As filed with the Securities and Exchange Commission on May 18, 1999.

                                         REGISTRATION STATEMENT NO. 333-_____
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                              --------------------

                                    FORM S-8

                          REGISTRATION STATEMENT UNDER
                           THE SECURITIES ACT OF 1933
                             --------------------

                                STORAGE USA, INC.
             (Exact name of Registrant as specified in its Charter)

      TENNESSEE                                         62-1251239
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
 incorporation or organization)

                          165 MADISON AVENUE
                               SUITE 1300
                        MEMPHIS, TENNESSEE 38103
                             (901) 252-2000
      (Address of principal executive office, including zip code)


         STORAGE USA, INC. 1995 EMPLOYEE STOCK PURCHASE AND LOAN PLAN
                         (Full title of the Plan)
                          ----------------------

                              MR. JOHN W. MCCONOMY
                            EXECUTIVE VICE PRESIDENT
                                STORAGE USA, INC.
                               165 MADISON AVENUE
                                   SUITE 1300
                            MEMPHIS, TENNESSEE 38103
                                (901) 252-2000
(Name, address, including zip code, and telephone number including area code,
      of agent for service)

                                    Copy to:

                              MR. RANDALL S. PARKS
                                HUNTON & WILLIAMS
                          RIVERFRONT PLAZA, EAST TOWER
                              951 EAST BYRD STREET
                            RICHMOND, VIRGINIA 23219
                                (804) 788-8200
                              --------------------

                         CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>

============================================================================================
                                     Proposed maximum   Proposed maximum
Title of securities   Amount to be   offering price      aggregate         Amount of
 to be registered     registered     per share(1)       offering price     registration fee
============================================================================================
<S>                   <C>             <C>                 <C>               <C>
Common Stock,       250,000 shares    $33.719          $8,429,750           $2,343
$.01 par value
============================================================================================

</TABLE>

         (1)  Estimated solely for the purpose of calculating the registration
fee pursuant to Rule 457(c) of the Securities Act of 1933. This amount was
calculated based on the average of the high and low sales prices of the Common
Stock on the New York Stock Exchange on May 13, 1999.
================================================================================
<PAGE>


                                 PART I

              INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS

ITEM 1.  PLAN INFORMATION.

         Not required to be filed with the Securities and Exchange Commission
(the "Commission").

ITEM 2.  REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.

         Not required to be filed with the Commission.

                         REOFFER PROSPECTUS

         A reoffer prospectus is included in this registration statement for use
in connection with the potential resale of 18,000 shares of restricted common
stock acquired by the selling shareholders pursuant to the Plan but not
previously registered.

<PAGE>

PROSPECTUS
                                 18,000 SHARES
                                STORAGE USA, INC.
                                  COMMON STOCK
                                  ------------
         Our common stock trades on the New York Stock Exchange under the
symbol "SUS."

         Storage USA, Inc. (the "Company") has privately placed a total of
18,000 shares of common stock with two selling shareholders (the "Selling
Shareholders"). This prospectus relates to resales of those shares by the
Selling Shareholders.

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

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

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

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

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


                  THE DATE OF THIS PROSPECTUS IS MAY 18, 1999.

<PAGE>

                           TABLE OF CONTENTS


WHERE YOU CAN FIND MORE INFORMATION...........................................1
A WARNING ABOUT FORWARD-LOOKING STATEMENTS....................................1
STORAGE USA, INC..............................................................2
DESCRIPTION OF COMMON STOCK...................................................2
RESTRICTIONS ON OWNERSHIP AND TRANSFER........................................3
FEDERAL INCOME TAX CONSEQUENCES OF STORAGE USA'S STATUS AS A REIT.............3
USE OF PROCEEDS...............................................................18
THE SELLING SHAREHOLDERS......................................................19
PLAN OF DISTRIBUTION..........................................................19
LEGAL OPINIONS................................................................19

                                   i
<PAGE>


                   WHERE YOU CAN FIND MORE INFORMATION

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

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

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

        o  Quarterly Report on Form 10-Q for the quarter ended March 31, 1999;
           and

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

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

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

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

                  A WARNING ABOUT FORWARD-LOOKING STATEMENTS

         This prospectus, and the documents incorporated by reference, may
contain "forward-looking" statements. These forwarding-looking statements
usually include words like "believes," "anticipates" and "expects" and describe
our expectations for the future. Of course, these expectations may not be met in
important ways for a variety of reasons. We have described these reasons in our
most recent Annual Report on Form 10-K under the heading "Risk Factors" and the
other reports we file with the SEC, and you should review them before you decide
to buy our stock. We are not required to update any forward-looking statements
we make and we may not.

                                      1
<PAGE>

                               STORAGE USA, INC.

         Storage USA, Inc. is a self-managed, self-advised real estate
investment trust ("REIT"). We manage, acquire, develop and franchise
self-storage facilities. We do business through SUSA Partnership, L.P. ("SUSA
Partnership"), of which we are the sole general partner and in which we owned an
approximate 88.6% partnership interest as of March 31, 1999. Our self-storage
facilities operate under the Storage USA name and offer low-cost, easily
accessible and enclosed storage space for personal and business use, primarily
on a month-to-month basis. All of our facilities are fenced, have locked gates,
are lighted at night and have computer-controlled gates that permit certain
tenants to access their storage units 24 hours a day or are being upgraded to
those standards.

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

         We are authorized to issue 150,000,000 shares of common stock, $.01 par
value, and 5,000,000 shares of preferred stock, $.01 par value. As of March 31,
1999, there were 27,875,377 shares of common stock outstanding. No shares of
preferred stock were outstanding. The following is only a summary of some of the
rights of stockholders that might be important to you. You should refer to our
Charter and By-laws for a complete statement of your rights as a shareholder.

COMMON STOCK

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

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

PREFERRED STOCK

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

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

                                    2
<PAGE>

                  RESTRICTIONS ON OWNERSHIP AND TRANSFER

         The Charter provides that, subject to certain exceptions specified in
the Charter, no stockholder may own, or be deemed to own by virtue of the
attribution provisions of Internal Revenue Code of 1986 as amended (the "Code"),
more than 9.8% of the outstanding shares of our common stock or 9.8% of the
outstanding shares of any series of our preferred stock (the "Ownership
Limitation"). Pursuant to a Strategic Alliance Agreement, dated as of March 19,
1996, as amended, among Storage USA, Security Capital U.S. Realty and Security
Capital Holdings S.A. (together with Security Capital U.S. Realty, "Security
Capital"), Security Capital and its affiliates may beneficially own, in the
aggregate, up to 42.5% of the common stock outstanding (the "Special Stockholder
Limit"). At January 1, 1999, Security Capital held 11,765,654 shares, or
approximately 42.2% of the common stock outstanding. The Ownership Limitation
prevents any non-U.S. holder (other than Security Capital and its affiliates)
from acquiring additional shares of Storage USA's capital stock if, as a result
of such acquisition, non-U.S. persons would own 50% or more of Storage USA's
capital stock (determined assuming that Security Capital owns the maximum
percentage of Storage USA's capital stock that it is permitted to own under the
Special Stockholder Limit).

