PS PARTNERS IV LTD, 10-K405, 1998-03-30

PS PARTNERS IV LTD
10-K405, 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 0-14475
-------

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

California 95-3931619
- ------------------------------------ -------------------------
(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 (Zip Code)
offices)

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 IV, Ltd. (the "Partnership") is a publicly held limited
partnership formed under the California Uniform Limited Partnership Act.
Commencing in December 1984, 128,000 units of limited partnership interest (the
"Units") were offered to the public in an interstate offering. The offering was
completed in July 1985.

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 40% 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 were the
Partnership's business parks 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.). See Item
13.

PSI's current relationship with the Partnership includes (i) the joint
ownership of 32 of the Partnership's 33 properties (which excludes the
properties 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 54.93% of
the Partnership's limited partnership units, and (iv) PSI is the operator of the
Partnership's mini-warehouse facilities.

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

The Partnership owns interests in 33 properties (excluding the
properties transferred to PSBPLP in January 1997); 32 of such properties are
held in a general partnership comprised of the Partnership and PSI. The
Partnership originally acquired interests in 40 properties. Three of those
properties were sold to the original seller during 1987 and another property was

2
<PAGE>

purchased during 1988. In addition, two properties, with secured mortgage notes,
were foreclosed upon in January 1991 by the lender. 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 326 to 5,231
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
- ---------------------

Through 1996, the Partnership owned and operated three office
buildings, two of which are located in San Antonio, Texas and the other in
Houston, Texas. These properties were 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
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.

3
<PAGE>

The Partnership will terminate on December 31, 2038, unless dissolved
earlier. Under the terms of the general partnership agreement with PSI, PSI has
the right to require the Partnership to sell all of the joint venture properties
(see Item 12(c)). The General Partners have no present intention to seek the
liquidation of the Partnership because they believe that it is not an opportune
time to sell mini-warehouses. Although the General Partners originally
anticipated a liquidation of the Partnership in 1990-1993, since the completion
of the Partnership's offering in 1985, significant changes have taken place in
the financial and real estate markets that must be taken into account in
considering the timing of any proposed sale or financing, including: (i) the
increased construction of mini-warehouses from 1984 to 1988, which has increased
competition, (ii) the general deterioration of the real estate market (resulting
from a variety of factors, including changes in tax laws), which has
significantly affected property values and decreased sales activities and (iii)
the reduced sources of real estate financing.

The Partnership engaged Lawrence R. Nicholson, MAI, a principal with
the firm of Nicholson-Douglas Realty Consultants, Inc. ("NDRC") to perform a
limited investigation and appraisal of the Partnership's property portfolio. In
a letter appraisal report dated May 13, 1996, NDRC indicated that, based on the
assumptions contained in the report, the aggregate market value of the
Partnership's 36 properties (consisting not only of the Partnership's interest
but also including PSI's interest), as of January 31, 1996, was $77,500,000:
$67,500,000 for the 33 mini-warehouses and $10,000,000 for the three low-rise
office buildings). (In January 1997, after the date of the appraisal, the
Partnership transferred its business parks to AOPPLP in exchange for a 7.5%
interest in AOPPLP.) NDRC's report is limited in that NDRC did not inspect the
properties and relied primarily upon the income capitalization approach in
arriving at its opinion. NDRC's aggregate value conclusion represents the 100%
property interests, and although not valued separately, includes both the
interest of the Partnership in the properties, as well as the interest of PSI,
which owns a joint venture interest (ranging from about 33% to 50%) in 35 of the
36 properties. The analytical process that was undertaken in the appraisal
included a review of the properties' unit mix, rental rates and historical
financial statements. Following these reviews, a stabilized level of net
operating income was projected for the properties (an aggregate of $6,968,000
for the 33 mini-warehouses and $1,109,000 for the office buildings). In the case
of the mini-warehouses, value estimates were then made using both a direct
capitalization analysis ($69,900,000) and a discounted cash flow analysis
($66,600,000). In applying the discounted cash flow analysis to the
mini-warehouses, projections of cash flow from each property were developed for
an 11-year period ending in the year 2007. Growth rates for income and expenses
were assumed to be 3.5% per year. NDRC then used a terminal capitalization rate
of 10.5% to capitalize each property's 11th year net operating income into a
residual value at the end of the holding period. The ten yearly cash flows plus
the residual or reversionary proceeds net of sales costs were then discounted to
present worth using a discount rate of 13.25%. In the direct capitalization
analysis, NDRC applied a 10.0% capitalization rate to the mini-warehouses'
stabilized net operating income. These value estimates were then compared to an
estimated value ($66,200,000) using a regression analysis applied to
approximately 300 sales of mini-warehouses to evaluate the reasonableness of the
estimates using the direct capitalization and discounted cash flow analysis.

