STORAGE USA INC
S-3, 1999-12-16
REAL ESTATE INVESTMENT TRUSTS
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    As filed with the Securities and Exchange Commission on December 16, 1999

                                                           Registration No. 333-
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------
                                    FORM S-3
                             REGISTRATION STATEMENT
                                      Under
                           THE SECURITIES ACT OF 1933
                             -----------------------

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

           TENNESSEE                                              62-1251239
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

                               165 Madison Avenue
                                   Suite 1300
                            Memphis, Tennessee 38103
                                 (901) 252-2000
               (Address, including zip code, and telephone number,
        including area code, of registrant's principal executive offices)

                                John W. McConomy
                  Executive Vice President and General Counsel
                                Storage USA, Inc.
                               165 Madison Avenue,
                                   Suite 1300
                            Memphis, Tennessee 38103
                                 (901) 252-2000
                (Name, address, including zip code, and telephone
               number, including area code, of agent for service)

                                    Copy to:
                              Mr. Randall S. Parks
                                Hunton & Williams
                          Riverfront Plaza, East Tower
                              951 East Byrd Street
                          Richmond, Virginia 23219-4074
                                 (804) 788-8200

Approximate  date of commencement  of proposed sale to the public:  From time to
time after the effective date of this Registration  Statement in light of market
conditions and other factors.

If the only securities  being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box:[ ]

If any of the  securities  being  registered on this form are to be offered on a
delayed or continuous  basis  pursuant to Rule 415 under the  Securities  Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box:[X]

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the  Securities  Act  registration  statement  number of the  earlier  effective
registration statement for the same offering:[ ]

If this Form is a  post-effective  amendment filed pursuant to Rule 462(c) under
the  Securities  Act,  check  the  following  box and  list the  Securities  Act
registration  statement number of the earlier effective  registration  statement
for the same offering:[ ]

If delivery of the  prospectus is expected to be made pursuant to Rule 434 under
the Securities Act, please check the following box:[ ]
<TABLE>
                                 CALCULATION OF REGISTRATION FEE
<CAPTION>
====================================================================================================================
                                                        Proposed Maximum     Proposed Maximum
       Title of Each Class of        Aggregate Amount  Offering Price Per   Aggregate Offering       Amount of
    Securities to be Registered      to be Registered        Unit(1)             Price(1)         Registration Fee
- --------------------------------------------------------------------------------------------------------------------
<S>                                       <C>                <C>                <C>                    <C>
 Common Stock, $.01 par value,            137,145            $28.625            $3,925,776             $1,036
 per share
====================================================================================================================
</TABLE>
(1)  Calculated  pursuant to Rule 457(c) under the  Securities  Act of 1933,  as
amended,  based  upon the  prices  of the  Common  Stock  on the New York  Stock
Exchange on December 15, 1999.
                              --------------------
The Registrant hereby amends this  Registration  Statement on such date or dates
as may be necessary to delay its effective date until the Registrant  shall file
a further amendment which specifically  states that this registration  statement
shall  thereafter  become  effective  in  accordance  with  Section  8(a) of the
Securities Act of 1933, as amended,  or until this registration  statement shall
become effective on such date as the Securities and Exchange Commission,  acting
pursuant to said Section 8(a), may determine.


<PAGE>
Prospectus


                                 137,145 Shares
                                Storage USA, Inc.
                                  Common Stock

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


         Our common stock trades on the New York Stock Exchange under the symbol
"SUS."

         We are the general partner of SUSA  Partnership,  L.P. At various times
from December 1994 through May 1997, SUSA Partnership  issued a total of 137,145
units  of  limited  partnership  interest  to  certain  owners  of  self-storage
facilities  ("Sellers").  The  Sellers  have the  option of  redeeming  all or a
portion of those  partnership  units for cash or shares of our common stock.  If
they  choose to redeem all or a portion of their  partnership  units,  and if we
choose to acquire  those  units in  exchange  for common  stock,  then they will
receive one share of our common stock for each unit  redeemed.  This  prospectus
relates to resales of those shares by the Sellers.

         The shares may be offered and sold by the Sellers or their  transferees
from time to time in open-market or  privately-negotiated  transactions that may
involve underwriters or brokers.

         We will not  receive  any of the  proceeds  from the sale of the shares
covered  by this  prospectus,  and  the  registration  of the  shares  does  not
necessarily mean that any of them will be offered or sold by the Sellers.

         In part so that we can continue to qualify as a "real estate investment
trust" under the Internal  Revenue  Code,  our Charter does not permit anyone to
own more than 9.8% of our  outstanding  common stock.  This limitation and other
limits on who can own our common stock are  described in this  prospectus  under
"Restrictions on Ownership and Transfer."

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

- --------------------------------------------------------------------------------
Neither the  Securities and Exchange  Commission nor any other state  securities
commission  has approved or disapproved  these  securities or determined if this
prospectus is truthful and  complete.  Any  representation  to the contrary is a
crime.
- --------------------------------------------------------------------------------


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

                The date of this Prospectus is _______________ .

<PAGE>
                                TABLE OF CONTENTS

WHERE YOU CAN FIND MORE INFORMATION........1
A WARNING ABOUT FORWARD-LOOKING STATEMENTS.1
STORAGE USA, INC...........................2
DESCRIPTION OF COMMON STOCK................2
RESTRICTIONS ON OWNERSHIP AND TRANSFER.....3
FEDERAL INCOME TAX CONSEQUENCES OF
         STORAGE USA'S STATUS AS A REIT....4
USE OF PROCEEDS...........................26
THE SELLING SHAREHOLDERS..................26
PLAN OF DISTRIBUTION......................26
LEGAL OPINIONS............................27
EXPERTS...................................27


<PAGE>

                                   WHERE YOU CAN FIND MORE INFORMATION

         We file annual,  quarterly and special  reports,  proxy  statements and
other  information  with the SEC.  You may read and copy any document we file at
the SEC's public  reference  rooms in  Washington,  D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public  reference  rooms. Our SEC filings are also available on the SEC's
Website at "http://www.sec.gov."

         The SEC allows us to "incorporate by reference"  information from other
documents  that we file with them,  which means that we can  disclose  important
information by referring to those  documents.  The  information  incorporated by
reference is considered to be part of this  prospectus,  and information that we
file  later  with  the  SEC  will   automatically   update  and  supersede  this
information.  We  incorporate  by reference the  documents  listed below and any
future filings we make with the SEC under Sections 13(a),  13(c), 14 or 15(d) of
the Securities  Exchange Act of 1934 prior to the sale of all the shares covered
by this prospectus:

        o       Annual Report on Form 10-K for the year ended December 31, 1998;

        o       Quarterly  Reports on Form 10-Q for the three months ended March
                31, 1999, the six months ended June 30, 1999 and the nine months
                ended September 30, 1999;

        o       Current  Report on Form 8-K,  filed with the SEC on  December 1,
                1999;

        o       Current Report on Form 8-K/A,  filed with the SEC on December 9,
                1999; and

        o       The   description   of  the  common   stock   contained  in  our
                Registration  Statement on Form 8-A, filed with the SEC on March
                15, 1994.

         You may  request a copy of these  filings,  at no cost,  by  writing or
telephoning:

                                Storage USA, Inc.
                                165 Madison Avenue
                                Suite 1300
                                Memphis, Tennessee  38101
                                Attention:  Secretary
                                Telephone:  901/252-2000

         You should rely only on the  information  incorporated  by reference or
provided in this  prospectus or any  supplement.  We have not authorized  anyone
else to provide you with  different  information.  The Sellers  will not make an
offer of these shares in any state where the offer is not permitted.  You should
not assume that the information in this prospectus or any supplement is accurate
as of any date other than the date on the front of those documents.

                   A WARNING ABOUT FORWARD-LOOKING STATEMENTS

         This  prospectus,  and the documents  incorporated  by  reference,  may
contain  "forward-looking"   statements.  These  forwarding  looking  statements
usually include words like "believes,"  "anticipates" and "expects" and describe



<PAGE>

our expectations for the future. Of course, these expectations may not be met in
important ways for a variety of reasons.  We have described these reasons in our
most recent Annual Report on Form 10-K under the heading "Risk  Factors" and the
other reports we file with the SEC, and you should review them before you decide
to buy our stock. We are not required to update any  forward-looking  statements
we make and we may not.

                                STORAGE USA, INC.

         Storage  USA,  Inc.  is  a  self-managed,   self-advised   real  estate
investment   trust  ("REIT").   We  manage,   acquire,   develop  and  franchise
self-storage  facilities.  We do business through SUSA Partnership,  L.P. ("SUSA
Partnership"),  of which we are the sole general  partner and in which we own an
approximately 88.376%  partnership   interest  as  of  November  30,  1999.  Our
self-storage  facilities  operate under the Storage USA name and offer low-cost,
easily  accessible  and enclosed  storage  space for personal and business  use,
primarily on a  month-to-month  basis.  All of our facilities  are fenced,  have
locked  gates,  are  lighted  at night and have  computer-controlled  gates that
permit certain tenants to access their storage units 24 hours a day or are being
upgraded to those standards.

         We are a Tennessee  corporation.  Our executive  offices are located at
165 Madison Avenue, Memphis,  Tennessee 38103, and our telephone number is (901)
252-2000.

                           DESCRIPTION OF COMMON STOCK

         We are authorized to issue 150,000,000 shares of common stock, $.01 par
value, and 5,000,000  shares of preferred stock,  $.01 par value. As of November
30, 1999, there were 28,055,123 shares of common stock outstanding. No shares of
preferred stock were outstanding. The following is only a summary of some of the
rights of  stockholders  that might be important to you. You should refer to our
Charter and By-laws for a complete  statement  of your rights as a  shareholder.
Both the  Charter  and the  By-laws  are filed with the SEC as  exhibits  to the
registration statement of which this prospectus is a part.

Common Stock

         As a holder  of  common  stock  you will have one vote per share on all
matters voted on by stockholders,  including  elections of directors.  Except as
otherwise  required by law or provided in any resolution adopted by the Board of
Directors with respect to any series of preferred stock,  only holders of common
stock have voting rights.  The Charter does not provide for cumulative voting in
the election of directors or for preemptive  rights to acquire new shares issued
by Storage  USA.  Holders of common  stock will  receive  dividends if the Board
declares them out of available funds.

         The Transfer Agent for the common stock is First Union National Bank of
North Carolina,  Charlotte,  North  Carolina.  The common stock is traded on the
NYSE under the symbol "SUS."



                                       2
<PAGE>

Preferred Stock

         Under  the  Charter,  the Board of  Directors  is  authorized,  without
further  stockholder action, to issue up to 5,000,000 shares of preferred stock.
The Board may issue  preferred  stock in  series,  with  different  preferences,
conversion or other  rights,  voting  powers,  restrictions,  limitations  as to
dividends, qualifications or other provisions.

         The Board has designated  650,000  shares of preferred  stock as 8 7/8%
Series A Cumulative  Redeemable  Preferred  Stock ("Series A Preferred  Stock").
Series A Preferred  Stock is issuable in certain  circumstances  in exchange for
units of 8 7/8% Series A Cumulative Redeemable Preferred partnership interest in
SUSA Partnership,  which have terms essentially identical to those of the Series
A Preferred  Stock. If issued,  the Series A Preferred Stock will be entitled to
receive  cumulative  preferential  dividends  at the rate of $8.78 per share per
year  and  will  have a  liquidation  preference  of $100  per  share.  Series A
Preferred  Stock  will be  redeemable  at the option of  Storage  USA  beginning
November  1, 2003 at a  redemption  price of $100 per share,  plus  accrued  but
unpaid  dividends.  The Series A  Preferred  Stock has voting  rights  only with
respect to certain matters that would adversely affect its rights.

 .                    RESTRICTIONS ON OWNERSHIP AND TRANSFER

         The Charter provides that, subject to certain  exceptions  specified in
the  Charter,  no  stockholder  may own,  or be  deemed  to own by virtue of the
attribution provisions of Internal Revenue Code of 1986 as amended (the "Code"),
more  than  9.8%  of the  outstanding  shares  of  common  stock  or 9.8% of the
outstanding   shares  of  any  series  of   preferred   stock  (the   "Ownership
Limitation").  Pursuant to a Strategic Alliance Agreement, dated as of March 19,
1996, as amended,  among Storage USA,  Security Capital U.S. Realty and Security
Capital Holdings S.A.  (together with Security  Capital U.S.  Realty,  "Security
Capital"),  Security  Capital and its  affiliates may  beneficially  own, in the
aggregate, up to 42.5% of the common stock outstanding (the "Special Stockholder
Limit").  At January 31, 1999,  Security  Capital  held  11,765,654  shares,  or
approximately  42.22% of the common stock outstanding.  The Ownership Limitation
prevents any non-U.S.  holder (other than Security  Capital and its  affiliates)
from acquiring  additional shares of Storage USA's capital stock if, as a result
of such  acquisition,  non-U.S.  persons  would own 50% or more of Storage USA's
capital  stock  (determined  assuming  that  Security  Capital  owns the maximum
percentage  of Storage USA's capital stock that it is permitted to own under the
Special Stockholder Limit).

