PS PARTNERS LTD, 10-K, 1998-03-30

PS PARTNERS LTD
10-K, 1998-03-30
LESSORS OF REAL PROPERTY, NEC

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 1997
-----------------

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required]

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

Commission File Number 0-11186
-------

PS PARTNERS, LTD.
------------------------------------------------------
(Exact name of registrant as specified in its charter)

California 95-3729108
- ---------------------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

701 Western Avenue
Glendale, California 91201-2394
- ---------------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:

NONE

Securities registered pursuant to Section 12(g) of the Act:

Units of Limited Partnership Interest
-------------------------------------
(Title of class)

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

Yes X No
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to the
Form 10-K. [X]

- -------------------------------------------------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
NONE

<PAGE>

PART I

ITEM 1. BUSINESS.

General
- -------

PS Partners, Ltd. (the "Partnership") is a publicly held limited
partnership formed under the California Uniform Limited Partnership Act in April
1982. Commencing in September 1982, 66,000 units of limited partnership interest
(the "Units") were offered to the public in an interstate offering. The offering
was completed in January 1983.

The Partnership was formed to invest in and operate existing
self-service facilities offering storage space for personal and business use
(the "mini-warehouses") and to invest up to 30% of the net proceeds of the
offering in and operate existing office and industrial properties. The
Partnership's investments were made through general partnerships with Storage
Equities, Inc., now known as Public Storage, Inc. ("PSI"), a real estate
investment trust ("REIT") organized as a corporation under the laws of
California. For tax administrative efficiency, the original general partnerships
with PSI were consolidated into a single general partnership effective December
31, 1990.

In 1995, there was a series of mergers among Public Storage Management,
Inc. (which was the Partnership's mini-warehouse operator), Public Storage, Inc
and their affiliates (collectively, "PSMI"), culminating in the November 16,
1995 merger (the "PSMI Merger") of PSMI into Storage Equities, Inc. In the PSMI
Merger, Storage Equities, Inc. was renamed Public Storage, Inc. and it acquired
substantially all of PSMI's United States real estate operations and became the
operator of the Partnership's mini-warehouse properties.

The Partnership's general partners (the "General Partners") are PSI and
B. Wayne Hughes ("Hughes"). PSI became a co-general partner in September 1993,
when PSI acquired the interest of PSI Associates, Inc. ("PSA"), an affiliate of
PSMI, relating to PSA's general partner capital contribution in the Partnership.
Hughes has been a general partner of the Partnership since its inception. Hughes
is the chairman of the board and chief executive officer of PSI, and Hughes and
members of his family (the "Hughes Family") are the major shareholders of PSI.
The Partnership is managed, and its investment decisions are made by Hughes and
the executive officers and directors of PSI. The limited partners of the
Partnership have no right to participate in the management or conduct of its
business affairs.

The Partnership's mini-warehouse properties are managed by PSI pursuant
to a Management Agreement. PSI believes that it is the largest operator of
mini-warehouse facilities in the United States.

Through 1996, the Partnership's commercial properties were managed by
Public Storage Commercial Properties Group, Inc. ("PSCPG") pursuant to a
Management Agreement. In January 1997, the Partnership and PSI and other related
partnerships transferred a total of 35 business parks to PS Business Parks, L.P.
("PSBPLP"), formerly known as American Office Park Properties, L.P., an
operating partnership formed to own and operate business parks in which PSI has
a significant interest. Included among the properties transferred was the
Partnership's Signal Hill, California business park in exchange for a
partnership interest in PSBPLP. Until March 17, 1998, the general partner of
PSBPLP was American Office Park Properties, Inc., an affiliate of PSI. On March
17, 1998, American Office Park Properties, Inc. was merged into Public Storage
Properties XI, Inc., which changed its name to PS Business Parks, Inc. ("PSBP").
PSBP is a REIT affiliated with PSI, and is publicly traded on the American Stock
Exchange. As a result of the merger, PSBP became the general partner of PSBPLP
(which changed its name from American Office Park Properties, L.P. to PS
Business Parks, L.P.). Since January 1997, PSBPLP manages the commercial
operations of the Partnership's Webster, Texas property. See Item 13.

PSI's current relationship with the Partnership includes (i) the joint
ownership of the Partnership's 27 properties (which excludes the property
transferred to PSBPLP in January 1997), (ii) PSI is a co-general partner along
with Hughes, who is chairman of the board and chief executive officer of PSI,
(iii) as of December 31, 1997, PSI owned approximately 69.37% of the
Partnership's limited partnership units, (iv) PSI is the operator of the
Partnership's mini-warehouse facilities, and (v) PSI has effective control of
PSBPLP, which manages the Partnership's commercial property.

2
<PAGE>

Investments in Facilities
- -------------------------

The Partnership owns interests in 27 properties (excluding the property
transferred to PSBPLP in January 1997); each of such properties was contributed
to and is held in a general partnership comprised of the Partnership and PSI.
The Partnership purchased its last property in December 1983. Reference is made
to the table in Item 2 for a summary of information about the Partnership's
properties.

The Partnership believes that its operating results have benefited from
favorable industry trends and conditions. Notably, the level of new
mini-warehouse construction has decreased since 1988 while consumer demand has
increased. In addition, in recent years consolidation has occurred in the
fragmented mini-warehouse industry.

Mini-warehouses
- ---------------

Mini-warehouses, which comprise the majority of the Partnership's
investments, are designed to offer accessible storage space for personal and
business use at a relatively low cost. A user rents a fully enclosed space which
is for the user's exclusive use and to which only the user has access on an
unrestricted basis during business hours. On-site operation is the
responsibility of resident managers who are supervised by area managers. Some
mini-warehouses also include rentable uncovered parking areas for vehicle
storage. Leases for mini-warehouse space may be on a long-term or short-term
basis, although typically spaces are rented on a month-to-month basis. Rental
rates vary according to the location of the property and the size of the storage
space.

Users of space in mini-warehouses include both individuals and large
and small businesses. Individuals usually employ this space for storage of,
among other things, furniture, household appliances, personal belongings, motor
vehicles, boats, campers, motorcycles and other household goods. Businesses
normally employ this space for storage of excess inventory, business records,
seasonal goods, equipment and fixtures.

Mini-warehouses in which the Partnership has invested generally consist
of three to seven buildings containing an aggregate of between 147 to 1,141
storage spaces, most of which have between 25 and 400 square feet and an
interior height of approximately 8 to 12 feet.

The Partnership experiences minor seasonal fluctuations in the
occupancy levels of mini-warehouses with occupancies higher in the summer months
than in the winter months. The Partnership believes that these fluctuations
result in part from increased moving activity during the summer.

The Partnership's mini-warehouses are geographically diversified and
are generally located in heavily populated areas and close to concentrations of
apartment complexes, single family residences and commercial developments.
However, there may be circumstances in which it may be appropriate to own a
property in a less populated area, for example, in an area that is highly
visible from a major thoroughfare and close to, although not in, a heavily
populated area. Moreover, in certain population centers, land costs and zoning
restrictions may create a demand for space in nearby less populated areas.

As with most other types of real estate, the conversion of
mini-warehouses to alternative uses in connection with a sale or otherwise would
generally require substantial capital expenditures. However, the Partnership
does not intend to convert its mini-warehouses to other uses.

Commercial Properties
- ---------------------

The Partnership owns and operates a facility, located in Webster/NASA,
Texas, which is a combined mini-warehouse and business park facility. Through
1996, the Partnership owned and operated another facility, a multi-tenant
business park located in Signal Hill, California, which was transferred to
PSBPLP in January 1997 in exchange for a partnership interest in PSBPLP.

Investment Objectives and Polices; Sale or Financing of Investments
- -------------------------------------------------------------------

The Partnership's objectives are to (i) preserve and protect invested
capital, (ii) maximize the potential for appreciation in value of its
properties, (iii) provide Federal income tax deductions so that during the early

3
<PAGE>

years of property operations a portion of cash distributions may be treated as a
return of capital for tax purposes, and therefore, may not represent taxable
income to the limited partners and (iv) provide for cash distributions from
operations. The Partnership will terminate on December 31, 2015 unless dissolved
earlier.

Operating Strategies
- --------------------

The Partnership's mini-warehouses are operated by PSI under the "Public
Storage" name, which the Partnership believes is the most recognized name in the
mini-warehouse industry. The major elements of the Partnership's operating
strategies are as follows:

* Capitalize on Public Storage's name recognition. PSI, together with
its predecessor, has more than 20 years of operating experience in the
mini-warehouse business. PSI has informed the Partnership that it is
the largest mini-warehouse facility operator in the United States in
terms of both number of facilities and rentable space operated. PSI
believes that its marketing and advertising programs improve its
competitive position in the market. PSI's in-house Yellow Pages staff
designs and places advertisements in approximately 700 directories.
Commencing in early 1996, PSI began to experiment with a telephone
reservation system designed to provide added customer service.
Customers calling either PSI's toll-free referral system, (800)
44-STORE, or a mini-warehouse facility are directed to PSI's
reservation system where a trained representative discusses with the
customer space requirements, price and location preferences and also
informs the customer of other products and services provided by PSI.
As of December 31, 1997, the telephone reservation system was
supporting rental activity at all of the Partnership's properties.
PSI's toll-free telephone referral system services approximately
160,000 calls per month from potential customers inquiring as to the
nearest Public Storage mini-warehouse.