The office buildings were valued using a direct capitalization analysis
by applying a 10.0% capitalization rate to their stabilized net operating
income. NDRC has prepared other appraisals for the General Partners and their
affiliates and is expected to continue to prepare appraisals for the General
Partners and their affiliates. No environmental investigations were conducted
with respect to the limited investigation of the Partnership's properties.
Accordingly, NDRC's appraisal did not take into account any environmental
cleanup or other costs that might be incurred in connection with a disposition
of the properties. Although there can be no assurance, based on recently
completed environmental investigations (see Item 2), the Partnership is not
aware of any environmental contamination of its facilities material to its
overall business or financial condition. In addition to assuming compliance with
applicable environmental laws, the appraisal also assumed, among other things,
compliance with applicable zoning and use regulations and the existence of
required licenses.

Limited Partners should recognize that appraisals are opinions as of
the date specified, are subject to certain assumptions and the appraised value
of the Partnership's properties may not represent their true worth or realizable
value. There can be no assurance that, if these properties were sold, they would
be sold at the appraised values; the sales price might be higher or lower than
the appraised values.

4
<PAGE>

In February 1997, PSI completed a cash tender offer, which had
commenced in December 1996, pursuant to which PSI acquired a total of 14,787
additional limited partnership units at $300 per Unit.

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 has decreased from 90% in 1996
to 89% in 1997. Realized monthly rents per occupied square foot
increased from $.59 in 1996 to $.62 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.

5
<PAGE>

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.

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 its business parks to PSBPLP in
exchange for a partnership interest.

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

6
<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 120 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 $99,000. 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 but one 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
Scottsdale 44,300 555 07/12/85 50.9%
70th St.
CALIFORNIA
Milpitas 54,700 701 12/24/85 50.0
Pecten Ct.
N. Hollywood 28,900 500 06/07/85 50.0
Raymer St.
N. Hollywood 50,000 829 10/04/85 50.0
Whitsett Ave.

7
<PAGE>

Net Number
Rentable of Date of Ownership
Location Square Feet Spaces Acquisition Percentage
- ---------------------- ----------- ------ ----------- ----------
Pleasanton 71,800 583 12/17/85 50.0%
Santa Rita Rd.
San Diego 50,800 640 07/11/85 50.0
Kearny Mesa Rd.
CONNECTICUT
Hartford 47,000 430 10/17/85 50.0
Roberts St.
INDIANA
Ft. Wayne 58,900 431 07/06/88 100.0
Illinois Rd.
Indianapolis 59,200 5,231 10/31/85 50.0
Elmwood
Indianapolis 59,200 539 10/31/85 50.0
Pike Plaza Rd.
KANSAS
Wichita 44,200 348 10/09/85 49.9
Carey Lane
Wichita 64,200 426 10/09/85 49.9
E. Harry
Wichita 40,800 326 10/09/85 49.9
E. Kellogg
Wichita 47,100 377 10/09/85 49.9
E. MacArthur
Wichita 107,600 814 10/09/85 49.9
S. Rock Road
Wichita 63,300 566 10/09/85 49.9
S. Tyler Rd.
Wichita 55,700 412 10/09/85 49.9
S. Woodlawn
Wichita 53,200 451 10/09/85 49.9
W. Maple
KENTUCKY
Florence 53,800 449 04/30/85 50.0
Tanner Lane
MISSOURI
Joplin 56,200 452 10/09/85 49.9
S. Range Line
NEW HAMPSHIRE
Manchester 61,600 536 05/20/85 50.0
S. Willow II
NORTH CAROLINA
Concord 41,000 454 07/26/85 50.0
Highway 29
OHIO
Cincinnati 53,100 502 04/30/85 50.0
Colerain Ave.
Cincinnati 50,100 464 04/30/85 50.0
E. Kemper
Columbus 62,800 526 10/04/85 50.0
Ambleside Dr.

