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, 1998
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)
701 Western Avenue
Glendale, California 91201
- ---------------------------------------- ----------------------
(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
Page
PART I. FINANCIAL INFORMATION
Condensed balance sheets at September 30, 1998
and December 31, 1997 2
Condensed statements of income for the three
and nine months ended September 30, 1998 and 1997 3
Condensed statement of partners' equity for the
nine months ended September 30, 1998 4
Condensed statements of cash flows for the
nine months ended September 30, 1998 and 1997 5
Notes to condensed financial statements 6
Management's discussion and analysis of
financial condition and results of operations 7-9
PART II. OTHER INFORMATION 10
<PAGE>
PUBLIC STORAGE PROPERTIES V, LTD.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------------- -------------------
(Unaudited)
ASSETS
------
<S> <C> <C>
Cash and cash equivalents $ 4,402,000 $ 2,963,000
Marketable securities of affiliate
(cost of $7,834,000 in 1998 and $7,399,000 in 1997) 14,300,000 15,226,000
Rent and other receivables 175,000 127,000
Real estate facilities, at cost:
Buildings and equipment 15,642,000 15,262,000
Land (including land held for sale of $230,000) 4,714,000 4,714,000
------------------- -------------------
20,356,000 19,976,000
Less accumulated depreciation (10,528,000) (9,876,000)
------------------- -------------------
9,828,000 10,100,000
------------------- -------------------
Other assets 122,000 184,000
------------------- -------------------
Total assets $ 28,827,000 $ 28,600,000
=================== ===================
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Accounts payable $ 250,000 $ 69,000
Deferred revenue 201,000 201,000
Mortgage note payable 21,880,000 22,272,000
Partners' equity:
Limited partners' equity (deficit), $500 per unit, 44,000 units
authorized, issued and outstanding 22,000 (1,314,000)
General partners' equity (deficit) 8,000 (455,000)
Unrealized gain on marketable securities 6,466,000 7,827,000
------------------- -------------------
Total partners' equity 6,496,000 6,058,000
------------------- -------------------
Total liabilities and partners' equity $ 28,827,000 $ 28,600,000
=================== ===================
</TABLE>
See accompanying notes.
2
<PAGE>
PUBLIC STORAGE PROPERTIES V, LTD.
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- -------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
REVENUES:
<S> <C> <C> <C> <C>
Rental income $ 1,915,000 $ 1,765,000 $ 5,581,000 $ 5,216,000
Dividends from marketable securities of affiliate 117,000 106,000 348,000 308,000
Other income 56,000 48,000 153,000 139,000
--------------- --------------- --------------- ---------------
2,088,000 1,919,000 6,082,000 5,663,000
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Cost of operations 453,000 407,000 1,400,000 1,270,000
Management fees paid to affiliates 113,000 105,000 332,000 311,000
Depreciation 221,000 207,000 652,000 618,000
Administrative 15,000 26,000 56,000 61,000
Interest expense 611,000 635,000 1,843,000 1,880,000
--------------- --------------- --------------- ---------------
1,413,000 1,380,000 4,283,000 4,140,000
--------------- --------------- --------------- ---------------
NET INCOME $ 675,000 $ 539,000 $ 1,799,000 $ 1,523,000
=============== =============== =============== ===============
Limited partners' share of net income ($40.48 per
unit in 1998 and $34.27 per unit in 1997) $ 1,781,000 $ 1,508,000
General partners' share of net income 18,000 15,000
--------------- ---------------
$ 1,799,000 $ 1,523,000
=============== ===============
</TABLE>
See accompanying notes.
3
<PAGE>
PUBLIC STORAGE PROPERTIES V, LTD.