* Maintain high occupancy levels and increase realized rents. Subject
to market conditions, the Partnership generally seeks to achieve
average occupancy levels in excess of 90% and to eliminate promotions
prior to increasing rental rates. Average occupancy for the
Partnership's mini-warehouses increased from 89% in 1996 to 90% in
1997. Realized monthly rents per occupied square foot increased from
$.60 in 1996 to $.63 in 1997. The Partnership has increased rental
rates in many markets where it has achieved high occupancy levels and
eliminated or minimized promotions.

* Systems and controls. PSI has an organizational structure and a
property operation system, "CHAMP" (Computerized Help and Management
Program), which links its corporate office with each mini-warehouse.
This enables PSI to obtain daily information from each mini-warehouse
and to achieve efficiencies in operations and maintain control over
its space inventory, rental rates, promotional discounts and
delinquencies. Expense management is achieved through centralized
payroll and accounts payable systems and a comprehensive property tax
appeals department, and PSI has an extensive internal audit program
designed to ensure proper handling of cash collections.

* Professional property operation. In addition to the approximately
150 support personnel at the Public Storage corporate offices, there
are approximately 2,700 on-site personnel who manage the day-to-day
operations of the mini-warehouses in the Public Storage system. These
on-site personnel are supervised by 110 district managers, 15 regional
managers and 3 divisional managers (with an average of 13 years
experience in the mini-warehouse industry) who report to the president
of the mini-warehouse property operator (who has 14 years of
experience with the Public Storage organization). PSI carefully
selects and extensively trains the operational and support personnel
and offers them a progressive career path. See "Mini-warehouse
Property Operator."

Mini-warehouse Property Operator
- --------------------------------

The Partnership's mini-warehouse properties are managed by PSI pursuant
to a Management Agreement.

Under the supervision of the Partnership, PSI coordinates the operation
of the facilities, establishes rental policies and rates, directs marketing
activity and directs the purchase of equipment and supplies, maintenance
activity, and the selection and engagement of all vendors, supplies and
independent contractors.

4
<PAGE>

PSI engages, at the expense of the Partnership, employees for the
operation of the Partnership's facilities, including resident managers,
assistant managers, relief managers, and billing and maintenance personnel. Some
or all of these employees may be employed on a part-time basis and may also be
employed by other persons, partnerships, REITs or other entities owning
facilities operated by PSI.

In the purchasing of services such as advertising (including broadcast
media advertising) and insurance, PSI attempts to achieve economies by combining
the resources of the various facilities that it operates. Facilities operated by
PSI have historically carried comprehensive insurance, including fire,
earthquake, liability and extended coverage.

PSI has developed systems for space inventory, accounting and handling
delinquent accounts, including a computerized network linking PSI operated
facilities. Each project manager is furnished with detailed operating procedures
and typically receives facilities management training from PSI. Form letters
covering a variety of circumstances are also supplied to the project managers. A
record of actions taken by the project managers when delinquencies occur is
maintained.

The Partnership's facilities are typically advertised via signage,
yellow pages, flyers and broadcast media advertising (television and radio) in
geographic areas in which many of the Partnership's facilities are located.
Broadcast media and other advertising costs are charged to the Partnership's
facilities located in geographic areas affected by the advertising. From time to
time, PSI adopts promotional programs, such as temporary rent reductions, in
selected areas or for individual facilities.

For as long as the Management Agreement is in effect, PSI has granted
the Partnership a non-exclusive license to use two PSI service marks and related
designs, including the "Public Storage" name, in conjunction with rental and
operation of facilities managed pursuant to the Management Agreement. Upon
termination of the Management Agreement, the Partnership would no longer have
the right to use the service marks and related designs. The General Partners
believe that the loss of the right to use the service marks and related designs
could have a material adverse effect on the Partnership's business.

The Management Agreement between the Partnership and PSI provides that
the Management Agreement may be terminated without cause upon 60 days written
notice by either party.

Commercial Property Operator
- ----------------------------

Through 1996, the Partnership's commercial properties were managed by
PSCPG, now known as PS Business Parks, Inc., pursuant to a Management Agreement.
In January 1997, the Partnership transferred the Signal Hill, California
business park in exchange for a partnership interest, and PSBPLP became the
manager of the commercial operations of the Partnership's Webster, Texas
property pursuant to the Management Agreement. The Management Agreement between
the Partnership and PSBPLP provides that the Management Agreement may be
terminated (i) without cause upon 60 days written notice by the Partnership and
upon seven years notice by PSBPLP and (ii) at any time by either party for
cause.

Competition
- -----------

Competition in the market areas in which the Partnership operates is
significant and affects the occupancy levels, rental rates and operating
expenses of certain of the Partnership facilities. Competition may be
accelerated by any increase in availability of funds for investment in real
estate. Recent increases in plans for development of mini-warehouses are
expected to further intensify competition among mini-warehouse operators in
certain market areas. In addition to competition from mini-warehouses operated
by PSI, there are three other national firms and numerous regional and local
operators. The Partnership believes that the significant operating and financial
experience of PSI's executive officers and directors and the "Public Storage"
name, should enable the Partnership to continue to compete effectively with
other entities.

Other Business Activities
- -------------------------

A corporation owned by the Hughes Family reinsures policies against
losses to goods stored by tenants in the Partnership's mini-warehouses. The
Partnership believes that the availability of insurance reduces the potential

5
<PAGE>

liability of the Partnership to tenants for losses to their goods from theft or
destruction. This corporation receives the premiums and bears the risks
associated with the insurance.

A corporation, in which PSI had a 95% economic interest and the Hughes
Family has a 5% economic interest, sells locks, boxes and tape to tenants to be
used in securing their spaces and moving their goods. PSI believes that the
availability of locks, boxes and tape for sale promotes the rental of spaces.

Employees
- ---------

There are 87 persons who render services on behalf of the Partnership.
These persons include resident managers, assistant managers, relief managers,
district managers, and administrative personnel. Some of these employees may be
employed on a part-time basis and may also be employed by other persons,
partnerships, REITs or other entities owning facilities operated by PSI or
PSBPLP.

Impact of Year 2000
- -------------------

PSI has completed an initial assessment of its computer systems. The
majority of the computer programs were installed or upgraded over the past few
years and are Year 2000 compliant. Some of the older computer programs utilized
by PSI were written without regard for Year 2000 issues and could cause a system
failure or miscalculations with possible disruption of operations. Each of these
computer programs and systems has been evaluated to be upgraded or replaced as
part of PSI's Year 2000 project.

The cost of the Year 2000 project will be allocated to all entities
that use the PSI computer systems. The cost of the Year 2000 project which is
expected to be allocated to the Partnership is approximately $81,000. The cost
of new software will be capitalized and the cost of maintenance to existing
systems will be expensed as incurred.

The project is expected to be completed by March 31, 1999 which is
prior to any anticipated impact on operating systems. PSI believes that with
modifications to existing software and, in some instances, the conversion to new
software, the Year 2000 issue will not pose significant operational problems.
However, if such modifications are not made, or are not completed timely, the
Year 2000 issue could have a material impact on the operations of the
Partnership.

The costs of the project and the date on which PSI believes it will
complete the Year 2000 modifications are based on management's best estimates,
which were derived utilizing numerous assumptions of future events. There can be
no guarantee that these estimates will be achieved and actual results could
differ materially from those anticipated.

ITEM 2. Properties.
-----------

The following table sets forth information as of December 31, 1997
about properties owned by the Partnership. All of these properties were acquired
jointly with PSI and were contributed to a general partnership comprised of the
Partnership and PSI.

Net Number
Rentable of Date of Ownership
Location Square Feet Spaces Acquisition Percentage
- -------------------- ----------- ------- ----------- ----------
ARIZONA
Tucson 63,400 585 11/02/83 72.5%
N. Romero Rd.

CALIFORNIA
Campbell 52,300 379 11/10/83 50.0
Salmar Ave.
Sacramento 36,900 406 12/30/82 58.7
Folsom
Ventura 51,900 526 06/17/83 68.8
Walker

6
<PAGE>

Net Number
Rentable of Date of Ownership
Location Square Feet Spaces Acquisition Percentage
- -------------------- ----------- ------- ----------- ----------

COLORADO
Aurora 39,400 334 11/18/83 70.0%
Hanover Way
Colorado Springs 26,500 147 05/13/83 59.7
Delta Drive
Colorado Springs 83,000 542 11/02/83 72.5
Edison Ave.
Colorado Springs 51,600 427 11/02/83 72.5
Mount View
Colorado Springs 50,400 478 01/04/83 51.6
Platte Ave.
Thornton 66,900 602 11/02/83 72.5
York St.

CONNECTICUT
Southington 42,600 491 09/08/83 46.5
Spring St.

DELAWARE
Dover 51,400 587 09/20/83 50.0
Jeffric
New Castle 64,900 667 09/20/83 50.0
New Churchmans Rd
Newark 62,600 748 09/20/83 50.0
Bellevue Rd.

