1.0)%
Advertising                                           2,204             1,818            21.2%
Telephone  reservation center costs                   2,288             2,149             6.5%
Other                                                 9,798             8,939             9.6%
                                                ------------      ------------       ------------
                                                $    41,578       $    40,105             3.7%
                                                ============      ============       ============
</TABLE>

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

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

         Rental  income  for the  Same  Store  facilities  included  promotional
discounts  totaling  $2.2  million  for the three  months  ended  March 31, 2001
compared to $4.5 million for the same period in 2000.

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.

                                       28

<PAGE>

<TABLE>
<CAPTION>
                                                                                           For the three months ended
                                                                                                    March 31,
                                                                                           ----------------------------
                                                                                               2001             2000
                                                                                           -----------      -----------
                                                                                             (Amounts in thousands)
<S>                                                                                         <C>             <C>
Net income...........................................................................       $  74,635       $  72,561
Less - Gain on sale of real estate...................................................          (1,568)              -
Depreciation and amortization (a)....................................................          39,622          36,034
Depreciation from Unconsolidated Entities............................................           5,275           5,032
Minority interest in income..........................................................          11,698           4,389
                                                                                           -----------      -----------
  Net cash provided by operating activities..........................................         129,662         118,016

Allocable to minority interests (Preferred OP Units)..................................         (8,505)           (925)
Allocable to minority interests (Common equity).......................................         (4,951)         (5,253)
                                                                                           -----------      -----------
Cash from operations allocable to the Company's shareholders.........................         116,206         111,838

Less: preferred stock dividends......................................................         (28,036)        (25,038)
Less: equity stock, Series A dividends...............................................          (3,452)         (2,258)
                                                                                           -----------      -----------
Cash from operations available to common shareholders................................          84,718          84,542

Capital improvements to maintain facilities:.........................................          (4,814)         (4,126)
Add back: minority interest share of capital improvements to maintain facilities.....              73              66
                                                                                           -----------      -----------
Cash  available for principal payments on debt, common dividends and reinvestment....          79,977          80,482

Cash distributions to common and Class B common shareholders (b).....................         (27,957)        (29,084)
                                                                                           -----------      -----------
Cash  available for principal payments on debt and reinvestment......................       $  52,020       $  51,398
                                                                                           ===========      ===========
</TABLE>


(a)  Depreciation  and  amortization  includes  $1,339,000 and  $1,153,000  with
     respect to non-real estate assets for the three months ended March 31, 2001
     and 2000, respectively.

(b)  Cash distributions to common  shareholders for the three months ended March
     31, 2001 and 2000 only include the Company's  regular common  distributions
     ($0.22 per common share in each period).  In November 1999 and August 2000,
     respectively,  the Company declared special  distributions in the amount of
     $82,086,000 and $78,673,000,  respectively. The Company expects to increase
     its common distribution in the final nine months of the year ended December
     31,  2001 and in future  years to a higher rate than that paid in the three
     months ended March 31, 2001 assuming a continuation of its increasing level
     of taxable  income.  These increased  distributions  will be in the form of
     special  distributions  in cash or  securities,  an increase in the regular
     quarterly common distribution, or a combination thereof.

         We expect to fund our growth  strategies with cash on hand at March 31,
2001,  internally  generated  retained cash flows,  proceeds from issuing equity
securities and borrowings  under our $150 million credit  facility.  As of March
31, 2001, our borrowings on our line of credit totaled $25.0 million.  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 March 31, 2001,  we had  mortgage  debt  outstanding  of $26.0
million and had  consolidated  real estate  facilities with a book value of $3.7
billion.  We have not  financed our  acquisitions  with debt and  generally  our
borrowing has increased  through the assumption of pre-existing debt on acquired
real estate facilities.

         In January 2001, the Company  completed a public  offering of 6,900,000
depositary  shares ($25 stated  value per  depositary  share) each  representing
1/1,000 of a share of 8.6%  Cumulative  Preferred  Stock,  Series Q, raising net
proceeds of approximately  $166,966,000.  In April 2001, the Company completed a
public offering of 2,210,500  depositary shares each  representing  1/1,000 of a
share of Equity  Stock,  Series A, raising net proceeds of  approximately  $51.7
million.

