SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

For the quarterly period ended March 31, 2009

                                       or

[ ]    Transition  Report  Pursuant to Section 13 or 15(d) of the  Securities
       Exchange Act of 1934

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

Commission File Number:  001-33519

                                 PUBLIC STORAGE
             (Exact name of registrant as specified in its charter)

                Maryland                                  95-3551121
----------------------------------------          -----------------------
     (State or other jurisdiction of                  (I.R.S. Employer
     incorporation or organization)                Identification Number)

701 Western Avenue, Glendale, California                  91201-2349
----------------------------------------          -----------------------
(Address of principal executive offices)                  (Zip Code)

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

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

                                 [X] Yes [ ] No

Indicate by check mark whether the registrant has submitted  electronically  and
posted on its corporate Web site, if any, every  Interactive  Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter)  during the  preceding 12 months (or for such shorter  period that
the registrant was required to submit and post such files).

                                 [ ] Yes [ ] No

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated filer, a non-accelerated  filer or a smaller reporting company.  See
the definitions of "large accelerated  filer",  "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

   Large Accelerated Filer [X] Accelerated Filer [ ] Non-accelerated Filer [ ]
                          Smaller Reporting Company [ ]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

                                 [ ] Yes [X] No

Indicate the number of the registrant's  outstanding common shares of beneficial
interest, as of May 7, 2009:

Common  Shares of  beneficial  interest,  $.10 par value per share - 169,489,966
shares





                                 PUBLIC STORAGE

                                      INDEX


                                                                          Pages

PART I.    FINANCIAL INFORMATION
           ---------------------

Item 1.    Financial Statements (Unaudited)

           Condensed Consolidated Balance Sheets at
              March 31, 2009 and December 31, 2008                            1

           Condensed Consolidated Statements of Income for the
              Three Months Ended March 31, 2009 and 2008                      2

           Condensed Consolidated Statement of Equity
              for the Three Months Ended March 31, 2009                       3

           Condensed Consolidated Statements of Cash Flows
              for the Three Months Ended March 31, 2009 and 2008          4 - 5

           Notes to Condensed Consolidated Financial Statements          6 - 33

Item 2.    Management's Discussion and Analysis of
              Financial Condition and Results of Operations             34 - 58

Item 3.    Quantitative and Qualitative Disclosures about Market Risk   58 - 59

Item 4.    Controls and Procedures                                           60

PART II.   OTHER INFORMATION (Items 3, 4 and 5 are not applicable)
           -----------------

Item 1.    Legal Proceedings                                                 61

Item 1A.   Risk Factors                                                      61

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds  61 - 62

Item 6.    Exhibits                                                          62







                                 PUBLIC STORAGE
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    (Amounts in thousands, except share data)




                                                                                  March 31,          December 31,
                                                                                    2009                 2008
                                                                               ---------------     ----------------
                                                                                (Unaudited)           (Unaudited)
                                   ASSETS

                                                                                              
  Cash and cash equivalents...............................................     $     493,400        $     680,701
  Real estate facilities, at cost:
     Land.................................................................         2,715,866            2,716,254
     Buildings............................................................         7,507,641            7,490,768
                                                                               ---------------     ----------------
                                                                                  10,223,507           10,207,022
     Accumulated depreciation.............................................        (2,485,242)          (2,405,473)
                                                                               ---------------     ----------------
                                                                                   7,738,265            7,801,549
     Construction in process..............................................             9,317               20,340
                                                                               ---------------     ----------------
                                                                                   7,747,582            7,821,889

  Investment in real estate entities......................................           545,224              544,598
  Goodwill, net...........................................................           174,634              174,634
  Intangible assets, net..................................................            49,748               52,005
  Loan receivable from Shurgard Europe....................................           517,497              552,361
  Other assets............................................................            98,412              109,857
                                                                               ---------------     ----------------
                Total assets..............................................     $   9,626,497        $   9,936,045
                                                                               ===============     ================
                           LIABILITIES AND EQUITY

  Notes payable...........................................................     $     527,235        $     643,811
  Accrued and other liabilities...........................................           210,573              212,353
                                                                               ---------------     ----------------
           Total liabilities..............................................           737,808              856,164

  Redeemable noncontrolling interests in subsidiaries (Note 7)............            12,798               12,777

  Commitments and contingencies (Note 12)
  Equity:
     Public Storage shareholders' equity:
      Cumulative Preferred Shares of beneficial interest, $0.01 par
         value, 100,000,000 shares authorized, 886,140 shares issued
         (in series) and outstanding, (887,122 at December 31, 2008)
         at liquidation preference........................................         3,399,777            3,424,327
      Common Shares of beneficial interest, $0.10 par value, 650,000,000
         shares authorized, 168,343,759 shares issued and outstanding
         (168,279,732 at December 31, 2008)...............................            16,835               16,829
      Equity Shares of beneficial interest, Series A, $0.01 par value,
         100,000,000 shares authorized, 8,377.193 shares issued and
         outstanding......................................................                 -                    -
      Paid-in capital.....................................................         5,669,796            5,590,093
      Retained earnings...................................................          (301,582)            (290,323)
      Accumulated other comprehensive loss................................           (42,134)             (31,931)
                                                                               ---------------     ----------------
            Total Public Storage shareholders' equity.....................         8,742,692            8,708,995
     Equity of permanent noncontrolling interests in subsidiaries (Note 7)           133,199              358,109
                                                                               ---------------     ----------------
        Total equity......................................................         8,875,891            9,067,104
                                                                               ---------------     ----------------
                Total liabilities and equity..............................     $   9,626,497        $   9,936,045
                                                                               ===============     ================


                            See accompanying notes.
                                       1


                                 PUBLIC STORAGE
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                (Amounts in thousands, except per share amounts)
                                   (Unaudited)



                                                                                    Three Months Ended
                                                                                        March 31,
                                                                            ----------------------------------
                                                                                 2009               2008
                                                                            ---------------    ---------------

Revenues:
                                                                                          
   Self-storage rental income.......................................         $    371,598       $    424,606
   Ancillary operating revenue......................................               25,835             30,037
   Interest and other income........................................                7,633              2,844
                                                                            ---------------    ---------------
                                                                                  405,066            457,487
                                                                            ---------------    ---------------
Expenses:
  Cost of operations (excluding depreciation and amortization):
      Self-storage facilities.......................................              133,641            156,815
      Ancillary operations..........................................                9,653             11,304
  Depreciation and amortization.....................................               85,167            122,441
  General and administrative........................................                9,679             14,916
  Interest expense..................................................                8,128             16,487
                                                                            ---------------    ---------------
                                                                                  246,268            321,963
                                                                            ---------------    ---------------
Income from continuing operations before equity in earnings of real
   estate entities, gain on disposition of an interest in Shurgard
   Europe and other real estate investments or early retirement of
   debt, and foreign currency exchange (loss) gain..................              158,798            135,524

Equity in earnings of real estate entities..........................               22,811              2,729
Gain on disposition of an interest in Shurgard Europe (Note 3)......                    -            341,865
Gain on disposition of other real estate investments................                2,722                  -
Gain on early retirement of debt....................................                4,114                  -
Foreign currency exchange (loss) gain...............................              (34,733)            40,971
                                                                            ---------------    ---------------
Income from continuing operations...................................              153,712            521,089
Discontinued operations.............................................                 (283)            (1,148)
                                                                            ---------------    ---------------
Net income..........................................................              153,429            519,941
                                                                            ---------------    ---------------
Net income allocated from (to) noncontrolling equity interests (Note 7)            63,573             (7,599)
                                                                            ---------------    ---------------
Net income allocable to Public Storage shareholders.................         $    217,002       $    512,342
                                                                            ===============    ===============
Allocation of net income to Public Storage shareholders:
   Preferred shareholders based on distributions paid...............         $     58,108       $     60,333
   Preferred shareholders based on redemptions......................               (6,218)                 -
   Equity Shares, Series A..........................................                5,131              5,356
   Restricted share units ..........................................                  486              1,825
   Common shareholders..............................................              159,495            444,828
                                                                            ---------------    ---------------
                                                                             $    217,002       $    512,342
                                                                            ===============    ===============
Net income per common share - basic
   Continuing operations............................................         $       0.95       $       2.65
   Discontinued operations..........................................                   -               (0.01)
                                                                            ---------------    ---------------
                                                                             $       0.95       $       2.64
                                                                            ===============    ===============
Net income per common share - diluted
   Continuing operations............................................         $       0.95       $       2.64
   Discontinued operations..........................................                   -               (0.01)
                                                                            ---------------    ---------------
                                                                             $       0.95       $       2.63
                                                                            ===============    ===============
Net income per depositary share of Equity Shares, Series A (basic and
   diluted) ........................................................         $       0.61       $       0.61
                                                                            ===============    ===============
Basic weighted average common shares outstanding....................              168,312            168,586
                                                                            ===============    ===============
Diluted weighted average common shares outstanding..................              168,473            168,982
                                                                            ===============    ===============
Weighted average shares of Equity Shares, Series A (basic and diluted)              8,377              8,744
                                                                            ===============    ===============


                            See accompanying notes.
                                       2


                                 PUBLIC STORAGE
                   CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
                    (Amounts in thousands, except share data)
                                   (Unaudited)



                                                                                                      Accumulated     Total Public
                                       Cumulative                                                        Other           Storage
                                        Preferred        Common         Paid-in         Retained     Comprehensive    Shareholders'
                                         Shares          Shares         Capital         Earnings     Income (Loss)       Equity
                                      --------------   ------------  -------------   -------------  ---------------  --------------
                                                                                                   
Balance at December 31, 2008.........  $  3,424,327     $  16,829    $  5,590,093    $   (290,323)    $  (31,931)    $  8,708,995
Repurchase of cumulative preferred
  shares (982,000 shares) (Note 8)...       (24,550)            -           7,015               -              -          (17,535)
Redemption of permanent
  noncontrolling equity interests
  (Note 7)...........................             -             -          72,000               -              -           72,000
Issuance of common shares in
   connection with share-based
   compensation (64,027 shares)
   (Note 10).........................             -             6             549               -              -              555
Stock-based compensation expense
   (Note 10) ........................             -             -             139               -              -              139
 Adjustments of permanent
   noncontrolling interests in
   subsidiaries to liquidation value
   (Note 7)..........................             -             -               -             (99)             -              (99)
Net income of the Company............             -             -               -         145,264              -          145,264
Net income allocated from redeemable
   noncontrolling interests in
   subsidiaries (Note 7).............             -             -               -            (262)             -             (262)
Distributions to equity holders:
   Cumulative preferred shares (Note
     8)..............................             -             -               -         (58,108)             -          (58,108)
   Permanent noncontrolling                                                                                                     -
     interests in subsidiaries ......             -             -               -                              -
   Equity Shares, Series A ($0.613
     per depositary share)...........             -             -               -          (5,131)             -           (5,131)
   Holders of unvested restricted
     share units.....................             -             -               -            (341)             -             (341)
   Common Shares ($0.55 per share)...             -             -               -         (92,582)             -          (92,582)
Other comprehensive income: Currency
  translation adjustments (Note 2)...             -             -               -               -        (10,203)         (10,203)
                                      --------------   ------------  -------------   -------------  ---------------  --------------
Balance at March 31, 2009............  $  3,399,777     $  16,835    $  5,669,796    $   (301,582)    $  (42,134)    $  8,742,692
                                      ==============   ============  =============   =============  ===============  ==============





                                          Permanent
                                       Noncontrolling
                                      Equity Interests
                                       In Subsidiares    Total Equity
                                      ----------------  ---------------
                                                  
Balance at December 31, 2008.........  $    358,109     $  9,067,104
Repurchase of cumulative preferred
  shares (982,000 shares) (Note 8)...             -          (17,535)
Redemption of permanent
  noncontrolling equity interests
  (Note 7)...........................      (225,000)        (153,000)
Issuance of common shares in
   connection with share-based
   compensation (64,027 shares)
   (Note 10).........................             -              555
Stock-based compensation expense
   (Note 10) ........................             -              139
 Adjustments of permanent
   noncontrolling interests in
   subsidiaries to liquidation value
   (Note 7)..........................             -              (99)
Net income of the Company............         8,165          153,429
Net income allocated from redeemable
   noncontrolling interests in
   subsidiaries (Note 7).............             -             (262)
Distributions to equity holders:
   Cumulative preferred shares (Note
     8)..............................             -          (58,108)
   Permanent noncontrolling
     interests in subsidiaries ......        (8,075)          (8,075)
   Equity Shares, Series A ($0.613
     per depositary share)...........             -           (5,131)
   Holders of unvested restricted
     share units.....................             -             (341)
   Common Shares ($0.55 per share)...             -          (92,582)
Other comprehensive income: Currency
  translation adjustments (Note 2)...             -          (10,203)
                                      ----------------  ---------------
Balance at March 31, 2009............  $    133,199     $  8,875,891
                                      ================  ===============


                            See accompanying notes.
                                       3




                                 PUBLIC STORAGE
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in thousands)
                                   (Unaudited)



                                                                                      For the Three Months Ended
                                                                                              March 31,
                                                                                   -------------------------------
                                                                                         2009            2008
                                                                                   --------------  ---------------
Cash flows from operating activities:
                                                                                              
   Net income...............................................................        $   153,429     $   519,941
   Adjustments to reconcile net income to net cash provided by operating
     activities:
    Gain on disposition of an interest in Shurgard Europe (Note 3)..........                  -        (341,865)
    Gain on disposition of other real estate investments including amounts in
       discontinued operations (Note 4).....................................             (2,722)              -
    Gain on early retirement of debt (Note 6)...............................             (4,114)              -
    Depreciation and amortization including amounts in discontinued
       operations...........................................................             85,200         122,491
    Equity share of income allocations from investee's repurchases of
       preferred stock .....................................................            (16,284)              -
    Distributions received from real estate entities in excess of other equity
       in earnings..........................................................              5,292           3,764
    Foreign currency exchange loss (gain)...................................             34,733         (40,971)
    Adjustments for stock-based compensation, amortization of note premium,
       and other............................................................              3,991         (23,694)
                                                                                   --------------  ---------------
       Total adjustments....................................................            106,096        (280,275)
                                                                                   --------------  ---------------
       Net cash provided by operating activities............................            259,525         239,666
                                                                                   --------------  ---------------
Cash flows from investing activities:
    Capital improvements to real estate facilities .........................             (8,499)         (6,874)
    Construction in process.................................................             (2,328)        (24,111)
    Proceeds from sales of other real estate investments....................             10,261               -
    Proceeds from the disposition of interest in Shurgard Europe (Note 3)...                  -         601,485
    Deconsolidation of Shurgard Europe (Note 3).............................                  -         (34,588)
    Investment in Shurgard Europe...........................................                  -         (32,911)
    Other investing activities..............................................               (825)          3,787
                                                                                   --------------  ---------------
       Net cash (used in) provided by investing activities..................             (1,391)        506,788
                                                                                   --------------  ---------------
Cash flows from financing activities:
    Principal payments on notes payable.....................................             (1,890)         (4,368)
    Redemption of senior unsecured notes payable............................           (109,622)              -
    Proceeds from borrowing on debt of Existing European Joint Ventures.....                  -          14,654
    Net proceeds from the issuance of common shares.........................                555           2,503
    Repurchases of common shares............................................                  -        (111,903)
    Redemption of cumulative preferred shares...............................            (17,535)              -
    Redemption of permanent noncontrolling equity interests.................           (153,000)              -
    Distributions paid to Public Storage shareholders.......................           (156,162)       (158,472)
    Distributions paid to permanent noncontrolling equity interests.........             (8,075)         (9,924)
                                                                                   --------------  ---------------
       Net cash used in financing activities................................           (445,729)       (267,510)
                                                                                   --------------  ---------------
Net (decrease) increase in cash and cash equivalents........................           (187,595)        478,944
Net effect of foreign exchange translation on cash..........................                294           2,544
Cash and cash equivalents at the beginning of the period....................            680,701         245,444
                                                                                   --------------  ---------------
Cash and cash equivalents at the end of the period..........................        $   493,400     $   726,932
                                                                                   ==============  ===============



                            See accompanying notes.
                                       4





                                 PUBLIC STORAGE
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in thousands)
                                  (Unaudited)

                                   (Continued)



                                                                                   For the Three Months Ended
                                                                                           March 31,
                                                                                  ------------------------------
                                                                                      2009            2008
                                                                                  -------------   --------------
Supplemental schedule of non cash investing and financing activities:

   Foreign currency translation adjustment:
                                                                                            
       Real estate facilities, net of accumulated depreciation...........          $        -     $    (96,534)
       Construction in process...........................................                   -             (956)
       Investment in real estate entities................................             (10,366)               -
       Intangible assets, net............................................                   -           (4,529)
       Loan receivable from Shurgard Europe..............................             (34,864)               -
       Other assets......................................................                   -           (3,742)
       Notes payable.....................................................                   -           28,912
       Accrued and other liabilities.....................................                   -            5,879
       Permanent noncontrolling equity interests in subsidiaries.........                   -            7,249
       Accumulated other comprehensive (loss) income.....................              45,524           66,265

   Deconsolidation of Shurgard Europe (Note 3)
       Real estate facilities, net of accumulated depreciation...........                   -        1,693,524
       Construction in process...........................................                   -           10,886
       Investment in real estate entities................................                   -         (594,330)
       Loan receivable from Shurgard Europe..............................                   -         (618,822)
       Intangible assets, net............................................                   -           78,135
       Other assets......................................................                   -           68,486
       Notes payable.....................................................                   -         (424,995)
       Accrued and other liabilities.....................................                   -          (98,571)
       Permanent noncontrolling equity interests in subsidiaries.........                   -         (148,901)





                            See accompanuing notes.
                                       5




                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

1.   Description of the Business
     ---------------------------

              Public  Storage,  Inc.,  formerly a  California  corporation,  was
     organized  in 1980.  Effective  June 1,  2007,  following  approval  by our
     shareholders,  we reorganized  Public Storage,  Inc. into Public Storage, a
     Maryland real estate investment trust (referred to herein as "the Company",
     "the Trust",  "we",  "us",  or "our").  Our principal  business  activities
     include  the   acquisition,   development,   ownership   and  operation  of
     self-storage  facilities which offer storage spaces for lease, generally on
     a  month-to-month  basis,  for personal and business use. Our  self-storage
     facilities  are located  primarily in the United States  ("U.S.").  We also
     have interests in self-storage facilities located in seven Western European
     countries.

              At March 31, 2009, we had direct and indirect equity  interests in
     2,010  self-storage  facilities  located in 38 states  operating  under the
     "Public  Storage" name, and 183 self-storage  facilities  located in Europe
     which  operate  under the  "Shurgard  Storage  Centers"  name. We also have
     direct and  indirect  equity  interests  in  approximately  21 million  net
     rentable  square feet of commercial  space located in 11 states in the U.S.
     primarily  operated  by PS  Business  Parks,  Inc.  ("PSB")  under  the "PS
     Business Parks" name.

              Any reference to the number of properties,  square footage, number
     of tenant  reinsurance  policies  outstanding and the aggregate coverage of
     such  reinsurance  policies  are  unaudited  and  outside  the scope of our
     independent  registered  public  accounting  firm's review of our financial
     statements  in  accordance   with  the  standards  of  the  Public  Company
     Accounting Oversight Board.

2.   Summary of Significant Accounting Policies
     ------------------------------------------

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

              The  accompanying   unaudited  condensed   consolidated  financial
     statements  have been prepared in accordance with U.S.  generally  accepted
     accounting  principles  ("GAAP") for interim financial  information and the
     instructions  to Form 10-Q and Article 10 of Regulation  S-X.  Accordingly,
     they do not include all of the  information  and notes required by GAAP for
     complete  financial   statements.   In  the  opinion  of  management,   all
     adjustments  (consisting  of normal and recurring  adjustments)  considered
     necessary for a fair  presentation  have been reflected in these  unaudited
     condensed  consolidated  financial  statements.  Operating  results for the
     three months  ended March 31, 2009 are not  necessarily  indicative  of the
     results that may be expected  for the year ending  December 31, 2009 due to
     seasonality  and  other  factors.  The  accompanying   unaudited  condensed
     consolidated   financial  statements  should  be  read  together  with  the
     consolidated  financial  statements  and  related  notes  included  in  the
     Company's Annual Report on Form 10-K for the year ended December 31, 2008.

              Certain  amounts  previously  reported have been  reclassified  to
     conform  to  the  March  31,  2009  presentation,   including  discontinued
     operations, the grouping of the separate captions "cumulative earnings" and
     "cumulative  distributions"  into  "retained  earnings"  on  our  condensed
     consolidated balance sheet, as well as reclassifications  required by newly
     implemented accounting standards described below.

     Adjustments due to accounting  pronouncements becoming effective
     ----------------------------------------------------------------
     January 1, 2009
     ---------------

              Statement   of   Financial    Accounting    Standards   No.   160,
     "Noncontrolling   Interests  in  Consolidated  Financial  Statements  -  an
     amendment  of ARB No. 51" ("SFAS No. 160") and other  accounting  standards
     implemented by the Financial  Accounting Standards Board and the Securities

                                       6


                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

     and  Exchange  Commission  ("SEC")  (collectively,  the  "Revised  Minority
     Interest Standards") became effective January 1, 2009. As a result, we have
     reclassified  certain equity interests  previously  referred to as minority
     interests  on  our  balance  sheet  at  December  31,  2008  to  "permanent
     noncontrolling  interests in  subsidiaries"  or "redeemable  noncontrolling
     interests  in  subsidiaries."  These  reclassifications   increased  equity
     $351,640,000,  decreased  minority  interest  $364,417,000,  and  increased
     redeemable  noncontrolling  interests in subsidiaries  by  $12,777,000,  as
     compared to the amounts  previously  presented as of December 31, 2008.  On
     our condensed  consolidated  statement of income, income allocations to the
     aforementioned  equity interests were reclassified from "minority  interest
     in income",  a reduction to income,  to "income allocated to noncontrolling
     interests in  subsidiaries," an allocation of net income in calculating net
     income allocable to our common  shareholders.  These adjustments  increased
     net income $7,599,000 for the three months ended March 31, 2008, but had no
     impact upon net income allocable to our common  shareholders or on earnings
     per common share, as compared to amounts previously presented.

              In addition,  FASB Staff  Position  No. EITF 03-6-1,  "Determining
     Whether  Instruments  Granted  in  Share-Based  Payment   Transactions  Are
     Participating Securities," which became effective January 1, 2009, requires
     the "two class"  method of  allocating  income with  respect to  restricted
     share units to  determine  basic and  diluted  earnings  per common  share.
     Previously,  restricted  share  units were  included  in  weighted  average
     diluted shares,  based upon application of the treasury stock method.  This
     change resulted in a decrease in income allocable to common shareholders of
     approximately  $1,825,000 and a decrease in diluted weighted average common
     shares outstanding of 248,000 for the three months ended March 31, 2008. As
     a result of these  changes,  net income per basic and diluted  earnings per
     common  share  decreased   approximately  $0.01,  as  compared  to  amounts
     previously presented for the three months ended March 31, 2008.

     Consolidation Policy
     --------------------

              Entities  in which we have an  interest  are  first  evaluated  to
     determine  whether,  in  accordance  with the  provisions  of the Financial
     Accounting  Standards  Board's  Interpretation  No. 46R,  "Consolidation of
     Variable  Interest  Entities," they represent  Variable  Interest  Entities
     ("VIE's").  VIE's in which we are the primary beneficiary are consolidated.
     Entities that are not VIE's that we control are consolidated.

              When we are the general partner,  we are considered to control the
     partnership unless the limited partners possess  substantial  "kick-out" or
     "participative"  rights as defined in Emerging  Issues Task Force Statement
     04-5 - "Determining  whether a general partner or the general partners as a
     group,  controls a limited  partnership  or similar entity when the limited
     partners have certain rights" ("EITF 04-5").

              The accounts of the  entities we control,  along with the accounts
     of the VIE's for which we are the primary beneficiary,  are included in our
     condensed consolidated financial statements,  and all intercompany balances
     and transactions are eliminated.  We account for our investment in entities
     that we do not consolidate  using the equity method of accounting or, if we
     do not have the ability to exercise significant influence over an investee,
     the  cost  method  of  accounting.  Changes  in  consolidation  status  are
     reflected  effective  the date the change of control  or  determination  of
     primary  beneficiary status occurred,  and previously  reported periods are
     not restated. The entities that we consolidate during the periods, to which
     the reference  applies,  are referred to hereinafter  as the  "Consolidated
     Entities." The entities that we have an interest in but do not  consolidate
     during  the  periods,  to which the  reference  applies,  are  referred  to
     hereinafter as the "Unconsolidated Entities."

              Collectively,  at March 31, 2009, the Company and the Consolidated
     Entities own a total of 2,000 real estate  facilities,  consisting of 1,991
     self-storage  facilities in the U.S., one self-storage  facility in London,
     England and eight commercial facilities in the U.S.

                                       7


                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

              At March 31, 2009,  the  Unconsolidated  Entities are comprised of
     PSB,  Shurgard  Europe,  as well  as  various  limited  and  joint  venture
     partnerships  (referred to as the "Other Investments").  At March 31, 2009,
     PSB owns  approximately  19.6 million  rentable  square feet of  commercial
     space,  Shurgard  Europe has  interests in 182  self-storage  facilities in
     Europe with 9.6 million net rentable square feet, and the Other Investments
     own in aggregate 19 self-storage facilities in the U.S.

