LIBERTY SELF STOR INC, 10KSB40, 2000-03-15

LIBERTY SELF STOR INC
10KSB40, 2000-03-15
REAL ESTATE INVESTMENT TRUSTS

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-KSB

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED: DECEMBER 31, 1999

[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER: 000-30502

LIBERTY SELF-STOR, INC.
(Exact name of Small Business Issuer as specified in its charter)

MARYLAND 94-6542723
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

8500 STATION STREET, SUITE 100, MENTOR, OHIO 44060
-------------------------------------------- -----
(Address of principal executive offices) (Zip Code)

ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(440) 974-3770

Securities registered under to Section 12(b) of the Exchange Act: NONE
Securities registered under to Section 12(g) of the Exchange Act: COMMON STOCK

Check whether the Issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [x] No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of Issuer's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.
Yes [x] No [_]

State Issuer's revenues for its most recent fiscal year. $119,661
-------

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. $1,369,693 as of January 13, 2000.

The Issuer had 3,031,618 shares of common stock outstanding on March 10, 2000.

<PAGE> 2

LIBERTY SELF-STOR, INC.
INDEX TO ANNUAL REPORT
ON FORM 10-KSB
<TABLE>
<CAPTION>

PART I Page
----
<S> <C>
Item 1: Business 3
Item 2: Description of Property 6
Item 3: Legal Proceedings 12
Item 4: Submission of Matters to a Vote of Security Holders 12

PART II

Item 5: Market for the Registrant's Common Equity and Related
Shareholder Matters 15
Item 6: Management's Discussion and Analysis or Plan of Operation 16
Item 7: Financial Statements 20
Item 8: Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 21

PART III

Item 9: Directors and Executive Officers of the Issuer 22
Item 10: Executive Compensation 24
Item 11: Security Ownership of Certain Beneficial Owners and
Management 25
Item 12: Certain Relationships and Related Transactions 27
Item 13: Exhibits, List and Reports on Form 8-K 29

</TABLE>

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PART I

ITEM 1. BUSINESS.

History. On December 29, 1999, Liberty Self-Stor, Inc., a Maryland
corporation, succeeded to the business of Meridian Point Realty Trust '83.
Meridian was organized as a business trust under the laws of the State of
California pursuant to a declaration of trust, dated June 24, 1982, and
commenced operation on April 12, 1983. Meridian was originally known as "Sierra
Real Estate Equity Trust '83." On October 11, 1991, the company changed its name
to "Meridian Point Realty Trust '83." The amended and restated declaration of
trust of Meridian was filed on May 12, 1992 and amended on July 23, 1993 and
February 14, 1995. Meridian was formed as a real estate investment trust to
invest in income-producing commercial and industrial real estate located in
selected areas of projected growth in the United States.

Meridian was formed as a self-liquidating/finite-life REIT, meaning
that Meridian was intended to have limited life through provisions of its
declaration of trust which stated that the net proceeds from the sale of a
property owned by Meridian could not be reinvested but had to be distributed to
shareholders after payment of indebtedness relating to that property and other
obligations. This limited life policy essentially precluded Meridian from
acquiring new properties and reinvesting the proceeds from the disposition of
future properties into new assets. Meridian sold its last remaining property in
August 1997 and the limited life policy precluded it from acquiring new
properties.

Following Meridian's sale of its last remaining property in August
1997, the former board of trustees of Meridian investigated a variety of
alternatives to maximize the value of Meridian's shares. At Meridian's September
22, 1998 annual meeting, the former board of trustees proposed complete
dissolution and liquidation. This plan of dissolution and liquidation was not
approved by the shareholders and a new board of trustees was elected. In its
proxy statement, the current board indicated that, if elected, it would seek to
eliminate the limited life policy and would consider merging with a real estate
company that owns self-storage facilities.

At a special meeting of Meridian's shareholders in lieu of an annual
meeting of shareholders on December 28, 1999, Meridian's shareholders approved,
among other matters, the reincorporation in which Meridian was merged with and
into Liberty with Liberty as the surviving entity. The purpose of the
reincorporation was to eliminate Meridian's limited life policy, giving
management the opportunity to seek new investments. The merger with Liberty was
effective on December 29, 1999.

Also, at the special meeting, Meridian's shareholders approved the
acquisition of Liberty Self-Stor, Ltd., an Ohio limited liability company owned
by Richard M. Osborne, Liberty's Chairman of the Board and Chief Executive
Officer, which owned 15 self-storage facilities. The acquisition was
accomplished through the reorganization of the company as an umbrella
partnership real estate investment trust, or UPREIT. In an UPREIT structure, the
publicly-held REIT is the general partner of an operating partnership which owns
the properties of the REIT.

The reorganization as an UPREIT resulted in the acquisition of Mr.
Osborne's self-storage company through the formation of an operating partnership
by Liberty and Richard M. Osborne, Thomas J. Smith and Retirement Management
Company, the members of Mr. Osborne's self-storage company. Mr. Osborne is the
sole manager and owned prior to the reorganization with Retirement Management
Company, of which Mr. Osborne was the sole shareholder, approximately 99.3% of
the self-storage company. The 99.3 % includes 0.7% interest that Mr. Osborne
owned as successor to

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Diane M. Osborne's interest. The remaining 0.7% was owned by Thomas J. Smith,
the President, Chief Operating Officer and a director of Liberty.

Upon the reorganization, Liberty became the general partner owning
approximately 1% of the operating partnership and a limited partner owning
approximately 28.9%, and Mr. Osborne, Mr. Smith and Retirement Management
Company are the limited partners, owning approximately 70.1% of the operating
partnership. The limited partnership interests of the operating partnership are
divided into two classes: Class A and Class B. Mr. Osborne, Mr. Smith and
Retirement Management Company received Class A limited partnership interests and
Liberty received Class B limited partnership interests. The Class A limited
partnership interests are redeemable for cash or, at the election of Liberty,
convertible into common stock on a one-for-one basis. The Class B limited
partnership interests are identical to the Class A interests in all material
respects except that the Class B interests are not redeemable or convertible.

Unless the context indicates otherwise, Liberty as used herein refers
to Liberty Self-Stor, Inc., as successor-in-interest to Meridian, the operating
partnership and the self-storage company.

Management. The operating partnership is the sole owner of Mr.
Osborne's self-storage company which owns the 15 self-storage facilities. The
operating partnership is the entity through which Liberty conducts substantially
all of its business and owns substantially of its assets, either directly or
through subsidiaries. Liberty's board of directors manage the affairs of the
operating partnership by directing the affairs of Liberty as general partner of
the operating partnership. Liberty's general partnership interests and Class B
limited partnership interests entitle it to share in cash distributions from,
and in the profits and losses of, the operating partnership in proportion to its
percentage interest therein and entitle Liberty to vote on all matters requiring
a vote of the limited partners. Liberty plans to make all future purchases of
self-storage facilities through the operating partnership.

The management of the self-storage company continued in that capacity as
the management of Liberty.

Business. Liberty is a self-managed real estate investment trust which
manages, acquires, develops, expands and operates self-storage facilities. As of
March 13, 2000, Liberty owned and operated 15 self-storage facilities consisting
of approximately 664,000 rentable square feet, situated in two states, Ohio and
New York. As of December 31, 1999, the facilities had an average occupancy of
77.95% and an average annual rental rate per square foot of $4.56.

Liberty seeks to increase cash flow and enhance shareholder value
through the promotion of management efficiency and selective acquisitions of new
self-storage facilities. To promote management efficiency, Liberty will seek to
concentrate acquisitions in each area into regional clusters in which regional
managers will be responsible for more than one facility and the individual
location managers will report to the regional manager. These regional clusters
promote economies of scale. In addition, Liberty intends to manage its
facilities aggressively by increasing rents, increasing occupancy levels,
strictly controlling costs, maximizing collections, strategically expanding and
improving facilities and developing new facilities, if economic conditions
warrant.

Liberty was formed to continue the business of Meridian, its
predecessor company. Liberty owns an indirect interest in each of the
self-storage facilities through LSS I Limited Partnership, the

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operating partnership. Liberty believes that this UPREIT structure facilitates
Liberty's ability to acquire properties by using limited partnership interests
of the operating partnership as currency.

Liberty was incorporated on May 12, 1999 under Maryland law. Liberty's
principal executive offices are located at 8500 Station Street, Suite 100,
Mentor, Ohio 44060 and its telephone number is 440-974-3770.

Proposed Acquisition. On March 10, 2000, Liberty signed a definitive
agreement to purchase a self-storage facility, known as Springfield Mini
Storage, in Springfield Township, Ohio, near Akron, from Springfield Mini
Storage, an Ohio limited partnership. The $2.2 million purchase price will
financed by a $1.7 million mortgage with a bank and $0.5 million from a note to
the seller guaranteed by Mr. Osborne. The purchase is expected to close by July
2000 and is subject to financing and other customary terms and conditions
including due diligence and approval by Liberty's board.

Industry Overview. Liberty believes that self-storage facilities offer
inexpensive storage space to residential and commercial users. Demand for
self-storage service has increased as indicated by an increase in industry-wide
average rents and in industry average occupancy rates. Demand is expected to
remain strong because historically demand for self-storage facilities is slow to
react to changing conditions and because of various other factors, including
population growth, increased mobility, expansion of condominium, townhouse and
apartment living, and increasing consumer awareness, particularly by commercial
users.

Federal Income Tax. Meridian made an election to be taxed as a REIT
under Sections 856 through 860 of the Internal Revenue Code of 1986 and Liberty
intends to continue to operate in such a manner in the future. However, Liberty
may not be able to operate in a manner so as to remain qualified as a REIT.
Liberty's continued qualification as a REIT in current and future taxable years
will depend upon whether Liberty and the operating partnership continue to meet
the various qualification tests imposed under the Code.

If Liberty continues to qualify for taxation as a REIT and distributes
to its stockholders at least 95% of its taxable income, excluding net capital
gain, it generally will not be subject to federal corporate income tax on the
portion of its ordinary income or capital gain that is timely distributed to its
stockholders. This treatment substantially eliminates the "double taxation" at
the corporate and stockholder levels that generally results from an investment
in a corporation. If Liberty were to fail to qualify as a REIT, it would be
taxed at rates applicable to corporations on all of its income, whether or not
distributed to its stockholders. Even if Liberty continually qualifies as a
REIT, it may be subject to federal income or excise tax in some circumstances.

Employees. Liberty currently employs a total of 11 part-time and 30
full-time employees, including 18 on-site managers and 2 regional managers. None
of Liberty's employees is covered by a collective bargaining agreement. Liberty
considers its employee relations to be excellent.

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ITEM 2. DESCRIPTION OF PROPERTY

THE SELF-STORAGE FACILITIES

As of March 13, 2000, Liberty owned and operated 15 self-storage
facilities containing an aggregate of 663,775 square feet. Twelve of the
self-storage facilities are located in Ohio and the other three are located in
New York. Liberty owns 100% fee interest in each of the self-storage facilities.
The following table provides an overview of information regarding the
self-storage facilities:
<TABLE>
<CAPTION>

YEAR RENTABLE
LOCATION DATE BUILT/ SQUARE ACRES UNITS CONSTRUCTION
- - -------- ACQUIRED EXPANDED FT. ----- ----- ------------
-------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
OHIO:

Avon 10/31/97 1981-1986/1998* 67,423 6.12 495 Masonry & Steel

Canton 4/22/97 1979-87 41,175 11.15 388 Concrete

Catawba 6/30/97 1988/1998* 43,052 7.57 302 Steel

Cleveland 12/3/96 1997/1999* 46,400 3.68 353 Steel

Dayton 5/22/97 1989/1999* 47,250 5.00 368 Concrete

East Canton 5/30/97 1997 26,700 12.63 177 Steel

East Liverpool 10/31/96 1986-1996 29,990 11.49 222 Steel

Louisville 5/30/97 1988-1990 53,060 6.83 364 Masonry

Mentor 3/20/98 1983/1999* 66,302 6.00 441 Masonry

Perry 1/10/97 1992/1997* 63,950 6.19 397 Steel

Ravenna 3/31/97 1988 16,950 1.79 150 Steel

Willoughby 10/4/96 1997 33,998 2.37 276 Masonry

NEW YORK:

Endicott 11/20/96 1989 35,580 4.99 297
Concrete/Steel
Roof

Southold 6/1/97 1989 53,055 6.95 552 Steel

Riverhead 5/26/99 1985-1986/ 38,890 3.05 336 Steel
1999*
-------------------------------------
TOTAL 663,775 95.81 5,118
=====================================
</TABLE>

* Year additional units were added by Liberty.