                                       29

<PAGE>

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

         During the three months  ended March  31,2001,  we paid cash  dividends
totaling $28,036,000 to the holders of our Senior Preferred Stock and $3,452,000
to the holders of Equity Stock,  Series A. This amount includes  $3,009,000 with
respect to the Series Q preferred stock,  which reflects a payment for a partial
period from the date of issuance.  We estimate the regular  annual  distribution
requirements  with respect to Senior  Preferred  Stock  outstanding at March 31,
2001 to be approximately  $114.9 million (with total distributions  estimated at
$114.2  million for fiscal  2001).  With respect to the Equity  Stock,  Series A
outstanding at March 31, 2001, we estimate the regular distribution requirements
for fiscal 2001 to be approximately $13.8 million.

         During  the three  months  ended  March  31,  2000,  we paid  dividends
totaling  $111,170,000  to the  holders of our  common  stock  which  includes a
special distribution of approximately  $82,086,000 that was declared in November
1999.  The  special  distribution  was paid on  January  14,  2000 to our common
shareholders  and  consisted  of  $38,076,000  in cash  and  $44,010,000  in the
issuance of depositary shares of Equity Stock, Series A.

         During the first quarter of 2001, we paid  $8,505,000 to the holders of
our preferred  operating  partnership units. The total distribution  requirement
with respect to the preferred operating  partnership units is estimated at $34.0
million for 2001.

         CAPITAL   IMPROVEMENT   REQUIREMENTS:   For  2001,   we  have  budgeted
approximately  $26.8 million for capital  improvements.  During the three months
ended March 31, 2001, we incurred  capital  improvements of  approximately  $4.8
million.

         DEBT SERVICE  REQUIREMENTS:  We do not believe we have any  significant
refinancing risks with respect to our notes payable, all of which is fixed rate.
At March 31,  2001,  we had total  outstanding  notes  payable of  approximately
$155.3 million and $25 million in borrowings on the line of credit.  Approximate
principal maturities of notes payable at March 31, 2001 are as follows:

                                 Unsecured
                                Senior Notes     Mortgage debt         Total
                               -------------     -------------     -------------
                                                (in thousands)
2001 (remainder of)........    $       9,500     $       2,170       $  11,670
2002.......................           24,450             3,530          27,980
2003.......................           35,900             3,585          39,485
2004.......................           25,800            15,063          40,863
2005.......................           11,200               156          11,356
Thereafter.................           22,400             1,509          23,909
                               -------------     -------------     -------------
                               $     129,250     $      26,013      $  155,263
                               =============     =============     =============
Weighted average rate......            7.5%             10.2%             7.9%
                               =============     =============     =============

         REPURCHASES OF THE COMPANY'S COMMON STOCK: As previously announced, the
Company's  Board of Directors  authorized the repurchase from time to time of up
to  25,000,000  shares of the  Company's  common  stock on the open market or in
privately  negotiated  transactions.  For the quarter ended March 31, 2001,  the
Company  repurchased  a  total  of  7,932,093  shares  at an  aggregate  cost of
approximately $205.1 million.  From the initial  authorization through March 31,
2001, the Company repurchased a total of 18,832,520 shares of common stock at an
aggregate cost of approximately  $463.7 million.  From April 1, 2001 through May
9, 2001,  the  Company  repurchased  2,229,500  shares at an  aggregate  cost of
approximately $59.8 million.

                                       30

<PAGE>

         DEVELOPMENT OF 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  $70 million at March 31, 2001. By December
31, 2000, the joint venture had completed  construction  on the 47 properties it
had committed to develop,  with total  development  costs of approximately  $232
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 March 31, 2001, the second development joint
venture was  committed to develop 18  facilities  (approximately  1,216,000  net
rentable  sq. ft.) with an estimated  development  cost of  approximately  $88.5
million,  of which 14  facilities  (approximately  931,000 net rentable sq. ft.)
have been completed with an aggregate cost of approximately $65.4 million. As of
March 31, 2001,  the second  development  joint venture is developing 4 projects
(approximately  285,000 net  rentable  square  feet) that were in process,  with
total costs incurred of $13.4 million and estimated  remaining costs to complete
of $9.7  million.  We have  submitted 4  additional  facilities  (3 of which are
complete)  for  approval  with  total  estimated  costs of  approximately  $18.2
million;  we have incurred  approximately  $13.8 million  through March 31, 2001
with respect to these 4 projects,  and upon  approval,  these  projects  will be
transferred to the joint venture and our joint venture  partner will  contribute
its 49% share.