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

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

     Income Taxes
     ------------

              For  all  taxable  years  subsequent  to  1980,  the  Company  has
     qualified  and intends to  continue to qualify as a real estate  investment
     trust ("REIT"),  as defined in Section 856 of the Internal Revenue Code. As
     a REIT, we do not incur federal or significant state tax on that portion of
     our taxable income which is distributed to our shareholders,  provided that
     we meet certain  tests.  We believe we have met these tests during 2008 and
     will meet these  tests  during  2009 and,  accordingly,  no  provision  for
     federal  income  taxes  has  been  made  in  the   accompanying   condensed
     consolidated  financial  statements on income  produced and  distributed on
     real estate rental operations. Our taxable REIT subsidiaries are subject to
     regular corporate tax on their taxable income, and such corporate taxes are
     presented in ancillary  cost of  operations in our  accompanying  condensed
     consolidated  statements  of income.  We also are subject to certain  state
     income taxes, which are presented in general and administrative  expense in
     our accompanying condensed consolidated statements of income.

              We adopted the provisions of Financial  Accounting Standards Board
     ("FASB") Interpretation No. 48, "Accounting for Uncertainty in Income Taxes
     - an  interpretation  of FASB  Statement No. 109" ("FIN 48"), on January 1,
     2007.  FIN 48 clarifies  the  accounting  for  uncertainty  in income taxes
     recognized in an enterprise's  financial  statement in accordance with FASB
     Statement 109,  "Accounting for Income Taxes", and prescribes a recognition
     threshold and measurement process for financial  statement  recognition and
     measurement  of a tax  position  taken  or  expected  to be  taken in a tax
     return.  FIN 48 also provides  guidance on  derecognition,  classification,
     interest and  penalties,  accounting in interim  periods,  disclosures  and
     transition.

              Based on our  evaluation,  we have  concluded  that  there  are no
     significant  uncertain tax positions requiring recognition in our financial
     statements.  Our  evaluation was performed for all tax periods which remain
     subject to examination by major tax  jurisdictions as of March 31, 2009, as
     well as the interim period ended March 31, 2009.

     Financial Instruments
     ---------------------

              We have  estimated  the fair  value of our  financial  instruments
     using available market information and appropriate valuation methodologies.
     Considerable  judgment is required in  interpreting  market data to develop
     estimates  of market  value.  Accordingly,  estimated  fair  values are not
     necessarily  indicative  of the  amounts  that could be realized in current
     market exchanges.

              For purposes of financial statement presentation,  we consider all
     highly liquid financial instruments such as short-term treasury securities,
     money  market funds with daily  liquidity  and a rating in excess of AAA by
     Standard and Poor's,  or investment grade short-term  commercial paper with
     remaining  maturities of three months or less at the date of acquisition to

                                       8


                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

     be  cash  equivalents.  Any  such  cash  and  cash  equivalents  which  are
     restricted from general corporate use (restricted cash) due to insurance or
     other regulations, or based upon contractual requirements,  are included in
     other assets.

              Due  to  the  short  period  to  maturity  of our  cash  and  cash
     equivalents,  accounts receivable and other financial  instruments included
     in other assets, and accrued and other liabilities, we believe the carrying
     values as  presented  on the  consolidated  balance  sheets are  reasonable
     estimates of fair value.

              Financial assets that are exposed to credit risk consist primarily
     of cash and cash equivalents,  notes receivable from affiliate,  as well as
     accounts  receivable and restricted cash which are included in other assets
     on our accompanying  condensed  consolidated  balance sheets. Cash and cash
     equivalents  and  restricted  cash,  consisting of short-term  investments,
     including  commercial  paper,  are only invested in investment  instruments
     with an investment grade rating.  Accounts receivable are not a significant
     portion of total assets and are comprised of a large number of individually
     insignificant  customer  balances.  We have a loan receivable from Shurgard
     Europe totaling  $517,497,000  at March 31, 2009.  Although there can be no
     assurance,  we believe that Shurgard  Europe has  sufficient  liquidity and
     collateral,  and we have sufficient  creditor rights, such that credit risk
     is  minimal.  In  addition,  we  believe  the  interest  rate  on the  loan
     approximates the market rate for loans with similar credit  characteristics
     and  tenor.  Accordingly,  we  believe  the  carrying  value  of  the  loan
     approximates  fair value based on these  characteristics  and other  market
     data, which represent significant  unobservable inputs, which are "Level 3"
     inputs as the term is utilized in SFAS No.  157,  "Fair Value  Measurement"
     (or SFAS No. 157).

              At March 31, 2009,  due  primarily to our  investment  in and loan
     receivable from Shurgard Europe,  our operations and our financial position
     are affected by fluctuations in the exchange rates between the Euro, and to
     a lesser extent, other European currencies, against the U.S. Dollar.

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

              Real estate facilities are recorded at cost. Costs associated with
     the acquisition,  development,  construction, renovation and improvement of
     properties  are  capitalized.  Interest,  property  taxes and  other  costs
     associated with  development  incurred during the  construction  period are
     capitalized as building cost. Costs associated with the sale of real estate
     facilities  or  interests  in  real  estate  investments  are  expensed  as
     incurred.  The purchase cost of existing  self-storage  facilities  that we
     acquire are allocated based upon relative fair value of the land,  building
     and tenant intangible components of the real estate facility.  Expenditures
     for  repairs and  maintenance  are  expensed  when  incurred.  Depreciation
     expense is  computed  using the  straight-line  method  over the  estimated
     useful lives of the buildings and improvements,  which generally range from
     5 to 25 years.

     Other Assets
     ------------

              Other assets primarily consist of prepaid expenses, investments in
     held-to-maturity debt securities, accounts receivable, interest receivable,
     restricted cash, merchandise inventory held for sale, as well as trucks and
     other equipment associated with our ancillary operations.

     Accrued and Other Liabilities
     -----------------------------

              Accrued and other  liabilities  consist primarily of real property
     tax accruals,  tenant prepayments of rents,  accrued interest payable,  and
     trade payables.  They also include losses and loss  adjustment  liabilities
     for our own  exposures,  as well as estimated  losses related to our tenant
     insurance  activities,  which  are not  covered  by  third-party  insurance
     carriers,  aggregating  $27,814,000  at  March  31,  2009  ($26,724,000  at
     December 31, 2008).

                                       9


                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

     Goodwill
     --------

              Goodwill  represents the excess of acquisition  cost over the fair
     value of net  tangible  and  identifiable  intangible  assets  acquired  in
     business  combinations.  Each business  combination from which our goodwill
     arose was for the  acquisition of single  businesses and  accordingly,  the
     allocation  of our goodwill to our business  segments is based  directly on
     such  acquisitions.  Our goodwill has an  indeterminate  life. Our goodwill
     balance of  $174,634,000  is reported net of  accumulated  amortization  of
     $85,085,000 as of March 31, 2009 and December 31, 2008 in our  accompanying
     condensed consolidated balance sheets.

              We evaluate  impairment  of goodwill  annually  by  comparing  the
     aggregate book value  (including  goodwill) of each reporting unit to their
     respective  estimated  fair  value.  No  impairment  of  our  goodwill  was
     identified  in our annual  evaluation  at December 31, 2008.  No impairment
     indicators  were noted as of March 31,  2009 which  would have  required an
     interim evaluation of goodwill for impairment.

     Intangible Assets
     -----------------

              We acquire finite-lived  intangible assets representing  primarily
     the tenants in place (a "Tenant Intangible") at the date of the acquisition
     of each respective facility,  and Tenant Intangibles are amortized relative
     to the benefit of the tenants in place to each  period.  At March 31, 2009,
     our Tenant Intangibles have a net book value of $30,924,000 ($33,181,000 at
     December  31,  2008),   which  is  net  of  accumulated   amortization   of
     $338,262,000 ($336,005,000 at December 31, 2008).

              Amortization  expense of $2,257,000 and  $28,411,000  was recorded
     for our Tenant  Intangibles  for the three  months ended March 31, 2009 and
     2008,  respectively.  The  estimated  future  amortization  expense for our
     finite-lived intangible assets is as follows:

             2009 (remainder of)                   $     2,814,000
             2010                                        2,724,000
             2011                                        2,395,000
             2012                                        2,327,000
             2013                                        2,222,000
             2014 and beyond                            18,442,000
                                                   ---------------
                                                   $    30,924,000
                                                   ===============

              We  also  have  an  intangible   representing  the  value  of  the
     "Shurgard"  trade  name,  which is used by  Shurgard  Europe  pursuant to a
     licensing  agreement  described  more fully in Note 3, with a book value of
     $18,824,000  at March 31, 2009 and December 31,  2008.  The Shurgard  trade
     name has an indefinite life and, accordingly, we do not amortize this asset
     but instead  analyze it on an annual basis for  impairment.  No impairments
     were  noted  from  our  evaluations  in  any  periods  presented  in  these
     accompanying condensed consolidated financial statements.

     Evaluation of Asset Impairment
     ------------------------------

              We evaluate our real-estate and Tenant  Intangibles for impairment
     on a quarterly  basis.  We first  evaluate  these assets for  indicators of
     impairment,  and if any  indicators of impairment  are noted,  we determine
     whether  the  carrying  value of such  assets is in  excess  of the  future
     estimated undiscounted cash flows attributable to these assets. If there is
     excess  carrying  value  over  such  future  undiscounted  cash  flows,  an

                                       10


                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

     impairment  charge is booked  for the  excess of  carrying  value  over the
     assets' estimated fair value. Any long-lived assets which we expect to sell
     or otherwise  dispose of prior to their estimated useful life are stated at
     the lower of their  estimated net  realizable  value (less cost to sell) or
     their carrying  value. No impairment was identified from our evaluations in
     any periods presented in the accompanying  condensed consolidated financial
     statements.

     Revenue and Expense Recognition
     -------------------------------

              Rental   income,   which   is   generally   earned   pursuant   to
     month-to-month  leases  for  storage  space,  as well as late  charges  and
     administrative  fees, are recognized as earned.  Promotional  discounts are
     recognized  as a reduction to rental  income over the  promotional  period,
     which is generally during the first month of occupancy.  Ancillary revenues
     and interest and other income is recognized when earned. Equity in earnings
     of real estate  entities is recognized  based on our ownership  interest in
     the earnings of each of the Unconsolidated Entities.

              We accrue for  property  tax  expense  based upon  actual  amounts
     billed for the  related  time  periods  and, in some  circumstances  due to
     taxing  authority  assessment  timing and  disputes  of  assessed  amounts,
     estimates and historical  trends.  If these  estimates are  incorrect,  the
     timing  and  amount  of  expense  recognition  could be  affected.  Cost of
     operations,  general and administrative expense,  interest expense, as well
     as television, yellow page, and other advertising expenditures are expensed
     as  incurred.  Casualty  losses or gains are  recognized  in the period the
     casualty  occurs,  based upon the  differential  between  the book value of
     assets destroyed and estimated insurance  proceeds,  if any, that we expect
     to receive in accordance with our insurance contracts.

     Foreign Currency Exchange Translation
     -------------------------------------

              The local  currency  is the  functional  currency  for the foreign
     operations for which we have an interest.  Assets and liabilities  included
     on  our  condensed  consolidated  balance  sheets,   including  our  equity
     investment in Shurgard  Europe,  are translated at  end-of-period  exchange
     rates, while revenues, expenses, and equity in earnings of the related real
     estate  entities,  are  translated at the average  exchange rates in effect
     during the period. The Euro, which represents the functional  currency used
     by a majority of the foreign operations for which we have an interest,  was
     translated at an end-of-period  exchange rate of  approximately  1.320 U.S.
     Dollars  per Euro at March 31,  2009  (1.409 at  December  31,  2008),  and
     average  exchange rates of 1.306 and 1.496 for the three months ended March
     31, 2009 and 2008,  respectively.  Equity is translated at historical rates
     and the resulting  cumulative  translation  adjustments,  to the extent not
     included in net income,  are included as a component of  accumulated  other
     comprehensive income (loss) until the translation adjustments are realized.
     See "Other  Comprehensive  Income" below for further information  regarding
     our foreign currency translation gains and losses.

     Fair Value Accounting
     ---------------------

              In 2006,  the FASB  issued  SFAS No.  157.  SFAS No.  157  expands
     required  fair  value  disclosures,  whenever  other  accounting  standards
     require or permit fair value  measurements,  including the information used
     to  measure  fair  value,  and the  effect of fair  value  measurements  on
     earnings.  SFAS  No.  157  clarifies  that  fair  value  is an exit  price,
     representing  the amount that would be received to sell an asset or paid to
     transfer a liability in an orderly transaction between market participants,
     and establishes a three-tier fair value  hierarchy,  which  prioritizes the
     inputs used in measuring fair value.  The Company adopted the provisions of
     SFAS No.  157 on  January  1, 2008 with  respect  to  financial  assets and
     liabilities and on January 1, 2009 with respect to non-financial assets and
     liabilities,  which  had no  effect on our  financial  position,  operating
     results or cash flows.

     Loan Receivable from Shurgard Europe
     ------------------------------------

              As of March  31,  2009,  we had a loan  receivable  from  Shurgard
     Europe totaling $517,497,000 ($552,361,000 at December 31, 2008).

                                       11


                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

              The loan bears interest at a fixed rate of 7.5% per annum, and had
     an initial term of one year  expiring  March 31, 2009 which was extended by
     Shurgard  Europe  pursuant to the terms of the  original  note to March 31,
     2010. In addition,  if Shurgard Europe acquires its partner's  interests in
     First Shurgard and Second Shurgard  (collectively,  the "Existing  European
     Joint  Ventures"),  joint  ventures  in  which  Shurgard  Europe  has a 20%
     interest, and is unable to obtain third-party financing,  we have agreed to
     provide  additional loans to Shurgard  Europe,  under the same terms as the
     existing loans, for up to (euro)305 million ($402.7 million as of March 31,
     2009) for the  acquisition.  This commitment was also extended to March 31,
     2010. Shurgard Europe has no obligation to acquire these interests, and the
     acquisition  of  these  interests  is  contingent  on a  number  of  items,
     including  whether  we  assent  to the  acquisition.  Loan  fees  paid  are
     amortized on a  straight-line  basis as interest income over the applicable
     term to which the fee applies.

              The loan  receivable  from Shurgard Europe is denominated in Euros
     and is  converted  to  U.S.  Dollars  on our  balance  sheet.  During  each
     applicable  period,  because we have expected repayment within two years of
     each  respective  balance  sheet  date,  we have been  recognizing  foreign
     exchange  rate gains or losses in income as a result of changes in exchange
     rates  between the Euro and the U.S.  Dollar  during the three months ended
     March 31, 2009 and 2008.  For the three  months  ended March 31,  2009,  we
     recorded interest income of approximately $5,177,000 related to the loan.

              The  $5,177,000  in  interest  income  reflects  the gross  amount
     charged to Shurgard Europe totaling  $10,151,000  less our portion totaling
     $4,974,000 which is reflected as equity in earnings of real estate entities
     rather than interest and other income.

     Other Comprehensive Income
     --------------------------

              We reflect  other  comprehensive  income  (loss) for our  pro-rata
     share of currency translation adjustments related to the foreign operations
     for which we have an  interest  that is not already  recognized  in our net
     income.  Such other  comprehensive  income  (loss) is reflected as a direct
     adjustment  to  "Accumulated  Other  Comprehensive  Income"  in the  equity
     section of our  consolidated  balance sheet, and is added to our net income
     in determining total comprehensive income for the period.


                                       12


                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

              The  following   table   reflects  the  components  of  our  other
     comprehensive  (loss) income, and our total comprehensive  income, for each
     respective period:

                                                   For the Three Months Ended
                                                           March 31,
                                                  ----------------------------
                                                    2009             2008
                                                  -------------   ------------
                                                    (Amounts in thousands)
     Net income................................   $   153,429      $  519,941
     Other comprehensive income (loss):
        Aggregate foreign currency translation
           adjustments for the period..........       (44,936)         66,222
        Less: foreign currency translation
           adjustments recognized during the
           period and reflected in "Gain on
           disposition of an interest in
           Shurgard Europe" (Note 3)...........             -         (37,854)
        Less: foreign currency translation
           adjustments reflected in net income
           as "Foreign currency loss (gain)"...        34,733         (40,971)
                                                 -------------   ------------
     Other comprehensive income (loss) income
           for the period......................       (10,203)        (12,603)
                                                 -------------   ------------
     Total comprehensive income................   $   143,226      $  507,338
                                                 =============   ============
     Discontinued Operations
     -----------------------

              We  segregate  all  of our  discontinued  operations  that  can be
     distinguished  from the rest of the Company and will be eliminated from the
     ongoing  operations of the Company,  due to a sale,  facility  closure,  or
     activity  termination.  During the three months  ended March 31,  2009,  we
     decided to terminate our truck rental and  containerized  storage  business
     units.  As a result,  we  reclassified  all of the historical  revenues and
     expenses  of  these  operations  from  ancillary   revenues  and  ancillary
     expenses,  into  "discontinued   operations."  In  addition,   included  in
     discontinued  operations is $3.5 million in expenses  incurred in the three
     months ended March 31, 2009  related  primarily to disposing of trucks used
     in our truck rental  operations.  Truck  operations  ceased as of March 31,
     2009, and the containerized operations are being actively marketed for sale
     and are expected to be disposed of by December 31, 2009.

     Net Income per Common Share
     ---------------------------

              In computing net income allocated to our common  shareholders,  we
     first allocate net income to our  noncontrolling  interests in subsidiaries
     (Note 7) and preferred  shareholders  to arrive at net income  allocable to
     our common shareholders.  Net income allocated to preferred shareholders or
     noncontrolling  interests in  subsidiaries  includes any excess of the cash
     required  to redeem any  preferred  securities  in the period  over the net
     proceeds from the original  issuance of the  securities  (or, if securities
     are redeemed for less than the original issuance proceeds, income allocated
     to the holders of the redeemed securities is reduced.)

              The  remaining  net income is allocated  among our regular  common
     shares,  restricted share units, and our Equity Shares, Series A based upon
     the dividends  declared (or  accumulated)  for each security in the period,
     combined  with  each  security's   participation  rights  in  undistributed
     earnings.

              Basic net income per share is computed using the weighted  average
     common shares  outstanding.  Diluted net income per share is computed using

                                       13


                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

     the weighted average common shares outstanding, adjusted for the impact, if
     dilutive,  of stock options outstanding (Note 10). There were no securities
     outstanding which would have had an anti-dilutive  effect upon earnings per
     common share in each of the three months ended March 31, 2009 and 2008.

              The following  table  reflects the  components of our earnings per
     share for each respective period:



                                                                   For the Three Months Ended March 31,
                                                                   ------------------------------------
                                                                         2009                2008
                                                                   ----------------      --------------
                                                                          (Amounts in thousands)
Earnings Per Share:
                                                                                     
Net income.......................................................     $   153,429          $   519,941

Less: Net income allocated from (to) noncontrolling equity
   interests:
   To preferred unitholders - redemptions........................          72,000                    -
   To preferred unitholders - distributions......................          (4,017)              (5,403)
   To other noncontrolling equity interests......................          (4,410)              (2,196)
                                                                   ----------------      --------------
Net income allocable to Public Storage shareholders..............         217,002              512,342

Less net income allocated (to) from preferred shareholders:
  Based on distributions paid....................................         (58,108)             (60,333)
  Based on redemptions of preferred shares (application of EITF
    Topic D-42)..................................................           6,218                    -
                                                                   ----------------      --------------
Total net income allocable to remaining shareholders.............      $  165,112           $  452,009
                                                                   ================      ==============
Allocation of net income based upon distributions and
   participation rights in undistributed earnings:
   Equity Shares, Series A.......................................      $    5,131           $    5,356
   Restricted share units .......................................             486                1,825
      Common shares..............................................         159,495              444,828
                                                                   ----------------      --------------
                                                                       $  165,112           $  452,009
                                                                   ================      ==============
Weighted average common shares and equivalents outstanding:
   Basic weighted average common shares outstanding..............         168,312              168,586
   Net effect of dilutive stock options - based on treasury stock
     method using average market price...........................             161                  396
                                                                   ----------------      --------------
   Diluted weighted average common shares outstanding............         168,473              168,982
                                                                   ================      ==============
Basic earnings per common and common equivalent share (a)........      $     0.95           $     2.64
                                                                   ================      ==============
Diluted earnings per common and common equivalent share (a)......      $     0.95           $     2.63
                                                                   ================      ==============


     (a) See "Net Income per Common Share" above and the  underlying  discussion
         on Emerging Issues Task Force Topic D-42.

     Recent Accounting Pronouncements and Guidance
     ---------------------------------------------

     Business Combinations
     ---------------------

              In December 2007, the Financial  Accounting  Standards  Board (the
     "FASB")  issued SFAS No.  141(R) and  requires  the  acquiring  entity in a
     business  combination to measure the assets acquired,  liabilities  assumed
     (including  contingencies) and any  noncontrolling  interests at their fair
     values  on  the   acquisition   date.  The  statement  also  requires  that
     acquisition-related transaction costs be expensed as incurred. In addition,
     acquisition-related  restructuring costs are to be capitalized only if they
     meet certain  criteria.  SFAS No. 141(R) was effective January 1, 2009. The
     application  of SFAS  No.141(R)  will  have an  impact  on our  results  of
     operations  and  financial  position  to the extent  that we enter into any
     business combinations.

                                       14


                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

3.   Disposition of an Interest in Shurgard Europe
     ---------------------------------------------

              On March  31,  2008,  an  institutional  investor  acquired  a 51%
     interest in Shurgard European Holdings LLC, a newly formed Delaware limited
     liability  company and the holding company for Shurgard  Europe  ("Shurgard
     Holdings").  Public  Storage  owns the  remaining  49%  interest and is the
     managing member of Shurgard Holdings.

              Our net proceeds  from the  transaction  aggregated  $609,059,000,
     comprised of i) $605,627,000  paid by the  institutional  investor on March
     31, 2008, ii) a receivable  from the investor  totaling  $7,574,000,  iii),
     less  $4,142,000  in legal,  accounting,  and other  expenses  incurred  in
     connection with the transaction. As a result of the disposition, we reduced
     our investment in Shurgard Europe by approximately $305,048,000 for the pro
     rata portion of our March 31, 2008 investment that was sold, and recognized
     a gain  of  $304,011,000  upon  disposition,  representing  the  difference
     between the net proceeds  received of $609,059,000 and the pro rata portion
     of our investment sold of $305,048,000.

              In addition,  as a result of our  disposition of this interest,  a
     portion  of the  cumulative  currency  exchange  gains  we  had  previously
     recognized in Other  Comprehensive  Income with respect to Shurgard  Europe
     was realized.  Accordingly,  we recognized a cumulative  currency  exchange
     gain of  $37,854,000,  representing  51% (the pro rata  portion of Shurgard
     Europe that was sold) of the cumulative  currency  exchange gain previously
     included in Other Comprehensive Income.

              The gain upon disposition of $304,011,000 and associated  realized
     currency  exchange gain totaling  $37,854,000 are both included in the gain
     on disposition  of an interest in Shurgard  Europe of  $341,865,000  in our
     condensed consolidated statement of income for the three months ended March
     31, 2008.

              The results of operations of Shurgard Europe have been included in
     our condensed consolidated  statements of income for the three months ended
     March 31, 2008.  Commencing  with the quarter  beginning April 1, 2008, our
     pro rata  share of  operations  of  Shurgard  Europe  is  reflected  on our
     condensed consolidated statement of income under equity in earnings of real
     estate entities.


                                       15


                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

4.   Real Estate Facilities
     ----------------------

              Activity in real estate facilities is as follows:

                                                                Three Months
                                                               Ended March 31,
                                                                    2009
                                                               ---------------
                                                                (Amounts in
                                                                 thousands)
Operating facilities, at cost:
  Beginning balance.......................................       $ 10,207,022
  Capital improvements....................................              8,499
  Newly developed facilities opened for operations........             13,351
  Disposition of real estate facilities...................             (5,365)
                                                               ---------------
  Ending balance..........................................         10,223,507
                                                               ---------------
Accumulated depreciation:
  Beginning balance.......................................         (2,405,473)
  Depreciation expense....................................            (81,776)
  Disposition of real estate facilities...................              2,007
                                                               ---------------
  Ending balance..........................................         (2,485,242)
                                                               ---------------
Construction in process:
   Beginning balance......................................             20,340
   Current development  (includes $190 in capitalized interest
     for the three months ended March 31, 2009)...........              2,328
   Newly developed facilities opened for operation........            (13,351)
                                                               ---------------
   Ending balance.........................................              9,317
                                                               ---------------
 Total real estate facilities at March 31, 2009...........       $  7,747,582
                                                               ===============

              During the three months ended March 31, 2009, we completed various
     expansion projects with total cost of $13,351,000. We also sold an existing
     real estate facility as well as a portion of certain real estate facilities
     in the quarter, primarily condemnation proceedings,  for aggregate proceeds
     totaling  $10,261,000.  We  recorded  an  aggregate  gain of  approximately
     $6,903,000,  of which $4,181,000 is included in discontinued operations and
     $2,722,000  is  included  in "gain  (loss) on  disposition  of real  estate
     investments."

              Construction in process at March 31, 2009 includes the development
     costs relating to various expansions to existing self-storage facilities.

5.   Investments in Real Estate Entities
     -----------------------------------

              During  the  three  months  ended  March  31,  2009 and  2008,  we
     recognized  earnings  from  our  investments  in real  estate  entities  of
     $22,811,000, and $2,729,000,  respectively, and received cash distributions
     from such investments, totaling $11,819,000, and $6,493,000,  respectively.
     Included in earnings  recognized  for the three months ended March 31, 2009
     is $16,284,000, representing our share of the earnings allocated from PSB's
     preferred shareholders, as a result of PSB's repurchases of preferred stock
     and preferred units for amounts that were less than the related book value,
     during the period.

