<PAGE>
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
STATEMENT ON SCHEDULE 14D-9
Solicitation/Recommendation Statement Pursuant to
Section 14(d)(4) of the Securities Exchange Act of 1934
_________________
PUBLIC STORAGE PROPERTIES, LTD.
(Name of Subject Company)
_________________
Public Storage, Inc.
B. Wayne Hughes
(NAME OF PERSON(S) FILING STATEMENT)
_________________
Units of Limited Partnership Interest
(TITLE OF CLASS OF SECURITIES)
_________________
NONE
(CUSIP NUMBER OF CLASS OF SECURITIES)
_________________
David Goldberg
Public Storage, Inc.
600 North Brand Boulevard, Suite 300
Glendale, California 91203-1241
(818) 244-8080
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF
THE PERSON(S) FILING STATEMENT)
_________________
<PAGE>
Item 1. SECURITY AND SUBJECT COMPANIES.
The name of the subject company is Public Storage Properties,
Ltd., a California limited partnership (the "Partnership"). The
address of the principal executive offices of the Partnership is
600 North Brand Boulevard, Suite 300 Glendale, California 91203-1241.
The title of the class of equity securities to which this Statement
relates is the Partnership's units of limited partnership interest
(the "Units").
Item 2. TENDER OFFER OF THE BIDDER.
This Statement relates to the offer by Public Storage, Inc., a
California corporation (the "Company") and B. Wayne Hughes ("Hughes")
disclosed in a Tender Offer Statement on Schedule 14D-1 being filed
concurrently with the filing of this Statement to acquire up to 9,000
Units in the Partnership. Each Unit acquired by the Company will be
acquired for $171 in cash. The Company's offer is being made pursuant
to an Offer to Purchase dated August 7, 1995 (the "Offer") annexed
hereto as Exhibit (a) and the accompanying letter of transmittal.
The business address of the Company and Hughes is 600 North Brand
Boulevard, Suite 300, Glendale, California 91203-1241.
Item 3. IDENTITY AND BACKGROUND.
(a) The persons filing this statement are the general partners
of the Partnership: Public Storage, Inc., a California corporation,
and B. Wayne Hughes (the "General Partners"). Their business address
is 600 North Brand Boulevard, Suite 300, Glendale, California
91203-1241.
(b) The information set forth in "Background and Purpose of the
Offer," "Special Considerations," "Effects of Offer on Non-Tendering
Unitholders" and "Certain Related Transactions" in the Offer is
incorporated herein by reference.
Item 4. THE SOLICITATION OR RECOMMENDATION.
The information set forth in "Position of the General Partners
With Respect to the Offer" in the Offer is incorporated herein by
reference.
Item 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "The Offer - Soliciting Agent" in
the Offer is incorporated herein by reference.
Item 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) The information set forth in "Market Prices of Units -
General" in the Offer is incorporated herein by reference.
(b) Neither the General Partners nor, to their knowledge, any
executive officer, director, affiliate or subsidiary, beneficially
owns any Units, except that the Company beneficially owns 445 Units.
-2-
<PAGE>
Item 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) and (b) No negotiation is being undertaken or is underway by
the General Partners with respect to the Partnership in response to
the Company's Offer which relates to or would result in:
(1) An extraordinary transaction such as a merger or
reorganization, involving the Partnership or any subsidiary of the
Partnership;
(2) A purchase, sale or transfer of material amount of
assets by the Partnership or any subsidiary of the Partnership;
(3) A tender offer for or other acquisition of
securities by or of the Partnership;
(4) Any material change in the present capitalization
or dividend policy of the Partnership.
Item 8. ADDITIONAL INFORMATION TO BE FURNISHED.
None.
Item 9. MATERIAL TO BE FILED.
See Exhibit Index contained herein.
-3-
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of our knowledge and
belief, the undersigned certify that the information set forth in this statement
is true, correct and complete.
Dated: August 4, 1995 PUBLIC STORAGE, INC.
By: /S/ B. WAYNE HUGHES
----------------------------------------
B. Wayne Hughes
President
/S/ B. WAYNE HUGHES
-----------------------------------------
B. Wayne Hughes
-4-
<PAGE>
EXHIBIT INDEX
EXHIBIT NO.
(a) Offer to Purchase dated August 7, 1995 (including
Letter of Transmittal).
(b) None.
(c) See Exhibit (a).
-5-
<PAGE>
[Letterhead of Public Storage]
IF YOU HAVE ANY QUESTIONS ABOUT THIS OFFER, PLEASE
CALL THE SOLICITING AGENT, THE WEIL COMPANY, AT
(800) 478-2605 OR PUBLIC STORAGE, INC.'S INVESTOR
SERVICES DEPARTMENT AT (800) 421-2856 or
(818) 244-8080. IF YOU NEED HELP IN COMPLETING THE
LETTER OF TRANSMITTAL, PLEASE CALL THE DEPOSITARY,
THE FIRST NATIONAL BANK OF BOSTON, AT (617) 575-3120.
August 7, 1995
Re: Tender Offer for Units of
Public Storage Properties, Ltd., a California limited partnership
-----------------------------------------------------------------
Dear Unitholder:
Public Storage, Inc. (the "Company") and B. Wayne Hughes ("Hughes")
are offering to purchase up to 9,000 of the limited partnership units (the
"Units") in Public Storage Properties, Ltd., a California limited partnership
(the "Partnership") at a net cash price per Unit of $171 (the "Offer"). There
will be no commissions or fees paid by you associated with the sale. A tender
of Units will result in a substantial taxable gain to most Unitholders. THE
COMPANY AND HUGHES ARE THE GENERAL PARTNERS OF THE PARTNERSHIP.
The Offer is not conditioned upon a minimum number of Units being
tendered. If more than 9,000 Units are validly tendered, the Company will only
accept 9,000 Units, with such Units purchased on a pro rata basis.
SINCE THE COMPANY AND HUGHES ARE THE GENERAL PARTNERS OF THE
PARTNERSHIP, NO RECOMMENDATION IS MADE TO ANY UNITHOLDER WHETHER OR NOT TO
PARTICIPATE IN THE OFFER.
The Company and Hughes have enclosed an Offer to Purchase and Letter
of Transmittal which together describe the terms of the Offer. They urge you to
read both the Offer to Purchase and the Letter of Transmittal carefully. If you
wish to sell your Units and receive a net cash price of $171 per Unit, please
complete the enclosed Letter of Transmittal and return it in the enclosed
postage-paid envelope at the address set forth on the back cover of the Offer to
Purchase. The Offer will expire on September 11, 1995, unless extended.
We thank you for your prompt attention to this matter.
Very truly yours,
PUBLIC STORAGE, INC.
By: /S/ HARVEY LENKIN
---------------------------
Harvey Lenkin
Vice President
<PAGE>
OFFER TO PURCHASE FOR CASH UP TO 9,000
LIMITED PARTNERSHIP UNITS OF
PUBLIC STORAGE PROPERTIES, LTD., A CALIFORNIA LIMITED PARTNERSHIP, AT
$171 NET PER UNIT
BY
PUBLIC STORAGE, INC.
AND
B. WAYNE HUGHES
THE OFFER, WITHDRAWAL RIGHTS AND THE
PRORATION PERIOD WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON SEPTEMBER
11, 1995, UNLESS THE OFFER IS EXTENDED.
PUBLIC STORAGE, INC. (THE "COMPANY" OR "PSI") AND B. WAYNE HUGHES
("HUGHES") ARE OFFERING TO PURCHASE UP TO 9,000 OF THE LIMITED PARTNERSHIP UNITS
(THE "UNITS") IN PUBLIC STORAGE PROPERTIES, LTD., A CALIFORNIA LIMITED
PARTNERSHIP (THE "PARTNERSHIP"), AT A NET CASH PRICE PER UNIT OF $171 (THE
"OFFER"). THE OFFER IS NOT CONDITIONED UPON A MINIMUM NUMBER OF UNITS BEING
TENDERED. IF MORE THAN 9,000 UNITS (45% OF THE OUTSTANDING UNITS) ARE VALIDLY
TENDERED, THE COMPANY AND HUGHES WILL ACCEPT ONLY 9,000 UNITS, WITH SUCH UNITS
PURCHASED ON A PRO RATA BASIS.
The Offer involves certain risk factors and detriments that should be
considered by holders of Units, including the following:
* Since the Company and Hughes are the General Partners of the
Partnership, no recommendation is made to the Unitholder with
respect to the Offer.
* The Offer Price was established by the Company and Hughes and is
not the result of arm's length negotiations.
* No independent person has been retained to evaluate or render any
opinion with respect to the fairness of the Offer Price.
(Continued on following page)
-----------------
IMPORTANT
Any holder of Units (a "Unitholder") desiring to tender Units
should complete and sign the Letter of Transmittal in accordance with the
instructions in the Letter of Transmittal and mail or deliver the Letter of
Transmittal and any other required documents to The First National Bank of
Boston at the address set forth on the back cover of this Offer to Purchase.
Any questions about the Offer may be directed to the Soliciting
Agent, The Weil Company, at (800) 379-4662. Any requests for assistance or
additional copies of the Offer to Purchase and the Letter of Transmittal may
be directed to the Company's Investor Services Department at (800) 421-2856
or (818) 244-8080. If you need any help in completing the Letter of
Transmittal, please call the Depositary, The First National Bank of Boston,
at (617) 575-3120. The Soliciting Agent will receive 2% of the Offer Price
for each Unit tendered and accepted by the Company and Hughes. See "The
Offer -- Soliciting Agent."
-----------------
<PAGE>
* After the Offer, the Company and Hughes could be in a position to
control all voting decisions with respect to the Partnership.
* The General Partners believe that the Offer Price is less than
the amount that Unitholders might realize if the Partnership were
liquidated. Accordingly, the Offer may not be advantageous to
holders of Units who do not need to sell their Units.
* Based on increases in net operating income, the General Partners
believe that the Partnership's properties have increased in value
over the last several years and, although there can be no
assurance, may continue to appreciate in value.
* A tender of Units will result in a substantial taxable gain to
most Unitholders.
* As alternatives to tendering their Units, holders of Units could
retain their Units until liquidation of the Partnership or seek a
private sale of their Units now or later. See "Special
Considerations."
The Partnership is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Partnership may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street N.W., Washington, D.C. 20549, as well as at the Regional
Offices of the Commission at the New York Regional Office, 7 World Trade Center,
12th Floor, New York, New York 10007, and the Chicago Regional Office,
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such information can also be obtained by mail
from the Public Reference Section of the Commission at 450 Fifth Street N.W.,
Washington D.C. 20549 at prescribed rates.
The Company has filed with the Commission a statement on Schedule
14D-1 pursuant to Rule 14d-3 under the Exchange Act furnishing certain
information with respect to the Offer. Pursuant to Rules 14d-9 and 14e-2 under
the Exchange Act, the Partnership will be required to file with the Commission a
statement on Schedule 14D-9 furnishing certain information with respect to its
position concerning the Offer. Such Schedules and any amendments thereto should
be available for inspection and copying as set forth above (except that such
Schedules and any amendments thereto will not be available at the regional
offices of the Commission).
The Letter of Transmittal and any other required documents should be
sent or delivered by each Unitholder to the Depositary at one of the addresses
set forth below:
The Depositary for the Offer is:
The First National Bank of Boston
BY MAIL BY HAND BY OVERNIGHT COURIER
The First National BancBoston Trust The First National Bank
Bank of Boston Company of New York of Boston
Shareholder Services 55 Broadway Corporate Agency & Reorganization
P.O. Box 1872 3rd Floor 150 Royall Street
Mail Stop 45-01-19 New York, NY 10006 Mail Stop 45-01-19
Boston, MA 02105 Canton, MA 02021
(ii)
<PAGE>
TABLE OF CONTENTS
Page
----
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purpose of the Offer. . . . . . . . . . . . . . . . . . . . . . . . . 1
Position of the General Partners With Respect to the Offer. . . . . . 2
Special Considerations. . . . . . . . . . . . . . . . . . . . . . . . 2
SPECIAL CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Conflicts of Interest with Respect to the Offer . . . . . . . . . . . 2
No Arms' Length Negotiation . . . . . . . . . . . . . . . . . . . . . 2
Control or Influence of all Partnership Voting Decisions by the General
Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
No Realization of Full Value of Investment. . . . . . . . . . . . . . 3
Possible Increase in Value. . . . . . . . . . . . . . . . . . . . . . 3
Taxable Gain. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Alternatives to Tendering Units . . . . . . . . . . . . . . . . . . . 3
BACKGROUND AND PURPOSE OF THE OFFER . . . . . . . . . . . . . . . . . . . 4
The Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
The General Partners. . . . . . . . . . . . . . . . . . . . . . . . . 5
Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Purpose of the Offer. . . . . . . . . . . . . . . . . . . . . . . . . 7
POSITION OF THE GENERAL PARTNERS WITH RESPECT TO THE OFFER . . . . . . . . 7
DETERMINATION OF OFFER PRICE . . . . . . . . . . . . . . . . . . . . . . . 8
THE OFFER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Terms of the Offer. . . . . . . . . . . . . . . . . . . . . . . . . . 9
Proration; Acceptance for Payment and Payment for Units . . . . . . . 10
Procedures for Tendering Units. . . . . . . . . . . . . . . . . . . . 10
Withdrawal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Extension of Tender Period; Termination and Amendment . . . . . . . . 12
Source of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Conditions of the Offer . . . . . . . . . . . . . . . . . . . . . . . 13
Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Soliciting Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Dissenters' Rights and Investor Lists . . . . . . . . . . . . . . . . 14
Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . 14
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
EFFECTS OF OFFER ON NON-TENDERING UNITHOLDERS. . . . . . . . . . . . . . . 15
Influence on the Partnership. . . . . . . . . . . . . . . . . . . . . 15
Effect on Trading Market. . . . . . . . . . . . . . . . . . . . . . . 15
Partnership Status. . . . . . . . . . . . . . . . . . . . . . . . . . 15
Partnership Business. . . . . . . . . . . . . . . . . . . . . . . . . 15
MARKET PRICES OF UNITS . . . . . . . . . . . . . . . . . . . . . . . . . . 15
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Information Obtained from Dean Witter Regarding Sales Transactions. . 17
Information From The Stanger Report Regarding Sales Transactions. . . 17
Information from the Chicago Partnership Board Regarding Sales
Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(iii)
<PAGE>
Page
----
CERTAIN RELATED TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . 19
General Partners Interest . . . . . . . . . . . . . . . . . . . . . . 19
Property Management . . . . . . . . . . . . . . . . . . . . . . . . . 19
Limited Partner Interests . . . . . . . . . . . . . . . . . . . . . . 19
SCHEDULE 1 PARTNERSHIP DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . 1-1
SCHEDULE 2 PROPERTY INFORMATION. . . . . . . . . . . . . . . . . . . . . . 2-1
SCHEDULE 3 PARTNERSHIP FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . F
SCHEDULE 4 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF THE PARTNERSHIP. . . . . . . . . . . . . . 4-1
SCHEDULE 5 DIRECTORS AND EXECUTIVE OFFICERS OF PUBLIC STORAGE, INC.. . . . 5-1
(iv)
<PAGE>
To the Holders of Limited Partnership Units of
Public Storage Properties, Ltd., a California limited partnership
UNITHOLDERS ARE URGED TO READ CAREFULLY THIS OFFER TO PURCHASE,
INCLUDING THE MATTERS DISCUSSED UNDER "SPECIAL CONSIDERATIONS," AND THE
ACCOMPANYING LETTER OF TRANSMITTAL BEFORE DECIDING WHETHER TO TENDER THEIR
UNITS.