8
<PAGE>

Net Number
Rentable of Date of Ownership
Location Square Feet Spaces Acquisition Percentage
- ---------------------- ----------- ------ ----------- ----------
Columbus 56,900 456 09/25/85 50.0%
Sinclair Rd.
Perrysburg 62,800 518 10/29/85 50.0
Helen Drive
OREGON
Milwaukie 50,600 494 05/17/85 49.8
McLoughlin II
Portland 35,100 451 10/02/85 50.0
SE 82nd St.
PENNSYLVANIA
Philadelphia 50,500 442 09/12/85 50.0
Tacony St.
TEXAS
Austin 66,700 852 04/18/85 50.0
S. First St.
WASHINGTON
Tacoma 47,300 524 05/23/85 50.0
Phillips Rd. S.W.
WISCONSIN
Madison 71,700 413 09/18/85 50.0
Copps Avenue

The weighted average occupancy level for the mini-warehouse facilities
was 89% in 1997 compared to 90% in 1996. The monthly average realized rent per
square foot for the mini-warehouse facilities was $.62 in 1997 compared to $.59
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 there are no
known environmental remediation requirements at this time. Although there can be
no assurance, the Partnership is not aware of any 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.

9
<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 2,528 record holders of Units.

In February 1997, PSI completed a cash tender offer, which had
commenced in December 1996, pursuant to which PSI acquired a total of 14,787
limited partnership units at $300 per Unit.

The Partnership makes quarterly distributions of all "Cash Available
for Distribution" and will make distributions of "Cash from Sales or
Refinancing". 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.

10
<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 $ 12,801 $ 15,020 $ 14,563 $ 13,972 $ 13,589

Depreciation and amortization 2,232 3,452 3,229 3,109 3,473

Net income (loss) 1,924 932 992 874 303

Limited partners' share 1,707 626 497 587 58

General partners' share 217 306 495 287 245

Limited partners'
per unit data (a)

Net income (loss) $ 13.34 $ 4.89 $ 3.88 $ 4.59 $.45

Cash distributions (b) $ 13.92 $ 20.88 $ 34.10 $ 19.60 $ 17.00

As of December 31,
- ------------------
Cash and cash equivalents $ 1,523 $ 413 $ 464 $ 1,712 $ 1,344

Total assets $ 59,974 $ 59,832 $ 61,270 $ 64,733 $ 66,238

</TABLE>

(a) Limited partners' per unit data is based on the weighted average number
of units outstanding during the year. (128,000 units).

(b) The General Partners distributed, concurrent with the distributions for
the third quarter of 1995, a portion of the Partnership's operating
reserve estimated to be $6.26 per Unit.

11
<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 $1,924,000 in 1997 compared to
$932,000 in 1996, representing an increase of $992,000, or 106%. Excluding the
1996 operations for the Partnership's business park facilities as compared to
the 1997 equity in income of real estate partnership, the increase is primarily
attributable to an increase in the Partnership's mini-warehouse operations,
combined with a decrease in minority interest in income for those properties
held in joint venture with PSI.

Rental income for the Partnership's mini-warehouse operations was
$12,160,000 in 1997 compared to $11,606,000 in 1996, representing an increase of
$554,000, or 5%. The increase in rental income was primarily attributable to
increased rental rates at the mini-warehouse facilities, partially offset by
decreased occupancy rates. The monthly average realized rent per square foot for
the mini-warehouse facilities was $.62 in 1997 compared to $.59 in 1996. The
weighted average occupancy levels at the mini-warehouse facilities decreased
from 90% in 1996 to 89% for 1997. Cost of operations (including management fees)
increased $156,000, or 3%, to $4,720,000 during 1997 from $4,564,000 in 1996.
This increase is primarily attributable to increases in advertising, management
fee, and payroll expenses. Accordingly, for the Partnership's mini-warehouse
operations, property net operating income increased by $398,000, or 6%, from
$7,042,000 in 1996 to $7,440,000 in 1997.

The following table summarizes the Partnership's operating income
(loss), net of depreciation, from its investment in PSBPLP in 1997 compared to
that of the exchanged business park facilities during 1996:

1997 1996
----------- -----------
Equity in earnings of real estate partnership $ 602,000 $ -
Rental income - 3,392,000
Cost of operations - 2,095,000
----------- -----------
Net operating income 602,000 1,297,000
Depreciation - 1,338,000
----------- -----------
Operating income (loss), net of depreciation $ 602,000 $ (41,000)
=========== ===========

The difference in operating income (loss), net of depreciation, in 1997
and 1996 is primarily due to the effect of depreciation and an improvement in
property operations.