         The Charter provides that if any holder of capital stock of Storage USA
purports to transfer shares to a person or there is a change in the capital
structure of Storage USA, and either the purported transfer or the change in
capital structure would result in Storage USA failing to qualify as a REIT or
would cause the transferee to hold shares in excess of the applicable ownership
limit, then the capital stock being transferred (or in the case of an event
other than a transfer, the capital stock beneficially owned) that would cause
one or more of the restrictions on ownership or transfer to be violated shall be
automatically transferred to a trust for the benefit of a designated charitable
beneficiary. The purported transferee of such shares shall have no right to
receive dividends or other distributions with respect to such shares and shall
have no right to vote such shares. Any dividends or other distributions paid to
such purported transferee prior to the discovery by Storage USA that the shares
have been transferred to a trust shall be paid upon demand to the trustee of the
trust for the benefit of the charitable beneficiary. The trustee of the trust
will have all rights to dividends with respect to shares of capital stock held
in trust, which rights will be exercised for the exclusive benefit of the
charitable beneficiary. Any dividends or distributions paid over to the trustee
will be held in trust for the charitable beneficiary. The trustee shall
designate a transferee of such stock so long as the ownership of such shares of
stock by the transferee would not violate the restrictions on ownership or
transfer. Upon the sale of such shares, the purported transferee shall receive
the lesser of (A)(1) the price per share such purported transferee paid for the
capital stock in the purported transfer that resulted in the transfer of shares
of capital stock to the trust, or (2) if the transfer or other event that
resulted in the transfer of shares of capital stock to the trust was not a
transaction in which the purported record transferee gave full value for such
shares, a price per share equal to the market price on the date of the purported
transfer or other event that resulted in the transfer of the shares to the
trust, and (B) the price per share received by the trustee from the sale or
other disposition of the shares held in the trust.

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

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

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

         This section summarizes the federal income tax issues that you, as a
stockholder, may consider relevant. Because this section is a summary, it does
not address all of the tax issues that may be important to you. In addition,
this section does not address the tax issues that may be important to certain
types of stockholders that are subject to special treatment under the federal

                                    3
<PAGE>

income tax laws, such as insurance companies, tax-exempt organizations (except
to the extent discussed in "--Taxation of Tax-Exempt Stockholders" below),
financial institutions or broker-dealers, and non-U.S. individuals and foreign
corporations (except to the extent discussed in "--Taxation of Non-U.S.
Stockholders" below).

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

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

TAXATION OF STORAGE USA

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

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

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

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

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

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

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

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

                                      4
<PAGE>

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

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

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

REQUIREMENTS FOR QUALIFICATION

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


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

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

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

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

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

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

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

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

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

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

                                       5
<PAGE>

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

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

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

INCOME TESTS

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

o     rents from real property;

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

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

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

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

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

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

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

                                         6
<PAGE>

o      Finally, Storage USA generally must not operate or manage its real
       property or furnish or render services to its tenants, other than through
       an "independent contractor" who is adequately compensated and from whom
       Storage USA does not derive revenue. However, Storage USA need not
       provide services through an "independent contractor," but instead may
       provide services directly, if the services are "usually or customarily
       rendered" in connection with the rental of space for occupancy only and
       are not considered to be provided for the tenants' convenience. In
       addition, Storage USA may provide a minimal amount of "non-customary"
       services to the tenants of a property, other than through an independent
       contractor, as long as its income from the services does not exceed 1% of
       its income from the related property.

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

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

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

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

o      providing general security for the facilities;

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

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

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

o      maintaining underground utilities and structural elements of the
       facilities;

                                       7
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

                                            8
<PAGE>


ASSET TESTS

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

o      cash or cash items, including certain receivables;

o      government securities;

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

o      interests in mortgages on real property;

o      stock in other REITs; and

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

         The second asset test has two components:

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

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

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

         A recent legislative proposal would allow Storage USA to own up to 100%
of the stock of taxable REIT subsidiaries, which could perform activities
unrelated to Storage USA's tenants, such as third-party management, development,
and other independent business activities, as well as provide services to
Storage USA's tenants. Storage USA would be subject to restrictions on its stock
ownership of those taxable subsidiaries. The taxable REIT subsidiary provision
would be effective for taxable years beginning after the date of enactment.
There would be a transition period during which Storage USA could convert its
existing taxable subsidiaries on a tax-free basis into new "taxable REIT
subsidiaries." Existing taxable subsidiaries, however, would not be
grandfathered after the transition period.

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

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

                                         9
<PAGE>

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



DISTRIBUTION REQUIREMENTS

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

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

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

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

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

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

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

o       any undistributed taxable income from prior periods,

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

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

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

                                     10
<PAGE>

         A recent legislative proposal would reduce the distribution requirement
from 95% to 90% of taxable income. That proposal would be effective for taxable
years beginning after the date of enactment.

RECORDKEEPING REQUIREMENTS

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

FAILURE TO QUALIFY

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

TAXATION OF TAXABLE U.S. STOCKHOLDERS

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

o    a citizen or resident of the United States;

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

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

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

         A U.S. stockholder generally will recognize distributions that Storage
USA designates as capital gain dividends as long-term capital gain without
regard to the period for which the U.S. stockholder has held its common stock.
Subject to certain limitations, Storage USA will designate its capital gain
dividends as either 20% or 25% rate distributions. A corporate U.S. stockholder,
however, may be required to treat up to 20% of certain capital gain dividends as
ordinary income.

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

                                    11

<PAGE>


credit or refund for its proportionate share of the tax Storage USA paid. The
U.S. stockholder would increase the basis in its stock by the amount of its
proportionate share of Storage USA's undistributed long-term capital gain, minus
its share of the tax Storage USA paid.

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

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

TAXATION OF U.S. STOCKHOLDERS ON THE DISPOSITION OF THE COMMON STOCK

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

CAPITAL GAINS AND LOSSES

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

                                       12
<PAGE>

INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING

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

TAXATION OF TAX-EXEMPT STOCKHOLDERS

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

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

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

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


                                          13
<PAGE>

TAXATION OF NON-U.S. STOCKHOLDERS

         The rules governing U.S. federal income taxation of nonresident alien
individuals, foreign corporations, foreign partnerships, and other foreign
stockholders (collectively, "non-U.S. stockholders") are complex. This section
is only a summary of such rules. WE URGE NON-U.S. STOCKHOLDERS TO CONSULT THEIR
OWN TAX ADVISORS TO DETERMINE THE IMPACT OF FEDERAL, STATE, AND LOCAL INCOME TAX
LAWS ON OWNERSHIP OF THE COMMON STOCK, INCLUDING ANY REPORTING REQUIREMENTS.