FLORIDA
Orlando 56,500 537 10/13/83 70.0
J. Young Parkway
Semoran 82,200 733 01/31/83 50.8
Extra

INDIANA
Ft. Wayne 42,000 447 09/20/83 70.0
Bluffton Rd.
Ft. Wayne 67,600 599 09/20/83 70.0
W. Coliseum
Hobart 81,100 470 08/31/83 70.0
Ridge Rd.

NEW JERSEY
Blackwood 64,100 594 03/29/83 44.2
Peters Lane

NEW YORK
Vailsgate 37,200 354 04/22/83 41.6
Route 94

7
<PAGE>

Net Number
Rentable of Date of Ownership
Location Square Feet Spaces Acquisition Percentage
- -------------------- ----------- ------- ----------- ----------

OKLAHOMA
Oklahoma City 62,900 478 11/02/83 72.5%
Reno Ave.

OREGON
Portland 34,200 367 12/30/82 58.7
Halsey

PENNSYLVANIA
Langhorne 98,800 1,141 09/20/83 50.0
S. Flower Mill
Southhampton 93,000 785 09/13/83 30.0
Jaymor

TEXAS
Webster 75,100 609 09/01/83 60.4
Gulf Freeway
Webster
NASA Rd.
mini-warehouse 97,000 934 11/10/83 70.0
business park 20,700 20 11/10/83 70.0

The weighted average occupancy level for the mini-warehouse facilities
was 90% in 1997 compared to 89% in 1996. The monthly average realized rent per
square foot for the mini-warehouse facilities was $.63 in 1997 compared to $.60
in 1996. The weighted average occupancy level for the Webster, Texas business
park facility remained stable at 93% from 1996 to 1997. The monthly average
realized rent per square foot for the Webster, Texas business park facility was
$.71 in 1997 compared to $.76 in 1996.

Substantially all of the Partnership's facilities were acquired prior
to the time that it was customary to conduct extensive environmental
investigations in connection with the property acquisitions. During the fourth
quarter of 1995, an independent environmental consulting firm completed
environmental assessments on the Partnership's properties to evaluate the
environmental condition of, and potential environmental liabilities of such
properties. Based on the assessments, the Partnership believes that it is
probable that it will incur costs totaling $124,000 after December 31, 1997 for
known environmental remediation requirements. Although there can be no
assurance, the Partnership is not aware of any unaccrued environmental
contamination of its facilities which individually or in the aggregate would be
material to the Partnership's overall business, financial condition, or results
of operations.

ITEM 3. LEGAL PROCEEDINGS.
------------------

No material legal proceeding is pending against the Partnership.

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

No matters were submitted to a vote of security holders during the
fourth quarter of 1997.

8
<PAGE>

PART II

ITEM 5. MARKET FOR THE PARTNERSHIP'S COMMON EQUITY AND
----------------------------------------------
RELATED STOCKHOLDER MATTERS.
----------------------------

The Partnership has no common stock.

The Units are not listed on any national securities exchange or quoted
on the NASDAQ System, and there is no established public trading market for the
Units. Secondary sales activity for the Units has been limited and sporadic. The
General Partners monitor transfers of the Units (a) because the admission of the
transferee as a substitute limited partner requires the consent of the General
Partners under the Partnership's Amended and Restated Agreement of Limited
Partnership, (b) in order to ensure compliance with safe harbor provisions to
avoid treatment as a "publicly traded partnership" for tax purposes and (c)
because PSI has purchased Units. However, the General Partners do not have
information regarding the prices at which all secondary sale transactions in the
Units have been effectuated. Various organizations offer to purchase and sell
limited partnership interests (including securities of the type such as the
Units) in secondary sales transactions. Various publications such as The Stanger
Report summarize and report information (on a monthly, bimonthly or less
frequent basis) regarding secondary sales transactions in limited partnership
interests (including the Units), including the prices at which such secondary
sales transactions are effectuated.

Exclusive of the General Partners' interest in the Partnership, as of
December 31, 1997, there were approximately 956 record holders of Units.

The Partnership makes quarterly distributions of all "Cash Available
for Distribution" and will make distributions of "Cash from Sales or
Refinancings". Cash Available for Distribution is cash flow from all sources
less cash necessary for any obligations or capital improvements or reserves.

Reference is made to Items 6 and 7 hereof for information on the amount
of such distributions.

9
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA.
------------------------

For the Years Ended December 31,
--------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
(In thousands, except per Unit data)

<S> <C> <C> <C> <C> <C>
Revenues $ 11,467 $ 11,258 $ 10,998 $ 10,692 $ 10,113

Depreciation and amortization 2,348 2,401 2,263 2,141 2,028

Interest expense - - - - 196

Net income 3,102 2,600 2,067 2,061 1,904

Limited partners' share 2,754 2,257 1,569 1,806 1,701

General partners' share 348 343 498 255 203

Limited partners'
per unit data (a)

Net income $ 41.73 $ 34.20 $ 23.77 $ 27.36 $ 25.77

Cash distributions (b) $ 43.20 $ 43.20 $ 65.10 $ 32.00 $ 25.00

As of December 31,
- ------------------
Cash and cash
equivalents $ 819 $ 506 $ 511 $ 1,855 $ 831

Total assets $ 33,942 $ 34,941 $ 36,307 $ 39,040 $ 39,452

</TABLE>

(a) Limited Partners' per unit data is based on the weighted average number of
units (66,000) outstanding during the year.

(b) The General Partners distributed, concurrent with the distributions for the
third quarter of 1995, a portion of the operating cash reserve of the
Partnership estimated to be $22.95 per Unit.

10
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS.
--------------------------

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

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996:

The Partnership's net income was $3,102,000 in 1997 compared to
$2,600,000 in 1996, representing an increase of $502,000, or 19%. The increase
was primarily due to an increase in property operations at the Partnership's
real estate facilities, combined with reduced minority interest in income for
those properties held jointly with PSI.

Net property income (rental income less cost of operations and
management fees and excluding depreciation) increased approximately $127,000, or
2%, in 1997 compared to 1996 as rental income increased $26,000 and cost of
operations (including management fees and excluding depreciation expense)
decreased $101,000, or 2%. Net property income in 1997 excludes property
operations for the Signal Hill, California business park facility, which was
transferred to PSBPLP in January 1997. Excluding Signal Hill operations, net
property income in 1997 increased $387,000, or 6%, compared to 1996 as rental
income increased $481,000, or 4%, and cost of operations increased $94,000, or
2%.

Rental income for the Partnership's mini-warehouse operations was
$11,056,000 in 1997 compared to $10,561,000 in 1996, representing an increase of
$495,000, or 5%. The increase in rental income was primarily attributable to
increased rental rates. The monthly average realized rent per square foot for
the mini-warehouse facilities was $.63 in 1997 compared to $.60 in 1996. The
weighted average occupancy levels at the mini-warehouse facilities remained
increased slightly from 89% in 1996 to 90% in 1997. Cost of operations
(including management fees) for the mini-warehouses increased $106,000, or 3%,
to $4,119,000 during 1997 from $4,013,000 in 1996, respectively. The increase in
cost of operations was primarily attributable to an increase in advertising
expense, partially offset by a decrease in repairs and maintenance expenses.
Accordingly, for the Partnership's mini-warehouse operations, property net
operating income increased $389,000, or 6%, from $6,548,000 in 1996 to
$6,937,000 in 1997.

Rental income for the Partnership's business-park operations was
$197,000 in 1997 compared to $666,000 in 1996, representing a decrease of
$469,000, or 70%. Excluding the operations of the Signal Hill property, rental
income decreased $14,000, or 7%, to $197,000 in 1997 from $211,000 in 1996. The
decrease in rental income was primarily attributable to a decrease in rental
rates. The monthly average realized rent per square foot for the Webster
facility was $.71 for 1997 compared to $.76 in 1996. The weighted average
occupancy level at the Partnership's Webster, Texas business park facility
remained stable at 93% during 1997 and 1996. Cost of operations (including
management fees) for the business parks decreased $207,000, or 70%, to $88,000
during 1997 from $295,000 in 1996. Excluding the operations of the Signal Hill
property, cost of operations decreased $12,000, or 12%, to $88,000 in 1997 from
$100,000 during 1996. Accordingly, for the Partnership's business park
facilities, property net operating income decreased by $262,000, or 71%, from
$371,000 during 1996 to $109,000 in 1997. Excluding the operations for the
Signal Hill property, property net operating income decreased by $2,000, or 2%,
from $111,000 in 1996 to $109,000 in 1997.

The following table summarizes the Partnerhsip's operating income, net
of depreciation, from its investment in PSBPLP during 1997 compared to that of
the Signal Hill, California business park facility during 1996:

1997 1996
---------- ----------
Equity in earnings of real estate partnership $ 181,000 $ -
Rental income - 455,000
Cost of operations - 195,000
---------- ----------
Net operating income 181,000 260,000
Depreciation - 169,000
---------- ----------
Operating income, net of depreciation $ 181,000 $ 91,000
========== =========

11
<PAGE>

The difference between the operating income, net of depreciation, in
1997 and 1996 is primarily due to the effect of depreciation and an improvement
in proeprty operations.