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The following table shows the occupancy rates and annual rental rates
per square foot for each of the 15 self-storage facilities for the year ended
December 31, 1999:

ANNUAL RENTAL
LOCATION OCCUPANCY RATE RATE
----------------------------------------------------------------

OHIO:

Avon 89.98% $3.90

Canton 52.49 2.69

Catawba 68.46 2.97

Cleveland 99.15 8.33

Dayton 53.35 2.86

East Canton 90.30 3.33

East Liverpool 86.69 4.59

Louisville 95.87 3.79

Mentor 30.29 1.28

Perry 88.39 3.35

Ravenna 91.67 5.09

Willoughby 83.00 5.83

NEW YORK:

Endicott 86.28 6.01

Southold 97.01 10.88

Riverhead 56.27 3.55
--------------------------------

AVERAGE 77.95% $4.56

Environmental and Other Regulations. Liberty is subject to federal,
state and local environmental regulations that apply generally to the ownership
of real property and the operation of self-storage facilities. Liberty has not
received notice from any governmental authority or private party of any material
environmental noncompliance, claim or liability in connection with any of the
self-storage facilities. Liberty is not aware of any environmental condition
with respect to any of the self-storage facilities that could have a material
adverse effect on Liberty's financial condition or results of operations.

The self-storage facilities are also generally subject to the same
types of local regulations governing other real property, including zoning
ordinances. Liberty believes that the self-storage facilities are in substantial
compliance with all such regulations.

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In addition, under various federal, state, and local environmental
laws, a current or previous owner or operator of real property may be liable for
the costs of removal or remediation of hazardous or toxic substances on, under
or in the property. These laws often impose liability whether or not the owner
or operator caused or knew of the presence of the hazardous or toxic substances
and whether or not the storage of such substances was in violation of a tenant's
lease. The owner or operator is not in a position to know what a tenant stores
at its self-storage facility. In addition, the presence of hazardous or toxic
substances, or the failure to remediate such property, may adversely affect the
owner's ability to borrow using the contaminated property as collateral. In
connection with the ownership of the self-storage facilities, Liberty may be
potentially liable for any cleanup costs.

In connection with Meridian's sale of its last property, the Charleston
property, in August 1997, $1.35 million was held-back from the $13.0 million
sale price for estimated remediation work. In the late 1980s, the San Francisco
Bay Region of the California Regional Water Quality Control Board requested that
Meridian investigate and characterize soil and groundwater contamination of the
Charleston property. Meridian engaged an environmental engineering firm that
discovered the presence of trichloroethylene and other solvent chemicals in the
groundwater. The Regional Water Quality Control Board deferred issuing a Site
Cleanup Requirements in order to give Meridian time to complete the pending sale
of the Charleston property. As part of the sale, the purchaser agreed to
indemnify Meridian broadly against the pending Site Cleanup Requirements and
other types of environmental claims. Its indemnity is backed by an environmental
insurance policy. It is possible that the Regional Water Quality Control Board
could still name Liberty (as Meridian's successor) as a potentially responsible
party when it ultimately issues its Site Cleanup Requirements order for the
property based on Meridian's former ownership.

In the course of due diligence in connection with the reorganization,
Liberty conducted Phase I environmental audits of each of these self-storage
facilities. The Phase I environmental audits showed no environmental
contamination, and, therefore, no need for remediation.

Property Management. All 15 self-storage facilities are operated under
the "Liberty Self-Stor, Ltd." trade name. All 15 facilities have on-site
managers, five of which have resident managers. All the managers report to Mr.
Heidnik, Liberty's Vice President of Operations. The facilities are staffed six
to nine hours per day, seven days a week, with gate access from 6 a.m. to 10
p.m. The facilities are located in a mix of urban, suburban and rural locations.

Proposed Expansions. Liberty currently has the following plans
regarding expansion of the existing self-storage facilities:

- - --------------------------------------------------------------------------------
LOCATION ADDITIONAL SQUARE FEET COST OF EXPANSION
- - --------------------------------------------------------------------------------
East Canton, Ohio 16,200 $380,000
- - --------------------------------------------------------------------------------
East Liverpool, Ohio 9,300 $165,000
- - --------------------------------------------------------------------------------
Southold, New York 11,150 $182,000
- - --------------------------------------------------------------------------------

Liberty plans to finance these expansions with traditional bank construction
loans.

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Competition. The facilities compete with a variety of other
self-storage companies including national, regional and local companies. Each
facility has at least two other self-storage facilities within a five mile
radius. Many of Liberty's competitors are larger and have substantially greater
financial resources than Liberty. Liberty competes in operations and for
acquisition opportunities with entities that have substantial financial
resources. Competition may reduce the number of suitable acquisition
opportunities offered to Liberty and increase the bargaining power of property
owners seeking to sell. If competition increases, Liberty could experience a
decrease in occupancy levels and rental rates, which could decrease the cash
available for distribution. In addition, the self-storage industry has at times
experienced overbuilding in response to perceived increases in demand. A
recurrence of such overbuilding might cause Liberty to experience a decrease in
occupancy levels, limit Liberty's ability to increase rents, and compel Liberty
to offer discounted rents.

Leases. Space at each facility is leased on a monthly basis using the
same standard form of lease agreement. Attached to each lease agreement is a
lease addendum notifying lessees that they store goods at their own risk.

Insurance. In the opinion of Liberty's management, the facilities are
adequately covered by insurance. Each facility has a limit on coverage
determined by management and the insurance company and each policy carries a
$2,500 deductible. The facility's responsibility for losses extends only to the
actual property and not the property of tenants. Tenants are responsible for
insuring their own belongings stored at the facility. Liberty's management will
use its discretion in determining amounts, coverage limits and deductibility
provisions of insurance, with a view to acquiring appropriate insurance on
Liberty's investments at a reasonable cost and on suitable terms.

In addition, Liberty maintains title insurance insuring fee title to
the self-storage facilities in an aggregate amount believed to be adequate.

Mortgages. The Willoughby, Perry, Canton, Catawba, East Canton,
Louisville, Ravenna, East Liverpool, Dayton, and Endicott facilities are all
encumbered by mortgages which secure a $10,300,000 loan from Provident Bank to
Liberty Self-Stor, Ltd. The loan is at a variable rate of interest equal to
2.25% over the average yield on U.S. Treasury Securities adjusted to a constant
maturity of three years. The rate for the initial three-years was fixed at 7.72%
and will adjust on June 1, 2001 for the final two years with maturity to occur
on June 1, 2003. The loan is amortized over 20 years. Current payments are
$84,367 per month. The loan is personally guaranteed by Mr. Osborne. The
principal amount of the loan as of December 31, 1999 was $9,418,466.

The Dayton facility is further encumbered by a mortgage securing a
$720,000 construction and development loan from Provident Bank. As of December
31, 1999, $670,641 has been drawn on the loan for construction expenditures.
Interest during the construction phase of the loan is at the prime rate of
Provident Bank. Upon completion of the construction phase, which is projected to
occur by April, 2000, the interest on the loan adjusts to 7.72%. Then the loan
will be adjusted to a variable rate equal to 2.25% above the then current weekly
average yield on U.S. Treasury Securities adjusted to the constant maturity of
two years. Monthly payments after the construction phase will be amortized over
an 18-year period. This note is personally guaranteed by Mr. Osborne.

The Catawba facility is further encumbered by a mortgage securing a
$265,087 construction and development loan from Provident Bank to the
self-storage company. The loan had an initial

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interest rate equal to the prime rate. As of July 1, 1999, the interest rate
converted to a rate equal to 2.25% over the average yield on U.S. Treasury
Securities adjusted to a constant maturity of two years. The interest rate will
be further re-adjusted as of June 1, 2001 for determining the payments during
the last two years of the loan, which matures June 2003. Payments were interest
only through May 31, 1999 and thereafter converted to the variable rate
discussed above, using a 23-year amortization period. This note is personally
guaranteed by Mr. Osborne. The principal amount of the loan as of December 31,
1999 was $262,544.

The East Liverpool facility is also encumbered by a $250,000 mortgage
with Rt. 11 Storage Park, Inc. Current monthly payments are $2,000. This note is
guaranteed by Mr. Osborne. The principal amount of the loan as of December 31,
1999 was $250,000.

The Avon facility is encumbered by a mortgage securing a $549,446, as
of December 31, 1999, construction and development loan from Provident Bank. The
terms of this loan are identical to those for the loan encumbering the Catawba
facility, except that the variable rate is 2.25% over the average yield on U.S.
Treasury Securities adjusted to a constant maturity of three years. The Avon
facility is also encumbered by a $940,000 loan, maturing October 31, 2002, from
Provident Bank, guaranteed by Mr. Osborne. The loan has an interest rate of
8.02%. Current monthly payments are $7,268 per month, with a 25-year
amortization period. The principal amount of the loan as of December 31, 1999
was $913,402.

The Mentor facility is encumbered by a mortgage securing a $1,884,000
construction and development loan from The Peoples Banking Company. As of
December 31, 1999, $1,884,000 has been drawn on the loan for construction
expenditures. Interest during the construction phase of the loan was fixed at
8.0%. The interest on the loan adjusted, upon completion of the construction, to
a variable rate equal to 2.75% above the then current weekly average yield on
U.S. Treasury Securities adjusted to the constant maturity of three years.
Monthly payments after the construction phase will be at $15,769 including
interest amortized over a 20-year period. This note is personally guaranteed by
Mr. Osborne.

The Southold facility is encumbered by a mortgage with Provident Bank
in the amount of $2,675,000, which matures July 2002. Current monthly payments
are $17,296. The initial interest rate is prime which converts on June 30, 2000
to 2.50% over the average yield on U.S. Treasury Securities adjusted for a
constant maturity of three years. The loan provides for interest only payments
through June 30, 2000 and thereafter converts to the variable rate discussed
above, using a 20-year amortization. This note is guaranteed by Mr. Osborne. The
principal amount of the loan as of December 31, 1999 was $2,647,246.

The Cleveland facility is encumbered by a mortgage with Shore Bank,
Cleveland in the amount of $1,271,237, maturing on May 20, 2002. Current monthly
payments are $9,695 with an interest rate of 6.76%, using a 20-year
amortization. This note is guaranteed by Mr. Osborne. The principal amount of
the loan as of December 31, 1999 was $1,235,526. The Cleveland facility is
further encumbered by a $300,000 construction loan with Shore Bank. As of
December 31, 1999, $298,319 has been drawn on the loan for construction
expenditures. Interest is payable monthly at 7.25%. Current monthly payments are
$2,397 for 20 months until a balloon payment of $290,816 is due on May 1, 2001.
This note is personally guaranteed by Mr. Osborne.

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The Riverhead facility is encumbered by a mortgage with James R. Stark
and Patricia Stark in the amount of $600,000, maturing June 2004. Current
monthly payments are $5,207, with an interest rate of 8.50%, using a 20-year
amortization. This note is personally guaranteed by Thomas J. Smith. The
principal amount of the loan as of December 31, 1999 was $593,157. The Riverhead
facility is encumbered by a second mortgage with Provident Bank in the amount of
$570,000, maturing in June 2003. Current monthly payments are $2,260. Interest
is at prime rate until June 1, 2000 when it converts to 2.50% over the average
yield on U.S. Treasury Securities adjusted to a constant maturity of three
years. The loan provides for interest only payments through May 31, 2000 and
thereafter converts to the variable rate discussed above, using a 18-year
amortization. This note is guaranteed by Mr. Osborne. The principal amount of
the loan as of December 31, 1999 was $570,000.

Depreciation. Depreciation on the self-storage facilities is computed
using the straight-line method and is based upon useful lives of 25 years for
buildings and improvements and five years for personal property.

INVESTMENT POLICY

Liberty was organized to acquire, succeed to, continue and expand the
business of Meridian following the mergers and reincorporation. Liberty intends
to operate and be taxed as a REIT. Liberty will operate and manage the 15
self-storage facilities, as the general partner of the operating partnership.
Although Liberty presently intends to focus its investment strategy on
self-storage facilities, the board of directors, in its sole discretion, may
change or modify Liberty's investment objective.

Activities of Liberty. Liberty has the ability to engage under its
articles and bylaws, subject to Maryland law, in the following activities:

1. issue senior securities;
2. borrow money;
3. make loans;
4. underwrite securities of other issuers;
5. engage in the purchase or sale of investments;
6. offer securities in exchange for property;
7. repurchase or otherwise reacquire its shares or other securities;
and
8. make annual reports and other reports to stockholders which contain
annual audited financial statements.

Liberty could borrow money necessary to acquire properties, could offer
interests of the operating partnership in exchange for properties, and will make
annual reports with audited financials. Liberty has no current plans to engage
in any of the other listed activities. During the last three years, Meridian did
not engage in any of these activities with the exception of making annual
reports and other reports to shareholders containing audited financial
statements. During each of the last three years, Meridian filed annual and
quarterly reports with the SEC. Liberty's ability to engage in any of the above
activities is subject to change without the approval of stockholders.

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Self-Storage Investment Strategy. Liberty will focus on the
acquisition, expansion and development of a portfolio of self-storage
facilities. Liberty seeks to capitalize on several types of opportunities it
believes are present in the self-storage market.