CONDENSED STATEMENT OF PARTNERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
Unrealized Gain
Limited Partners General Partners on Marketable Total Partners'
(Deficit) Equity (Deficit) Equity Securities Equity
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1997 $ (1,314,000) $ (455,000) $ 7,827,000 $ 6,058,000
Unrealized loss on marketable securities - - (1,361,000) (1,361,000)
Net income 1,781,000 18,000 - 1,799,000
Equity transfer (445,000) 445,000 - -
------------------ ------------------ ------------------ ------------------
Balance at September 30, 1998 $ 22,000 $ 8,000 $ 6,466,000 $ 6,496,000
================== ================== ================== ==================
</TABLE>
See accompanying notes.
4
<PAGE>
PUBLIC STORAGE PROPERTIES V, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------------------
1998 1997
------------------ ------------------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 1,799,000 $ 1,523,000
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation 652,000 618,000
Increase in rent and other receivables (48,000) (20,000)
Amortization of prepaid loan fees 61,000 61,000
Decrease in other assets 1,000 6,000
Increase in accounts payable 181,000 118,000
Decrease in deferred revenue - (16,000)
------------------ ------------------
Total adjustments 847,000 767,000
------------------ ------------------
Net cash provided by operating activities 2,646,000 2,290,000
------------------ ------------------
Cash flow from investing activities:
Purchase of marketable securities of affiliate (435,000) (1,070,000)
Additions to real estate facilities (380,000) (369,000)
------------------ ------------------
Net cash used in investing activities (815,000) (1,439,000)
------------------ ------------------
Cash flow from financing activities:
Principal payments on mortgage note payable (392,000) (352,000)
------------------ ------------------
Net cash used in financing activities (392,000) (352,000)
------------------ ------------------
Net increase in cash and cash equivalents 1,439,000 499,000
Cash and cash equivalents at beginning of period 2,963,000 3,177,000
------------------ ------------------
Cash and cash equivalents at end of period $ 4,402,000 $ 3,676,000
================== ==================
Supplemental schedule of non-cash investing and financing activities:
Decrease in fair value of marketable securities $ 1,361,000 $ 513,000
================== ==================
Unrealized loss on marketable securities $ (1,361,000) $ (513,000)
================== ==================
</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,
1997.
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, 1998, the results of its operations for the three and nine
months ended September 30, 1998 and 1997 and its cash flows for the nine
months then ended.
3. The results of operations for the three and nine months ended September 30,
1998 are not necessarily indicative of the results expected for the full
year.
4. Marketable securities at September 30, 1998 consist of 533,334 shares of
common stock of Public Storage, Inc., a publicly traded real estate
investment trust and a general partner of the Partnership. The Partnership
has designated its portfolio of marketable securities as available for
sale. Accordingly, at September 30, 1998, the Partnership has recorded the
marketable securities at fair value, based upon the closing quoted prices
of the securities at September 30, 1998. Changes in market value of
marketable securities are reflected as unrealized gains or losses directly
in Partners' Equity and accordingly have no effect on net income.
5. The Partnership's mortgage note payable matures on June 1, 1999. The
general partners believe the Partnership can refinance the loan on terms
acceptable to the Partnership upon maturity.
6
<PAGE>
PUBLIC STORAGE PROPERTIES V, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD LOOKING STATEMENTS
- --------------------------
Management's Discussion and Analysis of Financial Condition and Results of
Operations contains "forward looking" statements that involve risks and
uncertainties and are based upon a number of assumptions. Actual results and
trends may differ materially depending upon a number of factors. Information
regarding these factors is contained in the Partnership's Annual Report on Form
10-K for the fiscal year ended December 31, 1997 and in the reports for the
quarterly periods on Form 10-Q for the quarters ended March 31, 1998 and June
30, 1998.
RESULTS OF OPERATIONS
- ---------------------
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 1997:
The Partnership's net income for the nine months ended September 30, 1998
was $1,799,000 compared to $1,523,000 for the nine months ended September 30,
1997, representing an increase of $276,000 or 18%. The Partnership's net income
for the three months ended September 30, 1998 was $675,000 compared to $539,000
for the three months ended September 30, 1997, representing an increase of
$136,000 or 25%. These increases are primarily a result of increased operating
results at the Partnership's mini-warehouse facilities combined with decreased
interest expense.