         At March 31, 2001, the Company and its second development joint venture
partnership  have a "pipeline"  of 62 projects  comprised  of new and  expansion
self-storage  facilities and facilities that combine  containerized  storage and
self-storage  space  in  the  same  location,  with  total  estimated  costs  of
approximately  $393.2  million,  of which  $162.5  million has been spent,  with
opening dates  estimated  through the first quarter of 2003. The development and
fill-up of these storage facilities is subject to significant contingencies.  We
estimate that the amount remaining to be spent of approximately  $231 million on
these 62 projects in the pipeline will be incurred  over the next 24 months.

         We have acquired the land for 40 of the projects in the pipeline, which
have an aggregate  estimated cost of $247.0  million and costs incurred  through
March 31, 2001 of  approximately  $158.6  million.  The  remaining 22 facilities
represent  identified  sites where we have an  agreement in place to acquire the
land,  generally within one year. However,  there are no assurances that we will
acquire and/or development the land.

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

         In addition to the projects in the  pipeline,  at March 31,  2001,  the
Company had approximately $26.2 million of land held for development.

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

                                       31

<PAGE>

<TABLE>
<CAPTION>
                                             Number    Total Estimated       Total Cost        Estimated time
                                              of           Cost of        Incurred through    Frames of Facility
                                           Facilities    Development       March 31, 2001         Openings
                                           ----------  ----------------   ----------------    ------------------
Development - land acquired at 3/31/01
--------------------------------------
<S>                                            <C>        <C>                 <C>              <C>      <C>
Self-storage facilities...............         18         $   111,678         $   77,980      Q2 '01 - Q2 `02
Expansions of existing self-storage
    facilities........................         10              29,269             10,175      Q2 '01 - Q2 `02
Combination facilities................         12             106,035             70,477      Q2 '01 - Q2 `02
                                           ----------  ----------------   ----------------
     Total............................         40             246,982            158,632
                                           ----------  ----------------   ----------------

Potential  development  -  land  to  be
---------------------------------------
acquired after 3/31/01
----------------------
Self-storage facilities - development
    starts estimated by 9/30/01.......          4              24,357              1,013      Q4 '01 - Q2 `02
Self-storage facilities - development
    starts estimated after 9/30/01....         17             118,824              2,552      Q1 '02 - Q1 `03
Combination facility..................          1               2,995                349           Q2 `02
                                           ----------  ----------------   ----------------

     Total............................         22             146,176              3,914
                                           ----------  ----------------   ----------------

     Totals...........................         62         $   393,158         $  162,546
                                           ==========  ================   ================
</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.

         FUNDS FROM  OPERATIONS:  Total funds from operations or "FFO" increased
to  $114,867,000  for  the  three  months  ended  March  31,  2001  compared  to
$110,685,000  for the same period in 2000. FFO available to common  shareholders
(after deducting preferred stock dividends) was $83,379,000 for the three months
ended March 31, 2001 compared to  $83,389,000  for the same period in 2000.  FFO
means net income or (loss)  (computed  in  accordance  with  generally  accepted
accounting  principles)  before:  (i) gain or (loss) on early  extinguishment of
debt,  (ii)  minority  interest  in  income  and  (iii)  gain or  (loss)  on the
disposition  of real  estate,  adjusted as follows:  (a) plus  depreciation  and
amortization  (including our pro-rata share of depreciation  and amortization of
unconsolidated equity interests and amortization of assets acquired in a merger,
including  property  management  agreements  and  goodwill),  and (b)  less  FFO
attributable to minority interest.

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

                                       32

<PAGE>

PART II.  OTHER INFORMATION

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

         To limit our  exposure  to market  risk,  we  principally  finance  our
operations and growth with permanent equity capital, consisting of either common
or  preferred  stock.  At March  31,  2001,  our debt as a  percentage  of total
shareholders' equity (based on book values) was 4.9%.

