STORAGE USA INC
S-3, 1999-07-21
REAL ESTATE INVESTMENT TRUSTS
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     As filed with the Securities and Exchange Commission on July 21, 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:
                                Randall S. Parks
                                Hunton & Williams
                          Riverfront Plaza, East Tower
                              951 East Byrd Street
                          Richmond, Virginia 23219-4074

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: [ ]

                        CALCULATION OF REGISTRATION FEE

===============================================================================
                                        Proposed       Proposed
 Title of Each Class of   Aggregate      Maximum       Maximum      Amount of
    Securities to be        Amount      Offering      Aggregate    Registration
       Registered           to be       Price Per      Offering        Fee
                          Registered     Unit(1)       Price(1)
===============================================================================
 Common Stock, $.01 par    125,689       $30.875      $3,880,648       $1,079
      value, per share
===============================================================================
(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 July 20, 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>


      THE  INFORMATION  IN THIS  PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES  UNTIL THE  REGISTRATION  STATEMENT FILED WITH
THE SECURITIES  AND EXCHANGE  COMMISSION IS EFFECTIVE.  THIS  PROSPECTUS IS NOT
AN OFFER TO SELL THESE  SECURITIES,  AND IT IS NOT  SOLICITING  AN OFFER TO BUY
THESE SECURITIES, IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

                  SUBJECT TO COMPLETION, DATED JULY 21, 1999

Prospectus

                                125,689 Shares
                               Storage USA, Inc.
                                 Common Stock

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

      Storage USA Common Stock trades on the New York Stock Exchange under the
symbol "SUS."

      We may issue up to 125,689 shares of Common Stock to certain individuals
and entities (the "Unitholders") who sold self-storage facilities to SUSA
Partnership, L.P. on July 31, 1998.  As partial consideration for their
properties, the Unitholders received a total of 125,689 units of limited
partnership interest in SUSA Partnership.

      We will issue shares of Common Stock if:

            1.    the Unitholders choose to redeem their partnership units, and

            2.    Storage USA elects to exchange the units for shares of
                  Common Stock.

      The Unitholders will receive one share of Common Stock for each unit
exchanged.  The Unitholders will not pay, and we will not receive, any cash
for the shares of Common Stock.

      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 and other limits on
who can own Common Stock are described in this prospectus under "Restrictions
on Ownership and Transfer."

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

Neither the Securities and Exchange Commission nor any State securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete.  Any representation to the contrary
is a criminal offense.

                                 ------------
                 The date of this Prospectus is July __, 1999.


<PAGE>



                               TABLE OF CONTENTS

WHERE YOU CAN FIND MORE INFORMATION..........................................3
A WARNING ABOUT FORWARD-LOOKING STATEMENTS...................................3
DESCRIPTION OF CAPITAL STOCK.................................................4
RESTRICTIONS ON OWNERSHIP AND TRANSFER.......................................5
REDEMPTION OF UNITS..........................................................6
COMPARISON OF OWNERSHIP OF UNITS AND SHARES..................................7
FEDERAL INCOME TAX CONSEQUENCES
      OF STORAGE USA'S STATUS AS A REIT.....................................16
PLAN OF DISTRIBUTION........................................................36
LEGAL OPINIONS..............................................................36
EXPERTS.....................................................................36

<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 Report on Form 10-Q for the quarter ended March 31, 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.  We 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 as described in Section 27A of the
Securities Act and Section 21E of the Securities Exchange Act of 1934, as
amended.  These forward-looking statements usually include words like
"believes," "anticipates" and "expects" and describe 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 "Forward Looking Statements and 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.

<PAGE>

                               STORAGE USA, INC.

      Storage USA, Inc. ("Storage USA") 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
approximate 88.3316% partnership interest as of July 12, 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, Suite 1300, Memphis, Tennessee 38103, and our telephone
number is (410) 730-9500.

                          DESCRIPTION OF CAPITAL STOCK

      Storage USA is authorized to issue 150,000,000 shares of Common Stock,
$.01 par value, and 5,000,000 shares of Preferred Stock, $.01 par value,
650,000 shares of which have been designated as 8 7/8% Series A Cumulative
Redeemable Preferred Stock.  As of June 30, 1999, there were 27,990,527 shares
of Common Stock outstanding.  No shares of Preferred Stock were outstanding.
The following is only a summary of some of the rights of shareholders 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 shareholders, 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.  Common shareholders 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."

      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").

<PAGE>

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, no
stockholder may own, or be deemed to own by virtue of the attribution
provisions of the federal income tax laws, 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,
Storage USA would fail to qualify as a domestically-controlled REIT
(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 the 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 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.

<PAGE>

      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.

                               REDEMPTION OF UNITS

      Under the Second Amended and Restated Agreement of Limited Partnership
for SUSA Partnership (the "Partnership Agreement"), the limited partners of
SUSA Partnership generally have the right to redeem their units of partnership
interest (the "Units").  Each limited  partner may,  subject to certain
limitations, require that SUSA Partnership redeem all or a portion of his
Units at any time after one year from the date he acquired the Units by
delivering a redemption notice to Storage USA.  The form of the notice is an
exhibit to the Partnership Agreement.