SUMMARY
CERTAIN SIGNIFICANT MATTERS DISCUSSED IN THIS OFFER TO PURCHASE ARE
SUMMARIZED BELOW. THIS SUMMARY IS NOT INTENDED TO BE A COMPLETE DESCRIPTION AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE DETAILED INFORMATION
APPEARING ELSEWHERE IN THIS OFFER TO PURCHASE.
THE PARTIES
Public Storage Properties, Ltd. The Partnership, organized in 1977,
a California limited partnership owns nine mini-warehouses. The general
partners of the Partnership are B.
Wayne Hughes, the chairman of the board
and chief executive officer of the
Company, and the Company (the "General
Partners"). See "Background and
Purpose of the Offer -- The
Partnership" and "-- Relationships."
At March 31, 1995, there were
approximately 1,482 holders of record
owning 20,000 Units. The Company owns
445 Units in the Partnership
(approximately 2% of the outstanding
Units) excluding its general partner
interest.
Public Storage, Inc. The principal business activity of the
Company, organized in 1972, has been the
development, construction, acquisition
and management of mini-warehouses. The
Company is one of the general partners
of the Partnership. See "Background and
Purpose of the Offer -- The Company" and
"-- Relationships."
B. Wayne Hughes Hughes is the principal shareholder and
chief executive officer of the Company.
Hughes is the other general partner of
the Partnership.
THE OFFER
Number of Units 9,000 (45% of the outstanding Units)
Subject to Offer
Offer Price $171 per Unit (the "Offer Price")
Expiration, Withdrawal September 11, 1995, unless extended.
and Proration Date See "The Offer"
PURPOSE OF THE OFFER
The Company and Hughes have decided to increase their ownership of the
Partnership and have chosen to accomplish this through a tender offer on terms
they believe are attractive to them. The Company and Hughes believe that the
acquisition of Units through the Offer represents a good investment to them and
will improve their tax position in the Partnership. Unitholders who require or
desire liquidity are being offered the opportunity to receive cash for their
Units. See "Background and Purpose of the Offer -- Purpose of the Offer."
-1-
<PAGE>
POSITION OF THE GENERAL PARTNERS WITH RESPECT TO THE OFFER
In view of their conflicts of interest, the General Partners make no
recommendation to any Unitholder to tender or to refrain from tendering Units.
Since the Offer Price is less than the amount that the General Partners believe
Unitholders might realize if the Partnership were liquidated, the Offer may not
be advantageous to Unitholders who do not require or desire liquidity. The
General Partners have no present intention to seek the liquidation of the
Partnership. See "Position of the General Partners With Respect to the Offer."
Under the Partnership Agreement, a liquidation of the Partnership or a removal
of the General Partners can be initiated by limited partners and would require
approval by holders of more than 50% of the outstanding Units in the Partnership
at a meeting of limited partners or without a meeting by written consent.
SPECIAL CONSIDERATIONS
In their evaluation of the Offer, Unitholders should carefully
consider the following:
* The General Partners have substantial conflicts of interests with
respect to the Offer;
* The Offer Price has been established by the General Partners and
is not the result of arms' length negotiations;
* No independent person has been retained to evaluate or render any
opinion with respect to the fairness of the Offer Price;
* After the Offer, the Company and Hughes could own as much as 47%
of the Units and be in a position to control or influence all
Partnership voting decisions;
* The General Partners believe that the Offer Price is less than
the amount that Unitholders might realize if the Partnership were
liquidated;
* The General Partners believe that the Partnership's properties
have increased in value over the last several years and may
continue to do so, although there can be no assurance;
* A tender of Units will result in a substantial taxable gain to
most Unitholders;
* As alternatives to tendering their Units, Unitholders could
retain their Units until liquidation of the Partnership or seek a
private sale of the Units now or later. See "Special
Considerations" and "The Offer -- Federal Income Tax
Consequences."
SPECIAL CONSIDERATIONS
In their evaluation of the Offer, Unitholders should carefully
consider the following:
CONFLICTS OF INTEREST WITH RESPECT TO THE OFFER. Since the
Offer is being made by the General Partners of the
Partnership, they have substantial conflicts of interest
with respect to the Offer. The Company and Hughes have an
interest in purchasing Units at the lowest possible price,
whereas Unitholders who desire to sell have an interest in
selling their Units at the highest possible price. The
Company and Hughes could have proposed a liquidation of the
Partnership, which may have resulted in higher proceeds to
Unitholders, instead of offering to purchase a portion of
the Units.
NO ARMS' LENGTH NEGOTIATION. The Offer Price has been
established by the Company and Hughes, the General Partners of
the Partnership, and is not the result of arms' length
negotiations between the General Partners and the Partnership.
The General Partners have not retained any unaffiliated person to
represent the Unitholders. If an unaffiliated person had been
engaged to represent the Unitholders, the terms of the Offer
might have been different, and the unaffiliated person might have
been able to
-2-
<PAGE>
negotiate a higher Offer Price. The Company and Hughes, which
have substantial experience in the mini-warehouse industry,
believe that the Offer presents an opportunity to increase, on
attractive terms, their investment in mini-warehouses in which
they already have an interest.
CONTROL OR INFLUENCE OF ALL PARTNERSHIP VOTING
DECISIONS BY THE GENERAL PARTNERS. The General
Partners could, after the Offer, own as much as 47% of
the Units and be in a position to influence or control
all voting decisions with respect to the Partnership,
such as the timing of the liquidation of the
Partnership, a sale of all of the Partnership's
properties, a merger or other extraordinary
transaction. This voting power could (i) prevent non-
tendering Unitholders from taking action they desired
but that the General Partners opposed and (ii) enable
the Company to take action desired by the General
Partners but opposed by non-tendering Unitholders.
Conflicts could exist between the best interests of the
Partnership and the General Partners with regard to the
operation, sale or financing of the Partnership's
properties. For example, continued operation of the
properties could be in the interests of the General
Partners, while a sale could be in the interest of the
Partnership.
NO REALIZATION OF FULL VALUE OF INVESTMENT. The
General Partners believe that the Offer Price is less
than the amount that Unitholders might realize if the
Partnership were liquidated. However, there is no
present intention to liquidate the Partnership.
Accordingly, the Offer may not be advantageous to
Unitholders who do not need to sell their Units. No
independent person has been retained to evaluate or
render any opinion with respect to the fairness of the
Offer Price.
POSSIBLE INCREASE IN VALUE. Based on increases in net
operating income, the General Partners believe that the
Partnership's properties have increased in value over
the last several years and, although there can be no
assurance, may continue to appreciate in value.
TAXABLE GAIN. A tender of Units will result in a
substantial taxable gain to most Unitholders. See "The
Offer -- Federal Income Tax Consequences."
ALTERNATIVES TO TENDERING UNITS. As alternatives to
tendering their Units, Unitholders could retain their
Units until liquidation of the Partnership or seek a
private sale of their Units now or later. Under the
Partnership Agreement, a liquidation of the Partnership
or a removal of the General Partners can be initiated
by limited partners and would require approval by
holders of more than 50% of the outstanding Units in
the Partnership at a meeting of limited partners or
without a meeting by written consent. Meetings of
limited partners may be called at any time by the
General Partners or by one or more limited partners
holding 10% or more of the outstanding Units by
delivering written notice of such call to the General
Partners.
-3-
<PAGE>
BACKGROUND AND PURPOSE OF THE OFFER
THE PARTNERSHIP. The Partnership is a California limited partnership
which raised $10,000,000 from the sale of 20,000 Units at $500 per Unit in a
registered public offering of the Units completed in January 1978. All of the
Partnership's net proceeds of that offering have been used to develop nine mini-
warehouses. The properties were developed at an original total cost of
approximately $8,884,000 and were financed in 1987; $20,202,000 in financing
proceeds were distributed to the limited and general partners ($750 per Unit).
The general partners of the Partnership are Hughes, the principal
shareholder and chief executive officer of the Company, and the Company. The
Partnership's properties are operated by Public Storage Management, Inc.
("PSMI"), a subsidiary of the Company. The Partnership's properties are
operated under the "Public Storage" name.
For certain information on Partnership distributions and on
Partnership properties, see Schedules 1 and 2 to this Offer to Purchase,
respectively, and for financial information on the Partnership, refer to
Schedule 3 to this Offer to Purchase and the reports on the Partnership filed
with the Commission, which may be obtained in the manner described on the inside
front cover to this Offer to Purchase.
The following sets forth certain summarized financial information for
the Partnership. This information should be read in conjunction with the
Partnership's Financial Statements and Management's Discussion and Analysis of
Financial Condition and Results of Operations included as Schedules 3 and 4,
respectively, to this Offer to Purchase. EACH UNITHOLDER SHOULD CAREFULLY
REVIEW THE PARTNERSHIP'S FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE PARTNERSHIP.
<TABLE>
<CAPTION>
Three Months Ended
March 31, (3) Year Ended December 31,
---------------- --------------------------------------------
(In thousands, except per Unit data)
OPERATING DATA: 1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $944 $902 $4,181 $3,672 $3,717 $3,822 $3,779
Depreciation and
amortization 81 74 296 304 299 287 283
Net income 147 114 1,075 101 99 268 181
General partners'
share of net
income 2 1 11 1 1 3 102
Limited partners' per
Unit data (1):
Net income 9.20 5.65 53.20(4) 5.00 4.90 13.25 3.95
Cash distributions -- -- -- -- -- -- 15.00
Funds from operations
(2)(3) 228 188 892 405 398 555 464
</TABLE>
<TABLE>
<CAPTION>
As of March 31, As of December 31,
--------------- --------------------------------------------------
(In thousands, except per Unit data)
BALANCE SHEET DATA: 1995 (3) 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 235 $ 162 $ 136 $ 617 $ 1,318 $ 936
Marketable securities (fair value at
March 31, 1995 and December 31,
1994, cost at December 31, 1993,
1992 and 1991) (5) 673 574 1,133 1,133 165 --
Total assets 6,604 6,418 7,117 7,906 7,813 7,563
Notes payable 17,738 17,995 20,005 20,850 20,885 20,885
Book value per Unit (6) (439) (444) (484) (488) (492) (502)
<FN>
(1) Limited Partners' per Unit data is based on the weighted average number of
Units (20,000) outstanding during the year.
</TABLE>
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(2) Funds from operations ("FFO") is defined as income before loss on early
extinguishment of debt and gains or losses on disposition of real estate,
adjusted as follows: (i) plus depreciation and amortization, and (ii) less
distributions (from operations) to minority interests in excess of minority
interest in income. FFO is a supplemental performance measure for equity
REITs used by industry analysts. FFO does not take into consideration
principal payments on debt, capital improvements, distributions and other
obligations of the Partnership. Accordingly, FFO is not a substitute for
the Partnership's net cash provided by operating activities or net income
as a measure of the Partnership's liquidity or operating performance.
(3) Unaudited.
(4) Includes gain on sale of marketable securities.
(5) Effective January 1, 1994, the Partnership adopted FASB Statement No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," whereby
the Partnership has designated its portfolio of marketable securities as
being available for sale. Accordingly, at March 31, 1995 and December 31,
1994, the Partnership has recorded the marketable securities at fair value,
based upon the closing quoted price of the securities at March 31, 1995 and
December 31, 1994.
(6) The per unit amount is unaudited and does not include an allocation of the
valuation amount for unrealized gains/(losses) on marketable securities.
THE GENERAL PARTNERS. The principal business activity of the Company,
which was organized in 1972, has been the development, construction, acquisition
and management of mini-warehouses, and to a lesser extent business parks, in the
United States and Canada. The Company believes that, together with its
affiliates, it is the largest operator of mini-warehouse facilities in the
United States and Canada. Hughes is the principal shareholder and chief
executive officer of the Company.
At December 31, 1994, the Company had total assets, total debt and
total shareholders' equity of approximately $172,505,000, $114,791,000
and $20,970,000, respectively. Hughes has a net worth in excess of $2,000,000.
The principal executive offices of the General Partners are located at
600 North Brand Boulevard, Suite 300, Glendale, California 91203. Its telephone
number is (818) 244-8080.
RELATIONSHIPS. The following chart shows the relationships among the
General Partners and certain of their affiliates. As reflected in the table
below, PSMI is a direct subsidiary of PSI, which is controlled by B. Wayne
Hughes, the chairman of the board and chief executive officer of the Company.
Hughes and the Company are the General Partners of the Partnership.
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[CHART OMITTED HERE]
Description of Graphic
Chart illustrating the affiliated relationships among the Partnership, PSI,
BWH and certain affiliates: PSI and BWH are the general partners of the
Partnership; PSMI is the property manager of the Partnership; PSMI is a wholly
owned subsidiary of PSI; PSI is a wholly owned subsidiary of PSIH, 86% of
which is owned by BWH and 14% of which is owned by KQV.
SOLID LINES INDICATE OWNERSHIP INTERESTS AND SHADED LINES INDICATE OTHER
RELATIONSHIPS.
BWH = B. Wayne Hughes. Mr. Hughes, one of the General Partners, is the
chairman of the board and chief executive officer of the Company.
PSIH is owned 86% by B. Wayne Hughes and a member of his family
(who has an option (exercisable under certain circumstances) to
acquire Mr. Volk's remaining interest in PSIH and an irrevocable
proxy to vote Mr. Volk's shares in PSIH).
KQV = Kenneth Q. Volk, Jr.
PSIH = PSI Holdings, Inc.
PSI = Public Storage, Inc. or the Company. PSI has entered into a
merger agreement with an affiliate, Storage Equities, Inc. See
"Effects of Offer on Non-Tendering Unitholders -- Partnership
Business."
PSMI = Public Storage Management, Inc.
Partnership = Public Storage Properties, Ltd., a California limited
partnership.
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PURPOSE OF THE OFFER. The Company and Hughes have been General
Partners of the Partnership since its organization in 1977. Accordingly, the
Company and Hughes are familiar with the operations and prospects of the
Partnership.
The Company and Hughes have decided to increase their ownership of the
Partnership and have chosen to accomplish this through a tender offer on terms
that the Company and Hughes believe are attractive to them. The Company and
Hughes believe that they will benefit from ownership of Units acquired in the
Offer and that ownership of the Units will improve their tax position in the
Partnership because it would facilitate a future transfer of their interest in
the Partnership without taxable gain. The General Partners believe that the
acquisition of Units through the Offer represents a good investment to them.
Although the Offer Price is less than the amount the General Partners
believe Unitholders would realize if the Partnership were liquidated, each
Unitholder has the opportunity to make an individual decision on whether or not
to tender in the Offer. Additionally, the General Partners believe that the
price for a Unit should be less than the liquidation value per Unit for reasons
such as lack of liquidity of the Units and, unlike the underlying properties of
the Partnership, the Units cannot be readily used as collateral for a loan.