_ ACQUISITION PROPERTIES -- Liberty will seek properties in
locations with desirable supply and demand characteristics,
with the potential for higher occupancy and rental rates and
that currently have non-professional management/ownership.
Liberty will seek to acquire properties at an attractive price
where appropriate and expand the property to add additional
rental units. Liberty will seek to acquire properties based on
rents and expenses in place and then undertake a program of
cost control and revenue enhancement. To reduce competition
for its acquisitions, Liberty will primarily seek individual
properties, versus bulk acquisitions, and facilities which do
not meet the typical size requirements of the major national
self-storage companies, generally below 45,000-50,000 square
feet. Liberty believes opportunities exist to acquire such
facilities, and is engaged in discussions with potential
sellers.

_ DEVELOPMENT -- Messrs. Smith and Heidnik and Ms. Kirchenbauer
have had collectively 19 years of experience in the
self-storage industry and in the real estate industry. In
addition to the acquisition of 13 facilities and the
development of two facilities in the last three years, the
self-storage company has expanded approximately seven of its
facilities in that period and is currently expanding three
facilities. Through these individuals, Liberty has in-house
development and expansion expertise and will selectively
develop facilities in attractive markets.

Liberty intends to focus in geographic areas where it has existing real
estate relationships or has previously conducted business and owned self-storage
facilities, including Ohio, New York, North Carolina, New Jersey, Florida,
Indiana, Pennsylvania and Michigan. To promote management efficiency, Liberty
will seek to concentrate acquisitions in each area into regional clusters in
which regional managers will be responsible for more than one facility and the
individual location managers will report to the regional manager. These regional
clusters promote economies of scale. Liberty plans to pay for acquisitions with
cash, debt, the issuance of equity securities or funds from operations. Liberty
will acquire additional self-storage facilities primarily for income.

ITEM 3. LEGAL PROCEEDINGS.

There are no material pending legal proceedings to which Liberty is a
party or to which any of its assets are subject.

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

(a) A Special Meeting of Shareholders in lieu of the Annual Meeting of
Shareholders of Meridian Point Realty Trust '83, predecessor-in-interest to
Liberty, was held on December 28, 1999.

(b) Proxies were solicited for the election of directors by Meridian's
management pursuant to Regulation 14A under the Securities Exchange Act of 1934.
No solicitation in opposition to management's nominees as listed in the proxy
statement/prospectus was made. All of management's

12
<PAGE> 13

nominees were elected to hold office until the next annual election of directors
and until their successor are elected and qualified pursuant to the vote of
Liberty's stockholders.

1. Amendment to Meridian's Amended and Restated Declaration of
Trust.

For 1,629,498
Against 209,976
Withheld 45,577

2. Reincorporation of Meridian from a California common law
business trust into Liberty Self-Stor, Inc., a Maryland
corporation and wholly-owned subsidiary of Meridian.

For 1,605,046
Against 236,043
Withheld 43,962

3. Acquisition of Liberty Self-Stor, Ltd., a company
controlled by Richard M. Osborne, Meridian's and Liberty's
Chairman of the Board and Chief Executive Officer, through
the reorganization of Meridian as an umbrella partnership
real estate investment trust.

For 1,600,555
Against 241,052
Withheld 43,444

4. Election of Trustees (Steven A. Calabrese, Mark D. Grossi,
Marc C. Krantz, Richard M. Osborne and Thomas J. Smith),
who will, if the reincorporation is approved, serve as
directors of Liberty, to serve until the next annual
meeting of shareholders or until their successors are
elected and have been duly qualified.

Name For
---- ---
Steven A. Calabrese 1,979,842
Mark D. Grossi 1,979,842
Marc C. Krantz 1,979,842
Richard M. Osborne 1,979,842
Thomas J. Smith 1,979,842

5. Liberty's 1999 Stock Option and Award Plan.

For 1,615,818
Against 210,102
Withheld 59,131

13
<PAGE> 14

6. Lease with OsAir, Inc., a company owned by Richard M.
Osborne, Meridian's and Liberty's Chairman of the Board and
Chief Executive Officer, for Liberty's executive offices.

For 1,608,855
Against 229,119
Withheld 47,077

7. Ratification of Arthur Andersen LLP as Meridian's (and
Liberty's, as Meridian's successor) independent accountants
for the fiscal year ending December 31, 1999.

For 2,041,101
Against 71,756
Withheld 40,767

14
<PAGE> 15

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Shares Prices. Until May 6, 1999, Meridian's shares of
beneficial interest, $1.00 stated value, were traded on the SmallCap Market of
the Nasdaq Stock Market under the symbol "MPTBS." From May 6, 1999 until January
4, 2000, Meridian's shares of beneficial interest traded on the Over-the-Counter
Bulletin Board Market of Nasdaq under the symbol "MPTBS." On January 4, 2000,
after approval of the reincorporation, Liberty's shares of common stock, $0.001
par value per share, began trading on the Over-the-Counter Bulletin Board Market
of Nasdaq under the symbol "LSSI."

The following table sets forth the published high and low bid
information for Liberty's common stock for each quarter within Liberty's last
two fiscal years. Because Liberty's common stock is traded on the
Over-the-Counter Bulletin Board Market and previously was traded on the SmallCap
Market, these quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission, and may not represent actual transactions.

HIGH LOW

1998

First Quarter $1.50 $0.88

Second Quarter 1.56 0.88

Third Quarter 1.06 0.50

Fourth Quarter 1.00 0.31

1999

First Quarter $0.75 $0.38

Second Quarter 1.03 0.38

Third Quarter 0.97 0.56

Fourth Quarter 0.69 0.38

Record Holders. As of March 6, 2000, Liberty's shares of
common stock were held by approximately 2,143 holders of record.

Dividends. No dividends were paid to Liberty's stockholders in
1998 or 1999. Under the REIT tax rules, Liberty is required to make
distributions to stockholders that aggregate annually at least 95% of its
taxable income. Liberty did not have any taxable income in 1998 or 1999 and,
thus, Liberty remains in compliance with this rule. In accordance with Liberty's
organizational documents, dividend distributions are at the discretion of
Liberty's directors. In addition, under the terms of the partnership agreement
of the operating partnership, the operating partnership is required to make
distributions to enable Liberty to comply with the REIT dividend rules, unless
Liberty, acting as general partner of the operating partnership, determines that
such a distribution would not be in the best interests of the operating
partnership. There can be no assurance when or if dividends will resume.

15
<PAGE> 16

Liberty Transaction. In connection with Meridian's special
meeting held on December 28, 1999, Liberty filed a Registration Statement on
Form S-4 with the Securities and Exchange Commission to register the shares of
its common stock issued to Meridian's shareholders in connection with the
mergers and the shares of its common stock issuable to Mr. Osborne, Mr. Smith
and Retirement Management Company upon the conversion of each of their Class A
limited partnership interests in the operating partnership. This Registration
Statement was declared effective by the SEC on October 29, 1999. The merger was
effective December 29, 1999 at which time each share of beneficial interest of
Meridian was automatically deemed to represent one share of common stock of
Liberty. Cash was paid in lieu of fractional shares. There were no offering
proceeds from the registration of Liberty's common stock.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Introduction
- - ------------

On December 29, 1999, Liberty Self-Stor, Inc., a Maryland corporation,
succeeded to the business of Meridian Point Realty Trust '83. Meridian was
formed and operated as a self-liquidating/finite-life REIT, meaning that
Meridian was intended to have limited life through provisions of its declaration
of trust which stated that the net proceeds from the sale of a property owned by
Meridian could not be reinvested but had to be distributed to shareholders after
payment of indebtedness relating to that property and other obligations. This
limited life policy essentially precluded Meridian from acquiring new properties
and reinvesting the proceeds from the disposition of future properties into new
assets. Meridian sold its last remaining property in August 1997 and the limited
life policy precluded it from acquiring new properties.

16
<PAGE> 17

The reorganization as an UPREIT resulted in the acquisition of Mr.
Osborne's self-storage company through the formation of an operating partnership
by Liberty and Richard M. Osborne, Thomas J. Smith and Retirement Management
Company, the members of Mr. Osborne's self-storage company. Mr. Osborne was the
sole manager and owned prior to the reorganization with Retirement Management
Company, of which Mr. Osborne is the sole shareholder, approximately 99.3% of
the self-storage company. The 99.3 % includes 0.7% interest that Mr. Osborne
owned as successor to Diane M. Osborne's interest. The remaining 0.7% was owned
by Thomas J. Smith, the President, Chief Operating Officer and a director of
Liberty.

The operating partnership is the sole owner of Mr. Osborne's
self-storage company which owns the 15 self-storage facilities. The operating
partnership is the entity through which Liberty conducts substantially all of
its business and owns substantially of its assets, either directly or through
subsidiaries. Liberty's board of directors manage the affairs of the operating
partnership by directing the affairs of Liberty as general partner of the
operating partnership. Liberty's general partnership interests and Class B
limited partnership interests entitle it to share in cash distributions from,
and in the profits and losses of, the operating partnership in proportion to its
percentage interest therein and entitle Liberty to vote on all matters requiring
a vote of the limited partners. Liberty plans to make all future purchases of
self-storage facilities through the operating partnership.

Recent Events
- - -------------

On March 10, 2000, Liberty entered into a Purchase and Sale Agreement
with Springfield Mini Storage, an Ohio limited partnership, to purchase
Springfield Mini Storage, located in Springfield Township, Ohio. The $2.2
million purchase price will financed by a $1.7 million mortgage with a bank and
$0.5 million from a note to the seller guaranteed by Mr. Osborne. The purchase
is expected to close by July 2000 and is subject to financing and other
customary terms and conditions including due diligence and approval by Liberty's
Board.

The following discussion should be read in conjunction with
accompanying Balance Sheets and Statements of Operations and Cash Flows and the
notes thereto. Unless otherwise defined in this report, or unless the context
otherwise requires, the capitalized words or phrases referred to in this section
either: (a) describe accounting terms that are used as line items in such
financial statements, or (b) have the meanings ascribed to them in such
financial statements and the notes thereto.

17
<PAGE> 18
Liquidity and Capital Resources
- - -------------------------------

Liberty's source of near-term liquidity is its unrestricted cash, which
at December 31, 1999 totaled $450,512 as compared to $600,173 for the same
period in 1998. These funds are expected to be adequate to satisfy Liberty's
overhead and operating expenses in the short term. In addition, Liberty believes
that its cash flows from operating activities, from the self-storage facilities,
are sufficient to service its debt for the next 12 months. However, the
self-storage company has a history of 10 consecutive quarters of losses. Liberty
is currently seeking additional equity and debt financing. Liberty needs this
additional equity and debt financing for long-term growth. There is no guarantee
that Liberty will be able to obtain the necessary financing.

An annual meeting of shareholders of Meridian was held on September 22,
1998, at which time a proposed plan of liquidation was defeated by shareholders
and the current Board of Trustees was elected. The vote was declared official on
September 28, 1998. Before leaving office, the previous Board purchased
additional Directors' and Officers' indemnity insurance at a cost of $135,000,
which was expensed in the third quarter. The former Trustees also created the
Meridian Indemnity Trust to pay for the expenses of defending themselves against
potential litigation. The Indemnity Trust was funded with $350,000 of Meridian
funds, which along with interest is reflected as "Restricted Cash" on the
Balance Sheet. Current management negotiated the release of all but
approximately $3,000 of these funds from the Indemnity Trust in September 1999.

During the twelve months ended December 31, 1999 and 1998, Liberty had
no cash distributions.

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

Revenues
- - --------

Rentals from real estate properties totaled $26,984 and $0 for the
years ended December 31, 1999 and 1998, respectively. The rentals for 1999
consist of three days business generated by the self-storage facilities that
were acquired on December 29, 1999.

Interest and Other Revenues were $92,677 and $101,893 for the years
ended December 31, 1999 and 1998, respectively. The totals for both years
consist mainly of interest income from investments in mortgage-related assets.

Expenses
- - --------

Property Taxes and Insurance for the years ended December 31, 1999 and
1998 were $2,327 and $0, respectively. The property taxes and insurance for 1999
consist of three days business of the self-storage company, December 29, 1999 to
December 31, 1999, of the total property taxes and insurance for the
self-storage facilities in 1999.

Property Operating Costs totaled $9,433 and $100,000 for the years
ended December 31, 1999 and 1998, respectively. The 1999 costs consist of three
days business of the self-storage company, December 29, 1999 to December 31,
1999, of the total operating costs for the self-storage facilities in 1999. The
1998 costs represent fees paid to E & L Associates.

18
<PAGE> 19

Legal and Professional Fees for the years ended December 31, 1999 and
1998 were $228,368 and $226,240, respectively. The 1999 expenditures include
$115,585 related to accounting fees and investor relations expenses. The 1998
legal costs were due to costs incurred by Meridian prior to the current Board
taking office in September 1998 arising from the proposed plan of dissolution
and liquidation, the proxy contest, and the defense of the Fund's lawsuit.

