<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the period ended September 30, 1995
or
[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______________ to _______________
Commission File Number 0-9208
------
PUBLIC STORAGE PROPERTIES V, LTD.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-3292068
- ---------------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
600 N. Brand Boulevard
Glendale, California 91203
- ---------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 244-8080
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
<PAGE>
INDEX
<TABLE>
<CAPTION>
Page
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<S> <C>
PART I. FINANCIAL INFORMATION
Condensed balance sheets at September 30, 1995
and December 31, 1994 2
Condensed statements of operations for the three
and nine months ended September 30, 1995 and 1994 3
Condensed statement of partners' deficit for the
nine months ended September 30, 1995 4
Condensed statements of cash flows for the
nine months ended September 30, 1995 and 1994 5
Notes to condensed financial statements 6-7
Management's discussion and analysis of
financial condition and results of operations 8-10
PART II. OTHER INFORMATION 11-12
</TABLE>
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PUBLIC STORAGE PROPERTIES V, LTD.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
------
Cash and cash equivalents $ 1,453,000 $ 675,000
Marketable securities of affiliate
(cost of $4,885,000) 7,788,000 6,011,000
Rent and other receivables 126,000 74,000
Real estate facilities:
Buildings and equipment 14,105,000 13,824,000
Land 5,077,000 5,077,000
----------- -----------
19,182,000 18,901,000
Less accumulated depreciation (8,101,000) (7,593,000)
----------- -----------
11,081,000 11,308,000
----------- -----------
Other assets 359,000 422,000
----------- -----------
Total assets $20,807,000 $18,490,000
=========== ===========
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
Accounts payable $ 305,000 $ 396,000
Deferred revenue 204,000 229,000
Mortgage note payable 23,296,000 23,609,000
Partners' deficit:
Limited partners' deficit, $500 per
unit, 44,000 units authorized,
issued and outstanding (4,382,000) (5,101,000)
General partners' deficit (1,519,000) (1,769,000)
Unrealized gain on marketable
securities 2,903,000 1,126,000
----------- -----------
Total partners' deficit (2,998,000) (5,744,000)
----------- -----------
Total liabilities and partners' deficit $20,807,000 $18,490,000
=========== ===========
</TABLE>
See accompanying notes.
2
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PUBLIC STORAGE PROPERTIES V, LTD.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------- ---------------------------
1995 1994 1995 1994
----------- ------------------ ----------- -------------
<S> <C> <C> <C> <C>
REVENUES:
Rental income $1,606,000 $1,537,000 $4,640,000 $4,510,000
Dividends and other income
(including dividends from marketable
securities of affiliate) 108,000 214,000 311,000 355,000
---------- ---------- ---------- ----------
1,714,000 1,751,000 4,951,000 4,865,000
---------- ---------- ---------- ----------
COSTS AND EXPENSES:
Cost of operations 383,000 375,000 1,165,000 1,136,000
Management fees paid to affiliates 96,000 107,000 277,000 284,000
Depreciation and amortization 178,000 156,000 508,000 462,000
Administrative 21,000 24,000 80,000 53,000
Interest expense 648,000 658,000 1,952,000 2,022,000
---------- ---------- ---------- ----------
1,326,000 1,320,000 3,982,000 3,957,000
---------- ---------- ---------- ----------
NET INCOME $ 388,000 $ 431,000 $ 969,000 $ 908,000
========== ========== ========== ==========
Limited partners' share of net income
($21.79 per unit in 1995 and
$20.43 per unit in 1994) $ 959,000 $ 899,000
General partners' share of net income 10,000 9,000
---------- ----------
$ 969,000 $ 908,000
========== ==========
</TABLE>
See accompanying notes.
3
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PUBLIC STORAGE PROPERTIES V, LTD.
CONDENSED STATEMENT OF PARTNERS' DEFICIT
(UNAUDITED)
<TABLE>
<CAPTION>
Unrealized
Gain on Total
Limited General Marketable Partners'
Partners Partners Securities Deficit
------------ ------------ ---------- ------------
<S> <C> <C> <C> <C>
Balance at December 31, 1994 $(5,101,000) $(1,769,000) $1,126,000 $(5,744,000)
Change in unrealized gain on
marketable securities - - 1,777,000 1,777,000
Net income 959,000 10,000 - 969,000
Equity transfer (240,000) 240,000 - -
----------- ----------- ---------- -----------
Balance at September 30, 1995 $(4,382,000) $(1,519,000) $2,903,000 $(2,998,000)
----------- ----------- ---------- -----------
</TABLE>
See accompanying notes.