Depreciation and amortization attributable to the Partnership's
mini-warehouse facilities increased $118,000 from $2,114,000 in 1996 to
$2,232,000 during 1997. This increase was primarily attributable to the
depreciation of capital expenditures made during 1996 and 1997.

Minority interest in income was $3,782,000 in 1997 compared to
$3,838,000 in 1996, representing a decrease of $56,000. This decrease was
primarily attributable to a decrease in net income (net of depreciation) for 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 $932,000 compared to $992,000
in 1995, representing a decrease of $60,000, or 6%. The decrease was primarily
due to an increase in depreciation expense and a decrease in interest income,
combined with an increase in minority interest in income for those properties
held jointly with PSI, partially offset by improved property operations at the
Partnership's real estate facilities and a decrease in environmental costs.

12
<PAGE>

Property net operating income (rental income less cost of operations
and management fees and excluding depreciation expense) increased approximately
$215,000, or 3%, in 1996 compared to 1995, as rental income increased by
$511,000, or 4%, and cost of operations (including management fees) increased by
$296,000, or 5%.

Rental income for the Partnership's mini-warehouse operations was
$11,606,000 in 1996 compared to $11,159,000 in 1995, representing an increase of
$447,000, or 4%. The increase in rental income was primarily attributable to
increased rental rates at the Partnership's facilities, combined with an
increase in occupancy levels. The monthly average realized rent per square foot
for the mini-warehouse facilities was $.59 in 1996 compared to $.57 in 1995. The
weighted average occupancy levels at the mini-warehouse facilities were 90% and
89% in 1996 and 1995, respectively. Costs of operations (including management
fees) increased $374,000, or 9%, to $4,564,000 in 1996 from $4,190,000 in 1995.
The increase was primarily attributable to increases in property tax,
advertising and repairs and maintenance expenses. Accordingly, for the
Partnership's mini-warehouse operations, property net operating income increased
by $73,000 to $7,042,000 in 1996 from $6,969,000 in 1995.

Rental income for the Partnership's business park operations was
$3,392,000 in 1996 compared to $3,328,000 in 1995, representing an increase of
$64,000, or 2%. The increase in rental income is primarily attributable to
increased rental rates, partially offset by a decrease in occupancy levels. In
September 1996, a tenant procured an early termination of its lease at the
Partnership's San Antonio, Texas facility. Included in rental income for 1996 is
approximately $119,000 related to this lease buyout. Included in rental income
for 1995 is approximately $109,000 related to lease buyouts during 1995 at the
Partnership's Houston, Texas facility. Excluding the effect of these lease
buyouts, the monthly average realized rent per square foot for the business park
facilities was $.87 in 1996 compared to $.85 in 1995. The weighted average
occupancy levels at the business park facilities were 96% in 1996 compared to
97% in 1995. Cost of operations (including management fees) decreased $78,000,
or 4%, to $2,095,000 in 1996 from $2,173,000 in 1995. The decrease is primarily
attributable to decreases in lease commissions, payroll, property tax, and
office expenses. Accordingly, for the Partnership's business park facilities,
property net operating income increased by $142,000, or 12%, to $1,297,000 in
1996 from $1,155,000 in 1995.

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

Depreciation and amortization increased $223,000 to $3,452,000 in 1996
from $3,229,000 in 1995. This increase is principally attributable to
depreciation of capital expenditures made during 1995 and 1996.

Minority interest in income increased by $34,000 in 1996 compared to
1995. This increase was primarily attributable to an increase in operations at
the Partnership's real estate facilities owned jointly with PSI, partially
offset by 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 $50,000 in 1996 compared to none for 1995.

Administrative expenses decreased $36,000 from 1995 to 1996 as a result
of approximately $37,000 in environmental cost in 1995 and none in 1996.

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

The Partnership has adequate sources of cash to finance its operations,
both on a short-term and a long-term basis, primarily by internally generated
cash from property operations combined with cash on-hand at December 31, 1997
totaling $1,523,000.