              During the three months  ended March 31, 2009,  in addition to the
     impact  of  earnings  recognized  and  cash  distributions   received,  our
     investments in real estate entities decreased by $10,366,000 due to foreign
     currency translation adjustments.

                                       16


                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

              The following  table sets forth our investments in the real estate
     entities  at March  31,  2009 and  December  31,  2008,  and our  equity in
     earnings of real estate  entities the three months ended March 31, 2009 and
     2008 (amounts in thousands):



                                                                      Equity in Earnings of Real
                                       Investments in Real Estate      Estate Entities for the
                                               Entities at            Three Months Ended March31,
                                       ----------------------------   ---------------------------
                                       March 31,     December 31,
                                           2009           2008            2009          2008
                                       ------------  -------------    -----------   -----------
                                                                        
     PSB                                $   280,517   $   265,650     $  20,466     $   2,345
     Shurgard Europe................        250,529       264,145         1,901             -
     Other Investments..............         14,178        14,803           444           384
                                       ------------  -------------    -----------   -----------
         Total......................    $   545,224   $   544,598     $  22,811     $   2,729
                                       ============  =============    ===========   ===========


     INVESTMENT IN PSB
     -----------------

              PSB is a REIT  traded  on  the  New  York  Stock  Exchange,  which
     controls an operating partnership (collectively, the REIT and the operating
     partnership  are referred to as "PSB").  At March 31,  2009,  PSB owned and
     operated  approximately 19.6 million net rentable square feet of commercial
     space and manages certain of our commercial space.

              We have a 46% common  equity  interest in PSB as of  December  31,
     2008  comprised of our ownership of 5,418,273  shares of PSB's common stock
     and 7,305,355 limited partnership units in the operating  partnership.  The
     limited partnership units are convertible at our option, subject to certain
     conditions,  on a one-for-one  basis into PSB common stock.  Based upon the
     closing price at March 31, 2009 ($36.85 per share of PSB common stock), the
     shares  and units had a market  value of  approximately  $468.9  million as
     compared to a book value of $280.5 million.

              The following table sets forth selected  financial  information of
     PSB;  the amounts  represent  100% of PSB's  balances  and not our pro-rata
     share.



                                                                2009              2008
                                                           --------------  --------------
                                                                (Amounts in thousands)
 For the three months ended March 31,
 -----------------------------------
                                                                      
   Total revenue........................................   $     69,924     $     70,306
   Costs of operations and other operating expenses.....        (24,731)         (24,536)
   Depreciation and amortization........................        (22,391)         (25,447)
   Other items..........................................           (751)            (665)
                                                           --------------  --------------
     Net income.........................................   $     22,051     $     19,658
                                                           ==============  ==============





                                                            At March 31,   At December 31,
                                                                2009             2008
                                                           --------------  --------------
                                                                (Amounts in thousands)

                                                                      
   Total assets (primarily real estate).................   $  1,399,881     $  1,469,323
   Debt and other liabilities...........................        102,213          105,736
   Equity...............................................      1,297,668        1,363,587


                                       17


                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

     INVESTMENT IN SHURGARD EUROPE
     -----------------------------

              At March  31,  2009 we had a 49%  equity  investment  in  Shurgard
     Europe.  As a result of our disposition of an interest in Shurgard  Europe,
     we deconsolidated Shurgard Europe effective March 31, 2008 (see Note 3).

              For the  three  months  ended  March  31,  2009,  we  recorded  an
     aggregate of $1,901,000 in equity in earnings of real estate  entities with
     respect to our investment in Shurgard Europe. During the three months ended
     March 31,  2009,  our  investment  in  Shurgard  Europe  was  decreased  by
     approximately  $10,366,000 due to the impact of changes in foreign currency
     exchange rates, primarily between the Euro and the U.S. Dollar.

              The following table sets forth selected  financial  information of
     Shurgard  Europe.  These  amounts are based upon 100% of Shurgard  Europe's
     balances,  rather  than  our pro  rata  share  and are  based  upon  Public
     Storage's historical acquired book basis.

              Amounts  for  all  periods  are  presented,  notwithstanding  that
     Shurgard Europe was deconsolidated  effective March 31, 2008.  Accordingly,
     all amounts (net of intercompany  eliminations)  prior to April 1, 2008 are
     included in our consolidated financial statements.



                                                         For the Three Months Ended
                                                                  March 31,
                                                         ---------------------------
                                                            2009            2008
                                                         ------------   ------------
                                                            (Amounts in thousands)

                                                                  
   Self-storage and ancillary revenues..................  $  51,044     $   59,635
   Interest and other income............................        129            431
   Self-storage and ancillary cost of operations........    (23,922)       (26,064)
   Trademark license fee payable to Public Storage......       (362)          (640)
   Depreciation and amortization........................    (17,436)       (21,871)
   General and administrative...........................     (1,718)        (4,644)
   Interest expense on third party debt ................     (4,225)        (6,892)
   Interest expense on loan payable to Public Storage...    (10,151)       (10,351)
   Income (expenses) from foreign currency exchange ....       (587)          (123)
   Discontinued operations..............................          8            (12)
                                                         ------------   ------------
     Net loss (a).......................................  $  (7,220)    $  (10,531)
                                                         ============   ============


     (a) Approximately  $586,000 and $2,142,000  in net loss  was  allocated  to
         permanent noncontrolling equity interests in subsidiaries for the three
         months ended March 31, 2009 and 2008, respectively, of which $2,739,000
         and $3,184,000, respectively, represented depreciation and amortization
         expense.

                                                    At March 31, At December 31,
                                                       2009          2008
                                                    ------------ ---------------
                                                       (Amounts in thousands)

   Total assets (primarily self-storage facilities).. $1,410,997    $1,521,172
   Total debt to third parties.......................    320,369       362,352
   Total debt to Public Storage......................    517,497       552,361
   Other liabilities.................................     73,862        82,247
   Equity............................................    499,269       524,212

                                       18


                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

              Our equity in  earnings of  Shurgard  Europe for the three  months
     ended March 31,  2009,  totaling  $1,901,000  is comprised of (i) a loss of
     $3,251,000,  representing  our share of Shurgard  Europe's net loss for the
     three  months  ended  March  31,  2009 and (ii)  income of  $4,974,000  and
     $178,000,  respectively,  representing our share of the interest income and
     trademark  license fees received from Shurgard  Europe for the three months
     ended March 31, 2009 (such  amounts are  presented as equity in earnings of
     real estate entities rather than interest and other income).

     OTHER INVESTMENTS
     -----------------

              At March 31, 2009, other  investments  include an aggregate common
     equity ownership of approximately  24% in entities that collectively own 19
     self-storage facilities.

              The  following  table  sets  forth  certain  condensed   financial
     information  (representing  100% of these  entities'  balances  and not our
     pro-rata  share) with respect to the 19 facilities that we have an interest
     in at March 31, 2009:

                                                 2009              2008
                                          --------------- ----------------
                                                 (Amounts in thousands)
 For the three months ended March 31,
 -----------------------------------
 Total revenue........................    $      4,114    $      4,178
 Cost of operations and other expenses          (1,670)        (1,647)
 Depreciation and amortization........            (479)          (535)
     Net income.......................    $      1,965    $      1,996


                                           At March 31,    At December 31,
                                               2009             2008
                                          --------------- ----------------
                                                 (Amounts in thousands)

 Total assets (primarily self- storage
     facilities)......................    $     38,112    $     40,168
 Total accrued and other liabilities.            1,106             888
 Total Partners' equity..............           37,006          39,280



                                       19


                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

6.   Notes Payable and Line of Credit
     --------------------------------

              The carrying amounts of our notes payable at March 31, 2009 and
     December 31, 2008 consist of the following (dollar amounts in thousands):




                                                                                March 31,      December 31,
                                                                                  2009             2008
                                                                              -------------   -------------
                                                                                 (Amounts in thousands)
          Unsecured Notes Payable:
                                                                                         
          5.875%  effective and stated note rate,  interest only and payable
             semi-annually, matures in March 2013...........................   $   186,460     $   200,000
          5.73% effective rate,  7.75% stated note rate,  interest only and
             payable  semi-annually,  matures in  February  2011  (carrying
             amount  includes  $3,380 of  unamortized  premium at March 31,
             2009 and $7,433 at December 31, 2008) .........................       106,697         207,433

          Secured Notes Payable:

          5.47% average effective rate fixed rate mortgage notes payable,
             secured by 90 real estate facilities with a net book value of
             $571,833 at March 31, 2009 and stated note rates between 4.95%
             and 8.75%, maturing at varying dates between April 2009 and
             August 2015 (carrying amount includes $5,210 of unamortized
             premium at March 31, 2009 and $5,634 at December 31, 2008) ....       234,078         236,378
                                                                              -------------   -------------
                 Total notes payable........................................   $   527,235     $   643,811
                                                                              =============   =============


              When assumed in connection  with  property or other  acquisitions,
     notes payable are recorded at their  respective  estimated fair values upon
     acquisition,  based upon  discounting  the future  interest  and  principal
     payments using  estimated  market rates for debt  instruments  with similar
     terms and  ratings.  Any  initial  premium or  discount,  representing  the
     difference  between  the stated note rate and  estimated  fair value on the
     respective date of assumption,  is amortized over the remaining term of the
     notes using the effective interest method. Fair values are determined based
     upon  discounting  the future cash flows under each  respective  note at an
     interest  rate  that  approximates  those  of  loans  with  similar  credit
     characteristics,  term to maturity,  and other market data which  represent
     significant  unobservable inputs, which are "Level 3" inputs as the term is
     utilized in SFAS No. 157.

              At March 31,  2009,  we have a  revolving  credit  agreement  (the
     "Credit  Agreement")  which  expires on March 27,  2012,  with an aggregate
     limit with  respect to  borrowings  and letters of credit of $300  million.
     Amounts drawn on the Credit  Agreement bear an annual interest rate ranging
     from the London  Interbank  Offered Rate ("LIBOR") plus 0.35% to LIBOR plus
     1.00% depending on our credit ratings (LIBOR plus 0.35% at March 31, 2009).
     In addition,  we are required to pay a quarterly  facility fee ranging from
     0.10% per annum to 0.25% per annum  depending on our credit  ratings (0.10%
     per annum at March  31,  2009).  We had no  outstanding  borrowings  on our
     Credit Agreement at March 31, 2009 or at May 8, 2009. At March 31, 2009, we
     had  undrawn  standby  letters  of  credit,   which  reduce  our  borrowing
     capability  with respect to our line of credit by the amount of the letters
     of credit, totaling $20,281,000 ($17,736,000 at December 31, 2008).

                                       20


                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

              On  February  12,  2009,  we  acquired  $110,223,000  face  amount
     ($113,736,000  book value) of our existing senior  unsecured notes pursuant
     to a tender offer for an aggregate of $109,622,000 in cash (including costs
     associated  with  the  tender  of  $414,000)  plus  accrued  interest.   In
     connection  with this  transaction,  we recognized a gain of $4,114,000 for
     the three months ended March 31, 2009,  representing the difference between
     the book value of $113,736,000  and the retirement  amount paid plus tender
     costs.

              Our notes  payable  and our  Credit  Agreement  each have  various
     customary  restrictive  covenants,  all of which have been met at March 31,
     2009.

              At March 31, 2009,  approximate  principal maturities of our notes
     payable are as follows (amounts in thousands):

                                      Unsecured   Mortgage Notes
                                   Notes Payable    Payable           Total
                                  -------------- ---------------   ------------
2009.........................     $     1,057    $     6,830        $    7,887
2010.........................           2,207         11,037            13,244
2011.........................         103,433         27,819           131,252
2012.........................               -         55,575            55,575
2013.........................         186,460         64,961           251,421
Thereafter...................               -         67,856            67,856
                                  -------------- ---------------   ------------
                                  $   293,157    $   234,078        $  527,235
                                  ============== ===============   ============
Weighted average effective rate         5.8%           5.5%             5.7%
                                  ============== ===============   ============

              We incurred interest expense  (including  interest  capitalized as
     real estate  totaling  $190,000 and  $748,000,  respectively  for the three
     months  ended March 31, 2009 and 2008) with  respect to our notes  payable,
     capital  leases,   debt  to  joint  venture  partner  and  line  of  credit
     aggregating $8,318,000 and $17,235,000 for the three months ended March 31,
     2009 and 2008, respectively. These amounts were comprised of $9,282,000 and
     $18,450,000  in cash paid for the three  months  ended  March 31,  2009 and
     2008,  respectively,  less  $964,000  and  $1,215,000  in  amortization  of
     premium, respectively.

7.   Noncontrolling Interests in Subsidiaries
     ----------------------------------------

              In  consolidation,  we  classify  ownership  interests  in the net
     assets  of each of the  Consolidated  Entities,  other  than  our  own,  as
     "noncontrolling  interests in  subsidiaries."  If these  interests have the
     ability to require us to redeem the underlying securities for cash, assets,
     or  other  securities   (other  than  under  the  circumstances  of  entity
     liquidation)  that  would  not  also be  classified  as  equity  then  such
     interests are presented on our balance sheet outside of equity.  At the end
     of each  reporting  period,  if the book  value is less than the  estimated
     amount to be paid upon a redemption  occurring on the related balance sheet
     date, with the offset against retained earnings.  All other  noncontrolling
     interests  in  subsidiaries   are  presented  as  a  component  of  equity,
     "permanent noncontrolling interests in subsidiaries."

              The  following  table sets forth our  noncontrolling  interests in
     subsidiaries at March 31, 2009 and December 31, 2008, as well as the income
     allocated to these  interests for the three months ended March 31, 2009 and
     2008:

                                       21



                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009




                                                                    Allocated Income for the
                                              Balance at               Three Months Ended
            Description                March 31,    December 31,    March 31,   December 31,
        Noncontrolling Interest           2009         2008           2009         2008
------------------------------------  ----------   -------------  -----------  -------------
                                                               (Amounts in thousands)
                                                                    
Redeemable noncontrolling interests
   in subsidiaries (a)...........     $  12,798    $   12,777      $     262    $    239
                                      ----------   -------------  -----------  -------------
Permanent  noncontrolling interests
   in subsidiaries:
   Preferred  partnership interests
   (b)...........................       100,000       325,000        (67,983)      5,403
   Other (c).....................        33,199        33,109          4,148       1,957
                                      ----------   -------------  -----------  -------------
Total  noncontrolling  interests in
   subsidiaries..................       133,199       358,109        (63,835)      7,360
                                      ----------   -------------  -----------  -------------
Total  Noncontrolling  interests in
   subsidiaries..................     $ 145,997    $  370,886      $ (63,573)   $  7,599
                                      ==========   =============  ===========  =============


     (a) These  interests  are  presented  outside  of equity  on our  condensed
         consolidated  balance  sheets.  Income  allocated to these interests is
         reflected in the line-item  "income  allocated to other  noncontrolling
         interests  in  subsidiaries."  Distributions  paid to  these  interests
         totaled $340,000 and $463,000 for the three months ended March 31, 2009
         and 2008, respectively.

     (b) These  interests  are included in the equity  section of our  condensed
         consolidated  balance  sheets.  Distributions  paid  to  the  preferred
         partnership  interests  equaled the income allocated to those interests
         (other than  allocations due to  redemptions).  During the three months
         ended  March  31,  2009,  we  allocated  $72,000,000  in  income to the
         noncontrolling  equity interests,  based upon our redemption of certain
         of  the  preferred  partnership  units  for a  cash  payment  that  was
         $72,000,000 less than the related book value.

     (c) These  interests  are included in the equity  section of our  condensed
         consolidated  balance  sheets.  Income  allocated to these interests is
         reflected in the line-item  "income  allocated to other  noncontrolling
         interests  in  subsidiaries."  Distributions  paid to  these  interests
         totaled  $4,058,000 and $4,521,000 for the three months ended March 31,
         2009 and 2008, respectively.

     OTHER REDEEMABLE NONCONTROLLING INTERESTS IN SUBSIDIARIES
     ---------------------------------------------------------

              At March 31, 2009, the Other Redeemable  Noncontrolling  Interests
     in Subsidiaries  represent  equity  interests in three entities that own in
     aggregate 14 self-storage facilities. At December 31, 2008, these interests
     were  increased  and  retained  earnings  were  decreased  by  a  total  of
     $6,469,000 in connection with the implementation of SFAS No. 160, to adjust
     to their estimated  liquidation  value (which  approximates fair value). We
     estimate  the  amount  to be paid upon  redemption  of these  interests  by
     applying  the related  provisions  to our estimate of the fair value of the
     underlying net assets (principally real estate assets).

              In 2007, we sold an  approximately  0.6% common equity interest in
     Shurgard  Europe to various  officers of the Company  (the "PS  Officers"),
     other than our chief  executive  officer.  For periods  commencing from the
     sale  of the  interest  through  March  31,  2008,  the PS  Officers'  were
     allocated their pro rata share of the earnings of Shurgard Europe, and this

                                       22


                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

     was   included   in   "Other   Redeemable   noncontrolling   interests   in
     subsidiaries." As described in Note 3, on March 31, 2008, we deconsolidated
     Shurgard Europe and, as a result,  noncontrolling interests in subsidiaries
     with  respect to the PS Officers'  investment  was  eliminated.  See Note 5
     under  "Investment in Shurgard Europe" for further  historical  information
     regarding Shurgard Europe.

     PREFERRED PARTNERSHIP INTERESTS
     -------------------------------

              At December 31, 2008, our preferred  partnership units outstanding
     were  comprised of 8,000,000  units of our 6.400%  Series NN  ($200,000,000
     carrying amount,  redeemable March 17, 2010), 1,000,000 units of our 6.250%
     Series Z ($25,000,000  carrying amount,  redeemable  October 12, 2009), and
     4,000,000  units of our  7.250%  Series J  ($100,000,000  carrying  amount,
     redeemable May 9, 2011).

              In March 2009,  we acquired  all of the 6.40%  Series NN preferred
     partnership  units from a third party ($200.0 million  carrying amount) for
     approximately  $128.0 million,  plus accrued and unpaid  distributions from
     December 31, 2008 through the closing date. This transaction resulted in an
     increase  in income  allocated  to common  shareholders  and an increase in
     equity  allocable to Public Storage  shareholders  of  approximately  $72.0
     million for the three months ended March 31, 2009, based upon the excess of
     the carrying amount over the amount paid.

              Also  in  March  2009,  we  acquired  all of the  6.25%  Series  Z
     preferred  partnership  units from a third party  ($25.0  million  carrying
     amount) for $25.0 million. This resulted in no increase in income allocated
     to the common shareholders as they were acquired at par.

              At March 31, 2009,  our preferred  partnership  units  outstanding
     were  comprised of  4,000,000  units of our 7.250%  Series J  ($100,000,000
     carrying amount,  redeemable May 9, 2011).  Subject to certain  conditions,
     the  Series J  preferred  units are  convertible  into our  7.25%  Series J
     Cumulative  Preferred  Shares.  Our  preferred  partnership  interests  are
     presented as permanent  noncontrolling  interests  in  subsidiaries  on our
     condensed consolidated balance sheets.

     OTHER PERMANENT NONCONTROLLING INTERESTS IN SUBSIDIARIES
     --------------------------------------------------------

              At March 31, 2009, the Other Permanent Noncontrolling Interests in
     Subsidiaries   represent  equity   interests  in  28  entities   (generally
     partnerships) that own in aggregate 94 self-storage facilities.

              Shurgard  Europe  has a 20%  equity  interest  in two VIE's  which
     developed  self-storage  facilities in Europe,  and Shurgard Europe was the
     primary beneficiary. The remaining 80% equity interest in these entities is
     owned by an unaffiliated  investor.  On March 31, 2008, Shurgard Europe was
     deconsolidated  (see Note 3),  eliminating  these permanent  noncontrolling
     interests in subsidiaries  at March 31, 2008. See Note 5 under  "Investment
     in Shurgard Europe" for further historical  information  regarding Shurgard
     Europe, including historical income allocated to these interests.  Earnings
     allocated   to  these   interests   are   included   in  "Other   Permanent
     Noncontrolling   Interests  in  Subsidiaries"  for  periods  prior  to  the
     deconsolidation of Shurgard Europe.

              We estimate the fair value of the other  permanent  noncontrolling
     interests in subsidiaries of $212 million at March 31, 2009, based upon our
     estimate of the fair value of the underlying net assets  (principally  real
     estate assets),  applying the related liquidation provisions of the related
     partnership agreements.


                                       23


                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

8.   Public Storage Shareholders' Equity
     -----------------------------------

              Cumulative Preferred Shares
              ---------------------------

            At March 31, 2009 and December 31, 2008, we had the following series
     of Cumulative Preferred Shares of beneficial interest outstanding:




                                                             At March 31, 2009            At December 31, 2008
                           Earliest
                          Redemption      Dividend        Shares      Liquidation       Shares       Liquidation
       Series                Date           Rate        Outstanding   Preference      Outstanding     Preference
-----------------       ------------     ---------      -----------   -----------     -----------    ------------
                                                                      (Dollar amounts in thousands)
                                                                                   
Series V                   9/30/07          7.500%           6,200    $   155,000           6,900    $   172,500
Series W                   10/6/08          6.500%           5,300        132,500           5,300        132,500
Series X                  11/13/08          6.450%           4,800        120,000           4,800        120,000
Series Y                    1/2/09          6.850%         750,900         18,772         750,900         18,772
Series Z                    3/5/09          6.250%           4,500        112,500           4,500        112,500
Series A                   3/31/09          6.125%           4,600        115,000           4,600        115,000
Series B                   6/30/09          7.125%           4,350        108,750           4,350        108,750
Series C                   9/13/09          6.600%           4,425        110,625           4,600        115,000
Series D                   2/28/10          6.180%           5,400        135,000           5,400        135,000
Series E                   4/27/10          6.750%           5,650        141,250           5,650        141,250
Series F                   8/23/10          6.450%           9,893        247,325          10,000        250,000
Series G                  12/12/10          7.000%           4,000        100,000           4,000        100,000
Series H                   1/19/11          6.950%           4,200        105,000           4,200        105,000
Series I                    5/3/11          7.250%          20,700        517,500          20,700        517,500
Series K                    8/8/11          7.250%          16,990        424,756          16,990        424,756
Series L                  10/20/11          6.750%           8,267        206,665           8,267        206,665
Series M                    1/9/12          6.625%          19,065        476,634          19,065        476,634
Series N                    7/2/12          7.000%           6,900        172,500           6,900        172,500
                                                        -----------   -----------     -----------    ------------
     Total Cumulative Preferred Shares                     886,140    $ 3,399,777         887,122    $ 3,424,327
                                                        ===========   ===========     ===========    ============


              The  holders  of our  Cumulative  Preferred  Shares  have  general
     preference rights with respect to liquidation and quarterly  distributions.
     Holders of the preferred  shares,  except under certain  conditions  and as
     noted below, will not be entitled to vote on most matters.  In the event of
     a cumulative  arrearage  equal to six quarterly  dividends,  holders of all
     outstanding  series of preferred  shares  (voting as a single class without
     regard to series)  will have the right to elect two  additional  members to
     serve on our Board of Trustees until events of default have been cured.  At
     March 31, 2009, there were no dividends in arrears.

              Except  under  certain   conditions   relating  to  the  Company's
     qualification as a REIT, the Cumulative Preferred Shares are not redeemable
     prior the dates  indicated on the table above.  On or after the  respective
     dates,  each  of  the  series  of  Cumulative   Preferred  Shares  will  be
     redeemable,  at the option of the Company,  in whole or in part,  at $25.00
     per  share (or  depositary  shares as the case may be),  plus  accrued  and
     unpaid  dividends.  Holders of the Cumulative  Preferred Shares do not have
     the right to require the Company to redeem such shares.

                                       24


                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

              Upon  issuance of our  Cumulative  Preferred  Shares of beneficial
     interest,  we classify the  liquidation  value as  preferred  equity on our
     consolidated  balance sheet with any issuance costs recorded as a reduction
     to paid-in capital.

              During  March  2009,  we  repurchased  certain  of our  Cumulative
     Preferred Shares in privately negotiated  transactions as follows: Series V
     - 700,000  depositary shares,  each representing  1/1,000 of a share of our
     Cumulative  Preferred  Shares at a total  cost of  $13,230,000,  Series C -
     175,000  depositary  shares,  each  representing  1/1,000 of a share of our
     Cumulative  Preferred  Shares at a total cost of $2,695,000  and Series F -
     107,000  depositary  shares,  each  representing  1/1,000 of a share of our
     Cumulative  Preferred  Shares at a total cost of  $1,610,000.  The carrying
     value of the  shares  repurchased  totaled  $23.8  million  ($24.6  million
     liquidation  preference less $0.8 million of original issuance costs),  and
     exceeded the aggregate  repurchase  cost of $17.5 million by  approximately
     $6.2  million.  For purposes of  determining  net income per share,  income
     allocated to our preferred shareholders was reduced by the $6.2 million.

     Common Shares
     -------------

              Common Shares
              -------------

              During the three  months ended March 31,  2009,  we issued  64,027
     common shares in connection with employee stock-based compensation.

              Our Board of Trustees  previously  authorized the repurchase  from
     time to time of up to 25,000,000 of our common shares on the open market or
     in privately  negotiated  transactions.  On May 8, 2008, such authorization
     was increased to 35,000,000  common  shares.  During the three months ended
     March 31, 2009, we did not  repurchase  any of our common  shares.  Through
     March 31, 2009,  we have  repurchased  a total of  23,721,916 of our common
     shares pursuant to this authorization.

