<PAGE>
[Public Storage Letterhead]
[Date]
Re: Balcor/Colonial Storage Income Fund-86
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Dear Limited Partner:
In a proxy statement dated May __, 1996, the General Partners of
Balcor/Colonial Storage Income Fund-86 (the "Partnership") solicited your
approval of the sale of all the Partnership's properties (the "Properties") to
Storage Trust Properties, L.P. ("Storage Trust") for $67.1 million (the
"Proposed Sale"). We are writing to urge you to VOTE AGAINST THE PROPOSED
SALE./1/
Public Storage, Inc. (the "Company"), a real estate investment trust,
is the largest owner and operator of mini-warehouses in the United States. The
Company's securities are publicly traded on the New York Stock Exchange. We
currently own 20,166.678 (7.8%) of the limited partnership interests (the
"Interests") in the Partnership which we have purchased starting last September
at prices ranging from $200 to $240 per Interest. Also, we are currently
offering to purchase an additional 77,000 Interests at $240 per Interest (the
"Offer") pursuant to an Offer to Purchase dated April 15, 1996, which we have
disseminated to Limited Partners of the Partnership (the "Offer to Purchase").
This letter supplements and should be read in conjunction with the Offer to
Purchase. We have reviewed the Proposed Sale and intend to vote our Interests
against the transaction. We urge you to do likewise.
WE BELIEVE THAT THE PROPERTIES CAN CONTINUE TO BE MANAGED FOR IMPROVED
PERFORMANCE AND THAT NOW IS NOT THE BEST TIME TO SELL THE PROPERTIES.
As the largest owner and operator of mini-warehouse facilities in the
country, the Company has significant experience and understanding in the
operation of and market for mini-warehouses. IN OUR VIEW, NOW IS NOT THE BEST
TIME TO SELL THE PROPERTIES.
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/1/ The Partnership's proxy statement provides detailed information on the
Proposed Sale, as well as other information about the Partnership.
<PAGE>
Limited Partner
May __, 1996
Page 2
Over the last four years, the performance of the Properties has
steadily improved. For example, the Partnership's rental income has increased
from $6.8 million to $8.8 million during the 1991-95 period. Net income has
improved from $2.4 million to $4.3 million during the same period. Despite
recent increases in the development of mini-warehouses, the Company believes
that the financial performance of the Properties should be able to continue to
improve, although perhaps not necessarily at the rate of improvement experienced
in prior years. If such improvements continue, the value of the Properties
should be expected to increase.
We believe a number of advantages should arise from the continued
operation of the Partnership. Limited partners should continue to receive
regular quarterly distributions of net cash flow arising from operations. Based
on its own experience and its belief that market conditions will continue to
improve for mini-warehouses, the Company believes that the level of the
Partnership's distributions to Limited Partners may improve. Furthermore,
continuing the Partnership's operations affords Limited Partners with the
opportunity to participate in any future appreciation of the Properties.
In this regard, the Company is seeking to renew discussions regarding
acquisition of the Partnership's property manager. Although there can there be
no assurance that any such discussions will take place, the Company believes
that both its experience and size provide a reasonable basis in support of our
belief that the Company could improve the operating results of the Properties.
Furthermore, the Company anticipates that within 18 months it will submit a
proposal for liquidation of the Partnership.
WE BELIEVE THAT LIMITED PARTNERS WHO DESIRE LIQUIDITY HAVE A REASONABLE
ALTERNATIVE UNDER OUR OFFER TO PURCHASE
The General Partners have estimated that the Proposed Sale (together
with the distributable cash in the Partnership) would result in a liquidating
distribution to the Limited Partners of $254-257 per Interest, after deducting
professional fees, commissions and dissolution expenses -- BUT ONLY IF THE
PROPOSED SALE IS CONSUMMATED. The Proposed Sale is conditioned on approval by
holders of a majority of the Interests and, as indicated above, we intend to
vote our Interests against the transaction. Accordingly, there is no assurance
that the Proposed Sale will be consummated.
<PAGE>
Limited Partner
May__, 1996
Page 3
For those Limited Partners who desire to liquidate their Interests at
this time, we believe our Offer to Purchase, currently due to expire on May 14,
1996, provides a reasonable alternative to the Proposed Sale and may be the only
opportunity for Limited Partners to liquidate their Interests at this time. The
Company is offering to purchase up to 77,000 Interests (approximately 32.5% of
the Interests exclusive of Interests we already own) at $240 per Interest. It
is our intent to accept for purchase all Interests validly tendered up to 77,000
following the termination of our offer on May 14, 1996. If more than 77,000
Interests are validly tendered, we will accept only 77,000 Interests, with such
Interests purchased pro rata on the basis described in the Offer to Purchase
under the heading "The Offer -- Proration of Interests, Acceptance for Payment
and Payment for Interests." While there obviously can be no assurance, we
believe we will be able to purchase all Interests properly tendered.
<PAGE>
Limited Partner
May__, 1996
Page 4
YOUR VOTE IS IMPORTANT. PLEASE VOTE AGAINST THE PROPOSED
SALE ON THE FORM OF PROXY PROVIDED TO YOU BY THE GENERAL
PARTNERS. PLEASE DO NOT SEND US YOUR PROXY.
We thank you for your consideration and prompt attention to this
matter.
Very truly yours,
Public Storage, Inc.
By:
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Harvey Lenkin, President
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IF YOU HAVE ANY QUESTIONS ABOUT THIS LETTER, THE PROPOSED SALE OR OUR OFFER TO
PURCHASE, PLEASE CALL OUR SOLICITING AGENT, THE WEIL COMPANY, AT (800) 478-2605
OR PUBLIC STORAGE, INC., INVESTOR SERVICES DEPARTMENT AT (800) 421-2856 OR (818)
244-8080.
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NOTE: THIS SOLICITATION IS BEING MADE ON BEHALF OF THE COMPANY AND NOT THE
GENERAL PARTNERS OF THE PARTNERSHIP. THE COST OF THIS SOLICITATION (ESTIMATED
TO BE APPROXIMATELY $10,000) IS BEING BORNE ENTIRELY BY THE COMPANY. IN
ADDITION, REGULAR OFFICERS AND OTHER EMPLOYEES OF THE COMPANY, WITHOUT EXTRA
REMUNERATION, MAY SOLICIT YOUR VOTE BY PERSONAL INTERVIEW, TELEPHONE, TELEGRAPH
OR OTHERWISE. THE OFFER TO PURCHASE DESCRIBES OUR FEES, EXPENSES AND SOLICITING
ARRANGEMENTS WITH REGARD TO THE OFFER. THIS LETTER IS FIRST BEING MAILED TO
LIMITED PARTNERS ON OR ABOUT MAY __, 1996.