      A Limited Partner must request the redemption of at least 500 Units.  If
the limited partner owns less than 500 Units, he must request the redemption
of all of his Units.

      When a limited partner redeems his Units, SUSA Partnership can choose to
exchange the Units for either:

      o     a number of shares of Common Stock equal to the number of Units
            redeemed (subject to certain adjustments), or

      o     cash in an amount equal to the market  value of the number of shares
            of Common Stock he would have received pursuant to clause (1) above.

      To determine the amount of cash that SUSA Partnership will pay under
clause (2), SUSA Partnership will assume that the market value of the Common
Stock is equal to the average of the closing trading prices of the Common
Stock for the ten consecutive trading days before the day on which the
redemption notice was received by Storage USA.

      The limited partner shall not receive Common Stock for his Units if the
issuance of Common Stock to him would:

      o     result in any person owning, directly or indirectly, Common Stock in
            excess of the Ownership Limitation,

      o     result in Common Stock being owned by fewer than 100 persons
            (determined without reference to any rules of attribution),

      o     result in Storage USA being "closely held" within the meaning of the
            federal income tax laws,

<PAGE>

      o     cause Storage USA to own, actually or constructively, 10% or more of
            the ownership interests in  a  tenant  of  Storage   USA's  or  SUSA
            Partnership's  real property,  within the meaning of federal income
            tax laws, or

      o     cause the  acquisition of Common Stock by the redeeming  limited
            partner to be  "integrated"  with any other  distribution  of Common
            Stock for purposes of complying with the registration  provisions of
            the Securities Act of 1933, as amended.

      Instead of SUSA Partnership redeeming the Units, Storage USA may, in its
sole discretion, elect to purchase the Units directly from the limited partner
for either shares of Common Stock or cash, as described above.  Storage USA
anticipates that it generally will elect to exchange the Units for the shares
of Common Stock being offered by this prospectus.  This transaction will be
treated as a sale of the Units to Storage USA for federal income tax
purposes.  See "-- Tax Consequences of Redemption." After a limited partner
redeems Units, he will no longer have a right to receive distributions with
respect to those Units.

                   COMPARISON OF OWNERSHIP OF UNITS AND SHARES

      Generally, an investment in shares of Common Stock of Storage USA is
substantially equivalent economically to an investment in Units in SUSA
Partnership.  Since SUSA Partnership makes distributions to its partners on a
per Unit basis and Storage USA owns one Unit for each outstanding share of
Common Stock, a holder of a share of Common Stock generally receives the same
distribution  that a holder of a Unit receives.  Shareholders and SUSA
Partnership's limited partners generally share in the risks and rewards of
ownership in the enterprise being conducted by Storage USA (through SUSA
Partnership).  However, there are some differences between ownership of Units
and ownership of shares of Common Stock, some of which may be important to you.

      The information below highlights a number of the significant differences
between SUSA Partnership and Storage USA and compares certain legal rights
associated with the ownership of Units and Common Stock, respectively.  These
comparisons are intended to help SUSA Partnership's limited partners
understand how their investment will be changed if they redeem their Units for
Common Stock.

      This discussion is summary in nature and does not constitute a complete
discussion of these matters.  If you own Units, you should carefully review
all of this Prospectus and the registration statement of which this Prospectus
is a part for additional important information about Storage USA.

      Form of Organization and Assets Owned.  SUSA Partnership is organized as
a Tennessee limited partnership, and Storage USA is its General Partner.
Storage USA is a Tennessee corporation.  Storage USA elected to be taxed as a
REIT under the Code effective for its taxable year ended December 31, 1994 and
intends to maintain its qualification as a REIT.

      Length of Investment.  SUSA Partnership has a stated termination date of
December 31, 2054, although it may be terminated earlier under certain
circumstances.  Storage USA has a perpetual term and intends to continue its
operations indefinitely.

<PAGE>

      Additional Equity.  SUSA Partnership is authorized to issue Units and
other partnership interests to the partners or to other persons for such
consideration and on such terms and conditions as the General Partner, Storage
USA, in its sole discretion, may deem appropriate.  In addition, if Storage
USA offers securities and contributes the proceeds from the sale of those
securities to SUSA Partnership, the General Partner may cause SUSA Partnership
to issue additional Units, or another class or series of partnership interest
having substantially similar rights as the new securities, to the General
Partner.  Consideration for additional partnership interests may be cash or
other property or other assets permitted by Tennessee law.

      Under the Charter, Storage USA has the authority to issue up to
150,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock.
As long as SUSA Partnership is in existence, all equity capital raised by
Storage USA will be contributed to SUSA Partnership in exchange for Units or
other interests in SUSA Partnership.

      Management and Control.  The General Partner of SUSA Partnership has the
exclusive power to manage and control all of SUSA Partnership's business.  No
limited partner has any right to participate in or exercise management or
control over the SUSA Partnership's business.  Upon the occurrence of an event
of bankruptcy or the dissolution of the General Partner, the General Partner
will be deemed to be removed automatically; otherwise, the limited partners
may not remove the General Partner with or without cause.