         The Charter provides that if any holder of capital stock of Storage USA
purports  to  transfer  shares to a person  or there is a change in the  capital
structure  of Storage USA,  and either the  purported  transfer or the change in
capital  structure  would result in Storage USA failing to qualify as a REIT, or
such transfer or change in capital  structure would cause the transferee to hold
shares in excess of the applicable ownership limit, then the capital stock being
transferred (or in the case of an event other than a transfer, the capital stock
beneficially  owned)  that  would  cause  one or  more  of the  restrictions  on
ownership or transfer to be violated  shall be  automatically  transferred  to a
trust for the benefit of a  designated  charitable  beneficiary.  The  purported
transferee  of such  shares  shall have no right to receive  dividends  or other
distributions  with  respect to such shares and shall have no right to vote such
shares. Any dividends or other  distributions paid to such purported  transferee
prior to the discovery by Storage USA that the shares have been transferred to a
trust  shall be paid upon  demand to the trustee of the trust for the benefit of
the  charitable  beneficiary.  The  trustee of the trust will have all rights to
dividends  with respect to shares of capital  stock held in trust,  which rights
will be exercised for the exclusive benefit of the charitable  beneficiary.  Any


                                       3
<PAGE>

dividends  or  distributions  paid over to the trustee will be held in trust for
the  charitable  beneficiary.  The trustee shall  designate a transferee of such
stock so long as the ownership of such shares of stock by the  transferee  would
not violate the  restrictions  on ownership  or transfer.  Upon the sale of such
shares,  the purported  transferee  shall receive the lesser of (A)(i) the price
per share such purported  transferee paid for the capital stock in the purported
transfer  that resulted in the transfer of shares of capital stock to the trust,
or (ii) if the  transfer or other event that  resulted in the transfer of shares
of  capital  stock to the trust  was not a  transaction  in which the  purported
record  transferee  gave full value for such shares,  a price per share equal to
the  market  price on the date of the  purported  transfer  or other  event that
resulted in the transfer of the shares to the trust, and (B) the price per share
received by the trustee from the sale or other disposition of the shares held in
the trust.

         The  Board of  Directors  may  grant an  exemption  from the  Ownership
Limitation to any person so requesting,  so long as (A) the Board has determined
that such  exemption  will not result in Storage USA being "closely held" within
the meaning of the federal income tax laws, and (B) such person  provides to the
Board such representations and undertakings as the Board may require.

         In addition, the Charter restricts certain transfers of common stock to
persons who are not U.S. citizens, partnerships or corporations. Any transfer to
any of these  non-U.S.  persons is void if it would  result in non-U.S.  persons
holding 50% or more of the fair market  value of Storage  USA's  capital  stock.
Security  Capital  is  treated  as  a  non-U.S.  person  for  purposes  of  this
restriction.

                       FEDERAL INCOME TAX CONSEQUENCES OF
                         STORAGE USA'S STATUS AS A REIT

         This section  summarizes  the federal  income tax issues that you, as a
stockholder,  may consider relevant.  Because this section is a summary, it does
not  address all of the tax issues that may be  important  to you. In  addition,
this  section  does not address the tax issues that may be  important to certain
types of  stockholders  that are subject to special  treatment under the federal
income tax laws, such as insurance companies,  tax-exempt  organizations (except
to the extent  discussed in  "--Taxation  of  Tax-Exempt  Stockholders"  below),
financial institutions or broker-dealers,  and non-U.S.  individuals and foreign
corporations  (except  to  the  extent  discussed  in  "--Taxation  of  Non-U.S.
Stockholders" below).

         The statements in this section are based on the current  federal income
tax laws governing  qualification as a REIT. We cannot assure you that new laws,
interpretations  thereof,  or  court  decisions,  any of which  may take  effect
retroactively, will not cause any statement in this section to be inaccurate.



                                       4
<PAGE>

- --------------------------------------------------------------------------------
         We urge you to consult your own tax advisor  regarding the specific tax
consequences  to you of  investing  in the  common  stock and of  Storage  USA's
election to be taxed as a REIT.  Specifically,  you should  consult your own tax
advisor regarding the federal, state, local, foreign, and other tax consequences
of such investment and election,  and regarding  potential changes in applicable
tax laws.
- --------------------------------------------------------------------------------

                             Taxation of Storage USA

         Storage USA elected to be taxed as a REIT under the federal  income tax
laws  commencing  with its taxable year ended  December  31,  1994.  Storage USA
believes  that it has  operated in a manner  intended to qualify as a REIT since
its election to be a REIT and it intends to continue to so operate. This section
discusses the laws  governing the federal income tax treatment of a REIT and its
stockholders. These laws are highly technical and complex.

         Storage USA's qualification as a REIT depends on its ability to meet on
a continuing basis  qualification tests set forth in the federal tax laws. Those
qualification tests involve the percentage of income that Storage USA earns from
specified  sources,  the  percentage  of its assets that fall  within  specified
categories,  the  diversity of its share  ownership,  and the  percentage of its
earnings that it distributes.  We describe the REIT qualification  tests in more
detail  below.  For a  discussion  of the tax  treatment  of Storage USA and its
stockholders  if  Storage  USA fails to  qualify as a REIT,  see  "--Failure  to
Qualify."

         If Storage USA qualifies as a REIT, it generally will not be subject to
federal   income  tax  on  the  taxable   income  that  it  distributes  to  its
stockholders.  The benefit of that tax  treatment  is that it avoids the "double
taxation,"  or taxation  at both the  corporate  and  stockholder  levels,  that
generally results from owning stock in a corporation.  However, Storage USA will
be subject to federal tax in the following circumstances:

o      Storage USA will pay federal income tax on taxable income,  including net
       capital gain, that it does not distribute to its stockholders  during, or
       within a specified  time period  after,  the  calendar  year in which the
       income is earned.

o      Storage USA may be subject to the "alternative  minimum tax" on any items
       of tax  preference  that  it  does  not  distribute  or  allocate  to its
       stockholders.

o      Storage USA will pay income tax at the highest  corporate rate on (1) net
       income from the sale or other  disposition of property  acquired  through
       foreclosure  ("foreclosure property") that it holds primarily for sale to
       customers in the ordinary course of business and (2) other non-qualifying
       income from foreclosure property.

o      Storage  USA  will  pay a 100%  tax on net  income  from  sales  or other
       dispositions of property,  other than foreclosure property, that it holds
       primarily for sale to customers in the ordinary course of business.

o      If Storage  USA fails to  satisfy  the 75% gross  income  test or the 95%
       gross  income  test,  as  described  below  under   "--Requirements   for
       Qualification--Income  Tests," and nonetheless  continues to qualify as a
       REIT because it meets other  requirements,  it will pay a 100% tax on (1)
       the gross income  attributable  to the greater of the amounts by which it
       fails the 75% and 95% gross income  tests,  multiplied  by (2) a fraction
       intended to reflect its profitability.



                                       5
<PAGE>

o      If Storage USA fails to  distribute  during a calendar  year at least the
       sum of (1) 85% of its REIT ordinary  income for such year, (2) 95% of its
       REIT  capital  gain net income for such year,  and (3) any  undistributed
       taxable  income  from prior  periods,  it will pay a 4% excise tax on the
       excess  of  such  required  distribution  over  the  amount  it  actually
       distributed.

o      Storage  USA may elect to retain and pay income tax on its net  long-term
       capital gain.

o      If Storage USA acquires any asset from a C corporation,  or a corporation
       generally  subject  to full  corporate-level  tax,  in a merger  or other
       transaction  in which it acquires a basis in the asset that is determined
       by reference to the C corporation's basis in the asset, or another asset,
       it will pay tax at the highest  regular  corporate rate  applicable if it
       recognizes  gain on the sale or  disposition  of such  asset  during  the
       10-year period after it acquires such asset.  The amount of gain on which
       it  will  pay  tax is the  lesser  of (1)  the  amount  of  gain  that it
       recognizes at the time of the sale or  disposition  and (2) the amount of
       gain that it would have  recognized  if it had sold the asset at the time
       it acquired the asset.  The rule  described in this  paragraph will apply
       assuming  that Storage USA makes an election  under IRS Notice 88-19 upon
       its acquisition of an asset from a C corporation.

       Requirements for Qualification

         A REIT is a corporation, trust, or association that meets the following
requirements:

       1.     it is managed by one or more trustees or directors;

       2.     its beneficial  ownership is evidenced by transferable  shares, or
              by transferable certificates of beneficial interest;

       3.     it would be taxable as a  domestic  corporation,  but for the REIT
              provisions of the federal income tax laws;

       4.     it is neither a financial  institution  nor an  insurance  company
              subject to special provisions of the federal income tax laws;

       5.     at least  100  persons  are  beneficial  owners  of its  shares or
              ownership certificates;

       6.     not more than 50% in value of its outstanding  shares or ownership
              certificates  is owned,  directly or indirectly,  by five or fewer
              individuals,  as defined in the federal income tax laws to include
              certain entities, during the last half of any taxable year;

       7.     it elects to be a REIT,  or has made such  election for a previous
              taxable  year,  and  satisfies  all  relevant   filing  and  other
              administrative  requirements  established by the Internal  Revenue
              Service that must be met to elect and maintain REIT status;



                                       6
<PAGE>

       8.     it uses a  calendar  year for  federal  income  tax  purposes  and
              complies with the recordkeeping requirements of the federal income
              tax laws; and

       9.     it meets  certain  other  qualification  tests,  described  below,
              regarding the nature of its income and assets.

         Storage  USA must  meet  requirements  1 through  4 during  its  entire
taxable year and must meet  requirement  5 during at least 335 days of a taxable
year of 12 months, or during a proportionate part of a taxable year of less than
12 months.  If Storage USA complies with all the  requirements  for ascertaining
the ownership of its  outstanding  shares in a taxable year and has no reason to
know  that it  violated  requirement  6, it will  be  deemed  to have  satisfied
requirement 6 for such taxable year. For purposes of determining share ownership
under  requirement  6,  an  "individual"   generally   includes  a  supplemental
unemployment compensation benefits plan, a private foundation, or a portion of a
trust  permanently  set aside or used  exclusively for charitable  purposes.  An
"individual,"  however,  generally  does not include a trust that is a qualified
employee  pension or profit sharing trust under the federal income tax laws, and
beneficiaries  of such a trust will be treated as holding  shares of Storage USA
in  proportion  to their  actuarial  interests  in the  trust  for  purposes  of
requirement 6.

         Storage USA believes  that it has issued  sufficient  common stock with
sufficient  diversity  of ownership  to satisfy  requirements  5 and 6 set forth
above. In addition,  Storage USA's Charter  restricts the ownership and transfer
of the common stock so that Storage USA should continue to satisfy  requirements
5 and 6. The provisions of the Charter restricting the ownership and transfer of
the common stock are described in "Restrictions on Ownership and Transfer."

         Storage USA currently has one direct corporate subsidiary,  Storage USA
Trust,  a Maryland  real estate  investment  trust (the  "Trust"),  and may have
additional  corporate  subsidiaries  in the  future.  A  corporation  that  is a
"qualified  REIT  subsidiary" is not treated as a corporation  separate from its
parent REIT. All assets, liabilities, and items of income, deduction, and credit
of a "qualified REIT subsidiary" are treated as assets,  liabilities,  and items
of income, deduction, and credit of the REIT. A "qualified REIT subsidiary" is a
corporation,  all of the capital  stock of which is owned by the REIT.  Thus, in
applying the requirements  described herein,  any "qualified REIT subsidiary" of
Storage USA will be ignored, and all assets,  liabilities,  and items of income,
deduction, and credit of such subsidiary will be treated as assets, liabilities,
and items of  income,  deduction,  and  credit of  Storage  USA.  The Trust is a
qualified REIT subsidiary.  Accordingly,  it is not subject to federal corporate
income taxation, though it may be subject to state and local taxation.

         In the case of a REIT that is a partner in a  partnership,  the REIT is
treated as owning its  proportionate  share of the assets of the partnership and
as  earning  its  allocable  share of the gross  income of the  partnership  for
purposes  of the  applicable  REIT  qualification  tests.  Thus,  Storage  USA's
proportionate  share of the  assets,  liabilities,  and  items of income of SUSA
Partnership  and of any other  partnership  in which Storage USA has acquired or
will acquire an interest,  directly or indirectly (a "Subsidiary  Partnership"),
are treated as assets and gross  income of Storage USA for  purposes of applying
the various REIT qualification requirements.



                                       7
<PAGE>

Income Tests

         Storage USA must satisfy two gross  income  tests  annually to maintain
its  qualification  as a REIT.  First, at least 75% of its gross income for each
taxable year must consist of defined  types of income that it derives,  directly
or indirectly,  from investments  relating to real property or mortgages on real
property or temporary investment income.  Qualifying income for purposes of that
75% gross income test includes:

o      rents from real property;

o      interest on debt secured by mortgages on real property or on interests in
       real property; and

o      dividends or other  distributions  on and gain from the sale of shares in
       other REITs.

         Second,  in general,  at least 95% of its gross income for each taxable
year must  consist of income that is  qualifying  income for purposes of the 75%
gross income  test,  dividends,  other types of interest,  gain from the sale or
disposition of stock or securities,  or any combination of the foregoing.  Gross
income from Storage USA's sale of property  that it holds  primarily for sale to
customers in the ordinary course of business is excluded from both income tests.
The  following  paragraphs  discuss the specific  application  of these tests to
Storage USA.