Rental income for the nine months ended September 30, 1998 was $5,581,000
compared to $5,216,000 for the nine months ended September 30, 1997,
representing an increase of $365,000 or 7%. Rental income for the three months
ended September 30, 1998 was $1,915,000 compared to $1,765,000 for the three
months ended September 30, 1997, representing an increase of $150,000 or 8%. The
increases for the three and nine months ended September 30, 1998 are
attributable to increases in rental rates at the Partnership's mini-warehouse
and business park facilities. Realized rent at the mini-warehouse facilities for
the nine months ended September 30, 1998 increased to $.86 per occupied square
foot from $.80 per occupied square foot for the nine months ended September 30,
1997. Weighted average occupancy levels at the mini-warehouse facility were 94%
and 95% for the nine months ended September 30, 1998 and 1997, respectively.
Rental income at the Partnership's San Francisco business park facility
increased by $4,000 for the nine months ended September 30, 1998 compared to the
same period in 1997 due to increases in both rental rates and occupancy levels.
Realized rent for the nine months ended September 30, 1998 increased to $1.25
per occupied square foot from $1.18 per occupied square foot for the nine months
ended September 30, 1997. Weighted average occupancy levels at the business park
facility were 98% and 97% for the nine months ended September 30, 1998 and 1997,
respectively.
7
<PAGE>
Other income increased $14,000 for the nine months ended September 30, 1998
compared to the same periods in 1997 due to an increase in interest income
earned on invested cash.
Dividend income from marketable securities of affiliate increased $40,000
for the nine months ended September 30, 1998 compared to the same period in 1997
due to an increase in the number of shares owned in 1998 compared to the same
period in 1997.
Cost of operations (including management fees paid to affiliate) for the
nine months ended September 30, 1998 was $1,732,000 compared to $1,581,000 for
the nine months ended September 30, 1997, representing an increase of $151,000
or 10%. Cost of operations (including management fees paid to affiliate) for the
three months ended September 30, 1998 was $566,000 compared to $512,000 for the
three months ended September 30, 1997, representing a increase of $54,000 or
11%. This increase is mainly attributable to increases in management fees,
property taxes, and advertising and promotion expenses. Property taxes increased
due to an increase in property tax rates at some of the Partnership's
mini-warehouse facilities.
Interest expense decreased $37,000 for the nine months ended September 30,
1998 compared to the same period in 1997 due primarily to a lower outstanding
loan balance in 1998 over 1997.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash flows from operating activities ($2,646,000 for the nine months ended
September 30, 1998) have been sufficient to meet all current obligations of the
Partnership.
At September 30, 1998, the Partnership held 533,334 shares of common stock
(marketable securities) with a fair value totaling $14,300,000 (cost basis of
$7,834,000 at September 30, 1998) in Public Storage, Inc. The Partnership
recognized $348,000 in dividends for the nine months ended September 30, 1998.
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.
The Partnership's mortgage note payable matures on June 1, 1999. The
general partners believe the Partnership can refinance the loan on terms
acceptable to the Partnership upon maturity.
IMPACT OF THE YEAR 2000 ISSUE
- -----------------------------
Public Storage, Inc. ("PSI"), the general partner and property manager, has
completed an assessment of all of its hardware and software applications to
identify susceptibility to what is commonly referred to as the "Y2K Issue"
whereby certain computer programs have been written using two digits rather than
four to define the applicable year. Any of PSI's computer programs or hardware
with the Y2K Issue that have date-sensitive applications or embedded chips may
8
<PAGE>
recognize a date using "00" as the year 1900 rather than the year 2000,
resulting in miscalculations or system failure causing disruptions of
operations.