      The Board of Directors has exclusive control over Storage USA's business
and affairs, subject to the restrictions in the Charter and Bylaws.  The Board
of Directors has adopted certain policies with respect to acquisition,
development, investing, financing and conflicts of interest, but these
policies may be altered or eliminated without a vote of the shareholders.
Accordingly, except for their vote in the elections of directors, shareholders
have no control over the ordinary business policies of Storage USA.

      Fiduciary Duties.  Under Tennessee law, the General Partner of SUSA
Partnership is accountable to SUSA Partnership as a fiduciary and,
consequently, must exercise good faith in all of its dealings with respect to
partnership affairs.  However, under the Partnership Agreement, the General
Partner is not required to consider the tax consequences to any limited
partner of any action taken by it.  So long as it acts in good faith, the
General Partner is not liable to a limited partner if the limited partner
suffers damages or does not receive certain benefits as a result of action or
inaction of the General Partner.

      Under Tennessee law, Storage USA's directors must perform their duties
in good faith, in a manner that they believe to be in the best interests of
the company and with the care an ordinarily prudent person in a like situation
would exercise under similar circumstances.  Directors of Storage USA who act
in such a manner generally will not be liable to Storage USA or its
shareholders for monetary damages arising from their activities.

      Management Limitation of Liability and Indemnification.  The Partnership
Agreement generally provides that the General Partner will not be liable for
monetary damages to SUSA Partnership or any limited partner for losses
sustained or liabilities incurred as a result of any act or omission if the
General Partner acted in good faith.  In addition, the General Partner is not
responsible for any misconduct or negligence on the part of its agents,
provided the General Partner appointed such agents in good faith.  The General
Partner may consult with legal counsel, accountants, consultants, real estate
brokers and such other persons.  Any action it takes or omits to take while
relying on the opinion of such persons, as to matters which the General
Partner reasonably believes to be within their professional or expert
competence, are conclusively presumed to have been done or omitted in good
faith and in accordance with such opinion.

<PAGE>

      The Partnership Agreement also provides for indemnification of the
General Partner, the directors and officers of the General Partner, and such
other persons as the General Partner may from time to time designate, against
any and all liabilities (joint or several and including reasonable legal fees
and expenses) arising from claims that relate to the operations of SUSA
Partnership.  However, SUSA Partnership may not indemnify any such person (1)
for an act or omission that was material to the matter giving rise to the
claim and either was committed in bad faith or was the result of active and
deliberate dishonesty, (2) if such person actually received an improper
benefit in money, property or services or (3) in the case of any criminal
proceeding, if such person had reasonable cause to believe that the act or
omission was unlawful.  Any indemnification will be made only out of the
assets of SUSA Partnership.

      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 ("TBCA") 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 (1) such
persons conducted themselves in good faith, (2) 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 (3) 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 will be paid out of the assets of
Storage USA and will not be recoverable from the shareholders.

      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.  However, a corporation cannot eliminate or
limit the liability of a director (1) for any breach of the director's duty of
loyalty to the corporation or its shareholders, (2) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of the law, or (3) 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.

      Anti-Takeover Provisions.  Except in limited circumstances,  SUSA
Partnership's  General Partner has exclusive  management  power over the
partnership's business and affairs.  The limited partners may not remove the
General Partner with or without cause.  Under the Partnership Agreement, the
General Partner may, in its sole discretion, prevent a limited partner from
transferring his interest or any rights as a limited partner except in certain
limited circumstances.  The General Partner may exercise this right of
approval to deter, delay or hamper attempts by persons to acquire a
controlling interest in SUSA Partnership.

<PAGE>

      As described above under "Restrictions on Ownership and Transfer," the
Charter contains provisions restricting the acquisition of shares of Common
Stock.

      In addition, Tennessee has adopted a series of statutes which may delay
or prevent a tender offer or takeover attempt that a shareholder might
consider in its best interest.

      Under the Tennessee Investor Protection Act, unless a Tennessee
corporation's  board of directors has  recommended a takeover  offer to
shareholders which was made on substantially equal terms to all shareholders,
no offeror beneficially owning 5% or more of any class of equity securities of
the offeree company, any of which was purchased within one year prior to the
proposed takeover offer, may offer to acquire any class of equity security of
an offeree company pursuant to a tender offer, if after the acquisition
thereof the offeror would be directly or indirectly a beneficial owner of more
than 10% of any class of outstanding equity securities of the company (a
"Takeover Offer").  However, this prohibition does not apply if the offeror,
before making such purchase, has made a public announcement of his intention
with respect to changing or influencing the management or control of the
offeree company, has made a full, fair and effective disclosure of such
intention to the person from whom he intends to acquire such securities and
has filed with the Tennessee Commissioner of Commerce and Insurance (the
"Commissioner") and the offeree company a statement signifying such intentions
and containing such additional information as the Commissioner by rule
prescribes.