         Rent that  Storage USA  receives  from real  property  that it owns and
leases  to  tenants  will  qualify  as  "rents  from  real  property,"  which is
qualifying  income for purposes of the 75% and 95% gross income  tests,  only if
the following conditions are met:

o      First,  the rent must not be based, in whole or in part, on the income or
       profits  of any  person,  but  may be  based  on a  fixed  percentage  or
       percentages of receipts or sales.

o      Second, neither Storage USA nor a direct or indirect owner of 10% or more
       of its stock may own, actually or constructively, 10% or more of a tenant
       from whom it receives rent.

o      Third,  all of the rent received  under a lease of real property will not
       qualify as "rents from real property" unless the rent attributable to the
       personal  property  leased in connection  with such lease is no more than
       15% of the total rent received under the lease.

o      Finally,  Storage  USA  generally  must not  operate  or manage  its real
       property or furnish or render services to its tenants, other than through
       an "independent  contractor" who is adequately  compensated and from whom
       Storage  USA does  not  derive  revenue.  However,  Storage  USA need not
       provide  services  through an "independent  contractor,"  but instead may
       provide  services  directly,  if the services are "usually or customarily
       rendered" in connection  with the rental of space for occupancy  only and
       are not  considered  to be  provided  for the  tenants'  convenience.  In
       addition,  Storage  USA may provide a minimal  amount of  "non-customary"
       services to the tenants of a property,  other than through an independent
       contractor, as long as its income from the services does not exceed 1% of
       its income  from the related  property.  The House and Senate have passed
       legislation  that would allow  Storage USA to own up to 100% of the stock
       of a  "taxable  REIT  subsidiary,"  which  could  provide  customary  and
       noncustomary   services  to  Storage  USA's   tenants,   see   "--Taxable
       Subsidiaries."



                                       8
<PAGE>

         Storage  USA,  through SUSA  Partnership,  derives most of its revenues
from rent from  storage  unit  leases,  additional  first month  rent,  and late
charges attributable to such rents. We believe that, other than the late charges
attributable  to rent,  which are treated as interest that qualifies for the 95%
gross income test, but not the 75% gross income test,  those revenues qualify as
rents from real  property for purposes of both gross  income  tests.  Additional
revenues  are  derived  from  ancillary  services  such as moving  truck  rental
commissions,  packing and shipping commissions, rent from leasing space utilized
for sales of locks and packing  supplies to SUSA  Management,  Inc., a Tennessee
corporation,  5% of whose  voting  stock and 100% of whose  nonvoting  stock are
owned by SUSA Partnership,  rent from vehicle and boat storage leases, including
additional first month rent and late charges  attributable  thereto, and similar
items.   We  believe  that  those   revenues  and  other  types  of  potentially
nonqualifying  gross income earned by Storage USA in each taxable year are equal
to, and will  continue to be equal to, less than 5% of Storage USA's total gross
income and,  thus,  that such items of income do not  adversely  affect  Storage
USA's  qualification  as a REIT.  Storage USA also receives  dividends from SUSA
Management,  Inc. and Storage USA Franchise  Corp.,  a Tennessee  corporation of
which SUSA  Partnership  owns 100% of the nonvoting stock. We believe that those
dividends are qualifying income for purposes of the 95% test.

         Storage  USA does not  receive  any rent that is based on the income or
profits of any  person.  In  addition,  other than with  respect to its  leasing
arrangement  with SUSA  Management,  Inc.  with  respect to the sale of lock and
packing supplies, the revenue from which Storage USA will treat as nonqualifying
income for purposes of the 75% and 95% tests, Storage USA does not own, directly
or indirectly, 10% or more of any tenant or receive any rent based on the income
or profits of any tenant.  Furthermore,  we believe that any  personal  property
rented  in  connection  with  our  storage  facilities  is well  within  the 15%
restriction.  However,  in order for our rental income to constitute "rents from
real property," Storage USA must not provide services,  other than within the 1%
de minimis  exception  described  above, to its tenants that are not customarily
furnished or rendered in connection with the rental of the  self-storage  units,
other than through an independent contractor.

         Storage USA,  through  SUSA  Partnership,  which is not an  independent
contractor,  provides  certain  services with respect to the facilities and will
provide  certain  services  with  respect  to any  newly  acquired  self-storage
facilities. Such services include:

o      common area services,  such as cleaning and maintaining public entrances,
       exits,  stairways,  walkways,  lobbies and rest rooms,  removing snow and
       debris,  collecting  trash,  and painting the exteriors of the facilities
       and common areas;

o      providing general security for the facilities;

o      cleaning and repairing of units at the  facilities as tenants move in and
       out;



                                       9
<PAGE>

o      at the request of the tenant, and without  additional  charge,  accepting
       delivery of goods from carriers or unlocking a particular unit when goods
       are delivered to a facility (however, SUSA Partnership does not otherwise
       assist tenants in the storage or removal of goods or belongings  from the
       units);

o      permitting  tenants to use the fax machine at a facility  for  occasional
       local faxes without  additional  charge and for occasional  long-distance
       faxes for a nominal charge;

o      maintaining   underground   utilities  and  structural  elements  of  the
       facilities;

o      paying  real and  personal  property  taxes or the cost of  replacing  or
       refurbishing personal property with respect to real and personal property
       owned by SUSA Partnership at a facility;

o      for a fee,  acting as an agent for  moving  truck  rental  companies  for
       tenants of certain facilities and walk-in customers;

o      for a fee,  providing packing and shipping services to tenants of certain
       facilities and walk-in customers; and

o      at a few facilities,  allowing tenants to use trucks owned by Storage USA
       or SUSA  Partnership to move their goods and  belongings  into and out of
       the units without additional charge.

Storage  USA  believes  that  the  services  provided  by SUSA  Partnership  are
customarily  furnished  or rendered in  connection  with the rental of space for
occupancy only by self-storage  facilities in the geographic  areas in which its
facilities are located.

         Storage USA's investment,  through SUSA Partnership,  in the facilities
in major part gives rise to rental income that is qualifying income for purposes
of both gross income tests. Gains on sales of the facilities or of Storage USA's
interest in SUSA Partnership generally will be qualifying income for purposes of
both gross  income  tests.  Storage  USA  anticipates  that  income on its other
investments,  including its indirect  investments in SUSA  Management,  Inc. and
Storage USA Franchise Corp., will not result in Storage USA failing either gross
income test for any year.

         A REIT will incur a 100% tax on the net income derived from any sale or
other disposition of property,  other than foreclosure  property,  that the REIT
holds  primarily  for sale to  customers  in the  ordinary  course of a trade or
business.  We believe that none of Storage USA's or SUSA Partnership's assets is
held for sale to customers and that a sale of any such asset would not be in the
ordinary  course of its business.  Whether a REIT holds an asset  "primarily for
sale to  customers  in the  ordinary  course  of a trade or  business"  depends,
however,  on the facts and circumstances in effect from time to time,  including
those  related to a particular  asset.  Nevertheless,  we will attempt to comply
with  the  terms  of  safe-harbor  provisions  in the  federal  income  tax laws
prescribing  when an  asset  sale  will  not be  characterized  as a  prohibited
transaction. We cannot provide assurance,  however, that we can comply with such
safe-harbor provisions or that Storage USA or SUSA Partnership will avoid owning
property that may be characterized as property that it holds "primarily for sale
to customers in the ordinary course of a trade or business."



                                       10
<PAGE>

         From time to time,  Storage  USA or SUSA  Partnership  may  enter  into
hedging  transactions  with respect to one or more of its assets or liabilities.
Its hedging  activities may include entering into interest rate swaps, caps, and
floors,  options to purchase such items, and futures and forward  contracts.  To
the extent that  Storage USA or SUSA  Partnership  enters into an interest  rate
swap or cap contract,  option, futures contract,  forward rate agreement, or any
similar  financial  instrument to hedge its indebtedness  incurred to acquire or
carry "real estate  assets," any periodic income or gain from the disposition of
such contract  should be qualifying  income for purposes of the 95% gross income
test,  but not the 75% gross income test. To the extent that Storage USA or SUSA
Partnership  hedges  with  other  types of  financial  instruments,  or in other
situations, it is not entirely clear how the income from those transactions will
be treated for purposes of the gross income  tests.  We intend to structure  any
hedging  transactions in a manner that does not jeopardize  Storage USA's status
as a REIT.

         If Storage USA fails to satisfy one or both of the gross  income  tests
for any taxable year, it nevertheless  may qualify as a REIT for such year if it
qualifies  for relief under certain  provisions of the federal  income tax laws.
Those relief provisions generally will be available if:

o      its failure to meet such tests is due to reasonable  cause and not due to
       willful neglect;

o      we attach a schedule of the sources of its income to its tax return; and

o      any  incorrect  information  on the  schedule  was not due to fraud  with
       intent to evade tax.

         We cannot predict,  however,  whether in all circumstances  Storage USA
would  qualify for the relief  provisions.  In addition,  as discussed  above in
"--Taxation of Storage USA," even if the relief  provisions  apply,  Storage USA
would incur a 100% tax on the gross  income  attributable  to the greater of the
amounts by which it fails the 75% and 95% gross income  tests,  multiplied  by a
fraction intended to reflect its profitability.

 .Asset Tests

         To maintain its qualification as a REIT,  Storage USA also must satisfy
two asset tests at the close of each quarter of each  taxable  year.  First,  at
least 75% of the value of its total assets must consist of:

o      cash or cash items, including certain receivables;

o      government securities;

o      interests in real property,  including  leaseholds and options to acquire
       real property and leaseholds;

o      interests in mortgages on real property;



                                       11
<PAGE>

o      stock in other REITs; and

o      investments  in stock or debt  instruments  during  the  one-year  period
       following  Storage  USA's  receipt of new capital that it raises  through
       equity offerings or offerings of debt with at least a five-year term.

The second asset test has two components:

o      First, of Storage USA's  investments not included in the 75% asset class,
       the value of its interest in any one issuer's  securities  may not exceed
       5% of the value of its total assets; and

o      Second,  Storage  USA may  not  own  more  than  10% of any one  issuer's
       outstanding voting securities.

         For purposes of both components of the second asset test,  "securities"
does not include  Storage  USA's stock in any  qualified  REIT  subsidiary or in
other REITs or its interest in any partnership.

         SUSA  Partnership owns 5% of the voting stock and 100% of the nonvoting
stock of SUSA Management,  Inc., which together constitute 99% of the beneficial
economic  interest  therein.  In  addition,  SUSA  Partnership  owns 100% of the
nonvoting stock of Storage USA Franchise  Corp.,  which  represents 97.5% of the
beneficial economic interest therein.  By virtue of its partnership  interest in
SUSA Partnership,  Storage USA is deemed to own its pro rata share of the assets
of SUSA  Partnership,  including the stock of SUSA Management,  Inc. and Storage
USA Franchise Corp. held by SUSA Partnership.

         SUSA Partnership does not own more than 10% of the voting securities of
SUSA Management, Inc. or Storage USA Franchise Corp. In addition, based upon its
analysis of the estimated  value of the stock of each of SUSA  Management,  Inc.
and Storage USA Franchise  Corp.  relative to the  estimated  value of the other
assets  owned by Storage  USA,  Storage USA  believes  that neither its pro rata
share of the stock of SUSA Management,  Inc. nor its pro rata share of the stock
of Storage USA  Franchise  Corp.  exceeds 5% of the total value of Storage USA's
assets. No independent appraisals have been obtained to support this conclusion.
This 5% limitation must be satisfied at the end of each quarter in which Storage
USA or SUSA  Partnership  increases  its  interest in SUSA  Management,  Inc. or
Storage USA Franchise Corp., including as a result of Storage USA increasing its
interest in SUSA  Partnership in connection  with a stock offering or as Limited
Partners of SUSA Partnership exercise their Redemption Rights.  Although Storage
USA plans to take steps to ensure  that it  satisfies  the 5% asset test for any
quarter with respect to which  retesting is to occur,  there can be no assurance
that such steps will always be successful.

         The U.S. Congress recently passed legislation (the "Tax Bill") that
allows  Storage USA to own up to 100% of the stock of taxable REIT  subsidiaries
("TRSs"),  which can perform activities unrelated to Storage USA's tenants, such
as  third-party   management,   development,   and  other  independent  business
activities,  as well as provide  services to Storage USA's tenants.  Storage USA
and its taxable subsidiary must elect for the subsidiary to be treated as a TRS.
A corporation  of which a TRS directly or  indirectly  owns more than 35% of the
voting power or value of the stock will automatically be treated as a TRS. The
Tax Bill limits the  deductibility  of interest paid or accrued by a TRS to
Storage USA to


                                       12
<PAGE>

assure that the TRS is subject to an  appropriate  level of corporate  taxation.
Further,  the Tax Bill imposes a 100% excise tax on  transactions  between a TRS
and Storage USA or its tenants that are not conducted on an arm's-length  basis.
The Tax Bill also  prevents  Storage USA from owning more than 10% of the voting
power or value of the stock of a taxable  subsidiary  that is not  treated  as a
TRS. Prior to the Tax Bill,  Storage USA only was prohibited from owning more
than 10% of the voting stock of a taxable subsidiary.  Overall, no more than 20%
of Storage USA's assets can consist of securities of TRSs under the Tax Bill.