POSITION OF THE GENERAL PARTNERS WITH RESPECT TO THE OFFER
Since the Company and Hughes are the General Partners of the
Partnership, no recommendation is made to any Unitholder to tender or to refrain
from tendering his or her Units. EACH UNITHOLDER MUST MAKE HIS OR HER OWN
DECISION WHETHER OR NOT TO TENDER, BASED UPON A NUMBER OF FACTORS, INCLUDING THE
UNITHOLDER'S FINANCIAL POSITION, INCLUDING NEED OR DESIRE FOR LIQUIDITY, OTHER
FINANCIAL OPPORTUNITIES AND TAX POSITION. The General Partners believe that the
Offer provides all Unitholders who require or desire liquidity the opportunity
to receive cash for their Units without paying the fees or commissions often
paid in connection with transactions through secondary firms. See "Market
Prices of Units."
The Offer Price is less than the amount the General Partners believe,
based on their experience with the market for mini-warehouse properties, that
Unitholders would realize if the Partnership were liquidated. Also, a tender of
Units will result in a substantial taxable gain to many Unitholders.
Accordingly, the Offer may not be advantageous to Unitholders who do not require
or desire liquidity. However, the General Partners have no present intention to
seek the liquidation of the Partnership because they believe that it is not an
opportune time to sell mini-warehouses and a sale could have adverse federal and
state income tax consequences to many Unitholders and the General Partners. The
Partnership's properties were originally developed in 1978-79 with the
expectation that they be sold or financed within seven to ten years. The
Partnership generated substantial cash distributions (approximately $748 per
Unit) until its properties were financed in 1987 and the financing proceeds
distributed ($750 per Unit). See "Determination of Offer Price" and "The
Offer -- Federal Income Tax Consequences."
Cash distributions were discontinued in 1991 to enable the Partnership
to increase its cash reserves in connection with restructuring its mortgage
debt. In a 1993 debt restructure, the Partnership made a $5,000,000 principal
repayment (with the proceeds of a short term unsecured loan from an affiliate of
the General Partners), the interest rate on the mortgage debt was reduced from
10.25% per year to 8.25% per year, and the maturity date was extended from 1994
to 2001. In 1994, the affiliate loan was refinanced with an unsecured loan from
an institutional lender due in 1999. The Partnership's cash flow (after
payments on the mortgage debt) is being applied to the unsecured loan. At March
31, 1995, the outstanding balances on the mortgage note and the unsecured loan
were $15,138,000 and $2,600,000, respectively. When the unsecured loan is
repaid or refinanced, the Partnership may consider reinstating distributions.
There is no assurance that distributions will be reinstated. During or prior to
2001, the Partnership will be required to refinance its maturing debt or sell
its properties.
The Partnership is currently in the process of completing
environmental investigations of its properties. Based on preliminary
information, the General Partners do not believe that there is any environmental
contamination of the Partnership's facilities material to its overall business
or financial condition.
The Company and Hughes are not offering to purchase the properties and
the General Partners have not solicited any proposal for the acquisition of the
Partnership or its properties. The General Partners do not believe that
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this is an opportune time to sell the Partnership's properties. The
Partnership's results of operation have improved over the last several years and
the General Partners believe that the Partnership's properties have appreciated
in value and may continue to do so, as a result of the decrease in the level of
new mini-warehouse construction since 1988. There can be no assurance, however,
that the improvement in property operations will continue or that the
Partnership's properties will continue to appreciate in value. EACH UNITHOLDER
SHOULD CAREFULLY REVIEW THE PARTNERSHIP'S FINANCIAL STATEMENTS AND MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE
PARTNERSHIP INCLUDED AS SCHEDULES 3 AND 4, RESPECTIVELY, TO THIS OFFER TO
PURCHASE.
While the Offer presents each Unitholder with the opportunity to make
an individual decision on whether or not to dispose of his or her Units, a sale
of all the properties to the Company at their anticipated liquidation value and
liquidation of the Partnership would result in a higher price for Unitholders
and a higher cost to the Company and Hughes, the General Partners of the
Partnership. Under the Partnership Agreement, a liquidation of the Partnership
or a removal of the General Partners can be initiated by limited partners and
would require approval by holders of more than 50% of the outstanding Units at a
meeting or by written consent. See "Special Considerations -- Alternatives to
Tendering Units."
The General Partners will continue after the Offer to receive the same
fees with respect to the Partnership that they received prior to the Offer.
Since 1994 an affiliate of the Company has entered into merger
agreements with three affiliated finite-life REITs under which the Company has
acquired the REITs' properties in transactions under which the REITs'
shareholders were afforded, on a tax free basis, the opportunity to convert
their investment in the REITs into an investment in the affiliate of the
Company, which generally owns the same type of properties as the REITs. These
merger agreements were conditioned on approval by the respective REITs'
shareholders and satisfied the obligation in each of the REITs' bylaws to
present a proposal to its shareholders for the sale or financing of its
properties at a specified time. The affiliate of the Company has also acquired
properties from affiliated private partnerships, which, unlike the Partnership,
had little or no diversification because of the small number of properties they
owned.
An acquisition of the Partnership's properties by the Company and
liquidation of the Partnership (or a merger of the Partnership with the Company)
would result in a substantial taxable gain to most Unitholders and the General
Partners. A tender of Units will also result in a substantial taxable gain to
most Unitholders who tender. The Company intends, from time to time, to acquire
additional Units. However, the Company has no present plans or intentions to
engage in a "going private transaction" with the Partnership, which is defined
generally in the Commission's rules as a merger or other extraordinary
transaction between an entity and its affiliates that reduces the number of
security holders below 300.
The Company does not intend any material change in the Partnership's
operations after the Merger. However, the Company may at a later time offer to
acquire the Partnership's properties and the acquisition could result in
liquidation payments to Unitholders higher than the Offer Price. After the
Offer, the Company could own as much as 47% of the Units and thus control or
influence a sale of the properties.
For a discussion of the factors taken into account by the Company and
Hughes in establishing the Offer Price. See "Determination of Offer Price."
DETERMINATION OF OFFER PRICE
The Offer Price has been established by the Company and Hughes, the
General Partners of the Partnership, and is not the result of arms' length
negotiations between the General Partners and the Partnership. In establishing
the Offer Price, the Company and Hughes considered the following factors and
information:
1. An evaluation of the financial condition and results of
operations of the Partnership and its anticipated level of capital expenditures.
The Partnership's property operations have improved over the last several years
with marginal improvement over the last two years. The increase in property net
operating income (before depreciation and debt service) was less than 1% from
1993 to 1994 and 3% for the three months ended March 31, 1995 compared to the
same period in 1994. The General Partners believe that the Partnership's
properties have appreciated in value and may continue to do so. See the
Partnership's Financial Statements and Management's Discussion and Analysis of
Financial
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Condition and Results of Operations of the Partnership included as Schedules 3
and 4, respectively, to this Offer to Purchase.
2. Although there can be no assurance, based on environmental
investigations of its properties currently being completed, the Partnership is
not aware of any environmental contamination of its properties material to its
overall business or financial condition.
3. The Units are not liquid and, unlike the underlying properties of
the Partnership, the Units cannot be readily used as collateral for a loan.
4. Limited information on prices at which Units are transferred.
The Company and Hughes believe that the Offer Price is more attractive than
prices offered through secondary firms, particularly when related fees or
commissions often paid are taken into account. See "Market Prices of Units."
5. The Company and Hughes believe that the Offer Price should be
attractive to them. In connection with the Offer, the General Partners
performed an economic analysis of the Partnership by (i) applying to the
Partnership's properties 1994 net operating income before depreciation expense,
as adjusted for the projected increase in California property tax upon sale of
the properties and a reduction of 2.3% of rental income for capital
improvements, a capitalization rate of 10.75%, (ii) adding the Partnership's
other net assets as of December 31, 1994, primarily cash and marketable
securities, and (iii) deducting the Partnership's debt as of December 31, 1994.
This amount was allocated between the Unitholders and the General Partners in
accordance with the Partnership Agreement, I.E., 74.25% to the Unitholders and
25.75% to the General Partners. Based on this analysis, the General Partners
arrived at an amount of $157 per Unit. The Company and Hughes believe that a
purchase of the Units at this amount, or at the Offer Price of $171 per Unit,
represents a good investment for the Company and Hughes.
6. The price paid by the Company for certain Units acquired in 1993,
1994 and 1995.
In evaluating these factors, the Company and Hughes did not quantify
or otherwise attach particular weight to any of them in establishing the Offer
Price. The General Partners have participated in the structuring of the Offer
and have a conflict of interest with respect to its completion.
THE OFFER
TERMS OF THE OFFER. Upon the terms and subject to the conditions of
the Offer (including, if the Offer is extended or amended, the terms of any such
extension or amendment), the General Partners will accept for payment and pay
for up to 9,000 Units validly tendered on or prior to the Expiration Date and
not withdrawn in accordance with the Offer. The term "Expiration Date" shall
mean 5:00 P.M., New York City time, on September 11, 1995, unless and until the
General Partners in their sole discretion shall have extended the period of time
for which the Offer is open, in which event the term "Expiration Date" shall
mean the latest time and date on which the Offer, as so extended by the General
Partners, shall expire.
The Offer Price is $171 per Unit.
Of the Units validly tendered in the Offer, Hughes would acquire the
first 6,000 Units (or such lesser number of Units as are validly tendered) and
the balance, if any, would be acquired by the Company.
The Offer is conditioned on satisfaction of certain conditions as set
forth herein. The General Partners reserve the right (but shall not be
obligated), in their sole discretion, to waive any or all of such conditions.
If, by the Expiration Date, any or all of such conditions have not been
satisfied or waived, the General Partners reserve the right (but shall not be
obligated) to (i) decline to purchase any of the Units tendered and terminate
the Offer, (ii) waive all the unsatisfied conditions and, subject to complying
with applicable rules and regulations of the Commission, purchase all Units
validly tendered, (iii) extend the Offer and, subject to the right of
Unitholders to withdraw Units until the Expiration Date, retain the Units that
have been tendered during the period or periods for which the Offer is extended
or (iv) amend the Offer.
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The Partnership has provided to the General Partners the list of
Unitholders for the purpose of disseminating the Offer. Unitholders who tender
their Units in the Offer will not receive any cash distributions payable after
the Expiration Date.
The Company beneficially owns 445, or approximately 2%, of the
outstanding Units.
PRORATION; ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS. If the
number of Units validly tendered prior to the Expiration Date and not withdrawn
is not more than 9,000, the General Partners, upon the terms and subject to the
conditions of the Offer, will accept for payment all Units so tendered.
If the number of Units validly tendered and not withdrawn prior to the
Expiration Date is more than 9,000 Units, the General Partners, upon the terms
and subject to the conditions of the Offer, will accept for payment only 9,000
Units, with such Units purchased on a pro rata basis. If proration would result
in a Unitholder owning less than five Units, the General Partners will not
accept any Units tendered by such Unitholder in the Offer because the
Partnership Agreement does not allow a limited partner to own fewer than five
Units.
In the event that proration of tendered Units is required, the General
Partners will determine the final proration factor as promptly as practicable
after the Expiration Date.
Upon the terms and subject to the conditions of the Offer (including,
if the Offer is extended or amended, the terms and conditions of any extension
or amendment), the General Partners will accept for payment, and will pay for,
Units validly tendered and not withdrawn in accordance with the Offer, as
promptly as practicable following the Expiration Date. In all cases, payment
for Units purchased pursuant to the Offer will be made only after timely receipt
by the Depositary of a properly completed and duly executed Letter of
Transmittal and any other documents required by the Letter of Transmittal.
For purposes of the Offer, the General Partners shall be deemed to
have accepted for payment (and thereby purchased) tendered Units when, as and if
the General Partners gives oral or written notice to the Depositary of their
acceptance for payment of such Units pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Units purchased pursuant to
the Offer will in all cases be made by deposit of the purchase price with the
Depositary, which will act as agent for the tendering Unitholders for the
purpose of receiving payment from the General Partners and transmitting payment
to tendering Unitholders. Under no circumstances will interest be paid on the
purchase price by reason of any delay in making such payment.
If any tendered Units are not accepted for payment pursuant to the
terms and conditions of the Offer, the Letter of Transmittal with respect to
such Units not purchased will be destroyed by the Depositary. If, for any
reason whatsoever, acceptance for payment of, or payment for, any Units tendered
pursuant to the Offer is delayed or the General Partners are unable to accept
for payment, purchase or pay for Units tendered pursuant to the Offer, then,
without prejudice to the General Partners' rights under the Offer (but subject
to compliance with Rule 14e-1(c) under the Exchange Act), the Depositary may,
nevertheless, on behalf of the General Partners, retain tendered Units, subject
to any limitations of applicable law, and such Units may not be withdrawn except
to the extent that the tendering Unitholders are entitled to withdrawal rights
as described in the Offer.
If, prior to the Expiration Date, the General Partners shall increase
the consideration offered to Unitholders pursuant to the Offer, such increased
consideration shall be paid for all Units accepted for payment pursuant to the
Offer, whether or not such Units were tendered prior to such increase.
The General Partners reserve the right to transfer or assign, at any
time and from time to time, in whole or in part, to one or more affiliates, the
right to purchase Units tendered pursuant to the Offer, but no such transfer or
assignment will relieve the General Partners of their obligations under the
Offer or prejudice the rights of tendering Unitholders to receive payment for
Units validly tendered and accepted for payment pursuant to the Offer.
PROCEDURES FOR TENDERING UNITS. For Units to be validly tendered
pursuant to the Offer, a properly completed and duly executed Letter of
Transmittal, and any other documents required by the Letter of Transmittal must
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be received by the Depositary at its address set forth on the back cover of this
Offer to Purchase on or prior to the Expiration Date.
In order for a tendering Unitholder to participate in the Offer, Units
must be validly tendered and not withdrawn prior to the Expiration Date, which
is 5:00 P.M., New York City time, on September 11, 1995 (unless extended).
The method of delivery of the Letter of Transmittal and all other
required documents is at the option and risk of the tendering Unitholder, and
delivery will be deemed made only when actually received by the Depositary. If
delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. In all cases, sufficient time should be allowed to
ensure timely delivery.
By executing a Letter of Transmittal as set forth above, a tendering
Unitholder irrevocably appoints the designees of the General Partners as such
Unitholder's proxies, in the manner set forth in the Letter of Transmittal, each
with full power of substitution, to the full extent of such Unitholder's rights
with respect to the Units tendered by such Unitholder and accepted for payment
by the General Partners. Such appointment will be effective when, and only to
the extent that, the General Partners accept such Units for payment. Upon such
acceptance for payment, (i) all prior proxies given by such Unitholder with
respect to such Units will, without further action, be revoked, (ii) no
subsequent proxies may be given (and if given will not be effective) and (iii)
the designees of the General Partners will, with respect to such Units, be
empowered to exercise all voting and other rights of such Unitholder as they in
their sole discretion may deem proper at any meeting of Unitholders, by written
consent or otherwise. The General Partners reserve the right to require that,
in order for Units to be deemed validly tendered, immediately upon the General
Partners' acceptance for payment of such Units, the General Partners must be
able to exercise full voting and other rights as a record and beneficial owner
with respect to such Units, including voting at any meeting of Unitholders or
action by written consent.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for payment of any tender of Units pursuant to the
procedures described above will be determined by the General Partners, in their
sole discretion, which determination shall be final and binding. The General
Partners reserve the absolute right to reject any or all tenders if not in
proper form or if the acceptance of, or payment for, the Units tendered may, in
the opinion of the General Partners' counsel, be unlawful. The General Partners
also reserve the right to waive any defect or irregularity in any tender with
respect to any particular Units of any particular Unitholder, and the General
Partners's interpretation of the terms and conditions of the Offer (including
the Letter of Transmittal and the Instructions thereto) will be final and
binding. Neither the General Partners, the Depositary nor any other person will
be under any duty to give notification of any defects or irregularities in the
tender of any Units or will incur any liability for failure to give any such
notification.