Minority interest in income decreased $154,000 to $1,708,000 in 1997
from $1,862,000 in 1996. This decrease was primarily attributable to the
allocation of depreciation and amortization expense (pursuant to the partnership
agreement with respect to those real estate facilities which are jointly owned
with PSI) to PSI of $1,358,000 in 1997 compared to $1,029,000 in 1996, partially
offset by an increase in operations at the Partnership's real estate facilities
owned jointly with PSI.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995:

The Partnership's net income in 1996 was $2,600,000 compared to
$2,067,000 in 1995, representing an increase of $533,000. The increase was
primarily due to improved property operations at the Partnership's real estate
facilities and a reduction in environmental costs, combined with reduced
minority interest in income for those properties held jointly with PSI,
partially offset by an increase in depreciation expense and a decrease in
interest income.

Property net operating income (rental income less cost of operations
and management fees and excluding depreciation expense) increased approximately
$41,000 in 1996 compared to 1995, as rental income increased by $322,000, or 3%,
and cost of operations (including management fees) increased by $281,000, or 7%.

Rental income for the Partnership's mini-warehouse operations was
$10,561,000 in 1996 compared to $10,256,000 in 1995, representing an increase of
$305,000, or 3%. The increase in rental income was primarily attributable to
increased rental rates. The monthly average realized rent per square foot for
the mini-warehouse facilities was $.60 in 1996 compared to $.59 in 1995. The
weighted average occupancy levels at the mini-warehouse facilities remained
stable at 89% for both 1996 and 1995. Costs of operations (including management
fees) for the mini-warehouses increased $278,000, or 7%, to $4,013,000 in 1996
from $3,735,000 in 1995. This increase was primarily attributable to increases
in repairs and maintenance, property tax, and advertising expenses. Accordingly,
for the Partnership's mini-warehouse operations, property net operating income
increased by $27,000 to $6,548,000 in 1996 from $6,521,000 in 1995.

Rental income for the Partnership's business park operations was
$666,000 in 1996 compared to $649,000 in 1995, representing an increase of
$17,000, or 3%. The increase in rental income was primarily attributable to
increased occupancy levels, partially offset by decreased rental rates. The
weighted average occupancy levels at the business park facilities were 93% in
1996 compared to 91% in 1995. The monthly average realized rent per square foot
for the business park facilities was $.64 in 1996 compared to $.65 in 1995. Cost
of operations (including management fees) for the business parks increased
$3,000 to $295,000 in 1996 from $292,000 in 1995. Accordingly, for the
Partnership's business park facilities, property net operating income increased
by $14,000, or 4%, to $371,000 in 1996 from $357,000 in 1995.

Interest income decreased in 1996 over 1995 as a result of a decrease
in average invested cash balances.

Depreciation and amortization increased $138,000 to $2,401,000 in 1996
from $2,263,000 in 1995. This increase is principally attributable to
depreciation of capital expenditures made during 1995 and 1996.

Minority interest in income decreased by $479,000 in 1996 compared to
1995. This decrease was primarily attributed to the allocation of depreciation
and amortization expense (pursuant to the partnership agreement with respect to
those real estate facilities which are jointly owned with PSI) to PSI of
$1,029,000 compared to $465,000 for 1996 and 1995, respectively, partially
offset by an increase in operations at the Partnership's real estate facilities
owned jointly with PSI.

12
<PAGE>

Liquidity and Capital Resources
- -------------------------------

The Partnership has adequate sources of cash to finance its operations,
both on a short-term and long-term basis, primarily by internally generated cash
from property operations combined with cash on-hand at December 31, 1997 of
approximately $819,000.

Cash flows from operating activities ($7,110,000 for the year ended
December 31, 1997) have been sufficient to meet all current obligations of the
Partnership. Total capital improvements were $1,024,000, $996,000 and $803,000
in 1997, 1996 and 1995, respectively. During 1998, the Partnership anticipates
approximately $867,000 of capital improvements (of which $369,000 represents
PSI's joint venture share). During 1995, the Partnership's property manager
commenced a program to enhance the visual appearance of the mini-warehouse
facilities. Such enhancements include new signs, exterior color schemes, and
improvements to the rental offices.

The Partnership expects to continue making quarterly distributions.
Total distributions paid to the General Partners and the limited partners
(including per Unit amounts) for 1997 and prior years were as follows:

Total Per Unit
---------- --------
1997 $3,200,000 $43.20
1996 3,200,000 43.20
1995 4,823,000 65.10
1994 2,371,000 32.00
1993 1,850,000 25.00
1992 1,850,000 25.00
1991 2,522,000 34.04
1990 347,000 4.70
1989 2,223,000 30.00
1988 2,222,000 30.00
1987 2,222,000 30.00
1986 2,407,000 32.50
1985 2,963,000 40.00
1984 2,963,000 40.00
1983 2,407,000 32.50

Distributions were reduced significantly in 1990 in order to pay off
short-term borrowings as well as the prepayment of long-term borrowings. In
1991, the General Partners distributed a portion of the operating cash reserve
of the Partnership. The operating reserve that was distributed was estimated at
$8.10 per unit. During 1992, 1993 and 1994, the distribution level was adjusted
to a level supported by property operations after reduction for funds needed for
capital improvements, debt service and necessary cash reserves. The 1995
distribution includes a portion of the operating cash reserve of the
Partnership, estimated to be $22.95 per Unit. Future distribution levels will be
based upon cash flows available for distributions (cash flows from operations
less capital improvements, distributions to minority interest and necessary cash
reserves).

Impact of Year 2000
- -------------------

13
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
--------------------------------------------

The Partnership's financial statements are included elsewhere herein.
Reference is made to the Index to Consolidated Financial Statements and
Financial Statement Schedules in Item 14(a).

Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
-----------------------------------------------------
None.

15
<PAGE>

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP.
----------------------------------------------------

The Partnership has no directors or executive officers.

The Partnership's General Partners are PSI and B. Wayne Hughes. PSI,
acting through its directors and executive officers, and Mr. Hughes manage and
make investment decisions for the Partnership. The Partnership's mini-warehouse
properties are managed by PSI pursuant to a Management Agreement. Through 1996,
the Partnership's commercial properties were managed by PSCPG, now known as PS
Business Parks, Inc., pursuant to a Management Agreement. In January 1997, the
Partnership transferred the Signal Hill, California business park to PSBPLP in
exchange for a partnership interest in PSBPLP, and PSBPLP became the manager of
the commercial operations of the Partnership's Webster, Texas property pursuant
to the Management Agreement.

The names of all directors and executive officers of PSI, the offices
held by each of them with PSI, and their ages and business experience during the
past five years are as follows:

Name Positions with PSI
- ------------------------- -------------------------------------------------

B. Wayne Hughes Chairman of the Board and Chief Executive Officer
Harvey Lenkin President and Director
B. Wayne Hughes, Jr. Vice President and Director
John Reyes Senior Vice President and Chief Financial Officer
Carl B. Phelps Senior Vice President
Obren B. Gerich Senior Vice President
Marvin M. Lotz Senior Vice President
David Goldberg Senior Vice President and General Counsel
A. Timothy Scott Senior Vice President and Tax Counsel
David P. Singelyn Vice President and Treasurer
Sarah Hass Vice President and Secretary
Robert J. Abernethy Director
Dann V. Angeloff Director
William C. Baker Director
Thomas J. Barrack, Jr. Director
Uri P. Harkham Director

B. Wayne Hughes, age 64, a general partner of the Partnership, has been
a director of PSI since its organization in 1980 and was President and Co-Chief
Executive Officer from 1980 until November 1991 when he became Chairman of the
Board and sole Chief Executive Officer. Mr. Hughes has been active in the real
estate investment field for over 25 years. He is the father of B. Wayne Hughes,
Jr.

Harvey Lenkin, age 61, has been employed by PSI for 20 years and became
President and a director of PSI in November 1991. Mr. Lenkin is a director of
the National Association of Real Estate Investment Trusts (NAREIT).

B. Wayne Hughes, Jr., age 38, became a director of PSI in January 1998.
He has been Vice President - Acquisitions of the Company since 1992. He is the
son of B. Wayne Hughes.

John Reyes, age 37, a certified public accountant, joined PSI in 1990
and was controller of PSI from 1992 until December 1996 when he became Chief
Financial Officer. He became a Vice President of PSI in November 1995 and a
Senior Vice President of PSI in December 1996. From 1983 to 1990, Mr. Reyes was
employed by Ernst & Young.

Carl B. Phelps, age 58, became a Senior Vice President of PSI in
January 1998 with overall responsibility for property acquisition and
development. From June 1991 until joining PSI, he was a partner in the law firm

16
<PAGE>

of Andrews & Kurth, L.L.P., which performed legal services for PSI. From
December 1982 through May 1991, his professional corporation was a partner in
the law firm of Sachs & Phelps, then counsel to PSI.

Obren B. Gerich, age 59, a certified public accountant, has been a Vice
President of PSI since 1980 and became Senior Vice President of PSI in November
1995. He was Chief Financial Officer of PSI until November 1991.