         President  Clinton  has  announced  that he will  sign  the Tax Bill on
December 17,  1999.  The TRS  provisions  of the Tax Bill will apply for taxable
years  beginning  after  December 31, 2000.  However,  a taxable  subsidiary  in
existence  on July 12,  1999,  such as SUSA  Management,  Inc.  and  Storage USA
Franchise Corp., will be grandfathered  unless and until (i) it engages in a new
line of  business  or acquires a  substantial  new asset,  other than in certain
tax-free  transactions  or pursuant to a binding  contract in effect on July 12,
1999, or (ii) Storage USA acquires, directly or indirectly,  additional stock in
the taxable subsidiary,  other than in certain tax-free transactions or pursuant
to a  binding  contract  in  effect  on July 12,  1999.  Such  existing  taxable
subsidiaries  can be converted into TRSs on a tax-free basis prior to January 1,
2004. See "--Taxable Subsidiaries."

         If Storage  USA should  fail to satisfy the asset tests at the end of a
calendar  quarter,  it would not lose its REIT  status if (1) it  satisfied  the
asset  tests  at the  close  of the  preceding  calendar  quarter  and  (2)  the
discrepancy  between  the value of its assets  and the asset  test  requirements
arose  from  changes  in the  market  values of its assets and was not wholly or
partly  caused  by the  acquisition  of one or more  non-qualifying  assets.  If
Storage  USA did not  satisfy  the  condition  described  in  clause  (2) of the
preceding  sentence,  it  still  could  avoid  disqualification  as  a  REIT  by
eliminating  any  discrepancy  within 30 days  after  the close of the  calendar
quarter in which the discrepancy arose.

 .Distribution Requirements

         Each taxable year,  Storage USA must distribute  dividends,  other than
capital gain dividends and deemed distributions of retained capital gain, to its
stockholders in an aggregate amount at least equal to:

o      the sum of (1) 95% of its "REIT taxable income,"  computed without regard
       to the dividends paid deduction and its net capital gain or loss, and (2)
       95% of its after-tax net income, if any, from foreclosure property; minus

o      the sum of certain items of non-cash income.

         Storage USA must pay such  distributions  in the taxable  year to which
they relate,  or in the following  taxable year if it declares the  distribution
before it timely files its federal  income tax return for such year and pays the
distribution  on or before the first  regular  dividend  payment date after such


                                       13
<PAGE>

declaration.  Under the Tax Bill, the 95% distribution  requirement  discussed
above was reduced to 90% for taxable years  beginning  after  December 31, 2000.

         Storage USA will pay federal  income tax on taxable  income,  including
net capital gain, that it does not distribute to stockholders.  Furthermore,  if
it  fails  to  distribute  during  a  calendar  year,  or by the end of  January
following such calendar year in the case of  distributions  with declaration and
record dates falling in the last three months of the calendar year, at least the
sum of:

o      85% of its REIT ordinary income for such year;

o      95% of its REIT capital gain income for such year; and

o      any undistributed taxable income from prior periods,

it will  incur a 4%  nondeductible  excise  tax on the  excess of such  required
distribution over the amounts it actually distributed.  Storage USA may elect to
retain and pay income tax on the net  long-term  capital  gain it  receives in a
taxable year. See "--Taxation of Taxable U.S. Stockholders." If it so elects, it
will be treated as having  distributed  any such retained amount for purposes of
the 4% excise tax described above. Storage USA has made, and Storage USA intends
to  continue  to make,  timely  distributions  sufficient  to satisfy the annual
distribution requirements.

         It is possible  that,  from time to time,  Storage  USA may  experience
timing  differences  between (1) the actual receipt of income and actual payment
of  deductible  expenses and (2) the  inclusion of that income and  deduction of
such expenses in arriving at its REIT taxable income.  For example,  Storage USA
may not  deduct  recognized  capital  losses  from its  "REIT  taxable  income."
Further,  it is possible that, from time to time, Storage USA may be allocated a
share of net capital gain attributable to the sale of depreciated  property that
exceeds its allocable  share of cash  attributable  to that sale. As a result of
the  foregoing,  Storage USA may have less cash than is necessary to  distribute
all of its taxable income and thereby avoid corporate  income tax and the excise
tax imposed on certain undistributed income. In such a situation, it may need to
borrow funds or issue preferred stock or additional common stock.

         Under  certain  circumstances,  Storage  USA may be able to  correct  a
failure to meet the  distribution  requirement for a year by paying  "deficiency
dividends"  to its  stockholders  in a later year.  Storage USA may include such
deficiency  dividends in its deduction for dividends  paid for the earlier year.
Although  Storage USA may be able to avoid income tax on amounts  distributed as
deficiency  dividends,  it will be required to pay interest to the Service based
upon the amount of any deduction it takes for deficiency dividends.


                                       14
<PAGE>

Recordkeeping Requirements

         Storage  USA must  maintain  certain  records  in order to qualify as a
REIT.  In addition,  to avoid a monetary  penalty,  it must request on an annual
basis  information  from  its  stockholders  designed  to  disclose  the  actual
ownership of its outstanding  stock.  Storage USA has complied,  and Storage USA
intends to continue to comply, with such requirements.

Failure to Qualify

         If Storage USA failed to qualify as a REIT in any taxable year,  and no
relief  provision  applied,  it would be subject  to federal  income tax and any
applicable  alternative  minimum tax on its taxable income at regular  corporate
rates. In calculating its taxable income in a year in which it failed to qualify
as a REIT,  Storage  USA  would  not be  able  to  deduct  amounts  paid  out to
stockholders.  In fact,  Storage  USA would not be required  to  distribute  any
amounts  to  stockholders  in such  year.  In such  event,  to the extent of its
current and accumulated  earnings and profits, all distributions to stockholders
would be taxable as  ordinary  income.  Subject  to certain  limitations  of the
federal  income  tax laws,  corporate  stockholders  might be  eligible  for the
dividends  received  deduction.  Unless  Storage USA  qualified for relief under
specific statutory provisions,  it also would be disqualified from taxation as a
REIT for the four  taxable  years  following  the year during which it ceased to
qualify as a REIT. We cannot predict  whether in all  circumstances  Storage USA
would qualify for such statutory relief.

                      Taxation of Taxable U.S. Stockholders

         As  long  as  Storage  USA   qualifies  as  a  REIT,  a  taxable  "U.S.
stockholder"  must take into  account  distributions  made out of Storage  USA's
current or  accumulated  earnings  and  profits  and that  Storage  USA does not
designate  as capital  gain  dividends  or retained  long-term  capital  gain as
ordinary income. A U.S.  stockholder will not qualify for the dividends received
deduction  generally  available to corporations.  As used herein, the term "U.S.
stockholder"  means a holder of common  stock that for U.S.  federal  income tax
purposes is:

o      a citizen or resident of the United States;

o      a  corporation,  partnership,  or other entity created or organized in or
       under  the  laws of the  United  States  or of an  political  subdivision
       thereof;

o      an  estate  whose  income  from  sources  without  the  United  States is
       includible  in  gross  income  for  U.S.   federal  income  tax  purposes
       regardless  of its  connection  with the  conduct of a trade or  business
       within the United States; or

o      any trust  with  respect  to which (1) a U.S.  court is able to  exercise
       primary  supervision over the administration of such trust and (2) one or
       more U.S. persons have the authority to control all substantial decisions
       of the trust.

         A U.S. stockholder generally will recognize  distributions that Storage
USA  designates  as capital gain  dividends  as  long-term  capital gain without
regard to the period for which the U.S.  stockholder  has held its common stock.
Storage USA generally will designate its capital gain dividends as either 20% or


                                       15
<PAGE>

25% rate distributions.  A corporate U.S. stockholder,  however, may be required
to treat up to 20% of certain capital gain dividends as ordinary income.

         Storage USA may elect to retain and pay income tax on the net long-term
capital  gain  that  it  receives  in a  taxable  year.  In  that  case,  a U.S.
stockholder  would  be  taxed  on  its  proportionate  share  of  Storage  USA's
undistributed  long-term  capital  gain.  The U.S.  stockholder  would receive a
credit or refund for its  proportionate  share of the tax Storage USA paid.  The
U.S.  stockholder  would  increase  the basis in its stock by the  amount of its
proportionate share of Storage USA's undistributed long-term capital gain, minus
its share of the tax Storage USA paid.

         A U.S.  stockholder  will not incur tax on a distribution  in excess of
Storage USA's current and accumulated  earnings and profits if such distribution
does not exceed  the  adjusted  basis of the U.S.  stockholder's  common  stock.
Instead,  such distribution will reduce the adjusted basis of such common stock.
A U.S. stockholder will recognize a distribution in excess of both Storage USA's
current and accumulated earnings and profits and the U.S. stockholder's adjusted
basis in its common stock as long-term capital gain, or short-term  capital gain
if the  common  stock has been held for one year or less,  assuming  the  common
stock is a capital asset in the hands of the U.S.  stockholder.  In addition, if
Storage USA declares a  distribution  in October,  November,  or December of any
year that is payable to a U.S.  stockholder of record on a specified date in any
such month, such  distribution  shall be treated as both paid by Storage USA and
received by the U.S.  stockholder  on December  31 of such year,  provided  that
Storage USA  actually  pays the  distribution  during  January of the  following
calendar year.

         Stockholders may not include in their individual income tax returns any
net  operating  losses or capital  losses of Storage USA.  Instead,  such losses
would be carried  over by Storage USA for  potential  offset  against its future
income  generally.  Taxable  distributions  from  Storage  USA and gain from the
disposition of the common stock will not be treated as passive  activity  income
and,  therefore,  stockholders  generally will not be able to apply any "passive
activity  losses," such as losses from certain types of limited  partnerships in
which the shareholder is a limited  partner,  against such income.  In addition,
taxable  distributions  from Storage USA and gain from the disposition of common
stock  generally  will be  treated as  investment  income  for  purposes  of the
investment interest limitations.  Storage USA will notify stockholders after the
close  of  the  its  taxable  year  as to  the  portions  of  the  distributions
attributable to that year that constitute  ordinary  income,  return of capital,
and capital gain.

Taxation of U.S. Stockholders on the Disposition of the Common Stock

         In general,  a U.S.  stockholder who is not a dealer in securities must
treat any gain or loss realized upon a taxable  disposition  of the common stock
as long-term  capital gain or loss if the U.S.  stockholder  has held the common
stock for more than one year and otherwise as  short-term  capital gain or loss.
However,  a U.S.  stockholder  must  treat any loss upon a sale or  exchange  of
common  stock held by such  shareholder  for six  months or less as a  long-term
capital loss to the extent of capital  gain  dividends  and other  distributions
from Storage USA that such U.S.  stockholder  treats as long-term  capital gain.
All or a portion  of any loss that a U.S.  stockholder  realizes  upon a taxable
disposition  of the  common  stock  may be  disallowed  if the U.S.  stockholder
purchases  other  shares of  common  stock  within  30 days  before or after the
disposition.



                                       16
<PAGE>

Capital Gains and Losses

         A taxpayer  generally  must hold a capital asset for more than one year
for gain or loss  derived  from its sale or exchange to be treated as  long-term
capital gain or loss. The highest marginal  individual income tax rate is 39.6%.
The maximum tax rate on  long-term  capital  gain  applicable  to  non-corporate
taxpayers is 20% for sales and  exchanges of assets held for more than one year.
The  maximum  tax rate on  long-term  capital  gain from the sale or exchange of
"section 1250 property," or depreciable real property, is 25% to the extent that
such gain  would have been  treated  as  ordinary  income if the  property  were
"section  1245  property."  With  respect  to  distributions  that  Storage  USA
designates as capital gain  dividends  and any retained  capital gain that it is
deemed to  distribute,  Storage  USA  generally  may  designate  whether  such a
distribution is taxable to its non-corporate  stockholders at a 20% or 25% rate.
Thus, the tax rate  differential  between  capital gain and ordinary  income for
non-corporate taxpayers may be significant. In addition, the characterization of
income as capital  gain or  ordinary  income may  affect  the  deductibility  of
capital losses. A non-corporate taxpayer may deduct capital losses not offset by
capital gains against its ordinary  income only up to a maximum annual amount of
$3,000.  A  non-corporate  taxpayer  may carry  forward  unused  capital  losses
indefinitely.  A  corporate  taxpayer  must pay tax on its net  capital  gain at
ordinary corporate rates. A corporate taxpayer can deduct capital losses only to
the extent of capital  gains,  with unused losses being carried back three years
and forward five years.

Information Reporting Requirements and Backup Withholding

         Storage USA will report to its stockholders and to the Internal Revenue
Service the amount of  distributions  it pays during each calendar year, and the
amount of tax it  withholds,  if any.  Under the  backup  withholding  rules,  a
stockholder may be subject to backup withholding at the rate of 31% with respect
to distributions unless such holder (1) is a corporation or comes within certain
other  exempt  categories  and,  when  required,  demonstrates  this fact or (2)
provides a taxpayer identification number,  certifies as to no loss of exemption
from backup withholding, and otherwise complies with the applicable requirements
of the backup  withholding rules. A stockholder who does not provide Storage USA
with its correct taxpayer identification number also may be subject to penalties
imposed by the Internal Revenue Service.  Any amount paid as backup  withholding
will be creditable against the stockholder's income tax liability.  In addition,
Storage USA may be required to withhold a portion of capital gain  distributions
to any stockholders who fail to certify their non-foreign status to Storage USA.
The  Treasury  Department  has issued  final  regulations  regarding  the backup
withholding rules as applied to non-U.S.  stockholders.  Those regulations alter
certain procedural  aspects of backup  withholding  compliance and are effective
for  distributions  made after  December 31, 2000.  See  "--Taxation of Non-U.S.
Stockholders."