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

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

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

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

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

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

         For any year in which Storage USA qualifies as a REIT, a Non-U.S.
Stockholder will incur tax on distributions that are attributable to gain from
its sale or exchange of "U.S. real property interests" under special provisions
of the federal income tax laws. The term "U.S. real property interests" includes
certain interests in real property and stock in corporations at least 50% of
whose assets consists of interests in real property, but excludes mortgage
loans. Under those rules, a non-U.S. stockholder is taxed on distributions
attributable to gain from sales of U.S. real property interests as if such gain
were effectively connected with a U.S. business of the non-U.S. stockholder. A
non-U.S. stockholder thus would be taxed on such a distribution at the normal
capital gain rates applicable to U.S. stockholders, subject to applicable
alternative minimum tax and a special alternative minimum tax in the case of a
nonresident alien individual. A non-U.S. corporate stockholder not entitled to
treaty relief or exemption also may be subject to the 30% branch profits tax on
such a distribution. Storage USA must withhold 35% of any distribution that it
could designate as a capital gain dividend. A non-U.S. stockholder may receive a
credit against its tax liability for the amount Storage USA withholds.

                                    14
<PAGE>

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

OTHER TAX CONSEQUENCES

STATE AND LOCAL TAXES

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

TAX ASPECTS OF THE COMPANY'S INVESTMENTS IN SUSA PARTNERSHIP AND SUBSIDIARY
PARTNERSHIPS

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


CLASSIFICATION AS PARTNERSHIPS

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

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

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

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

                                           15
<PAGE>

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

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

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

         Treasury regulations (the "PTP regulations") provide limited safe
harbors from the definition of a publicly traded partnership. Pursuant to one of
those safe harbors (the "private placement exclusion"), interests in a
partnership will not be treated as readily tradable on a secondary market or the
substantial equivalent thereof if (1) all interests in the partnership were
issued in a transaction (or transactions) that was not required to be registered
under the Securities Act of 1933, as amended, and (2) the partnership does not
have more than 100 partners at any time during the partnership's taxable year.
In determining the number of partners in a partnership, a person owning an
interest in a partnership, grantor trust, or S corporation that owns an interest
in the partnership is treated as a partner in such partnership only if (1)
substantially all of the value of the owner's interest in the entity is
attributable to the entity's direct or indirect interest in the partnership and
(2) a principal purpose of the use of the entity is to permit the partnership to
satisfy the 100-partner limitation. Each Partnership qualifies for the private
placement exclusion.

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


INCOME TAXATION OF THE PARTNERSHIPS AND THEIR PARTNERS

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

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

                                          16
<PAGE>

         TAX ALLOCATIONS WITH RESPECT TO CONTRIBUTED PROPERTIES. Income, gain,
loss, and deduction attributable to appreciated or depreciated property that is
contributed to a partnership in exchange for an interest in the partnership must
be allocated in a manner such that the contributing partner is charged with, or
benefits from, respectively, the unrealized gain or unrealized loss associated
with the property at the time of the contribution. The amount of such unrealized
gain or unrealized loss is generally equal to the difference between the fair
market value of contributed property at the time of contribution, and the
adjusted tax basis of such property at the time of contribution (a "book-tax
difference"). Such allocations are solely for federal income tax purposes and do
not affect the book capital accounts or other economic or legal arrangements
among the partners. SUSA Partnership was formed by way of contributions of
appreciated property and has received contributions of appreciated property
since Storage USA's initial public offering. SUSA Partnership's partnership
agreement requires such allocations to be made in a manner consistent with the
federal income tax laws governing partnership allocations.

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

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

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

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

                                       17
<PAGE>


SALE OF A PARTNERSHIP'S PROPERTY

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

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


TAXABLE SUBSIDIARIES

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

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

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

         A recent legislative proposal would allow Storage USA to own up to 100%
of the stock of taxable REIT subsidiaries, which could perform activities
unrelated to Storage USA's tenants, such as third-party management, development,
and other independent business activities, as well as provide services to
Storage USA's tenants. Storage USA would be subject to restrictions on its stock
ownership of those taxable subsidiaries. The taxable REIT subsidiary provision
would be effective for taxable years beginning after the date of enactment.
There would be a transition period during which Storage USA could convert its
existing taxable subsidiaries on a tax-free basis into new "taxable REIT
subsidiaries." Existing taxable subsidiaries, however, would not be
grandfathered after the transition period.


                              USE OF PROCEEDS

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

                                        18
<PAGE>

                            THE SELLING SHAREHOLDERS

         This prospectus relates to the offer and sale of up to 10,000 shares of
common stock by Larry Nelson ("Mr. Nelson") or his donees, pledgees, transferees
or other successors in interest and the offer and sale of up to 8,000 shares of
common stock by John W. McConomy ("Mr. McConomy") or his donees, pledgees,
transferees or other successors in interest. Mr. Nelson has served as an officer
of Storage USA since April 1998. Mr. McConomy has served as an officer of
Storage USA since August 1998. Prior to the filing of this registration
statement, as of May 1, 1999, Mr. Nelson owned 10,274 shares of common stock.
Prior to the filing of this registration statement, as of May 1, 1999, Mr.
McConomy owned 15,506 shares of common stock.

         Mr. Nelson and Mr. McConomy acquired the 18,000 shares of common stock
covered by this prospectus from the Company pursuant to the 1995 Employee Stock
Purchase and Loan Program in a series of private placements.

         We do not know if, when, or in what amounts Mr. Nelson or Mr. McConomy
will sell shares. Consequently, we cannot estimate how many shares will be held
by Mr. Nelson or Mr. McConomy after completion of the offering.

                             PLAN OF DISTRIBUTION

         The Selling Shareholders may sell the common stock in transactions on
the NYSE or in privately negotiated transactions, including transactions with
exchange funds, through the writing of options on the shares or a combination of
such methods of sale, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. Alternatively, the shares may be offered to or
through underwriters, brokers or dealers who may act solely as agents, or who
may acquire shares as principals. The distribution of the shares through such
persons may be effected in one or more transactions that may take place on the
NYSE, including block trades or ordinary broker's transactions, or through
privately negotiated transactions or sales to one or more brokers or dealers for
resale of such securities as principals, or otherwise at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Shareholders may pay usual and
customary or specifically negotiated brokerage fees or commissions in connection
with such sales. In connection with such sales, the Selling Shareholders and any
participating brokers or dealers may be deemed "underwriters" as such term is
defined in the Securities Act and the commissions paid or discounts allowed to
any of such underwriters, brokers, dealers or agents, in addition to any profits
received on resale of the shares if any such underwriters, brokers, dealers or
agents should purchase any shares as a principal, may be deemed to be
underwriting discounts or commissions under the Securities Act.

                                LEGAL OPINIONS

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

                                       19
<PAGE>

                                     PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3.  INCORPORATION OF DOCUMENTS BY REFERENCE.

         The following documents filed by Storage USA, Inc. (the "Company") with
the Commission (Commission File No. 001-12910) under the Exchange Act are hereby
incorporated by reference in this Prospectus: (i) the Company's Annual Report on
Form 10-K for the period ended December 31, 1998; (ii) the Company's Quarterly
Report on 10-Q for the period ending March 31, 1999; and (iii) the description
of the Common Stock contained in the Company's Registration Statement on Form
8-A filed on March 15, 1994, under the Exchange Act, including any reports filed
under the Exchange Act for the purpose of updating such description. All
documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act prior to the termination of the offering of all of the Common
Stock shall be deemed to be incorporated by reference herein.

         Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for the purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document, as the case may
be, which also is or is deemed to be incorporated by reference herein, modifies
or supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.

         The Company will provide on request and without charge to each person
to whom this Prospectus is delivered a copy (without exhibits) of any or all
documents incorporated by reference into this Prospectus. Requests for such
copies should be directed to Storage USA, Inc., 165 Madison Avenue, Suite 1300,
Memphis, TN 38103, Attention: Secretary (telephone: 901-252-2000).

ITEM 4.  DESCRIPTION OF SECURITIES.

         Not applicable.

ITEM 5.  INTERESTS OF NAMED EXPERTS AND COUNSEL.

         Not applicable.

                                  II-1
<PAGE>

ITEM 6.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.

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

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

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

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

ITEM 7.  EXEMPTION FROM REGISTRATION CLAIMED.

         The 18,000 shares covered by the reoffer prospectus included in this
registration statement were issued by the Company in a series of private
placements exempt from registration under Section 4(2) of the Securities Act of
1933.

                                     II-2
<PAGE>

ITEM 8.  EXHIBITS.

Exhibit No.

   4.1            1995 Employee Stock Purchase and Loan Plan.

   4.2            Form of Stock Purchase Agreement in connection with the 1995
                  Employee Stock Purchase and Loan Plan (filed as an Exhibit to
                  the Company's current report on Form 8-K, as amended to Form
                  8-K/A, filed with the Commission on November 17, 1995, and
                  incorporated by reference herein).

   4.3            Amendment  No. 1 to 1995  Employee  Stock  Purchase  and Loan
                  Plan  (filed as an  Exhibit  to the Company's Registration
                  Statement on Form S-8, File No. 333-29753,  and incorporated
                  by reference herein).

   4.4            Amendment No. 2 to 1995 Employee Stock Purchase and Loan Plan.

   5.1            Opinion of Hunton & Williams as to the legality of the
                  securities being registered.

   23.1           Consent of Hunton & Williams (included in the opinion filed as
                  Exhibit 5.1 to the  Registration Statement).

   23.2           Consent of PricewaterhouseCoopers LLP.

   24.1           Power of Attorney (included on signature page).

ITEM 9.  UNDERTAKINGS

         (a)      The undersigned registrant hereby undertakes:

                  1. To file, during any period in which offers or sales are
made, a post-effective amendment to this registration statement:

                      (i)      To include  any  prospectus  required  by Section
                               10(a)(3) of the Securities Act of 1933;

                      (ii)     To reflect in the  prospectus any facts or events
                               arising   after   the   effective   date  of  the
                               registration   statement   (or  the  most  recent
                               post-effective    amendment    thereof)    which,
                               individually  or in the  aggregate,  represent  a
                               fundamental  change in the  information set forth
                               in the  registration  statement.  Notwithstanding
                               the foregoing, any increase or decrease in volume
                               of securities  offered (if the total dollar value
                               of securities offered would not exceed that which
                               was registered) and any deviation from the low or
                               high end of the estimated  maximum offering range
                               may be reflected in the form of prospectus  filed
                               with the  Commission  pursuant to Rule 424(b) if,
                               in the aggregate, the changes in volume and price
                               represent  no more than 20 percent  change in the
                               maximum aggregate offering price set forth in the
                               "Calculation  of  Registration  Fee" table in the
                               effective registration statement; and

                      (iii)    To include any material  information with respect
                               to  the  plan  of  distribution   not  previously
                               disclosed  in the  registration  statement or any
                               material  change  in  such   information  in  the
                               registration statement;

PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the registration statement.

                                 II-3
<PAGE>

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

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

         (b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act, and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act, that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA FIDE offering
thereof.

         (c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 6
above, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

                                      II-4
<PAGE>





                                   SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Memphis, State of Tennessee on this 18th day of May,
1999.

                                         STORAGE USA, INC.
                                         

                                         By: /s/ John W. McConomy
                                             Name: John W. McConomy
                                             Title:Executive Vice President
                                                   and General Counsel


                                POWER OF ATTORNEY

         Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on May 18, 1999. Each of the undersigned officers and
directors of the registrant hereby constitutes Christopher P. Marr, John W.
McConomy and Randall S. Parks, any of whom may act, his true and lawful
attorneys-in-fact with full power to sign for him and in his name in the
capacities indicated below and to file any and all amendments to the
registration statement filed herewith, making such changes in the registration
statement as the registrant deems appropriate, and generally to do all such
things in his name and behalf in his capacity as an officer and director to
enable the registrant to comply with the provisions of the Securities Act of
1933 and all requirements of the Securities and Exchange Commission.

              Signature                        Title & Capacity

 /s/ Dean Jernigan
     -------------                  Chairman of the Board, Chief Executive
     Dean Jernigan                  Officer and Director
                                    (Principal Executive Officer)

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

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

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

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

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

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


<PAGE>


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

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

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


<PAGE>

                           EXHIBIT INDEX

   EXHIBIT NO.                           DESCRIPTION
   ----------                            -----------

         4.1               1995 Employee Stock Purchase and Loan Plan.

         4.2               Form of Stock Purchase Agreement in connection with
                           the 1995 Employee Stock Purchase and Loan Plan (filed
                           as an Exhibit to the Company's current report on Form
                           8-K, as amended to Form 8-K/A, filed with the
                           Commission on November 17, 1995, and incorporated by
                           reference herein).

         4.3               Amendment No. 1 to 1995 Employee Stock Purchase and
                           Loan Plan (filed as an Exhibit to the Company's
                           Registration Statement on Form S-8, File No.
                           333-29753, and incorporated by reference herein).

         4.4               Amendment No.2 to 1995 Employee Stock Purchase and
                           Loan Plan.

         5.1               Opinion of Hunton & Williams (as to the legality of
                           the securities being registered).

         23.1              Consent of Hunton & Williams (included in the
                           opinion filed as Exhibit 5.1 to the Registration
                           Statement).

         23.2              Consent of PricewaterhouseCoopers LLP.

         24.1              Power of Attorney (included on signature page).
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As filed with the Securities and Exchange Commission on May 18, 1999.