              Equity Shares, Series A
              -----------------------

              At March 31, 2009 and  December  31,  2008,  we had  8,377,193  of
     depositary  shares  outstanding,  each  representing  1/1,000  of an Equity
     Share, Series A. The Equity Shares, Series A rank on parity with our common
     shares  and  junior to the  Cumulative  Preferred  Shares  with  respect to
     general preference rights and have a liquidation amount which cannot exceed
     $24.50 per share. Distributions with respect to each depositary share shall
     be the  lesser  of:  (i) five  times the per share  dividend  on our common
     shares or (ii) $2.45 per annum. We have no obligation to pay  distributions
     on  the  depositary   shares  if  no  distributions   are  paid  to  common
     shareholders.

              Except in order to  preserve  the  Company's  Federal  income  tax
     status as a REIT, we may not redeem the depositary shares  representing the
     Equity Shares,  Series A before March 31, 2010. On or after March 31, 2010,
     we  may,  at our  option,  redeem  the  depositary  shares  at  $24.50  per
     depositary  share.  If the Company fails to preserve its Federal income tax
     status as a REIT, each of the depositary  shares will be convertible at the
     option of the shareholder  into .956 common shares.  The depositary  shares
     are otherwise not  convertible  into common  shares.  Holders of depositary
     shares  vote as a  single  class  with  holders  of our  common  shares  on
     shareholder  matters,  but the  depositary  shares have the  equivalent  of
     one-tenth of a vote per depositary share.

                                       25


                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

              Dividends
              ---------

              The unaudited characterization of dividends for Federal income tax
     purposes is made based upon earnings and profits of the Company, as defined
     by the Internal Revenue Code.  Common share dividends totaled $92.9 million
     ($0.55 per share) and $92.8 million ($0.55 per share), for the three months
     ended  March  31,  2009 and 2008,  respectively.  Equity  Shares,  Series A
     dividends  totaled  $5.1  million  ($0.6125  per  share)  and $5.4  million
     ($0.6125  per share),  for the three  months ended March 31, 2009 and 2008,
     respectively.  Preferred  share  dividends  pay fixed  rates from 6.125% to
     7.500% with a total liquidation  amount of $3,399,777,000 at March 31, 2009
     ($3,424,327,000  at December  31,  2008) and  dividends  aggregating  $58.1
     million  and $60.3  million for the three  months  ended March 31, 2009 and
     2008, respectively. Dividends paid to permanent noncontrolling interests in
     subsidiaries  totaled  $4,058,000 and $4,521,000 for the three months ended
     March 31, 2009 and 2008, respectively.

9.   Related Party Transactions
     --------------------------

              Mr.  Hughes,  the Company's  Chairman of the Board of Trustees and
     his family  (collectively the "Hughes Family") have ownership interests in,
     and operate  approximately  49 self-storage  facilities in Canada using the
     "Public  Storage"  brand  name ("PS  Canada")  pursuant  to a  royalty-free
     trademark license  agreement with the Company.  We currently do not own any
     interests in these  facilities nor do we own any facilities in Canada.  The
     Hughes Family owns  approximately  20% of our common shares  outstanding at
     March 31,  2009.  We have a right of first  refusal to acquire the stock or
     assets of the corporation  that manages the 49  self-storage  facilities in
     Canada,  if the  Hughes  Family or the  corporation  agrees  to sell  them.
     However, we have no interest in the operations of this corporation, we have
     no right to acquire this stock or assets unless the Hughes  Family  decides
     to sell and we receive no benefit  from the profits and  increases in value
     of the Canadian self-storage facilities.

              We reinsure  risks  relating to loss of goods stored by tenants in
     the self-storage  facilities in Canada. During the three months ended March
     31, 2009 and 2008,  we received  $183,000 and  $225,000,  respectively,  in
     reinsurance  premiums  attributable to the Canadian  facilities.  Since our
     right to provide  tenant  reinsurance  to the  Canadian  facilities  may be
     qualified, there is no assurance that these premiums will continue.

              The  Company  and Mr.  Hughes are  co-general  partners in certain
     consolidated  partnerships and affiliated  partnerships of the Company that
     are not consolidated.  The Hughes Family owns 47.9% of the voting stock and
     the  Company  holds  46% of the  voting  and  100% of the  nonvoting  stock
     (representing  substantially all the economic  interest) of a private REIT.
     The private REIT owns  limited  partnership  interests  in five  affiliated
     partnerships.  The Hughes Family also owns limited partnership interests in
     certain of these  partnerships and holds securities in PSB. PS Canada holds
     approximately  a 1.2%  interest  in  Stor-RE,  a  consolidated  entity that
     provides  liability and casualty  insurance for PS Canada,  the Company and
     certain  affiliates of the Company,  for occurrences prior to April 1, 2004
     as described below. The Company and the Hughes Family receive distributions
     from  these  entities  in  accordance  with the  terms  of the  partnership
     agreements or other organizational documents.

              From time to time, the Company and the Hughes Family have acquired
     limited   partnership   units  from  limited   partners  of  the  Company's
     consolidated  partnerships.  In connection with the acquisition in 1998 and
     1999 of a total of 638 limited partnership units by Tamara Hughes Gustavson
     and H-G Family Corp., a company owned by Hughes Family members, the Company
     was granted an option to acquire the limited  partnership units acquired at
     cost,  plus  expenses.  During the  fourth  quarter  of 2008,  the  Company
     exercised  its option to acquire  the units for a total  purchase  price of
     approximately  $239,000.  The  transaction  was approved by the independent
     members of the Board of Trustee.

                                       26


                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

10.  Share-Based Compensation
     ------------------------

              Stock Options
              -------------

              We have various  stock option plans  (collectively  referred to as
     the "PS Plans").  Under the PS Plans, the Company has granted non-qualified
     options to certain  trustees,  officers  and key  employees to purchase the
     Company's  common  shares at a price equal to the fair market  value of the
     common  shares  at the date of  grant.  Generally,  options  granted  after
     December 31, 2002 vest generally over a five-year period and expire between
     eight years and ten years after the date they  became  exercisable.  The PS
     Plans  also  provide  for the grant of  restricted  shares  (see  below) to
     officers,  key  employees and service  providers on terms  determined by an
     authorized committee of our Board.

              We recognize  compensation  expense for  share-based  awards based
     upon their fair value on the date of grant  amortized  over the  applicable
     vesting  period  (the "Fair Value  Method"),  net of  estimates  for future
     forfeitures.

              For the three months ended March 31, 2009, we recorded $600,000 in
     stock option compensation  expense related to options granted after January
     1, 2002, as compared to $384,000 for the same period in 2008.

              A total of 1,440,000  stock options were granted  during the three
     months  ended March 31,  2009,  12,500  shares were  exercised,  and 23,000
     shares were forfeited.  A total of 3,801,832 stock options were outstanding
     at March 31, 2009 (2,397,332 at December 31, 2008).

              Outstanding  stock options are included on a one-for-one  basis in
     our diluted  weighted  average  shares,  less a reduction  for the treasury
     stock method applied to a) the average cumulative measured but unrecognized
     compensation  expense  during the period and b) the strike  price  proceeds
     expected from the employee upon exercise.

              Restricted Share Units
              ----------------------

              Outstanding  restricted share units vest over a five or eight-year
     period from the date of grant at the rate of  one-fifth or  one-eighth  per
     year, respectively.  The employee receives additional compensation equal to
     the per-share  dividends  received by common  shareholders  with respect to
     restricted share units  outstanding.  Such compensation is accounted for as
     dividends  paid.  Any  dividends  paid  on  units  which  are  subsequently
     forfeited are expensed.  Upon vesting,  the employee receives common shares
     equal to the number of vested  restricted  share units in exchange  for the
     units.

              The total value of each  restricted  share unit grant,  based upon
     the market  price of our common  shares at the date of grant,  is amortized
     over the  service  period,  net of  estimates  for future  forfeitures,  as
     compensation  expense.  The related  employer  portion of payroll  taxes is
     expensed as incurred.

              During the three months ended March 31,  2009,  89,450  restricted
     share units were granted,  27,365 restricted share units were forfeited and
     83,091 restricted share units vested. This vesting resulted in the issuance
     of  51,527  common  shares.  In  addition,  cash  compensation  was paid to
     employees  in lieu of 31,564  common  shares based upon the market value of
     the shares at the date of vesting,  and used to settle the  employees'  tax
     liability generated by the vesting.

              At March 31, 2009,  approximately  609,206  restricted share units
     were  outstanding  (630,212 at December 31, 2008). A total of $2,013,000 in

                                       27


                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

     restricted  share expense was recorded for the three months ended March 31,
     2009,  as compared to  $2,390,000  for the same period in 2008.  Restricted
     share  expense  includes  amortization  of the  fair  value  of  the  grant
     reflected as an increase to paid-in  capital,  as well as payroll  taxes we
     incurred upon each respective vesting.

              See  also  "net  income  per  common   share"  above  for  further
     discussion regarding the impact of restricted share units on our net income
     per common and income allocated to common shareholders.

11.  Segment Information
     -------------------

              Description of Each Reportable Segment
              --------------------------------------

              Our reportable segments reflect significant  operating  activities
     that are  evaluated  separately by  management,  comprised of the following
     segments which are organized based upon their operating characteristics.

              Our   self-storage   segment   comprises  the  direct   ownership,
     development,  and operation of traditional  self-storage  facilities in the
     U.S.,  and  the  ownership  of  equity   interests  in  entities  that  own
     self-storage  facilities in the U.S., and our interest in the operations of
     a facility in London,  England.  Our Shurgard Europe segment  comprises our
     interest in the  self-storage  and associated  activities owned by Shurgard
     Europe.  See also Note 3 for a discussion of the disposition of an interest
     in, and deconsolidation of, Shurgard Europe effective March 31, 2008.

              Our ancillary  segment  includes (i) the  reinsurance  of policies
     against losses to goods stored by tenants in our  self-storage  facilities,
     (ii) merchandise  sales,  (iii) commercial  property  operations,  and (iv)
     management of  facilities  for third  parties and  facilities  owned by the
     Unconsolidated  Entities.  During the three months ended March 31, 2009, we
     discontinued our truck rental and containerized  storage operations,  which
     previously had been included in our ancillary  segment.  See  "Discontinued
     Operations" in Note 2 for further discussion.

              Measurement of Segment Income (Loss) and Segment Assets -
              ---------------------------------------------------------
              Self-Storage and Ancillary
              --------------------------

              The   self-storage   and  ancillary   segments  are  evaluated  by
     management  based upon the net segment income of each segment.  Net segment
     income  represents net income in conformity  with GAAP and our  significant
     accounting policies as denoted in Note 2, before interest and other income,
     interest  expense,  and  corporate  general  and  administrative   expense.
     Interest  and  other  income,  interest  expense,   corporate  general  and
     administrative expense, and gains and losses on sales of real estate assets
     are not allocated to these  segments  because  management  does not utilize
     them to evaluate the results of operations  of each  segment.  In addition,
     there is no presentation of segment assets for these other segments because
     total assets are not considered in the evaluation of these segments.

              Measurement of Segment Income (Loss) and Segment Assets -
              ---------------------------------------------------------
              Shurgard Europe
              ---------------

              Shurgard  Europe's  operations  are primarily  independent  of our
     other segments,  with a separate  management team that makes the financing,
     capital  allocation,  and other significant  decisions.  As a result,  this
     segment is evaluated by  management  as a stand-alone  business  unit.  The
     Shurgard  Europe  segment  presentation   includes  all  of  the  revenues,
     expenses,  and operations of this business unit to the extent  consolidated

                                       28


                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

     in our financial statements,  and for periods following the deconsolidation
     of Shurgard  Europe,  the  presentation  below includes our equity share of
     Shurgard Europe's  operations,  the interest and other income received from
     Shurgard Europe,  as well as specific general and  administrative  expense,
     disposition  gains,  and foreign  currency  exchange  gains and losses that
     management  considers in evaluating our investment in Shurgard  Europe.  At
     March 31,  2009,  our  condensed  consolidated  balance  sheet  includes an
     investment in Shurgard  Europe with a book value of $250.5 million  ($264.1
     million at December 31, 2008) and a loan  receivable  from Shurgard  Europe
     totaling  (euro)391.9  million ($517.5 million) ($552.4 million at December
     31, 2008).

              Presentation of Segment Information
              -----------------------------------

              The following table reconciles the performance of each segment, in
     terms of  segment  income,  to our  consolidated  net  income  (amounts  in
     thousands):

                                       29



                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

For the three months ended March 31, 2009



                                                                                                   Other Items Not
                                                                      Shurgard                       Allocated to         Total
                                                     Self-Storage      Europe          Ancillary      Segments        Consolidated
                                                    ---------------  -------------   ------------  ----------------  -------------
                                                                                   (Amounts in thousands)
Revenues:
                                                                                                      
   Self-storage rental income....................     $   371,598     $        -      $        -      $       -      $   371,598
   Ancillary operating revenue...................               -              -          25,835              -           25,835
   Interest and other income.....................               -          5,361               -          2,272            7,633
                                                    ---------------  -------------   ------------  ----------------  -------------
                                                          371,598          5,361          25,835          2,272          405,066
                                                    ---------------  -------------   ------------  ----------------  -------------
Expenses:
  Cost of operations (excluding depreciation and
   amortization below):
      Self-storage facilities....................         133,641              -               -              -          133,641
      Ancillary operations.......................               -              -           9,653              -            9,653
  Depreciation and amortization..................          84,187              -             980              -           85,167
  General and administrative.....................               -              -               -          9,679            9,679
  Interest expense...............................               -              -               -          8,128            8,128
                                                    ---------------  -------------   ------------  ----------------  -------------
                                                          217,828              -          10,633         17,807          246,268
                                                    ---------------  -------------   ------------  ----------------  -------------
Income (loss) from continuing operations before
   equity in earnings of real estate entities, gain
   on disposition of other real estate investments,
   gain on early retirement of debt and foreign
   currency exchange loss........................         153,770          5,361          15,202        (15,535)         158,798

Equity in earnings of real estate entities.......             444          1,901          20,466              -           22,811
Gain on disposition of other real estate
   investments...................................               -              -               -          2,722            2,722
Gain on early retirement debt....................               -              -               -          4,114            4,114
Foreign currency exchange loss...................               -        (34,733)              -              -          (34,733)
                                                    ---------------  -------------   ------------  ----------------  -------------
Income (loss) from continuing operations.........         154,214        (27,471)         35,668         (8,699)         153,712
Discontinued operations..........................               -              -               -           (283)            (283)
                                                    ---------------  -------------   ------------  ----------------  -------------
Net income (loss)................................     $   154,214     $  (27,471)     $   35,668      $  (8,982)     $   153,429
                                                    ===============  =============   ============  ================  =============





                                       30


                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

For the three months ended March 31, 2008



                                                                                                   Other Items Not
                                                                      Shurgard                       Allocated to        Total
                                                     Self-Storage      Europe        Ancillary         Segments       Consolidated
                                                     -------------   -----------    ------------   ----------------  -------------
                                                                                   (Amounts in thousands)
Revenues:
                                                                                                      
   Self-storage rental income....................     $  369,884     $   54,722      $        -      $        -      $    424,606
   Ancillary operating revenue...................              -          4,913          25,124               -            30,037
   Interest and other income.....................              -              -               -           2,844             2,844
                                                     -------------   -----------    ------------   ----------------  -------------
                                                         369,884         59,635          25,124           2,844           457,487
                                                     -------------   -----------    ------------   ----------------  -------------
Expenses:
  Cost of operations (excluding depreciation and
   amortization below):
      Self-storage facilities....................        132,161         24,654               -               -           156,815
      Ancillary operations.......................              -          1,409           9,895               -            11,304
  Depreciation and amortization..................         99,628         21,871             942               -           122,441
  General and administrative.....................              -          4,644               -          10,272            14,916
  Interest expense...............................              -          7,308               -           9,179            16,487
                                                     -------------   -----------    ------------   ----------------  -------------
                                                         231,789         59,886          10,837          19,451           321,963
                                                     -------------   -----------    ------------   ----------------  -------------
Income (loss) from continuing operations before
   equity in earnings of real estate entities,
   gain on disposition of an interest in Shurgard
   Europe and foreign currency exchange gain.....        138,095           (251)         14,287         (16,607)          135,524

Equity in earnings of real estate entities.......            384              -           2,345               -             2,729
Gain on disposition of an interest in Shurgard
   Europe........................................              -        341,865               -               -           341,865
Foreign currency exchange gain...................              -         40,971               -               -            40,971
                                                     -------------   -----------    ------------   ----------------  -------------
Income (loss) from continuing operations.........        138,479        382,585          16,632         (16,607)          521,089
Discontinued operations..........................              -              -               -          (1,148)           (1,148)
                                                     -------------   -----------    ------------   ----------------  -------------
Net income (loss)................................     $  138,479     $  382,585      $   16,632      $  (17,755)     $    519,941
                                                     =============   ===========    ============   ================  =============




                                       31



                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

12.  Commitments and Contingencies
     -----------------------------

              Legal Matters
              -------------

              Brinkley v. Public  Storage,  Inc.  (filed  April 2005)  (Superior
              ------------------------------------------------------------------
              Court of California - Los Angeles County)
              -----------------------------------------

              The plaintiff  sued the Company on behalf of a purported  class of
     California  non-exempt  employees based on various California wage and hour
     laws and seeking  monetary  damages and injunctive  relief.  In May 2006, a
     motion  for  class   certification   was  filed  seeking  to  certify  five
     subclasses.   Plaintiff  sought   certification  for  alleged  meal  period
     violations, rest period violations, failure to pay for travel time, failure
     to pay for mileage  reimbursement,  and for wage statement  violations.  In
     October  2006,  the  Court  declined  to  certify  three  out of  the  five
     subclasses.  The Court did,  however,  certify  subclasses based on alleged
     meal period and wage statement violations.  Subsequently, the Company filed
     a motion  for  summary  judgment  seeking  to  dismiss  the  matter  in its
     entirety.  On June 22,  2007,  the  Court  granted  the  Company's  summary
     judgment  motion  as to the  causes of action  relating  to the  subclasses
     certified and dismissed those claims.  The only surviving  claims are those
     relating to the named  plaintiff.  The plaintiff has filed an appeal to the
     Court's June 22, 2007 summary  judgment  ruling.  On October 28, 2008,  the
     Court of Appeals sustained the trial court's ruling.  The plaintiff filed a
     petition for review with the California  Supreme  Court,  which was granted
     but further action in this matter was deferred  pending  consideration  and
     disposition  of a related  issue in Brinker  Restaurant  Corp.  v. Superior
     Court which is currently pending before the California Supreme Court.

              Other Items
              -----------

              We are a party to  various  claims,  complaints,  and other  legal
     actions that have arisen in the normal course of business from time to time
     that are not  described  above.  We believe  that it is  unlikely  that the
     outcome of these other pending legal proceedings  including  employment and
     tenant claims,  in the aggregate,  will have a material adverse impact upon
     our operations or financial position.

              Insurance and Loss Exposure
              ---------------------------

              We  have  historically  carried  customary  property,  earthquake,
     general liability and workers compensation coverage through internationally
     recognized insurance carriers,  subject to customary levels of deductibles.
     The aggregate limits on these policies of $75 million for property coverage
     and $102 million for general liability are higher than estimates of maximum
     probable  loss  that  could  occur  from  individual   catastrophic  events
     determined in recent engineering and actuarial studies; however, in case of
     multiple catastrophic events, these limits could be exhausted.

              Our tenant  insurance  program  reinsures a program that  provides
     insurance to certificate  holders against claims for property losses due to
     specific  named  perils  (earthquakes  and floods are not  covered by these
     policies) to goods  stored by tenants at our  self-storage  facilities  for
     individual limits up to a maximum of $5,000. We have third-party  insurance
     coverage  for  claims  paid  exceeding  $1,000,000  resulting  from any one
     individual event, to a limit of $25,000,000.  At March 31, 2009, there were
     approximately  574,000 certificate holders participating in this program in
     the U.S. representing  aggregate coverage of approximately $1.3 billion. We
     rely on a  third-party  insurance  company to provide the insurance and are
     subject to licensing  requirements  and regulations in several  states.  No
     assurance  can be given that this  activity can continue to be conducted in
     any given jurisdiction.

                                       32


                                 PUBLIC STORAGE
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2009

              Operating Lease Obligations
              ---------------------------

              We lease  trucks,  land,  equipment and office space under various
     operating  leases.  At March 31, 2009, the future  minimum rental  payments
     required under our operating  leases for the years ending  December 31, are
     as follows (amounts in thousands):

  2009......................................    $    5,100
  2010......................................         6,171
  2011......................................         5,632
  2012......................................         5,640
  2013......................................         5,530
  Thereafter................................        76,663
                                                -----------
                                                $  104,736
                                                ===========

              Expenses under operating  leases were  approximately  $2.7 million
     and $3.3  million  for the three  months  ended  March  31,  2009 and 2008,
     respectively. Certain of our land leases include escalation clauses, and we
     recognize related lease expenses on a straight-line basis.

                                       33




ITEM 2.  MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION AND
-------  ------------------------------------------------------------------
         RESULTS OF OPERATIONS
         ---------------------

     The following  discussion and analysis  should be read in conjunction  with
our condensed consolidated financial statements and notes thereto.

     FORWARD  LOOKING  STATEMENTS:  This Quarterly  Report on Form 10-Q contains
forward-looking  statements  within the meaning of the federal  securities laws.
All statements in this document,  other than statements of historical  fact, are
forward-looking  statements  which  may be  identified  by the use of the  words
"expects,"  "believes,"   "anticipates,"   "plans,"  "would,"  "should,"  "may,"
"estimates" and similar expressions.  These  forward-looking  statements involve
known and unknown  risks and  uncertainties,  which may cause  Public  Storage's
actual results and  performance to be materially  different from those expressed
or implied in the forward-looking  statements.  As a result, you should not rely
on any  forward-looking  statements in this report, or which management may make
orally or in writing  from time to time,  as  predictions  of future  events nor
guarantees of future performance.  We caution you not to place undue reliance on
forward-looking statements, which speak only as the date of this report or as of
the dates indicated in the statements.  All of our  forward-looking  statements,
including  those  in this  report,  are  qualified  in  their  entirely  by this
statement.  We expressly disclaim any obligation to update publicly or otherwise
revise any forward-looking  statements,  whether as a result of new information,
new estimates,  or other factors, events or circumstances after the date of this
document,  except where expressly required by law.  Accordingly,  you should use
caution in relying  on past  forward-looking  statements  to  anticipate  future
results.

     Factors  and risks  that may  impact our  future  results  and  performance
include,  but are not limited to, those  described in Item 1A, "Risk Factors" in
the Public  Storage  Annual Report on Form 10-K for the year ended  December 31,
2008,  our  subsequent  filings  on Form 8-K and in our other  filings  with the
Securities and Exchange  Commission  ("SEC").  These risks include,  among other
things, the following:

     o    general  risks  associated  with the  ownership  and operation of real
          estate   including   changes  in  demand,   potential   liability  for
          environmental  contamination,  adverse changes in tax, real estate and
          zoning laws and regulations, and the impact of natural disasters;

     o    risks associated with downturns in the national and local economies in
          the  markets  in which we  operate,  including  risks  related  to the
          current global fiscal crisis;

     o    the  impact of  competition  from new and  existing  self-storage  and
          commercial facilities and other storage alternatives;

     o    difficulties  in  our  ability  to  successfully  evaluate,   finance,
          integrate  into  our  existing  operations  and  manage  acquired  and
          developed properties;

     o    risks  associated with  international  operations  including,  but not
          limited to, unfavorable foreign currency rate fluctuations, that could
          adversely affect our earnings and cash flows;

     o    risks related to our participation in joint ventures;

     o    the impact of the regulatory  environment as well as national,  state,
          and local laws and regulations  including,  without limitation,  those
          governing  environmental,  tax and tenant  insurance  matters and real
          estate investment trusts ("REITs");

     o    risks  associated  with a possible  failure by us to qualify as a REIT
          under the Internal Revenue Code of 1986, as amended;

     o    disruptions or shutdowns of our automated processes and systems;

     o    difficulties in raising capital at a reasonable cost;


                                       34


     o    delays in the development process; and

     o    economic uncertainty due to the impact of war or terrorism.

     The  risks  included  here are not  exhaustive  as it is not  possible  for
management  to predict all  possible  risk factors that may exist or emerge from
time to time. Investors should refer to our future reports and other information
filed from time to time with the SEC for additional information.

     CRITICAL ACCOUNTING POLICIES

     Management's  Discussion and Analysis of Financial Condition and Results of
Operations  discusses our  consolidated  financial  statements,  which have been
prepared in accordance with United States ("U.S.") generally accepted accounting
principles  ("GAAP").  The  preparation of our financial  statements and related
disclosures  in  conformity  with GAAP and our  discussion  and  analysis of our
financial  condition  and  results of  operations  requires  management  to make
judgments,  assumptions  and estimates  that affect the amounts  reported in our
condensed consolidated financial statements and accompanying notes. The notes to
our March 31, 2009 condensed consolidated  financial statements,  primarily Note
2,  summarize  the  significant  accounting  policies  and  methods  used in the
preparation  of our  condensed  consolidated  financial  statements  and related
disclosures.

     Management  believes the following are critical  accounting  policies,  the
application  of  which  has  a  material  impact  on  the  Company's   financial
presentation. That is, they are both important to the portrayal of our financial
condition  and  results,  and they  require  management  to make  judgments  and
estimates about matters that are inherently uncertain.