4
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PUBLIC STORAGE PROPERTIES V, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------
1995 1994
----------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 969,000 $ 908,000
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 508,000 462,000
Increase in rent and other receivables (52,000) (39,000)
Decrease in other assets 63,000 61,000
Decrease in accounts payable (91,000) (425,000)
Decrease in deferred revenue (25,000) (36,000)
---------- -----------
Total adjustments 403,000 23,000
---------- -----------
Net cash provided
by operating activities 1,372,000 931,000
---------- -----------
Cash flows from investing activities:
Insurance proceeds relating to destroyed
real estate facility - 825,000
Purchase of marketable securities - (1,129,000)
Additions to real estate facilities (281,000) (130,000)
---------- -----------
Net cash used in
investing activities (281,000) (434,000)
---------- -----------
Cash flows from financing activities:
Principal payments on mortgage note payable (313,000) (1,773,000)
---------- -----------
Net cash used in
financing activities (313,000) (1,773,000)
---------- -----------
Net increase (decrease) in
cash and cash equivalents 778,000 (1,276,000)
Cash and cash equivalents at
the beginning of the period 675,000 3,152,000
---------- -----------
Cash and cash equivalents at
the end of the period $1,453,000 $ 1,876,000
========== ===========
Supplemental schedule of non-cash
investing and financing activities:
Increase in fair value of marketable
securities $(1,777,000) $(1,200,000)
=========== ===========
Unrealized gain on marketable
securities $ 1,777,000 $ 1,200,000
=========== ===========
</TABLE>
See accompanying notes.
5
<PAGE>
PUBLIC STORAGE PROPERTIES V, 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 September 30, 1995, the results of its operations for the
three and nine months ended September 30, 1995 and 1994 and its cash
flows for the nine months then ended.
3. The results of operations for the three and nine months ended September
30, 1995 are not necessarily indicative of the results expected for the
full year.
4. Marketable securities at September 30, 1995 consist of 418,128 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 September 30, 1995,
the Partnership has recorded the marketable securities at fair value,
based upon the closing quoted prices of the securities at September 30,
1995, and a corresponding unrealized gain totaling $2,903,000 as a credit
to Partnership equity.
6
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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 six month period ended
June 30, 1995, the Partnership completed environmental assessments on its
properties. Those assessments indicate that the Partnership's property
sites do not have any significant environmental issues which would have a
materially adverse effect on the Partnership's financial position.
Included in administrative expenses on the statement of operations for the
nine months ended September 30, 1995 is approximately $25,000 incurred in
connection with the environmental assessments.
6. PSI, a general partner of the Partnership, and Public Storage Management,
Inc. ("PSMI"), the Partnership's mini-warehouse property manager, have
entered into an Agreement and Plan of Reorganization by and among PSI,
PSMI and SEI, dated as of June 30, 1995, pursuant to which PSMI would be
merged into SEI. Prior to the merger, substantially all of the United
States real estate interests of PSI, together with Public Storage
Commercial Properties Group, Inc. (the Partnership's business park
property manager) and Public Storage Advisers, Inc. (SEI's investment
adviser), will be combined with PSMI. Upon completion of the merger,
which is scheduled to occur in November 1995, SEI would replace PSI as a
general partner of the Partnership. After the merger, B. Wayne Hughes
would continue as a general partner of the Partnership. The merger is
subject to a number of conditions.
In November 1995, the Management Agreement with PSMI was amended to
provide that upon demand from PSMI or SEI made prior to December 15, 1995,
the Partnership agrees to prepay (within 15 days after such demand) up to
12 months of management fees (based on the management fees for the
calendar year immediately preceding such prepayment) discounted at the
rate of 14% per year to compensate for early payment.
7
<PAGE>
PUBLIC STORAGE PROPERTIES V, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
---------------------
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 1994:
The Partnership's net income for the nine months ended September 30, 1995
and 1994 was $969,000 and $908,000, respectively, representing an increase of
$62,000 or 7%. Net income for the three months ended September 30, 1995 and
1994 was $388,000 and $431,000, respectively, representing a decrease of
$43,000 or 10%. The increase for the nine months ended September 30, 1995 is
primarily the result of increased operating results at the Partnership's
mini-warehouse facilities offset by a decrease in operations at the San
Francisco business park facility. The decrease for the three months ended
September 30, 1995 is primarily due to a decrease in other income.