                                         REGISTRATION STATEMENT NO. 333-_____
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                              --------------------

                                    FORM S-8

                          REGISTRATION STATEMENT UNDER
                           THE SECURITIES ACT OF 1933
                             --------------------

                                STORAGE USA, INC.
             (Exact name of Registrant as specified in its Charter)

      TENNESSEE                                         62-1251239
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
 incorporation or organization)

                          165 MADISON AVENUE
                               SUITE 1300
                        MEMPHIS, TENNESSEE 38103
                             (901) 252-2000
      (Address of principal executive office, including zip code)

         STORAGE USA, INC. 1995 EMPLOYEE STOCK PURCHASE AND LOAN PLAN
                         (Full title of the Plan)
                          ----------------------

                              MR. JOHN W. MCCONOMY
                            EXECUTIVE VICE PRESIDENT
                                STORAGE USA, INC.
                               165 MADISON AVENUE
                                   SUITE 1300
                            MEMPHIS, TENNESSEE 38103
                                (901) 252-2000
(Name, address, including zip code, and telephone number including area code,
      of agent for service)

                                    Copy to:

                              MR. RANDALL S. PARKS
                                HUNTON & WILLIAMS
                          RIVERFRONT PLAZA, EAST TOWER
                              951 EAST BYRD STREET
                            RICHMOND, VIRGINIA 23219
                                (804) 788-8200
                              --------------------

                         CALCULATION OF REGISTRATION FEE
============================================================================================
                                     Proposed maximum   Proposed maximum
Title of securities   Amount to be   offering price      aggregate         Amount of
 to be registered     registered     per share(1)       offering price     registration fee
============================================================================================
Common Stock,       250,000 shares    $33.719          $8,429,750           $2,343
$.01 par value
============================================================================================
(1)  Estimated solely for the purpose of calculating the registration
fee pursuant to Rule 457(c) of the Securities Act of 1933. This amount was
calculated based on the average of the high and low sales prices of the Common
Stock on the New York Stock Exchange on May 13, 1999.
================================================================================
PART I

              INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS

ITEM 1.  PLAN INFORMATION.

         Not required to be filed with the Securities and Exchange Commission
(the "Commission").

ITEM 2.  REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.

         Not required to be filed with the Commission.

                         REOFFER PROSPECTUS

         A reoffer prospectus is included in this registration statement for use
in connection with the potential resale of 18,000 shares of restricted common
stock acquired by the selling shareholders pursuant to the Plan but not
previously registered.
PROSPECTUS
                                 18,000 SHARES
                                STORAGE USA, INC.
                                  COMMON STOCK
                                  ------------
         Our common stock trades on the New York Stock Exchange under the
symbol "SUS."

         Storage USA, Inc. (the "Company") has privately placed a total of
18,000 shares of common stock with two selling shareholders (the "Selling
Shareholders"). This prospectus relates to resales of those shares by the
Selling Shareholders.

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

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

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

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

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

                  THE DATE OF THIS PROSPECTUS IS MAY 18, 1999.
TABLE OF CONTENTS

WHERE YOU CAN FIND MORE INFORMATION...........................................1
A WARNING ABOUT FORWARD-LOOKING STATEMENTS....................................1
STORAGE USA, INC..............................................................2
DESCRIPTION OF COMMON STOCK...................................................2
RESTRICTIONS ON OWNERSHIP AND TRANSFER........................................3
FEDERAL INCOME TAX CONSEQUENCES OF STORAGE USA'S STATUS AS A REIT.............3
USE OF PROCEEDS...............................................................18
THE SELLING SHAREHOLDERS......................................................19
PLAN OF DISTRIBUTION..........................................................19
LEGAL OPINIONS................................................................19

                                   i
WHERE YOU CAN FIND MORE INFORMATION

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

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

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

        o  Quarterly Report on Form 10-Q for the quarter ended March 31, 1999;
           and

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

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

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

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

                  A WARNING ABOUT FORWARD-LOOKING STATEMENTS

         This prospectus, and the documents incorporated by reference, may
contain "forward-looking" statements. These forwarding-looking statements
usually include words like "believes," "anticipates" and "expects" and describe
our expectations for the future. Of course, these expectations may not be met in
important ways for a variety of reasons. We have described these reasons in our
most recent Annual Report on Form 10-K under the heading "Risk Factors" and the
other reports we file with the SEC, and you should review them before you decide
to buy our stock. We are not required to update any forward-looking statements
we make and we may not.

                                      1
STORAGE USA, INC.

         Storage USA, Inc. is a self-managed, self-advised real estate
investment trust ("REIT"). We manage, acquire, develop and franchise
self-storage facilities. We do business through SUSA Partnership, L.P. ("SUSA
Partnership"), of which we are the sole general partner and in which we owned an
approximate 88.6% partnership interest as of March 31, 1999. Our self-storage
facilities operate under the Storage USA name and offer low-cost, easily
accessible and enclosed storage space for personal and business use, primarily
on a month-to-month basis. All of our facilities are fenced, have locked gates,
are lighted at night and have computer-controlled gates that permit certain
tenants to access their storage units 24 hours a day or are being upgraded to
those standards.

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

         We are authorized to issue 150,000,000 shares of common stock, $.01 par
value, and 5,000,000 shares of preferred stock, $.01 par value. As of March 31,
1999, there were 27,875,377 shares of common stock outstanding. No shares of
preferred stock were outstanding. The following is only a summary of some of the
rights of stockholders that might be important to you. You should refer to our
Charter and By-laws for a complete statement of your rights as a shareholder.

COMMON STOCK

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

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

PREFERRED STOCK

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

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

                                    2
RESTRICTIONS ON OWNERSHIP AND TRANSFER

         The Charter provides that, subject to certain exceptions specified in
the Charter, no stockholder may own, or be deemed to own by virtue of the
attribution provisions of Internal Revenue Code of 1986 as amended (the "Code"),
more than 9.8% of the outstanding shares of our common stock or 9.8% of the
outstanding shares of any series of our preferred stock (the "Ownership
Limitation"). Pursuant to a Strategic Alliance Agreement, dated as of March 19,
1996, as amended, among Storage USA, Security Capital U.S. Realty and Security
Capital Holdings S.A. (together with Security Capital U.S. Realty, "Security
Capital"), Security Capital and its affiliates may beneficially own, in the
aggregate, up to 42.5% of the common stock outstanding (the "Special Stockholder
Limit"). At January 1, 1999, Security Capital held 11,765,654 shares, or
approximately 42.2% of the common stock outstanding. The Ownership Limitation
prevents any non-U.S. holder (other than Security Capital and its affiliates)
from acquiring additional shares of Storage USA's capital stock if, as a result
of such acquisition, non-U.S. persons would own 50% or more of Storage USA's
capital stock (determined assuming that Security Capital owns the maximum
percentage of Storage USA's capital stock that it is permitted to own under the
Special Stockholder Limit).

         The Charter provides that if any holder of capital stock of Storage USA
purports to transfer shares to a person or there is a change in the capital
structure of Storage USA, and either the purported transfer or the change in
capital structure would result in Storage USA failing to qualify as a REIT or
would cause the transferee to hold shares in excess of the applicable ownership
limit, then the capital stock being transferred (or in the case of an event
other than a transfer, the capital stock beneficially owned) that would cause
one or more of the restrictions on ownership or transfer to be violated shall be
automatically transferred to a trust for the benefit of a designated charitable
beneficiary. The purported transferee of such shares shall have no right to
receive dividends or other distributions with respect to such shares and shall
have no right to vote such shares. Any dividends or other distributions paid to
such purported transferee prior to the discovery by Storage USA that the shares
have been transferred to a trust shall be paid upon demand to the trustee of the
trust for the benefit of the charitable beneficiary. The trustee of the trust
will have all rights to dividends with respect to shares of capital stock held
in trust, which rights will be exercised for the exclusive benefit of the
charitable beneficiary. Any dividends or distributions paid over to the trustee
will be held in trust for the charitable beneficiary. The trustee shall
designate a transferee of such stock so long as the ownership of such shares of
stock by the transferee would not violate the restrictions on ownership or
transfer. Upon the sale of such shares, the purported transferee shall receive
the lesser of (A)(1) the price per share such purported transferee paid for the
capital stock in the purported transfer that resulted in the transfer of shares
of capital stock to the trust, or (2) if the transfer or other event that
resulted in the transfer of shares of capital stock to the trust was not a
transaction in which the purported record transferee gave full value for such
shares, a price per share equal to the market price on the date of the purported
transfer or other event that resulted in the transfer of the shares to the
trust, and (B) the price per share received by the trustee from the sale or
other disposition of the shares held in the trust.