Marvin M. Lotz, age 55, has had overall responsibility for Public
Storage's mini-warehouse operations since 1988. He became a Senior Vice
President of PSI in November 1995. Mr. Lotz was an officer of PSI with
responsibility for property acquisitions from 1983 until 1988.

David Goldberg, age 48, joined PSI's legal staff in June 1991. He
became Senior Vice President and General Counsel of PSI in November 1995. From
December 1982 until May 1991, he was a partner in the law firm of Sachs &
Phelps, then counsel to PSI.

A. Timothy Scott, age 46, became a Senior Vice President and Tax
Counsel of PSI and Vice President and Tax Counsel of the Public Storage REITs in
November 1996. From June 1991 until joining PSI, Mr. Scott practiced tax law as
a shareholder of the law firm of Heller, Ehrman, White & McAuliffe, counsel to
PSI. Prior to June 1991, his professional corporation was a partner in the law
firm of Sachs & Phelps, then counsel to PSI.

David P. Singelyn, age 36, a certified public accountant, has been
employed by PSI since 1989 and became Vice President and Treasurer of PSI in
November 1995. From 1987 to 1989, Mr. Singelyn was Controller of Winchell's
Donut Houses, L.P.

Sarah Hass, age 42, became Secretary of PSI in February 1992. She
became a Vice President of PSI in November 1995. She joined PSI's legal
department in June 1991, rendering services on behalf of PSI. From 1987 until
May 1991, her professional corporation was a partner in the law firm of Sachs &
Phelps, then counsel to PSI, and from April 1986 until June 1987, she was
associated with that firm, practicing in the area of securities law. From
September 1979 until September 1985, Ms. Hass was associated with the law firm
of Rifkind & Sterling, Incorporated.

Robert J. Abernethy, age 58, has been President of American Standard
Development Company and of Self-Storage Management Company, which develop and
operate mini-warehouses, since 1976 and 1977, respectively. Mr. Abernethy has
been a director of PSI since its organization in 1980. He is a member of the
board of directors of Johns Hopkins University and of the Los Angeles County
Metropolitan Transportation Authority and a former member of the board of
directors of the Metropolitan Water District of Southern California.

Dann V. Angeloff, age 62, has been President of the Angeloff Company, a
corporate financial advisory firm, since 1976. The Angeloff Company has
rendered, and is expected to continue to render, financial advisory and
securities brokerage services for PSI. Mr. Angeloff is the general partner of a
limited partnership that owns a mini-warehouse operated by PSI and which secures
a note owned by PSI. Mr. Angeloff has been a director of PSI since its
organization in 1980. He is a director of Compensation Resource Group, Eagle
Lifestyle Nutrition, Inc., Nicholas/Applegate Growth Equity Fund,
Nicholas/Applegate Investment Trust, ReadyPac Produce, Inc. and Royce Medical
Company.

William C. Baker, age 64, became a director of PSI in November 1991.
Since November 1997, Mr. Baker has been Chairman of the Board and Chief
Executive Officer of The Santa Anita Companies, Inc., which operates the Santa
Anita Racetrack and is a wholly-owned subsidiary of Meditrust Operating Company.
From August 1996 until November 1997, he was Chairman of the Board and Chief
Executive Officer of Santa Anita Operating Company and Chairman of the Board of
the Board of Santa Anita Realty Enterprises, Inc., the companies which were
merged with Meditrust in November 1992. From April 1993 through May 1995, Mr.
Baker was President of Red Robin International, Inc., an operator and franchiser
of casual dining restaurants in the United States and Canada. From January 1992
through December 1995, he was Chairman and Chief Executive Officer of Carolina
Restaurant Enterprises, Inc., a franchisee of Red Robin International, Inc.
Since 1991, he has been Chairman of the Board of Coast Newport Properties, a
real estate brokerage company. From 1976 to 1988, he was a principal shareholder
and Chairman and Chief Executive Officer of Del Taco, Inc., an operator and

17
<PAGE>

franchiser of fast food restaurants in California. Mr. Baker is a director of
Callaway Golf Company and Meditrust Operating Company.

Thomas J. Barrack, Jr., age 50, became a director of PSI in February
1998. Mr. Barrack has been the Chairman and Chief Executive Officer of Colony
Capital, Inc. since September 1991. Colony Capital, Inc. is one of the largest
real estate investors in America, having acquired properties in the U.S., Europe
and Asia. Prior to founding Colony Capital, Inc., from 1987 to 1991, Mr. Barrack
was a principal with the Robert M. Bass Group, Inc., the principal investment
vehicle for Robert M. Bass of Fort Worth, Texas. From 1985 to 1987, Mr. Barrack
was President of Oxford Ventures, Inc., a Canadian-based real estate development
company. From 1984 to 1985, he was Senior Vice President at E.F. Hutton
Corporate Finance in New York. Mr. Barrack was appointed by President Ronald
Reagan as Deputy Under Secretary at the U.S. Department of the Interior from
1982 to 1983. Mr. Barrack currently is a director of Continental Airlines, Inc.
and Virgin Entertainment Group, Ltd.

Uri P. Harkham, age 49, became a director of PSI in March 1993. Mr.
Harkham has been the President and Chief Executive Officer of the Jonathan
Martin Fashion Group, which specializes in designing, manufacturing and
marketing women's clothing, since its organization in 1976. Since 1978, Mr.
Harkham has been the Chairman of the Board of Harkham Properties, a real estate
firm specializing in buying and managing fashion warehouses in Los Angeles and
Australia.

Pursuant to Articles 16 and 17 of the Partnership's Amended Certificate
and Agreement of Limited Partnership (the "Partnership Agreement"), a copy of
which is included in the Partnership's prospectus included in the Partnership's
Registration Statement, File No. 2-77224, each of the General Partners continues
to serve until (i) death, insanity, insolvency, bankruptcy or dissolution, (ii)
withdrawal with the consent of the other general partner and a majority vote of
the limited partners, or (iii) removal by a majority vote of the limited
partners.

Each director of PSI serves until he resigns or is removed from office
by PSI, and may resign or be removed from office at any time with or without
cause. Each officer of PSI serves until he resigns or is removed by the board of
directors of PSI. Any such officer may resign or be removed from office at any
time with or without cause.

There have been no events under any bankruptcy act, no criminal
proceedings, and no judgments or injunctions material to the evaluation of the
ability of any director or executive officer of PSI during the past five years.

ITEM 11. EXECUTIVE COMPENSATION.
-----------------------
The Partnership has no subsidiaries, directors or officers. See Item 13
for a description of certain transactions between the Partnership and the
General Partners and their affiliates.

17
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
---------------------------------------------------------------

(a) At December 31, 1997, PSI beneficially owned more than 5% of
the Units of the Partnership:

Title Name and Address Amount of Beneficial Percent
of Class of Beneficial Owner Ownership of Class
- --------------------- ---------------------------- -------------------- ----------
<S> <C> <C> <C>
Units of Limited Public Storage, Inc. 45,785 Units (1) 69.37%
Partnership Interest 701 Western Avenue
Glendale, CA 91201-2394 (1)
</TABLE>

(1) These Units are held of record by SEI Arlington Acquisition Corporation,
a wholly-owned subsidiary of PSI.

The Partnership is not aware of any other beneficial owners of more
than 5% of the Units.

(b) The Partnership has no officers and directors.

The General Partners (or their predecessor-in-interest) have
contributed $333,000 to the capital of the Partnership representing 1%
of the aggregate capital contributions and as a result participate in
the distributions to the limited partners and in the Partnership's
profits and losses in the same proportion that the general partners'
capital contribution bears to the total capital contribution.
Information regarding ownership of the Units by PSI, a General Partner,
is set forth under section (a) above. The directors and executive
officers of PSI, as a group, do not own any Units.

(c) The Partnership knows of no contractual arrangements, the
operation of the terms of which may at a subsequent date result in a
change in control of the Partnership, except for articles 16, 17 and
21.1 of the Partnership's Amended Certificate and Agreement of Limited
Partnership, a copy of which is included in the Partnership's
prospectus included in the Partnership's Registration Statement File
No. 2-77224. Those articles provide, in substance, that the limited
partners shall have the right, by majority vote, to remove a general
partner and that a general partner may designate a successor with the
consent of the other general partner and a majority of the limited
partners.

The Partnership owns interests in 27 properties (which exclude the
property transferred to PSBPLP in January 1997); all of these
properties are held in a general partnership comprised of the
Partnership and PSI.

Under the terms of the partnership agreement relating to the
ownership of the properties, PSI has the right to compel a sale of each
property at any time after seven years from the date of acquisition at
not less than its independently determined fair market value provided
the Partnership receives its share of the net sales proceeds solely in
cash. As of December 31, 1997, PSI has the right to require the
Partnership to sell all of the joint venture properties on these terms.

18
<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
-----------------------------------------------

The Partnership Agreement provides that the General Partners and their
affiliates are entitled to the following compensation:
1. Incentive distributions equal to 10% of Cash Flow from Operations.
2. Provided the limited partners have received distributions equal to
100% of their investment plus a cumulative 8% per year (not
compounded) on their investment (reduced by distributions other
than from Cash Flow from Operations), subordinated incentive
distributions equal to 15% of remaining Cash from Sales or
Refinancings.
3. Provided the limited partners have received distributions equal to
100% of their capital contributions plus a cumulative 6% per year
(not compounded) on their investment (reduced by distributions
other than distributions from Cash Flow from Operations),
brokerage commissions at the lesser of 3% of the sales price of a
property or 50% of a competitive commission.