General and Administrative Expenses were $31,960 and $575,461 for the
years ended December 31, 1999 and 1998, respectively. The 1999 expenditures
consist of three days business of the self-storage company, December 29, 1999 to
December 31, 1999, of the total general and administrative expenditures for the
self-storage facilities in 1999. The majority of the 1998 expenditures were
incurred prior to September 1998, when the current Board took office. The costs
were related to the former Board's evaluation of Meridian's future options, the
charges related to the reimbursement of proxy solicitation costs of $102,613,
which reimbursement was conditioned upon the authorization by the shareholders
of the conversion to a perpetual-life REIT through an amendment to the
Declaration of Trust, and the purchase by former trustees of additional
Directors' and Officers' indemnity insurance of $219,143.

For the years ended December 31, 1999 and 1998, Depreciation,
Amortization and Other totaled $15,022 and $13,017, respectively. The 1999
expense consists of $7,351 in an unrealized loss on investment in
mortgage-related assets and the balance consists of three days business of the
self-storage company, December 29, 1999 to December 31, 1999, of the total
depreciation, amortization, and other expenses for the self-storage facilities
in 1999. The 1998 expense represents an unrealized loss on investment in
mortgage-related assets.

Interest Expense was $14,530 and $0 for the years ended December 31,
1999 and 1998, respectively. The 1999 expense consists of three days business of
the self-storage company, December 29, 1999 to December 31, 1999, of the total
interest expense for the self-storage facilities in 1999. The interest expense
relates to mortgages and notes payable for the self-storage facilities.

Net Income (Loss)
- - -----------------

As a result of the factors noted above, there was a net loss was
$181,979 for the year ended December 31, 1999 compared to a net loss of $812,825
for the same period of 1998.

Forward-Looking Statements
- - --------------------------

Statements that are not historical facts, including statements about
Liberty's confidence in its prospects and strategies and its expectations about
growth, are forward-looking statements that involve risks and uncertainties.
These risks and uncertainties include, but are not limited to:

- Liberty's continued tax status as a REIT,
- the failure to successfully implement Liberty's business plans,
- the failure to successfully integrate the self-storage company and
other acquired facilities into Liberty,
- the failure to complete the acquisition of Springfield Mini
Storage, or, if the acquisition is completed to successfully
integrate the operations of Springfield Mini Storage into those of
Liberty,
- the failure to obtain additional funds necessary to execute
Liberty's business plan,

19
<PAGE> 20

- changes in general economic conditions,
- changes in local real estate conditions,
- the inability to generate sufficient revenues to meet operating
expenses, and
- the failure to manage growth effectively.

Any investor or potential investor in Liberty must consider these risks
and others that are detailed in other filings by Liberty with the Securities and
Exchange Commission, including Liberty's Registration Statement on Form S-4.
These risks and others could cause actual results to differ materially from
those in the forward-looking statements.

Election for REIT Status
- - ------------------------

Meridian previously elected to be taxed as a REIT pursuant to Section
856(c)(1) of the Code and Liberty intends to be taxed as a REIT under the Code
for the fiscal year ending December 31, 1999. The REIT provisions of the Code
generally allow a REIT to deduct dividends paid to stockholders in computing
Liberty's taxable income. No provisions for federal or state income taxes have
been made in the accompanying Statements of Operations.

To qualify for REIT status, Liberty must meet a number of highly
technical organizational and operations requirements on a continuing basis.
Those requirements seek to ensure, among other things, that the gross income and
investments of a REIT are largely real estate related, with other permitted
assets, that a REIT distributes substantially all its ordinary taxable income to
shareholders on a current basis and that the REIT's ownership is not overly
concentrated. Due to the complex nature of these rules, the limited available
guidance concerning interpretation of the rules, the importance of ongoing
factual determinations and the possibility of adverse changes in or
interpretations of the law, administrative interpretations of the law and
developments at Liberty, no assurance can be given regarding Liberty's
qualification as a REIT for any particular year. If Liberty failed to qualify as
a REIT, distributions to stockholders would no longer be required. In addition,
distributions originally treated as capital gain distributions could be
re-characterized as ordinary dividend distributions to shareholders. Moreover,
Liberty might not be able to elect to be treated as a REIT for the four taxable
years after the year during which Liberty or Meridian ceased to qualify as a
REIT. If Liberty later re-qualified as a REIT, it might be required to pay a
full corporate-level tax on any unrealized gain associated with its assets as of
the date of re-qualification and to make distributions equal to any earnings
accumulated during the period of non-REIT status.

As previously reported, as a result of Meridian's sale of its last real
estate property in August 1997, Meridian's status as a REIT for 1997 and 1998
was dependent, in part, upon tax rules regarding investments by REITs in
specific types of non-real estate assets. On June 8, 1999, Meridian entered into
a Closing Agreement with the Internal Revenue Service in which the IRS agreed to
accept Meridian's status as a REIT regarding these investments for 1997 and
1998.

ITEM 7. FINANCIAL STATEMENTS

Liberty's Report of Independent Accountants and Financial Statements
are incorporated herein by reference and filed as part of this report.

20
<PAGE> 21

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

Liberty has not changed its independent certified public accountants
and has not had any disagreement with its independent certified public
accountants on accounting or financial disclosures required to be made under
rules of the Securities and Exchange Commission.

21
<PAGE> 22

PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS

Directors and Executive Officers
- - --------------------------------

Liberty's directors are elected annually and serve until the next
annual meeting of stockholders and until their successors are elected and
qualified. Liberty's Articles of Incorporation provide that the number of
directors shall be not less than three nor more than fifteen. Currently, the
authorized number of directors is five.

The following table sets forth as to each person who currently serves
as a director or as an executive officer, his name, age, and position with
Liberty:
<TABLE>
<CAPTION>

Name Age Position
------------------------------------------------------------------------------------
<S> <C> <C>
Richard M. Osborne 54 Chairman, Chief Executive Officer and a Director

Thomas J. Smith 55 President, Chief Operating Officer and a Director

Sherry L. Kirchenbauer 31 Chief Financial Officer and Assistant Secretary

Jeffrey J. Heidnik 38 Vice President of Operations

Marc C. Krantz 39 Secretary and a Director

Steven A. Calabrese 38 Director

Mark D. Grossi 44 Director
</TABLE>

Officers of Liberty hold office at the discretion of the directors.
Each director and executive officer's principal occupations during the past five
years or more are set forth below.

Richard M. Osborne has been Chairman of the Board, Chief Executive
Officer and a Director of the Liberty since September 1998. Mr. Osborne is
President and Chief Executive Officer of OsAir, Inc., a company he founded in
1963. Mr. Osborne is the sole manager of Turkey Vulture Fund XIII, Ltd., which
began operations in January 1995. He is also a director of USP Real Estate
Investment Trust, a publicly-held real estate investment trust, a director of
NuMED Home Health Care, Inc., a publicly-held home healthcare company, a
director and Chairman of the Board of Pacific Gateway Properties, Inc., a
publicly-held real estate company, and a director and Vice Chairman of the Board
of GLB Bancorp, Inc., a publicly-held bank holding company.

Thomas J. Smith has been President, Chief Operating Officer and a
Director of Liberty since September 1998. Since April 1, 1996, Mr. Smith has
served as the Executive Operating Manager of Liberty Self-Stor, Ltd. Mr. Smith
has been the President of Retirement Management Company since 1992. Mr. Smith
also serves as a Director of GLB Bancorp, Inc.

22
<PAGE> 23

Sherry L. Kirchenbauer has been Chief Financial Officer and the
Assistant Secretary of Liberty since December 1999. Prior to joining Liberty,
Ms. Kirchenbauer was controller for two years for Interpak, a plastics
manufacturing company, and accounting manager for LaRich Distributors, which has
real estate interests in apartment buildings and shopping centers.

Jeffrey J. Heidnik has been the Vice President of Operations of the
Liberty since December 1999. Mr. Heidnik has worked for Mr. Osborne since 1980.
In 1986, he began building and managing self-storage projects for Mr. Osborne
and gradually assumed total responsibility for managing the operations of the
storage sites.

Marc C. Krantz has been the Secretary and a Director of Liberty since
September 1998. Mr. Krantz is the managing partner with the law firm of Kohrman
Jackson & Krantz P.L.L. and has been with that firm for the last five years.

Steven A. Calabrese has been a Director of Liberty since September
1998. Mr. Calabrese is serving as managing partner of Calabrese, Racek and
Markos, Inc., CRM Construction, Inc. and CRM Environmental Services, Inc., firms
which specialize in evaluation, management, construction and environmental
assessment services for commercial and industrial real estate. Mr. Calabrese is
also a director of Pacific Gateway.

Mark D. Grossi has been a Director of Liberty since September 1998. Mr.
Grossi is currently Executive Vice President and a Director of Charter One
Financial, Inc., a publicly-traded savings and loan holding company, and
Executive Vice President and Chief Retail Banking Officer of its subsidiary,
Charter One Bank. Mr. Grossi also serves as a director of Pacific Gateway and a
director of JB Oxford Holdings, Inc., a publicly-held brokerage company. Since
prior to 1993, Mr. Grossi has held various senior executive positions with
Charter One Bank and its predecessor.

Board of Directors; Committees
- - ------------------------------

The board of directors is currently comprised of Messrs. Calabrese,
Grossi, Krantz, Osborne and Smith. The board of directors has two standing
committees: an audit committee and compensation committee.

Audit Committee: The audit committee is currently comprised of Messrs.
Grossi and Krantz. The audit committee makes recommendations to the board of
directors regarding the selection of the independent auditors, reviews the plan,
scope and results of the audit, reviews with the independent auditors and
management the policies and procedures with respect to internal accounting and
financial controls, changes in accounting policy and the scope of the non-audit
services which may be performed by the independent auditors.

Compensation Committee. The compensation committee is currently
comprised of Messrs. Calabrese and Grossi. The compensation committee
establishes the compensation of the executive officers and administers Liberty's
1999 Stock Option and Award Plan.

23
<PAGE> 24

Meetings of the Board of Directors
- - ----------------------------------

The current Board of Directors met three times in 1999 and at least 75%
of the directors participated in all meetings. The Board also acted by unanimous
written consent three times in 1999.

Director Compensation
- - ---------------------

Beginning in 1999, Liberty will pay each director, other than Messrs.
Osborne, Smith and Krantz, an annual fee of $5,000 in shares of Liberty. In
addition, Liberty will pay each such director $250 in cash for each board
meeting that such director participates in.

ITEM 10. EXECUTIVE COMPENSATION

Executive Compensation
- - ----------------------

From February 23, 1996 until September 28, 1998, Meridian had no
employees and no compensation was paid to its executive officers. On February
23, 1996, Meridian entered into an agreement with E&L Associates, Inc., to
provide Meridian with asset management and other administrative services.
Lorraine O. Legg, Meridian's former President, Chief Executive Officer and a
trustee, has an ownership interest in a company which is the parent company of
E&L. The agreement with E&L was terminated by the current trustees on September
22, 1998. Meridian paid E&L a total of $100,000 in 1998, $120,000 in 1997 and
$95,000 in 1996.

The new officers of Liberty, who took office on September 28, 1998,
agreed to serve without salaries until a plan for converting Meridian to a
perpetual-life REIT was approved by the shareholders. This plan was completed
upon shareholder approval of the reincorporation on December 28, 1999.
Therefore, no executive compensation was paid in 1999.

Employment Agreements
- - ---------------------

Liberty is a party to an employment agreement with Mr. Smith. The
employment agreement provides for a two-year term commencing on December 28,
1999, with automatic one-year renewal periods. Mr. Smith will receive an annual
salary of $125,000, bonuses at the discretion of Liberty's Board of Directors,
and the use of a company car.

Section 16(a) Beneficial Ownership Reporting Compliance
- - -------------------------------------------------------

Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires Liberty's directors and executive officers, and persons who own more
than 10% of Liberty's shares, to file with the Securities and Exchange
Commission and the Nasdaq Stock Market initial reports of ownership and reports
of changes in ownership of the shares. Officers, directors and greater than 10%
shareholders are required by SEC regulation to furnish Liberty with copies of
all Section 16(a) forms they file.

Based solely on its review of copies of reports furnished to Liberty or
written representations that no reports were required, Liberty believes that all
Section 16(a) filing requirements were met in 1999.

24
<PAGE> 25

Option Grants in 1999
- - ---------------------

The following table summarizes information concerning options granted
during Liberty's fiscal year ended December 31, 1999 to each of the executive
officers.

NUMBER OF PERCENT OF
SHARES OF TOTAL
COMMON OPTIONS
STOCK GRANTED TO EXERCISE
UNDERLYING EMPLOYEES IN PRICE PER
NAME OPTIONS * FISCAL 1999 SHARE EXPIRATION DATE
- - ----------------- ---------- ------------- --------- -----------------

Thomas J. Smith 100,000 64.5% $0.5625 May 6, 2009

Jeffrey J. Heidnik 25,000 16.1% $0.5625 May 6, 2009

* Options vest over three years beginning on the first anniversary of the date
of grant.