A tender of Units pursuant to any of the procedures described above
will constitute a binding agreement between the tendering Unitholder and the
General Partners upon the terms and subject to the conditions of the Offer,
including the tendering Unitholder's representation and warranty that such
Unitholder owns the Units being tendered.
WITHDRAWAL RIGHTS. Except as otherwise provided in the Offer, all
tenders of Units pursuant to the Offer are irrevocable, provided that Units
tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment as provided in this
Offer to Purchase, may also be withdrawn at any time after October 6, 1995.
For withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at the address
set forth on the back cover of this Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the Units to be
withdrawn and must be signed by the person(s) who signed the Letter of
Transmittal in the same manner as the Letter of Transmittal was signed. The
signature(s) on the notice of withdrawal must be guaranteed by an eligible
guarantor institution (a bank, stockbroker, savings and loan association or
credit union with membership in an approved signature guarantee medallion
program).
If purchase of, or payment for, Units is delayed for any reason or if
the General Partners are unable to purchase or pay for Units for any reason,
without prejudice to the General Partners' rights under the Offer, tendered
Units may be retained by the Depositary on behalf of the General Partners and
may not be withdrawn except to the extent that tendering Unitholders are
entitled to withdrawal rights as set forth herein, subject to Rule 14e-1(c)
under the Exchange
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Act, which provides that no person who makes a tender offer shall fail to pay
the consideration offered or return the securities deposited by or on behalf of
security holders promptly after the termination or withdrawal of the tender
offer.
All questions as to the form and validity (including timeliness of
receipt) of notices of withdrawal will be determined by the General Partners, in
their sole discretion, which determination shall be final and binding. Neither
the General Partners, the Depositary, nor any other person will be under any
duty to give notification of any defects or irregularities in any notice of
withdrawal or will incur any liability for failure to give any such
notification.
Any Units properly withdrawn will be deemed not to be validly tendered
for purposes of the Offer. Withdrawn Units may be re-tendered, however, by
following any of the procedures described in the Offer at any time prior to the
Expiration Date.
EXTENSION OF TENDER PERIOD; TERMINATION AND AMENDMENT. The General
Partners expressly reserves the right, in its sole discretion, at any time and
from time to time, (i) to extend the period of time during which the Offer is
open and thereby delay acceptance for payment of, and the payment for, any Units
by giving oral or written notice of such extension to the Depositary (during any
such extension all Units previously tendered and not withdrawn will remain
subject to the Offer), (ii) to terminate the Offer and not accept for payment
any Units not theretofore accepted for payment or paid for, by giving oral or
written notice of such termination to the Depositary, (iii) upon the occurrence
of any of the conditions specified in the Offer, delay the acceptance for
payment of, or payment for, any Units not theretofore accepted for payment or
paid for, by giving oral or written notice of such termination or delay to the
Depositary and (iv) to amend the Offer in any respect (including, without
limitation, by increasing or decreasing the consideration offered or the number
of Units being sought in the Offer or both) by giving oral or written notice of
such amendment to the Depositary. Any extension, termination or amendment will
be followed as promptly as practicable by public announcement, the announcement
in the case of an extension to be issued no later than 9:00 a.m., Eastern time,
on the next business day after the previously scheduled Expiration Date, in
accordance with the public announcement requirement of Rule 14d-4(c) under the
Exchange Act. Without limiting the manner in which the General Partners may
choose to make any public announcement, except as provided by applicable law
(including Rule 14d-4(c) under the Exchange Act), the General Partners will have
no obligation to publish, advertise or otherwise communicate any such public
announcement, other than by issuing a release to the Dow Jones News Service.
The General Partners may also be required by applicable law to disseminate to
Unitholders certain information concerning the extensions of the Offer and any
material changes in the terms of the Offer.
If the General Partners extend the Offer, or if the General Partners
(whether before or after its acceptance for payment of Units) is delayed in its
payment for Units or is unable to pay for Units pursuant to the Offer for any
reason, then, without prejudice to the General Partners' rights under the Offer,
the Depositary may retain tendered Units on behalf of the General Partners, and
such Units may not be withdrawn except to the extent tendering Unitholders are
entitled to withdrawal rights as described in the Offer. However, the ability
of the General Partners to delay payment for Units that the General Partners
have accepted for payment is limited by Rule 14e-1(c) under the Exchange Act,
which requires that the General Partners pay the consideration offered or return
the securities deposited by or on behalf of holders of securities promptly after
the termination or withdrawal of the Offer.
If the General Partners make a material change in the terms of the
Offer or the information concerning the Offer or waives a material condition of
the Offer, the General Partners will extend the Offer to comply with the
Commission's interpretations of Rules 14d-4(c) and 14d-6(d) under the Exchange
Act. The minimum period during which an offer must remain open following a
material change in the terms of the offer or information concerning the offer,
other than a change in price, percentage of securities sought or the soliciting
agent's fee, will depend upon the facts and circumstances, including the
relative materiality of the change in the terms or information. (In the
Commission's view, an offer should remain open for a minimum of five business
days from the date such material change is first published, sent or given to
security holders.) With respect to a change in price, percentage of securities
sought or the soliciting agent's fee, however, a minimum 10 business day period
is required to allow for adequate dissemination to security holders and for
investor response.
Following the termination of the Offer, the General Partners may make
an offer for Units not tendered in this Offer, which may be on terms similar or
different from those described in the Offer, provided that the General Partners
will not acquire more than an aggregate of 45% of the Units under the Offer and
any other offer for Units made
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within 12 months of the Offer. There is no assurance that, following the
Expiration Date, the General Partners will make another offer for Units not
tendered in the Offer.
SOURCE OF FUNDS. The General Partners expect that approximately
$1,621,000 is necessary to consummate the Offer, including related fees and
expenses, assuming all 9,000 Units are tendered and accepted for payment. These
funds will be available from the Company's general corporate funds or funds
borrowed under the Company's credit facility with Wells Fargo Bank, N.A. The
credit facility provides for borrowings of $45,000,000 and is secured by
marketable securities, general partner interests and stock of subsidiaries. At
June 30, 1995, the Company had approximately $27,200,000 outstanding under this
credit facility. This credit facility bears interest, at the Company's option,
either at the prime rate plus 1/4% or LIBOR plus 2%. The Company intends to
repay amounts borrowed under these facilities, including any amounts borrowed to
acquire Units in the Offer, from the Company's cash flow. The Company would
advance funds to Hughes to acquire Units in the Offer at the Company's cost of
funds, and Hughes would repay the advances from his cash flow.
CONDITIONS OF THE OFFER. The obligation of the General Partners to
complete the purchase of tendered Units is subject to each and all of the
following conditions which, in the reasonable judgment of the General Partners
with respect to each and every matter referred to below and regardless of the
circumstances (including any action or inaction by the General Partners) giving
rise to any such condition, makes it inadvisable to proceed with the Offer or
with such acceptance for purchase:
(a) There shall not be threatened, instituted or pending
any action or proceeding before any domestic or foreign court or
governmental agency or other regulatory or administrative agency or
commission (i) challenging the acquisition by the General Partners of
the Units, seeking to restrain or prohibit the making or consummation
of the Offer, seeking to obtain any material damages or otherwise
directly or indirectly relating to the transactions contemplated by
the Offer, (ii) seeking to prohibit or restrict the General Partners'
ownership or operation of any material portion of the General
Partners' business or assets, or to compel the General Partners to
dispose of or hold separate all or any material portion of its
business or assets as a result of the Offer, (iii) seeking to make the
purchase of, or payment for, some or all of the Units illegal,
(iv) resulting in a delay in the ability of the General Partners to
accept for payment or pay for some or all of the Units, (v) imposing
material limitations on the ability of the General Partners
effectively to acquire or hold or to exercise full rights of ownership
of the Units, including, without limitation, the right to vote the
Units purchased by the General Partners on all matters properly
presented to limited partners of the Partnership, (vi) which, in the
reasonable judgment of the General Partners, could materially and
adversely affect the treatment of the Offer for federal income tax
purposes, (vii) which otherwise is reasonably likely to materially
adversely affect the Partnership or the value of the Units or
(viii) which imposes any material condition unacceptable to the
General Partners;
(b) No statute, rule, regulation or order shall be enacted,
promulgated, entered or deemed applicable to the Offer, no legislation
shall be pending and no other action shall have been taken, proposed
or threatened by any domestic government or governmental authority or
by any court, domestic or foreign, which, in the reasonable judgment
of the General Partners, is likely, directly or indirectly, to result
in any of the consequences referred to in paragraph (a) above;
(c) There shall not have occurred (i) any general suspension of,
or limitation on prices for, trading in securities on the NYSE,
(ii) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (iii) the
commencement of a war, armed hostilities or other international or
national calamity materially affecting the United States, (iv) any
limitation by any governmental authority or any other event which is
reasonably likely to affect the extension of credit by banks or other
lending institutions in the United States, (v) any material decline in
security prices on the NYSE or (vi) in the case of any of the
foregoing existing at the time of the Offer, any material worsening
thereof; and
(d) After the Offer, the Units shall be held of record by at
least 350 persons.
-13-
<PAGE>
The foregoing conditions (other than the condition set forth in
paragraph (d)) are for the sole benefit of the General Partners. The conditions
(other than the condition set forth in paragraph (d)) may be waived by the
General Partners at any time and from time to time in their reasonable
discretion. Any determination by the General Partners will be final and binding
on all parties. If any such conditions are waived, the Offer will remain open
for a minimum of five business days from the date notice of such waiver is first
published, sent or given to Unitholders.
FEES AND EXPENSES. The Company and Hughes have retained The First
National Bank of Boston to act as Depositary in connection with the Offer. The
Company and Hughes will pay the Depositary reasonable and customary compensation
for its services. The Company will indemnify the Depositary against certain
liabilities and expenses in connection therewith, including liabilities under
the federal securities laws. The Company and Hughes will also pay all costs and
expenses of printing and mailing the Offer.
Assuming all 9,000 Units are tendered and accepted for payment,
expenses of the Offer (exclusive of the purchase price of the Units) are
estimated at $82,000, including: legal and accounting fees and expenses
($10,000), printing ($2,000), filing fees ($300), Depositary Agent fees and
expenses ($4,500), Soliciting Agent fees and expenses ($56,000), distribution of
Offer materials ($2,200) and miscellaneous ($7,000).
SOLICITING AGENT. The General Partners have retained The Weil
Company, a registered broker dealer, to answer questions and solicit responses
to this transaction and will pay The Weil Company 2% of the Offer Price for each
Unit tendered and accepted by the General Partners. In addition, The Weil
Company will be reimbursed for certain out-of-pocket expenses up to a maximum of
$25,000 and will be indemnified against certain liabilities, including
liabilities under the federal securities laws. The Weil Company has acted in a
similar capacity in connection with other tender and exchange offers by the
General Partners and in soliciting consents from the limited partners of other
partnerships sponsored by the General Partners and their affiliates.
DISSENTERS' RIGHTS AND INVESTOR LISTS. Neither the Partnership
Agreement nor California law provides any right for Unitholders to have their
respective Units appraised or redeemed in connection with or as a result of the
Offer. Each Unitholder has the opportunity to make an individual decision on
whether or not to tender in the Offer. Under the Partnership Agreement, any
Unitholder is entitled (i) upon request, to obtain a list of the limited
partners in the Partnership, at the expense of the Partnership and (ii) upon
reasonable request, to inspect and copy, at his or her expense and during normal
business hours, the books and records of the Partnership.
FEDERAL INCOME TAX CONSEQUENCES. The tender of Units for cash will be
treated for federal income tax purposes as a taxable sale of such tendered
Units. The particular tax consequences of the tender for a Unitholder will
depend upon a number of factors related to that Unitholder's tax situation,
including the Unitholder's tax basis in his or her Units. THE GENERAL PARTNERS
ANTICIPATE THAT UNITHOLDERS WHO ACQUIRED THEIR UNITS IN THE ORIGINAL OFFERING
AND WHO SELL THEIR UNITS IN THE OFFER WILL GENERALLY RECOGNIZE A CAPITAL GAIN OF
APPROXIMATELY $426 PER UNIT AS A RESULT OF THE SALE (BASED ON THE GENERAL
PARTNERS' ESTIMATE OF THE PARTNERSHIP'S 1995 INCOME AND ASSUMING A SALE
EFFECTIVE AT THE BEGINNING OF THE THIRD QUARTER OF 1995). The tax impact,
however, could be quite different for Unitholders who acquired their Units after
the original offering. To the extent a Unitholder recognizes a capital loss,
such loss can be applied to offset capital gains from other sources. (Losses
from a sale of less than all of the Units that a Unitholder is deemed to own may
be subject to limitation under the passive loss rules.) In addition,
individuals may use capital losses in excess of capital gains to offset up to
$3,000 of ordinary income in any single year ($1,500 for a married individual
filing a separate return). Any capital losses that are not used currently can
be carried forward and used in subsequent years. A corporation's capital losses
in excess of current capital gains generally may be carried back three years,
with any remaining unused portion available to be carried forward for five
years. BECAUSE THE INCOME TAX CONSEQUENCES OF A TENDER OF UNITS WILL NOT BE THE
SAME FOR ALL UNITHOLDERS, UNITHOLDERS CONSIDERING TENDERING THEIR UNITS SHOULD
CONSULT WITH THEIR OWN TAX ADVISORS WITH SPECIFIC REFERENCE TO THEIR OWN TAX
SITUATIONS.
MISCELLANEOUS. THE OFFER IS BEING MADE TO ALL UNITHOLDERS, PROVIDED,
HOWEVER, THAT THE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS BE ACCEPTED FROM
OR ON BEHALF OF) UNITHOLDERS IN ANY JURISDICTION IN WHICH THE MAKING OF THE
OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH
JURISDICTION. THE COMPANY IS NOT AWARE OF ANY JURISDICTION WITHIN THE UNITED
STATES IN WHICH THE MAKING OF THE
-14-
<PAGE>
OFFER OR THE ACCEPTANCE THEREOF WOULD BE ILLEGAL. HOWEVER, IF ANY SUCH
JURISDICTION EXISTS, THE GENERAL PARTNERS MAY IN THEIR DISCRETION TAKE SUCH
ACTIONS AS THEY MAY DEEM NECESSARY TO MAKE THE OFFER IN SUCH JURISDICTION.
EFFECTS OF OFFER ON NON-TENDERING UNITHOLDERS
INFLUENCE ON THE PARTNERSHIP. After the Offer, the General Partners
could be in a position, through its substantial ownership of Units, to direct
the vote of the limited partners. See "Special Considerations -- Influence on
all Partnership Voting Decisions by the General Partners."
EFFECT ON TRADING MARKET. There is no established public trading
market for the Units, and, therefore, a reduction in the number of Unitholders
should not materially further restrict the Unitholders' ability to find
purchasers for their Units. See "Market Prices of Units" for certain limited
information regarding secondary sales of the Units.
PARTNERSHIP STATUS. The General Partners believe the purchase of
Units by them, as proposed, should not adversely affect the issue of whether the
Partnership is classified as a partnership for federal income tax purposes.