                                       17
<PAGE>

                       Taxation of Tax-Exempt Stockholders

         Tax-exempt  entities,  including  qualified employee pension and profit
sharing trusts and individual  retirement  accounts and annuities  generally are
exempt from federal income  taxation.  However,  they are subject to taxation on
their unrelated  business taxable income.  While many investments in real estate
generate  unrelated  business  taxable income,  the Internal Revenue Service has
issued a published ruling that dividend  distributions  from a REIT to an exempt
employee  pension trust do not constitute  unrelated  business  taxable  income,
provided  that the exempt  employee  pension  trust does not  otherwise  use the
shares of the REIT in an unrelated trade or business of the pension trust. Based
on that ruling, amounts that Storage USA distributes to tax-exempt  stockholders
generally should not constitute unrelated business taxable income. However, if a
tax-exempt  shareholder were to finance its acquisition of the common stock with
debt, a portion of the income that it receives from Storage USA would constitute
unrelated  business  taxable  income  pursuant to the  "debt-financed  property"
rules.  Furthermore,  social clubs,  voluntary  employee  benefit  associations,
supplemental  unemployment  benefit  trusts,  and qualified group legal services
plans that are exempt from  taxation  under  special  provisions  of the federal
income tax laws are  subject to  different  unrelated  business  taxable  income
rules, which generally will require them to characterize distributions that they
receive from Storage USA as  unrelated  business  taxable  income.  Finally,  in
certain circumstances, a qualified employee pension or profit sharing trust that
owns more than 10% of Storage  USA's stock is required to treat a percentage  of
the dividends  that it receives from Storage USA as unrelated  business  taxable
income. Such percentage is equal to the gross income Storage USA derives from an
unrelated trade or business,  determined as if it were a pension trust,  divided
by its total gross income for the year in which it pays the dividends. That rule
applies to a pension trust holding more than 10% of Storage USA's stock only if:

o      the percentage of its dividends  that the tax-exempt  trust must treat as
       unrelated business taxable income is at least 5%;

o      Storage USA qualifies as a REIT by reason of the modification of the rule
       requiring  that no more than 50% of Storage USA's shares be owned by five
       or fewer  individuals that allows the  beneficiaries of the pension trust
       to be treated as  holding  Storage  USA's  stock in  proportion  to their
       actuarial interests in the pension trust; and

o      either (1) one  pension  trust owns more than 25% of the value of Storage
       USA's stock or (2) a group of pension  trusts  individually  holding more
       than 10% of the value of Storage USA's stock  collectively owns more than
       50% of the value of Storage USA's stock.

                        Taxation of Non-U.S. Stockholders

         The rules governing U.S.  federal income taxation of nonresident  alien
individuals,  foreign  corporations,  foreign  partnerships,  and other  foreign
stockholders (collectively,  "non-U.S.  stockholders") are complex. This section
is only a summary of such rules. We urge non-U.S.  stockholders to consult their
own tax advisors to determine the impact of federal, state, and local income tax
laws on ownership of the common stock, including any reporting requirements.



                                       18
<PAGE>

         A  non-U.S.  stockholder  that  receives  a  distribution  that  is not
attributable  to gain from Storage  USA's sale or exchange of U.S. real property
interests,  as defined  below,  and that  Storage  USA does not  designate  as a
capital gain dividend or retained capital gain will recognize ordinary income to
the  extent  that  Storage  USA pays such  distribution  out of its  current  or
accumulated  earnings and profits.  A withholding  tax equal to 30% of the gross
amount of the distribution  ordinarily will apply to such distribution unless an
applicable tax treaty reduces or eliminates the tax. However,  if a distribution
is treated as effectively connected with the non-U.S. stockholder's conduct of a
U.S. trade or business,  the non-U.S.  stockholder  generally will be subject to
federal income tax on the distribution at graduated rates, in the same manner as
U.S.  stockholders are taxed with respect to such  distributions and also may be
subject to the 30% branch profits tax in the case of a non-U.S. stockholder that
is a non-U.S. corporation.  Storage USA plans to withhold U.S. income tax at the
rate of 30% on the gross  amount  of any such  distribution  paid to a  non-U.S.
stockholder unless either:

o      a lower  treaty  rate  applies  and the  non-U.S.  stockholder  files the
       required form  evidencing  eligibility for that reduced rate with Storage
       USA; or

o      the non-U.S. stockholder files an IRS Form 4224 with Storage USA claiming
       that the distribution is effectively connected income.

         The U.S.  Treasury  Department has issued final regulations that modify
the manner in which Storage USA will comply with the  withholding  requirements.
Those regulations are effective for distributions made after December 31, 2000.

         A non-U.S.  stockholder  will not incur tax on a distribution in excess
of  Storage  USA's  current  and  accumulated   earnings  and  profits  if  such
distribution  does not exceed the adjusted  basis of its common stock.  Instead,
such a  distribution  will reduce the  adjusted  basis of such common  stock.  A
non-U.S.  stockholder will be subject to tax on a distribution that exceeds both
Storage  USA's  current and  accumulated  earnings  and profits and the adjusted
basis of its  common  stock,  if the  non-U.S.  stockholder  otherwise  would be
subject  to tax on gain from the sale or  disposition  of its common  stock,  as
described  below.  Because Storage USA generally cannot determine at the time it
makes a distribution whether or not the distribution will exceed its current and
accumulated  earnings and profits,  it normally  will withhold tax on the entire
amount of any  distribution at the same rate as it would withhold on a dividend.
However, a non-U.S.  stockholder may obtain a refund of amounts that Storage USA
withholds  if it later  determines  that a  distribution  in fact  exceeded  its
current and accumulated earnings and profits.

         Storage USA must  withhold  10% of any  distribution  that  exceeds its
current and accumulated earnings and profits. Consequently,  although it intends
to withhold at a rate of 30% on the entire  amount of any  distribution,  to the
extent that it does not do so, it will  withhold at a rate of 10% on any portion
of a distribution not subject to withholding at a rate of 30%.

         For any year in which  Storage  USA  qualifies  as a REIT,  a  Non-U.S.
Stockholder will incur tax on  distributions  that are attributable to gain from
its sale or exchange of "U.S. real property  interests" under special provisions
of the  federal  income  tax laws  ("FIRPTA").  The  term  "U.S.  real  property
interests" includes certain interests in real property and stock in corporations
at least 50% of whose assets consists of interests in real property. Under those
rules, a non-U.S.  stockholder is taxed on  distributions  attributable  to gain


                                       19
<PAGE>

from sales of U.S.  real  property  interests  as if such gain were  effectively
connected  with  a  U.S.  business  of  the  non-U.S.  stockholder.  A  non-U.S.
stockholder  thus would be taxed on such a  distribution  at the normal  capital
gain rates applicable to U.S.  stockholders,  subject to applicable  alternative
minimum tax and a special  alternative  minimum tax in the case of a nonresident
alien individual. A non-U.S. corporate stockholder not entitled to treaty relief
or  exemption  also  may be  subject  to the 30%  branch  profits  tax on such a
distribution.  Storage USA must withhold 35% of any  distribution  that it could
designate  as a capital  gain  dividend.  A non-U.S.  stockholder  may receive a
credit against its tax liability for the amount Storage USA withholds.

         A non-U.S.  stockholder  generally  will not incur tax under  FIRPTA as
long as at all times non-U.S.  persons hold,  directly or indirectly,  less than
50% in value of Storage USA's stock. We cannot assure you that that test will be
met. However, a non-U.S. stockholder that owned, actually or constructively,  5%
or less of the common stock at all times during a specified  testing period will
not incur tax under  FIRPTA if the  common  stock is  "regularly  traded"  on an
established  securities market. If the gain on the sale of the common stock were
taxed under FIRPTA, a non-U.S.  stockholder would be taxed in the same manner as
U.S.  stockholders with respect to such gain, subject to applicable  alternative
minimum tax, a special  alternative minimum tax in the case of nonresident alien
individuals,  and the possible  application of the 30% branch profits tax in the
case of non-U.S.  corporations.  Furthermore, a non-U.S.  stockholder will incur
tax on gain not subject to FIRPTA if (1) the gain is effectively  connected with
the non-U.S.  stockholder's  U.S. trade or business,  in which case the non-U.S.
stockholder  will be subject to the same  treatment  as U.S.  stockholders  with
respect to such gain, or (2) the non-U.S.  stockholder  is a  nonresident  alien
individual  who was present in the U.S.  for 183 days or more during the taxable
year and has a "tax  home" in the  United  States,  in which  case the  non-U.S.
stockholder will incur a 30% tax on his capital gains.

                             Other Tax Consequences

State and Local Taxes

         Storage USA and/or you may be subject to state and local tax in various
states and  localities,  including  those states and localities in which Storage
USA or you transact business,  own property,  or reside. The state and local tax
treatment in such jurisdictions may differ from the federal income tax treatment
described above. Consequently, you should consult your own tax advisor regarding
the effect of state and local tax laws upon an investment in the common stock.

Tax Aspects of the Company's Investments in SUSA Partnership and Subsidiary
Partnerships

         The  following   discussion   summarizes  certain  federal  income  tax
considerations  applicable  to  our  direct  or  indirect  investments  in  SUSA
Partnership and the Subsidiary  Partnerships  (each individually a "Partnership"
and, collectively,  the "Partnerships").  The discussion does not cover state or
local tax laws or any federal tax laws other than income tax laws.



                                       20
<PAGE>

Classification as Partnerships

         Storage USA is entitled to include in its income its distributive share
of each  Partnership's  income  and to  deduct  its  distributive  share of each
Partnership's  losses only if the Partnerships are classified for federal income
tax purposes as partnerships rather than as corporations or associations taxable
as  corporations.  An organization  will be classified as a partnership,  rather
than as a corporation, for federal income tax purposes if it (1) is treated as a
partnership under Treasury  regulations,  effective January 1, 1997, relating to
entity  classification  (the  "check-the-box  regulations")  and  (2)  is  not a
"publicly traded" partnership.

         Under the check-the-box  regulations,  an unincorporated entity with at
least two members may elect to be classified either as an association taxable as
a corporation or as a partnership.  If such an entity fails to make an election,
it generally  will be treated as a partnership  for federal income tax purposes.
The federal income tax  classification  of an entity that was in existence prior
to January 1, 1997, such as the Partnerships,  will be respected for all periods
prior to January 1, 1997 if:

o      the entity had a reasonable basis for its claimed classification;

o      the entity  and all  members of the entity  recognized  the  federal  tax
       consequences of any changes in the entity's  classification within the 60
       months prior to January 1, 1997; and

o      neither  the entity nor any member of the entity was  notified in writing
       by a taxing authority on or before May 8, 1996 that the classification of
       the entity was under examination.

         Each Partnership  reasonably claimed partnership  classification  under
the Treasury  Regulations  relating to entity  classification in effect prior to
January  1,  1997.  In  addition,  the  Partnerships  intend to  continue  to be
classified as  partnerships  for federal  income tax purposes and no Partnership
will elect to be treated as an  association  taxable as a corporation  under the
check-the-box regulations.

         A publicly  traded  partnership  is a partnership  whose  interests are
traded  on an  established  securities  market  or  are  readily  tradable  on a
secondary  market or the  substantial  equivalent  thereof.  A  publicly  traded
partnership will not, however,  be treated as a corporation for any taxable year
if 90% or more of the  partnership's  gross  income  for such year  consists  of
certain passive-type income,  including real property rents, gains from the sale
or other disposition of real property, interest, and dividends (the "90% passive
income exception").

         Treasury  regulations  (the "PTP  regulations")  provide  limited  safe
harbors from the definition of a publicly traded partnership. Pursuant to one of
those  safe  harbors  (the  "private  placement  exclusion"),   interests  in  a
partnership will not be treated as readily tradable on a secondary market or the
substantial  equivalent  thereof if (1) all  interests in the  partnership  were
issued in a transaction or transactions  that were not required to be registered
under the Securities Act of 1933, as amended,  and (2) the partnership  does not
have more than 100 partners at any time during the  partnership's  taxable year.


                                       21
<PAGE>

In  determining  the number of partners  in a  partnership,  a person  owning an
interest in a partnership, grantor trust, or S corporation that owns an interest
in the  partnership  is  treated as a partner  in such  partnership  only if (1)
substantially  all of the  value  of  the  owner's  interest  in the  entity  is
attributable to the entity's direct or indirect  interest in the partnership and
(2) a principal purpose of the use of the entity is to permit the partnership to
satisfy the 100-partner  limitation.  Each Partnership qualifies for the private
placement exclusion.