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

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

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

         This section summarizes the federal income tax issues that you, as a
stockholder, may consider relevant. Because this section is a summary, it does
not address all of the tax issues that may be important to you. In addition,
this section does not address the tax issues that may be important to certain
types of stockholders that are subject to special treatment under the federal

                                    3
income tax laws, such as insurance companies, tax-exempt organizations (except
to the extent discussed in "--Taxation of Tax-Exempt Stockholders" below),
financial institutions or broker-dealers, and non-U.S. individuals and foreign
corporations (except to the extent discussed in "--Taxation of Non-U.S.
Stockholders" below).

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

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

TAXATION OF STORAGE USA

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

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

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

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

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

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

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

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

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

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

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

REQUIREMENTS FOR QUALIFICATION

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

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

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

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

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

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

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

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

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

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

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

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

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

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

INCOME TESTS

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

o     rents from real property;

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

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

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

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

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

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

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

                                         6
o      Finally, Storage USA generally must not operate or manage its real
       property or furnish or render services to its tenants, other than through
       an "independent contractor" who is adequately compensated and from whom
       Storage USA does not derive revenue. However, Storage USA need not
       provide services through an "independent contractor," but instead may
       provide services directly, if the services are "usually or customarily
       rendered" in connection with the rental of space for occupancy only and
       are not considered to be provided for the tenants' convenience. In
       addition, Storage USA may provide a minimal amount of "non-customary"
       services to the tenants of a property, other than through an independent
       contractor, as long as its income from the services does not exceed 1% of
       its income from the related property.

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

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

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

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

o      providing general security for the facilities;

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

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

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

o      maintaining underground utilities and structural elements of the
       facilities;

                                       7
o      paying real and personal property taxes or the cost of replacing or
       refurbishing personal property with respect to real and personal property
       owned by SUSA Partnership at a facility;

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

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

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

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

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

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

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

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

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

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

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

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

                                            8
ASSET TESTS

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

o      cash or cash items, including certain receivables;

o      government securities;

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

o      interests in mortgages on real property;

o      stock in other REITs; and

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

         The second asset test has two components:

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

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

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

         A recent legislative proposal would allow Storage USA to own up to 100%
of the stock of taxable REIT subsidiaries, which could perform activities
unrelated to Storage USA's tenants, such as third-party management, development,
and other independent business activities, as well as provide services to
Storage USA's tenants. Storage USA would be subject to restrictions on its stock
ownership of those taxable subsidiaries. The taxable REIT subsidiary provision
would be effective for taxable years beginning after the date of enactment.
There would be a transition period during which Storage USA could convert its
existing taxable subsidiaries on a tax-free basis into new "taxable REIT
subsidiaries." Existing taxable subsidiaries, however, would not be
grandfathered after the transition period.

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

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

                                         9
If Storage USA should fail to satisfy the asset tests at the end of a
calendar quarter, it would not lose its REIT status if (1) it satisfied the
asset tests at the close of the preceding calendar quarter and (2) the
discrepancy between the value of its assets and the asset test requirements
arose from changes in the market values of its assets and was not wholly or
partly caused by the acquisition of one or more non-qualifying assets. If
Storage USA did not satisfy the condition described in clause (2) of the
preceding sentence, it still could avoid disqualification as a REIT by
eliminating any discrepancy within 30 days after the close of the calendar
quarter in which the discrepancy arose.

DISTRIBUTION REQUIREMENTS

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

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

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

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

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

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

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

o       any undistributed taxable income from prior periods,

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

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

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

                                     10
A recent legislative proposal would reduce the distribution requirement
from 95% to 90% of taxable income. That proposal would be effective for taxable
years beginning after the date of enactment.

RECORDKEEPING REQUIREMENTS

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

FAILURE TO QUALIFY

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

TAXATION OF TAXABLE U.S. STOCKHOLDERS

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

o    a citizen or resident of the United States;

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

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

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

         A U.S. stockholder generally will recognize distributions that Storage
USA designates as capital gain dividends as long-term capital gain without
regard to the period for which the U.S. stockholder has held its common stock.
Subject to certain limitations, Storage USA will designate its capital gain
dividends as either 20% or 25% rate distributions. A corporate U.S. stockholder,
however, may be required to treat up to 20% of certain capital gain dividends as
ordinary income.

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

                                    11
credit or refund for its proportionate share of the tax Storage USA paid. The
U.S. stockholder would increase the basis in its stock by the amount of its
proportionate share of Storage USA's undistributed long-term capital gain, minus
its share of the tax Storage USA paid.

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

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

TAXATION OF U.S. STOCKHOLDERS ON THE DISPOSITION OF THE COMMON STOCK

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

CAPITAL GAINS AND LOSSES

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

                                       12
INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING

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

TAXATION OF TAX-EXEMPT STOCKHOLDERS

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

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

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

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

                                          13
TAXATION OF NON-U.S. STOCKHOLDERS

         The rules governing U.S. federal income taxation of nonresident alien
individuals, foreign corporations, foreign partnerships, and other foreign
stockholders (collectively, "non-U.S. stockholders") are complex. This section
is only a summary of such rules. WE URGE NON-U.S. STOCKHOLDERS TO CONSULT THEIR
OWN TAX ADVISORS TO DETERMINE THE IMPACT OF FEDERAL, STATE, AND LOCAL INCOME TAX
LAWS ON OWNERSHIP OF THE COMMON STOCK, INCLUDING ANY REPORTING REQUIREMENTS.

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

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

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

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

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

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

         For any year in which Storage USA qualifies as a REIT, a Non-U.S.
Stockholder will incur tax on distributions that are attributable to gain from
its sale or exchange of "U.S. real property interests" under special provisions
of the federal income tax laws. The term "U.S. real property interests" includes
certain interests in real property and stock in corporations at least 50% of
whose assets consists of interests in real property, but excludes mortgage
loans. Under those rules, a non-U.S. stockholder is taxed on distributions
attributable to gain from sales of U.S. real property interests as if such gain
were effectively connected with a U.S. business of the non-U.S. stockholder. A
non-U.S. stockholder thus would be taxed on such a distribution at the normal
capital gain rates applicable to U.S. stockholders, subject to applicable
alternative minimum tax and a special alternative minimum tax in the case of a
nonresident alien individual. A non-U.S. corporate stockholder not entitled to
treaty relief or exemption also may be subject to the 30% branch profits tax on
such a distribution. Storage USA must withhold 35% of any distribution that it
could designate as a capital gain dividend. A non-U.S. stockholder may receive a
credit against its tax liability for the amount Storage USA withholds.