PARTNERSHIP BUSINESS. The Offer will not materially affect the
operation of the properties owned by the Partnership since the properties will
continue to be operated by an affiliate of the General Partners.
Although after the Offer the General Partners or their affiliates may
acquire additional Units thereby increasing an ownership position in the
Partnership, the General Partners have no present plans or intentions with
respect to the Partnership for a liquidation, a merger, a sale or purchase of
material assets or borrowings (other than a possible restructure of the existing
property debt). No Partnership assets have been identified for sale. The
Company has entered into a merger agreement with an affiliate, Storage Equities,
Inc. ("SEI"), a REIT whose securities are listed on the New York Stock Exchange.
Upon completion of the merger, which is scheduled to occur at the end of 1995,
SEI would replace the Company as a general partner of the Partnership and would
acquire the Units tendered in the Offer and purchased by the Company. SEI would
also have an option to acquire Units purchased by Hughes. In the merger, the
Units could be valued at an amount higher than the Offer Price. After the
merger, Hughes would continue as a general partner of the Partnership. The
merger is subject to significant contingencies and there is no assurance that it
will be completed. At March 31, 1995, SEI has total assets, total debt and
total shareholders' equity of approximately $932,337,000, $87,119,000 and
$696,432,000, respectively.
MARKET PRICES OF UNITS
GENERAL. The Units are not listed on any national securities exchange
or quoted in the over the counter market, and there is no established public
trading market for the Units. Secondary sales activity for the Units has been
limited and sporadic. The General Partners monitor transfers of the Units (i)
because the admission of the transferee as a substitute limited partner
requires the consent of the General Partners under the Partnership Agreement,
(ii) in order to track compliance with safe harbor provisions to avoid treatment
as a "publicly traded partnership" for tax purposes and (iii) because the
Company has purchased Units. However, the General Partners do not have
information regarding the prices at which all secondary sales transactions in
the Units have been effectuated. Various organizations offer to purchase and
sell limited partnership interests (such as the Units) in secondary sales
transactions. Various publications such as The Stanger Report summarize and
report information (on a monthly, bimonthly or less frequent basis) regarding
secondary sales transactions in limited partnership interests (including the
Units), including the prices at which such secondary sales transactions are
effectuated.
-15-
<PAGE>
The General Partners estimate, based solely on the transfer records of
the Partnership and the Partnership's transfer agent, that the number of Units
transferred in sales transactions (I.E., excluding transactions believed to be
between related parties, family members or the same beneficial owner) was as
follows:
<TABLE>
<CAPTION>
Number of Total Percentage of Number of
Year Units Transferred(1) Units Outstanding Transactions(1)
---- -------------------- ----------------- ---------------
<S> <C> <C> <C>
1993 267 (2) 1.34% 22 (2)
1994 515 (3) 2.58% 41 (3)
1995 (through
April 1) 308 (4) 1.54% 18 (4)
---------------
<FN>
(1) Transfers are recorded quarterly on the Partnership's records, as of the
first day following each calendar quarter.
(2) In 1993, the Company purchased 86 Units in 7 transactions: 76 Units at
$171 per Unit (July 1) and 10 Units at $171 per Unit (October 1).
(3) In 1994, the Company purchased 256 Units in 22 transactions: 42 Units at
$171 per Unit (January 1), 58 Units at $171 per Unit (April 1), 30 Units at
$120 per Unit (April 1), 17 Units at $171 per Unit (July 1) and 109 Units
at $171 per Unit (October 1).
(4) On January 1, 1995, the Company purchased 25 Units in 2 transactions at
$171 per Unit. On April 1, 1995, the Company purchased 75 Units in 2
transactions: 10 units at $130 per Unit and 65 Units at $155 per Unit.
The price of $171 was determined based upon an analysis performed by the
General Partners in 1993.
</TABLE>
On July 1, 1995, the Company purchased 3 Units at a price of $155 per
Unit directly from a Unitholder.
All of the purchases of Units described in notes (2), (3) and (4)
above were acquired directly from Unitholders or through secondary firms of the
type described below under "Information From The Stanger Report Regarding Sales
Transactions."
-16-
<PAGE>
INFORMATION OBTAINED FROM DEAN WITTER REGARDING SALES TRANSACTIONS.
Dean Witter Reynolds Inc. ("Dean Witter") was the dealer-manager for the
Partnership's initial offering of Units. Set forth below is information
obtained from Dean Witter on the high and low sale price per Unit for sale
transactions during each quarter of 1993, 1994 and 1995 (through June 30):
<TABLE>
<CAPTION>
Per Unit Transaction Price (1)(2)
Number
Number of Units
High Low of Sales(2) Sold(2)
---- --- ----------- --------
<S> <C> <C> <C> <C>
1993
First Quarter -- -- -- --
Second Quarter -- -- -- --
Third Quarter -- -- -- --
Fourth Quarter -- -- -- --
1994
First Quarter -- -- -- --
Second Quarter -- -- -- --
Third Quarter -- -- -- --
Fourth Quarter -- -- -- --
1995
First Quarter (through
June 30) -- -- -- --
<FN>
_______________
(1) The original purchase price was $500 per Unit.
(2) This information was compiled by Dean Witter in the ordinary course based
upon reports made of negotiated sales. The price information represents
the prices reported to have been paid by the buyers to the sellers net of
commissions.
</TABLE>
INFORMATION FROM THE STANGER REPORT REGARDING SALES TRANSACTIONS. The
information set forth below is extracted from sections of the June 1993,
September 1993, December 1993, March 1994, June 1994, September 1994, December
1994, March 1995 and June 1995 issues of The Stanger Report captioned "Limited
Partnership Secondary-Market Prices" and additional information provided to the
General Partners by Robert A. Stanger & Co., Inc. ("Stanger"). Those
publications (the "Stanger Publications") and the additional information
provided by Stanger summarized secondary market prices for public limited
partnerships based on actual transactions during the reporting periods listed on
the tables below. The following secondary-market firms provided high and low
price data to The Stanger Report for some or all of the reporting periods: 2nd
Market Capital Service - (800) 999-7793/(608) 833-7793, American Partnership
Services - (800) 736-9797/(801) 756-1166, Bigelow Management, Inc. - (800)
431-7811/(212) 697-5880, Chicago Partnership Board - (800) 272-6273/(312)
332-4100, Cuyler & Associates - (800) 274-9991/(602) 596-0120, DCC Securities
Corp. - (800) 945-0440/(212) 370-1090, Empire Securities - (805) 943-0950,
EquityLine Properties - (800) 327-9990/(305) 670-9700, Equity Resources Group -
(617) 876-4800, Frain Asset Management - (800) 654-6110, Joseph Charles &
Assoc., Inc. - (800) 526-1763, Liquidity Fund - (800) 833-3360, MacKenzie-
Patterson, Inc. - (800) 854-8357/(510) 631-9100, Murillo Company - (800)
275-9626/(805) 327-9626, Nationwide Partnership Marketplace - (800)
969-8996/(415) 382-3555, New York Partnership Exchange - (800) 444-7357/(813)
955-8816, Pacific Partnership Group - (800) 727-7244/(602) 957-3050, Partnership
Exchange Securities Company - (800) 736-9797/(510) 763-5555, Raymond James &
Associates - (800) 248-8863, Secondary Income Funds - (708) 325-4445, Securities
Planners, Inc. - (800) 747-0088 and Sunpoint Securities, Inc. - (800)
483-0776/(813) 588-0776. IN EVALUATING WHETHER OR NOT TO TENDER THEIR UNITS IN
THE OFFER, UNITHOLDERS MAY WISH TO CONTACT THESE FIRMS OR OTHER FIRMS INVOLVED
IN SECONDARY SALES OF INTERESTS IN LIMITED PARTNERSHIPS.
-17-
<PAGE>
The information regarding sale transactions in Units from the Stanger
Publications and Stanger is as follows:
<TABLE>
<CAPTION>
Per Unit Transaction Price(1) No. of
Reporting period High Low Units(2)
<S> <C> <C> <C>
1993
January 1 - March 31 -- -- --
April 1 - June 30 -- -- --
July 1 - September 30 -- -- --
October 1 - December 31 -- -- --
1994
January 1 - March 31 -- -- --
April 1 - June 30 -- -- --
July 1 - September 30 $ 75.00 $ 75.00 36
October 1 - October 31(3) -- -- --
October 31 - December 31 100.00 100.00 69
1995
January 1 - March 31 130.00 60.00 105
April 1 - April 30(3) -- -- --
May 1 - May 31(3) 130.00 130.00 10
_________________
<FN>
(1) The original purchase price was $500 per Unit. The General Partners do not
know whether the transaction prices shown are before or after commissions.
(2) The General Partners do not know the number of transactions.
(3) Based on information provided by Stanger.
</TABLE>
The information from The Stanger Report contained above is provided
without verification by the General Partners and is subject to the following
qualifications in The Stanger Report: "Limited partnerships are designed as
illiquid, long-term investments. Secondary-market prices generally do not
reflect the current value of partnership assets, nor are they indicative of
total return since prior cash distributions and tax benefits received by the
original investor are not reflected in the price. Transaction prices are not
verified by Robert A. Stanger & Co."
INFORMATION FROM THE CHICAGO PARTNERSHIP BOARD REGARDING SALES
TRANSACTIONS. According to the Chicago Partnership Board, Inc. ("CPB"), an
auctioneer for limited partnership interests, the amounts paid by buyers for
Units in transactions executed by CPB ranged from $125 to $155 per Unit during
the period July 27, 1994 to July 27, 1995 with an ending transaction price of
$125.
According to CPB, all prices are amounts paid by buyers and, due to
transaction costs, such mark-ups and general partner imposed transfer fees,
sellers typically receive a lesser amount.
No assurances can be given that the above prices represent the true
value of Units.
-18-
<PAGE>
CERTAIN RELATED TRANSACTIONS
GENERAL PARTNERS INTEREST. The Company and Hughes are General
Partners of the Partnership. The Company and Hughes receive incentive
distributions equal to 20% and 5%, respectively, of the Partnership's cash
available for distribution (operating cash flow, plus net proceeds from sale or
financing of property). The General Partners also have a 1% interest in the
Partnership in respect of their capital contributions and participate in
Partnership distributions in proportion to their interest in the Partnership.
PROPERTY MANAGEMENT. The Partnership's properties are operated by
PSMI pursuant to a management agreement under which they receive 6% of gross
revenues from operations of the mini-warehouses properties. In 1992, 1993 and
1994, PSMI received $218,000, $214,000 and $217,000, respectively, from the
Partnership.
LIMITED PARTNER INTERESTS. Of the 20,000 outstanding Units, 445
(approximately 2%) are beneficially owned by the Company. Substantially all of
these Units have been acquired since July 1, 1993 for an aggregate purchase
price of $73,000 in cash. These Units were acquired directly from Unitholders
or through secondary firms of the type described above under "Market Prices of
Units -- Information From The Stanger Report Regarding Sales Transactions." The
Company participates in Partnership distributions on the same terms as other
Unitholders in respect of Units owned by the Company. See "Background and
Purpose of the Offer -- Relationships."
No person has been authorized to give any information or to make any
representation on behalf of the Company not contained herein or in the Letter of
Transmittal and, if given or made, such information or representation must not
be relied upon as having been authorized.
PUBLIC STORAGE, INC.
600 North Brand Boulevard, Suite 300
Glendale, California 91203-1241
By: /s/ HARVEY LENKIN
-----------------------------------
Harvey Lenkin
Vice President
August 7, 1995
-19-
<PAGE>
SCHEDULE 1
PARTNERSHIP DISTRIBUTIONS
PARTNERSHIP DISTRIBUTIONS. There have been no Partnership
distributions since 1991. Since inception, Unitholders have received an
aggregate of approximately $748 per Unit from operating cash flow and $750 per
Unit from financing proceeds.
1-1
<PAGE>
SCHEDULE 2
PROPERTY INFORMATION
The following table sets forth information as of December 31, 1994,
about properties owned by the Partnership.
Net Number
Size of Rentable of Completion
Location Parcel Area Spaces Date
---------- -------- -------- ------ ----------
CALIFORNIA
Corona 2.82 acres 52,000 sq. ft. 469 Dec. 1978
Fremont 3.00 acres 53,000 sq. ft. 482 Nov. 1978
Milpitas 3.46 acres 54,000 sq. ft. 439 Nov. 1978
Norco 1.66 acres 29,000 sq. ft. 257 Dec. 1978
North Hollywood 2.06 acres 38,000 sq. ft. 342 Dec. 1979
Pasadena 1.84 acres 38,000 sq. ft. 389 Aug. 1978
Sun Valley 2.72 acres 53,000 sq. ft. 483 Oct. 1978
Wilmington 6.32 acres 133,000 sq. ft. 1,117 Aug. 1978
Whittier -
El Monte 4.06 acres 58,000 sq. ft. 536 July 1978
All of the land on which the Partnership's facilities were built was
acquired prior to the time that it was customary to conduct extensive
environmental investigations in connection with the property acquisitions.
Although there can be no assurance, the Partnership is not aware of any
environmental contamination of its facilities material to its overall business
or financial condition.
The properties are held subject to encumbrances which are described in
Note 7 of the Notes to the Financial Statements included in Schedule 3 to this
Offer to Purchase.
The weighted average occupancy level for the mini-warehouse spaces was
87.0% in 1994 compared to 85.5% in 1993. In 1994, the monthly realized rent per
square foot for the mini-warehouse spaces averaged $.59 compared to $.58 in
1993.
2-1
<PAGE>
SCHEDULE 3
PARTNERSHIP FINANCIAL STATEMENTS
Page
References
----------
Report of independent auditors . . . . . . . . . . . . . . . . . . . . F-1
Balance sheets at December 31, 1994 and 1993 . . . . . . . . . . . . . F-2
For the years ended December 31, 1994, 1993 and 1992
Statements of income. . . . . . . . . . . . . . . . . . . . . . . F-3
Statements of partners' deficit . . . . . . . . . . . . . . . . . F-4
Statements of cash flows. . . . . . . . . . . . . . . . . . F-5 - F-6
Notes to financial statements. . . . . . . . . . . . . . . . . . F-7 - F-9
Condensed balance sheets at March 31, 1995 and
December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . .F-10
Condensed statements of operations for three months ended
March 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . .F-11
Condensed statement of partners' deficit for the three
months ended March 31, 1995 . . . . . . . . . . . . . . . . . . .F-12
Condensed statements of cash flows for the three months
ended March 31, 1995 and 1994 . . . . . . . . . . . . . . . . . .F-13
Notes to condensed financial statements. . . . . . . . . . . . . . . .F-14
F
<PAGE>
Report of Independent Auditors
The Partners
Public Storage Properties, Ltd.
We have audited the accompanying balance sheets of Public Storage Properties,
Ltd. as of December 31, 1994 and 1993, and the related statements of income,
partners' deficit and cash flows for each of the three years in the period ended
December 31, 1994. Our audits also included the schedule listed in the index at
item 14(a). These financial statements and schedule are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Public Storage Properties, Ltd.
at December 31, 1994 and 1993, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1994, in
conformity with generally accepted accounting principles. Also, in our opinion,
the related financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
As discussed in Note 2, effective January 1, 1994, the Partnership adopted the
provisions of FASB Statement No. 115, "Accounting for Certain Investments in
Debt and Equity Securities."