      Such an offeror must provide that any equity securities of an offeree
company deposited or tendered pursuant to a Takeover Offer may be withdrawn by
an offeree at any time within seven days from the date the offer has become
effective following filing with the Commissioner and the offeree company a
public announcement of the terms or after 60 days from the date the offer has
become effective.  If an offeror makes a Takeover Offer for less than all of
the outstanding equity securities of any class, and if the number of
securities tendered is greater than the number the offeror has offered to
accept and pay for, the securities shall be accepted pro rata.  If an offeror
varies the terms of a Takeover Offer before its expiration date by increasing
the consideration offered to offerees, the offeror shall pay the increased
consideration for all equity securities accepted, whether accepted before or
after the variation in the terms of the offer.

      Under the Tennessee Business Combination Act, subject to certain
exceptions, no Tennessee corporation may engage in any "business combination"
with an "interested shareholder" for a period of five years following the date
that such shareholder became an interested shareholder unless prior to such
date the board of directors of the corporation approved either the business
combination or the transaction which resulted in the shareholder becoming an
interested shareholder.

      "Business combination" is defined by the statute as any (1) merger or
consolidation; (2) share exchange; (3) sale, lease, exchange, mortgage, pledge
or other transfer of assets representing 10% or more of (A) the aggregate
market value of the corporation's consolidated assets, (B) the aggregate
market value of the corporation's shares, or (C) the corporation's
consolidated net income; (4) issuance or transfer of shares from the
corporation to the interested shareholder; (5) plan of liquidation or
dissolution proposed by the interested shareholder; (6) transaction or
recapitalization which  increases the proportionate share of any outstanding
voting securities owned or controlled by the interested shareholder; or (7)
financing arrangement whereby any interested shareholder receives, directly or
indirectly, a benefit, except proportionately as a shareholder.

<PAGE>

      "Interested shareholder" is defined as (1) any person that is the
beneficial owner, directly or indirectly, of 10% or more of the voting power
of any class or series of outstanding voting stock of the corporation or (2)
an affiliate or associate of the corporation who at any time within the
five-year period immediately prior to the date in question was the beneficial
owner, directly or indirectly, of 10% or more of the voting power of any class
or series of the outstanding voting stock of the corporation.

      Consummation of a business combination that is subject to the five-year
moratorium is permitted after such period when the transaction complies with
all applicable charter and bylaw requirements and either (A) is approved by
the holders of two-thirds of the voting stock not beneficially owned by the
interested shareholder, or (B) meets certain fair price criteria.

      The Tennessee Greenmail Act prohibits a Tennessee corporation from
purchasing, directly or indirectly, any of its shares at a price above the
market value of such shares (defined as the average of the highest and lowest
closing market price for such shares during the 30 trading days preceding the
purchase and sale of the shares or preceding the commencement of announcement
or a tender offer if the seller of such shares has commenced a tender offer or
announced an intention to seek control of the corporation) from any person who
holds more than 3% of the class of securities to be purchased, if such person
has held such shares for less than two years, unless the purchase has been
approved by the affirmative vote of a majority of the outstanding shares of
each class of voting stock issued by the corporation or the corporation makes
an offer, of at least equal value per share, to all holders of shares of such
class.

      The Tennessee Control Share Acquisition Act provides that "control
shares" of a Tennessee corporation acquired in a "control share acquisition"
have the same voting rights as all other shares of the same class or series
only if approved at an annual or special meeting by the holders of a majority
of all shares entitled to vote generally with respect to the election of
directors, but excluding shares of stock owned by an acquiring person,
officers and employees of the corporation who are also directors.

      "Control shares" are voting shares of stock which, if aggregated with
all of the other shares of stock previously acquired by the person, would
entitle the acquiror to exercise or direct the exercise of voting power in
electing directors within one of the following ranges of voting power: (A)
one-fifth (1/5) or more but less than one-third (1/3) of all voting power; (B)
one-third (1/3) or more but less than a majority of all voting power; or (C) a
majority or more of all voting power.  Control shares do not include shares
that the acquiring person is then entitled to vote as a result of having
previously obtained  shareholder  approval.  A "control share acquisition"
means the acquisition, directly or indirectly, by any person of ownership of,
or the power to direct the exercise of voting power with respect to, issued
and outstanding control shares.

      A person who has made or proposes to make a control share acquisition,
upon the satisfaction of certain conditions (including an undertaking to pay
expenses and deliver a control share acquisition statement to the
corporation), may compel the board of directors to call a special meeting of
shareholders to be held within 50 days of demand to consider the voting rights
to be accorded the control shares acquired or to be acquired in the control
share acquisition.  If no request for a special meeting of shareholders is
made, consideration of the voting rights to be accorded the control shares
acquired or to be acquired in the control share acquisition shall be presented
at the next annual or special meeting of shareholders.

<PAGE>

      If voting rights are not approved at the shareholders' meeting, or if
the acquiring person does not deliver a control share acquisition statement as
permitted by the act, then, subject to certain conditions and limitations, the
corporation may redeem all but not less than all of the control shares
acquired in a control share acquisition, at any time during the period ending
60 days after the last acquisition of control shares by an acquiring person,
from the acquiring person for the fair value of such shares.  If a control
share acquisition statement is filed, fair value is determined as of the
effective date of the vote of the shareholders denying voting rights to the
acquiring person or, if no such statement is filed, as of the date of the last
acquisition of control shares by the acquiring person without regard to the
effect of the denial of voting rights.