Rental income was $4,640,000 compared to $4,510,000 for the nine months
ended September 30, 1995 and 1994, respectively, representing an increase of
$130,000 or 3%. Rental income was $1,606,000 compared to $1,537,000 for the
three months ended September 30, 1995 and 1994, respectively, representing an
increase of $69,000 or 4%. These increases are attributable to an increase
in rental rates and a slight increase in occupancy levels at the
Partnership's mini-warehouse facilities. Weighted average occupancy levels
at the mini-warehouse facilities were 90% and 89% for the nine months ended
September 30, 1995 and 1994, respectively. Rental income at the San
Francisco business park facility declined by $27,000 for the nine months
ended September 30, 1995 compared to the same period in 1994 due to a
decrease in occupancy. Average occupancy levels at the business park
facility were 92% and 96% for the nine months ended September 30, 1995 and
1994, respectively.
Other income decreased $44,000 for the nine months ended September 30,
1995 compared to the same period in 1994. Other income decreased $106,000
for the three months ended September 30, 1995 compared to the same period in
1994. These decreases are due to the receipt of $138,000 in the third
quarter of 1994 of additional insurance proceeds relating to the Perrine,
Florida property destroyed by Hurricane Andrew in August 1992 offset by an
increase in dividend income on marketable securities of affiliate. The
increase in dividend income is attributable to an increase in the number of
shares owned in 1995 compared to the same period in 1994 and an increase in
the dividend rate from $.21 to $.22 per quarter per share.
8
<PAGE>
Cost of operations (including management fees paid to affiliates)
increased $22,000 to $1,442,000 from $1,420,000 for the nine months ended
September 30, 1995 and 1994, respectively. This increase is mainly
attributable to increases in payroll and repairs and maintenance costs offset
by a decrease in property tax expense. Cost of operations remained stable
for the three months ended September 30, 1995 compared to the same period in
1994.
Administrative expenses increased $27,000 for the nine months ended
September 30, 1995 compared to the same period in 1994 primarily as a 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 environmental
investigations in connection with property acquisitions. During the first
quarter of 1995, the Partnership commenced environmental assessments on its
properties and incurred approximately $25,000 in connection with those
assessments. Those assessments indicate that the Partnership's property
sites do not have any significant environmental issues which would have a
materially adverse effect on the Partnership's financial position.
Interest expense decreased $70,000 for the nine months ended September
30, 1995 compared to the same period in 1994 due primarily to a lower
outstanding loan balance in 1995 over 1994.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Cash flows from operating activities ($1,372,000 for the nine months
ended September 30, 1995) have been sufficient to meet all current
obligations of the Partnership. During 1995, the Partnership anticipates
approximately $311,000 of capital improvements, of which $281,000 has been
incurred through September 30, 1995.
At September 30, 1995, the Partnership held 418,128 shares of common
stock (marketable securities) with a fair value totaling $7,788,000 (cost
basis of $4,885,000 at September 30, 1995) in Storage Equities, Inc. ("SEI"),
a real estate investment trust whose investment advisor is an affiliate of
Public Storage, Inc. (a general partner of the Partnership). The Partnership
recognized $276,000 in dividends for the nine months ended September 30, 1995
and included this in Other income on the Condensed Statements of Operations.
As of September 30, 1995, SEI's stock price per share has increased $6.95
over the Partnership's cost resulting in a $2,903,000 increase in the
aggregate value of the securities.
9
<PAGE>
In the third quarter of 1991, quarterly distributions were discontinued
to enable the Partnership to make principal payments that commenced in 1991
and to increase cash reserves in subsequent years through 1999, at which time
the remaining principal balance is due.
10
<PAGE>
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:
(10) Amendment to Management Agreement among Public Storage
Management, Inc., Storage Equities, Inc. and the
Partnership, dated as of November 13, 1995.
(27) Financial Data Schedule
(b) Form 8-K
None
11
<PAGE>
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, 1995
PUBLIC STORAGE PROPERTIES V, LTD.
BY: Public Storage, Inc.
General Partner
BY: /s/ Ronald L. Havner, Jr.
----------------------------
Ronald L. Havner, Jr.