Cash flows from operating activities ($7,157,000 for the year ended
December 31, 1997) have been sufficient to meet all current obligations of the
Partnership. Total capital improvements were $1,094,000, $1,910,000, and
$998,000 in 1997, 1996, and 1995, respectively. 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. In addition to these budgeted
improvements, the increase in 1996 capital improvements is primarily
attributable to tenant improvements at the Partnership's business park
facilities. During 1998, the Partnership anticipates incurring approximately
$850,000 of capital improvements (including PSI's joint venture share of
$420,000).

13
<PAGE>

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 $2,000,000 $13.92
1996 2,999,000 20.88
1995 4,899,000 34.10
1994 2,816,000 19.60
1993 2,442,000 17.00
1992 2,968,000 20.66
1991 3,607,000 25.11
1990 3,144,000 21.89
1989 3,097,000 21.56
1988 3,769,000 26.23
1987 3,770,000 26.23
1986 3,593,000 25.00

During the fourth quarter of 1990, the Partnership made a special
distribution totaling $1,077,000 ($7.50 per Unit), representing cash reserves
held. The General Partners distributed, concurrently with the distributions for
the fourth quarter of 1991, a portion of the operating reserve estimated at
$9.00 per Unit. The General Partners also distributed, concurrently with the
distributions for the third quarter of 1995, a portion of the operating reserve
estimated at $6.26 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
- -------------------

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.

14
<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 its business parks to PSBPLP in exchange for a
partnership interest in PSBPLP.

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

15
<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

16
<PAGE>

and Chairman and Chief Executive Officer of Del Taco, Inc., an operator and
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. 2-92009, 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.

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 Amount of Percent
of Name and Address of Beneficial of
Class Beneficial Owner Ownership Class
- ------------- --------------------------- ----------------- --------
Units of Public Storage, Inc.
Limited 701 Western Avenue
Partnership Glendale, CA 91201-2394 (1) 70,308 Units (1) 54.93%
Interest

- -------------------------

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

17
<PAGE>

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

In February 1997, PSI completed a cash tender offer, which had
commenced in December 1996, pursuant to which PSI acquired a total of 14,787
limited partnership units at $300 per unit.

(b) The Partnership has no officers and directors.

The General Partners (or their predecessor-in-interest) have
contributed $646,000 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. 2-92009. 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 33 properties (which exclude the
properties transferred to PSBPLP in January 1997); 32 of such 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.

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 $200,000 was paid to PSI with respect to
items 1, 2, and 3 above. The Partnership owns interests in 33 properties (which
exclude the properties transferred to PSBPLP in January 1997); 32 of such
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
$731,000 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

18
<PAGE>

partnership formed to own and operate business parks in which PSI has a
significant interest. Included among the properties transferred were the
Partnership's business parks 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.

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

19
<PAGE>

PS PARTNERS IV, 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. 2-92009
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 PS Partners, Ltd.'s Annual Report on Form 10-K for the year
ended December 31, 1996 and incorporated herein by reference.

10.2 Amended Management Agreement 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 December 26, 1984, 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. Annual
Report on Form 10-K for the year ended December 31, 1984 and
incorporated herein by reference.

27 Financial data schedule. Filed herewith.

<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 IV, LTD.
Dated: March 26, 1998 By: Public Storage, Inc., General Partner

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

By: /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.

<TABLE>
<CAPTION>
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>
21
<PAGE>

PS PARTNERS IV, 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-9

Schedule

III - Real Estate and Accumulated Depreciation F-10 - F-12

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.

22
<PAGE>

Report of Independent Auditors

The Partners
PS Partners IV, Ltd.

We have audited the consolidated balance sheets of PS Partners IV, 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 IV, 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, CA

F-1
<PAGE>

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

1997 1996
---------------------------------------

ASSETS

<S> <C> <C>
Cash and cash equivalents $ 1,523,000 $ 413,000

Rent and other receivables 81,000 136,000

Real estate facilities, at cost:
Land 14,428,000 19,957,000
Buildings and equipment 46,279,000 73,238,000
---------------------------------------
60,707,000 93,195,000

Less accumulated depreciation (22,444,000) (34,144,000)
---------------------------------------
38,263,000 59,051,000

