PUBLIC STORAGE PROPERTIES, LTD.
CONDENSED BALANCE SHEETS
September 30, December 31,
2000 1999
--------------- ----------------
(Unaudited)
ASSETS
------
Cash and cash equivalents $ 159,000 $ 153,000
Rent and other receivables 37,000 73,000
Real estate facilities, at cost:
Building, land improvements and equipment 8,784,000 8,611,000
Land 2,475,000 2,511,000
--------------- ----------------
11,259,000 11,122,000
Less accumulated depreciation (6,970,000) (6,569,000)
--------------- ----------------
4,289,000 4,553,000
Other assets 84,000 94,000
--------------- ----------------
Total assets $ 4,569,000 $ 4,873,000
=============== ================
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
Accounts payable $ 79,000 $ 78,000
Deferred revenue 147,000 156,000
Note payable to commercial bank 6,675,000 9,225,000
Partners' deficit:
Limited partners' deficit, $500 per unit, 20,000 units
authorized, issued and outstanding (1,732,000) (3,405,000)
General partners' deficit (600,000) (1,181,000)
--------------- ----------------
Total partners' deficit (2,332,000) (4,586,000)
--------------- ----------------
Total liabilities and partners' deficit $ 4,569,000 $ 4,873,000
=============== ================
See accompanying notes.
2
PUBLIC STORAGE PROPERTIES, LTD.
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- -------------------------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
REVENUES:
Rental income $ 1,371,000 $ 1,296,000 $ 4,005,000 $ 3,709,000
Gain on sale of land 1,000 - 136,000 -
Other income 2,000 1,000 7,000 6,000
------------- ------------- ------------- -------------
1,374,000 1,297,000 4,148,000 3,715,000
------------- ------------- ------------- -------------
COSTS AND EXPENSES:
Cost of operations 293,000 281,000 864,000 859,000
Management fees paid to affiliate 82,000 78,000 240,000 223,000
Depreciation 130,000 146,000 401,000 433,000
Administrative 16,000 14,000 71,000 56,000
Interest expense 98,000 143,000 318,000 459,000
------------- ------------- ------------- -------------
619,000 662,000 1,894,000 2,030,000
------------- ------------- ------------- -------------
NET INCOME $ 755,000 $ 635,000 $ 2,254,000 $ 1,685,000
============= ============= ============= =============
Limited partners' share of net income
($111.55 per unit in 2000 and $83.40 per
unit in 1999) $ 2,231,000 $ 1,668,000
General partners' share of net income 23,000 17,000
------------- -------------
$ 2,254,000 $ 1,685,000
============= =============
See accompanying notes.
3
PUBLIC STORAGE PROPERTIES, LTD.
CONDENSED STATEMENT OF PARTNERS' DEFICIT
(UNAUDITED)
Total
Limited General Partners'
Partners Partners Deficit
----------------- ----------------- -----------------
Balance at December 31, 1999 $ (3,405,000) $ (1,181,000) $ (4,586,000)
Net income 2,231,000 23,000 2,254,000
Equity transfer (558,000) 558,000 -
----------------- ----------------- -----------------
Balance at September 30, 2000 $ (1,732,000) $ (600,000) $ (2,332,000)
================= ================= =================
See accompanying notes.
4
PUBLIC STORAGE PROPERTIES, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
-------------------------------------
2000 1999
---------------- ----------------
Cash flows from operating activities:
Net income $ 2,254,000 $ 1,685,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 401,000 433,000
Gain on sale of land (136,000) -
Decrease in rent and other receivables 36,000 5,000
Decrease (increase) in other assets 10,000 (1,000)
Increase (decrease) in accounts payable 1,000 (24,000)
(Decrease) increase in deferred revenue (9,000) 8,000
---------------- ----------------
Total adjustments 303,000 421,000
---------------- ----------------
Net cash provided by operating activities 2,557,000 2,106,000
---------------- ----------------
Cash flows from investing activities:
Proceeds from sale of land 172,000 -
Additions to real estate facilities (173,000) (115,000)
---------------- ----------------
Net cash used in investing activities (1,000) (115,000)
---------------- ----------------
Cash flows from financing activities:
Principal payments on note payable to commercial bank (2,550,000) (2,125,000)
---------------- ----------------
Net cash used in financing activities (2,550,000) (2,125,000)
---------------- ----------------
Net increase (decrease) in cash and cash equivalents 6,000 (134,000)
Cash and cash equivalents at the beginning of the period 153,000 248,000
---------------- ----------------
Cash and cash equivalents at the end of the period $ 159,000 $ 114,000
================ ================
See accompanying notes.
5
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, 1999.
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 September 30, 2000, the results of its operations for the nine months ended September 30,
2000 and 1999 and its cash flows for the nine months then ended.
3. The results of operations for the nine months ended September 30, 2000 are not necessarily indicative of
the results expected for the full year.
4. During October 1998, we borrowed $12,400,000 from a commercial bank. The loan is unsecured and bears
interest at the London Interbank Offering Rate ("LIBOR") plus 0.55% (7.17% as of September 30, 2000).
The loan requires monthly payments of interest and matures October 2002. Principal may be paid, in
whole or in part, at any time without penalty or premium. We also entered into interest rate swap
agreements to reduce the impact of changes in interest rates on a portion of its floating rate debt.
The agreement, which covers $5,000,000 of debt through October 2000, effectively changes the interest
rate exposure from floating rate to a fixed rate of 5.205%. The second agreement, which covers
$2,500,000 of debt through October 2001 and effectively changes the interest rate exposure from floating
rate to a fixed rate of 5.33%. Market gains and losses on the value of the swap are deferred and
included in income over the life of the contract. We record the differences paid or received on the
interest rate swap in interest expense as payments are made or received. As of September 30, 2000 the
unrealized gain on the interest swap, if required to be liquidated was approximately $45,000.