         If a Partnership is considered a publicly traded  partnership under the
PTP  regulations  because  it is deemed to have  more  than 100  partners,  such
Partnership should not be treated as a corporation because it should be eligible
for the 90% passive income exception.  If, however, for any reason a Partnership
were taxable as a corporation,  rather than as a partnership, for federal income
tax purposes,  Storage USA would not be able to qualify as a REIT.  See "Federal
Income Tax  Consequences of Storage USA's Status as a REIT --  Requirements  for
Qualification -- Income Tests" and "--  Requirements for  Qualification -- Asset
Tests." In addition, any change in a Partnership's status for tax purposes might
be  treated  as a taxable  event,  in which  case  Storage  USA might  incur tax
liability  without  any  related  cash  distribution.  See  "Federal  Income Tax
Consequences of Storage USA's Status as a REIT -- Requirements for Qualification
- -- Distribution  Requirements."  Further,  items of income and deduction of such
Partnership  would not pass through to its partners,  and its partners  would be
treated as stockholders for tax purposes.  Consequently,  such Partnership would
be required  to pay income tax at  corporate  tax rates on its net  income,  and
distributions  to its  partners  would  constitute  dividends  that would not be
deductible in computing such Partnership's taxable income.

Income Taxation of the Partnerships and their Partners

         Partners, Not the Partnerships,  Subject to Tax. A partnership is not a
taxable entity for federal income tax purposes.  Rather, Storage USA is required
to take into account its allocable share of each  Partnership's  income,  gains,
losses,  deductions, and credits for any taxable year of such Partnership ending
within or with the  taxable  year of  Storage  USA,  without  regard to  whether
Storage USA has received or will receive any distribution from such Partnership.

         Partnership  Allocations.  Although a partnership  agreement  generally
will  determine  the  allocation  of income  and  losses  among  partners,  such
allocations  will be disregarded for tax purposes if they do not comply with the
provisions of the federal income tax laws governing partnership allocations.  If
an  allocation  is not  recognized  for federal  income tax  purposes,  the item
subject to the allocation  will be reallocated in accordance  with the partners'
interests in the  partnership,  which will be  determined by taking into account
all of the facts and circumstances  relating to the economic  arrangement of the
partners with respect to such item.  Each  Partnership's  allocations of taxable
income,  gain,  and loss are  intended  to comply with the  requirements  of the
federal income tax laws governing partnership allocations.

         Tax Allocations With Respect to Contributed  Properties.  Income, gain,
loss, and deduction  attributable to appreciated or depreciated property that is
contributed to a partnership in exchange for an interest in the partnership must
be allocated in a manner such that the contributing  partner is charged with, or
benefits from,  respectively,  the unrealized gain or unrealized loss associated


                                       22
<PAGE>

with the property at the time of the contribution. The amount of such unrealized
gain or unrealized  loss is generally  equal to the difference  between the fair
market  value  of  contributed  property  at the time of  contribution,  and the
adjusted  tax basis of such  property at the time of  contribution  (a "book-tax
difference"). Such allocations are solely for federal income tax purposes and do
not affect the book  capital  accounts or other  economic or legal  arrangements
among the  partners.  SUSA  Partnership  was formed by way of  contributions  of
appreciated  property and has received  contributions  of  appreciated  property
since Storage USA's initial  public  offering.  SUSA  Partnership's  partnership
agreement  requires such allocations to be made in a manner  consistent with the
federal income tax laws governing partnership allocations.

         In  general,  the  carryover  basis of the  facilities  contributed  by
Storage USA to SUSA  Partnership  will cause  Storage USA to be allocated  lower
depreciation and other  deductions,  and possibly amounts of taxable income,  in
the event of a sale of such a facility, in excess of the economic or book income
allocated to it as a result of such sale.  While this will tend to eliminate the
book-tax  differences over the life of the  Partnership,  the federal income tax
laws  governing  partnership  allocations  do not always  entirely  rectify  the
book-tax  difference  on an annual basis or with  respect to a specific  taxable
transaction such as a sale. Therefore,  elimination of book-tax differences with
respect to the  facilities  contributed  by Storage USA may cause Storage USA to
recognize  taxable  income  in  excess  of its  proportionate  share of the cash
proceeds,  which might adversely affect Storage USA's ability to comply with the
REIT distribution requirements.  See "Federal Income Tax Consequences of Storage
USA's  Status  as a REIT  --  Requirements  for  Qualification  --  Distribution
Requirements."

         Under  SUSA  Partnership's   partnership  agreement,   depreciation  or
amortization  deductions of SUSA  Partnership  generally will be allocated among
the partners in accordance with their respective  interests in SUSA Partnership,
except to the extent that SUSA  Partnership is required under the federal income
tax laws  governing  partnership  allocations to use a method for allocating tax
depreciation  deductions  attributable to contributed properties that results in
Storage USA receiving a disproportionate share of such deductions.  In addition,
gain on sale of a facility  that has been  contributed,  in whole or in part, to
SUSA Partnership will be specially allocated to the contributing partners to the
extent of any  "built-in"  gain with respect to such facility for federal income
tax purposes.

         Basis in Partnership Interest.  Storage USA's adjusted tax basis in its
partnership interest in SUSA Partnership generally is equal to (1) the amount of
cash and the basis of any other  property  contributed  to SUSA  Partnership  by
Storage USA,  (2)  increased by (A) its  allocable  share of SUSA  Partnership's
income and (B) its allocable share of indebtedness of SUSA Partnership,  and (3)
reduced,  but not below  zero,  by (A)  Storage  USA's  allocable  share of SUSA
Partnership's loss and (B) the amount of cash distributed to Storage USA, and by
constructive  distributions resulting from a reduction in Storage USA's share of
indebtedness of SUSA Partnership.



                                       23
<PAGE>

         If  the  allocation  of  Storage  USA's   distributive  share  of  SUSA
Partnership's  loss  would  reduce  the  adjusted  tax  basis of  Storage  USA's
partnership  interest in SUSA  Partnership  below zero, the  recognition of such
loss will be deferred until such time as the  recognition of such loss would not
reduce  Storage  USA's  adjusted  tax basis below zero.  To the extent that SUSA
Partnership's  distributions,  or any  decrease  in Storage  USA's  share of the
indebtedness  of SUSA  Partnership,  which is  considered  a  constructive  cash
distribution  to the partners,  would reduce  Storage  USA's  adjusted tax basis
below zero, such  distributions  constitute  taxable income to Storage USA. Such
distributions and constructive  distributions  normally will be characterized as
capital gain, and, if Storage USA's partnership interest in SUSA Partnership has
been  held  for  longer  than  one  year,  the  distributions  and  constructive
distributions will constitute long-term capital gain.

Sale of a Partnership's Property

         Generally,  any gain realized by a Partnership  on the sale of property
held by the Partnership  for more than one year will be long-term  capital gain,
except for any  portion of such gain that is  treated  as  depreciation  or cost
recovery  recapture.  Any gain recognized by a Partnership on the disposition of
contributed   properties  will  be  allocated  first  to  the  partners  of  the
Partnership  to the  extent of their  "built-in  gain" on those  properties  for
federal income tax purposes.  The partners'  "built-in  gain" on the contributed
properties  sold will equal the excess of the partners'  proportionate  share of
the book value of those  properties  over the partners'  tax basis  allocable to
those  properties at the time of the sale. Any remaining gain  recognized by the
Partnership  on the  disposition  of the  contributed  properties,  and any gain
recognized by the Partnership or the disposition of the other  properties,  will
be allocated among the partners in accordance with their  respective  percentage
interests in the Partnership.

         Storage USA's share of any gain  realized by a Partnership  on the sale
of any property  held by the  Partnership  as inventory or other  property  held
primarily  for sale to  customers in the  ordinary  course of the  Partnership's
trade or business will be treated as income from a prohibited  transaction  that
is subject to a 100% penalty tax. Such  prohibited  transaction  income also may
have an adverse  effect upon Storage  USA's  ability to satisfy the income tests
for REIT status. See "Federal Income Tax Consequences of Storage USA's Status as
a REIT -- Requirements for Qualification -- Income Tests." Storage USA, however,
does not  presently  intend  to allow any  Partnership  to  acquire  or hold any
property that represents  inventory or other property held primarily for sale to
customers in the ordinary course of Storage USA's or such Partnership's trade or
business.

Taxable Subsidiaries

         SUSA Partnership owns 100% of the nonvoting stock, and 5% of the voting
stock, of SUSA  Management,  Inc.,  representing in the aggregate a 99% economic
interest therein. In addition, SUSA Partnership owns 100% of the nonvoting stock
of Storage USA  Franchise  Corp.  which  represents  a 97.5%  economic  interest
therein.  By  virtue  of its  ownership  of  SUSA  Partnership,  Storage  USA is
considered to own its pro rata share of the stock of SUSA  Management,  Inc. and
Storage USA Franchise Corp. held by SUSA Partnership.



                                       24
<PAGE>

         As noted  above,  for Storage USA to qualify as a REIT,  Storage  USA's
proportionate  share of the value of the securities of each of SUSA  Management,
Inc.  and Storage USA  Franchise  Corp.  may not exceed 5% of the total value of
Storage USA's assets.  In addition,  Storage  USA's  proportionate  share of the
equity  securities  of each of SUSA  Management,  Inc. and Storage USA Franchise
Corp. may not constitute more than 10% of the voting  securities of such entity.
Storage USA does not own,  directly or  indirectly,  more than 10% of the voting
securities  of SUSA  Management,  Inc. or Storage USA  Franchise  Corp.,  and it
believes that its proportionate  share of the value of the securities of each of
SUSA Management,  Inc. and Storage USA Franchise Corp. does not exceed 5% of the
total value of Storage USA's  assets.  If the Internal  Revenue  Service were to
challenge successfully those determinations,  however,  Storage USA likely would
fail to qualify as a REIT.

         SUSA Management,  Inc. and Storage USA Franchise Corp. are organized as
corporations  and pay federal,  state,  and local income taxes on their  taxable
income at normal corporate  rates.  Any such taxes reduce amounts  available for
distribution by SUSA Management,  Inc. and Storage USA Franchise Corp., which in
turn  will  reduce  amounts   available  for   distribution   to  Storage  USA's
stockholders.

         As described  above,  the Tax Bill allows Storage USA to own up to 100%
of the stock of taxable REIT subsidiaries ("TRSs"), which can perform activities
unrelated to Storage USA's tenants, such as third-party management, development,
and other  independent  business  activities,  as well as  provide  services  to
Storage  USA's  tenants.  Storage  USA and its  subsidiary  must  elect  for the
subsidiary  to be treated as a TRS. A  corporation  of which a TRS  directly  or
indirectly  owns more than 35% of the  voting  power or value of the stock  will
automatically  be treated as a TRS.  The Tax Bill  limits the  deductibility  of
interest  paid or  accrued  by a TRS to  Storage  USA to assure  that the TRS is
subject to an appropriate  level of corporate  taxation.  Further,  the Tax Bill
imposes a 100% excise tax on  transactions  between a TRS and Storage USA or its
tenants  that are not  conducted  on an  arm's-length  basis.  The Tax Bill also
prevents  Storage USA from owning more than 10% of the voting  power or value of
the stock of a taxable subsidiary that is not treated as a TRS. Current law only
prevents  Storage USA from owning more than 10% of the voting stock of a taxable
subsidiary.  Overall,  no more than 20% of Storage  USA's  assets can consist of
securities of TRSs under the Tax Bill.

         President Clinton has announced that he will sign the Tax Bill into law
on December 17, 1999.  The TRS provisions of the Tax Bill will apply for taxable
years  beginning  after  December 31, 2000.  However,  a taxable  subsidiary  in
existence  on July 12,  1999,  such as SUSA  Management,  Inc.  and  Storage USA
Franchise Corp., will be grandfathered  unless and until (1) it engages in a new
line of  business  or acquires a  substantial  new asset,  other than in certain
tax-free  transactions  or pursuant to a binding  contract in effect on July 12,
1999, or (2) Storage USA acquires,  directly or indirectly,  additional stock in
the taxable subsidiary,  other than in certain tax-free transactions or pursuant
to a  binding  contract  in  effect  on July 12,  1999.  Such  existing  taxable
subsidiaries  can be converted into TRSs on a tax-free basis prior to January 1,
2004. Accordingly, SUSA Management, Inc. and Storage USA Franchise Corp. will be
grandfathered  unless and until either (1) they engage in a new line of business
or acquire a substantial new asset or (2) Storage USA acquires  additional stock
in either such  subsidiary  (e.g.,  as a result of an increase in Storage  USA's
percentage interest in SUSA Partnership due to limited


                                       25
<PAGE>

partners' exercise of redemption  rights).  If SUSA Management,  Inc. or Storage
USA Franchise  Corp. were to acquire a substantial new asset or Storage USA were
to acquire additional stock in either such entity, Storage USA would not be able
to satisfy the  provision in the Tax Bill that prevents Storage USA from owning
more than 10% of the voting power or value of the stock of a taxable  subsidiary
that is not treated as a TRS.

                                 USE OF PROCEEDS

         Storage USA will not receive any  proceeds  from the sale of the common
stock.

                            THE SELLING SHAREHOLDERS

         This  prospectus  relates  to the  offer  and  sale of up to a total of
137,145 shares of common stock by the Sellers or donees,  pledgees,  transferees
or other successors in interest.

         SUSA Partnership issued units of partnership  interest to the following
unitholders in connection with its acquisition of self-storage facilities: Jesse
Morgan,  16,000 and 21,400  units on  September  30, 1994 and January 16,  1995,
respectively;  Carol Crocker,  912 and 9,671 units on December 15, 1994 and June
15,  1995,  respectively;  Kenneth  Wooley,  24,200  units on November 14, 1995;
Willard Sparks,  47,808 units on March 6, 1995; and Dean Keller, 17,154 units on
May 30, 1997.  They may choose to redeem any or all of those  units,  at Storage
USA's option,  for cash or shares of our common  stock.  If any of Jesse Morgan,
Richard Crocker,  Carol Crocker,  Kenneth Wooley, Willard Sparks and Dean Keller
choose to redeem their  shares,  and if Storage USA chooses to acquire the units
in exchange for shares of its common stock,  rather than cash, they will receive
one share of our  common  stock for each unit  redeemed.  We agreed to  register
those shares of common stock.