      If voting rights for control shares are approved at a shareholders
meeting and the acquiror becomes entitled to vote a majority of the shares
entitled to vote, all shareholders who have not voted in favor of granting
such voting rights to the acquiring person may exercise appraisal rights.  The
fair value of the shares as determined for purposes of such appraisal rights
includes consideration of the valuations, future events or transactions
bearing upon the  corporation's value to the acquiring shareholder as
described in any valuations, projections or estimates made by or on behalf of
the acquiring person or his associates.

      The Tennessee Control Share Acquisition Act does not apply to shares
acquired in a merger, consolidation or share exchange if the corporation is a
party to the transaction.

      Storage USA's Bylaws contain a provision exempting from the Tennessee
Control Share Acquisition Act any and all such acquisitions by any person of
Storage USA's shares of capital stock.  There can be no assurance that such
provision will not be amended or eliminated at any point in the future.

      Voting Rights.  Under the Partnership Agreement, limited partners have
voting rights only as to the continuation of SUSA Partnership in certain
circumstances and certain amendments of the Partnership Agreement, as
described more fully below.  Otherwise, all decisions relating to the
operation and management of SUSA Partnership are made by the General Partner.
As of December 31, 1998, Storage USA held approximately 88% of the outstanding
interests in SUSA Partnership.  As limited partners redeem their Units,
Storage USA's percentage ownership of SUSA Partnership will increase.  If
additional Units are issued to third parties, Storage USA's percentage
ownership of SUSA Partnership will decrease.

      Shareholders of Storage USA have the right to vote on, among other
things, a merger or sale of substantially all of the assets of Storage USA,
certain amendments to the Charter and dissolution of the company.  All shares
of Common Stock have one vote, and the Charter permits the Board of Directors
to classify and issue Preferred Stock in one or more series having voting
power which may differ from that of the Common Stock.  See "Description of
Capital Stock."

      Amendment of the Partnership Agreement or the Charter.  The Partnership
Agreement may be amended by the General Partner without the consent of the
limited partners, except that certain amendments affecting the fundamental
rights of a limited partner must be approved by consent of limited partners
holding more than 51% of the Units.  Such consent is required for any
amendment that would (1) affect the redemption rights, (2) adversely affect
the rights of limited partners to receive distributions payable to them under
The Partnership Agreement, (3) alter SUSA Partnership's profit and loss
allocations, or (4) impose any obligation upon the limited partners to make
additional capital contributions to SUSA Partnership.

<PAGE>

      The Charter may be amended by the affirmative vote of the holders of a
majority of the outstanding shares of the Common Stock, with the shareholders
voting as a class with one vote per share (or by the written consent of such
majority if such a vote becomes permissible under Tennessee law).  Storage
USA's Bylaws may be amended by the Board of Directors or by vote of the
holders of a majority of the outstanding shares, provided that certain
provisions cannot be amended without the affirmative vote of 80% of the
members of the entire Board of Directors or the holders of 75% of the
outstanding shares of capital stock entitled to vote generally in the election
of the directors.

      Vote Required to Dissolve SUSA Partnership or Storage USA.  At any time
prior to December 31, 2054 (upon which date SUSA Partnership will terminate),
the General Partner may elect to dissolve SUSA Partnership in its sole
discretion.  Such dissolution shall also occur upon (1) the bankruptcy,
dissolution or withdrawal of the General Partner (unless the limited partners
unanimously elect to continue SUSA Partnership), (2) 90 days after the sale or
other disposition of all or substantially all the assets of SUSA Partnership
or (3) the redemption of all of the outstanding Units (other than those held
by the General Partner, if any).

      Under Tennessee law, the Board of Directors generally must recommend and
the holders of a majority of the outstanding Common Stock entitled to vote
must approve any proposal in order to dissolve Storage USA.

      Vote Required to Sell Assets or Merge.  Under The Partnership Agreement,
the sale, exchange, transfer or other disposition of all or substantially all
of SUSA Partnership's assets or merger or consolidation of the partnership
requires only the consent of the General Partner.

      Under Tennessee law, any merger or share exchange of Storage USA
requires the separate approval of the Board of Directors and each group of
shareholders entitled to vote on such matter by a majority of all votes
entitled to be cast by such group.  Under Tennessee law, the sale of all or
substantially all of the Storage USA's assets other than in the normal course
of business requires the approval of the Board of Directors and holders of a
majority of the outstanding shares of Common Stock.  No approval of the
shareholders is required for the sale of Storage USA's assets in the usual and
regular course of business.

      Compensation, Fees and Distributions.  Storage USA does not receive any
compensation for its services as General Partner of SUSA Partnership.  As a
partner in SUSA Partnership, however, the General Partner has the same right
to allocations and distributions as other partners.  In addition, SUSA
Partnership will reimburse the General Partner for all of its expenses related
to the ongoing operation of SUSA Partnership and any offering of partnership
interests in SUSA Partnership or capital stock of Storage USA.