5. We sold during March 2000 excess land adjacent to one of our operating properties for $98,000. This
resulted in a gain of approximately $66,000 being realized in the first quarter of 2000. We sold during
June 2000, excess land adjacent to one of our operating properties for $73,000. This resulted in a gain
of approximately $69,000 being realized in the second quarter of 2000. We sold during August 2000 excess
6
land adjacent to one of our operating properties for $1,000. This resulted in a gain of approximately
$1,000 being realized in the third quarter of 2000.
6. In June 1998, June 1999 and June 2000, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities -- Deferral of the Effective Date of SFAS No. 133," and SFAS No. 138,
"Accounting for Certain Derivative Instruments and Certain Hedging Activities - an, amendment of SFAS No.
133." These statements outline the accounting treatment for all derivative activity. The Partnership is
required to and will adopt SFAS No. 133 in the first quarter of fiscal 2001 and does not expect adoption
to have a significant effect on its consolidated results of operations or financial position.
7
PUBLIC STORAGE PROPERTIES, LTD.,
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD LOOKING STATEMENTS
When used within this document, the words "expects," "believes," "anticipates," "should," "estimates,"
and similar expressions are intended to identify "forward-looking statements" within the meaning of that term in
Section 27A of the Securities Exchange Act of 1933, as amended, and in Section 21F of the Securities Exchange Act
of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties, and other
factors, which may cause the actual results and performance of the Partnership to be materially different from
those expressed or implied in the forward looking statements. Such factors include the impact of competition
from new and existing real estate facilities which could impact rents and occupancy levels at the real estate
facilities that the Partnership has an interest in; the Partnership's ability to effectively compete in the
markets that it does business in; the impact of the regulatory environment as well as national, state, and local
laws and regulations including, without limitation, those governing Partnerships; and the impact of general
economic conditions upon rental rates and occupancy levels at the real estate facilities that the Partnership has
an interest in.
RESULTS OF OPERATIONS
Three and nine months ended September 30, 2000 compared to three and nine months ended September 30,
1999:
Our net income for the nine months ended September 30, 2000 was $2,254,000 compared to $1,685,000 for
the nine months ended September 30, 1999, representing an increase of $569,000 or 34%. Our net income for the
three months ended September 30, 2000 was $755,000 compared to $635,000 for the three months ended September 30,
1999, representing an increase of $120,000 or 19%. These increases are primarily a result of the sale of excess
land which resulted in a gain of $136,000 and increased property operating results combined with a decrease in
interest expense.
Rental income for the nine months ended September 30, 2000 was $4,005,000 compared to $3,709,000 for the
nine months ended September 30, 1999, representing an increase of $296,000 or 8%. Rental income for the three
months ended September 30, 2000 was $1,371,000 compared to $1,296,000 for the three months ended September 30,
1999, representing an increase of $75,000 or 6%. These increases are primarily attributable to higher rental
rates and higher occupancy levels at our mini-warehouse facilities. The weighted average occupancy levels at the
mini-warehouse facilities were 96% and 94% for the nine months ended September 30, 2000 and 1999, respectively.
Annual realized rent for the nine months ended September 30, 2000 increased to $10.97 per occupied square foot
from $10.41 per occupied square foot for the nine months ended September 30, 1999.
8
Cost of operations (including management fees paid to an affiliate) for the nine months ended September
30, 2000 was $1,104,000 compared to $1,082,000 for the nine months ended September 30, 1999, representing an
increase of $22,000 or 2%. Cost of operations (including management fees paid to an affiliate) for the three
months ended September 30, 2000 was $375,000 compared to $359,000 for the three months ended September 30, 1999,
representing a increase of $16,000 or 4%.
Interest expense decreased $141,000 to $318,000 for the nine months ended September 30, 2000 from
$459,000 for the same period in 1999. This decrease is mainly attributable to lower outstanding principal
balances. See Liquidity and Capital Resources for a discussion of the refinancing of the Partnership's
indebtedness.
LIQUIDITY AND CAPITAL RESOURCES
Cash generated from operations ($2,557,000 for the nine months ended September 30, 2000) has been
sufficient to meet all current obligations of the Partnership.
During October 1998, we borrowed $12,400,000 from a commercial bank to payoff other loans. The loan is
unsecured and bears interest at the London Interbank Offering Rate ("LIBOR") plus 0.55% (7.17% as of September
30, 2000). The loan requires monthly payments of interest and mature October 2002. Principal may be paid, in
whole or in part, at any time without penalty or premium.
We have also entered into interest rate swap agreements to reduce the impact of changes in interest
rates on a portion of its floating rate debt. The agreement, which covers $5,000,000 of debt through October
2000, effectively changes the interest rate exposure from floating rate to a fixed rate of 5.205%. The second
agreement, which covers $2,500,000 of debt through October 2001 and effectively changes the interest rate
exposure from floating rate to a fixed rate of 5.33%. Market gains and losses on the value of the swap are
deferred and included in income over the life of the contract. We record the differences paid or received on the
interest rate swap in interest expense as payments are made or received. As of September 30, 2000, the
unrealized gain on the interest rate swap, if required to be liquidated was approximately $45,000.
9
PART II. OTHER INFORMATION
ITEMS 1 through 5 are inapplicable.
ITEM 6 Exhibits and Reports on Form 8-K
(a) The following Exhibits are included herein:
(27) Financial Data Schedule
(b) Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.
DATED: November 13, 2000
PUBLIC STORAGE PROPERTIES, LTD.
BY: Public Storage, Inc.
General Partner
BY: /s/ John Reyes
John Reyes
Senior Vice President and
Chief Financial Officer
10