         As of November 29, 1999, Messrs. Jesse Morgan,  Carol Crocker,  Kenneth
Wooley,  Willard Sparks and Dean Keller owned 14; 0; 0; 609,549 and 2,800 shares
of our common  stock,  respectively.  We do not know if, when or in what amounts
any of the Sellers will sell shares.  Consequently,  we cannot estimate how many
shares will be held by them after completion of the offering.

                              PLAN OF DISTRIBUTION

         The Sellers, or their donees, pledgees, transferees or other successors
in  interest,  may  sell the  common  stock  in  transactions  on the NYSE or in
privately negotiated  transactions,  including transactions with exchange funds,
through the writing of options on the shares or a combination of such methods of
sale, at fixed prices that may be changed,  at market  prices  prevailing at the
time  of  sale,  at  prices  related  to such  prevailing  market  prices  or at
negotiated  prices.  Alternatively,  the  shares  may be  offered  to or through
underwriters,  brokers  or  dealers  who may act  solely as  agents,  or who may
acquire  shares as  principals.  The  distribution  of the shares  through  such
persons may be effected in one or more  transactions  that may take place on the
NYSE,  including  block  trades or ordinary  broker's  transactions,  or through
privately negotiated transactions or sales to one or more brokers or dealers for
resale  of  such  securities  as  principals,  or  otherwise  at  market  prices


                                       26
<PAGE>

prevailing  at the time of sale,  at prices  related to such  prevailing  market
prices or at  negotiated  prices.  The  Sellers may pay usual and  customary  or
specifically  negotiated  brokerage fees or commissions in connection  with such
sales. In connection with such sales, the Sellers and any participating  brokers
or  dealers  may be  deemed  "underwriters"  as  such  term  is  defined  in the
Securities  Act and the  commissions  paid or  discounts  allowed to any of such
underwriters, brokers, dealers or agents, in addition to any profits received on
resale of the shares if any such underwriters, brokers, dealers or agents should
purchase any shares as a principal,  may be deemed to be underwriting  discounts
or commissions under the Securities Act.

         Storage USA has agreed to pay the  expenses of  registering  all of the
shares of common stock offered  hereby under the Securities  Act,  including all
registration,  filing and exchange listing fees, blue sky expenses,  fees of its
own counsel and accountants,  and underwriters' fees customarily paid by issuers
(excluding underwriting discounts, commissions and transfer taxes).

                                 LEGAL OPINIONS

         Hunton & Williams,  Richmond,  Virginia, has delivered to Storage USA a
legal opinion as to the validity of the common stock covered by this prospectus.

                                     EXPERTS

         The consolidated balance sheets of Storage USA, Inc. as of December 31,
1998 and 1997, the consolidated  statements of operations,  shareholders' equity
and cash flows for each of the three  years in the  period  ended  December  31,
1998,  and the  financial  statement  schedule of Storage USA as of December 31,
1998  have  been   incorporated   herein  in   reliance   on  the   reports   of
PricewaterhouseCoopers  LLP, independent accountants,  given on the authority of
said firm as experts in auditing and accounting.



                                       27
<PAGE>

                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14.  Other Expenses of Issuance and Distribution

         The estimated expenses in connection with the offering are as follows:

         Securities and Exchange Commission registration fee         $  1,036.00
         Legal fees                                                     3,000.00
         Accounting fees and expenses                                   2,000.00
                                                                        --------
                           TOTAL                                     $  6,036.00

Item 15.  Indemnification of Officers and Directors.

         Storage USA's Charter obligates it to indemnify and advance expenses to
present and former  directors  and officers to the maximum  extent  permitted by
Tennessee law. The Tennessee  Business  Corporation Act permits a corporation to
indemnify its present and former directors and officers,  among others,  against
judgments,  settlements,  penalties,  fines or reasonable expenses incurred with
respect  to a  proceeding  to which  they may be made a party by reason of their
service in those or other capacities if (i) such persons conducted themselves in
good  faith,  (ii) they  reasonably  believed,  in the case of  conduct in their
official  capacities  with the  corporation,  that their conduct was in its best
interests  and, in all other cases,  that their conduct was at least not opposed
to its best interests,  and (iii) in the case of any criminal  proceeding,  they
had no reasonable cause to believe that their conduct was unlawful.

         Any  indemnification  by Storage USA pursuant to the  provisions of the
Charter described above shall be paid out of the assets of Storage USA and shall
not be  recoverable  from the  shareholders.  To the extent  that the  foregoing
indemnification  provisions purport to include  indemnification  for liabilities
arising under the  Securities  Act of 1933, in the opinion of the Securities and
Exchange  Commission  such  indemnification  is contrary  to public  policy and,
therefore,  unenforceable.  Storage  USA  has  purchased  director  and  officer
liability  insurance  for the purpose of  providing a source of funds to pay any
indemnification described above.

         The TCBA  permits the charter of a Tennessee  corporation  to include a
provision eliminating or limiting the personal liability of its directors to the
corporation  or its  shareholders  for monetary  damages for breach of fiduciary
duty as a director,  except that such  provision  cannot  eliminate or limit the
liability of a director (i) for any breach of the director's  duty of loyalty to
the  corporation  or its  shareholders,  (ii) for acts or omissions  not in good
faith or which involve intentional misconduct or a knowing violation of the law,
or (iii) for unlawful distributions that exceed what could have been distributed
without violating the TBCA or the corporation's  charter.  Storage USA's Charter
contains a provision  eliminating  the personal  liability  of its  directors or
officers to Storage  USA or its  shareholders  for money  damages to the maximum
extent permitted by Tennessee law from time to time.



                                      II-1
<PAGE>

         The Second  Amended and Restated  Agreement of Limited  Partnership  of
SUSA Partnership provides, generally, for the indemnification of an "indemnitee"
against losses, claims, damages, liabilities,  judgments, fines, settlements and
other amounts (including  reasonable  expenses) that relate to the operations of
SUSA  Partnership  unless it is established  that (i) the act or omission of the
Indemnitee  was  material  and either was  committed in bad faith or pursuant to
active and  deliberate  dishonesty,  (ii) the  Indemnitee  actually  received an
improper personal benefit in money,  property or services,  or (iii) in the case
of any criminal proceeding,  the Indemnitee had reasonable cause to believe that
the act or  omission  was  unlawful.  For this  purpose,  the term  "Indemnitee"
includes  any person made a party to a  proceeding  by reason of his status as a
director or officer of SUSA Partnership,  SUSA Management,  Inc. or Storage USA,
and such other persons (including affiliates of Storage USA or SUSA Partnership)
as Storage  USA, may  designate  from time to time in its  discretion.  Any such
indemnification  will be made only out of assets of SUSA Partnership,  and in no
event may an  Indemnitee  subject the limited  partners of SUSA  Partnership  to
personal  liability  by  reason  of  the   indemnification   provisions  in  The
Partnership Agreement.  Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted pursuant to the foregoing provisions
or  otherwise,  SUSA  Partnership  has been advised  that, in the opinion of the
Securities  and Exchange  Commission,  such  indemnification  is against  public
policy and, therefore,  unenforceable.  SUSA Partnership has purchased liability
insurance   for  the  purpose  of  providing  a  source  of  funds  to  pay  the
indemnification described above.

Item 16.  Exhibits.

4.1*      Form of Common Stock Certificate

4.2**     Amended Charter of Storage USA

4.3***    Articles of  Amendment to the Amended  Charter of Storage  USA,  Inc.,
          designating and fixing the rights and preferences of the 8 7/8% Series
          A Cumulative  Redeemable  Preferred Stock, as filed with the Secretary
          of State of the State of Tennessee on November 12, 1998.

4.4*      Restated and Amended Bylaws of Storage USA

5         Opinion of Hunton & Williams

8         Tax Opinion of Hunton & Williams

23.1      Consent of Hunton & Williams (included in Exhibits 5 and 8)

23.2      Consent of PricewaterhouseCoopers LLP

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

*         Filed as an Exhibit to Storage  USA's  Registration  Statement on Form
          S-11, File No.  33-74072,  as amended,  and  incorporated by reference
          herein.

**        Filed as an Exhibit to Storage USA's  Amendment No. 1 to  Registration
          Statement  on  Form  S-3,  File  No.  333-4556,  and  incorporated  by
          reference herein.

***       Filed as an Exhibit to Storage USA's current report on Form 8-K, filed
          with  the  Commission  on  November  20,  1998,  and  incorporated  by
          reference herein.



                                      II-2
<PAGE>

Item 17.  Undertakings.

         The undersigned registrant hereby undertakes:

         (1) To file,  during any period in which offers or sales are being made
of  the  securities  registered  hereby,  a  post-effective  amendment  to  this
registration  statement  (i) to  include  any  prospectus  required  by  Section
10(a)(3) of the  Securities  Act of 1933;  (ii) to reflect in the prospectus any
facts or events arising after the effective date of the  registration  statement
(or the most recent post-effective amendment thereof) which,  individually or in
the aggregate,  represent a fundamental  change in the  information set forth in
the  registration  statement  (Notwithstanding  the  foregoing,  any increase or
decrease  in the volume of  securities  offered  (if the total  dollar  value of
securities offered would not exceed that which was registered) and any deviation
from  the  low or  high  and of the  estimated  maximum  offering  range  may be
reflected in the form of prospectus  filed with the Commission  pursuant to Rule
424(b) if, in the aggregate,  the changes in volume and price  represent no more
than 20 percent change in the maximum aggregate  offering price set forth in the
"Calculation   of  Registration   Fee"  table  in  the  effective   registration
statement.);  and (iii) to include any material  information with respect to the
plan of distribution not previously  disclosed in the registration  statement or
any material change to such information in the registration statement; provided,
however,  that the undertakings set forth in subparagraphs (i) and (ii) above do
not  apply  if the  information  required  to be  included  in a  post-effective
amendment by those  paragraphs  is contained in periodic  reports  filed with or
furnished to the Commission by the registrant pursuant to Section 13 or 15(d) of
the Securities  Exchange Act of 1934 that are  incorporated by reference in this
registration statement;

         (2) That,  for the  purpose  of  determining  any  liability  under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such  securities at that time shall be deemed to be the initial bona
fide offering thereof;

         (3) To remove from registration by means of a post-effective  amendment
any of the securities being registered which remain unsold at the termination of
the offering.

         The undersigned registrant hereby further undertakes that, for purposes
of determining  any liability  under the Securities Act of 1933,  each filing of
the  registrant's  annual  report  pursuant  to  Section  13(a)  or 15(d) of the
Securities  Exchange  Act of 1934  (and,  where  applicable,  each  filing of an
employee  benefit  plan's  annual  report  pursuant  to  Section  15(d)  of  the
Securities  Exchange  Act of 1934) that is  incorporated  by  reference  in this
registration  statement  shall  be  deemed  to be a new  registration  statement
relating to the securities offered therein,  and the offering of such securities
at that time shall be deemed to be the initial bona fide offering  thereof;  and
Insofar as indemnification  for liabilities  arising under the Securities Act of
1933 may be permitted to  directors,  officers  and  controlling  persons of the
registrant pursuant to the foregoing provisions or otherwise, the registrant has
been advised that the in the opinion of the Securities  and Exchange  Commission
such  indemnification  is against  public policy as expressed in the Act and is,


                                      II-3
<PAGE>

therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the registrant of expenses incurred
or paid by a director,  officer or  controlling  person of the registrant in the
successful  defense of any action,  suit or proceeding) is asserted  against the
registrant by such director,  officer or controlling  person in connection  with
the securities being  registered,  the registrant will, unless in the opinion of
its counsel the matter has been settled by  controlling  precedent,  submit to a
court of appropriate  jurisdiction the question whether such  indemnification by
it is against  public policy as expressed in the Act and will be governed by the
final adjudication of such issue.

         The undersigned registrant further hereby undertakes that:

         (1) For purposes of determining  any liability under the Securities Act
of 1933, the  information  omitted from the form of prospectus  filed as part of
this registration statement in reliance upon Rule 430A and contained in the form
of  prospectus  filed by the  registrant  pursuant to Rule  424(b)(1)  or (4) or
497(h) under the Securities Act shall be deemed to be part of this  registration
statement as of the time it was declared effective.

         (2) For the purpose of determining  any liability  under the Securities
Act of 1933,  each  post-effective  amendment that contains a form of prospectus
shall be deemed to be a new  registration  statement  relating to the securities
offered  therein,  and the  offering  of such  securities  at that time shall be
deemed to be the initial bona fide offering thereof.



                                      II-4
<PAGE>

                                   SIGNATURES

         Pursuant  to the  requirements  of the  Securities  Act  of  1933,  the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized,  in the City of  Memphis,  State of  Tennessee  on this  30th day of
November, 1999.

                                     STORAGE USA, INC.