      Liability of Investors.  Under The Partnership Agreement and applicable
state law, the liability of the limited partners for SUSA Partnership's debts
and obligations is generally limited to the amount of their investment in the
partnership, and limited partners are generally not liable for any debts,
liabilities, contracts or obligations of SUSA Partnership.

<PAGE>

      Under Tennessee law, Storage USA's shareholders are not personally
liable for the debts or obligations of the company.

      Nature of Investments.  The Units constitute equity interests entitling
each limited partner to his pro rata share of cash distributions made to the
limited partners of SUSA Partnership. SUSA Partnership generally intends to
retain and reinvest in its business proceeds of the sale of property or excess
refinancing proceeds.

      The shares of Common Stock constitute equity interests in Storage USA.
Storage USA is entitled to receive its pro rata share of distributions made by
SUSA Partnership with respect to the Units owned by Storage USA, and each
shareholder will be entitled to his pro rata share of any dividends or
distributions paid with respect to the Common Stock. The dividends payable to
the shareholders are not fixed in amount and are only paid if, when and as
declared by the Board of Directors. In order to qualify as a REIT, Storage USA
must distribute at least 95% of its annual taxable income (excluding capital
gains), and any taxable income (including capital gains) not distributed will
be subject to corporate income tax.

      Potential Dilution of Rights.  The General Partner of SUSA Partnership
is authorized, in its sole discretion and without the consent of the limited
partners, to cause the partnership to issue additional limited partnership
interests and other equity securities for any purpose at any time on terms and
conditions established by the General Partner.

      Storage USA's Board of Directors may issue, in its discretion,
additional shares of Common Stock and a variety of other equity securities
with such powers, preferences and rights as the Board of Directors may
designate.   The issuance of additional shares of either Common Stock or other
similar or senior equity securities may result in the dilution of the
interests of the shareholders.

      Liquidity.  Subject to certain exceptions, a limited partner may not
transfer any of his Units without (1) obtaining the prior written consent of
the General Partner, which consent may be withheld in its sole and absolute
discretion, and (2) meeting certain other requirements set forth in the
Partnership Agreement.  However, subject to certain restrictions, a limited
partner may transfer Units (A) as a gift to a member of a his immediate family
or a trust for the benefit of a member of a his immediate family or (B) if the
limited partner is a corporation or other business entity, to any of its
affiliates or subsidiaries or to any successor in interest.

      Limited partners should expect to hold their Units until they redeem
them for cash or shares of Common Stock, or until SUSA Partnership
terminates.  The right of a transferee to become a substituted limited partner
also is subject to the consent of the General Partner, and the General Partner
may withhold its consent in its sole and absolute discretion.  If the General
Partner does not consent to the admission of a transferee, the transferee will
succeed to all economic rights and benefits attributable to such Units
(including the right of redemption) but will not become a limited partner or
possess any other rights of limited partners (including the right to vote on
or consent to actions of the partnership).  The General Partner may require,
as a condition of any transfer, that the transferring limited partner assume
all costs incurred by SUSA Partnership in connection with such transfer.

<PAGE>

      Federal Income Taxation.  SUSA Partnership is not subject to federal
income taxes.  Instead, each holder of an interest in SUSA Partnership takes
into account its allocable share of the partnership's taxable income or loss
in determining its federal income tax liability.

      Income and loss from SUSA Partnership generally is subject to the
"passive activity" limitations.  Under the "passive activity" rules, income
and loss from SUSA Partnership that is considered "passive" income or loss
generally can be offset against income and loss, including passive loss
carry-forwards from prior years, from other investments that constitute
"passive activities."  However, if SUSA Partnership is considered a "publicly
traded partnership," then income and loss from SUSA Partnership can only be
offset against other income and loss from SUSA Partnership.  Income of the
partnership, however, that is attributable to dividends or interest does not
qualify as passive income and cannot be offset with losses and deductions from
a "passive activity."

      Cash distributions from SUSA Partnership are not taxable to a holder of
Units except to the extent they exceed such holder's basis in its Units, which
will include such holder's allocable share of SUSA Partnership's debt.  Each
year, holders of Units will receive a Schedule K-1 tax form containing
detailed tax information for inclusion in preparing their federal income tax
returns.  Holders of Units are required in some cases to file state income tax
returns and/or pay state income taxes in the states where SUSA Partnership
owns property, even if they are not residents of those states, and in some
such states SUSA Partnership is required to remit a withholding tax with
respect to distributions to such nonresidents.

      Storage USA elected to be taxed as a REIT effective for its taxable year
ended December 31, 1994.  So long as it qualifies as a REIT, Storage USA
generally will be permitted to deduct distributions paid to its shareholders,
which effectively will reduce or eliminate the "double taxation" that
typically results when a corporation earns income and distributes that income
to its shareholders in the form of dividends.  A REIT, however, is subject to
federal income tax on income that is not distributed and also may be subject
to federal income and excise taxes in certain circumstances.  The maximum
federal income tax rate for corporations currently is 35% and for individuals
is 39.6%.