Option Values at Year-End 1999
- - ------------------------------

The following table summarizes information with respect to the number
of unexercised options held by executive officers as of December 31, 1999. The
exercise price of the options exceeded the last sale price of Liberty's common
stock on December 31, 1999. No executive officer exercised any options in 1999.

NUMBER OF SHARES
UNDERLYING UNEXERCISED
OPTIONS AT DECEMBER 31, 1999
--------------------------------
NAME EXERCISABLE UNEXERCISABLE
--------------------- ----------- -------------
Thomas J. Smith -0- 100,000

Jeffrey J. Heidnik -0- 25,000

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the amount and nature of the beneficial
ownership of Liberty's common stock as of March 8, 2000 by (i) each person known
by Liberty to own more than 5% of the outstanding shares (based upon filings
made with the SEC), (ii) each director, (iii) each executive officer, and (iv)
all the Directors and Executive Officers as a group.

25
<PAGE> 26

Amount of Shares
Name and Address Beneficially Owned Percentage
- - ---------------- ------------------ ----------
<S> <C> <C>
Turkey Vulture Fund XIII, Ltd. 297,344 (1) 9.8%
8500 Station Street, Suite 113
Mentor, Ohio 44060

Richard M. Osborne 297,344 (1) 9.8%
8500 Station Street, Suite 113
Mentor, Ohio 44060

Steven A. Calabrese 290,265 9.6%
1110 Euclid Avenue, Suite 300
Cleveland, Ohio 44115

Marc C. Krantz 5,000 *
1375 E. Ninth Street, 20th Floor
Cleveland, Ohio 44114

Sherry L. Kirchenbauer 4,000 *
8500 Station Street, Suite 100
Mentor, Ohio 44060

Mark D. Grossi -0- 0.0%
1215 Superior Avenue, 7th Floor
Cleveland, Ohio 44114

Thomas J. Smith -0- 0.0%
8500 Station Street, Suite 100
Mentor, Ohio 44060

Jeffrey J. Heidnik -0- 0.0%
8500 Station Street, Suite 100
Mentor, Ohio 44060

All Directors and Executive Officers as a group 596,609 19.7%
</TABLE>

- - -------------------
* less than 1%

(1) Richard M. Osborne is the sole manager of Turkey Vulture Fund XIII, Ltd., an
Ohio limited liability company, and may be deemed to be the beneficial owner of
all 297,344 shares owned by the Fund.

26
<PAGE> 27

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Effective February 24, 1996, Meridian entered into an agreement with E
& L Associates to provide property management and certain other administrative
services. Under this agreement, E & L received a monthly fee of $8,333 to June
30, 1996. Effective July 1, 1996, the monthly fee was increased to $10,000.
During 1998, E & L received fees of $100,000. In 1997, E & L received fees of
$120,000 and, in connection with the sale of the Charleston property in August
1997, received a fee of $233,000 under an incentive plan adopted by the trustees
for E & L's arranging, structuring, negotiating and closing the transaction. E &
L is a wholly-owned subsidiary of a company in which Lorraine O. Legg,
Meridian's former President, Chief Executive Officer and a Trustee has an
ownership interest. Other than the management fees paid to E & L, Ms. Legg
received no other compensation from Meridian. The agreement between Meridian and
E & L was terminated by the current board on September 22, 1998.

Before leaving office, the previous board created the Indemnity Trust
to pay for the expense of defending themselves against potential litigation. The
Indemnity Trust was funded with $350,000 of company funds. Current management
negotiated the release of all but approximately $3,000 of these funds from the
Indemnity Trust.

In connection with the proxy solicitation by Meridian `83 Shareholders'
Committee for Growth, Turkey Vulture Fund XIII, Ltd. incurred expenses of
$102,613. The current board authorized the expense reimbursement because of the
benefit to Liberty of the proxy solicitation. The reimbursement was conditioned
upon the authorization by the shareholders of the conversion to a perpetual-life
REIT through an amendment to the Declaration of Trust. Mr. Osborne is the sole
manager of the Fund. The $102,613 is shown as an accounts payable on Liberty's
balance sheet because Mr. Osborne has informed Liberty's management that he is
not requiring payment at this time.

On January 14, 1997, Mr. Osborne personally executed a promissory note
to Second National Bank (formerly Enterprise Bank) for a line of credit in the
amount of $500,000. The entire $500,000 has been drawn on and Mr. Osborne passed
the proceeds onto the self-storage company. The self-storage company has made,
and will continue to make, the monthly interest-only payments on the note. The
initial interest rate of the note was 8.25%, subject to change from time to time
based on changes in an index which is Second National's prime rate. The $500,000
is shown as notes payable to related party on Liberty's balance sheet.

Mr. Osborne is the sole manager of Liberty Self-Stor II, Ltd., an Ohio
limited liability company, which is the owner of a truck rental business, which
makes trucks available for short-term rental to the general public, including
tenants of the self-storage facilities, and provides for the retail sale of
locks, boxes, packing materials, propane gas and related merchandise at the
self-storage facilities. Liberty has entered into a cost sharing agreement with
Liberty Self-Stor II with respect to the sharing of employees and space at the
offices of the self-storage facilities for the benefit of both companies.

Mr. Osborne, through Turkey Vulture Fund XIII, Ltd., an Ohio limited
liability company of which he is sole manager, owns 297,344 shares, or 9.8% of
the Liberty's outstanding shares. Mr. Osborne and Retirement Management Company,
of which he is the sole shareholder, owned 99.3% of the self-storage company and
received limited partnership interests in the operating partnership in

27
<PAGE> 28

exchange for the membership interests in the self-storage company. Mr. Osborne,
Mr. Smith and Retirement Management Company received 7,107,573 limited
partnership interests in the operating partnership in exchange for their
membership interests in the self-storage company. Therefore, Mr. Osborne, with
Retirement Management Company, received 99.3% of the Class A limited partnership
interests, or 7,057,820 limited partnership interests. Mr. Osborne, Mr. Smith
and Retirement Management Company own 70.1% of the operating partnership, with
Liberty owning the remaining 29.9%. The Class A limited partnership interests
are redeemable for cash equal to the number of limited partnership interests
multiplied by the market price of Liberty's stock or, at the election of
Liberty, convertible into common stock, on a one-for-one basis. Including
297,344 shares of common stock that will be held by Turkey Vulture Fund, of
which Mr. Osborne is the sole manager, upon completion of the reorganization,
Mr. Osborne would, upon conversion, own 7,355,164 shares of the common stock, or
approximately 72% of the common stock then outstanding. No such conversion into
common stock will be permitted if Liberty determines that such conversion would
be likely to disqualify Liberty as a REIT.

For each contributor to the operating partnership, the percentage
interest in the operating partnership was determined by dividing the net asset
value to be contributed by that contributor by the sum of the net asset value of
the cash and other assets and liabilities to contributed to the operating
partnership by Liberty, and the net asset value of the assets and liabilities to
be contributed to the operating partnership by the self-storage company. The
self-storage company assumed $725,000 of the costs of the reincorporation and
the acquisition through the reorganization through a deduction to its net asset
value. Total costs of the reincorporation and the acquisition were approximately
$793,000, $68,000 of which was paid by Liberty.

As an officer and trustee of Meridian, as an officer and director of
Liberty and as the significant member of the self-storage company, Mr. Osborne
was a party to all sides of the negotiations regarding the reincorporation and
the reorganization. Mr. Osborne receives the benefit of the contribution of the
self-storage facilities in a tax-free transaction and the opportunity to convert
his privately-held self-storage company into a public entity through the
reorganization. The agreements and arrangements in connection with the
reincorporation and the acquisition of the self-storage company were not the
result of arm's-length negotiations.

Liberty's corporate offices are leased from OsAir, Inc., a company
owned by Mr. Osborne. The rent for the initial term of the lease is $4,000 per
month. At December 31, 1999, the rent, which is included under Administrative
Expenses, was $516.

Marc C. Krantz, a director and secretary of Liberty, is the managing
partner of the law firm of Kohrman, Jackson & Krantz P.L.L., which provides
legal services to Liberty.

28
<PAGE> 29

ITEM 13. EXHIBITS, LIST, AND REPORTS ON FORM 8-K

(a) INDEX TO EXHIBITS
-----------------
(In accordance with Item 601 of Regulation S-B)
Exhibit No. Description
- - ----------- -----------

2.1 Purchase and Sale Agreement entered into August 4,
1997, together with First Amendment to Purchase and
Sale Agreement effective August 7, 1997 and Second
Amendment to Purchase and Sale Agreement effective
August 15, 1997, between Meridian Point Realty Trust
'83 and 2400 Charleston Associates, LLC (successor to
Rubin-Pachulski Properties, Inc.) (Filed as Exhibit
10.1 to Registrant's Form 8-K dated September 5, 1997
and incorporated herein by reference.)

2.2 Agreement and Plan of Merger, dated as of December
28, 1999, by and among Meridian Point Realty Trust
'83, Liberty Self-Stor, Inc. and Liberty Self-Stor
Limited Partnership (Exhibits A and B to the
Agreement and Plan of Merger are Exhibits 3.1 and
3.2, respectively) (Filed as Exhibit 2.1 to
Registrant's Form 8-K dated January 12, 2000 and
incorporated herein by reference.)

3.1 Articles of Incorporation of Liberty Self-Stor, Inc.
(Filed as Exhibit 3.1 to Registrant's Form 8-K dated
January 12, 2000 and incorporated herein by
reference.)

3.2 Bylaws of Liberty Self-Stor, Inc. (Filed as Exhibit
3.2 to Registrant's Form 8-K dated January 12, 2000
and incorporated herein by reference.)

10.1 Agreement between Meridian Point Realty Trust '83 and
E&L Associates, dated February 23, 1996 (Filed as
part of Registrant's Form 8-K dated February 10, 1995
and incorporated herein by reference.)

10.2 Indemnity Trust Agreement, dated as of September 2,
1998, by and between Meridian Point Realty Trust '83
and U.S. Trust Company, N.A. (Filed as Exhibit 10.2
to Registrant's Form 10-KSB dated March 31, 1999 and
incorporated herein by reference.)

10.3 1999 Stock Option and Award Plan of Liberty
Self-Stor, Inc. (Filed as Exhibit 10.1 to
Registrant's Form 8-K dated January 12, 2000 and
incorporated herein by reference.)

10.4 Lease between OsAir, Inc. and Liberty Self-Stor, Inc.
(Filed as Exhibit 10.2 to Registrant's Form 8-K dated
January 12, 2000 and incorporated herein by
reference.)

29
<PAGE> 30

10.5 Agreement of Limited Partnership of LSS I Limited
Partnership, dated December 29, 1999. (Filed as
Exhibit 10.3 to Registrant's Form 8-K dated January
12, 2000 and incorporated herein by reference.)

10.6 Employment Agreement, dated December 28, 1999, by and
between Liberty Self-Stor, Inc. and Thomas J. Smith
(Filed as Exhibit 10.4 to Registrant's Form 8-K dated
January 12, 2000 and incorporated herein by
reference.)

10.7* Cost Sharing Agreement, by and between Liberty
Self-Stor, Ltd. and Liberty Self-Stor II, Ltd., dated
December 28, 1999

27.1* Financial Data Schedule

(b) REPORTS ON FORM 8-K
-------------------
No Form 8-K reports were filed during the quarter ended December 31,
1999.

* Filed herewith

30
<PAGE> 31

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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: March 15, 2000 LIBERTY SELF-STOR, INC.

By: /s/ Richard M. Osborne
-------------------------------------
Richard M. Osborne
Chairman and Chief Executive Officer
(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

/s/ Richard M. Osborne Dated: March 15, 2000
- - ---------------------------------------
Richard M. Osborne
Chairman and Chief Executive Officer
(Principal Executive Officer)

/s/ Thomas J. Smith Dated: March 15, 2000
- - ---------------------------------------
Thomas J. Smith
President, Chief Operating Officer and Director

/s/ Marc C. Krantz Dated: March 15, 2000
- - ---------------------------------------
Marc C. Krantz
Secretary and Director

/s/ Sherry L. Kirchenbauer Dated: March 15, 2000
- - ---------------------------------------
Sherry L. Kirchenbauer
Chief Financial Officer and Assistant Secretary
(Principal Financial and Accounting Officer)

/s/ Jeffrey J. Heidnik Dated: March 15, 2000
- - ---------------------------------------
Jeffrey J. Heidnik
Vice President of Operations

31
<PAGE> 32

/s/ Mark D. Grossi Dated: March 15, 2000
- - ---------------------------------------
Mark D Grossi
Director

/s/ Steven A. Calabrese Dated: March 15, 2000
- - ---------------------------------------
Steven A. Calabrese
Director

32
<PAGE> 33

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors of
Liberty Self-Stor, Inc.:

We have audited the accompanying consolidated balance sheet of Liberty
Self-Stor, Inc. (a Maryland corporation, formerly Meridian Point Realty Trust
'83) and Subsidiary as of December 31, 1999, and the related consolidated
statements of operations, shareholders' equity and cash flows for each of the
two years in the period ended December 31, 1999. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Liberty Self-Stor, Inc. and
Subsidiary as of December 31, 1999, and the results of their operations and
their cash flows for each of the two years in the period ended December 31,
1999, in conformity with accounting principles generally accepted in the United
States.