                                     By:   /s/ John W. McConomy
                                        -------------------------------
                                         John W. McConomy
                                         Secretary

                                POWER OF ATTORNEY

         Pursuant  to the  requirements  of the  Securities  Act of  1933,  this
Registration  Statement  has  been  signed  by  the  following  persons  in  the
capacities  indicated on November 30, 1999. Each of the undersigned officers and
directors of the registrant hereby  constitutes  Christopher P. Marr and John W.
McConomy,  either of whom may act as his/her  true and lawful  attorneys-in-fact
with  full  power to sign for  him/her  and in  his/her  name in the  capacities
indicated below and to file any and all amendments to the registration statement
filed  herewith,  making  such  changes  in the  registration  statement  as the
registrant  deems  appropriate,  and  generally to do all such things in his/her
name and behalf in his/her  capacity  as an officer  and  director to enable the
registrant to comply with the  provisions of the  Securities Act of 1933 and all
requirements of the Securities and Exchange Commission.
<TABLE>
<CAPTION>
                    Signature                                                   Title & Capacity
                    ---------                                                   ----------------
<S> <C>
                                                                     Chairman of the Board, Chief Executive
                                                                              Officer and Director
                /s/ Dean Jernigan                                         (Principal Executive Officer)
- ---------------------------------------------------
                  Dean Jernigan

                                                                             Chief Financial Officer
             /s/ Christopher P. Marr                              (Principal Financial and Accounting Officer)
- ---------------------------------------------------
               Christopher P. Marr


            /s/ C. Ronald Blankenship                                               Director
- ---------------------------------------------------
              C. Ronald Blankenship


              /s/ Howard P. Colhoun                                                 Director
- ---------------------------------------------------
                Howard P. Colhoun




                                      II-5
<PAGE>

              /s/ Alan B. Graf, Jr.                                                 Director
- ---------------------------------------------------
                Alan B. Graf, Jr.


                /s/ Mark Jorgensen                                                  Director
- ---------------------------------------------------
                  Mark Jorgensen


                /s/ John P. McCann                                                  Director
- ---------------------------------------------------
                  John P. McCann


             /s/ Caroline S. McBride                                                Director
- ---------------------------------------------------
               Caroline S. McBride


              /s/ William D. Sanders                                                Director
- ---------------------------------------------------
                William D. Sanders


                /s/ Harry J. Thie                                                   Director
- ---------------------------------------------------
                  Harry J. Thie

</TABLE>


                                      II-6
<PAGE>

                                  EXHIBIT INDEX

Exhibit
Number       Exhibit
- ------       -------

4.1*         Form of Common Stock Certificate

4.2**        Amended Charter of Storage USA

4.3***       Articles of Amendment to the Amended  Charter of Storage USA, Inc.,
             designating  and fixing the  rights and  preferences  of the 8 7/8%
             Series A Cumulative  Redeemable  Preferred Stock, as filed with the
             Secretary of State of the State of Tennessee on November 12, 1998.

4.4*         Restated and Amended Bylaws of Storage USA

5            Opinion of Hunton & Williams

8            Tax Opinion of Hunton & Williams

23.1         Consent of Hunton & Williams (included in Exhibits 5 and 8)

23.2         Consent of PricewaterhouseCoopers LLP
- ----------------

*            Filed as an Exhibit to Storage USA's Registration Statement on Form
             S-11, File No. 33-74072,  as amended, and incorporated by reference
             herein.

**           Filed  as  an  Exhibit  to  Storage   USA's   Amendment  No.  1  to
             Registration   Statement  on  Form  S-3,  File  No.  333-4556,  and
             incorporated by reference herein.

***          Filed as an Exhibit to Storage  USA's  current  report on Form 8-K,
             filed with the Commission on November 20, 1998, and incorporated by
             reference herein.





                                                                       Exhibit 5

                       [Letterhead of Hunotn & Williams]


                                December 16, 1999

Board of Directors
Storage USA, Inc.
165 Madison Avenue, Suite 1300
Memphis, Tennessee 38103

                       Registration Statement on Form S-3
                       ----------------------------------
                                Storage USA, Inc.
                                -----------------

Ladies and Gentlemen:

         We are counsel for Storage USA, Inc. (the "Company") in connection with
its  registration  under the  Securities  Act of 1933 of  137,145  shares of its
common stock (the  "Shares") that are proposed to be offered and sold by certain
selling  shareholders  as described in the Company's  Registration  Statement on
Form S-3 (the  "Registration  Statement")  to be filed today with the Securities
and Exchange Commission (the "Commission").

         In rendering this opinion, we have relied upon, among other things, our
examination of such records of the Company and  certificates of its officers and
of public officials as we have deemed necessary.

         Based upon the foregoing, we are of the opinion that:

         1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Tennessee.

         2. The Shares have been duly  authorized and, when sold as described in
the   Registration   Statement,   will  be  legally   issued,   fully  paid  and
nonassessable.

         We hereby  consent to the filing of this opinion with the Commission as
an exhibit to the  Registration  Statement  and  reference to our firm under the
heading "Legal Opinions" in the Registration Statement.

                                  Very truly yours,

                                  /s/ Hunton & Williams


                                                                       Exhibit 8

                       [Letterhead of Hunton & Williams]




                                December 16, 1999

Storage USA, Inc.
165 Madison Avenue, Suite 1300
Memphis, Tennessee  38103


                                Storage USA, Inc.
                                -----------------
                  Qualification as Real Estate Investment Trust
                  ---------------------------------------------

Ladies and Gentlemen:

                  We have acted as counsel to Storage  USA,  Inc.,  a  Tennessee
corporation  (the  "Company"),  in connection with the preparation of a Form S-3
registration statement filed with the Securities and Exchange Commission ("SEC")
on December 16, 1999 (the  "Registration  Statement")  with respect to the offer
and sale from time to time in open-market or  privately-negotiated  transactions
that may involve underwriters or brokers of up to 139,098 shares (the "Secondary
Shares") of the common  stock,  par value $0.01 per share,  of the Company  (the
"Common Stock") by selling  shareholders named in the prospectus  contained as a
part of the Registration  Statement (the  "Prospectus").  You have requested our
opinion regarding certain U.S. federal income tax matters.

                  The  Company,  through  SUSA  Partnership,  L.P.,  a Tennessee
limited   partnership   (the   "Operating   Partnership"),   owns  interests  in
self-storage facilities directly and through various subsidiary partnerships and
limited  liability   companies  (the  "Subsidiary   Entities").   The  Operating
Partnership  also owns 100% of the nonvoting  stock, and 5% of the voting stock,
of SUSA Management,  Inc., a Tennessee corporation ("Management"),  representing
99%  of the  economic  interests  in  Management.  In  addition,  the  Operating
Partnership  owns 100% of the nonvoting stock of Storage USA Franchise  Corp., a
Tennessee corporation ("Franchise"),  representing 97.5% of the equity interests
in Franchise.

                  In giving the opinions set forth below,  we have  examined the
following:

                  1. the Company's Charter, as amended and restated;

                  2. the Company's Bylaws;

                  3. the Prospectus;


<PAGE>

                  4. the  Second  Amended  and  Restated  Agreement  of  Limited
Partnership of the Operating Partnership,  dated as of September 21, 1994, among
the Company,  as general partner,  and several limited  partners,  as amended on
March 19,  1996,  June 14,  1996,  August 14,  1996,  and November 12, 1998 (the
"Operating Partnership Agreement");

                  5. the governing documents of the Subsidiary Entities; and

                  6.  such  other  documents  as we  have  deemed  necessary  or
appropriate for purposes of this opinion.

                  In  connection  with  the  opinions  rendered  below,  we have
assumed generally that:

                  1.  Each of the  documents  referred  to above  has been  duly
authorized,  executed,  and  delivered;  is  authentic,  if an  original,  or is
accurate, if a copy; and has not been amended.

                  2. Each partner or member (each, a "Partner") of the Operating
Partnership   and  the   Subsidiary   Entities   (together  with  the  Operating
Partnership,  the  "Partnerships")  that is a corporation  or other entity has a
valid legal existence.

                  3. Each Partner has full power, authority,  and legal right to
enter into and to perform the terms of the Operating  Partnership  Agreement and
the governing  documents of the Subsidiary Entities (together with the Operating
Partnership  Agreement,  the  "Partnership  Agreements"),  and the  transactions
contemplated thereby.

                  4. Each Partnership  operates in accordance with the governing
law of the state in which it was formed and the Partnership  Agreement  pursuant
to which it was formed.

                  5. Each  Partnership  Agreement has remained in  substantially
the same form as it was upon the most recent amendment and restatement  thereof,
and has not been amended in any material  respect (except upon the  substitution
of partners in accordance with the terms of such Partnership Agreement).

                  6.  During its taxable  year ending  December  31,  1999,  and
subsequent  taxable years, the Company has operated and will continue to operate
in such a manner  that  makes  and  will  continue  to make the  representations
contained  in a  certificate,  dated  December  10, 1999 and  executed by a duly
appointed  officer of the Company (the "Officer's  Certificate"),  true for such
years.

                  7.  The  Company   will  not  make  any   amendments   to  its
organizational documents or the organizational documents of Storage USA Trust, a
wholly-owned subsidiary of the Company (the "Trust"), the Operating Partnership,
the Subsidiary Entities, Management, or Franchise after the date of this opinion
that would affect its  qualification as a real estate  investment trust ("REIT")
for any taxable year.


<PAGE>

                  8. No action  will be taken by the  Company,  the  Trust,  the
Operating  Partnership,  the Subsidiary Entities, the Partners,  Management,  or
Franchise after the date hereof that would have the effect of altering the facts
upon which the opinions set forth below are based.

                  In connection  with the opinions  rendered below, we also have
relied upon the  correctness of the  representations  contained in the Officer's
Certificate.

                  Based on the factual  matters in the documents and assumptions
set forth above, the representations set forth in the Officer's Certificate, the
discussions in the Prospectus under the caption "Federal Income Tax Consequences
of Storage USA's Status as a REIT" (which are incorporated herein by reference),
and without  further  investigation  as to such factual  matters,  we are of the
opinion that:

                  (a) the Company  qualified  to be taxed as a REIT  pursuant to
                  sections 856 through 860 of the Internal Revenue Code of 1986,
                  as amended (the "Code"),  for its taxable years ended December
                  31,  1994  through   December  31,  1998,  and  the  Company's
                  organization and current and proposed method of operation will
                  enable it to  continue  to qualify  as a REIT for its  taxable
                  year ending December 31, 1999, and in the future; and

                  (b) the  descriptions  of the law contained in the  Prospectus
                  under the caption  "Federal Income Tax Consequences of Storage
                  USA's Status as a REIT" are correct in all material  respects,
                  and the discussions  thereunder  fairly  summarize the federal
                  income tax considerations  that are likely to be material to a
                  holder of the Secondary Shares.

                  We have performed no due diligence and have made no efforts to
verify the accuracy and  genuineness of the documents and  assumptions set forth
above, or the  representations set forth in the Officer's  Certificate.  We will
not review on a continuing basis the Company's  compliance with the documents or
assumptions set forth above, or the  representations  set forth in the Officer's
Certificate.  Accordingly,  no assurance can be given that the actual results of
the Company's  operations for its 1999 and subsequent taxable years will satisfy
the requirements for qualification and taxation as a REIT.

                  The foregoing  opinions are based on current provisions of the
Code and the Treasury  regulations  thereunder  (the  "Regulations"),  published
administrative  interpretations  thereof,  and published  court  decisions.  The
Internal   Revenue  Service  has  not  issued   Regulations  or   administrative
interpretations  with respect to various provisions of the Code relating to REIT
qualification.  No assurance  can be given that the law will not change in a way
that will prevent the Company from qualifying as a REIT.

                  We hereby  consent to the filing of this opinion as an exhibit
to the Registration  Statement.  In giving this consent, we do not admit that we
are in the  category  of persons  whose  consent is required by Section 7 of the
Securities  Act of 1933, as amended,  or the rules and  regulations  promulgated
thereunder by the SEC.


<PAGE>

                  The foregoing  opinions are limited to the U.S. federal income
tax matters addressed herein, and no other opinions are rendered with respect to
other  federal  tax matters or to any issues  arising  under the tax laws of any
other  country,  or any state or locality.  We undertake no obligation to update
the opinions expressed herein after the date of this letter. This opinion letter
is solely  for the  information  and use of the  addressee  and the  holders  of
Secondary Shares, and it may not be distributed,  relied upon for any purpose by
any other  person,  quoted in whole or in part or  otherwise  reproduced  in any
document,  or filed with any  governmental  agency  without our express  written
consent.

                                  Very truly yours,

                                  /s/ Hunton & Williams




                                                                    Exhibit 23.2





                       CONSENT OF INDEPENDENT ACCOUNTANTS



         We  hereby   consent  to  the   incorporation   by  reference  in  this
Registration Statement on Form S-3 of our report dated February 3, 1999 relating
to the  financial  statements,  which  appears  in the  1998  Annual  Report  to
Shareholders  of Storage USA, Inc. (the  "Company"),  which is  incorporated  by
reference  in the  Company's  Annual  Report  on Form  10-K for the  year  ended
December 31,  1998.  We also  consent to the  incorporation  by reference of our
report dated  February 3, 1999  relating to the  financial  statement  schedule,
which appears in such Annual Report on Form 10-K.

         We also consent to the reference to us made under the heading "Experts"
in such Registration Statement.


         /s/      PricewaterhouseCoopers LLP



Memphis, Tennessee
December 15, 1999



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