ERNST & YOUNG LLP
February 28, 1995
Los Angeles, California
F-1
<PAGE>
PUBLIC STORAGE PROPERTIES, LTD.
BALANCE SHEETS
December 31, 1994 and 1993
<TABLE>
<CAPTION>
1994 1993
------------ ----------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 162,000 $ 136,000
Marketable securities (Note 2) 574,000 1,133,000
Rent and other receivables 63,000 57,000
Real estate facilities:
Buildings and equipment 7,149,000 6,999,000
Land 2,511,000 2,511,000
----------- ------------
9,660,000 9,510,000
Less: accumulated depreciation (4,288,000) (3,992,000)
----------- ------------
5,372,000 5,518,000
Other assets 247,000 273,000
----------- ------------
$ 6,418,000 $ 7,117,000
----------- ------------
----------- ------------
LIABILITIES AND PARTNERS' DEFICIT
Accounts payable $ 30,000 $ 29,000
Deferred revenue 136,000 128,000
Notes payable 17,995,000 20,005,000
Partners' deficit:
Limited partners' deficit, $500 per
unit, 20,000 units authorized,
issued and outstanding (8,888,000) (9,686,000)
General partners' deficit (3,082,000) (3,359,000)
Unrealized gain on marketable
securities 227,000 -
----------- ------------
Total partners' deficit (11,743,000) (13,045,000)
----------- ------------
$6,418,000 $7,117,000
----------- ------------
----------- ------------
</TABLE>
F-2
<PAGE>
PUBLIC STORAGE PROPERTIES, LTD.
STATEMENTS OF INCOME
For the years ended December 31, 1994, 1993, and 1992
<TABLE>
<CAPTION>
1994 1993 1992
--------------- --------------- ---------------
<S> <C> <C> <C>
REVENUE:
Rental income $ 3,611,000 $ 3,563,000 $ 3,628,000
Gain on sale of marketable securities 479,000 - -
Other income 91,000 109,000 89,000
--------------- --------------- ---------------
4,181,000 3,672,000 3,717,000
--------------- --------------- ---------------
COSTS AND EXPENSES:
Cost of operations 862,000 826,000 813,000
Management fees 217,000 214,000 218,000
Depreciation and amortization 296,000 304,000 299,000
Administrative 73,000 56,000 56,000
Interest expense 1,658,000 2,171,000 2,232,000
--------------- --------------- ---------------
3,106,000 3,571,000 3,618,000
--------------- --------------- ---------------
NET INCOME $ 1,075,000 $ 101,000 $ 99,000
--------------- --------------- ---------------
--------------- --------------- ---------------
Limited partners' share of net income
($53.20 per unit in 1994, $5.00 per
unit in 1993, and $4.90 per unit
in 1992) $1,064,000 $100,000 $98,000
General partners' share of net income 11,000 1,000 1,000
--------------- --------------- ---------------
$ 1,075,000 $ 101,000 $ 99,000
--------------- --------------- ---------------
--------------- --------------- ---------------
</TABLE>
F-3
<PAGE>
PUBLIC STORAGE PROPERTIES, LTD.
STATEMENT OF PARTNERS' DEFICIT
For the years ended December 31, 1994, 1993, and 1992
<TABLE>
<CAPTION>
Unrealized
Gain on
Limited General Marketable Equity
Partners Partners Securities Total
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1991 $(9,834,000) $(3,411,000) $(3,000) $(13,248,000)
Net income 98,000 1,000 - 99,000
Reverse valuation account - - 3,000 3,000
Equity transfer (24,000) 24,000 - -
------------ ------------ ------------- -------------
Balance at December 31, 1992 (9,760,000) (3,386,000) - (13,146,000)
Net income 100,000 1,000 - 101,000
Equity transfer (26,000) 26,000 - -
------------ ------------ ------------- -------------
Balance at December 31, 1993 (9,686,000) (3,359,000) - (13,045,000)
Unrealized gain on
marketable securities - - 227,000 227,000
Net income 1,064,000 11,000 - 1,075,000
Equity transfer (266,000) 266,000 - -
------------ ------------ ------------- -------------
Balance at December 31, 1994 $(8,888,000) $(3,082,000) $227,000 $(11,743,000)
------------ ------------ ------------- -------------
------------ ------------ ------------- -------------
</TABLE>
F-4
<PAGE>
PUBLIC STORAGE PROPERTIES, LTD.
STATEMENT OF CASH FLOWS
For the years ended December 31, 1994, 1993, and 1992
<TABLE>
<CAPTION>
1994 1993 1992
------------ ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,075,000 $101,000 $99,000
Adjustments to reconcile net income to net
cash provided by operating activites:
Depreciation and amortization 296,000 304,000 299,000
Gain on sale of marketable securities (479,000) - -
(Increase) decrease in rent and other receivables (6,000) 168,000 (154,000)
Write off of prepaid loan fees - 145,000 -
Decrease (increase) in other assets 26,000 (28,000) 87,000
Increase (decrease) in accounts payable 1,000 1,000 (1,000)
Increase (decrease) in deferred revenue 8,000 (46,000) 27,000
------------ ----------- -----------
Total adjustments (154,000) 544,000 258,000
------------ ----------- -----------
Net cash provided by operating activities 921,000 645,000 357,000
------------ ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale (purchase) of marketable securities 1,265,000 - (965,000)
Additions to real estate facilities (150,000) (35,000) (58,000)
------------ ----------- -----------
Net cash provided by (used in)
investing activities 1,115,000 (35,000) (1,023,000)
------------ ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in prepaid loan fees - (246,000) -
Proceeds from note payable to bank 3,000,000 - -
Proceeds from note payable to affiliate 1,250,000 5,000,000 -
Principal payments on notes payable (6,260,000) (5,845,000) (35,000)
------------ ----------- -----------
Net cash used in financing activities (2,010,000) (1,091,000) (35,000)
------------ ----------- -----------
Net increase (decrease) in cash and cash equivalents 26,000 (481,000) (701,000)
Cash and cash equivalents at the
beginning of the year 136,000 617,000 1,318,000
------------ ----------- -----------
Cash and cash equivalents at the
end of the year $162,000 $136,000 $617,000
------------ ----------- -----------
------------ ----------- -----------
</TABLE>
F-5
<PAGE>
PUBLIC STORAGE PROPERTIES, LTD.
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1994, 1993, and 1992
(Continued)
<TABLE>
<CAPTION>
1994 1993 1992
--------------- --------------- ---------------
<S> <C> <C> <C>
Supplemental schedule of non-cash
investing and financing activities:
Increase in fair value of marketable securities $(227,000) - -
Unrealized gain on marketable securities 227,000 - -
</TABLE>
F-6
<PAGE>
PUBLIC STORAGE PROPERTIES, LTD.
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
1. DESCRIPTION OF PARTNERSHIP
Public Storage Properties, Ltd. (the "Partnership") was formed with
the proceeds of a California intrastate public offering. Public Storage,
Inc. ("PSI"), a California corporation, which is a wholly-owned subsidiary
of PSI Holdings, Inc. ("PSIH"), a California corporation, organized the
Partnership and is a general partner, along with PSIH's principal
stockholder.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PARTNERSHIP MATTERS
MINI-WAREHOUSE FACILITIES:
Cost of land includes appraisal fees and legal fees related to
acquisition and closing costs. Buildings, land improvements and equipment
reflect costs incurred through December 31, 1994 and 1993 to develop
mini-warehouse facilities which provide self-service storage spaces for
lease, usually on a month-to-month basis, to the general public. The
buildings and equipment are depreciated on the straight-line basis over
estimated useful lives of 25 and 5 years, respectively.
ALLOCATION OF NET INCOME:
The general partners' share of net income consists of amounts
attributable to their 1% capital contribution and an additional percentage
of cash flow (as defined) which relates to the general partners' share of
cash distributions as set forth in the Partnership Agreement (Note 4). All
remaining net income is allocated to the limited partners.
Per unit data is based on the weighted average number of the limited
partnership units (20,000) outstanding during the period.
CASH AND CASH EQUIVALENTS:
For financial statement purposes, the Partnership considers all highly
liquid investments purchased with a maturity of three months or less to be
cash equivalents.
MARKETABLE SECURITIES:
Marketable securities at December 31, 1994 and 1993, consist of 39,911
and 124,911 of common shares of Storage Equities, Inc. ("SEI"), a publicly
traded real estate investment trust whose investment advisor is an
affiliate of PSI. At December 31, 1993, the securities were recorded at
cost (with a fair value of $1,780,000). Effective January 1, 1994, the
Partnership adopted FASB Statement No. 115, "Accounting for Certain
Investments in Debt and Equity Securities", whereby the Partnership has
designated its portfolio of marketable securities as being available for
sale. Accordingly, at December 31, 1994, the Partnership has recorded the
marketable securities at fair value, based upon the closing quoted price of
the securities at December 31, 1994, and has recorded a corresponding
unrealized gain totaling $227,000 as a credit to Partnership equity.
OTHER ASSETS:
Other assets consist primarily of deferred financing costs. In 1993,
the Partnership incurred deferred financing costs of approximately $246,000
in connection with modification of its mortgage note payable (Note 7). In
addition, deferred financing costs of approximately $145,000 relating to
the pre-modified mortgage loan were expensed during 1993 and included in
interest expense.
F-7
<PAGE>
PUBLIC STORAGE PROPERTIES, LTD.
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
3. CASH DISTRIBUTIONS
The Partnership Agreement requires that cash available for
distribution (cash flow from all sources less cash necessary for any
obligations or capital improvement needs) be distributed at least
quarterly. Cash distributions have been suspended since the fourth quarter
of 1990 in order to build cash reserves for future debt service payments.
4. PARTNERS' EQUITY
The general partners have a 1% interest in the Partnership. In
addition, the general partners have an 8% interest in cash
distributions attributable to operations (exclusive of distributions
attributable to sale and financing proceeds until the limited partners
recover all of their initial investment). Thereafter, the general
partners have a 25% interest in all cash distributions (including sale
and financing proceeds). In 1985, the limited partners recovered all
of their initial investment. All subsequent cash distributions are
being made 25.75% (including the 1% interest) to the general partners
and 74.25% to the limited partners. Transfers of equity are made
periodically to conform the partners' equity accounts to the
provisions of the Partnership Agreement. These transfers have no
effect on the results of operations or distributions to partners.
Concurrent with the financing of the Partnership's properties in 1987
(Note 7), the Partnership made a special distribution totalling $20,202,000
to the partners. This special distribution had no effect on the
Partnership's taxable income, however, resulted in a deficit in the limited
and general partners' equity accounts.
5. RELATED PARTY TRANSACTIONS
The Partnership has an agreement with Public Storage Management, Inc.
("PSMI"), a subsidiary of PSI, to operate the day-to-day operations of
mini-warehouse facilities for a fee equal to 6% of the facilities' gross
revenue (as defined).
6. TAXES BASED ON INCOME
Taxes based on income are the responsibility of the individual
partners and, accordingly, the Partnership's financial statements do not
reflect a provision for such taxes. The following is a reconciliation of
net income to taxable net income:
<TABLE>
<CAPTION>
1994 1993 1992
---------- --------- ---------
<S> <C> <C> <C>
Net income $1,075,000 $101,000 $99,000
Book depreciation
in excess of tax 34,000 42,000 36,000
Book rental income
less than (in excess of) tax 8,000 (46,000) 27,000
Other (3,000) (4,000) -
---------- --------- ---------
Taxable net income $1,114,000 $93,000 $162,000
---------- --------- ---------
---------- --------- ---------
</TABLE>
F-8
<PAGE>
PUBLIC STORAGE PROPERTIES, LTD
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
7. NOTES PAYABLE
Notes payable at December 31, 1994 and 1993 consist of the following:
<TABLE>
<CAPTION>
1994 1993
-------------- -------------
<S> <C> <C>
8.25% mortgage note payable to an
insurance company with principal
and interest due monthly; remaining
principal due September, 2001. $15,245,000 $15,655,000
1% above bank's prime rate term
loan due bank, payable monthly,
and requiring $50,000 monthly principal
payments; remaining principal due
July 1, 1999. 2,750,000 -
10% unsecured note payable due to an
affiliate with interest only payable
monthly, principal due August, 1994. - 4,350,000
------------- -------------
$17,995,000 $20,005,000
-------------- -------------
-------------- -------------
</TABLE>
During 1987, the Partnership financed all of its properties with a
$20,885,000, nonrecourse note secured by the Partnership's properties which was
scheduled to mature in 1994. In September 1993, the Partnership and the lender
modified the terms of the note whereby (i) the Partnership was required to make
a $5,000,000 principal repayment, (ii) the interest rate was reduced from 10.25%
to 8.25% per annum, and (iii) the maturity date was extended from September 1,
1994 to September 1, 2001.
On September 1, 1993, the Partnership borrowed $5,000,000 from SEI, the
proceeds of which were used to repay the required principal on the above
modified note. On June 30, 1994, the Partnership repaid the remaining principal
balance of $4,350,000 due to SEI. This payment was funded with a combination of
(i) a $3,000,000 term loan from Wells Fargo Bank, (ii) a $1,250,000 loan from
Public Storage, Inc. ("PSI") and (iii) cash reserves. The terms of the Wells
Fargo Bank loan requires compliance by the Partnership with certain financial
covenants, including the maintenance of a debt coverage ratio, as defined. As
of December 31, 1994, the Partnership was in compliance with all financial
covenant requirements.
The Partnership believes that it is not practical to estimate the fair
value of its long-term fixed rate debt at December 31, 1994 because there is no
public market for such debt, and although interest rates at December 31, 1994
are lower than when such debt was incurred, the Partnership does not believe it
could obtain financing currently on such favorable term. This is in part due to
the reduced sources of real estate financing resulting from a variety of
factors, including the present condition of financial institutions.
The principal repayment schedule of the above notes payable as of December
31, 1994, is as follows:
<TABLE>
<S> <C>
1995 $ 1,045,000
1996 1,083,000
1997 1,124,000
1998 1,169,000
1999 968,000
Thereafter 12,606,000
----------
$17,995,000
-----------
-----------
</TABLE>
Interest paid on the notes was $1,626,000, $2,017,000 and $2,145,000 for
the years ended December 31, 1994, 1993 and 1992, respectively.