/s/ARTHUR ANDERSEN LLP

Cleveland, Ohio,
February 25, 2000.
(except for Note 12 as to which
the date is March 10, 2000)

33
<PAGE> 34

LIBERTY SELF-STOR, INC. AND SUBSIDIARY
--------------------------------------

CONSOLIDATED BALANCE SHEET
--------------------------

DECEMBER 31, 1999
-----------------

ASSETS
------
<TABLE>
<CAPTION>

1999
--------------
<S> <C>
ASSETS:
Cash and cash equivalents $ 450,512
Accounts receivable 55,642
Investments in mortgage-related assets, at market value 1,390,131
Restricted cash 3,623
Other current assets 71,240
--------------

Total current assets 1,971,148
--------------

PROPERTY AND EQUIPMENT:
Land 2,528,966
Buildings and improvements 22,403,996
Furniture and equipment 171,721
--------------
25,104,683

Less- Accumulated depreciation 7,643
--------------
25,097,040
--------------
OTHER ASSETS:
Goodwill, net 68,581
Other 11,740
--------------
80,321
--------------
$ 27,148,509
==============
</TABLE>

34
<PAGE> 35

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>

1999
--------------
<S> <C>
LIABILITIES:
Current maturities of long-term debt $ 441,587
Note payable to related party 500,000
Accounts payable 614,743
Accounts payable to related party 102,613
Accrued expenses 536,154
--------------

Total current liabilities 2,195,097

LONG-TERM DEBT, net of current maturities 18,851,160

OTHER LONG-TERM LIABILITIES 41,620

MINORITY INTEREST LIABILITY 4,250,102

COMMITMENTS AND CONTINGENCIES (Note 10)

SHAREHOLDERS' EQUITY:
Serial preferred stock- $.001 stated value: 2,000,000
shares authorized, no shares issued and outstanding -
Common stock--$.001 stated value: 50,000,000 shares
authorized; 3,031,618 shares issued and outstanding 3,031,618
Paid-in capital 22,755,694
Distributions in excess of income (23,976,782)
--------------

Total shareholders' equity 1,810,530
--------------

Total liabilities and shareholders' equity $ 27,148,509
==============
</TABLE>

The accompanying notes to consolidated financial
statements are an integral part of this balance sheet.

35
<PAGE> 36

LIBERTY SELF-STOR, INC. AND SUBSIDIARY
--------------------------------------

CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------

FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
----------------------------------------------

1999 1998
----------- ----------
<S> <C> <C>
GROSS REVENUES:
Rentals from real estate properties $ 26,984 $ -
Interest and other 92,677 101,893
----------- ----------

Total revenues 119,661 101,893
----------- ----------

OPERATING EXPENSES:
Interest 14,530 -
Property taxes and insurance 2,327 -
Property operating costs, including amounts
paid to related parties of $0 and
$100,000, respectively 9,433 100,000
Legal and professional fees 228,368 226,240
General and administrative, including
amounts paid to related parties of $0 and
$133,000, respectively 31,960 575,461
Depreciation, amortization and other 15,022 13,017
----------- ----------

Total expenses 301,640 914,718
----------- ----------

Net loss $ (181,979) $(812,825)
=========== ==========

NET LOSS PER COMMON SHARE--BASIC AND DILUTED:
$ (.06) $ (.27)
=========== ==========
</TABLE>

The accompanying notes to consolidated financial
statements are an integral part of these statements.

36
<PAGE> 37

LIBERTY SELF-STOR, INC. AND SUBSIDIARY
--------------------------------------

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
-----------------------------------------------

FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
----------------------------------------------

Distributions
Paid-in in excess
Shares Amount capital of income
-------------- ---------------- ----------------- ------------------

<S> <C> <C> <C> <C>
BALANCE, December 31, 1997 3,031,618 $3,031,618 $22,755,694 $(22,981,978)

Net loss - - - (812,825)
-------------- ---------------- ----------------- ------------------

BALANCE, December 31, 1998 3,031,618 3,031,618 22,755,694 (23,794,803)

Net loss - - - (181,979)
-------------- ---------------- ----------------- ------------------

BALANCE, December 31, 1999 3,031,618 $3,031,618 $22,755,694 $(23,976,782)
============== ================ ================= ==================
</TABLE>

The accompanying notes to consolidated financial statements
are an integral part of these statements

37
<PAGE> 38

LIBERTY SELF-STOR, INC. AND SUBSIDIARY
--------------------------------------

CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------

FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
----------------------------------------------
<TABLE>
<CAPTION>

1999 1998
--------------- ----------------
<S> <C> <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (181,979) $ (812,825)
Adjustments to reconcile net loss to net
cash provided (used) in operating
activities-
Depreciation and amortization 7,643 -
Unrealized loss on investments in
mortgage-related assets 7,351 13,017
Changes in operating assets and
liabilities-
Restricted cash 354,105 (357,728)
Accounts receivable 26,858 -
Other assets, net (599) 6,599
Accounts payable 268,475 83,510
Other liabilities (53,095) -
----------- ----------

Net cash provided by (used
in) operating activities
428,759 (1,067,427)
----------- ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash acquired with merger 434,765 -
Merger transaction costs (793,581) -
Investments in mortgage-related assets (1,705,438) (2,019,460)
Return of principal from mortgage-related
assets 1,513,678 800,721
----------- ----------

Net cash used in investing
activities (550,576) (1,218,739)
----------- ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on debt (27,844) -
----------- ----------

Net cash used in financing
activities (27,844) -
----------- ----------
</TABLE>

38
<PAGE> 39
<TABLE>
<CAPTION>

1999 1998
------------------ ------------------
<S> <C> <C>
NET DECREASE IN CASH AND CASH EQUIVALENTS
$ (149,661) $ (2,286,166)
------------------ ------------------

CASH AND CASH EQUIVALENTS, beginning of period
600,173 2,886,339
------------------ ------------------

CASH AND CASH EQUIVALENTS, end of period
$ 450,512 $ 600,173
================== ==================

NON-CASH INVESTING AND FINANCING TRANSACTIONS:
Purchase of Liberty Self-Stor, Ltd.-
Mortgage debt assumed $ 19,820,591 $ -
Estimated fair value of real estate
properties acquired 25,104,683 -
Net working capital deficit assumed 743,755 -

</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements

39
<PAGE> 40

LIBERTY SELF-STOR, INC. AND SUBSIDIARY
--------------------------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

DECEMBER 31, 1999 AND 1998
--------------------------

1. GENERAL:
--------

Liberty Self-Stor, Inc. (the "Company" or "Liberty") is a corporation organized
under the laws of the State of Maryland for the purpose of operating, managing,
developing, expanding and investing in self-storage facilities. The Company was
formerly known as Meridian Point Realty Trust '83 ("Meridian"). On December 29,
1999, Meridian was merged with and reincorporated into Liberty.

Meridian was formed as a self-liquidating/finite-life real estate investment
trust ("REIT"). Under this self-liquidating policy, Meridian could not invest
net proceeds from sales or refinancings in additional properties. Meridian was
formed on June 24, 1982 and commenced operations on April 12, 1983. On February
23, 1996, Meridian sold all of its real estate properties except for the
Charleston Business Park ("Charleston"). On August 22, 1997, Meridian sold the
Charleston property. Following the sale, Meridian's assets had consisted almost
entirely of cash and cash equivalents and investments in mortgage-related
assets. An annual meeting of shareholders was held on September 22, 1998, for
the purpose of electing trustees and approving and adopting a plan of
liquidation. The proposed plan of liquidation was defeated by shareholders and a
new Board of Trustees was elected. The vote was declared official on September
28, 1998.

On December 28, 1999, an annual meeting of shareholders was held for the purpose
of electing trustees and approving and adopting certain proposals including, but
not limited to, approval of the reincorporation of Meridian into Liberty and the
formation of an operating partnership, LSS I Limited Partnership ("LSS"), a
Delaware limited partnership, with the members of Liberty Self-Stor, Ltd., an
Ohio limited liability company (the "Ohio LLC"). The members of the Ohio LLC
were Richard M. Osborne, Chairman and Chief Executive Officer of Liberty, Thomas
J. Smith, Liberty's President and Chief Operating Officer, and Retirement
Management Company, an Ohio corporation owned by Mr. Osborne.

All of the proposals were approved by the shareholders and adopted on December
28, 1999. As a result, Meridian was merged with and reincorporated into Liberty
Self-Stor, Inc., a perpetual-life REIT. As a perpetual-life REIT, Liberty is now
able to invest proceeds from sales and refinancings in additional properties. In
addition, each member of the Ohio LLC exchanged their membership interests for
Class A limited partnership interests in LSS, resulting in LSS being the sole
member of the Ohio LLC. Liberty contributed its net assets, primarily cash and
investments, to LSS in exchange for the sole general partnership therein and
Class B limited partnership interests. The Class A limited partnership interests
are redeemable for cash or, at the election of Liberty, convertible into shares
of Liberty stock on a one-for-one basis. The Class B limited partnership
interests are not entitled to redemption or a preferred return. At December 31,
1999, Liberty and the former members of the Ohio LLC have 30% and 70% equity
interests in LSS, respectively. The minority interest liability of $4,250,102 at
December 31, 1999 represents the 70% interest in the net assets of LSS held by
the former members of the Ohio LCC. After completion of the formation
transactions, LSS owns and operates 15 self-storage facilities.

40
<PAGE> 41

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------

Principles of Consolidation
- - ---------------------------

Pursuant to the terms of the partnership agreement of LSS, Liberty, as sole
general partner, controls LSS. Accordingly, Liberty accounts for its investment
in LSS utilizing the consolidation method, recognizing minority interest to the
extent of the Class A limited partnership interests issued to the former members
of the Ohio LLC. The statement of operations of Liberty for 1999 includes the
results of operations of LSS from the December 29, 1999 acquisition date.

Acquisition of Properties
- - -------------------------

The consummation of the LSS formation transactions discussed in Note 1 were
accounted for utilizing the purchase method of accounting, with LSS being the
acquiror. As such, the historical net carrying values of the assets and
liabilities of the Ohio LLC were adjusted to their estimated fair values. The
purchase price allocation remains preliminary at December 31, 1999 and is
subject to change based upon final determination of the fair values of assets
acquired and liabilities assumed. No adjustments were made to the historical net
carrying values of assets and liabilities of Meridian.

The following unaudited pro forma information for the years ended December 31,
1999 and 1998 is presented showing the effect of the reincorporation and
reorganization as if they had been consumated on January 1, 1998.

1999 1998
----------------- -----------------

Revenues $3,399,899 $2,744,146
Net loss (325,586) (615,013)
Net loss per share - basic
and diluted $ (.11) $ (.20)

The pro forma operating results have been prepared for comparative purposes
only. They do not purport to present the operating results that would have been
achieved had the transactions been made in the periods presented.

Cash and Cash Equivalents
- - -------------------------

Liberty considers all investments with an original maturity of three months or
less to be cash equivalents.

Property and Equipment
- - ----------------------

Property and equipment are stated at estimated fair value based upon an
appraisal done in 1999 in connection with LSS's acquisition of the Ohio LLC and
are depreciated using the straight-line method over estimated useful lives of 25
years for buildings and improvements and 5 years for furniture and equipment.

41
<PAGE> 42

Liberty reviews the properties for impairment when events or changes in
circumstances indicate the carrying amounts of the properties may not be
recoverable. When such conditions exist, management estimates the future cash
flows from operations and disposition of the properties. If the estimated
undiscounted future cash flows are less than the carrying amount of the asset,
an adjustment to reduce the carrying amount to the related property's estimated
fair market value would be recorded and an impairment loss would be recognized.
Liberty does not believe that there are any factors or circumstances indicating
impairment of any of its investment in its properties.

Goodwill
- - --------

Goodwill associated with LSS's acquisition of the Ohio LLC of approximately
$68,000 is being amortized on a straight-line basis over its estimated useful
life of 20 years.

Revenue Recognition
- - -------------------

Liberty's rental revenue is derived from monthly rentals of self-storage units.

Rental revenue is recognized in the period the rent is earned which is typically
on a monthly basis.

Estimates, Risks and Uncertainties
- - ----------------------------------

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

From time to time, Liberty is subject to legal claims arising in the ordinary
course of business in connection with Liberty's ownership of real estate and
leasing of such real estate to tenants. Liberty maintains liability insurance,
subject to customary deductibles and, accordingly, management does not believe
the ultimate resolution of such matters will have a material effect on Liberty's
financial position or results of operations.