     QUALIFICATION AS A REIT - INCOME TAX EXPENSE:  We believe that we have been
organized  and operated,  and we intend to continue to operate,  as a qualifying
REIT under the Code and  applicable  state laws.  We also believe that  Shurgard
qualified as a REIT.  A REIT  generally  does not pay  corporate  level  federal
income taxes on its REIT taxable income that is distributed to its shareholders,
and  accordingly,  we do not pay  federal  income  tax on the  share of our REIT
taxable income that is distributed to our shareholders.

     We therefore  do not estimate or accrue any federal  income tax expense for
income earned and distributed related to REIT operations. This estimate could be
incorrect,  because  due  to  the  complex  nature  of  the  REIT  qualification
requirements,   the  ongoing  importance  of  factual   determinations  and  the
possibility of future changes in our circumstances, we cannot be assured that we
actually have satisfied or will satisfy the  requirements for taxation as a REIT
for any  particular  taxable  year.  For any  taxable  year that we fail or have
failed to qualify as a REIT and for which applicable  relief  provisions did not
apply,  we would be taxed at the regular  corporate  rates on all of our taxable
income,  whether or not we made or make any  distributions to our  shareholders.
Any resulting  requirement to pay corporate income tax, including any applicable
penalties or interest,  could have a material  adverse  impact on our  financial
condition or results of  operations.  Unless  entitled to relief under  specific
statutory provisions,  we also would be disqualified from taxation as a REIT for
the four taxable  years  following  the year for which  qualification  was lost.
There can be no assurance that we would be entitled to any statutory  relief. In
addition,  if  Shurgard  failed to qualify as a REIT,  we  generally  would have
succeeded to or incurred significant tax liabilities.

     IMPAIRMENT OF LONG-LIVED ASSETS: Substantially all of our assets consist of
long-lived  assets,  including  real  estate and other  intangible  assets.  The
evaluation of our long-lived assets for impairment includes  determining whether
indicators  of  impairment  exist,  which  is a  subjective  process.  When  any
indicators of impairment  are found,  the evaluation of such  long-lived  assets
then entails  projections of future  operating  cash flows,  which also involves
significant  judgment.  Future events, or facts and circumstances that currently
exist, that we have not yet identified, could cause us to conclude in the future
that our long-lived  assets are impaired.  Any resulting  impairment  loss could
have a  material  adverse  impact on our  financial  condition  and  results  of
operations.

     ESTIMATED  USEFUL  LIVES OF  LONG-LIVED  ASSETS:  Substantially  all of our
assets consist of  depreciable  or  amortizable,  long-lived  assets.  We record
depreciation  and  amortization  expense with respect to these assets based upon
their estimated  useful lives. Any change in the estimated useful lives of those

                                       35



assets,  caused by functional or economic  obsolescence or other factors,  could
have a  material  adverse  impact  on our  financial  condition  or  results  of
operations.

     ACCRUALS FOR CONTINGENCIES:  We are exposed to business and legal liability
risks with respect to events that have occurred, but in accordance with GAAP, we
have not accrued for such potential  liabilities  because the loss is either not
probable  or not  estimable  or because  we are not aware of the  event.  Future
events and the  results of pending  litigation  could  result in such  potential
losses  becoming  probable and  estimable,  which could have a material  adverse
impact on our  financial  condition  or  results  of  operations.  Some of these
potential  losses,  of which we are aware, are described in Note 12 to our March
31, 2009 condensed consolidated financial statements.

     ACCRUALS  FOR  OPERATING  EXPENSES:  We accrue for property tax expense and
certain other operating  expenses based upon estimates and historical trends and
current and anticipated  local and state government  rules and  regulations.  If
these estimates and assumptions are incorrect, our expenses could be misstated.

     VALUATION OF ASSETS AND LIABILITIES ACQUIRED IN BUSINESS  COMBINATIONS:  We
have estimated the fair value of real estate,  intangible assets,  debt, and the
other  assets and other  liabilities  acquired  in business  combinations,  most
notably the Shurgard  Merger.  We have acquired these assets,  in certain cases,
with non-cash assets, most notably the 38.9 million shares that we issued to the
Shurgard  shareholders.   These  estimates  are  based  upon  many  assumptions,
including  interest  rates,  market values of land and buildings in the U.S. and
Europe, estimated future cash flows from the tenant base in place at the time of
the  merger,  and the  recoverability  of certain  assets.  We believe  that the
assumptions used were reasonable,  however,  these assumptions were subject to a
significant  degree of judgment,  and others could come to materially  different
conclusions as to the estimated values,  if different  assumptions were used. If
the values were  determined  using  different  assumptions  than those used, our
depreciation and amortization expense,  interest expense, gain on disposition of
an interest in Shurgard Europe,  real estate,  debt, and intangible assets could
have been materially different.

     OVERVIEW OF MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS

     Our principal  business  activities  include the acquisition,  development,
ownership and operation of  self-storage  facilities  which offer storage spaces
for lease,  generally on a month-to-month  basis, for personal and business use.
We are the largest  owner and operator of  self-storage  facilities in the U.S.,
and we have an interest in what we believe is the largest  owner and operator of
self-storage facilities in Europe.

     We currently  operate within three reportable  segments:  (i) self-storage,
(ii) Shurgard Europe and (iii) ancillary. The self-storage segment comprises the
direct and indirect ownership,  development, and operation of storage facilities
in the U.S. Our Shurgard  Europe  segment  comprises our equity  interest in the
self-storage and associated activities in seven countries in Western Europe. Our
ancillary segment represents all of our other activities,  which are reported as
a group, including (i) commercial property operations,  directly and through our
46% ownership  interest in PS Business Parks,  Inc.  ("PSB"),  a publicly traded
REIT whose common stock trades on the New York Stock  Exchange  under the symbol
"PSB" (as of March 31, 2009,  PSB owned and  operated  19.6 million net rentable
square feet of  commercial  space),  (ii) the  reinsurance  of policies  against
losses to goods stored by tenants in our self-storage  facilities,  (iii) retail
operations conducted at our self-storage  facilities including merchandise sales
and truck  rentals,  and (iv)  management of  self-storage  facilities  owned by
third-party owners and domestic facilities owned by the affiliated entities that
are not consolidated.

     During the three months ended March 31, 2009,  we decided to terminate  our
containerized storage and truck rental operations,  each of which had previously
been classified in our ancillary segment. Accordingly, the results of operations
for these  operations  have been  included  in  discontinued  operations  on our
condensed  consolidated  statements of income. See "Discontinued  Operations" in
Note 2 to our March 31, 2009  condensed  consolidated  financial  statements for
further information regarding our discontinued  operations.  See also Note 11 to
our March 31,  2009  condensed  consolidated  financial  statements  for further
information regarding our segments.

     Our self-storage  facilities in the U.S. comprise  approximately 93% of our
operating revenue,  and represent the primary driver of growth in our net income
and cash flows from operations.  In addition, much of our ancillary revenues are
derived  at our  self-storage  facility  locations,  either  from  our  existing

                                       36



self-storage  customer base or from the customer traffic within our self-storage
facilities.  Accordingly, a large portion of management time and focus is placed
upon maximizing  revenues and effectively  managing expenses in our self-storage
facilities.

     The self-storage  industry is not immune to the  recessionary  pressures in
the general economic environment. Demand for self-storage space in both the U.S.
and Europe has softened and, as a result, we are experiencing  downward pressure
on  occupancy  levels,  rental  rates,  and  revenues  in each of our  operating
segments.

     An important  determinant  of our long-term  growth is the expansion of our
asset base and deployment of capital.  Acquisitions of  self-storage  facilities
have  been  minimal  over  the  past  year  as we  continue  to  monitor  seller
expectations  and wait for better  opportunities  that may come about as certain
local developers,  who raised capital through the issuance of debt,  endeavor to
refinance such debt in the near-term,  but face the current tight credit markets
as  well as  pressure  on  operating  cash  flow  due to the  current  difficult
operating environment.

     While  historically  we have  developed  real  estate  facilities,  we have
substantially  reduced our development  activities due to the existing recession
and our belief  that our  capital  can be more  effectively  put to use in other
ways.

     We currently  have $493.4  million in cash and cash  equivalents on hand at
March 31, 2009, and continue to monitor the  appropriate  and most effective way
to deploy this capital,  primarily  either through the acquisition of facilities
or through the opportunistic  acquisition of our own debt and equity securities.
We acquired  $110.2 million of our  outstanding  senior  unsecured  notes during
February  2009 and we  acquired,  for $24.6  million,  certain of our  preferred
securities in March 2009 at a substantial  discount to liquidation  value.  Also
during March 2009,  we acquired  for $153.0  million,  certain of our  preferred
partnership units at a substantial discount to their carrying amount.

RESULTS OF OPERATIONS
--------------------------------------------------------------------------------

OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2009:
------------------------------------------------------------

     Net income for the three  months  ended March 31,  2009 was $153.4  million
compared to $519.9 million for the same period in 2008,  representing a decrease
of $366.5 million. This decrease is primarily due to a gain of $341.9 million in
the three months ended March 31, 2008 related to our  disposition of an interest
in Shurgard  Europe,  combined with a $34.7 million foreign exchange loss during
the quarter  ended  March 31,  2009 as  compared  to an  exchange  gain of $41.0
million in the same period in 2008.

     Net income to Public Storage  shareholders for the three months ended March
31, 2009 was $217.0  million  compared to $512.3  million for the same period in
2008,  representing a decrease of $295.3 million.  The decrease is due primarily
to the factors  noted above with  respect to net income,  partially  offset by a
$72.0  million  reduction  in earnings  allocated to our  preferred  partnership
unitholders in the three months ended March 31, 2009.

     The foreign  currency  exchange gains and losses relate primarily to a Euro
denominated  loan receivable from Shurgard Europe and were due to changes in the
value of the U.S. Dollar relative to the Euro during each period.

     During the three  months  ended March 31, 2009,  we  repurchased  preferred
partnership  units at an aggregate  acquisition cost of $153.0 million which was
approximately $72.0 million less than the original net proceeds from issuance of
the respective  units.  The $72.0 million benefit to our common  shareholders is
reflected  as a  reduction  in the  amount  of net  income  allocated  to  these
preferred  partnership  unitholders  and  a  corresponding  increase  in  income
allocation to our common shareholders.

     Net operating income with respect to our domestic  operations  increased by
$0.2  million in the three  months  ended March 31, 2009 as compared to the same
period  in  2008  due  to an  increase  of  $4.2  million  with  respect  to our
non-stabilized  facilities combined with a decrease of $4.0 million with respect
to our Same Store operations.

                                       37



     During the three months ended March 31, 2009,  pursuant to a tender  offer,
we acquired $96.7 million  principal  amount of our 7.75% senior unsecured notes
due in 2011 at par plus accrued  interest,  and $13.5 million face amount of our
5.875% senior unsecured notes due in 2013 at 92.5% of par plus accrued interest.
We recorded a gain on early retirement of debt of approximately  $4.1 million in
the quarter ended March 31, 2009.

     During the three  months  ended March 31, 2009,  we  repurchased  preferred
shares at an acquisition  cost of $17.5 million was  approximately  $6.2 million
less than the original net proceeds  from issuance of the  respective  preferred
securities.  The $6.2 million benefit to our common shareholders is reflected as
an increase in the amount of net income allocated to our common shareholders and
a corresponding decrease in income allocation to our preferred shareholders.

     For the three  months  ended March 31,  2009,  net income  allocable to our
common  shareholders  (after  allocating  net income to our preferred and equity
shareholders)  was $159.5  million or $0.95 per common share on a diluted  basis
compared to $444.8  million or $2.63 per common share on a diluted basis for the
same period in 2008,  representing  an  decrease of $285.3  million or $1.68 per
common share on a diluted basis. These decreases are primarily due to the impact
of the factors described above.

     Weighted average diluted common shares were 168,473,000 and 168,982,000 for
the three months ended March 31, 2009 and 2008, respectively.

REAL ESTATE OPERATIONS
--------------------------------------------------------------------------------

     SELF-STORAGE OPERATIONS: Our self-storage operations are by far the largest
component of our operating activities, representing approximately 92% and 93% of
our total revenues generated for the three months ended March 31, 2009 and 2008,
respectively. Net operating income (after depreciation and amortization expense)
with respect to our self-storage operations increased by $7.5 million during the
three months ended March 31, 2009,  when compared to the same period in 2008 due
to decreased  amortization of tenant intangible assets,  offset partially by the
deconsolidation of Shurgard Europe effective April 1, 2008.

     To enhance year-over-year comparisons,  the following table summarizes, and
the  ensuing  discussion  describes  the  operating  results of three  groups of
facilities  that management  analyzes with respect to the Company's  performance
for our  self-storage  segment,  which  includes:  (i)  the  Same  Store  group,
representing our domestic  facilities that we have owned and have been operating
on a stabilized  basis since January 1, 2007,  (ii) the  facilities  operated by
Shurgard  Europe which were  deconsolidated  effective March 31, 2008, and (iii)
all other facilities included in our financial  statements,  which are primarily
those facilities that we have not owned and operated at a stabilized basis since
January 1, 2007 such as newly acquired,  newly developed,  or recently  expanded
facilities.

                                       38





SELF - STORAGE OPERATIONS SUMMARY:
---------------------------------                       Three Months Ended March 31,
                                                   ----------------------------------------
                                                                                Percentage
                                                       2009           2008        Change
                                                   -----------    -----------   -----------
                                                           (Dollar amounts in thousands)

Rental income:
                                                                         
   Same Store Facilities.......................    $   347,185    $   349,991     (0.8)%
   Other Facilities ...........................         24,413         19,893     22.7%
                                                   -----------    -----------   ---------
      Total Self-Storage Segment...............        371,598        369,884      0.5%
   Shurgard Europe Segment Facilities (a)......              -         54,722   (100.0)%
                                                   -----------    -----------   ---------
     Total rental income.......................        371,598        424,606    (12.5)%
                                                   -----------    -----------   ---------
Cost of operations before depreciation and
    amortization expense:
   Same Store Facilities.......................        125,007        123,856      0.9%
   Other Facilities............................          8,634          8,305      4.0%
                                                   -----------    -----------   ---------
      Total Self-Storage Segment...............        133,641        132,161      1.1%
   Shurgard Europe Segment Facilities (a)......              -         24,654   (100.0)%
                                                   -----------    -----------   ---------
      Total cost of operations.................        133,641        156,815    (14.8)%
                                                   -----------    -----------   ---------
Net operating income before depreciation and
    amortization expense (b):
   Same Store Facilities.......................        222,178        226,135     (1.7)%
   Other Facilities............................         15,779         11,588     36.2%
                                                   -----------    -----------   ---------
      Total Self-Storage Segment...............        237,957        237,723      0.1%
   Shurgard Europe Segment Facilities..........              -         30,068   (100.0)%
                                                   -----------    -----------   ---------
   Total net operating income before
        depreciation and amortization expense..        237,957        267,791    (11.1)%
   Total depreciation and amortization expense.        (84,187)      (121,499)   (30.7)%
                                                   -----------    -----------   ---------
   Total net operating income..................    $   153,770    $   146,292      5.1%
                                                   ===========    ===========   =========

Data for Same Store and Other Facilities:

Number of facilities at period end:
  Same Store Facilities........................          1,899          1,899      -
  Other Facilities.............................             93             84     10.7%

Net rentable square footage at period end (in thousands):
  Same Store Facilities........................        117,462        117,462      -
  Other Facilities.............................          8,536          7,381     15.6%

Weighted average square foot occupancy during the period:
  Same Store Facilities........................          87.9%          88.8%     (1.0)%
  Other Facilities.............................          79.9%          73.3%      9.0%

Realized rents per occupied square foot during the period:
  Same Store Facilities........................    $     12.84    $     12.87     (0.2)%
  Other Facilities.............................    $     13.80    $     14.11     (2.2)%

Square foot occupancy at period end:
  Same Store Facilities........................          88.2%          89.3%     (1.2)%
  Other Facilities.............................          81.2%          74.6%      8.8%
In place rents per square foot at period end:
  Same Store Facilities........................    $     13.57    $     13.86     (2.1)%
  Other Facilities.............................    $     14.75    $     15.45     (4.5)%



     (a)  Represents  the results with respect to Shurgard  Europe's  properties
          for the periods consolidated in our financial statements.  We acquired
          these  facilities on August 22, 2006 in  connection  with the Shurgard
          Merger.  As  described  in  Note 3 to our  March  31,  2009  condensed
          consolidated  financial  statements,  effective  March  31,  2008,  we
          deconsolidated  Shurgard Europe.  See also "Equity in Earnings of Real
          Estate Entities - Investment in Shurgard  Europe" for further analysis
          of the historical same store property operations of Shurgard Europe.

     (b)  Total net operating  income before  depreciation  and  amortization or
          "NOI"  is  a  non-GAAP  (generally  accepted  accounting   principles)
          financial  measure  that  excludes  the  impact  of  depreciation  and
          amortization  expense.  See Note 11 to our March 31, 2009 consolidated
          financial   statements,   "Segment   Information,"  which  includes  a

                                       39


          reconciliation  of  NOI  for  our  self-storage  and  Shurgard  Europe
          segments to our  consolidated  net income.  Although  depreciation and
          amortization  are  operating  expenses,  we  believe  that  NOI  is  a
          meaningful measure of operating performance, because we utilize NOI in
          making decisions with respect to capital  allocations,  in determining
          current   property   values,   segment   performance,   and  comparing
          period-to-period and market-to-market  property operating results. NOI
          is not a substitute for net operating  income after  depreciation  and
          amortization in evaluating our operating results.


     Same Store Facilities

     The Same Store Pool represents  those 1,899  facilities that are stabilized
and owned since January 1, 2007 and therefore provide meaningful comparisons for
2007,  2008,  and 2009. The Same Store Pool increased from 1,789 at December 31,
2008 to 1,899 at March 31, 2009, as we added  facilities that are now stabilized
and owned since January 1, 2007, and removed  facilities  from the previous Same
Store  Pool  that,  due  primarily  to  construction  activities,  are no longer
expected to be  stabilized  through  December  31,  2009.  The  following  table
summarizes the historical  operating  results of these 1,899  facilities  (117.5
million  net  rentable  square  feet) that  represent  approximately  93% of the
aggregate  net  rentable  square  feet  of our  U.S.  consolidated  self-storage
portfolio at March 31, 2009.




SAME STORE FACILITIES                                        Three Months Ended March 31,
                                                        -------------------------------------
                                                                                   Percentage
                                                            2009          2008       Change
                                                        -----------    ----------- -----------
                                                        (Dollar amounts in thousands, except
                                                              weighted average amounts)


                                                                               
Rental income......................................      $  331,539     $  335,553      (1.2)%
Late charges and administrative fees collected.....          15,646         14,438       8.4%
                                                         -----------    -----------   --------
   Total rental income.............................         347,185        349,991      (0.8)%
                                                         -----------    -----------   --------
Cost of operations before depreciation and amortization:
     Direct property payroll.......................          24,360         24,377      (0.1)%
     Property taxes................................          37,762         36,349       3.9%
     Repairs and maintenance.......................          10,716         11,398      (6.0)%
     Media advertising.............................           8,158          6,947      17.4%
     Other advertising and promotion...............           4,614          4,426       4.2%
     Utilities.....................................           9,598          9,437       1.7%
     Property insurance............................           2,698          3,213     (16.0)%
     Telephone reservation center..................           2,794          3,123     (10.5)%
     Other cost of management......................          24,307         24,586      (1.1)%
                                                         -----------    -----------   --------
   Total cost of operations........................         125,007        123,856       0.9%
                                                         -----------    -----------   --------
Net operating income before depreciation and
   amortization expense (a)........................         222,178        226,135      (1.7)%
Depreciation and amortization expense..............         (75,286)       (89,358)     15.7%
                                                         -----------    -----------   --------
 Net operating income..............................      $  146,892     $  136,777       7.4%
                                                         ===========    ===========   ========


Gross margin (before depreciation and amortization
expense)...........................................          64.0%          64.6%       (0.9)%

Weighted average for the period:
   Square foot occupancy (b).......................          87.9%          88.8%       (1.0)%
   Realized annual rent per occupied square foot (c)
   (e).............................................     $    12.84     $    12.87       (0.2)%
   REVPAF (d) (e)..................................     $    11.29     $    11.43       (1.2)%

 Weighted average at March 31:
   Square foot occupancy...........................          88.2%          89.3%       (1.2)%
   In place annual rent per occupied square foot (f)    $    13.57     $    13.86       (2.1)%
Total net rentable square feet (in thousands)......        117,462        117,462         -
Number of facilities...............................          1,899          1,899         -



                                       40


     (a)  Total  net  operating  income  before  depreciation  and  amortization
          expense  or  "NOI"  is  a  non-GAAP   (generally  accepted  accounting
          principles) financial measure that excludes the impact of depreciation
          and  amortization   expense.  For  our  Same  Store  facilities,   NOI
          represents a portion of our total  self-storage  segment's  NOI and is
          reconciled   to  the   self-storage   segment   total  in  the   table
          "self-storage operations summary" above. A reconciliation of our total
          self-storage  segment's NOI to consolidated  net income is included in
          Note  11 to  our  March  31,  2009  condensed  consolidated  financial
          statements,   "Segment   Information."   Although   depreciation   and
          amortization  are  operating  expenses,  we  believe  that  NOI  is  a
          meaningful measure of operating performance, because we utilize NOI in
          making decisions with respect to capital  allocations,  in determining
          current   property   values,   segment   performance,   and  comparing
          period-to-period and market-to-market  property operating results. NOI
          is not a substitute for net operating  income after  depreciation  and
          amortization expense in evaluating our operating results.

     (b)  Square foot occupancies  represent  weighted average  occupancy levels
          over the entire period.

     (c)  Realized  annual rent per occupied square foot is computed by dividing
          rental income, which excludes late charges and administrative fees, by
          the weighted average occupied square footage for the period.  Realized
          annual  rent  per  occupied  square  foot  takes  into   consideration
          promotional  discounts  and other items that reduce rental income from
          the contractual amounts due.

     (d)  Annualized   rental  income  per  available   square  foot  ("REVPAF")
          represents  annualized rental income,  which excludes late charges and
          administrative  fees,  divided by total  available net rentable square
          feet.

     (e)  Late charges and administrative fees are excluded from the computation
          of realized  annual rent per occupied  square foot and REVPAF  because
          exclusion of these  amounts  provides a better  measure of our ongoing
          level of revenue,  by excluding the volatility of late charges,  which
          are dependent  principally upon the level of tenant  delinquency,  and
          administrative fees, which are dependent principally upon the absolute
          level of move-ins for a period.

     (f)  In place annual rent per occupied  square foot  represents  annualized
          contractual  rents per  occupied  square foot without  reductions  for
          promotional  discounts,  and excludes late charges and  administrative
          fees.

     Rental income decreased  approximately 1.2% in the three months ended March
31, 2009, as compared to the same period in 2008. These decreases were primarily
attributable  to lower average  realized annual rental rates per occupied square
foot,  which  were 0.2%  lower in the three  months  ended  March 31,  2009,  as
compared to the same period in 2008 and to a 1.0%  decline in  occupancy  levels
during the three months ended March 31, 2009,  as compared to the same period in
2008.

     We believe  that  demand  for our  self-storage  space has been  negatively
impacted  by general  economic  conditions,  the slow down in housing  sales and
moving activity, as well as increased competition.  It is unclear to us how much
these factors may impact us going forward.

     In response to these  conditions,  during the quarter ended March 31, 2009,
we aggressively  lowered rates charged to new tenants upon move-in and increased
our  television  advertising.  While  the  move-in  volume  at our  Same  Stores
increased  3% during the three  months ended March 31, 2009 over the same period
in 2008,  our  move-outs  increased  4%. As a result,  we lost 0.9% of occupancy
during the three months ended March 31, 2009,  as compared to the same period in
2008,  and ended March 31, 2009,  1.2% lower than at March 31, 2008. Our average
in-place  rental rate per occupied  square foot was 2.1% lower at March 31, 2009
than at March 31, 2008, due primarily to the aforementioned rate reductions.  In
order to effectively address the softness in demand, we will continue to closely
monitor and adapt our media advertising, pricing, and promotional discounts on a
localized basis.

     Cost of operations (excluding  depreciation and amortization)  increased by
0.9% in the three months ended March 31, 2009, as compared to the same period in
2008.  Growth moderated in the three months ended March 31, 2009 as higher media
advertising and property tax expenses were partially offset by lower repairs and
maintenance and property insurance expenses.

     Direct property payroll expense decreased by 0.1% in the three months ended
March 31, 2009, as compared to the same period in 2008.  This  reflects  minimal
growth in average  wage rates and lower hours  incurred  due to  adjustments  in
staffing levels.  For the remainder of 2009, we expect moderate growth trends in
payroll.

     Property tax expense  increased by 3.9% in the three months ended March 31,
2009,  as  compared  to the same  period  in 2008.  These  increases  are due to
increases  in  assessments  of property  values that have been  greater  than we

                                       41


experienced  in prior  years.  While we expect  property  tax expense  growth of
approximately  4% in 2009,  the actual  growth could be higher or lower  because
there are  several  jurisdictions  where we have not yet  received  tax bills or
assessment information for 2009, or appeals or assessments are pending.

     Repairs and  maintenance  expenditures  were decreased by 6.0% in the three
months ended March 31, 2009, as compared to the same period in 2008. Repairs and
maintenance  expenditures are dependent upon several  factors,  such as weather,
the timing of periodic needs  throughout our  portfolio,  inflation,  and random
events and  accordingly  are  difficult to project from year to year.  We expect
repairs and maintenance expenditures to moderate for the remainder of 2009.