      Dividends paid by Storage USA will be treated as "portfolio" income to
its shareholders and cannot be offset with losses from "passive activities."
Distributions made by Storage USA to its taxable domestic shareholders out of
current or accumulated earnings and profits will be taken into account by them
as ordinary income.  Distributions that are designated as capital gain
dividends generally will be taxed as long-term capital gain,  subject to
certain limitations.  Distributions in excess of current and accumulated
earnings and profits will be treated as a non-taxable return of capital to the
extent of a shareholder's adjusted basis in its Common Stock, and the excess
over a shareholder's adjusted basis will be taxed as capital gain.  Each year,
Storage USA shareholders, other than certain types of institutional investors,
will receive IRS Form 1099, which is used by corporations to report dividends
paid to their shareholders.  Shareholders who are individuals generally should
not be required to file state income tax returns and/or pay state income taxes
outside of their state of residence with respect to Storage USA's operations
and distributions.  Storage USA may be required to pay state income and/or
franchise taxes in some states.

<PAGE>

                       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 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.

      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.  Those 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" 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:

<PAGE>

      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 certain  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.

      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.

<PAGE>


                         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
            specified 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;

      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 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."

<PAGE>

      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.

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.  In general, 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" only if the
following conditions are met:

<PAGE>

      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.

      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.

<PAGE>

      Storage USA, through SUSA Partnership, which is not an independent
contractor, provides services with respect to the facilities and will provide
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;

      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;

      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 and walk-in customers;

      o     for a fee, providing packing and shipping services  to  tenants  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.

<PAGE>

      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."

      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 the Code.  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.

<PAGE>

      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;

      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
            6-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.

      A recent legislative proposal would allow Storage USA to own up to 100%
of the stock of taxable REIT subsidiaries, which could 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 would be subject to
restrictions on its stock ownership of those taxable subsidiaries.  The
taxable REIT subsidiary provision would be effective for taxable years
beginning after the date of enactment.  The proposed legislation would not
apply to Storage USA's existing taxable subsidiaries unless Storage USA so
elects or such a subsidiary engages in a new line of business or acquires
substantial new assets.

<PAGE>

      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.

      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 declaration.

<PAGE>

      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 some 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.


<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.  Subject to certain limitations, Storage USA will designate its capital
gain dividends as either 20% or 25% rate distributions.  A corporate U.S.
stockholder, however, may be required to treat up to 20% of capital gain
dividends as ordinary income.

<PAGE>

      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.  Storage
USA will notify stockholders after the close of 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.

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 depreciable real property is 25% to the extent that such gain
would have been treated as ordinary income if the property were personal
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.

<PAGE>

Information Reporting Requirements and Backup Withholding

      Storage USA will report to its stockholders and to the 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 another
exempt category 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."

                       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:

<PAGE>

      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.

      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:

<PAGE>

      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.  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, but excludes mortgage loans.  Under those rules, a non-U.S.
stockholder is taxed on distributions attributable to gain 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 the provisions
applicable to distributions that are attributable to gain from the sale of
U.S. real property interests on gain from the sale of its common stock 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 the provisions applicable to distributions that are
attributable to gain from the sale of U.S. real property interests 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 those provisions, 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 the provisions applicable to distributions that are
attributable to gain from the sale of U.S. real property interests 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.

<PAGE>

                             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.

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:

<PAGE>

      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 was 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.  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.

<PAGE>

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 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."

<PAGE>

      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.

      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 (such decrease being considered a
constructive cash distribution to the partners), would reduce Storage USA's
adjusted tax basis below zero, such distributions (including such constructive
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 currently 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.

<PAGE>

      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.

      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.

      A recent legislative proposal would allow Storage USA to own up to 100%
of the stock of taxable REIT subsidiaries which could 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 would be subject to
restrictions on its stock ownership of those taxable subsidiaries.  The
taxable REIT subsidiary provision would be effective for taxable years
beginning after the date of enactment.  The provision would not apply to
Storage USA's existing taxable subsidiaries unless Storage USA so elects or
such a subsidiary engages in a new line of business or acquires substantial
new assets.

<PAGE>

                              PLAN OF DISTRIBUTION

      This Prospectus relates to the possible issuance by Storage USA of the
shares of Common Stock if, and to the extent that, the Unitholders tender
their Units for redemption and Storage USA elects to redeem the Units for
shares of Common Stock.  SUSA Partnership issued 125,689 Units to the
Unitholders in exchange for interests in self-storage facilities on July 31,
1998.  The Units became redeemable on July 31, 1999.  Storage USA is
registering the issuance of 125,689 shares of Common Stock so that the
Unitholders will have freely tradable securities upon redemption of their
Units.  However, registration of these shares does not necessarily mean that
any of such shares will be issued by Storage USA or offered or sold by the
Unitholders.

      Storage USA may from time to time issue shares of Common Stock upon
redemption of Units.  Storage USA will exchange the redeeming partner's Units
for shares of Common Stock.  Consequently, with each such redemption, Storage
USA's interest in SUSA Partnership will increase.

                                 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 financial statements incorporated in this Registration Statement by
reference to the Annual Report on Form 10-K for the year ended December 31,
1999, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

<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  $1,079.00
      Accounting fees and expenses                          2,000.00
                                                            --------
                  TOTAL                                    $3,079.00

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.