Many of PSI's critical applications, relative to the direct management of
properties, have recently been replaced and PSI believes they are already Year
2000 compliant. PSI has an implementation in process on the remaining critical
applications, including its general ledger and related systems, that are
believed to have Y2K Issues. PSI expects the implementation to be complete by
June 1999. Contingency plans have been developed for use in case PSI's
implementations are not completed on a timely basis. While PSI presently
believes that the impact of the Y2K Issue on its systems can be mitigated, if
the plan for ensuring Year 2000 compliance and the related contingency plans
were to fail, be insufficient, or not be implemented on a timely basis,
operations of the Partnership could be materially impacted.
Certain of PSI's other non-computer related systems that may be impacted by
the Y2K Issue, such as security systems, are currently being evaluated, and PSI
expects the evaluation to be completed by June 1999. PSI expects the
implementation of any required solutions to be complete in advance of December
31, 1999. PSI has not fully evaluated the impact of lack of Year 2000 compliance
on these systems, but has no reason to believe that lack of compliance would
materially impact the operations of the Partnership.
The Partnership exchanges electronic data with certain outside vendors in
the banking and payroll processing areas. PSI has been advised by these vendors
that their systems are or will be Year 2000 compliant, but has requested a Year
2000 compliance certification from these entities. PSI is not aware of any other
vendors, suppliers, or other external agents with a Y2K Issue that would
materially impact the Partnership's results of operations, liquidity, or capital
resources. However, PSI has no means of ensuring that external agents will be
Year 2000 compliant, and there can be no assurance that the Partnership has
identified all such external agents. The inability of external agents to
complete their Year 2000 compliance process in a timely fashion could materially
impact the Partnership. The effect of non-compliance by external agents is not
determinable.
The total cost of PSI's Year 2000 compliance activities (which primarily
consists of the costs of new systems) will be allocated to all entities that use
the PSI computer systems. The amount to be allocated to the Partnership is
estimated at approximately $64,000. These costs are capitalized.
The costs of the projects and the date on which PSI believes that it will
be Year 2000 compliant are based upon management's best estimates, and were
derived utilizing numerous assumptions of future events. There can be no
assurance that these estimates will be achieved, and actual results could differ
materially from those anticipated. There can be no assurance that PSI has
identified all potential Y2K Issue either within PSI and the Partnership or at
external agents. In addition, the impact of the Y2K Issue on governmental
entities and utility providers and the resultant impact on the Partnership, as
well as disruptions in the general economy, may be material but cannot be
reasonably determined or quantified.
9
<PAGE>
PART II. OTHER INFORMATION
Items 1 through 5 are inapplicable.
Item 6 Exhibits and Reports on Form 8-K.
---------------------------------
(a) The following exhibit is 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, 1998
PUBLIC STORAGE PROPERTIES V, LTD.
BY: Public Storage, Inc.
General Partner
BY: /s/ John Reyes
-------------------------
John Reyes
Senior Vice President and
Chief Financial Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000277925
<NAME> Public Storage Properties V, Ltd.
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-1-1998
<PERIOD-END> Sep-30-1998
<EXCHANGE-RATE> 1
<CASH> 4,402,000
<SECURITIES> 14,300,000
<RECEIVABLES> 175,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 18,999,000
<PP&E> 20,356,000
<DEPRECIATION> (10,528,000)
<TOTAL-ASSETS> 28,827,000
<CURRENT-LIABILITIES> 451,000
<BONDS> 21,880,000
0
0
<COMMON> 0
<OTHER-SE> 6,496,000
<TOTAL-LIABILITY-AND-EQUITY> 28,827,000
<SALES> 0
<TOTAL-REVENUES> 6,082,000
<CGS> 0
<TOTAL-COSTS> 1,732,000
<OTHER-EXPENSES> 708,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,843,000
<INCOME-PRETAX> 1,799,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,799,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,799,000
<EPS-PRIMARY> 40.48
<EPS-DILUTED> 40.48
</TABLE>