     Media  advertising  for the Same Store  facilities  increased  17.4% in the
three months ended March 31, 2009, as compared to the same period in 2008, as we
expanded our media spend in order to stimulate move-in volume. Other advertising
and promotion is comprised  principally of yellow page and internet advertising,
which  increased  4.2% in the three months ended March 31, 2009,  as compared to
the same period in 2008.

     Due to current  market  conditions  we expect  that we will  continue to be
aggressive with media  advertising in the near term,  however we will experience
moderate  decreases in the second  quarter of 2009 as compared to the high level
of  spending  incurred  in the second  quarter of 2008.  Our future  spending on
yellow page, media, and internet advertising expenditures will be driven in part
by demand for our self-storage  spaces,  our current occupancy  levels,  and the
relative  efficacy of each type of advertising.  Media advertising in particular
can be volatile and increase or decrease significantly in the short-term.

     Utility  expenses  increased 1.7% in the three months ended March 31, 2009,
as compared  to the same  period in 2008.  It is  difficult  to estimate  future
utility cost levels  because  utility costs are dependent upon changes in demand
driven by weather and  temperature,  as well as fuel  prices,  both of which are
volatile and not predictable.

     Property  insurance expense decreased 16.0% in the three months ended March
31, 2009, as compared to the same period in 2008.  This decline is primarily due
to  softer  insurance  markets  as lack of  hurricane  activity  and  additional
competition  from  insurance  providers has  benefited  us. We expect  insurance
expense to be down  slightly in the  remainder of 2009,  as compared to the same
period in 2008.

     Telephone  reservation  center  costs  decreased  10.5% in the three months
ended March 31,  2009,  as  compared to the same period in 2008,  as we adjusted
staffing  levels  to  expected  inquiry  volumes.  We  expect  future  telephone
reservation center costs to remain flat.

                                       42



     The following  table  summarizes  selected  quarterly  financial  data with
respect to the Same Store facilities:


                                               For the Quarter Ended
                      ---------------------------------------------------------------------
                        March 31           June 30        September 30         December 31        Entire Year
                      -----------        -----------      -------------        ------------       ------------
                             (Amounts in thousands, except for per square foot amount)

                                                                                      
Total rental income:
     2009             $   347,185
     2008             $   349,991        $   359,461        $   368,976         $   357,202       $  1,435,630

Total cost of operations (excluding
depreciation and amortization expense):
     2009             $   125,007
     2008             $   123,856        $   120,526        $   113,972         $   104,442       $    462,796

Property tax expense:
     2009             $    37,762
     2008             $    36,349        $    35,156        $    36,161         $    28,159       $    135,825

Media advertising expense:
     2009             $     8,158
     2008             $     6,947        $     9,836        $     2,148         $       922       $     19,853

Other advertising and promotion expense:
     2009             $     4,614
     2008             $     4,426        $     5,027        $     4,645         $     4,137       $     18,235

REVPAF:
     2009             $     11.29
     2008             $     11.43        $     11.74        $     12.03         $     11.65       $      11.71

Weighted average realized annual rent per occupied square foot:
     2009             $     12.84
     2008             $     12.87        $     12.90        $     13.29         $     13.27       $      13.08

Weighted average occupancy levels for the period:
     2009                   87.9%
     2008                   88.8%              91.0%              90.5%               87.8%              89.5%



                                       43



ANALYSIS OF REGIONAL TRENDS
---------------------------

     The  following   table  sets  forth  regional  trends  in  our  Same  Store
Facilities:

                                              Three Months Ended March 31,
                                          --------------------------------------
                                             2009         2008        Change
                                          ------------ ------------ ------------
                                            (Amounts in thousands, except for
                                                 weighted average data)
SAME STORE FACILITIES OPERATING TRENDS
BY REGION
Rental income:
   Southern California  (176 facilities)  $    51,738  $    52,147      (0.8)%
   Northern California  (167 facilities)       37,426       37,239       0.5%
   Texas  (231 facilities)..........           34,594       34,193       1.2%
   Florida  (182 facilities)........           33,803       35,085      (3.7)%
   Illinois  (119 facilities).......           21,963       21,847       0.5%
   Georgia  (86 facilities).........           12,192       12,682      (3.9)%
   All other states  (938 facilities)         155,469      156,798      (0.8)%
                                          ------------ ------------ ------------
Total rental income.................          347,185      349,991      (0.8)%

Cost of operations before depreciation and amortization expense:
   Southern California..............           12,149       11,648       4.3%
   Northern California..............           10,702       10,448       2.4%
   Texas............................           14,195       14,323      (0.9)%
   Florida..........................           12,467       12,756      (2.3)%
   Illinois.........................           11,011       11,099      (0.8)%
   Georgia..........................            4,307        4,218       2.1%
   All other states.................           60,176       59,364       1.4%
                                          ------------ ------------ ------------
Total cost of operations............          125,007      123,856       0.9%

Net operating income before depreciation and amortization expense:
   Southern California..............           39,589       40,499      (2.2)%
   Northern California..............           26,724       26,791      (0.3)%
   Texas............................           20,399       19,870       2.7%
   Florida..........................           21,336       22,329      (4.4)%
   Illinois.........................           10,952       10,748       1.9%
   Georgia..........................            7,885        8,464      (6.8)%
   All other states.................           95,293       97,434      (2.2)%
                                          ------------ ------------ ------------
Total net operating income before
   depreciation and amortization expense  $   222,178  $   226,135      (1.7)%

Weighted average occupancy:
   Southern California..............           90.6%        90.1%        0.6%
   Northern California..............           88.1%        89.0%       (1.0)%
   Texas............................           88.6%        89.9%       (1.4)%
   Florida..........................           88.1%        87.1%        1.1%
   Illinois.........................           86.3%        87.4%       (1.3)%
   Georgia..........................           85.7%        88.5%       (3.2)%
   All other states.................           87.4%        88.7%       (1.5)%
                                          ------------ ------------ ------------
Total weighted average occupancy....           87.9%        88.8%       (1.0)%

                                       44



   SAME STORE FACILITIES OPERATING
   TRENDS BY REGION (CONTINUED)               Three Months Ended March 31,
                                         --------------------------------------
                                            2009         2008         Change
                                         ------------ ------------ ------------
                                           (Amounts in thousands, except for
                                                 weighted average data)
Realized annual rent per occupied square foot:
   Southern California..............     $    18.91   $    19.18       (1.4)%
   Northern California..............          16.99        16.73        1.6%
   Texas............................           9.92         9.71        2.2%
   Florida..........................          12.32        13.07       (5.7)%
   Illinois.........................          13.22        13.04        1.4%
   Georgia..........................           9.92        10.08       (1.6)%
   All other states.................          11.97        11.96        0.1%
                                         ------------ ------------ ------------
Total realized rent per square foot.     $    12.84   $    12.87       (0.2)%
                                         ============ ============ ============

REVPAF:
   Southern California..............     $    17.14   $    17.28       (0.8)%
   Northern California..............          14.97        14.88        0.6%
   Texas............................           8.79         8.73        0.7%
   Florida..........................          10.86        11.38       (4.6)%
   Illinois.........................          11.41        11.40        0.1%
   Georgia..........................           8.50         8.92       (4.7)%
   All other states.................          10.46        10.61       (1.4)%
                                         ------------ ------------ ------------
Total REVPAF........................     $    11.29   $    11.43       (1.2)%
                                         ============ ============ ============

     We believe  that our  geographic  diversification  and scale  provide  some
insulation from localized  economic effects and add to the stability of our cash
flows.  However,  it is  difficult  to predict  localized  trends in  short-term
self-storage  demand and operating  results.  Accordingly,  the discussion below
primarily  focuses on the long-term  characteristics  of our markets rather than
the short-term impacts of current economic trends,  notwithstanding,  we believe
that each market has been negatively impacted to some degree by general economic
trends and may continue to experience  negative operating trends until such time
that general economic trends improve.

     The Southern  California  Market  consists  principally  of the greater Los
Angeles area and San Diego, and has historically  been a source of strong growth
due to its  diverse  economy  and  continued  population  growth.  In  addition,
barriers  to entry  in the form of  difficult  permitting  requirements  tend to
reduce the potential for increased  competition in the infill locations where we
focus our operations.

     The Northern  California  market consists  principally of San Francisco and
related peripheral submarkets/cities.  While this area has a vibrant economy and
relatively strong population growth, it has been subject to periodic  turbulence
in general  economic  conditions,  particularly  associated  with the technology
sector.

     The Texas  market  principally  includes  Dallas,  Houston,  Austin and San
Antonio.  This market has historically been subject to volatility due to minimal
regulatory restraint upon building,  which results in cycles of overbuilding and
absorption.

     The Florida market  principally  includes Miami,  Orlando,  Tampa, and West
Palm Beach.  Florida continues to be one of our weakest markets,  reflecting the
general economic trend of Florida, which has underperformed the U.S. economy for
the past two years. We believe that Florida will continue to experience negative
operating trends at least in the near-term.

                                       45



     OTHER FACILITIES
     ----------------

     In  addition to the Same Store  facilities,  at March 31,  2009,  we had an
additional  93  self-storage  facilities.   These  facilities  include  recently
acquired  facilities,  recently  developed  facilities and facilities  that were
recently  expanded  by  adding  additional  storage  units.  In  general,  these
facilities are not stabilized  with respect to occupancies or rental rates. As a
result of the fill-up  process and timing of when the  facilities  were put into
place,  year-over-year  changes  can be  significant.  There were no  facilities
acquired in the three months ended March 31, 2009.

     Rental income,  cost of  operations,  depreciation,  net operating  income,
weighted  average square foot  occupancies and realized rents per square foot in
the  table  above  represent  the  operating  results  following  the date  each
particular facility began to be included in our consolidated  operating results,
and in the case of acquired  facilities,  do not include any  operating  results
prior to our acquisition of these facilities.

     In the three  months ended March 31, 2009,  we  completed  three  expansion
projects to existing real estate  facilities  (75,000 net rentable  square feet)
for an aggregate cost of $13.4 million, and did not acquire any new properties.

     We believe our presence in and knowledge of substantially  all of the major
markets in the U.S.  enhances  our  ability to identify  attractive  acquisition
opportunities  and  capitalize  on the  overall  fragmentation  in  the  storage
industry.  Our acquisitions consist of facilities that have been operating for a
number of years as well as newly constructed facilities that were in the process
of filling up to stabilized  occupancy levels. In either case, we have been able
to leverage off of our operating  strategies and improve the occupancy levels of
the facilities,  or with respect to the newly developed  facilities we have been
able to accelerate the fill-up pace.

     We expect  that the Other  Facilities  will  continue  to provide  earnings
growth  during  the  remainder  of 2009 as these  facilities  continue  to reach
stabilization.  However,  the Other Facilities are subject to the same occupancy
and rate pressures that our same-store  facilities are facing as a result of the
recession,   and   accordingly  the  pace  at  which  these   facilities   reach
stabilization,  and  the  ultimate  level  of  cash  flows  to be  reached  upon
stabilization, may be negatively impacted by the current economic trends.

     Our  development  pipeline is nominal at March 31, 2009. Our level of newly
developed  facilities,  and starts to newly developed  facilities,  has declined
significantly  in the last few  years due to  increases  in  construction  cost,
increases in competition with retail,  condominium,  and apartment operators for
quality  construction  sites in urban  locations,  and more difficult zoning and
permitting  requirements,  which has  reduced  the  number of  attractive  sites
available  for  development  and  reduced  our  development  of  facilities.  In
addition,  we  further  reduced  our  development  pipeline  in late 2008 due to
reduced self-storage demand and our belief that our capital can be put to use in
a more advantageous manner. It is unclear when these conditions will improve.

                                       46



     ANCILLARY  OPERATIONS:  Ancillary operations include (i) the reinsurance of
policies  against  losses  to  goods  stored  by  tenants  in  our  self-storage
facilities,  (ii) retail  operations,  comprised  of  merchandise  sales,  (iii)
commercial  property  operations,  and (iv)  management of facilities  for third
parties and facilities owned by the Unconsolidated Entities.

     During the three months ended March 31, 2009,  we decided to terminate  our
truck  rental  and  containerized  operations.  Accordingly,  the  revenues  and
expenses of these  operations  are included in  discontinued  operations  on our
condensed consolidated statements of income for the three months ended March 31,
2009 and 2008.

     The following table sets forth our ancillary operations:

                                              Three Months Ended March 31,
                                           ----------------------------------
                                               2009       2008         Change
                                           ----------  ----------    ---------
                                              (Amounts in thousands)
Revenues:
    Tenant reinsurance premiums (a).....   $   15,103  $   13,822   $   1,281
    Merchandise sales (a)...............        6,427       6,589        (162)
    Other ancillary operations (a)......        4,305       4,713        (408)
    Shurgard Europe merchandise and tenant
      insurance.........................            -       4,913      (4,913)
                                           ----------  ----------    ---------
       Total revenues...................       25,835      30,037      (4,202)
                                           ----------  ----------    ---------

Cost of operations:
    Tenant reinsurance premiums (a).....        3,227       3,023         204
    Merchandise sales (a)...............        4,951       5,213        (262)
    Other ancillary operations (a)......        1,475       1,659        (184)
    Shurgard Europe merchandise and tenant
      insurance.........................            -       1,409      (1,409)
                                           ----------  ----------    ---------
       Total cost of operations.........        9,653      11,304      (1,651)
                                           ----------  ----------    ---------

Depreciation - Other ancillary operations (a):    980         942          38

Net income:
    Tenant reinsurance premiums (a).....       11,876      10,799       1,077
    Merchandise sales (a)...............        1,476       1,376         100
    Other ancillary operations (a)......        1,850       2,112        (262)
    Shurgard Europe merchandise and tenant
      insurance.........................            -       3,504      (3,504)
                                           ----------  ----------    ---------
       Total net income.................   $   15,202  $   17,791    $ (2,589)
                                           ==========  ==========    =========

     (a)  Revenues and expenses for these items are a component of our Ancillary
          segment,  as  described  in Note 11 to our  March 31,  2009  condensed
          consolidated financial statements.

     Tenant  reinsurance  operations:  We reinsure  policies  offered  through a
non-affiliated  insurance  company  against  losses to goods  stored by tenants,
primarily in our domestic self-storage  facilities.  The revenues that we record
are based upon premiums,  which are originally  paid by the customer,  which are
then paid to us by the broker in accordance with our  reinsurance  arrangements.
Cost of operations  primarily  includes  claims paid that are not covered by our
outside third-party insurers, as well as claims adjustment expenses.

     The  increase  in  tenant  reinsurance  revenues  over  the  past  year was
attributable  to higher rates combined with an increase in the percentage of our
existing  tenants  retaining  such  policies.  Approximately  55% and 50% of our
tenants had such policies at March 31, 2009 and 2008, respectively.

     The future level of tenant  reinsurance  revenues is largely dependent upon
the number of new tenants electing to purchase  policies,  the level of premiums
charged  for  such   insurance,   and  the  number  of  tenants  that   continue

                                       47



participating  in the  insurance  program.  Future  cost of  operations  will be
dependent  primarily upon the level of losses  incurred,  including the level of
catastrophic events, such as hurricanes, that occur and affect our properties.

     Merchandise  sales:  We sell  locks,  boxes,  and  packing  supplies at the
self-storage  facilities that we operate. The primary factor impacting the level
of  merchandise  sales is the  level of  customer  traffic  at our  self-storage
facilities, including the level of move-ins.

     Other Ancillary:  We also operate  commercial  facilities,  primarily small
storefronts  and  office  space  located  on or near our  existing  self-storage
facilities  that are rented to third  parties,  and we also manage  self-storage
facilities  utilizing  our existing  management  infrastructure,  to third party
owners as well as to the Unconsolidated  Entities.  These businesses are largely
independent  of the  self-storage  operations  at our facility and have remained
largely unchanged in scope. We do not expect any significant changes in revenues
or profitability from these ancillary businesses.

     EQUITY IN EARNINGS OF REAL ESTATE ENTITIES: In addition to our ownership of
equity  interests  in PSB  and  Shurgard  Europe,  we had  general  and  limited
partnership  interests in five limited partnerships at March 31, 2009 Due to our
limited  ownership  interest and limited  control of these  entities,  we do not
consolidate the accounts of these entities for financial reporting purposes, and
account for such investments using the equity method.

     Equity in earnings of real estate entities for the three months ended March
31, 2009 and 2008, consists of our pro-rata share of the Unconsolidated Entities
based upon our ownership interest for the period. The following table sets forth
the  significant  components  of equity in  earnings  of real  estate  entities.
Amounts with respect to PSB, Shurgard Europe, and Other Investments are included
in our Ancillary,  Shurgard Europe, and Self-Storage segments,  respectively, as
described  in Note 11 to our March 31,  2009  condensed  consolidated  financial
statements.

                                       48



HISTORICAL SUMMARY:                             Three Months Ended March 31,
-------------------                        -----------------------------------
                                             2009           2008       Change
                                           ---------     ---------   ---------
                                                 (Amounts in thousands)
Property operations:
  PSB                                      $  21,553     $  21,779   $    (226)
  Shurgard Europe........................     10,012             -      10,012
  Other Investments......................        653         1,149        (496)
                                           ---------     ---------   ----------
                                              32,218        22,928       9,290
                                           ---------     ---------   ----------
Depreciation:
  PSB....................................    (10,231)      (11,591)      1,360
  Shurgard Europe .......................     (7,209)            -      (7,209)
  Other Investments......................       (192)         (581)        389
                                           ---------     ---------   ----------
                                             (17,632)      (12,172)     (5,460)
                                           ---------     ---------   ----------
Other: (1)
  PSB (2) ...............................      9,144        (7,843)     16,987
  Shurgard Europe........................       (902)            -        (902)
  Other Investments .....................        (17)         (184)        167
                                           ---------     ---------   ----------
                                               8,225        (8,027)     16,252
                                           ---------     ---------   ----------
Total equity in earnings of real estate entities:
  PSB....................................     20,466         2,345      18,121
  Shurgard Europe .......................      1,901             -       1,901
  Other Investments .....................        444           384          60
                                           ---------     ---------   ----------
                                           $  22,811     $   2,729   $  20,082
                                           =========     =========   ==========

     (1)  "Other"  reflects  our share of general  and  administrative  expense,
          interest expense, interest income, our pro-rata share of gains on sale
          of  real  estate  assets,  and  other  non-property;  non-depreciation
          related operating results of these entities.

     (2)  Includes  our pro rata share of benefit  totaling  $16.3  million from
          PSB's  preferred  stock and preferred unit  repurchases  for the three
          months ended March 31, 2009.

Investment in PSB
-----------------

     Throughout each of the three months ended March 31, 2009 and 2008, we owned
5,418,273 common shares and 7,305,355  operating  partnership units (units which
are convertible into common shares on a one-for-one basis) in PS Business Parks,
Inc., a public REIT (NYSE:  PSB). At March 31, 2009, PSB owned and operated 19.6
million net rentable  square feet of  commercial  space located in eight states.
PSB also manages  commercial space owned by the Company and affiliated  entities
at March 31, 2009 pursuant to property management agreements.

     Our future  equity  income from PSB will be dependent  entirely  upon PSB's
operating results.  Our investment in PSB provides us with some  diversification
into another asset type. We have no plans of disposing of our investment in PSB.
PSB's filings and selected  financial  information  can be accessed  through the
Securities and Exchange Commission, and on its website, www.psbusinessparks.com.

Investment in Shurgard Europe
-----------------------------

     As  described  in  Note 3 to our  March  31,  2009  condensed  consolidated
financial  statements,  due to the  disposition  of a 51%  interest  in Shurgard
Europe,  our pro-rata  share of the operating  results of Shurgard  Europe after
March 31, 2008 is  included  in "equity in  earnings  of real estate  entities."
Selected  financial data for Shurgard  Europe for each of the three months ended
March 31, 2009 and 2008 is  included  in Note 5 to our March 31, 2009  condensed
consolidated financial statements.

     At March 31, 2009,  Shurgard  Europe's  operations  comprise 182 facilities
with an aggregate of 9,644,000 net rentable square feet. The portfolio  consists
of 110 wholly owned  facilities  and 72  facilities  owned by two joint  venture
partnerships, in which Shurgard Europe has a 20% equity interest.

                                       49


     Our equity in earnings of Shurgard Europe, for the three months ended March
31,  2009  totaling  $1,901,000  is  comprised  of  (i) a  loss  of  $3,251,000,
representing  our 49% equity  share of Shurgard  Europe's net loss for the three
months  ended  March  31,  2009 and (ii)  income  of  $4,974,000  and  $178,000,
respectively,  representing  our 49% pro-rata  share of the interest  income and
trademark  license fees received  from  Shurgard  Europe during the three months
ended March 31, 2009 (our pro-rata share of such amounts  received are presented
as equity in earnings of real estate  entities  rather than  interest  and other
income).  Our future equity income will be dependent  upon the future  operating
results of Shurgard Europe.

     In the three months ended March 31, 2009, we also recognized  $5,177,000 in
interest  income on our note  receivable  from  Shurgard  Europe and $184,000 in
trademark  license income,  representing 51% of the aggregate amounts paid to us
by  Shurgard  Europe.  See Note 5 to our March 31, 2009  condensed  consolidated
financial  statements,  "Investment in Shurgard  Europe" for further analysis of
the  presentation  of our equity  earnings  and  interest  and other income from
Shurgard Europe.

     The Shurgard Europe Same Store Pool represents those 94 facilities that are
stabilized  and owned since  January 1, 2007 and  therefore  provide  meaningful
comparisons  for 2007,  2008, and 2009. The number of facilities in the Shurgard
Europe Same Store Pool  declined from 96 at December 31, 2008 to 94 at March 31,
2009, as we removed facilities from the previous Shurgard Europe Same Store Pool
that, due primarily to  construction  activities,  are no longer  expected to be
stabilized  through  December  31,  2009,  and  added  facilities  that  are now
stabilized  and owned since January 1, 2007.  The following  table  reflects the
operating results of these 94 facilities.


SELECTED OPERATING DATA FOR THE 94 FACILITIES OPERATED
------------------------------------------------------
BY SHURGARD EUROPE ON A STABILIZED BASIS SINCE JANUARY
------------------------------------------------------
1, 2007 ("EUROPE SAME STORE FACILITIES"):                      Three Months Ended March 31,
-----------------------------------------                ---------------------------------------
                                                                                      Percentage
                                                             2009          2008         Change
                                                         ------------  ------------   ----------
                                                           (Dollar amounts in thousands, except
                                                                  weighted average data,
                                                          utilizing constant exchange rates) (a)

Revenues:
                                                                                
    Rental income.................................       $     26,607  $     27,828      (4.4)%
    Late charges and administrative fees collected                435           479      (9.2)%
                                                         ------------  ------------   ----------
    Total revenues (b)............................             27,042        28,307      (4.5)%

Cost of operations (excluding depreciation
      and amortization expense):
    Property taxes ...............................              1,373         1,326       3.5%
    Direct property payroll.......................              3,284         3,153       4.2%
    Advertising and promotion.....................              1,443           729      97.9%
    Utilities.....................................                864           670      29.0%
    Repairs and maintenance.......................                802           759       5.7%
    Property insurance............................                164           175      (6.3)%
    Other costs of management.....................              3,733         3,937      (5.2)%
                                                         ------------  ------------   ----------
  Total cost of operations (b)....................             11,663        10,749       8.5%
                                                         ------------  ------------   ----------

   Net operating income (excluding depreciation and
      amortization expense) (c)...................       $    15,379   $     17,558     (12.4)%
                                                         ===========   ============   ==========

Gross margin (before depreciation and amortization
   expense).......................................              56.9%         62.0%      (8.2)%
Weighted average for the period:
  Square foot occupancy (d).......................              84.7%         88.3%      (4.1)%
  Realized annual rent per occupied square foot (e)            $24.35        $24.43      (0.3)%
  REVPAF (f) (g)..................................             $20.63        $21.57      (4.4)%

Weighted average at March 31:
  Square foot occupancy...........................              85.1%         87.5%      (2.7)%
  In place annual rent per occupied square foot (h)            $25.96        $26.24      (1.1)%
Total net rentable square feet (in thousands).....              5,160         5,160        -



                                       50


     (a)  The majority of Shurgard Europe's operations are denominated in Euros.
          For comparative purposes, amounts for the three months ended March 31,
          2008 and 2009 are translated at constant  exchange rates  representing
          the average  exchange rates for the three months ended March 31, 2009.
          The average exchange rate for the Euro was approximately 1.3065 during
          the three months  ended March 31, 2009.  The amounts that are included
          in our March 31, 2009 condensed  consolidated financial statements are
          based upon the actual exchange rate for each period.

     (b)  Revenues and cost of operations do not include ancillary  revenues and
          expenses   generated  at  the   facilities   with  respect  to  tenant
          reinsurance and retail sales. "Other costs of management"  included in
          cost of  operations  principally  represents  all the  indirect  costs
          incurred  in  the  operations  of  the   facilities.   Indirect  costs
          principally  include  supervisory  costs and  corporate  overhead cost
          incurred to support the operating activities of the facilities.

     (c)  Net operating income (excluding depreciation and amortization expense)
          or "NOI" is a  non-GAAP  (generally  accepted  accounting  principles)
          financial  measure  that  excludes  the  impact  of  depreciation  and
          amortization  expense.  Although  depreciation  and  amortization  are
          operating  expenses,  we believe that NOI is a  meaningful  measure of
          operating performance, because we utilize NOI in making decisions with
          respect  to  capital  allocations,  in  determining  current  property
          values,  segment  performance,   and  comparing  period-to-period  and
          market-to-market  property operating results.  NOI is not a substitute
          for net operating income after  depreciation and amortization  expense
          in evaluating our operating results.