Investment in real estate partnership 20,001,000 -

Other assets 106,000 232,000
---------------------------------------

$ 59,974,000 $ 59,832,000
=======================================

LIABILITIES AND PARTNERS' EQUITY

Accounts payable $ 702,000 $ 1,049,000

Advance payments from renters 389,000 402,000

Minority interest in general partnerships 39,189,000 38,611,000

Partners' equity:
Limited partners' equity, $500 per unit, 128,000
units authorized, issued and outstanding 19,414,000 19,490,000
General partner's equity 280,000 280,000
---------------------------------------

Total partners' equity 19,694,000 19,770,000
---------------------------------------

$ 59,974,000 $ 59,832,000
=======================================

</TABLE>
See accompanying notes.
F-2

<PAGE>

PS PARTNERS IV, 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 $ 12,160,000 $ 14,998,000 $ 14,487,000
Equity in income of real estate partnership 602,000 - -
Interest income 39,000 22,000 76,000
------------------------------------------------------------
12,801,000 15,020,000 14,563,000
------------------------------------------------------------

COSTS AND EXPENSES:

Cost of operations 3,989,000 5,792,000 5,524,000
Management fees 731,000 867,000 839,000
Depreciation and amortization 2,232,000 3,452,000 3,229,000
Administrative 143,000 139,000 175,000
------------------------------------------------------------
7,095,000 10,250,000 9,767,000
------------------------------------------------------------

Income before minority interest 5,706,000 4,770,000 4,796,000

Minority interest in income (3,782,000) (3,838,000) (3,804,000)
------------------------------------------------------------

NET INCOME $ 1,924,000 $ 932,000 $ 992,000
============================================================

Limited partners' share of net income
($13.34, $4.89, and $3.88 per unit in
1997, 1996, and 1995, respectively) $ 1,707,000 $ 626,000 $ 497,000
General partner's share of net income 217,000 306,000 495,000
------------------------------------------------------------
$ 1,924,000 $ 932,000 $ 992,000
============================================================

</TABLE>
See accompanying notes.
F-3

<PAGE>

PS PARTNERS IV, 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 $ 25,404,000 $ 340,000 $ 25,744,000

Net income 497,000 495,000 992,000

Distributions (4,365,000) (534,000) (4,899,000)
------------------------------------------------------------

Balances at December 31, 1995 21,536,000 301,000 21,837,000

Net income 626,000 306,000 932,000

Distributions (2,672,000) (327,000) (2,999,000)
------------------------------------------------------------

Balances at December 31, 1996 19,490,000 280,000 19,770,000

Net income 1,707,000 217,000 1,924,000

Distributions (1,783,000) (217,000) (2,000,000)
------------------------------------------------------------

Balances at December 31, 1997 $ 19,414,000 $ 280,000 $ 19,694,000
============================================================

</TABLE>
See accompanying notes.
F-4

<PAGE>

PS PARTNERS IV, 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 $ 1,924,000 $ 932,000 $ 992,000

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

Depreciation and amortization 2,232,000 3,452,000 3,229,000
Decrease (increase) in rent and other receivables 55,000 (81,000) (9,000)
Decrease (increase) in other assets 126,000 (74,000) (7,000)
(Decrease) increase in accounts payable (347,000) (79,000) 109,000
Decrease in advance payments from renters (13,000) (16,000) (41,000)
Equity in income of real estate partnership (602,000) - -
Minority interest in income 3,782,000 3,838,000 3,804,000
---------------------------------------------------------

Total adjustments 5,233,000 7,040,000 7,085,000
---------------------------------------------------------

Net cash provided by operating activities 7,157,000 7,972,000 8,077,000
---------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:

Distributions from real estate partnership 252,000 - -
Investment in real estate partnership (1,000) - -
Additions to real estate facilities (1,094,000) (1,910,000) (998,000)
---------------------------------------------------------

Net cash used in investing activities (843,000) (1,910,000) (998,000)
---------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:

Distributions to holder of minority interest (3,204,000) (3,114,000) (3,428,000)
Distributions to partners (2,000,000) (2,999,000) (4,899,000)
---------------------------------------------------------

Net cash used in financing activities (5,204,000) (6,113,000) (8,327,000)
---------------------------------------------------------

Net increase (decrease) in cash and cash equivalents 1,110,000 (51,000) (1,248,000)

Cash and cash equivalents at the beginning of the period 413,000 464,000 1,712,000
---------------------------------------------------------

Cash and cash equivalents at the end of the period $ 1,523,000 $ 413,000 $ 464,000
=========================================================
</TABLE>
See accompanying notes.
F-5

<PAGE>

PS PARTNERS IV, 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 $ (19,650,000) $ - $ -

Transfer of real estate facilities for interest in real estate
partnership, net 19,650,000 - -

</TABLE>

See accompanying notes.
F-6

<PAGE>

PS PARTNERS IV, LTD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997

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

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

PS Partners IV, 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 33 properties in 15
states, which exclude 3 properties transferred to PS Business Parks,
L.P. ("PSBPLP") in January 1997. 32 of the properties are owned jointly
through 23 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 49.8% to 50.9%.