During 1997, approximately $320,000 was paid to PSI with respect to
items 1, 2, and 3 above. The Partnership owns interests in 27 properties (which
exclude the property transferred to PSBPLP in January 1997); all of these
properties are held in a general partnership comprised of the Partnership and
PSI.

The Partnership has a Management Agreement with PSI pursuant to which
the Partnership pays PSI a fee of 6% of the gross revenues of the mini-warehouse
spaces operated for the Partnership. During 1997, the Partnership paid fees of
$665,000 to PSI pursuant to the Management Agreement.

Through 1996, the Partnership's commercial properties were managed by
PSCPG pursuant to a Management Agreement which provides for the payment of a fee
by the Partnership of 5% of the gross revenues of the commercial space operated
for the Partnership. In January 1997, the Partnership and PSI and other related
partnerships transferred a total of 35 business parks to PSBPLP, an operating
partnership formed to own and operate business parks in which PSI has a
significant interest. Included among the properties transferred was the
Partnership's Signal Hill, California business park in exchange for a
partnership interest in PSBPLP. The general partner of PSBPLP is PS Business
Parks, Inc., a REIT traded on the American Stock Exchange. Since January 1997,
PSBPLP manages the commercial operations of the Partnership's Webster, Texas
property pursuant to the Management Agreement. During 1997, the Partnership paid
$10,000 to PSBPLP pursuant to the Management Agreement.

19
<PAGE>

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
----------------------------------------------------------------

(a) List of Documents filed as part of the Report.

1. Financial Statements: See Index to Consolidated Financial
Statements and Financial Statement Schedules.

2. Financial Statement Schedules: See Index to Consolidated
Financial Statements and Financial Statement Schedules.

3. Exhibits: See Exhibit Index contained herein.

(b) Reports on Form 8-K:

None

20
<PAGE>

PS PARTNERS, LTD.,
INDEX TO EXHIBITS

3.1 Amended Certificate and Agreement of Limited Partnership. Previously filed
with the Securities and Exchange Commission as Exhibit A to the
Partnership's Prospectus included in Registration Statement No. 2-77224 and
incorporated herein by reference.

10.1 Second Amended and Restated Management Agreement dated November 16, 1995,
between the Partnership and Public Storage Management, Inc. Previously
filed with the Securities and Exchange Commission as an exhibit to the
Partnership's Annual Report on Form 10-K for the year ended December 31,
1996 and incorporated herein by reference.

10.2 Amended Management Agreement dated February 21, 1995 between Storage
Equities, Inc. and Public Storage Commercial Properties Group, Inc.
Previously filed with the Securities and Exchange Commission as an exhibit
to the Partnership's Annual Report on Form 10-K for the year ended December
31, 1994 and incorporated herein by reference.

10.3 Participation Agreement dated as of September 14, 1982, among Storage
Equities, Inc., the Partnership, Public Storage, Inc., B. Wayne Hughes and
Kenneth Q. Volk, Jr. Previously filed with the Securities and Exchange
Commission as an exhibit to Storage Equities, Inc.'s Annual Report on Form
8-K dated September 14, 1982 and incorporated herein by reference.

27 Financial data schedule. Filed herewith.

21
<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Partnership has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

PS PARTNERS, LTD.
Dated: March 26, 1998 By: Public Storage, Inc., General Partner

By: /s/ B. Wayne Hughes
-------------------------------------
B. Wayne Hughes, Chairman of the Board

/s/ B. Wayne Hughes
-------------------------------------
B. Wayne Hughes, General Partner

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
Partnership in the capacities and on the dates indicated.

Signature Capacity Date
- ------------------------------------- --------------------------------------------- -----------------
<S> <C> <C>
/s/ B. Wayne Hughes Chairman of the Board and Chief March 26, 1998
- ------------------------------------- Executive Officer of Public Storage, Inc. and
B. Wayne Hughes General Partner (principal executive officer)

/s/ Harvey Lenkin President and Director March 26, 1998
- ------------------------------------- of Public Storage, Inc.
Harvey Lenkin

/s/ B. Wayne Hughes, Jr. Vice President and Director March 26, 1998
- ------------------------------------ of Public Storage, Inc.
B. Wayne Hughes, Jr.

/s/ John Reyes Senior Vice President and Chief Financial Officer March 26, 1998
- ------------------------------------ of Public Storage, Inc. (principal financial
John Reyes officer and principal accounting officer)

/s/ Robert J. Abernethy Director of Public Storage, Inc. March 26, 1998
- ------------------------------------
Robert J. Abernethy

/s/ Dann V. Angeloff Director of Public Storage, Inc. March 26, 1998
- ------------------------------------
Dann V. Angeloff

/s/ William C. Baker Director of Public Storage, Inc. March 26, 1998
- ------------------------------------
William C. Baker

/s/ Uri P. Harkham Director of Public Storage, Inc. March 26, 1998
- ------------------------------------
Uri P. Harkham

</TABLE>

22
<PAGE>

PS PARTNERS, LTD.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES

(Item 14 (a))

Page
References

Report of Independent Auditors F-1

Consolidated Financial Statements and Schedules:

Consolidated Balance Sheets as of December 31, 1997 and 1996 F-2

For the years ended December 31, 1997, 1996 and 1995:
Consolidated Statements of Income F-3

Consolidated Statements of Partners' Equity F-4

Consolidated Statements of Cash Flows F-5 - F-6

Notes to Consolidated Financial Statements F-7 - F-10

Schedule

III- Real Estate and Accumulated Depreciation F-11 - F-13

All other schedules have been omitted since the required information is
not present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the consolidated
financial statements or the notes thereto.

23
<PAGE>

Report of Independent Auditors

The Partners
PS Partners, Ltd.

We have audited the consolidated balance sheets of PS Partners, Ltd. as of
December 31, 1997 and 1996 and the related consolidated statements of income,
partners' equity, and cash flows for each of the three years in the period ended
December 31, 1997. Our audits also included the financial statement schedule
listed in the Index at Item 14(a). These financial statements and schedule are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements and schedule based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of PS
Partners, Ltd. at December 31, 1997 and 1996, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

ERNST & YOUNG LLP

February 23, 1998
Los Angeles, California

F-1
<PAGE>

PS PARTNERS, LTD.
CONSOLIDATED BALANCE SHEETS
December 31, 1997 and 1996

<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
---------------------------------------

ASSETS

<S> <C> <C>
Cash and cash equivalents $ 819,000 $ 506,000

Rent and other receivables 65,000 89,000

Real estate facilities, at cost:
Land 10,660,000 11,855,000
Buildings and equipment 44,834,000 46,862,000
---------------------------------------
55,494,000 58,717,000

Less accumulated depreciation (25,402,000) (24,576,000)
---------------------------------------
30,092,000 34,141,000

Investment in real estate partnership 2,830,000 -

Other assets 136,000 205,000
---------------------------------------

$ 33,942,000 $ 34,941,000
=======================================

LIABILITIES AND PARTNERS' EQUITY

Accounts payable $ 686,000 $ 654,000

Advance payments from renters 374,000 366,000

Minority interest in general partnerships 19,727,000 20,668,000

Partners' equity:
Limited partners' equity, $500 per unit, 66,000
units authorized, issued and outstanding 12,980,000 13,077,000
General partner's equity 175,000 176,000
---------------------------------------

Total partners' equity 13,155,000 13,253,000
---------------------------------------

$ 33,942,000 $ 34,941,000
=======================================
</TABLE>
See accompanying notes.
F-2
<PAGE>

PS PARTNERS, LTD.
CONSOLIDATED STATEMENTS OF INCOME
For the years ended December 31, 1997, 1996, and 1995

<TABLE>
<CAPTION>
1997 1996 1995
-----------------------------------------------------

REVENUE:

<S> <C> <C> <C>
Rental income $ 11,253,000 $ 11,227,000 $ 10,905,000
Equity in income of real estate partnership 181,000 - -
Interest income 33,000 31,000 93,000
-----------------------------------------------------
11,467,000 11,258,000 10,998,000
-----------------------------------------------------

COSTS AND EXPENSES:

Cost of operations 3,532,000 3,640,000 3,378,000
Management fees 675,000 668,000 649,000
Depreciation and amortization 2,348,000 2,401,000 2,263,000
Administrative 102,000 87,000 84,000
Environmental costs - - 216,000
-----------------------------------------------------
6,657,000 6,796,000 6,590,000
-----------------------------------------------------

Income before minority interest 4,810,000 4,462,000 4,408,000

Minority interest in income (1,708,000) (1,862,000) (2,341,000)
-----------------------------------------------------

NET INCOME $ 3,102,000 $ 2,600,000 $ 2,067,000
=====================================================

Limited partners' share of net income
($41.73, $34.20, and $23.77 per unit in
1997, 1996, and 1995, respectively) $ 2,754,000 $ 2,257,000 $ 1,569,000
General partner's share of net income 348,000 343,000 498,000
-----------------------------------------------------
$ 3,102,000 $ 2,600,000 $ 2,067,000
=====================================================
</TABLE>
See accompanying notes.
F-3
<PAGE>