     (d)  Square foot occupancies  represent  weighted average  occupancy levels
          over the entire period.

     (e)  Realized   annual  rent  per  occupied  square  foot  is  computed  by
          annualizing  the  result of  dividing  rental  income by the  weighted
          average  occupied square footage for the period.  Realized annual rent
          per  occupied  square  foot  takes  into   consideration   promotional
          discounts   and  other  items  that  reduce  rental  income  from  the
          contractual amounts due.

     (f)  Annualized   rental  income  per  available   square  foot  ("REVPAF")
          represents  annualized  rental income  divided by total  available net
          rentable square feet.

     (g)  Late charges and administrative fees are excluded from the computation
          of realized  annual rent per occupied  square foot and REVPAF  because
          exclusion of these  amounts  provides a better  measure of our ongoing
          level of revenue,  by excluding the volatility of late charges,  which
          are dependent  principally upon the level of tenant  delinquency,  and
          administrative fees, which are dependent principally upon the absolute
          level of move-ins for a period.

     (h)  In place annual rent per occupied  square foot  represents  annualized
          contractual  rents per  occupied  square foot without  reductions  for
          promotional  discounts,  and excludes late charges and  administrative
          fees.

     We have  recently  seen  softness in Shurgard  Europe's  operations,  as it
appears  to be  impacted  by the same  trends in  self-storage  demand  that our
domestic  facilities  are  facing,  but  to a  larger  degree.  In  addition  to
same-store  NOI growth being negative for the three months ended March 31, 2009,
occupancies as well as rates charged to new customers are below that of the same
period in 2008,  continuing a trend that began in the fourth quarter of 2008. We
expect  continued  declines  in  operating  results for the  remainder  of 2009.
Shurgard Europe has ceased  commencement of new development  projects.  At March
31, 2009, Shurgard Europe has five newly developed facilities and two expansions
to existing  facilities under  construction  (373,000 net rentable square feet),
with costs incurred of $43.5 million and $18.9 million in costs to complete. The
development of these projects is subject to various risks and contingencies.

Other Investments
-----------------

     The "Other  Investments"  at March 31, 2009 are comprised  primarily of our
equity in earnings from entities that own 19  self-storage  facilities.  Amounts
included in the tables above also include our equity in earnings with respect to
three facilities  owned by the  Unconsolidated  Entities,  until we acquired the
remaining  interest we did not own in these entities  during 2008, and commenced
consolidating these facilities. Our future earnings with respect to the other 19
facilities  will be dependent upon the operating  results of the facilities that
these  entities  own.  See Note 5 to our March 31, 2009  condensed  consolidated
financial  statements for the operating results of these 19 facilities under the
"Other Investments."

OTHER INCOME AND EXPENSE ITEMS
--------------------------------------------------------------------------------

     INTEREST AND OTHER  INCOME:  Interest and other  income was  $7,633,000  in
three months ended March 31, 2009,  as compared to $2,844,000 in the same period
in 2008.  The increase is  principally  as a result of (i) interest  income with

                                       51


respect to notes receivable from Shurgard Europe  (described  below),  offset by
lower  interest  income  on cash  balances.  While we had  higher  average  cash
balances,  interest  rates were  significantly  lower in the three  months ended
March 31, 2009 as compared to the same period in 2008. We have $493.4 million in
cash on hand at March 31, 2009 invested  primarily in money-market  funds, which
earn nominal rates of interest in the current interest rate environment.  Future
interest  income will depend upon the level of interest  rates and the timing of
when the cash on hand is ultimately invested.

     We have a loan  receivable  from Shurgard Europe totaling $517.5 million as
of March 31, 2009 that bears interest at the rate of 7.5% per annum. We received
interest  income with respect to this loan  receivable  of  approximately  $10.2
million  in the three  months  ended  March 31,  2009,  however,  for  financial
reporting  purposes,  51% of this amount ($5.2  million) is included in interest
and other income and the remainder was recorded as additional equity in earnings
for the three months ended March 31, 2009. No interest income in connection with
this loan  receivable  was recorded in the same period in 2008, as such interest
income was fully eliminated in consolidation  until March 31, 2008. The level of
interest  income  recorded in connection  with the loan receivable from Shurgard
Europe will be dependent  upon the balances due from Shurgard  Europe as well as
the exchange rate of the Euro versus the U.S. Dollar.

     DEPRECIATION AND  AMORTIZATION:  Depreciation and amortization  expense was
$85,167,000 and $122,441,000 for the three months ended March 31, 2009 and 2008,
respectively.

     The decrease in depreciation and  amortization  expense in the three months
ended March 31, 2009, as compared to the same period in 2008 is due  principally
to a decline of $26,153,000 from $28,391,000 in the three months ended March 31,
2008 to $2,257,000 in the three months ended March 31, 2009 in tenant intangible
amortization,  principally tenant intangibles acquired in the Shurgard Merger in
2006,  that are being  amortized  relative to the expected future benefit of the
tenants in place to each period. We expect minimal  amortization  expense of our
existing  intangibles  during  the  remainder  of 2009,  and  future  intangible
amortization  will  be  dependent  upon  our  future  level  of  acquisition  of
facilities with existing tenants in place.

     Effective  March 31,  2008,  depreciation  and  amortization  ceased on the
facilities owned by Shurgard Europe,  which was  deconsolidated  effective March
31, 2008.  Included in our depreciation  and  amortization on Shurgard  Europe's
facilities were $21,871,000 for the three months ended March 31, 2008.

     GENERAL AND ADMINISTRATIVE EXPENSE:  General and administrative expense was
$9,679,000,  and $14,916,000 for the three months ended March 31, 2009 and 2008,
respectively.  General and administrative  expense principally consists of state
income taxes, investor relations expenses, and corporate and executive salaries.
In addition,  general and  administrative  expenses  includes expenses that vary
depending on our activity levels in certain areas,  such as overhead  associated
with the acquisition and development of real estate facilities, certain expenses
related to capital  raising and merger and  acquisition  activities,  litigation
expenditures,   employee  severance,  stock-based  compensation,  and  incentive
compensation.

     General and  administrative  expense for the three  months  ended March 31,
2008  includes  $2,487,000  in  additional  incentive  compensation  incurred by
Shurgard  Europe related to our disposition of an interest in Shurgard Europe as
well as ongoing general and administrative  expense incurred by Shurgard Europe.
Following March 31, 2008 we record no further general and administrative expense
incurred by Shurgard Europe's operations.

     We expect  ongoing  general and  administrative  expense to  approximate $8
million to $10 million per quarter.

     INTEREST  EXPENSE:  Interest expense was $8,128,000 and $16,487,000 for the
three  months  ended  March 31,  2009 and 2008,  respectively.  The  decrease in
interest expense is due primarily to the  deconsolidation of Shurgard Europe and
the retirement of $110.2 million face amount of our senior notes.  See also Note
6 to our  March 31,  2009  condensed  consolidated  financial  statements  for a
schedule of our notes payable balances,  principal repayment  requirements,  and
average interest rates.

                                       52



     Capitalized  interest  expense totaled  $190,000 and $748,000 for the three
months  ended  March 31, 2009 and 2008,  respectively,  in  connection  with our
development activities.

     Included in our  condensed  consolidated  statement of income for the three
months ended March 31, 2008 is interest  expense  incurred by Shurgard Europe of
$7,308,000,  relative to third-party  debt (excluding the debt payable to Public
Storage).  Interest  expense incurred by Shurgard Europe after March 31, 2008 is
no longer reflected in our financial statements.

     On February 12, 2009, in  connection  with a tender  offering,  we acquired
$110.2 million face amount of our senior  unsecured notes for cash. See "GAIN ON
EARLY  RETIREMENT OF DEBT" below.  This retirement  reduced our interest expense
for the three months  ended March 31, 2009 by $895,000,  as compared to the same
period in 2008. On an annualized basis, this retirement will reduce our interest
expense by approximately $6.4 million.

     GAIN ON DISPOSITION OF AN INTEREST IN SHURGARD  EUROPE:  On March 31, 2008,
an institutional  investor acquired a 51% interest in Shurgard European Holdings
LLC, a newly formed Delaware limited  liability  company and the holding company
for Shurgard Europe ("Shurgard Holdings").  In connection with this transaction,
we recorded a gain on  disposition  of  $341,865,000  for the three months ended
March 31,  2008.  Public  Storage  owns the  remaining  49%  interest and is the
managing member of Shurgard Holdings. See Note 3 to our March 31, 2009 condensed
consolidated   financial  statements  for  further  information  regarding  this
transaction.

     GAIN ON  DISPOSITION  OF REAL ESTATE  INVESTMENTS:  During the three months
ended March 31, 2009, we recorded gains totaling  $2,722,000 on sales of assets,
principally partial disposals in connection with property condemnations.  During
the three months ended March 31, 2008,  we had no such  dispositions  of assets.
Future  gains  or  losses  will be  dependent  upon the  level  of such  partial
condemnations, and are expected to be minimal.

     GAIN ON EARLY  RETIREMENT  OF DEBT:  On  February  12,  2009,  we  acquired
$110,223,000  face  amount  ($113,736,000  book  value) of our  existing  senior
unsecured  notes pursuant to a tender offer for an aggregate of  $109,622,000 in
cash  (including  costs  associated  with the tender of  $414,000)  plus accrued
interest.  In  connection  with  this  transaction,  we  recognized  a  gain  of
$4,114,000  for  the  three  months  ended  March  31,  2009,  representing  the
difference between the book value of $113,736,000 and the retirement amount paid
plus tender costs.

     FOREIGN  EXCHANGE GAIN (LOSS):  At March 31, 2009, we had a loan receivable
from Shurgard Europe of approximately  (euro)391.9 million ($517.5 million).  We
expect  Shurgard  Europe to repay the loan in the near term.  These  amounts are
denominated in Euros but have not been hedged.  The amount of U.S.  Dollars that
will be received on repayment  will depend upon the exchange  rates at the time.
Based  upon the  change in  estimated  U.S.  Dollars  to be  received  caused by
fluctuation  in currency  rates during the three months ended March 31, 2009, we
recorded  foreign  currency  translation  losses of $34,733,000,  as compared to
foreign  currency  translation  gains of $40,971,000  for the three months ended
March  31,  2008.  The  U.S.  Dollar  exchange  rate  relative  to the  Euro was
approximately  1.320  and  1.409  at  March  31,  2009  and  December  31  2008,
respectively.

     Future foreign  exchange  gains or losses will be dependent  primarily upon
the movement of the Euro relative to the U.S. Dollar (the closing  exchange rate
of the U.S. dollar relative to the Euro was 1.320 at March 31, 2009), the amount
owed from Shurgard Europe and our continued expectation with respect to repaying
the loan.

     DISCONTINUED  OPERATIONS:  During the three months ended March 31, 2009, we
decided to terminate our truck rental and containerized  storage business units,
and  disposed  of  a  complete   self-storage  facility  in  connection  with  a
condemnation  proceeding.  As a result,  we  reclassified  all of the historical
revenues and expenses of these  operations  from  revenues  and  expenses,  into
"discontinued  operations." Included in discontinued  operations is $3.5 million
in expenses  incurred in the three months ended March 31, 2009 related primarily
to disposing of trucks used in our truck rental operations, as well as a gain on
sale of the sold self-storage facility of approximately $4.2 million.

                                       53



LIQUIDITY AND CAPITAL RESOURCES
--------------------------------------------------------------------------------

     We have $493.4  million of cash on hand at March 31, 2009, and believe that
these  funds,  together  with our  internally  generated  net cash  provided  by
operating  activities  and cash on hand will continue to be sufficient to enable
us  to  meet  our  operating  expenses,   capital  improvements,   debt  service
requirements  and  distributions   requirements  to  our  shareholders  for  the
foreseeable future.

     Operating as a REIT,  our ability to retain cash flow for  reinvestment  is
restricted.  In order for us to maintain our REIT status, a substantial  portion
of  our  operating  cash  flow  must  be  used  to  make  distributions  to  our
shareholders (see "REQUIREMENT TO PAY DISTRIBUTIONS"  below).  However,  despite
the  significant  distribution  requirements,  we have  been  able to  retain  a
significant  amount of our operating cash flow. The following  table  summarizes
our  ability  to  fund   distributions  to  the  minority   interests,   capital
improvements to maintain our facilities,  and  distributions to our shareholders
through the use of cash provided by operating  activities.  The  remaining  cash
flow  generated  is  available to make both  scheduled  and  optional  principal
payments on debt and for reinvestment.


                                                                           For the Three Months Ended
                                                                                      March 31,
                                                                         ------------------------------
                                                                             2009             2008
                                                                         -----------       -----------
                                                                              (Amount in thousands)

                                                                                     
Net cash provided by operating activities (a).........................   $   259,525       $   239,666

Capital improvements to maintain our facilities.......................        (8,499)           (6,874)
                                                                         ------------      ------------
Remaining operating cash flow available for distributions to equity
   holders............................................................       251,026           232,792

Distributions to permanent noncontrolling interests in subsidiaries...        (4,058)           (4,521)
Distribution requirements paid to preferred partnership interests.....        (4,017)           (5,403)
                                                                         ------------      ------------

Cash from operations allocable to Public Storage shareholders.........       242,951           222,868
Distributions paid to Public Storage shareholders:
   Preferred share dividends..........................................       (58,108)          (60,333)
   Equity Shares, Series A dividends..................................        (5,131)           (5,356)
   Common shareholders ($0.55 per share)..............................       (92,582)          (92,499)
                                                                         ------------      ------------
Cash from operations available for principal payments on debt and
   reinvestment (b)...................................................   $    87,130       $    64,680
                                                                         ============      ============



     (a)  Represents  net  cash  provided  by  operating   activities  for  each
          respective  three  month  period as  presented  in our March 31,  2009
          Condensed Consolidated Statements of Cash Flows.

     (b)  Cash from  operations  available  for  principal  payments on debt and
          reinvestment  is not a substitute  for cash flows from  operations  in
          evaluating  our  liquidity,  ability to repay our debt, or to meet our
          distribution requirements.

     Cash  from  operations   available  for  principal  payments  on  debt  and
reinvestment  increased  from $64.7  million in the three months ended March 31,
2008 to $87.1  million in the three  months  ended March 31, 2009.

     Other sources of readily available  liquidity and capital resources include
unrestricted  cash on hand at March 31, 2009 totaling  $493.4 million and a $300
million  revolving line of credit.  The line of credit expires in March 2012 and
there were no outstanding borrowings on the line of credit at May 8, 2009.

     We also have a loan receivable from Shurgard Europe totaling $517.5 million
that matures on March 31, 2010.  We expect that this loan will be repaid in full
on the maturity date.

     Significant  requirements on our liquidity and capital  resources  include:
(i)  capital   improvements  to  maintain  our  facilities,   (ii)  distribution
requirements  to our  shareholders  to  maintain  our REIT  status,  (iii)  debt

                                       54



service,  (iv)  acquisition and  development  commitments and (v) commitments to
provide  funding  to  Shurgard  Europe  for  certain   investing  and  financing
activities.

     CAPITAL IMPROVEMENT REQUIREMENTS:  During 2009, we expect approximately $74
million  for  capital  improvements  for our  facilities.  Capital  improvements
include  major  repairs  or  replacements  to the  facilities,  which  keep  the
facilities in good operating condition and maintain their visual appeal. Capital
improvements  do not include costs  relating to the  development or expansion of
facilities.  During the three months ended March 31, 2009,  we incurred  capital
improvements of approximately $8.5 million.

     REQUIREMENT TO PAY DISTRIBUTIONS:  We have operated, and intend to continue
to  operate,  in such a manner as to qualify  as a REIT  under the Code,  but no
assurance can be given that we will at all times so qualify.  To the extent that
the Company  continues to qualify as a REIT, we will not be taxed,  with certain
limited  exceptions,  on the REIT  taxable  income  that is  distributed  to our
shareholders, provided that at least 90% of our taxable income is so distributed
to our  shareholders.  We  believe  we  have  satisfied  the  REIT  distribution
requirement since 1981.

     Aggregate  dividends  paid  during the three  months  ended  March 31, 2009
totaled $58.1 million to the holders of our Cumulative  Preferred Shares,  $92.9
million to the holders of our common  shares and $5.1  million to the holders of
our Equity Shares,  Series A. Although we have not finalized the  calculation of
our 2008 taxable income, we believe that the aggregate dividends paid in 2008 to
our  shareholders   enable  us  to  continue  to  meet  our  REIT   distribution
requirements.

     During  the three  months  ended  March  31,  2009,  we paid  distributions
totaling  $4.0 million  with respect to our  Preferred  Partnership  Units,  and
expect our annual  distribution  requirement  based upon  preferred  partnership
units  outstanding  at March 31, 2009,  to be  approximately  $7.3  million.  In
addition,  we estimate the annual distribution  requirements with respect to our
preferred  shares  outstanding  at March 31, 2009,  to be  approximately  $232.4
million,  assuming no additional preferred share issuances or redemptions during
2009.

     For  2009,  distributions  with  respect  to  the  common  shares  will  be
determined  based upon our REIT  distribution  requirements  after  taking  into
consideration  distributions to the preferred shareholders.  We anticipate that,
at a minimum,  quarterly  distributions  per common share for 2009 will be $0.55
per common share.  For the second quarter of 2009, a quarterly  distribution  of
$0.55 per common share has been declared by our Board of Trustees.

     With  respect to the  depositary  shares  representing  the Equity  Shares,
Series A, we have no obligation to pay  distributions  if no  distributions  are
paid  to  the  common  shareholders.  To  the  extent  that  we  do  pay  common
distributions  in any year, the holders of the depositary  shares receive annual
distributions  equal to the lesser of (i) five times the per share  dividend  on
the common shares or (ii) $2.45. The depositary shares are  non-cumulative,  and
have  no  preference  over  our  Common  Shares  either  as to  dividends  or in
liquidation.

     We are required by the underlying  governing documents to pay distributions
to permanent  noncontrolling  interests in subsidiaries based upon the operating
cash flows of the  underlying  entities  less any required  reserves for capital
expenditures  or debt repayment.  Such interests  received a total of $4,508,000
during the three months ended March 31, 2009.

     DEBT SERVICE  REQUIREMENTS:  At March 31, 2009,  we have total  outstanding
debt of approximately $527.2 million. See Note 6 to our March 31, 2009 condensed
consolidated  financial statements for approximate  principal maturities of such
borrowings.  It is our current  intention to fully amortize our outstanding debt
as opposed to refinance debt maturities with additional debt. Alternatively,  we
may prepay debt and finance such prepayments  with retained  operating cash flow
or proceeds from the issuance of preferred securities or common shares.

     Our portfolio of real estate facilities remains substantially unencumbered.
At March 31, 2009, we have secured debt  outstanding  of $234.1  million,  which
encumbers  90  self-storage  facilities  with an  aggregate  net  book  value of
approximately $571.8 million.

                                       55




     ACQUISITION AND DEVELOPMENT OF FACILITIES: During 2009, we will continue to
seek to acquire additional self-storage facilities from third parties;  however,
it is  difficult  to  estimate  the amount of third party  acquisitions  we will
undertake. We have a minimal development pipeline at March 31, 2009.

     EUROPEAN ACTIVITIES:  At the end of February 2009, the maturity date of the
loan owed by Shurgard  Europe to Public  Storage was extended to March 31, 2010.
The loan totaled approximately $517.5 million at March 31, 2009.

     In addition,  if Shurgard Europe acquires its partner's  interests in First
Shurgard and Second Shurgard,  joint ventures in which Shurgard Europe has a 20%
interest,  and is unable  to obtain  third-party  financing,  we have  agreed to
provide  additional  loans to  Shurgard  Europe,  under  the  same  terms as the
existing  loans,  for up to (euro)305  million  ($402.7  million as of March 31,
2009) for the  acquisition.  Shurgard  Europe has no obligation to acquire these
interests,  and the  acquisition of these interests is contingent on a number of
items,  including  whether  we  assent to the  acquisition.  In  February  2009,
Shurgard  Europe  exercised  their  option  to  extend  the  (euro)305   million
commitment through March 31, 2010.

     Shurgard  Europe has a 20%  interest  in two joint  ventures  and one other
partner  owns 80%  interest in each.  The two joint  ventures  collectively  had
approximately  (euro)238  million ($314 million) of outstanding  debt payable to
third parties at March 31, 2009, which is non-recourse to Shurgard  Europe.  One
of the joint venture loans,  totaling  (euro)117 million ($154 million),  is due
May 2009 and the other joint  venture  loan,  totaling  (euro)121  million ($160
million),  is due in July 2010.  Shurgard Europe is currently  negotiating terms
with the respective  lenders to extend the maturities out one to three years. We
expect  Shurgard Europe will finalize a loan extension of the joint venture loan
that  matures  in May 2009  within  the next 30 days,  although  there can be no
assurance that such an extension will actually be completed.

     If  Shurgard  Europe was unable to extend the  maturity  dates of the joint
venture  loan,  it is our  expectation  that the loans would be repaid with each
partner  contributing their pro rata share towards repayment.  Shurgard Europe's
pro rata share, in the aggregate,  would be approximately  (euro)24 million ($32
million)  which  Shurgard  Europe  could  borrow  from us  pursuant  to our loan
commitment described above.  Further, it is also possible that Shurgard Europe's
joint venture  partner will be unable to contribute  its pro rata share to repay
the loans and may want to sell their  interest.  Shurgard Europe could borrow on
the loan  commitment we have provided to consummate such a transaction and repay
the loans.

     We  also  committed  to fund  up to  $88.2  million  of  additional  equity
contributions  to Shurgard  Europe to fund  certain  investing  activities.  Our
remaining  obligation  under this commitment  totaled $66.4 million at March 31,
2009.

     We expect that Shurgard  Europe will repay the existing loan due to us (and
any additional  borrowings  pursuant to our  commitment) no later than March 31,
2010 or sooner if  capital  markets  become  accessible  to  Shurgard  Europe on
appropriate  terms.  Given the difficulty in the credit markets,  it is possible
that  Shurgard  Europe may not able to repay the loans prior to March 31,  2010.
Our business operations are not dependent on the repayment of such loans.

     In March 2009,  Shurgard  Europe's  joint  venture  partner  gave its "exit
notice"  with  respect to one of the joint  ventures.  There are  specific  exit
procedures  to be followed in accordance  with the joint  venture  agreement and
Shurgard Europe has 90 days to respond. We are evaluating our options.

     ACCESS TO CAPITAL: Over the past several months,  accessing capital through
the equity or credit markets has become very difficult,  in part due to the lack
of liquidity,  particularly with respect to real estate companies.  As a result,
our  ability  to  raise  additional  capital  by  issuing  common  or  preferred
securities is not currently a viable option.

     Our   financial    profile   is   characterized   by   a   low   level   of
debt-to-total-capitalization  and a  conservative  dividend  payout  ratio  with
respect to the common shares.  We expect to fund our long-term growth strategies

                                       56



and debt  obligations  with (i) cash on hand at March 31, 2009,  (ii) internally
generated   retained  cash  flows  and  (iii)   depending  upon  current  market
conditions, proceeds from issuing equity securities. In general, our strategy is
to  continue  to finance our growth with  permanent  capital,  either  common or
preferred   equity  to  the  extent  that  market   conditions   are  favorable,
notwithstanding current market conditions are not favorable.

     Historically,  we have funded  substantially  all of our acquisitions  with
permanent capital (both common and preferred securities). We have elected to use
preferred  securities  as a form of leverage  despite the fact that the dividend
rates of our preferred securities exceed the prevailing market interest rates on
conventional  debt.  We have chosen this method of financing  for the  following
reasons:  (i) under the REIT structure,  a significant  amount of operating cash
flow needs to be distributed to our  shareholders,  making it difficult to repay
debt with operating cash flow alone, (ii) our perpetual preferred shares have no
sinking fund requirement or maturity date and do not require redemption,  all of
which eliminate any future  refinancing risks, (iii) after the end of a non-call
period,  we have the option to redeem the  preferred  shares at any time,  which
enable us to refinance  higher coupon preferred shares with new preferred shares
at lower rates if appropriate,  (iv) preferred shares do not contain  covenants,
thus  allowing  us  to  maintain  significant  financial  flexibility,  and  (v)
dividends  on  the  preferred   shares  can  be  applied  to  satisfy  our  REIT
distribution requirements.

     Our credit ratings on each of our series of preferred  shares are "Baa1" by
Moody's and "BBB" by Standard & Poor's.

     ISSUANCE AND REDEMPTION OF PREFERRED  SECURITIES:  We believe that our size
and financial flexibility enables us to access capital when appropriate and when
market conditions are favorable.  However,  over the past six months,  accessing
capital through the credit markets has become very difficult, in part due to the
lack of liquidity.

     As of March 31,  2009,  several  of our  series of  preferred  shares  were
redeemable  at our  option;  however,  we  have  not  called  these  series  for
redemption.  Although we may acquire these shares on the open market,  it is not
advantageous to redeem these shares at face pursuant to our redemption option at
this time  because,  based  upon  current  market  conditions,  we cannot  issue
additional  preferred securities at a lower coupon rate than the securities that
would be called.  The timing of  redemption  of any of these series of preferred
shares will depend upon many factors  including  when, or if, market  conditions
improve such that we can issue new  preferred  shares at a lower cost of capital
than the shares that would be redeemed.