F-9
<PAGE>
PUBLIC STORAGE PROPERTIES, LTD.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
------------ ------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $235,000 $162,000
Marketable securities of affiliate
at market value (cost of $347,000) 673,000 574,000
Rent and other receivables 78,000 63,000
Real estate facilities at cost:
Building, land improvements and equipment 7,237,000 7,149,000
Land 2,511,000 2,511,000
------------ ------------
9,748,000 9,660,000
Less accumulated depreciation (4,369,000) (4,288,000)
------------ ------------
5,379,000 5,372,000
------------ ------------
Other assets 239,000 247,000
------------ ------------
Total assets $6,604,000 $6,418,000
------------ ------------
------------ ------------
LIABILITIES AND PARTNERS' DEFICIT
Accounts payable $237,000 $30,000
Deferred revenue 126,000 136,000
Notes payable 17,738,000 17,995,000
Partners' deficit:
Limited partners' deficit, $500 per
unit, 20,000 units authorized,
issued and outstanding (8,779,000) (8,888,000)
General partners' deficit (3,044,000) (3,082,000)
Unrealized gain on marketable
securities 326,000 227,000
------------ ------------
Total partners' deficit (11,497,000) (11,743,000)
------------ ------------
Total liabilities and partners' deficit $6,604,000 $6,418,000
------------ ------------
------------ ------------
</TABLE>
F-10
<PAGE>
PUBLIC STORAGE PROPERTIES, LTD.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------
1995 1994
------------ ------------
<S> <C> <C>
REVENUES:
Rental income $ 934,000 $ 876,000
Interest income and other income
(including dividends from marketable
securities of affiliate in 1995) 10,000 26,000
------------ ------------
944,000 902,000
------------ ------------
COSTS AND EXPENSES:
Cost of operations 238,000 207,000
Management fees paid to affiliate 56,000 53,000
Depreciation and amortization 81,000 74,000
Administrative 34,000 15,000
Interest expense 388,000 439,000
------------ ------------
797,000 788,000
------------ ------------
NET INCOME $ 147,000 $ 114,000
------------ ------------
------------ ------------
Limited partners'
share of net income
($7.25 per unit in 1995
and $5.65 per unit in 1994) $145,000 $113,000
General partners' share
of net income 2,000 1,000
------------ ------------
$ 147,000 $ 114,000
------------ ------------
------------ ------------
</TABLE>
F-11
<PAGE>
PUBLIC STORAGE PROPERTIES, LTD.
STATEMENT OF PARTNERS' DEFICIT
(UNAUDITED)
<TABLE>
<CAPTION>
Unrealized
Gain on Total
Limited General Marketable Partners'
Partners Partners Securities Equity
------------ ------------ ------------ --------------
<S> <C> <C> <C> <C>
Balance at December 31, 1994 $(8,888,000) $(3,082,000) $227,000 $(11,743,000)
Unrealized gain on marketable
Securities - - 99,000 99,000
Net Income 145,000 2,000 - 147,000
Equity transfer (36,000) 36,000 - -
------------ ------------ ------------ --------------
Balance at March 31, 1995 $(8,779,000) $(3,044,000) $326,000 $(11,497,000)
------------ ------------ ------------ --------------
------------ ------------ ------------ --------------
</TABLE>
F-12
<PAGE>
PUBLIC STORAGE PROPERTIES, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
March 31,
1995 1994
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 147,000 $ 114,000
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 81,000 74,000
Increase in rent and other receivables (15,000) (47,000)
Decrease in other assets 8,000 7,000
Increase (decrease) in accounts payable 207,000 (9,000)
Decrease in deferred revenue (10,000) (12,000)
----------- -----------
Total adjustments 271,000 13,000
----------- -----------
Net cash provided
by operating activities 418,000 127,000
----------- -----------
Cash flows from investing activities:
Additions to real estate facilities (88,000) (28,000)
----------- -----------
Net cash used in
investing activities (88,000) (28,000)
----------- -----------
Cash flows from financing activities:
Principal payments on note payable (257,000) (99,000)
----------- -----------
Net cash used in
financing activities (257,000) (99,000)
----------- -----------
Net increase in
cash and cash equivalents 73,000 -
Cash and cash equivalents at
the beginning of the period 162,000 136,000
----------- -----------
Cash and cash equivalents at
the end of the period $ 235,000 $ 136,000
----------- -----------
----------- -----------
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Increase in fair value of marketable
securities $ (326,000) $ -
----------- -----------
----------- -----------
Unrealized gain on marketable
securities 326,000 -
----------- -----------
----------- -----------
</TABLE>
F-13
<PAGE>
PUBLIC STORAGE PROPERTIES LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. The accompanying unaudited condensed financial statements have been
prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to
such rules and regulations, although management believes that the
disclosures contained herein are adequate to make the information presented
not misleading. These unaudited condensed financial statements should be
read in conjunction with the financial statements and related notes
appearing in the Partnership's Form 10-K for the year ended December 31,
1994.
2. In the opinion of management, the accompanying unaudited condensed
financial statements reflect all adjustments, consisting of only normal
accruals, necessary to present fairly the Partnership's financial position
at March 31, 1995, the results of its operations for the three months ended
March 31, 1995 and its cash flows for the three months then ended.
3. The results of operations for the three months ended March 31, 1995 are not
necessarily indicative of the results expected for the full year.
4. Marketable securities at March 31, 1995 consist of 39,911 common shares of
Storage Equities, Inc. ("SEI"), a publicly traded real estate investment
trust, whose investment advisor is an affiliate of Public Storage, Inc. (a
general partner of the Partnership). SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." requires marketable securities
to be classified as trading or available for sale. The Partnership has
designated its portfolio of marketable securities as available for sale.
Accordingly, at March 31, 1995, the Partnership has recorded the marketable
securities at fair value and, based upon the closing quoted price of the
securities at March 31, 1995, recorded a corresponding unrealized gain
totaling $326,000 as a credit to Partnership equity.
5. Substantially all of the Partnership's facilities were acquired prior to
the time that it was customary to conduct environmental investigations in
connection with property acquisitions. During the first quarter of 1995,
the Partnership commenced environmental assessments on its properties. The
result of those assessments have not been completed. The Partnership is
not presently aware of any environmental matters with respect to any of its
properties which would have a materially adverse effect on the Company's
financial position. Included in administrative expenses on the statements
of operations for three months ended March 31, 1995 is approximately
$24,000 in cost incurred in connection with the environmental assessments.
F-14
<PAGE>
SCHEDULE 4
PUBLIC STORAGE PROPERTIES, LTD.,
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1995 COMPARED TO THREE MONTHS ENDED MARCH
31, 1994: The Partnership's net income for the three months ended March 31,
1995 was $147,000 compared to $114,000 for the three months ended March 31,
1994, representing an increase of $33,000. This increase is primarily a result
of increased operating results at the Partnership's real estate facilities and a
decrease in interest expense resulting from a lower note payable balance in 1995
compared to 1994.
Rental income was $934,000 compared to $876,000 for the three months
ended March 31, 1995 and 1994, respectively, representing an increase of
$58,000. This increase is primarily attributable to an increase in occupancy
levels at the Partnership's mini-warehouse facilities. The weighted average
occupancy levels at the mini-warehouse facilities were 90% and 84% for the three
months ended March 31, 1995 and 1994, respectively.
Other income decreased $16,000 in the three months ended March 31,
1995 compared to the same period in 1994 as the result of less dividend income
earned on marketable securities of affiliate. This decrease is due to a
decrease in the number of shares held in 1995 compared to 1994.
Cost of operations (including management fees paid to an affiliate)
increased $34,000 to $294,000 from $260,000 for the three months ended March 31,
1995 and 1994, respectively. This increase is mainly attributable to increases
in payroll and management fees paid to an affiliate. Payroll increased in 1995
compared to 1994 due to an increase in incentive payroll attributable to an
increase in property performance.
Administrative expenses increased $19,000 for the three months ended
March 31, 1995 compared to the same period in 1994 primarily as the result of
cost incurred on environmental assessments on the Partnership's properties.
Substantially all of the Partnership's facilities were acquired prior to the
time that it was customary to conduct extensive environmental investigations in
connection with the property acquisitions. During the first quarter of 1995,
the Partnership commenced environmental assessments on its properties. The
result of those assessments have not been completed. However, the Partnership
is not presently aware of any environmental matters with respect to any of its
properties which would have a materially adverse effect on the Company's
financial position. There is an environmental uncertainty with respect to the
Wilmington, California property.
YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993:
The Partnership's net income in 1994 was $1,075,000 compared to $101,000 in
1993, representing an increase of $974,000. Net income in 1994 includes a gain
on sale of marketable securities of $479,000. Excluding this gain net income
increased $495,000 in 1994 as compared to 1993. The increase was primarily a
result of the decrease in interest expense.
Property net operating income (rental income less cost of operations
and management fees and excluding depreciation expense) was $2,532,000 and
$2,523,000 in 1994 and 1993, respectively, representing an increase of $9,000.
Rental income was $3,611,000 in 1994 compared to $3,563,000 in 1993,
representing an increase of $48,000, or 1%. This increase was primarily
attributable to increased occupancies at the Partnership's real estate
facilities. Weighted average occupancy levels at the mini-warehouses were 87%
and 85% in 1994 and 1993, respectively. The average monthly realized rent per
square foot at the mini-warehouses was $.59 in 1994 compared to $.58 in 1993.
Cost of operations (including management fees) was $1,079,000 and
$1,040,000 in 1994 and 1993, respectively, representing an increase of $39,000,
or 3%. This increase was primarily attributable to increases in payroll,
repairs and maintenance expenses, partially offset by decreases in advertising
and promotion expenses.
4-1
<PAGE>
Interest expense was $1,658,000 and $2,171,000 in 1994 and 1993,
respectively, representing a decrease of $513,000, or 24%. The decrease was
primarily a result of a lower interest rate on the outstanding debt combined
with a reduction in the average outstanding debt balance in 1994 compared to
1993 partially offset by an increase in the amortization of deferred loan costs.
YEAR ENDED DECEMBER 31, 1993 COMPARED TO YEAR ENDED DECEMBER 31, 1992:
The Partnership's net income in 1993 was $101,000 compared to $99,000 in 1992,
representing an increase of $2,000, or 2%. The increase was primarily a result
of an increase in other income combined with a decrease in interest expense
partially offset by decreased property operations.
Property net operating income (rental income less cost of operations
and management fees and excluding depreciation expense) was $2,523,000 and
$2,597,000 in 1993 and 1992, respectively, representing a decrease of $74,000 or
3%.
Rental income was $3,563,000 in 1993 compared to $3,628,000 in 1992,
representing a decrease of $65,000, or 2%. This decrease was primarily
attributable to an overall decrease in rental rates at the Partnership's real
estate facilities. Year end occupancy levels at the mini-warehouses were 83% in
1993 and 1992.
Cost of operations (including management fees) was $1,040,000 and
$1,031,000 in 1993 and 1992, respectively, representing an increase of $9,000.
This increase was primarily attributable to increases in payroll and property
taxes partially offset by decreases in advertising and promotion.
Interest expense was $2,171,000 and $2,232,000 in 1993 and 1992,
representing a decrease of $61,000, or 3%. The decrease was primarily a result
of a lower interest rate on the outstanding debt combined with a reduction in
the outstanding debt balance partially offset by an increase in the amortization
of deferred loan costs.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities ($921,000 in 1994 and
$418,000 for the three months ended March 31, 1995) has been sufficient to meet
all current obligations of the Partnership. During 1995, the Partnership
anticipates approximately $355,000 of capital improvements compared to $150,000
in 1994, $35,000 in 1993 and $58,000 in 1992.
In September 1993, after review of the historical property operations
and the Partnership's cash reserves, the General Partners projected that the
Partnership would be unable to make the 1994 scheduled balloon payment on the
mortgage note payable. Accordingly, the General Partners and the lender agreed
to modify the terms of the related mortgage note payable. Under the modified
terms (i) the Partnership prepaid $5,000,000 principal on the loan, (ii) the
interest rate was reduced from 10.25% to 8.25% (effective November 1, 1993), and
(iii) the maturity date was extended from September 1, 1994 to September 1,
2001. The prepayment of $5,000,000 was funded by a short-term loan from Storage
Equities, Inc. ("SEI"), a publicly traded real estate investment trust, whose
investment advisor is an affiliate of the General Partners.
On September 1, 1993, the Partnership borrowed $5,000,000 from SEI.
The proceeds of the borrowings were used by the Partnership to make the required
prepayment of principal and obtain the favorable mortgage note payable
modifications, as discussed above. The related unsecured promissory note bore
interest at a rate of 10% (which was below the rate of the mortgage note payable
prior to modification), with monthly payments of interest only. At December 31,
1993, the outstanding principal balance was $4,350,000.
On June 30, 1994, the Partnership repaid the remaining principal
balance of $4,350,000 due to SEI. This payment was funded with a combination of
(i) a $3,000,000 term loan from Wells Fargo Bank, (ii) a $1,250,000 loan from
PSI and (iii) cash reserves. The new loans provided the Partnership with more
favorable repayment terms. The Wells Fargo Bank loan bears interest at the rate
of 1.00% above the bank's prime rate (payable monthly), and requires monthly
principal payments of $50,000. A final payment, including all remaining
principal, is due July 1, 1999. The PSI loan, which bore interest at the rate
of .25% above the prime rate was repaid on September 30, 1994 (see below).
4-2
<PAGE>
At March 31, 1995, the Partnership held 39,911 shares of common stock
(marketable securities) with a fair value of $673,000 (cost basis of $347,000 at
March 31, 1995) in SEI. The Partnership recognized $9,000 in dividends for the
three months ended March 31, 1995 and included this in other income on the
condensed statements of operations. The Partnership believes this investment
provides a better investment return than is currently available for short term
investments through money instruments.
In the fourth quarter of 1990, quarterly distributions were
discontinued to enable the Partnership to increase its reserves for principal
payments that commenced in 1992.
The distributions in the aggregate to limited and general partners for each
of the prior years were as follows:
<TABLE>
<CAPTION>
<S> <C>
1978 $ 427,000
1979 1,025,000
1980 1,098,000
1981 1,427,000
1982 1,592,000
1983 1,785,000
1984 2,076,000
1985 2,477,000
1986 2,828,000
1987 21,751,000
1988 421,000
1989 521,000
1990 404,000
1991 --
1992 --
1993 --
1994 --
1995 (through March 31) --
</TABLE>
During 1987, the Partnership financed all of its facilities with a
$20,885,000 loan. Proceeds of $20,202,000 were distributed to the partners in
September 1987 and are included in the 1987 distribution. At March 31, 1995,
the outstanding balance of the notes payable was $17,738,000.
4-3
<PAGE>
SCHEDULE 5
DIRECTORS AND EXECUTIVE OFFICERS OF PUBLIC STORAGE, INC.
<TABLE>
<CAPTION>
Name of Director Employer/Address/ Current Position/
or Executive Nature of Business Dates of Employment
Officer
-------------------------------- -------------------------- --------------------------------
<S> <C> <C>
B. Wayne Hughes Storage Equities,Inc. Chairman of the Board and Chief
(Executive Officer and Director) 600 North Brand Boulevard Executive Officer
Suite 300 11/91-present
Glendale, CA 91203-1241 President
1980-10/91
Real estate investment
Public Storage, Inc. ("PSI") and President and Chief Executive
affiliates Officer of PSI since 1978
600 North Brand Boulevard Officer of PSI and affiliates since
Suite 300 1972
Glendale, CA 91203-1241
Real estate investment
Harvey Lenkin Storage Equities, Inc. President
(Executive Officer and Director) 11/91-present
Real estate investment
PSI and affiliates Vice President of PSI since 1988
Real estate investment Officer of affiliates of PSI
since 1978
Hugh W. Horne Storage Equities, Inc. Vice President
(Executive Officer and Director) 1980-present
Real estate investment Secretary
1980-2/92
PSI and affiliates Officer of PSI and affiliates since
1973
Real estate investment
Ronald L. Havner, Jr. Storage Equities, Inc. Chief Financial Officer
(Executive Officer) 11/91-present
Real estate investment Vice President
7/90-present
PSI and affiliates Officer of PSI and affiliates since
1986 (chief financial officer
Real estate investment since 1991)
5-1
<PAGE>
<CAPTION>
Name of Director Employer/Address/ Current Position/
or Executive Nature of Business Dates of Employment
Officer
-------------------------------- -------------------------- --------------------------------
<S> <C> <C>
Obren B. Gerich Storage Equities, Inc. Vice President
(Executive Officer and Director) 1980-present
Real estate investment Chief Financial Officer
1980-10/91
PSI and affiliates Officer of PSI and affiliates since
1975
Real estate investment
</TABLE>
To the knowledge of the General Partners, all of the foregoing persons are
citizens of the United States.