PS PARTNERS, LTD.
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
For the years ended December 31, 1997, 1996, and 1995

<TABLE>
<CAPTION>
Limited General
Partners Partners Total
-------------------------------------------------------

<S> <C> <C> <C>
Balances at December 31, 1994 $ 16,399,000 $ 210,000 $ 16,609,000

Net income 1,569,000 498,000 2,067,000

Distributions (4,297,000) (526,000) (4,823,000)
-------------------------------------------------------

Balances at December 31, 1995 13,671,000 182,000 13,853,000

Net income 2,257,000 343,000 2,600,000

Distributions (2,851,000) (349,000) (3,200,000)
-------------------------------------------------------

Balances at December 31, 1996 13,077,000 176,000 13,253,000

Net income 2,754,000 348,000 3,102,000

Distributions (2,851,000) (349,000) (3,200,000)
-------------------------------------------------------

Balances at December 31, 1997 $ 12,980,000 $ 175,000 $ 13,155,000
=======================================================
</TABLE>
See accompanying notes.
F-4
<PAGE>

PS PARTNERS, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1997, 1996, and 1995

<TABLE>
<CAPTION>
1997 1996 1995
----------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES:

<S> <C> <C> <C>
Net income $ 3,102,000 $ 2,600,000 $ 2,067,000

Adjustments to reconcile net income to net cash
provided by operating activities

Depreciation and amortization 2,348,000 2,401,000 2,263,000
Decrease (increase) in rent and other receivables 24,000 32,000 (64,000)
Decrease (increase) in other assets 69,000 (76,000) (7,000)
Increase (decrease) in accounts payable 32,000 (92,000) 260,000
Increase (decrease) in advance payments from renters 8,000 (25,000) (14,000)
Equity in income of real estate partnership (181,000) - -
Minority interest in income 1,708,000 1,862,000 2,341,000
----------------------------------------------------

Total adjustments 4,008,000 4,102,000 4,779,000
----------------------------------------------------

Net cash provided by operating activities 7,110,000 6,702,000 6,846,000
----------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:

Distributions from real estate partnership 79,000 - -
Investment in real estate partnership (3,000) - -
Additions to real estate facilities (1,024,000) (996,000) (803,000)
----------------------------------------------------

Net cash used in investing activities (948,000) (996,000) (803,000)
----------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:

Distributions to holder of minority interest (2,649,000) (2,511,000) (2,564,000)
Distributions to partners (3,200,000) (3,200,000) (4,823,000)
----------------------------------------------------

Net cash used in financing activities (5,849,000) (5,711,000) (7,387,000)
----------------------------------------------------

Net increase (decrease) in cash and cash equivalents 313,000 (5,000) (1,344,000)

Cash and cash equivalents at the beginning of the period 506,000 511,000 1,855,000
----------------------------------------------------

Cash and cash equivalents at the end of the period $ 819,000 $ 506,000 $ 511,000
====================================================
</TABLE>
See accompanying notes.
F-5
<PAGE>

PS PARTNERS, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1997, 1996, and 1995
(Continued)

<TABLE>
<CAPTION>
1997 1996 1995
---------------------------------------------

Supplemental schedule of noncash investing and financing activities:

<S> <C> <C> <C>
Investment in real estate partnership $ (2,725,000) $ - $ -

Transfer of real estate facilities for interest in real estate
partnership, net 2,725,000 - -

</TABLE>
See accompanying notes.
F-6
<PAGE>

PS PARTNERS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997

1. Summary of Significant Accounting Policies and Partnership Matters
------------------------------------------------------------------

Description of Partnership
--------------------------

PS Partners, Ltd. (the "Partnership") was formed with the proceeds
of an interstate public offering. PSI Associates II, Inc. ("PSA"), an
affiliate of Public Storage Management, Inc., organized the Partnership
along with B. Wayne Hughes ("Hughes"). In September 1993, Storage
Equities, Inc., now known as Public Storage, Inc. ("PSI") acquired the
interest of PSA relating to its general partner capital contribution in
the Partnership and was substituted as a co-general partner in place of
PSA.

In 1995, there was a series of mergers among Public Storage
Management, Inc. (which was the Partnership's mini-warehouse operator),
Public Storage, Inc. and their affiliates (collectively, "PSMI"),
culminating in the November 16, 1995 merger (the "PSMI Merger") of PSMI
into Storage Equities, Inc. In the PSMI Merger, Storage Equities, Inc.
was renamed Public Storage, Inc. and it acquired substantially all of
PSMI's United States real estate operations and became the operator of
the Partnership's mini-warehouse properties.

The Partnership has invested in existing mini-warehouse storage
facilities which offer self-service storage spaces for lease, usually
on a month-to-month basis, to the general public and, to a lesser
extent, in existing business park facilities which offer industrial and
office space for lease.

The Partnership has ownership interests in 27 properties in 13
states, which exclude a property transferred to PS Business Parks, L.P.
("PSBPLP") in January 1997. All of the properties are owned jointly
through 22 general partnerships (the "Joint Ventures") with PSI. For
tax administrative efficiency, the Joint Ventures were subsequently
consolidated into a single general partnership. The Partnership is the
managing general partner of the Joint Ventures, with ownership
interests in the Joint Ventures ranging from 30% to 72.5%.

Basis of Presentation
---------------------

The consolidated financial statements include the accounts of the
Partnership and the Joint Ventures. PSI's ownership interest in the
Joint Ventures is shown as minority interest in general partnerships in
the accompanying consolidated balance sheets. All significant
intercompany balances and transactions have been eliminated.

Minority interest in income represents PSI's share of net income
with respect to the Joint Ventures. Under the terms of the partnership
agreements all depreciation and amortization with respect to each Joint
Venture is allocated solely to the Partnership until the limited
partners recover their initial capital contribution. Thereafter, all
depreciation and amortization is allocated solely to PSI until it
recovers its initial capital contribution. All remaining depreciation
and amortization is allocated to the Partnership and PSI in proportion
to their ownership percentages.

Depreciation and amortization allocated to PSI was $1,358,000 in
1997, $1,029,000 in 1996 and $465,000 in 1995. The allocation of
depreciation and amortization to PSI has the effect of reducing
minority interest in income and has no effect on the reported
depreciation and amortization expense.

Under the terms of the partnership agreements, for property
acquisitions in which PSI issued convertible securities to the sellers
for its interest, PSI's rights to receive cash flow distributions from
the partnerships for any year after the first year of operation are
subordinated to cash distributions to the Partnership equal to a
cumulative annual 7% of its cash investment (not compounded). These
agreements also specify that upon sale or refinancing of a property for
more than its original purchase price, distribution of proceeds to PSI
is subordinated to the return to the Partnership of the amount of its
cash investment and the 7% distribution described above.

F-7
<PAGE>

PS PARTNERS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997

1. Summary of Significant Accounting Policies and Partnership Matters
------------------------------------------------------------------
(continued)
-----------

Basis of Presentation (continued)
---------------------------------

In addition to the above provisions, PSI has the right to compel
the sale of each property in the general partnerships at any time after
seven years from the date of acquisition at not less than its
independently determined fair market value provided the Partnership
receives its share of the net sales proceeds solely in cash. PSI's
right to require the Partnership to sell all of its properties became
exercisable in 1990.

Real Estate Facilities
----------------------

The Partnership depreciates the buildings and equipment on a
straight-line method over estimated useful lives of 25 and 5 years,
respectively. Leasing commissions relating to business park properties
are expensed when incurred.

In 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121 ("Statement 121"),
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of." Statement 121 requires impairment losses to
be recorded on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be
generated by those assets are less than the assets' carrying amount.
Statement 121 also addresses the method of accounting for long-lived
assets that are expected to be disposed. The Partnership adopted
Statement 121 in 1996 and the adoption had no effect.

In January 1997, the Partnership and PSI and other related
partnerships transferred a total of 35 business parks to PSBPLP, an
operating partnership formed to own and operate business parks in which
PSI has a significant interest. Included among the properties
transferred was the Partnership's Signal Hill, California business park
in exchange for a partnership interest in PSBPLP. The general partner
of PSBPLP is PS Business Parks, Inc. Since January 1997, PSBPLP manages
the commercial operations of the Partnership's Webster, Texas Property
pursuant to the Management Agreement.

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

Property rents are recognized as earned.

Allocation of Net Income
------------------------

The General Partners' share of net income consists of an amount
attributable to their 1% capital contribution and an additional
percentage of cash flow (as defined, see Note 3) which relates to the
General Partners' share of cash distributions as set forth in the
Partnership Agreement. All remaining net income is allocated to the
limited partners.

Per Unit Data
-------------

Per unit data is based on the number of limited partnership units
(66,000) outstanding during the year.

Cash Distributions
------------------

The Partnership Agreement provides for quarterly distributions of
cash flow from operations (as defined). Cash distributions per unit
were $43.20 for 1997, $43.20 for 1996 and $65.10 for 1995.