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 agreement 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 $68,000 and
$50,000 in 1997 and 1996, respectively. 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 IV, 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 the jointly owned
properties became exercisable during 1992.

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 were the Partnership's business parks in exchange for a
partnership interest in PSBPLP. The general partner of PSBPLP is PS
Business Parks, Inc.

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

Property rents are recognized as earned.

Allocation of Net Income or Loss
--------------------------------

The General Partners' share of net income or loss 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 or loss is
allocated to the limited partners.

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

Per unit data is based on the number of limited partnership
units (128,000) 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 $13.92, $20.88, and $34.10 for 1997, 1996, and 1995, respectively.

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 IV, 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.
Administrative expense in 1995 includes $37,000 in relation to these
assessments. During 1997 and 1996, the Partnership paid approximately
$2,000 and $12,000, respectively, in related costs. Based on the
assessments, the Partnership believes there are no environmental
remediation requirements at this time. 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 financing 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).

In January 1997, the Partnership transferred its business park
facilities 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.

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 (loss) was $4,980,000, $(950,000), and
$585,000 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-9
<PAGE>

PS PARTNERS IV, 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 Improvements Land Improvements Total Depreciation
- ------------------------------------------------------------------------------------------------------------------------------------

Mini-warehouse

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
4/85 Austin/ S. First $ - $ 778,000 $ 1,282,000 $ 221,000 $ 778,000 $ 1,503,000 $ 2,281,000 $ 750,000
4/85 Cincinnati/ E. Kemper - 232,000 1,573,000 232,000 232,000 1,805,000 2,037,000 900,000
4/85 Cincinnati/ Colerain - 253,000 1,717,000 260,000 253,000 1,977,000 2,230,000 993,000
4/85 Florence/ Tanner Lane - 218,000 1,477,000 281,000 218,000 1,758,000 1,976,000 860,000
5/85 Tacoma/ Phillips Rd. - 396,000 1,204,000 182,000 396,000 1,386,000 1,782,000 686,000
5/85 Milwaukie/ Mcloughlin II - 458,000 742,000 275,000 458,000 1,017,000 1,475,000 509,000
7/85 San Diego/ Kearny Mesa Rd - 783,000 1,750,000 308,000 783,000 2,058,000 2,841,000 1,046,000
5/85 Manchester/ S. Willow II - 371,000 2,129,000 (229,000) 371,000 1,900,000 2,271,000 962,000
6/85 N. Hollywood/ Raymer - 967,000 848,000 243,000 967,000 1,091,000 2,058,000 556,000
7/85 Scottsdale/ 70th St - 632,000 1,368,000 194,000 632,000 1,562,000 2,194,000 773,000
7/85 Concord/ Hwy 29 - 150,000 750,000 226,000 150,000 976,000 1,126,000 479,000
10/85 N. Hollywood/ Whitsett - 1,524,000 2,576,000 275,000 1,524,000 2,851,000 4,375,000 1,380,000
10/85 Portland/ SE 82nd St - 354,000 496,000 244,000 354,000 740,000 1,094,000 382,000
9/85 Madison/ Copps Ave. - 450,000 1,150,000 331,000 450,000 1,481,000 1,931,000 728,000
9/85 Columbus/ Sinclair - 307,000 893,000 168,000 307,000 1,061,000 1,368,000 504,000
9/85 Philadelphia/ Tacony St - 118,000 1,782,000 158,000 118,000 1,940,000 2,058,000 951,000
10/85 Perrysburg/ Helen Dr. - 110,000 1,590,000 (137,000) 110,000 1,453,000 1,563,000 699,000
10/85 Columbus/ Ambleside - 124,000 1,526,000 (179,000) 124,000 1,347,000 1,471,000 656,000
10/85 Indianapolis/ Pike Place - 229,000 1,531,000 204,000 229,000 1,735,000 1,964,000 834,000
10/85 Indianapolis/ Beach Grove - 198,000 1,342,000 191,000 198,000 1,533,000 1,731,000 720,000
10/85 Hartford/ Roberts - 219,000 1,481,000 356,000 219,000 1,837,000 2,056,000 849,000
10/85 Wichita/ S. Rock Rd. - 501,000 1,478,000 (19,000) 642,000 1,318,000 1,960,000 639,000
10/85 Wichita/ E. Harry - 313,000 1,050,000 (42,000) 313,000 1,008,000 1,321,000 498,000
10/85 Wichita/ S. Woodlawn - 263,000 905,000 (56,000) 263,000 849,000 1,112,000 403,000
10/85 Wichita/ E. Kellogg - 185,000 658,000 (98,000) 185,000 560,000 745,000 266,000
10/85 Wichita/ S. Tyler - 294,000 1,004,000 47,000 294,000 1,051,000 1,345,000 527,000
10/85 Wichita/ W. Maple - 234,000 805,000 (141,000) 234,000 664,000 898,000 307,000