Fair Value of Financial Instruments
- - -----------------------------------

Fair value is determined by using available market information and appropriate
valuation methodologies. Liberty's principal financial instruments are cash and
cash equivalents, restricted cash, accounts receivable, investments in mortgage
related assets, and the notes payable. Cash and cash equivalents and restricted
cash, due to their short maturities, and the liquidity of accounts receivable,
are carried at amounts which reasonably approximate fair value. Investments in
mortgage related assets are recorded at fair value. The carrying values of notes
payable at December 31, 1999 approximate fair value as such debt was recorded at
fair value at December 29, 1999 in the application of purchase accounting.

42
<PAGE> 43

3. INVESTMENTS IN MORTGAGE-RELATED ASSETS:
---------------------------------------

At December 31, 1999, Liberty held investments in Real Estate Mortgage
Investment Conduits ("REMICs"). The Company has classified these investments as
trading securities under Statement of Financial Accounting Standard No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." Accordingly,
the unrealized loss on these investments was $7,351 in 1999 and $13,017 in 1998.
The loss has been included in other expenses in the accompanying statements of
operations. Presented in the following table is a schedule of the REMIC's
purchased by the Company and their fair market values as of December 31, 1999.

Stated Fair
REMIC Series Interest Rate Maturity Market Value
------------ --------------- --------------------------------

FHLMC 1426 D 6.5% 07/15/06 $ 149,717
FHLMC 1758 D 5.5% 07/15/06 247,865
FNMA 1993-250 A 6.15% 9/25/16 395,900
FHLMC 1829 A 6.10% 10/15/17 167,160
FHLMC 1732 E 6.5% 12/15/17 360,520
FHLMC 1472 E 6.25% 02/15/05 68,969
---------------
$1,390,131
===============

43
<PAGE> 44

4. LONG-TERM DEBT:
---------------

Long-term debt consists of the following:
<TABLE>
<CAPTION>

December 31,
1999
------------
<S> <C>
Mortgage note payable to a bank with monthly installments of $84,367 including
interest at 7.72%, amortized over a twenty-year period with a maturity date
of June 1, 2003, secured by certain real property and personally guaranteed
by a shareholder of the Company. $9,418,466

Mortgage note payable to a bank with monthly installments of $9,695 including
interest at 6.76%, amortized over a twenty-year period with a maturity date
of May 20, 2002, secured by certain real property and personally guaranteed
by a shareholder of the Company. 1,235,526

Mortgage note payable to a bank with monthly installments of $7,268 including
interest at 8.02%, amortized over a twenty-five year period with a maturity
date of October 31, 2002, secured by certain real property and personally
guaranteed by a shareholder of the Company. 913,402

Mortgage note payable to a bank with monthly installments of $2,035, including
interest at 7.60%, amortized over a twenty-three year period with a maturity
date of June 1, 2003, secured by certain real property and personally
guaranteed by a shareholder of the Company. 262,544

Mortgage note payable to a bank with monthly installments of $4,287 including
interest at 7.68%, amortized over a twenty-three year period with a maturity
date of October 31, 2002, secured by certain real property and personally
guaranteed by a shareholder of the Company. 549,446

Note payable to a corporation, due 1,188 months after August 1996, monthly
interest payments of $2,000, secured by certain real property and personally
guaranteed by a shareholder of the Company 250,000
</TABLE>

44
<PAGE> 45

December 31,
1999
------------
<S> <C>
Mortgage note payable to a bank for construction and term financing of real
property, interest at 8.17% amortized over a twenty-year period with a
maturity date of July 1, 2002 secured by certain real property and personally
guaranteed by a shareholder of the Company. $2,647,246

Mortgage note payable to a bank with monthly installments of $15,769 including
interest at 8.0%, amortized over a twenty-year period with a maturity date of
June 4, 2009, secured by certain real property and personally guaranteed by a
shareholder of the Company. 1,884,000

Mortgage note payable to individuals in monthly installments of $5,207 including
interest at 8.5%, payable on a twenty-year amortization, due June 2004,
secured by certain real property. 593,157

Mortgage note payable to a bank for construction and term financing of real
property, interest currently at 8.5%, amortized over an eighteen-year period
with a maturity date of June 1, 2003, secured by certain real property and
personally guaranteed by a shareholder of the Company. 570,000

Construction and permanent financing loan payable to a bank in monthly
installments of $2,397 including interest at 7.25% with a maturity date of
May 1, 2001, secured by certain real property and personally guaranteed by a
shareholder of the Company. 298,319

Mortgage note payable to a bank for construction and term financing of real
property, interest at 8.5%, amortized over an eighteen-year period with a
maturity date of October 31, 2002, secured by certain real property and
personally guaranteed by a shareholder of the Company. 670,641
------------

19,292,747
Less- Current maturities 441,587
------------

$ 18,851,160
============

</TABLE>

45
<PAGE> 46

Long-term debt matures as follows:

2000 $ 441,587
2001 776,970
2002 3,144,489
2003 10,077,440
2004 671,755
Thereafter 4,180,506
-------------------

$19,292,747
===================

5. NOTE PAYABLE TO RELATED PARTY:
------------------------------

The Company has an unsecured note payable to the Chairman and Chief Executive
Officer in the amount of $500,000 at December 31, 1999. The note is payable upon
demand and bears interest at a variable rate which was 8.25% at December 31,
1999.

6. CAPITAL STOCK:
--------------

Common Shares
- - -------------
Holders of Liberty's common shares are entitled to receive dividends, when, as
and if declared by the Board of Directors, out of funds legally available
therefor. The common shares possess ordinary voting rights, each share entitling
the holder thereof to one vote. The holders of common shares, upon any
liquidation, dissolution, or winding-up of Liberty, are entitled to share
ratably in any assets remaining after payment in full of all liabilities of
Liberty and all preferences of the holders of any outstanding preferred shares.
Holders of common shares do not have cumulative voting rights in the election of
directors and do not have preemptive rights.

Preferred Shares
- - ----------------

The Board of Directors is authorized to provide for the issuance of one or more
classes or series of preferred shares with such voting rights, full or limited,
or without voting rights, and with certain designations, preferences and
relative, participating, optional or special rights, and qualifications,
limitations or restrictions.

7. EARNINGS PER SHARE:
-------------------

Basic earnings per share of beneficial interest is determined by dividing net
income (loss) by the weighted average number of shares of beneficial interest
outstanding during the period. Weighted average number of shares outstanding was
3,031,618 for both 1999 and 1998.

During the years ended December 31, 1999 and 1998, Liberty paid no cash
distributions to its shareholders.

46
<PAGE> 47

8. INCOME TAXES:
-------------

The Company has previously elected to be taxed as a REIT pursuant to Section 856
(c) (1) of the Internal Revenue Code of 1986, as amended (the "Code"), and
intends to be taxed as a REIT under the Code for the fiscal year ended December
31, 1999. The REIT provisions of the Code generally allow a REIT to deduct
dividends paid to shareholders in computing the Company's taxable income. In
addition, Liberty has net operating loss carryforwards for future years of
approximately $4,000,000. These net operating loss carryforwards will expire at
various dates through 2019. Utilization of the loss carryforwards could be
limited if there is a substantial change in ownership of Liberty. No provisions
for federal or state income taxes have been made in the accompanying
consolidated statements of operations.

To qualify for REIT status, the Company must meet a number of highly technical
organizational and operational requirements on a continuing basis. Those
requirements seek to ensure, among other things, that the gross income and
investments of a REIT are largely real estate related, with certain other
permitted assets, that a REIT distributes substantially all its ordinary taxable
income to shareholders on a current basis and that the REIT's ownership is not
overly concentrated. Due to the complex nature of these rules, the limited
available guidance concerning interpretation of the rules, the importance of
ongoing factual determinations and the possibility of adverse changes in or
interpretations of the law, administrative interpretations of the law and
developments at the Company, no assurance can be given regarding the Company's
qualification as a REIT for any particular year.

If the Company failed to qualify as a REIT, it would be taxed as a regular
corporation, and distributions to shareholders would not be deductible in
computing the Company's taxable income. Also, if the Company failed to qualify
as a REIT, distributions to shareholders would no longer be required. Moreover,
the Company might not be able to elect to be treated as a REIT for the four
taxable years after the year during which the Company ceased to qualify as a
REIT. If the Company later requalified as a REIT, it might be required to pay a
full corporate-level tax on any unrealized gain associated with its assets as of
the date of requalification and to make distributions equal to any earnings
accumulated during the period of non-REIT status.

As a result of Meridian's sale of its last real estate property in August 1997,
Meridian's status as a REIT for 1997 and 1998 was dependent, in part, upon tax
rules regarding investments by REITS in certain types of non-real estate assets.
In June 1999, Meridian entered into a closing agreement with the Internal
Revenue Service (IRS) in which the IRS agreed to accept Meridian's tax status as
a REIT regarding these investments for 1997 and 1998.

47
<PAGE> 48

9. OTHER RELATED PARTY TRANSACTIONS:
---------------------------------

Effective February 24, 1996, the Company entered into an agreement with E&L
Associates, Inc. ("E&L") under which E&L provided asset management and certain
other administrative services to the Company. E&L received a monthly fee of
$10,000 plus reimbursement for other expenses incurred on behalf of the Company.
During the year ended December 31, 1998, E&L received management fees of
$100,000, all of which is included in property operating costs in the
accompanying statements of operations. E&L is a wholly-owned subsidiary of a
company in which Lorraine O. Legg (the Company's former President, Chief
Executive Officer and a former Trustee) has an ownership interest. The agreement
between the Company and E&L was terminated by the current Board of Trustees on
September 22, 1998.

Before leaving office, the previous Board created the Meridian Indemnity Trust
(the "Trust") to pay for the expense of defending themselves against potential
litigation. The Trust was initially funded with $350,000 of Company funds, the
remaining balance of which has been reflected as restricted cash in the
accompanying balance sheet as of December 31, 1999. The majority of funds were
disbursed in 1999.

In connection with the 1998 proxy solicitation by Meridian '83 Shareholders'
Committee for Growth, Turkey Vulture Fund XIII, Ltd. (the "Fund"), a shareholder
of the Company, incurred expenses of $102,613 which is included in general and
administrative expenses in the accompanying statements of operations for the
year ended December 31, 1998. The Board of Trustees authorized the expense
reimbursement because of the benefit to the Company of the proxy solicitation.
The reimbursement is conditioned upon the authorization by the Company's
shareholders of the conversion of the Company to a perpetual-life REIT through
an amendment to the Declaration of Trust. On December 28, 1999, Meridian was
converted into a perpetual-life REIT; however, amounts have not yet been paid to
the Fund. Richard M. Osborne, the Company's Chairman of the Board and Chief
Executive Officer, is the sole manager of the Fund.

At December 31, 1999, the Company has $406,308 of cash and cash equivalents at a
financial institution which is partially owned by a group controlled by the
Chairman and Chief Executive Officer of the Company.

For the year ended December 31, 1998, the Company incurred fees and expenses for
services rendered by the former Trustees of the Company totaling $30,000. No
expenses were incurred in 1999.

On December 28, 1999, the shareholders approved Liberty's lease of its executive
offices from OsAir, Inc., a company owned by Richard M. Osborne, the Chairman
and Chief Executive Officer of Liberty. The rent for the initial term is $4,000
per month. At December 31, 1999, $516 of related party rent expense is included
in general and administrative expenses.

48
<PAGE> 49

10. COMMITMENTS AND CONTINGENCIES:
------------------------------

The ownership of real estate entails environmental risks and potential liability
to owners, including former owners. Environmental investigation at the Golden
Cove property sold to Meridian Industrial Trust ("MIT") in 1997 indicated that
soil at the property contained volatile organic compounds in concentrations that
exceeded the clean-up goals typically cited by the California Regional Water
Quality Control Board (the "RWQCB"). As part of the sale transaction, the
Company was obligated to fully fund the remediation costs, for which it had
previously accrued $140,000 in 1994. Approximately $95,000 had been expended by
the Company for remediation costs through December 1999, and the Company does
not believe that any additional costs will be incurred. However there can be no
assurance to that effect. The Company may be entitled to seek contribution and
indemnity for the remediation costs against other potentially responsible
parties who may have caused the contamination at the property.

In the late 1980's, the San Francisco Bay Region of the RWQCB requested that the
Company investigate and characterize soil and groundwater contamination at the
Charleston property which was sold by Meridian in August, 1997. The Company
engaged an environmental engineering firm that discovered the presence of
trichloroethlylene and other solvent chemicals in the groundwater. The RWQCB
deferred issuing a Site Cleanup Requirements ("SCRs") order to give the Company
time to complete the pending sale of the property. As part of the sale, the
purchaser agreed to indemnify the Company broadly against the pending SCRs and
other types of environmental claims. The indemnity is backed by an environmental
insurance policy placed with Reliance Insurance Company of Illinois. It is
possible that the RWQCB could still name the Company when it ultimately issues
its SCRs order for the property based on the Company's former ownership. If that
occurs, the Company would tender the SCRs order to the purchaser for compliance.
Similarly, the Company would tender any other environmental claim brought
against it to the purchaser pursuant to the indemnity.