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

For financial statement purposes, the Partnership considers all
highly liquid investments purchased with a maturity of three months or
less to be cash equivalents.

F-8
<PAGE>

PS PARTNERS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997

1. Summary of Significant Accounting Policies and Partnership Matters
------------------------------------------------------------------
(continued)
-----------

Environmental Cost
------------------

Substantially all of the Partnership's facilities were acquired
prior to the time that it was customary to conduct extensive
environmental investigations in connection with the property
acquisitions. During the fourth quarter of 1995, an independent
environmental consulting firm completed environmental assessments on
the Partnership's properties to evaluate the environmental condition
of, and potential environmental liabilities of such properties. Based
on the assessments, the Partnership believes that it is probable that
it will incur costs totaling $124,000 after December 31, 1997 for known
environmental remediation requirements. During 1997, 1996, and 1995,
the Partnership paid $22,000, $33,000, and $37,000, respectively, in
connection with the environmental remediations. Although there can be
no assurance, the Partnership is not aware of any unaccrued
environmental contamination of its facilities which individually or in
the aggregate would be material to the Partnership's overall business,
financial condition, or results of operations.

Use of Estimates
----------------

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

2. General Partners' Equity
------------------------

The General Partners have a 1% interest in the Partnership. In
addition, the General Partners have a 10% interest in cash
distributions attributable to operations, exclusive of distributions
attributable to sales and refinancing proceeds.

Proceeds from sales and refinancings will be distributed entirely
to the limited partners until the limited partners recover their
investment plus a cumulative 8% annual return (not compounded);
thereafter, the General Partners have a 15% interest in remaining
proceeds.

3. Related Party Transactions
--------------------------

The Partnership has a management agreement with PSI whereby PSI
operates the Partnership's mini-warehouse facilities for a fee equal to
6% of the facilities' monthly gross revenue (as defined).

The Partnership's commercial property is managed by PSBPLP
pursuant to a management agreement which provides for a fee equal to 5%
of the facility's gross revenues.

In January 1997, the Partnership transferred its Signal Hill,
California business park facility to PSBPLP in exchange for a
partnership interest in PSBPLP.

PSI has a significant economic interest in PSBPLP and PSBP.

4. Leases
------

The Partnership has invested primarily in existing mini-warehouse
storage facilities which offer self-service storage spaces for lease to
the general public. Leases for such space are usually on a
month-to-month basis.

F-9
<PAGE>

PS PARTNERS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997

5. Taxes Based on Income
---------------------

Taxes based on income are the responsibility of the individual
partners and, accordingly, the Partnership's consolidated financial
statements do not reflect a provision for such taxes.

Taxable net income was $4,470,000, $3,385,000 and $3,415,000 for
the years ended December 31, 1997, 1996 and 1995, respectively. The
difference between taxable income and book income is primarily related
to timing differences in depreciation expense.

F-10
<PAGE>

PS PARTNERS I, LTD.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION

Costs Gross Carrying Amount
Initial Cost subsequent At December 31, 1997
-------------------------- to acquisition -------------------------------------------------
Date Building & Building & Building & Accumulated
Acquired Description Encumbrances Land Improvement Improvement Land Improvements Total Depreciation
- ------------------------------------------------------------------------------------------------------------------------------------

Mini-warehouse

<S> <C> <C> <C> <C> <C> <C> <C> <C>
1/83 Platte $ - $ 409,000 $ 953,000 $ 208,000 $ 409,000 $ 1,161,000 $ 1,570,000 $ 664,000
5/83 Delta Drive - 67,000 481,000 130,000 67,000 611,000 678,000 347,000
12/82 Port/Halsey - 357,000 1,150,000 (461,000) 357,000 689,000 1,046,000 401,000
12/82 Sacto/Folsom - 396,000 329,000 563,000 396,000 892,000 1,288,000 481,000
1/83 Semoran - 442,000 1,882,000 124,000 442,000 2,006,000 2,448,000 1,198,000
3/83 Blackwood - 213,000 1,559,000 136,000 213,000 1,695,000 1,908,000 980,000
10/83 Orlando J. Y. Parkway - 383,000 1,512,000 227,000 383,000 1,739,000 2,122,000 987,000
9/83 Southington - 124,000 1,233,000 234,000 124,000 1,467,000 1,591,000 806,000
4/83 Vailsgate - 103,000 990,000 321,000 103,000 1,311,000 1,414,000 702,000
6/83 Ventura - 658,000 1,734,000 54,000 658,000 1,788,000 2,446,000 1,035,000
9/83 Southhampton - 331,000 1,738,000 472,000 331,000 2,210,000 2,541,000 1,264,000
9/83 Webster/Keystone - 449,000 1,688,000 614,000 449,000 2,302,000 2,751,000 1,253,000
9/83 Dover - 107,000 1,462,000 310,000 107,000 1,772,000 1,879,000 972,000
9/83 Newcastle - 227,000 2,163,000 279,000 227,000 2,442,000 2,669,000 1,394,000
9/83 Newark - 208,000 2,031,000 150,000 208,000 2,181,000 2,389,000 1,232,000
9/83 Langhorne - 263,000 3,549,000 219,000 263,000 3,768,000 4,031,000 2,141,000
8/83 Hobart - 215,000 1,491,000 412,000 215,000 1,903,000 2,118,000 982,000
9/83 Ft. Wayne/W. Coliseum - 160,000 1,395,000 53,000 160,000 1,448,000 1,608,000 821,000
9/83 Ft. Wayne/Bluffton - 88,000 675,000 116,000 88,000 791,000 879,000 435,000
11/83 Aurora - 505,000 758,000 193,000 505,000 951,000 1,456,000 530,000
11/83 Campbell - 1,820,000 1,408,000 (664,000) 1,379,000 1,185,000 2,564,000 633,000
11/83 Col Springs/Ed (Coulter) - 471,000 1,640,000 19,000 471,000 1,659,000 2,130,000 964,000
11/83 Col Springs/Mv (Coulter) - 320,000 1,036,000 115,000 320,000 1,151,000 1,471,000 675,000
11/83 Thorton (Coulter) - 418,000 1,400,000 16,000 418,000 1,416,000 1,834,000 837,000
11/83 Oklahoma City (Coulter) - 454,000 1,030,000 605,000 454,000 1,635,000 2,089,000 945,000
11/83 Tucson (Coulter) - 343,000 778,000 454,000 343,000 1,232,000 1,575,000 667,000

</TABLE>
F-11
<PAGE>

PS PARTNERS I, LTD.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION

Mini-warehouse & business park

<S> <C> <C> <C> <C> <C> <C> <C> <C>
11/83 Webster/Nasa $ - $ 1,570,000 $ 2,457,000 $ 972,000 $ 1,570,000 $ 3,429,000 $ 4,999,000 $ 2,056,000
-------------------------------------------------------------------------------------------------------

TOTAL $ - $ 11,101,000 $ 38,522,000 $ 5,871,000 $ 10,660,000 $ 44,834,000 $ 55,494,000 $ 25,402,000
=======================================================================================================

</TABLE>

F-12
<PAGE>

PS PARTNERS, LTD.
REAL ESTATE RECONCILIATION
SCHEDULE III (CONTINUED)

(A) The following is a reconciliation of cost and related accumulated
depreciation.

GROSS CARRYING COST RECONCILIATION

Years Ended December 31,
--------------------------------------------
1997 1996 1995
--------------------------------------------

Balance at beginning of the period $ 58,717,000 $ 57,721,000 $ 56,918,000

Additions during the period:
Improvements, etc. 1,024,000 996,000 803,000

Deductions during the period:
Disposition of real estate (4,247,000) - -
--------------------------------------------

Balance at the close of the period $ 55,494,000 $ 58,717,000 $ 57,721,000
============================================

ACCUMULATED DEPRECIATION RECONCILIATION

Years Ended December 31,
--------------------------------------------
1997 1996 1995
--------------------------------------------

Balance at beginning of the period $ 24,576,000 $ 22,175,000 $ 19,913,000

Additions during the period:
Depreciation 2,348,000 2,401,000 2,262,000

Deductions during the period:
Disposition of real estate (1,522,000) - -
--------------------------------------------

Balance at the close of the period $ 25,402,000 $ 24,576,000 $ 22,175,000
============================================

(B) The aggregate cost of real estate for Federal income tax purposes is
$55,153,000.

F-13

<ARTICLE> 5
<CIK> 0000702276
<NAME> PS PARTNERS , LTD.
<MULTIPLIER> 1
<CURRENCY> U.S. $

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<CASH> 819,000
<SECURITIES> 0
<RECEIVABLES> 65,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 884,000
<PP&E> 55,494,000
<DEPRECIATION> (25,402,000)
<TOTAL-ASSETS> 33,942,000
<CURRENT-LIABILITIES> 1,060,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 13,155,000
<TOTAL-LIABILITY-AND-EQUITY> 33,942,000
<SALES> 0
<TOTAL-REVENUES> 11,467,000
<CGS> 0
<TOTAL-COSTS> 4,207,000
<OTHER-EXPENSES> 2,450,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,102,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,102,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,102,000
<EPS-PRIMARY> 41.73
<EPS-DILUTED> 41.73

</TABLE>