</TABLE>

F-10
<PAGE>

PS PARTNERS IV, LTD.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>

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

Mini-warehouse

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/85 Wichita/ Carey Lane $ - $ 192,000 $ 674,000 $ (90,000) $ 192,000 $ 584,000 $ 776,000 $ 272,000
10/85 Wichita/ E. Macarthur - 220,000 775,000 (155,000) 220,000 620,000 840,000 297,000
10/85 Joplin/ S. Range Line - 264,000 904,000 (66,000) 264,000 838,000 1,102,000 443,000
12/85 Milpitas - 1,623,000 1,577,000 288,000 1,623,000 1,865,000 3,488,000 882,000
12/85 Pleasanton/ Santa Rita - 1,226,000 2,078,000 313,000 1,226,000 2,391,000 3,617,000 1,112,000
7/88 Fort Wayne - 101,000 1,524,000 (4,000) 101,000 1,520,000 1,621,000 581,000
--------------------------------------------------------------------------------------------------

TOTAL $ - $ 14,287,000 $ 42,639,000 $ 3,781,000 $ 14,428,000 $ 46,279,000 $ 60,707,000 $ 22,444,000
==================================================================================================

</TABLE>
F-11

<PAGE>

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

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

GROSS CARRYING COST RECONCILIATION
<TABLE>
<CAPTION>

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

<S> <C> <C> <C>
Balance at beginning of the period $ 93,195,000 $ 91,285,000 $ 90,287,000

Additions during the period:
Improvements, etc. 1,094,000 1,910,000 998,000

Deductions during the period:
Disposition of real estate (33,582,000) - -
----------------------------------------------------

Balance at the close of the period $ 60,707,000 $ 93,195,000 $ 91,285,000
====================================================

</TABLE>

ACCUMULATED DEPRECIATION RECONCILIATION
<TABLE>
<CAPTION>

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

<S> <C> <C> <C>
Balance at beginning of the period $ 34,144,000 $ 30,692,000 $ 27,463,000

Additions during the period:
Depreciation 2,232,000 3,452,000 3,229,000

Deductions during the period:
Disposition of real estate (13,932,000) - -
----------------------------------------------------

Balance at the close of the period $ 22,444,000 $ 34,144,000 $ 30,692,000
====================================================
</TABLE>

(B) The aggregate cost of real estate for Federal income tax purposes is
$60,672,000.

F-12

<ARTICLE> 5
<CIK> 0000748901
<NAME> PS PARTNERS IV, 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> 1,523,000
<SECURITIES> 0
<RECEIVABLES> 81,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,604,000
<PP&E> 60,707,000
<DEPRECIATION> (22,444,000)
<TOTAL-ASSETS> 59,974,000
<CURRENT-LIABILITIES> 1,091,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 19,694,000
<TOTAL-LIABILITY-AND-EQUITY> 59,974,000
<SALES> 0
<TOTAL-REVENUES> 12,801,000
<CGS> 0
<TOTAL-COSTS> 4,721,000
<OTHER-EXPENSES> 2,374,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,924,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,924,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,924,000
<EPS-PRIMARY> 13.34
<EPS-DILUTED> 13.34

</TABLE>