11. EMPLOYEE BENEFITS:
------------------

Long-Term Incentive Plan
- - ------------------------

The 1999 Stock Option Plan ("the Plan") permits the grant of nonstatutory stock
options ("NSSOs"), incentive stock options ("ISOs" and together with NSSOs,
"Options"), and restricted shares. The Plan was adopted to attract and retain
qualified and competent persons who are key to Liberty, including key employees,
officers and directors. The Plan provides for the grant to employees of ISOs
within the meaning of Section 422 of the Code, for grant of NSSOs to eligible
employees (including officers and directors) and non-employee directors and for
the grant of restricted share awards. Liberty may grant up to 300,000 options or
restricted shares pursuant to the Plan. As of December 31, 1999, 155,000 options
have been granted.

The Plan is administered by the Compensation Committee of the Board of
Directors, which designated those persons to whom such options or restricted
share awards are to be granted and shall determine the terms of such awards,
including the exercise price of options, the number of shares subject to an
option, the time of the exercise of an option and the number of shares of, and
the restrictions placed on, a restricted share award.

Options granted under the Plan are subject to certain restrictions, including:
(1) the per share exercise price for ISOs must be equal to or greater than 100%
of the fair

49
<PAGE> 50

market value of Liberty stock on the date of grant of the option, and (2) no
option may be exercisable after the expiration of ten years from the date of its
grant.

Liberty follows the disclosure provisions of Statement of Financial Accounting
Standard No. 123, "Accounting for Stock-Based Compensation," and accordingly, no
expense was recognized for options and restricted shares granted. The impact of
the grants on 1999 pro forma loss per share was not significant.

12. SUBSEQUENT EVENT:
-----------------

Effective in March 2000, Liberty entered into an agreement to purchase a
self-storage facility in Ohio for approximately $2.2 million. This acquisition
is expected to close in mid-2000. The purchase price is expected to be funded
with a mortgage against the property.

<PAGE> 1
EXHIBIT 10.7

COST SHARING AGREEMENT

THIS COST SHARING AGREEMENT ("Agreement") is made and entered into as
of this 28th day of December, 1999, by and between LIBERTY SELF-STOR, LTD., an
Ohio limited liability company (the "Company") and LIBERTY SELF-STOR II, LTD.,
an Ohio limited liability company ("Liberty II").

WHEREAS, the Company owns and operates self-storage properties (the
"Facilities") that provide self-storage space for rent to the general public;

WHEREAS, Liberty II is the owner of certain assets that comprise a
truck rental business, which makes trucks available for short-term rental to the
general public, including tenants of the Facilities, and owns certain assets
that will be used in connection with the retail sale of locks, boxes, packing
materials, propane gas and related merchandise at the Facilities, as provided in
this Agreement (collectively referred to as the "Business");

WHEREAS, the Facilities are generally in visible locations and provide
easy access to the general public and the parties acknowledge that it would be
beneficial to Liberty II's Business and the Company's self-storage business to
operate Liberty II's Business at one or more of the Facilities; and

WHEREAS, the parties desire to agree on the terms and conditions of
sharing costs and expenses in connection with Liberty II's operation of the
Business at one or more of the Facilities and related matters as set forth in
this Agreement.

NOW THEREFORE, the parties hereto agree as follows:

1. LOCATION OF THE BUSINESS. The Business will be located and operated
at one or more of the Facilities, under the terms and conditions of this
Agreement.

2. BUSINESS ASSETS. The right, title and interest of all assets used in
connection with the Business, other than the "Trade Name" as set forth under
Section 3(e) below, will remain at all times the property of Liberty II (the
"Business Assets").

3. COST SHARING

(a) Authority of Liberty II. Notwithstanding anything provided
to the contrary in this Section 3, Liberty II will have ultimate decision making
authority over the Business and the Business Assets. Liberty II's
responsibilities will include, but not be limited to, evaluating markets and
self-storage sites for operations of the Business, negotiating lease and agency
contracts with truck providers, establishing truck rental policy and procedures,
overseeing training of any of the personnel and workers employed by the Company
to perform Business activities, and monitoring and reporting for financial, tax
and other purposes on the Business.

<PAGE> 2

(b) Reimbursement of Costs. Under Liberty II's direction and
control, the Company's employees will engage in the following activities on
behalf of Liberty II in connection with the Business and the Business Assets:
(a) sales, promotional, administrative, and bookkeeping activities, (b) the
payment of expenses and the collection of revenues, and (c) other activities as
the parties may agree to facilitate Liberty II's operation of the Business.
However, Company will not have any authority to incur any obligations or
liabilities on behalf of or for Liberty II's account without the prior consent
of Liberty II designated in writing for such purpose. Liberty II will reimburse
the Company on a monthly basis for the actual costs the Company incurs in
connection with the activities required under this Section 3(b); provided that
the Company provides Liberty II with an accounting of such costs, within 30 days
of the close of each month. The parties agree that the Company's receipt of
reimbursement payments to which it is entitled under this Section 3(b) will not
be treated as income to the Company, but will reduce the amount of its
deductible expenses, for federal income tax purposes.

(c) Rental of Facilities. The Company will rent to Liberty II
space at the Facilities to permit Liberty II to park and use rental trucks at
the Facilities and office space at the Facilities to permit Liberty II to
operate the Business. Liberty II will pay to the Company a monthly rental
payment based on the fair rental value of the space used and occupied by Liberty
II at the Facilities under this Section 3(c) (the "Fair Rental"). The Fair
Rental will be an amount that is equivalent to the rentals paid in comparable
rental agreements between unrelated parties. In the event the parties cannot
agree on the amount of the Fair Rental within 30 days of the effective date of
this Agreement, the Fair Rental will be determined by a qualified independent
appraiser who is agreed upon by the parties. The determination of the Fair
Rental by the qualified appraiser will be binding on the parties.

(d) Facilities. Liberty II and Company will mutually agree,
from time to time, on one or more of the Facilities at which the Business will
be operated. Either party will have the option to terminate the operation of the
Business at any Facility upon 30 days written notice to the other party.

(e) Advertising of the Company's Trade Name. Liberty II will
advertise the Company's trade name "Liberty Self-Storage" (the "Trade Name") by
displaying the Trade Name in a prominent manner and design, as agreed by the
parties, on its rental trucks (whether owned by Liberty II or leased from a
third party) that are used in connection with the Business (the "Advertising").
In consideration for the Advertising, the Company will pay to Liberty II, on a
monthly basis, the fair market value of the Advertising (the "FMV of the
Advertising"). The FMV of the Advertising will be an amount that is equivalent
to the cost charged in comparable advertising agreements between unrelated
parties. In the event the parties cannot agree on the amount of the FMV of the
Advertising within 30 days of the effective date of this Agreement, the FMV of
the Advertising will be determined by a qualified independent appraiser who is
agreed upon by the parties. The determination of the FMV of the Advertising by
the qualified appraiser will be binding on the parties.

(f) Grant of Licence to Use Trade Name. The Company grants
Liberty II a non-exclusive license to use the Trade Name to identify the
Business to the general public (the

2
<PAGE> 3

"License"). Liberty II's License have the right to use the Trade Name to
advertise and promote the Business and for any other purpose intended to enhance
the goodwill of the Business. In consideration for the grant of the License,
Liberty II will pay to the Company, on a monthly basis, the fair market value of
the License (the "FMV of the License"). The FMV of the License will be an amount
that is equivalent to the cost charged in comparable trade name licensing
agreements between unrelated parties. In the event the parties cannot agree on
the amount of the FMV of the License within 30 days of the effective date of
this Agreement, the FMV of the License will be determined by a qualified
independent appraiser who is agreed upon by the parties. The determination of
the FMV of the License by the qualified appraiser will be binding on the
parties.

(g) Cost Sharing Payment Due Dates. The parties will be
obligated to pay the other party all amounts due under Section 3 on a monthly
basis, within 30 days of the end of each month. To carry-out the foregoing, the
parties may agree that one of the parties will make a net payment for any
particular month of the net amount due under Section 3.

4. PERIODIC REVIEW. Within 30 days of each annual anniversary of the
effective date of this Agreement, the parties will review the terms and
conditions of Section 3, including but not limited to, the payments made and
benefits derived during the preceding 12 months under the provisions of Section
3, to determine whether any of the terms or conditions of Section 3 should be
adjusted, modified, amended or canceled in order to fairly compensate either
party for its obligations thereunder or to fairly charge either party for the
benefits derived thereunder.

5. NON-EXCLUSIVITY. Nothing in this Agreement shall be construed as
granting the Company any rights in the Business, or in any of Liberty II's
undertakings, activities, businesses or assets, including any right to
participate as a service provider, independent contractor, partner, member,
shareholder, beneficiary, or in any other capacity, in connection with Liberty
II's conduct of its truck rental business or the retail sale of locks, boxes and
packaging materials, or any other related or unrelated activity, at any
locations other than the Facilities. Nothing in this Agreement shall be
construed as granting Liberty II any rights in the Company's undertakings,
activities, businesses or assets, including any right to participate as a
service provider, independent contractor, partner, member, shareholder,
beneficiary, or in any other capacity, in connection with the Company's
self-storage business, or any other related or unrelated activity, at any
locations other than the Facilities.

6. NOT A PARTNERSHIP OR SEPARATE ENTITY. The rights, duties and
obligations of and between the parties created by this Agreement will not
constitute a partnership or an entity separate from the parties for federal
income tax purposes within the meaning of Treas. Reg.ss. 301.7701-1.

7. INSURANCE. Liberty II shall, during the term of this Agreement, at
its own cost and expense, obtain and keep in force liability insurance with
limits of at least $300,000/$500,000 per occurrence with $1,000,000 umbrella
coverage for injuries to or death of persons involved with the Business. Such
policy or policies shall name the Company as an additional insured party.

3
<PAGE> 4

8. EFFECTIVE DATE. This Agreement will be effective as of the date
first set forth above.

9. NO OTHER AGREEMENTS. This Agreement sets forth all of the promises,
agreements, conditions, understandings, warranties and representations be and
between the parties hereto, and there are no promises, agreements, conditions,
understandings, warranties or representations, oral or written, express or
implied, by and between them other than as set forth herein. Any and all prior
agreements by and between the parties hereto are hereby revoked. This Agreement
is, and is intended by the parties to be, an integration of any and all prior
agreements or understandings, oral or written.

10. TERMINATION. This Agreement may be terminated at any time by either
party upon 30 days written notice to the other party.

11. MISCELLANEOUS. This Agreement is for the exclusive benefit of
Liberty II and the Company, and it is not intended to confer any rights on any
other persons or entities. This Agreement will be construed and enforced in
accordance with the domestic substantive laws of the State of Ohio without
giving effect to any choice or conflict of laws provision or rule that would
cause the application of the domestic substantive laws of any other state. This
Agreement cannot be changed orally, and can be changed only by an instrument in
writing signed by the party against whom enforcement of such change is sought.
All agreements, covenants, representations and warranties made in this Agreement
will survive the execution and the Closing Date. This Agreement may not be
assigned by either party without the consent of the other party. Whenever in
this Agreement any of the parties hereto is referred to, such reference will be
deemed to include their successors and assigns, and all covenants, promises and
agreements in this Agreement will bind and inure to the benefit of their
successors and assigns. This Agreement may be executed by any one or more of the
parties in any number of counterparts, each of which will be deemed to be an
original, but all such counterparts will together constitute one and the same
instrument.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.

LIBERTY SELF-STOR, LTD.

By: /s/ Thomas J. Smith
-----------------------------------
Its: Executive Operating Manager

LIBERTY SELF-STOR II, LTD.

By: /s/ Thomas J. Smith
-----------------------------------
Its: Managing Member Designee

<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 450,512
<SECURITIES> 1,390,131
<RECEIVABLES> 55,642
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,971,148
<PP&E> 25,104,683
<DEPRECIATION> 7,643
<TOTAL-ASSETS> 27,148,509
<CURRENT-LIABILITIES> 2,195,097
<BONDS> 18,892,780
0
0
<COMMON> 3,031,618
<OTHER-SE> (1,221,088)
<TOTAL-LIABILITY-AND-EQUITY> 27,148,509
<SALES> 26,984
<TOTAL-REVENUES> 119,661
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 287,110
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,530
<INCOME-PRETAX> (181,979)
<INCOME-TAX> 0
<INCOME-CONTINUING> (181,979)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (181,979)
<EPS-BASIC> (.06)
<EPS-DILUTED> (.06)

</TABLE>