                                    14
A non-U.S. stockholder generally will not incur tax under the
provisions applicable to distributions that are attributable to gain from the
sale of U.S. real property interests on gain from the sale of its common stock
as long as at all times non-U.S. persons hold, directly or indirectly, less than
50% in value of Storage USA's stock. We cannot assure you that that test will be
met. However, a non-U.S. stockholder that owned, actually or constructively, 5%
or less of the common stock at all times during a specified testing period will
not incur tax under the provisions applicable to distributions that are
attributable to gain from the sale of U.S. real property interests if the common
stock is "regularly traded" on an established securities market. If the gain on
the sale of the common stock were taxed under those provisions, a non-U.S.
stockholder would be taxed in the same manner as U.S. stockholders with respect
to such gain, subject to applicable alternative minimum tax, a special
alternative minimum tax in the case of nonresident alien individuals, and the
possible application of the 30% branch profits tax in the case of non-U.S.
corporations. Furthermore, a non-U.S. stockholder will incur tax on gain not
subject to the provisions applicable to distributions that are attributable to
gain from the sale of U.S. real property interests if (1) the gain is
effectively connected with the non-U.S. stockholder's U.S. trade or business, in
which case the non-U.S. stockholder will be subject to the same treatment as
U.S. stockholders with respect to such gain, or (2) the non-U.S. stockholder is
a nonresident alien individual who was present in the U.S. for 183 days or more
during the taxable year and has a "tax home" in the United States, in which case
the non-U.S. stockholder will incur a 30% tax on his capital gains.

OTHER TAX CONSEQUENCES

STATE AND LOCAL TAXES

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

TAX ASPECTS OF THE COMPANY'S INVESTMENTS IN SUSA PARTNERSHIP AND SUBSIDIARY
PARTNERSHIPS

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

CLASSIFICATION AS PARTNERSHIPS

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

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

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

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

                                           15
o      neither the entity nor any member of the entity was notified in writing
       by a taxing authority on or before May 8, 1996 that the classification of
       the entity was under examination.

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

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

         Treasury regulations (the "PTP regulations") provide limited safe
harbors from the definition of a publicly traded partnership. Pursuant to one of
those safe harbors (the "private placement exclusion"), interests in a
partnership will not be treated as readily tradable on a secondary market or the
substantial equivalent thereof if (1) all interests in the partnership were
issued in a transaction (or transactions) that was not required to be registered
under the Securities Act of 1933, as amended, and (2) the partnership does not
have more than 100 partners at any time during the partnership's taxable year.
In determining the number of partners in a partnership, a person owning an
interest in a partnership, grantor trust, or S corporation that owns an interest
in the partnership is treated as a partner in such partnership only if (1)
substantially all of the value of the owner's interest in the entity is
attributable to the entity's direct or indirect interest in the partnership and
(2) a principal purpose of the use of the entity is to permit the partnership to
satisfy the 100-partner limitation. Each Partnership qualifies for the private
placement exclusion.

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

INCOME TAXATION OF THE PARTNERSHIPS AND THEIR PARTNERS

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

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

                                          16
TAX ALLOCATIONS WITH RESPECT TO CONTRIBUTED PROPERTIES. Income, gain,
loss, and deduction attributable to appreciated or depreciated property that is
contributed to a partnership in exchange for an interest in the partnership must
be allocated in a manner such that the contributing partner is charged with, or
benefits from, respectively, the unrealized gain or unrealized loss associated
with the property at the time of the contribution. The amount of such unrealized
gain or unrealized loss is generally equal to the difference between the fair
market value of contributed property at the time of contribution, and the
adjusted tax basis of such property at the time of contribution (a "book-tax
difference"). Such allocations are solely for federal income tax purposes and do
not affect the book capital accounts or other economic or legal arrangements
among the partners. SUSA Partnership was formed by way of contributions of
appreciated property and has received contributions of appreciated property
since Storage USA's initial public offering. SUSA Partnership's partnership
agreement requires such allocations to be made in a manner consistent with the
federal income tax laws governing partnership allocations.

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

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

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

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

                                       17
SALE OF A PARTNERSHIP'S PROPERTY

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

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

TAXABLE SUBSIDIARIES

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

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

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

         A recent legislative proposal would allow Storage USA to own up to 100%
of the stock of taxable REIT subsidiaries, which could perform activities
unrelated to Storage USA's tenants, such as third-party management, development,
and other independent business activities, as well as provide services to
Storage USA's tenants. Storage USA would be subject to restrictions on its stock
ownership of those taxable subsidiaries. The taxable REIT subsidiary provision
would be effective for taxable years beginning after the date of enactment.
There would be a transition period during which Storage USA could convert its
existing taxable subsidiaries on a tax-free basis into new "taxable REIT
subsidiaries." Existing taxable subsidiaries, however, would not be
grandfathered after the transition period.

                              USE OF PROCEEDS

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

                                        18
THE SELLING SHAREHOLDERS

         This prospectus relates to the offer and sale of up to 10,000 shares of
common stock by Larry Nelson ("Mr. Nelson") or his donees, pledgees, transferees
or other successors in interest and the offer and sale of up to 8,000 shares of
common stock by John W. McConomy ("Mr. McConomy") or his donees, pledgees,
transferees or other successors in interest. Mr. Nelson has served as an officer
of Storage USA since April 1998. Mr. McConomy has served as an officer of
Storage USA since August 1998. Prior to the filing of this registration
statement, as of May 1, 1999, Mr. Nelson owned 10,274 shares of common stock.
Prior to the filing of this registration statement, as of May 1, 1999, Mr.
McConomy owned 15,506 shares of common stock.

         Mr. Nelson and Mr. McConomy acquired the 18,000 shares of common stock
covered by this prospectus from the Company pursuant to the 1995 Employee Stock
Purchase and Loan Program in a series of private placements.

         We do not know if, when, or in what amounts Mr. Nelson or Mr. McConomy
will sell shares. Consequently, we cannot estimate how many shares will be held
by Mr. Nelson or Mr. McConomy after completion of the offering.

                             PLAN OF DISTRIBUTION

         The Selling Shareholders may sell the common stock in transactions on
the NYSE or in privately negotiated transactions, including transactions with
exchange funds, through the writing of options on the shares or a combination of
such methods of sale, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. Alternatively, the shares may be offered to or
through underwriters, brokers or dealers who may act solely as agents, or who
may acquire shares as principals. The distribution of the shares through such
persons may be effected in one or more transactions that may take place on the
NYSE, including block trades or ordinary broker's transactions, or through
privately negotiated transactions or sales to one or more brokers or dealers for
resale of such securities as principals, or otherwise at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Shareholders may pay usual and
customary or specifically negotiated brokerage fees or commissions in connection
with such sales. In connection with such sales, the Selling Shareholders and any
participating brokers or dealers may be deemed "underwriters" as such term is
defined in the Securities Act and the commissions paid or discounts allowed to
any of such underwriters, brokers, dealers or agents, in addition to any profits
received on resale of the shares if any such underwriters, brokers, dealers or
agents should purchase any shares as a principal, may be deemed to be
underwriting discounts or commissions under the Securities Act.