         Our  preferred  stock is not  redeemable  by the holders.  Except under
certain  conditions  relating to our  qualification as a REIT, we may not redeem
the Senior  Preferred Stock prior to the following  dates:  Series A - September
30,  2002,  Series B - March  31,  2003,  Series C - June 30,  1999,  Series D -
September  30,  2004,  Series E - January 31,  2005,  Series F - April 30, 2005,
Series G - December  31, 2000,  Series H - January 31, 2001,  Series I - October
31, 2001,  Series J - August 31, 2002,  Series K - January 19, 2004,  Series L -
March 10, 2004,  Series M - August 17, 2004 and Series Q - January 19, 2006.  On
or after the respective dates, each of the series of Senior Preferred Stock will
be  redeemable  at our  option,  in  whole  or in  part,  at $25 per  share  (or
depositary  share in the case of the  Series G through  Series M and  Series Q),
plus accrued and unpaid dividends.

         Our market risk  sensitive  instruments  include notes  payable,  which
totaled  $155.3  million at March 31, 2001.  Substantially  all of the Company's
notes  payable  bear  interest  at fixed  rates.  See  "Item  2" -  Management's
Discussion  and  Analysis of  Financial  Condition  and Results of  Operations -
Liquidity and Capital  Resources  for  approximate  principal  maturities of the
notes payable as of March 31, 2001.

         During  April 2001,  the Company  entered  into an  arrangement  with a
financial  institution in which we granted the  institution the right to sell us
up to  1,000,000  shares of our  common  stock at a price of $26.26 per share on
certain dates in September 2001 and October 2001.

                                       33


<PAGE>

ITEM 6   EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------

(a)      Exhibits:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

3.29     Certification of Determination for 9.125%  Cumulative  Preferred Stock,
         Series O. Filed with Registrant's Quarterly Report on Form 10-Q for the
         quarterly  period  ended  March  31,  2000 and  incorporated  herein by
         reference.

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<PAGE>

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

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

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

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

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

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

3.36     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.

3.37     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.

3.38     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.

                                       36

<PAGE>

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

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

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

10.10    Deposit Agreement dated as of December 13, 1995, among Registrant,  The
         First  National  Bank of  Boston,  and the  holders  of the  depositary
         receipts evidencing the Depositary Shares Each Representing  1/1,000 of
         a Share of 8-7/8  Cumulative  Preferred  Stock,  Series G.  Filed  with
         Registrant's  Form  8-A/A   Registration   Statement  relating  to  the
         Depositary  Shares  Each  Representing  1/1000th  of a Share  of  8-7/8
         Cumulative  Preferred  Stock,  Series  G  and  incorporated  herein  by
         reference.

10.11    Deposit Agreement dated as of January 25, 1996, among  Registrant,  The
         First  National  Bank of  Boston,  and the  holders  of the  depositary
         receipts evidencing the Depositary Shares Each Representing  1/1,000 of
         a Share of 8.45%  Cumulative  Preferred  Stock,  Series H.  Filed  with
         Registrant's  Form  8-A/A   Registration   Statement  relating  to  the
         Depositary  Shares  Each  Representing  1/1000th  of a Share  of  8.45%
         Cumulative  Preferred  Stock,  Series  H  and  incorporated  herein  by
         reference.

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

10.13    Deposit Agreement dated as of November 1, 1996, among  Registrant,  The
         First  National  Bank of  Boston,  and the  holders  of the  depositary
         receipts evidencing the Depositary Shares Each Representing  1/1,000 of
         a Share of 8-5/8%  Cumulative  Preferred  Stock,  Series I.  Filed with
         Registrant's  Form  8-A/A   Registration   Statement  relating  to  the
         Depositary  Shares  Each  Representing  1/1000th  of a Share of  8-5/8%
         Cumulative  Preferred  Stock,  Series  I  and  incorporated  herein  by
         reference.

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

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

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

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

                                       37

<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

                                       38

<PAGE>

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

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

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

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

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

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

(b)      Reports on Form 8-K.

         The Company  filed a Current  Report on form 8-K dated January 16, 2001
         (filed  January 17, 2001),  pursuant to Item 5, in connection  with the
         Company's public offering of depositary shares each representing 1/1000
         of a share of 8.600%  Cumulative  Preferred Stock,  Series Q in January
         2001.

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


                                       39

<PAGE>

                                 SIGNATURES


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





                        DATED:  May 14, 2001

                        PUBLIC STORAGE, INC.


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

                                       40