5-2
<PAGE>
The Letter of Transmittal and any other required documents should be sent
or delivered by each Unitholder to the Depositary at one of the addresses set
forth below:
The Depositary for the Offer is:
The First National Bank of Boston
<TABLE>
<CAPTION>
BY MAIL BY HAND BY OVERNIGHT COURIER
<S> <C> <C>
The First National Bank of Boston BancBoston Trust The First National Bank of Boston
Shareholder Services Company of New York Corporate Agency & Reorganization
P.O. Box 1872 55 Broadway 150 Royall Street
Mail Stop 45-01-19 3rd Floor Mail Stop 45-01-19
Boston, MA 02105 New York, NY 10006 Canton, MA 02021
</TABLE>
Any questions about the Offer to Purchase may be directed to the Soliciting
Agent at its telephone number set forth below:
The Soliciting Agent for the Offer is:
The Weil Company
(800) 478-2605
Any requests for assistance or additional copies of the Offer to Purchase
and the Letter of Transmittal may be directed to the Company at its address and
telephone number set forth below:
Public Storage, Inc.
600 North Brand Boulevard, Suite 300
Glendale, California 91203-1241
(800) 421-2856
(818) 244-8080
[Recycled Logo]
Printed on recycled paper
<PAGE>
LETTER OF TRANSMITTAL
To Purchase Limited Partnership Units of Public Storage Properties, Ltd.,
a California limited partnership
Pursuant to the Offer to Purchase dated August 7, 1995
of Public Storage, Inc.
DESCRIPTION OF UNITS TENDERED
Name and Address of Registered Holder Number of Units Tendered
------------------------------------- ------------------------
___________________*
* Unless otherwise indicated, it will
be assumed that all Units held by
the registered holder are being
tendered.
THIS OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON MONDAY, SEPTEMBER
11, 1995, UNLESS EXTENDED. UNITS WHICH ARE TENDERED PURSUANT TO THIS OFFER MAY
BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION OF THIS OFFER.
This Letter of Transmittal is to be executed and returned to The First National
Bank of Boston (the "Depositary") at one of the following addresses:
<TABLE>
<CAPTION>
<S><C>
BY MAIL BY HAND BY OVERNIGHT COURIER FOR INFORMATION
The First National Bank of BancBoston Trust The First National Bank of The First National Bank
Boston Company of New York Boston of Boston
Shareholder Services 55 Broadway Corporate Agency & Shareholder Services
P.O. Box 1872 3rd Floor Reorganization (617) 575-3120
Mail Stop 45-01-19 New York, NY 10006 150 Royall Street
Boston, MA 02105 Mail Stop 45-01-19
Canton, MA 02021
</TABLE>
Delivery of this instrument to an address other than as set forth above will not
constitute a valid delivery. The accompanying instructions should be read
carefully before this Letter of Transmittal is completed.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Public Storage, Inc., a California
corporation (the "Company"), for $171 per Unit in cash the above-described units
of limited partnership interest (the "Units") of Public Storage Properties,
Ltd., a California limited partnership (the "Partnership"), in accordance with
the terms and subject to the conditions of the Company's offer contained in the
Company's Offer to Purchase dated August 7, 1995 (the "Offer to Purchase"), and
in this Letter of Transmittal (which together with the Offer to Purchase
constitutes the "Offer"). The undersigned hereby acknowledges receipt of the
Offer to Purchase.
Subject to, and effective upon, acceptance for tender of the Units tendered
herewith in accordance with the terms and subject to the conditions of the
Offer, the undersigned hereby sells, assigns and transfers to, or upon the order
of, the Company, all right, title and interest in and to all of the Units that
are being tendered hereby and that are being accepted for purchase pursuant to
the Offer and any non-cash distributions, other Units or other securities issued
or issuable in respect thereof on or after August 7, 1995 and appoints the
Depositary the true and lawful attorney-in-fact of the undersigned with respect
to such Units (and such non-cash distributions, other Units or securities), with
full power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (a) transfer ownership of such
Units (and any such non-cash distributions, other Units or securities), to or
upon the order of the Company, (b) present such Units (and any such non-cash
distributions, other Units or securities) for transfer on the books of the
Partnership and (c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Units (and any such non-cash distributions, other
Units or securities), all in accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned (i) has
received and reviewed the Offer to Purchase and (ii) has full power and
authority to sell, assign and transfer the Units tendered hereby (and any and
all non-cash distributions, other Units or securities issued or issuable in
respect thereof on or after August 7, 1995) and that when the same are accepted
for purchase by the Company, the Company will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances, and the same will not be subject to any adverse claim. The
undersigned, upon request, will execute and deliver any additional documents
deemed by the Depositary or the Company to be necessary or desirable to complete
the sale, assignment and transfer of the Units tendered hereby and any non-cash
distributions, other Units or other securities issued or issuable in respect of
such Units on or after August 7, 1995. In addition, the undersigned shall
promptly remit and transfer to the
<PAGE>
Depositary for the account of the Company any and all other Units or other
securities (including rights) issued to the undersigned on or after August 7,
1995 in respect of Units tendered hereby, accompanied by appropriate
documentation of transfer, and pending such remittance or appropriate assurance
thereof, the Company shall be entitled to all rights and privileges as owner of
any such other Units or other securities and may withhold the entire
consideration or deduct from the consideration the amount of value thereof as
determined by the Company, in its sole discretion.
The undersigned has been advised that (i) the Company is a General Partner
of the Partnership, the other General Partner of the Partnership is an affiliate
of the Company, and the General Partners of the Partnership make no
recommendation as to whether or not the undersigned should tender his or her
Units in the Offer and the undersigned has made his or her own decision to
tender the Units and (ii) the General Partners believe that the Offer Price is
less than the amount that Unitholders might receive if the Partnership were
liquidated.
The undersigned understands that notwithstanding any other provisions of
the Offer and subject to the applicable rules of the Securities and Exchange
Commission, the Company will not be required to accept for purchase any Units,
may postpone the acceptance for purchase of Units tendered and may terminate or
amend the Offer if prior to the time of purchase of any such Units any of the
following events shall occur or the Company shall have learned of the occurrence
of any of such events:
(a) There shall be threatened, instituted or pending any action or
proceeding before any domestic or foreign court or governmental agency or
other regulatory or administrative agency or commission (i) challenging the
acquisition by the Company of the Units, seeking to restrain or prohibit
the making or consummation of the Offer, seeking to obtain any material
damages or otherwise directly or indirectly relating to the transactions
contemplated by the Offer, (ii) seeking to prohibit or restrict the
Company's ownership or operation of any material portion of the Company's
business or assets, or to compel the Company to dispose of or hold separate
all or any material portion of its business or assets as a result of the
Offer, (iii) seeking to make the purchase of, or payment for, some or all
of the Units illegal, (iv) resulting in a delay in the ability of the
Company to accept for payment or pay for some or all of the Units, (v)
imposing material limitations on the ability of the Company effectively to
acquire or hold or to exercise full rights of ownership of the Units,
including, without limitation, the right to vote the Units purchased by the
Company on all matters properly presented to the limited partners of the
Partnership, (vi) which, in the sole judgment of the Company, could
materially and adversely affect the treatment of the Offer for federal
income tax purposes, (vii) which otherwise is reasonably likely to
materially adversely affect the Partnership or value of the Units or (viii)
which imposes any material condition unacceptable to the Company;
(b) Any statute, rule, regulation or order shall be enacted,
promulgated, entered or deemed applicable to the Offer, any legislation
shall be pending, or any other action shall have been taken, proposed or
threatened, by any domestic government or governmental authority or by any
court, domestic or foreign, which, in the sole judgment of the Company, is
likely, directly or indirectly, to result in any of the consequences
referred to in paragraph (a) above; or
(c) There shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the New York Stock
Exchange ("NYSE"), (ii) the declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (iii) the
commencement of a war, armed hostilities or other international or national
calamity materially affecting the United States, (iv) any limitation by any
governmental authority or any other event which is reasonably likely to
affect the extension of credit by banks or other lending institutions in
the United States, (v) any material decline in security prices on the NYSE
or (vi) in the case of any of the foregoing existing at the time of the
Offer, any material worsening thereof;
which in the sole judgment of the Company with respect to each and every matter
referred to above and regardless of the circumstances (including any action or
inaction by the Company) giving rise to any such condition, makes it inadvisable
to proceed with the Offer or with such acceptance for purchase. The foregoing
conditions are for the sole benefit of the Company and may be asserted by the
Company regardless of the circumstances giving rise to any such conditions
(including any action or inaction by the Company) or may be waived by the
Company in whole or in part. The failure by the Company at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right, and
each such right shall be deemed a continuing right which may be asserted at any
time and from time to time.
The undersigned hereby irrevocably appoints B. Wayne Hughes and Harvey
Lenkin designees of the Company, and each of them, the attorneys and proxies of
the undersigned, each with full power of substitution, to vote in such manner as
each such attorney and proxy or his substitute shall, in his sole discretion,
deem proper, and otherwise act (including pursuant to written consent) with
respect to all of the Units tendered hereby which have been accepted for payment
by the Company prior to the time of such vote or action (and any and all non-
cash distributions, other Units or securities, issued or issuable in respect
thereon on or after August 7, 1995), which the undersigned is entitled to vote,
at any meeting (whether annual or special and whether or not an adjourned
meeting) of limited partners of the Partnership, or with respect to which the
undersigned is empowered to act in connection with action by written consent in
lieu of any such meeting or otherwise. This proxy is irrevocable and is granted
in consideration of, and is effective upon, the acceptance for payment of such
Units by the Company, in accordance with the terms of the Offer. Such
acceptance for payment shall revoke any other proxy granted by the undersigned
at any time with respect to such Units (and any such non-cash distributions,
other Units or securities) and no subsequent proxies will be given (and if given
will be deemed not to be effective) with respect thereto by the undersigned.
The Company reserves the right to require that in order for Units to be properly
tendered, immediately upon acceptance of such Units for purchase by the Company,
the Company is able to exercise full voting rights with respect to such Units.
The undersigned understands that tenders of Units pursuant to any one of
the procedures described in the Offer and in the instructions hereto will
constitute a binding agreement between the undersigned and the Company upon the
terms and subject to the conditions of the Offer.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, legal and
personal representatives, successors and assigns of the undersigned. Except as
stated in the Offer, this tender is irrevocable.
Please issue the payment for the Units in the name(s) of the undersigned.
Similarly, unless otherwise indicated under "Special Mailing Instructions,"
please mail the payment (and accompanying documents, as appropriate) to the
undersigned at the registered address. In the event that the "Special Mailing
Instructions" are completed, please deliver the payment to the registered
holder(s) at the address so indicated.
-2-
<PAGE>
TENDER OF UNITS IN OFFER
The Undersigned tenders Units in the Offer on the terms described above.
SIGN HERE
Signature(s)
-----------------------------------------------------------------
-----------------------------------------------------------------
Date ( )
------------------------ ---------------------
Telephone number
(Must be signed by registered holder(s) as name(s) appear(s) under registration
above. If signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, agents, officers of corporations or others acting in a
fiduciary or representative capacity, please provide the following information.
See Instruction 3.)
Name(s)
----------------------------------------------------------------------
----------------------------------------------------------------------
(Please print)
Capacity (full title)
--------------------------------------------------------
Address
----------------------------------------------------------------------
----------------------------------------------------------------------
Zip Code
SPECIAL MAILING INSTRUCTIONS
To be completed ONLY if payment is to be issued to the registered holder(s) but
mailed to OTHER than the address of record. (See Instruction 5.)
Mail payment to:
Name
----------------------------------------------------------------------
(Must be same as registered holder(s))
Address
----------------------------------------------------------------------
(Please print)
----------------------------------------------------------------------
Zip Code
-3-
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. DELIVERY OF LETTER OF TRANSMITTAL. A properly completed and duly
executed Letter of Transmittal and any other documents required by this Letter
of Transmittal, must be received by the Depositary at its address set forth
herein on or prior to September 11, 1995, unless extended.
The method of delivery of this Letter of Transmittal and all other required
documents, is at the option and risk of the tendering Unitholder and the
delivery will be deemed made only when actually received by the Depositary. If
delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. In all cases, sufficient time should be allowed to
assure timely delivery.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Units will be accepted for payment or purchased. All tendering
Unitholders, by execution of this Letter of Transmittal, waive any right to
receive any notice of the acceptance of their Units for payment.
2. PARTIAL TENDERS. If fewer than all the Units held by a Unitholder are
to be tendered, (i) fill in the number of Units which are to be tendered in the
section entitled "Number of Units Tendered" and (ii) the Unitholder must hold at
least five Units after such tender. Accordingly, a Unitholder should not tender
if, as a result of such tender, the tendering holder (other than one
transferring all of his or her Units) will hold less than five Units. All Units
held by a Unitholder will be deemed to have been tendered unless otherwise
indicated.
3. SIGNATURES ON LETTER OF TRANSMITTAL.
(a) If this Letter of Transmittal is signed by the registered
holder(s) of the Units, the signature(s) must correspond exactly with the
Unitholder's registration.
(b) If any of the Units are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
(c) If any Units are registered in different names, it will be
necessary to complete, sign and submit as many separate Letters of Transmittal
as there are different registrations.
(d) If this Letter of Transmittal is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing, and if requested, proper evidence satisfactory to the
Company of such person's authority so to act must be submitted.
4. STOCK TRANSFER TAXES. Except as set forth in this Instruction 4, the
Company will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of Units to it or its order pursuant to the Offer. If
payment of the purchase price is to be made to any person other than the
registered holder, the amount of any stock transfer taxes (whether imposed on
the registered holder or such other person) payable on account of the transfer
to such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or exemption therefrom is submitted.
5. SPECIAL MAILING INSTRUCTIONS. If payment for the Units is to be issued
to the registered holder(s) but mailed to other than the address of record, the
section entitled "Special Mailing Instructions" must be completed.
6. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed to, or additional copies of the Offer to Purchase and this
Letter of Transmittal may be obtained from, the Depositary or the Soliciting
Agent at their respective addresses set forth below.
7. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance of any tender of Units will be
determined by the Company, in its sole discretion, and its determination shall
be final and binding. The Company reserves the absolute right to reject any or
all tenders of any particular Units (i) determined by it not to be in the
appropriate form or (ii) the acceptance for purchase of Units which may, in the
opinion of the Company's counsel, be unlawful.
IMPORTANT: THIS LETTER OF TRANSMITTAL, TOGETHER WITH ALL OTHER REQUIRED
DOCUMENTS, MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO SEPTEMBER 11, 1995,
UNLESS EXTENDED.
THE DEPOSITARY: THE SOLICITING AGENT FOR THE OFFER IS:
THE FIRST NATIONAL BANK OF BOSTON THE WEIL COMPANY
Shareholder Services (800) 478-2605
P.O. Box 1872
Mail Stop 45-01-19
Boston, Massachusetts 02105
(617) 575-3120
-4-