     In the past we have typically raised  additional  capital in advance of the
redemption  dates  to  ensure  that we have  available  funds  to  redeem  these
securities.  Provided  market  conditions  improve in the  future,  we may raise
capital in advance to fund redemptions.

     REPURCHASES OF THE COMPANY'S EQUITY AND PREFERRED SECURITIES:  Dislocations
in  capital  markets  have  provided  opportunities  for the  repurchase  of our
preferred and debt securities.  During the three months ended March 31, 2009, we
repurchased certain of our Cumulative  Preferred Shares in privately  negotiated
transactions with a liquidation  value of $24.6 million for approximately  $17.5
million, including accrued dividends,  reducing our ongoing dividend requirement
by approximately $1.8 million per year. Also during the three months ended March
31, 2009, we repurchased certain of our Preferred Partnership Units in privately
negotiated transactions with a carrying amount of $225 million for approximately
$153 million,  reducing our ongoing dividend  requirement by approximately $14.4
million per year.

     On February 12, 2009, we acquired approximately $110 million face amount of
our existing senior unsecured notes pursuant to a tender offer. The amounts paid
in the tender were  substantially less than what would have been paid if we were
to repay this debt early subject to the  prepayment  premiums  under the related
debt agreement.

     Our Board of Trustees has authorized the repurchase from time to time of up
to 35,000,000 of our common shares on the open market or in privately negotiated
transactions.  During  the  three  months  ended  March  31,  2009,  we did  not
repurchase  any of our  common  shares.  From the  inception  of the  repurchase
program  through May 8, 2009, we have  repurchased a total of 23,721,916  common
shares at an aggregate cost of  approximately  $679.1 million.  Future levels of

                                       57



common  repurchases  will be dependent  upon our available  capital,  investment
alternatives, and the trading price of our common shares.

     These  acquisitions  were  funded by us with cash on hand.  We  continue to
monitor  the  existing  trading  ranges of all our  outstanding  debt and equity
securities for potential opportunities.

CONTRACTUAL OBLIGATIONS

     Our significant  contractual obligations at March 31, 2009 and their impact
on our cash  flows and  liquidity  are  summarized  below  for the years  ending
December 31 (amounts in thousands):


                                     Total      2009         2010        2011       2012        2013       Thereafter
                                  ----------  ---------   ----------   ---------  --------   ----------    ----------


                                                                                      
Long-term debt (1) ............   $  634,868  $  29,557   $   41,642   $ 154,096  $ 74,716   $  259,880    $   74,977

Operating leases (2)...........      104,736      5,100        6,171       5,632     5,640        5,530        76,663

Construction commitments (3)...        5,176      4,659          517           -         -            -             -
                                  ----------  ---------   ----------   ---------  --------   ----------    ----------
Total..........................   $  744,780  $  39,316   $   48,330   $ 159,728  $ 80,356   $  265,410    $  151,640
                                  ==========  =========   ==========   =========  ========   ==========    ==========



     (1)  Amounts include interest  payments on our notes payable based on their
          contractual  terms.  See  Note  6 to  our  March  31,  2009  condensed
          consolidated  financial  statements for additional  information on our
          notes payable.

     (2)  We lease land,  equipment  and office  space under  various  operating
          leases. Certain leases are cancelable with substantial penalties.

     (3)  Includes  obligations for facilities  under  construction at March 31,
          2009.

     We have not included any  additional  funding  requirements  that we may be
required make to Shurgard Europe as a contractual obligation in the table above,
since it is uncertain  whether or not we will be required to fund any additional
amounts and because such funding is subject to our assent.

     We have no substantial construction commitments at March 31, 2009.

     OFF-BALANCE  SHEET  ARRANGEMENTS:  At  March  31,  2009 we had no  material
off-balance sheet arrangements as defined under Regulation S-K 303(a)(4) and the
instructions thereto.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
         ----------------------------------------------------------

     To limit our exposure to market risk, we principally finance our operations
and growth with permanent equity capital  consisting either of common shares and
preferred  shares.  At  March  31,  2009,  our  debt as a  percentage  of  total
equity (based on book values) was 5.9%.

     Our preferred  shares are not  redeemable at the option of the holders.  At
March 31, 2009,  our Series V, Series W, Series X, Series Y, Series Z and Series
A shares  are  currently  redeemable  by us.  Except  under  certain  conditions
relating to the Company's  qualification as a REIT, the preferred shares are not
redeemable by the Company  pursuant to its redemption  option prior to the dates
set forth in Note 8 to our  March  31,  2009  condensed  consolidated  financial
statements.

     Our market risk sensitive instruments include notes payable,  which totaled
$527,235,000 at March 31, 2009.

     We have foreign  currency  exposures  related to our investment in Shurgard
Europe, which has a book value of $250.5 million at March 31, 2009. We also have
a loan receivable from Shurgard Europe, which is denominated in Euros,  totaling

                                       58



(euro)391.9  million  ($517.5  million)  at  March  31,  2009.  We also  have an
obligation,  in certain  circumstances,  to loan up to an  additional  (euro)305
million to Shurgard Europe.

     The table below  summarizes  annual debt  maturities  and  weighted-average
interest rates on our  outstanding  debt at the end of each year and fair values
required to evaluate  our  expected  cash-flows  under debt  agreements  and our
sensitivity  to  interest  rate  changes at March 31,  2009  (dollar  amounts in
thousands).



                            2009       2010        2011          2012        2013     Thereafter      Total     Fair Value
                         ----------- ---------- ------------ ------------ ----------- ------------ ------------ ------------

                                                                                        
Fixed rate debt........  $   7,887   $ 13,244   $  131,252   $   55,575   $ 251,421   $   67,856   $  527,235   $  528,833
Average interest rate..      5.68%      5.68%        5.68%        5.70%       5.62%        5.50%
----------------------------------------------------------------------------------------------------------------------------
Variable rate debt (1).  $      -    $     -    $       -    $       -    $      -    $       -    $        -   $        -
Average interest rate..
----------------------------------------------------------------------------------------------------------------------------





     (1)  Amounts include borrowings under our line of credit,  which expires in
          2012. As of March 31, 2009,  we have no  borrowings  under our line of
          credit.

                                       59



ITEM 4.  CONTROLS AND PROCEDURES
-------  -----------------------

     The Company maintains  disclosure controls and procedures that are designed
to ensure that information required to be disclosed in reports the Company files
and submits under the  Securities  Exchange Act of 1934,  as amended  ("Exchange
Act"), is recorded,  processed,  summarized and reported within the time periods
specified  in  accordance  with SEC  guidelines  and that  such  information  is
communicated to the Company's management,  including its Chief Executive Officer
and Chief  Financial  Officer,  to allow  timely  decisions  regarding  required
disclosure  based on the definition of "disclosure  controls and  procedures" in
Rules  13a-15(e) and 15d-15(e) of the Exchange Act. In designing and  evaluating
the disclosure controls and procedures,  management recognized that any controls
and  procedures,  no matter how well  designed  and  operated,  can provide only
reasonable  assurance of achieving the desired control objectives and management
necessarily  was required to apply its judgment in evaluating  the  cost-benefit
relationship  of possible  controls  and  procedures  in reaching  that level of
reasonable   assurance.   Also,   the   Company  has   investments   in  certain
unconsolidated  entities.  As the  Company  does not  control  or  manage  these
entities,  its disclosure  controls and procedures with respect to such entities
are  substantially  more  limited  than those it  maintains  with respect to its
consolidated subsidiaries.

     As of the end of the fiscal  quarter  covered by this  report,  the Company
carried out an evaluation,  under the supervision and with the  participation of
the Company's  management,  including the Company's Chief Executive  Officer and
the Company's Chief Financial  Officer,  of the  effectiveness of the design and
operation of the Company's  disclosure  controls and procedures (as such term is
defined in Rules  13a-15(e)  and  15d-15(e) of the Exchange  Act.  Based on that
evaluation,  the Company's Chief Executive  Officer and Chief Financial  Officer
concluded that the Company's disclosure controls and procedures were effective.

     There have not been any  changes in our  internal  control  over  financial
reporting (as such term is defined in Rules  13a-15(f)  and 15d-15(f)  under the
Exchange  Act)  during  the  quarter  to which  this  report  relates  that have
materially affected, or are reasonable likely to materially affect, our internal
control over financial reporting.

                                       60


PART II.      OTHER INFORMATION

ITEM 1.       LEGAL PROCEEDINGS
              -----------------

     The  information  set forth under the heading "Legal Matters" in Note 12 to
the  Condensed   Consolidated   Financial   Statements  in  this  Form  10-Q  is
incorporated by reference in this Item 1.

ITEM 1A.      RISK FACTORS
              ------------

     As of March 31, 2009, no material  changes had occurred in our risk factors
as discussed in Item 1A of the Public Storage Annual Report on Form 10-K for the
year ended December 31, 2008.

ITEM 2.       UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
              -----------------------------------------------------------

     Common Share Repurchases

     Our Board of Trustees has authorized the repurchase from time to time of up
to 35,000,000 of our common shares on the open market or in privately negotiated
transactions.  On May 8, 2008,  the Board of Trustees  authorized an increase in
the total repurchase  authorization  from 25,000,000 common shares to 35,000,000
common  shares.  During  the  three  months  ended  March 31,  2009,  we did not
repurchase  any of our  common  shares.  From the  inception  of the  repurchase
program  through May 8, 2009, we have  repurchased a total of 23,721,916  common
shares at an aggregate cost of  approximately  $679.1 million.  Our common share
repurchase  program does not have an  expiration  date and there are  11,278,084
common shares that may yet be  repurchased  under our  repurchase  program as of
March 31,  2009.  During  the three  months  ended  March 31,  2009,  we did not
repurchase  any of our common shares outside our publicly  announced  repurchase
program,  except shares  withheld for payment of tax  withholding  in connection
with our various stock option plans. Future levels of common repurchases will be
dependent upon our available capital,  investment alternatives,  and the trading
price of our common shares.

     Preferred and Equity Share Repurchases

     During March 2009,  in privately  negotiated  transactions  we  repurchased
various series of our Cumulative Preferred Shares with an aggregate  liquidation
amount of $24.6  million,  for an aggregate of $17.5  million in cash (which was
inclusive of accrued dividends),  in addition to various series of our Preferred
Partnership  Units with an aggregate  carrying amount of $225.0 million,  for an
aggregate of $155.2 million in cash (inclusive of accrued dividends).

                                       61



     The following table presents monthly  information  related to our privately
negotiated   repurchases  of  our  Cumulative  Preferred  Shares  and  Preferred
Partnership Units during the three months ended March 31, 2009:

                                                   Total Number
                                                        of        Average Price
                                                   Shares/Units      Paid per
    Period Covered                                   Purchased      Share/Unit
    ---------------------------------------------  ------------   -------------

    January 1, 2009  - January 31, 2009                      -              -
    February 1, 2009  - February 28, 2009                    -              -
    March 1, 2009  - March 31, 2009
         Preferred Shares - Series V                    700,000        $18.90
         Preferred Shares - Series C                    175,000        $15.40
         Preferred Shares - Series F                    107,000        $15.05
         Preferred Partnership Units - Series NN      8,000,000        $16.00
         Preferred Partnership Units - Series Z       1,000,000        $25.00
                                                      ---------        ------
         Monthly Total                                9,982,000        $16.54
                                                      ---------        ------
       Total                                          9,982,000        $17.08
                                                      =========        ======


ITEM 6.       EXHIBITS
              --------

     Exhibits  required  by Item 601 of  Regulation  S-K are filed  herewith  or
incorporated  herein by reference  and are listed in the attached  Exhibit Index
which is incorporated herein by reference.

                                       62



                                        SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                        DATED: May 8, 2009

                                        PUBLIC STORAGE

                                        By: /s/ John Reyes
                                            --------------
                                            John Reyes
                                            Senior Vice President and
                                            Chief Financial Officer
                                            (Principal financial officer
                                             and duly authorized officer)

                                       63



                                 PUBLIC STORAGE

                              INDEX TO EXHIBITS (1)

                           (Items 15(a)(3) and 15(c))


3.1      Articles of Amendment and Restatement of Declaration of Trust of Public
         Storage,  a  Maryland  real  estate  investment  trust.  Filed with the
         Registrant's  Current  Report  on  Form  8-K  dated  June 6,  2007  and
         incorporated by reference herein.

3.2      Bylaws of Public  Storage,  a Maryland  real estate  investment  trust.
         Filed with the  Registrant's  Current  Report on Form 8-K dated June 6,
         2007 and incorporated by reference herein.

3.3      Articles  Supplementary  for Public Storage  Equity  Shares,  Series A.
         Filed with the  Registrant's  Current  Report on Form 8-K dated June 6,
         2007 and incorporated by reference herein.

3.4      Articles  Supplementary  for Public Storage Equity Shares,  Series AAA.
         Filed with the  Registrant's  Current  Report on Form 8-K dated June 6,
         2007 and incorporated by reference herein.

3.5      Articles  Supplementary for Public Storage 7.500% Cumulative  Preferred
         Shares,  Series V. Filed with the  Registrant's  Current Report on Form
         8-K dated June 6, 2007 and incorporated by reference herein.

3.6      Articles  Supplementary for Public Storage 6.500% Cumulative  Preferred
         Shares,  Series W. Filed with the  Registrant's  Current Report on Form
         8-K dated June 6, 2007 and incorporated by reference herein.

3.7      Articles  Supplementary for Public Storage 6.450% Cumulative  Preferred
         Shares , Series X. Filed with the  Registrant's  Current Report on Form
         8-K dated June 6, 2007 and incorporated by reference herein.

3.8      Articles  Supplementary for Public Storage 6.850% Cumulative  Preferred
         Shares,  Series Y. Filed with the  Registrant's  Current Report on Form
         8-K dated June 6, 2007 and incorporated by reference herein.

3.9      Articles  Supplementary for Public Storage 6.250% Cumulative  Preferred
         Shares,  Series Z. Filed with the  Registrant's  Current Report on Form
         8-K dated June 6, 2007 and incorporated by reference herein.

3.10     Articles  Supplementary for Public Storage 6.125% Cumulative  Preferred
         Shares,  Series A. Filed with the  Registrant's  Current Report on Form
         8-K dated June 6, 2007 and incorporated by reference herein.

3.11     Articles  Supplementary for Public Storage 7.125% Cumulative  Preferred
         Shares,  Series B. Filed with the  Registrant's  Current Report on Form
         8-K dated June 6, 2007 and incorporated by reference herein.

3.12     Articles  Supplementary for Public Storage 6.600% Cumulative  Preferred
         Shares,  Series C. Filed with the  Registrant's  Current Report on Form
         8-K dated June 6, 2007 and incorporated by reference herein.

3.13     Articles  Supplementary for Public Storage 6.180% Cumulative  Preferred
         Shares,  Series D. Filed with the  Registrant's  Current Report on Form
         8-K dated June 6, 2007 and incorporated by reference herein.

3.14     Articles  Supplementary for Public Storage 6.750% Cumulative  Preferred
         Shares,  Series E. Filed with the  Registrant's  Current Report on Form
         8-K dated June 6, 2007 and incorporated by reference herein.

3.15     Articles  Supplementary for Public Storage 6.450% Cumulative  Preferred
         Shares,  Series F. Filed with the  Registrant's  Current Report on Form
         8-K dated June 6, 2007 and incorporated by reference herein.

3.16     Articles  Supplementary for Public Storage 7.000% Cumulative  Preferred
         Shares,  Series G. Filed with the  Registrant's  Current Report on Form
         8-K dated June 6, 2007 and incorporated by reference herein.

                                       64


3.17     Articles  Supplementary for Public Storage 6.950% Cumulative  Preferred
         Shares,  Series H. Filed with the  Registrant's  Current Report on Form
         8-K dated June 6, 2007 and incorporated by reference herein.

3.18     Articles  Supplementary for Public Storage 7.250% Cumulative  Preferred
         Shares,  Series I. Filed with the  Registrant's  Current Report on Form
         8-K dated June 6, 2007 and incorporated by reference herein.

3.19     Articles  Supplementary for Public Storage 7.250% Cumulative  Preferred
         Shares,  Series K. Filed with the  Registrant's  Current Report on Form
         8-K dated June 6, 2007 and incorporated by reference herein.

3.20     Articles  Supplementary for Public Storage 6.750% Cumulative  Preferred
         Shares,  Series L. Filed with the  Registrant's  Current Report on Form
         8-K dated June 6, 2007 and incorporated by reference herein.

3.21     Articles  Supplementary for Public Storage 6.625% Cumulative  Preferred
         Shares,  Series M. Filed with the  Registrant's  Current Report on Form
         8-K dated June 6, 2007 and incorporated by reference herein.

3.22     Articles  Supplementary for Public Storage 7.000% Cumulative  Preferred
         Shares,  Series N. Filed with the  Registrant's  Current Report on Form
         8-K dated June 28, 2007 and incorporated by reference herein.

4.1      Master  Deposit  Agreement,  dated as of May 31,  2007.  Filed with the
         Registrant's  Current  Report  on  Form  8-K  dated  June 6,  2007  and
         incorporated by reference herein.

10.1     Amended  Management  Agreement  between  Registrant  and Public Storage
         Commercial  Properties Group, Inc. dated as of February 21, 1995. Filed
         with Public  Storage  Inc.'s ("PSI") Annual Report on Form 10-K for the
         year ended December 31, 1994 (SEC File No.  001-0839) and  incorporated
         herein by reference.

10.2     Second  Amended  and  Restated   Management   Agreement  by  and  among
         Registrant  and the entities  listed  therein  dated as of November 16,
         1995. Filed with PS Partners, Ltd.'s Annual Report on Form 10-K for the
         year ended December 31, 1996 (SEC File No.  001-11186) and incorporated
         herein by reference.

10.3     Limited Partnership Agreement of PSAF Development Partners,  L.P. Filed
         with PSI's Quarterly Report on Form 10-Q for the quarterly period ended
         March 31,  1997  (SEC File No.  001-0839)  and  incorporated  herein by
         reference.

10.4     Agreement of Limited  Partnership of PS Business Parks, L.P. Filed with
         PS  Business  Parks,  Inc.'s  Quarterly  Report  on Form  10-Q  for the
         quarterly  period  ended  June 30,  1998 (SEC File No.  001-10709)  and
         incorporated herein by reference.

10.5     Amended and Restated Agreement of Limited Partnership of Storage Trust
         Properties, L.P. (March 12, 1999). Filed with PSI's Quarterly Report on
         Form 10-Q for the quarterly period ended June 30, 1999 (SEC File No.
         001-0839) and incorporated herein by reference.

10.6     Limited Partnership Agreement of PSAC Development Partners,  L.P. Filed
         with PSI's Current Report on Form 8-K dated November 15, 1999 (SEC File
         No. 001-0839) and incorporated herein by reference.

10.7     Agreement  of  Limited  Liability  Company of PSAC  Storage  Investors,
         L.L.C.  Filed with PSI's Current  Report on Form 8-K dated November 15,
         1999 (SEC File No. 001-0839) and incorporated herein by reference.

10.8     Amended  and  Restated   Agreement  of  Limited   Partnership   of  PSA
         Institutional  Partners,  L.P.  Filed with PSI's Annual  Report on Form
         10-K for the year ended  December 31, 1999 (SEC File No.  001-0839) and
         incorporated herein by reference.

10.9     Amendment to Amended and Restated  Agreement of Limited  Partnership of
         PSA Institutional  Partners,  L.P. Filed with PSI's Quarterly Report on
         Form 10-Q for the  quarterly  period  ended June 30, 2000 (SEC File No.
         001-0839) and incorporated herein by reference.

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10.10    Second   Amendment  to  Amended  and  Restated   Agreement  of  Limited
         Partnership  of PSA  Institutional  Partners,  L.P.  Filed  with  PSI's
         Quarterly  Report on Form 10-Q for the quarterly period ended March 31,
         2004 (SEC File No. 001-0839) and incorporated herein by reference.

10.11    Third   Amendment  to  Amended  and   Restated   Agreement  of  Limited
         Partnership  of PSA  Institutional  Partners,  L.P.  Filed  with  PSI's
         Quarterly  Report on Form 10-Q for the quarterly period ended September
         30, 2004 (SEC File No. 001-0839) and incorporated herein by reference.

10.12    Limited Partnership Agreement of PSAF Acquisition Partners,  L.P. Filed
         with PSI's Annual  Report on Form 10-K for the year ended  December 31,
         2003 (SEC File No. 001-0839) and incorporated herein by reference.

10.13    Credit Agreement by and among  Registrant,  Wells Fargo Bank,  National
         Association  and  Wachovia  Bank,   National   Association  as  co-lead
         arrangers,  and the other financial  institutions party thereto,  dated
         March 27, 2007. Filed with PSI's Current Report on Form 8-K on April 2,
         2007 (SEC File No. 001-0839) and incorporated herein by reference.

10.14*   Employment Agreement between Registrant and B. Wayne Hughes dated as of
         November 16, 1995.  Filed with PSI's Annual Report on Form 10-K for the
         year ended December 31, 1995 (SEC File No.  001-0839) and  incorporated
         herein by reference.

10.15*   Shurgard  Storage Centers,  Inc. 1995 Long Term Incentive  Compensation
         Plan.  Incorporated  by  reference  to Appendix B of  Definitive  Proxy
         Statement   dated  June  8,  1995  filed  by  Shurgard  (SEC  File  No.
         001-11455).

10.16*   Shurgard   Storage  Centers,   Inc.  2000  Long-Term   Incentive  Plan.
         Incorporated  by reference to Exhibit  10.27 Annual Report on Form 10-K
         for the year ended  December  31, 2000 filed by Shurgard  (SEC File No.
         001-11455).

10.17*   Shurgard  Storage Centers,  Inc. 2004 Long Term Incentive  Compensation
         Plan.  Incorporated  by  reference  to Appendix A of  Definitive  Proxy
         Statement   dated  June  7,  2004  filed  by  Shurgard  (SEC  File  No.
         001-11455).

10.18*   Public Storage,  Inc. 1996 Stock Option and Incentive Plan.  Filed with
         PSI's Annual  Report on Form 10-K for the year ended  December 31, 2000
         (SEC File No. 001-0839) and incorporated herein by reference.

10.19*   Public Storage, Inc. 2000  Non-Executive/Non-Director  Stock Option and
         Incentive  Plan.  Filed with PSI's  Registration  Statement on Form S-8
         (SEC File No. 333-52400) and incorporated herein by reference.

10.20*   Public Storage, Inc. 2001  Non-Executive/Non-Director  Stock Option and
         Incentive  Plan.  Filed with PSI's  Registration  Statement on Form S-8
         (SEC File No. 333-59218) and incorporated herein by reference.

10.21*   Public  Storage,  Inc.  2001 Stock  Option and  Incentive  Plan  ("2001
         Plan").  Filed with PSI's Registration  Statement on Form S-8 (SEC File
         No. 333-59218) and incorporated herein by reference.

10.22*   Form of 2001 Plan  Non-qualified  Stock  Option  Agreement.  Filed with
         PSI's  Quarterly  Report on Form 10-Q for the  quarterly  period  ended
         September 30, 2004 (SEC File No. 001-0839) and  incorporated  herein by
         reference.

10.23*   Form of 2001 Plan  Restricted  Share Unit  Agreement.  Filed with PSI's
         Quarterly  Report on Form 10-Q for the quarterly period ended September
         30, 2004 (SEC File No. 001-0839) and incorporated herein by reference.

10.24*   Form  of  2001  Plan   Non-Qualified   Outside  Director  Stock  Option
         Agreement.  Filed  with  PSI's  Quarterly  Report  on Form 10-Q for the
         quarterly  period ended September 30, 2004 (SEC File No.  001-0839) and
         incorporated herein by reference.

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10.25*   Public Storage,  Inc.  Performance Based  Compensation Plan for Covered
         Employees.  Filed with PSI's  Current  Report on Form 8-K dated May 11,
         2005 (SEC File No. 001-0839) and incorporated herein by reference.

10.26*   Public Storage 2007 Equity and Performance-Based Incentive Compensation
         Plan.  Filed as Exhibit 4.1 to Registrant's  Registration  Statement on
         Form  S-8  (SEC  File  No.  333-144907)  and  incorporated   herein  by
         reference.

10.27*   Form  of  2007  Plan  Restricted  Stock  Unit  Agreement.   Filed  with
         Registrant's  Quarterly  Report on Form 10-Q for the quarter ended June
         30, 2007 and incorporated herein by reference.

10.28*   Form of 2007 Plan  Stock  Option  Agreement.  Filed  with  Registrant's
         Quarterly  Report on Form 10-Q for the quarter  ended June 30, 2007 and
         incorporated herein by reference.

10.29*   Form of Indemnity Agreement. Filed with Registrant's Amendment No. 1 to
         Registration  Statement  on Form S-4  (SEC  File  No.  333-141448)  and
         incorporated herein by reference.

10.30*   Offer  letter/Employment  Agreement  dated as of July 28, 2008  between
         Registrant and Mark Good. Filed as Exhibit 10.1 to Registrant's Current
         Report on Form 8-K dated September 9, 2008 and  incorporated  herein by
         reference.

12       Statement  Re:  Computation  of Ratio of Earnings to Fixed  Charges and
         Preferred Stock Dividends. Filed herewith.

31.1     Rule 13a - 14(a) Certification.  Filed herewith.

31.2     Rule 13a - 14(a) Certification.  Filed herewith.

32       Section 1350 Certifications.  Filed herewith.


_        (1)  SEC File No. 001-33519 unless otherwise indicated.

* Denotes management compensatory plan agreement or arrangement.




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