      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

<PAGE>

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.

<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, 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.

<PAGE>

      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.


<PAGE>


                                   SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, the
registrant 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 21st day of July, 1999.

                                       STORAGE USA, INC.

                                       By:   /s/ Christopher P. Marr
                                          ----------------------------------
                                          Christopher P. Marr
                                          Chief Financial Officer

                               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 July 21, 1999.  Each of the undersigned officers and
directors of the registrant hereby constitutes Christopher P. Marr, John W.
McConomy and Randall S. Parks, any of whom may act, his true and lawful
attorneys-in-fact with full power to sign for him and in his 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 name and behalf in his 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.

            Signature                               Title & Capacity
            ---------                               ----------------

                                         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


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

<PAGE>


        /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


<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 5.1






                                  July 21, 1999

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

              Storage USA, Inc. Registration Statement on Form S-3
                      Unit Redemption for 125,689 Shares

Ladies and Gentlemen:

         We are acting as counsel for  Storage  USA,  Inc.  (the  "Company")  in
connection  with its  registration  under the  Securities Act of 1933 of 125,689
shares of its common stock (the  "Shares")  which are proposed to be offered and
sold 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 issued in redemption
of the partnership  units 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 Matters" in the Registration Statement.


                                      Very truly yours,

                                      /s/ Hunton & Williams




                                                                     Exhibit 8

                              July 21, 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 July 21, 1999 (the "Registration Statement") with respect to the
possible issuance by the Company of up to 125,689 shares (the "Redemption
Shares") of the common stock, par value $0.01 per share, of the Company (the
"Common Stock") if, and to the extent that, the current holders of 125,689
units of limited partnership interest ("Units") in SUSA Partnership, L.P., a
Tennessee limited partnership (the "Operating Partnership"), tender such
Units for redemption and the Company elects to redeem the Units for shares of
Common Stock.  You have requested our opinion regarding certain U.S. federal
income tax matters.

            The Company, through the Operating Partnership, owns interests in
self-storage facilities directly and through the following subsidiary
partnerships (the "Subsidiary Partnerships"): (1) Storage-USA of Palm Beach
County Limited Partnership, (2) SUSA/38th Avenue, Capitola, L.P.,
(3) Clarendon Storage Associates Limited Partnership, (4) Buzzman Partners I,
Limited Partnership, (5) Buzzman Partners II, Limited Partnership, (6)
Tamiami Mini-Storage Partners, Ltd., (7) 441 Mini-Storage Partners, Ltd., (8)
Sunset Mini-Storage Partners, Ltd., (9) Southeast Mini-Storage Limited
Partners, (10) Dade County Mini-Storage Associates, Ltd., (11) Preston Self
Storage, Ltd., (12) SUSA Hackensack, LP, (13) SUSA Harrison, LP, (14) SUSA

<PAGE>

Storage USA, Inc.
July 21, 1999
Page 2

Secaucus, LP, (15) SUSA Orange, LP, (16) Cole/Morgan, Ltd., (17) SUSA
Nashville, L.P., (18) SUSA Mesa, L.P., (19) Prospect Heights Self Storage,
LLC, (20) Storage Partners of Paoli, LP, (21) SUSA Germantown, LP, (22) SUSA
Columbia, LP, (23) SUSA Whitney Mesa , LP, (24) Frankford Road Self Storage,
Ltd., (25) Spring Creek Self Storage, Ltd., (26) McNeil Drive Self Storage,
Ltd., (27) SUSA/Poplar Partners, LP, (28) Storage Partners of Okeechobee,
Ltd., (29) Parklawn Storage Partners, LP, (30) SUSA Investments I, LLC, (31)
SUSA Investments II, LLC, (32) SUSA Hollywood, LP, (33) SUSA Brooklyn John,
LP, (34) SUSA Brooklyn Snyder, LP, (35) SUSA Long Island, LP, (36) ABC Self
Storage Limited Co., (37) SUSA Mt. Vernon, LLC, (38) SUSA Peachtree, LLC,
(39) DMMJ Limited Partnership, (40) River Road Limited Partnership, (41)
Storage Partners of West Colonial, LLC, (42) Storage Partners of Egg Harbor,
LLC, and (43) Storage Partners of Eatontown, LLC.

            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 contained as a part of the Registration Statement
            (the "Prospectus");

      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, and August 14, 1996 (the
            "Operating Partnership Agreement");

      5.    the partnership agreements of the Subsidiary Partnerships; and

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


<PAGE>


            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 (a "Partner") of the Operating Partnership and the
            Subsidiary Partnerships (each, a "Partnership"), other than the
            Company and Storage USA Trust, 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 partnership agreements of the Subsidiary Partnerships (each,
            a "Partnership Agreement"), 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 May 20, 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 the Operating
            Partnership, the Subsidiary Partnerships, 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.

      8.    No action will be taken by the Company, the Operating Partnership,
            the Subsidiary Partnerships, 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.

<PAGE>

            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 ended 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
            Redemption 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 Redemption 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


Baltimore, Maryland
July 20, 1999



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