                                LEGAL OPINIONS

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

                                       19
PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3.  INCORPORATION OF DOCUMENTS BY REFERENCE.

         The following documents filed by Storage USA, Inc. (the "Company") with
the Commission (Commission File No. 001-12910) under the Exchange Act are hereby
incorporated by reference in this Prospectus: (i) the Company's Annual Report on
Form 10-K for the period ended December 31, 1998; (ii) the Company's Quarterly
Report on 10-Q for the period ending March 31, 1999; and (iii) the description
of the Common Stock contained in the Company's Registration Statement on Form
8-A filed on March 15, 1994, under the Exchange Act, including any reports filed
under the Exchange Act for the purpose of updating such description. All
documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act prior to the termination of the offering of all of the Common
Stock shall be deemed to be incorporated by reference herein.

         Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for the purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document, as the case may
be, which also is or is deemed to be incorporated by reference herein, modifies
or supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.

         The Company will provide on request and without charge to each person
to whom this Prospectus is delivered a copy (without exhibits) of any or all
documents incorporated by reference into this Prospectus. Requests for such
copies should be directed to Storage USA, Inc., 165 Madison Avenue, Suite 1300,
Memphis, TN 38103, Attention: Secretary (telephone: 901-252-2000).

ITEM 4.  DESCRIPTION OF SECURITIES.

         Not applicable.

ITEM 5.  INTERESTS OF NAMED EXPERTS AND COUNSEL.

         Not applicable.

                                  II-1
ITEM 6.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.

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

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

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

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

ITEM 7.  EXEMPTION FROM REGISTRATION CLAIMED.

         The 18,000 shares covered by the reoffer prospectus included in this
registration statement were issued by the Company in a series of private
placements exempt from registration under Section 4(2) of the Securities Act of
1933.

                                     II-2
ITEM 8.  EXHIBITS.

Exhibit No.

   4.1            1995 Employee Stock Purchase and Loan Plan.

   4.2            Form of Stock Purchase Agreement in connection with the 1995
                  Employee Stock Purchase and Loan Plan (filed as an Exhibit to
                  the Company's current report on Form 8-K, as amended to Form
                  8-K/A, filed with the Commission on November 17, 1995, and
                  incorporated by reference herein).

   4.3            Amendment  No. 1 to 1995  Employee  Stock  Purchase  and Loan
                  Plan  (filed as an  Exhibit  to the Company's Registration
                  Statement on Form S-8, File No. 333-29753,  and incorporated
                  by reference herein).

   4.4            Amendment No. 2 to 1995 Employee Stock Purchase and Loan Plan.

   5.1            Opinion of Hunton & Williams as to the legality of the
                  securities being registered.

   23.1           Consent of Hunton & Williams (included in the opinion filed as
                  Exhibit 5.1 to the  Registration Statement).

   23.2           Consent of PricewaterhouseCoopers LLP.

   24.1           Power of Attorney (included on signature page).

ITEM 9.  UNDERTAKINGS

         (a)      The undersigned registrant hereby undertakes:

                  1. To file, during any period in which offers or sales are
made, a post-effective amendment to this registration statement:

                      (i)      To include  any  prospectus  required  by Section
                               10(a)(3) of the Securities Act of 1933;

                      (ii)     To reflect in the  prospectus any facts or events
                               arising   after   the   effective   date  of  the
                               registration   statement   (or  the  most  recent
                               post-effective    amendment    thereof)    which,
                               individually  or in the  aggregate,  represent  a
                               fundamental  change in the  information set forth
                               in the  registration  statement.  Notwithstanding
                               the foregoing, any increase or decrease in volume
                               of securities  offered (if the total dollar value
                               of securities offered would not exceed that which
                               was registered) and any deviation from the low or
                               high end of the estimated  maximum offering range
                               may be reflected in the form of prospectus  filed
                               with the  Commission  pursuant to Rule 424(b) if,
                               in the aggregate, the changes in volume and price
                               represent  no more than 20 percent  change in the
                               maximum aggregate offering price set forth in the
                               "Calculation  of  Registration  Fee" table in the
                               effective registration statement; and

                      (iii)    To include any material  information with respect
                               to  the  plan  of  distribution   not  previously
                               disclosed  in the  registration  statement or any
                               material  change  in  such   information  in  the
                               registration statement;

PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the registration statement.

                                 II-3
2. That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.

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

         (b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act, and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act, that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA FIDE offering
thereof.

         (c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 6
above, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

                                      II-4
SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Memphis, State of Tennessee on this 18th day of May,
1999.

                                         STORAGE USA, INC.
                                         

                                         By: /s/ John W. McConomy
                                             Name: John W. McConomy
                                             Title:Executive Vice President
                                                   and General Counsel

                                POWER OF ATTORNEY

         Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on May 18, 1999. Each of the undersigned officers and
directors of the registrant hereby constitutes Christopher P. Marr, John W.
McConomy and Randall S. Parks, any of whom may act, his true and lawful
attorneys-in-fact with full power to sign for him and in his name in the
capacities indicated below and to file any and all amendments to the
registration statement filed herewith, making such changes in the registration
statement as the registrant deems appropriate, and generally to do all such
things in his name and behalf in his capacity as an officer and director to
enable the registrant to comply with the provisions of the Securities Act of
1933 and all requirements of the Securities and Exchange Commission.

              Signature                        Title & Capacity

 /s/ Dean Jernigan
     -------------                  Chairman of the Board, Chief Executive
     Dean Jernigan                  Officer and Director
                                    (Principal Executive Officer)

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

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

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

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

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

 /s/ John P. McCann
     --------------                 Director
     John P. McCann
/s/ Caroline S. McBride
     -------------------            Director
     Caroline S. McBride

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

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

   EXHIBIT NO.                           DESCRIPTION
   ----------                            -----------

         4.1               1995 Employee Stock Purchase and Loan Plan.

         4.2               Form of Stock Purchase Agreement in connection with
                           the 1995 Employee Stock Purchase and Loan Plan (filed
                           as an Exhibit to the Company's current report on Form
                           8-K, as amended to Form 8-K/A, filed with the
                           Commission on November 17, 1995, and incorporated by
                           reference herein).

         4.3               Amendment No. 1 to 1995 Employee Stock Purchase and
                           Loan Plan (filed as an Exhibit to the Company's
                           Registration Statement on Form S-8, File No.
                           333-29753, and incorporated by reference herein).

         4.4               Amendment No.2 to 1995 Employee Stock Purchase and
                           Loan Plan.

         5.1               Opinion of Hunton & Williams (as to the legality of
                           the securities being registered).

         23.1              Consent of Hunton & Williams (included in the
                           opinion filed as Exhibit 5.1 to the Registration
                           Statement).

         23.2              Consent of PricewaterhouseCoopers LLP.

         24.1              Power of Attorney (included on signature page).