Vice President and Chief
Financial Officer
(principal accounting and
financial officer)
12
<PAGE>
EXHIBIT 10
AMENDMENT TO MANAGEMENT AGREEMENTS
This Amendment to Management Agreements is executed as of November 13,
1995, by and among Public Storage Management, Inc. ("PSMI"), Storage
Equities, Inc. ("SEI") and each of the entities whose name appears on the
signature pages hereof under the designation "Owners" (collectively, the
"Owners" and individually, an "Owner").
A. At various dates between May 1976 and May 1978, PSMI and each of
the Owners entered into Management Agreements (collectively, the "Management
Agreements") providing for the management by PSMI of the mini-warehouses
owned by the Owners and monthly payments of management fees equal to 6% of
the gross revenues generated by Owners' mini-warehouses.
B. SEI and PSMI have entered into an Agreement and Plan of
Reorganization dated as of June 30, 1995 pursuant to which PSMI would be
merged with and into SEI. Upon completion of the merger, SEI will manage the
mini-warehouses owned by the Owners.
C. The general partners of the Owners believe that the Owners'
prepayment of management fees on the terms set forth in this Amendment is
financially beneficial to the Owners, and the parties hereto desire to modify
each of the Management Agreements to provide for such prepayment.
Now, therefore, the parties agree as follows:
1. The following shall be added as the last two sentences of the first
paragraph of Section 4 of each of the Management Agreements:
"Upon demand from SEI or PSMI made prior to December 15, 1995, each
of the Owners agrees to pay within 15 days after such demand in advance
up to 12 months of management fees discounted at the rate of 14% per
year (based on the management fees for the comparable period during the
calendar year immediately preceding such prepayment). The property
manager shall be deemed to have earned such prepayments at the time of
payment thereof, and Owners shall not be entitled to a return of such
prepayment, or any portion thereof, under any circumstances. In
addition, the property manager shall not be entitled to any further or
additional payment of management fees for a period with respect to which
a prepayment is made hereunder because the actual gross revenues for
such period would have resulted in a higher management fee had such
prepayment not been made."
2. Other than as set forth in this Amendment, all of the provisions
contained in each of the Management Agreements are hereby ratified and
approved.
1
<PAGE>
In witness whereof, the undersigned have executed this Amendment, as of
the day and year first above written.
"PSMI"
PUBLIC STORAGE MANAGEMENT, INC.
By: /s/ Ronald L. Havner, Jr.
-------------------------
Ronald L. Havner, Jr.,
Vice President
"SEI"
STORAGE EQUITIES, INC.
By: /s/ B. Wayne Hughes
-------------------
B. Wayne Hughes,
Chairman of the Board
"Owners"
PUBLIC STORAGE PARTNERS, LTD.
By: Public Storage, Inc.
General Partner
By: /s/ Ronald L. Havner, Jr.
-------------------------
Ronald L. Havner, Jr.,
Vice President
PUBLIC STORAGE PARTNERS II, LTD.
By: Public Storage, Inc.
General Partner
By: /s/ Ronald L. Havner, Jr.
-------------------------
Ronald L. Havner, Jr.,
Vice President
2
<PAGE>
PUBLIC STORAGE PROPERTIES, LTD.
By: Public Storage, Inc.
General Partner
By: /s/ Ronald L. Havner, Jr.
-------------------------
Ronald L. Havner, Jr.,
Vice President
PUBLIC STORAGE PROPERTIES IV, LTD
By: Public Storage, Inc.
General Partner
By: /s/ Ronald L. Havner, Jr.
-------------------------
Ronald L. Havner, Jr.,
Vice President
PUBLIC STORAGE PROPERTIES V, LTD.
By: Public Storage, Inc.
General Partner
By: /s/ Ronald L. Havner, Jr.
-------------------------
Ronald L. Havner, Jr.,
Vice President
3
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1995
<CASH> 1,453,000
<SECURITIES> 7,788,000
<RECEIVABLES> 126,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,367,000
<PP&E> 19,541,000
<DEPRECIATION> (8,101,000)
<TOTAL-ASSETS> 20,807,000
<CURRENT-LIABILITIES> 509,000
<BONDS> 23,296,000
<COMMON> 0
0
0
<OTHER-SE> (2,998,000)
<TOTAL-LIABILITY-AND-EQUITY> 20,807,000
<SALES> 0
<TOTAL-REVENUES> 4,951,000
<CGS> 0
<TOTAL-COSTS> 1,950,000
<OTHER-EXPENSES> 80,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,952,000
<INCOME-PRETAX> 969,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 969,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 969,000
<EPS-PRIMARY> 21.79
<EPS-DILUTED> 0
</TABLE>
