<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
STATEMENT ON SCHEDULE 14D-1
Tender Offer Statement Pursuant To Section 14(d)(1) of
the Securities Exchange Act of 1934
_________________
STATEMENT ON SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
_________________
PS PARTNERS, LTD.
(Name of Subject Company)
_________________
Public Storage, Inc.
(Bidder)
_________________
Units of Limited Partnership Interest
(Title of Class of Securities)
_________________
NONE
(CUSIP Number of Class of Securities)
_________________
DAVID GOLDBERG
Public Storage, Inc.
701 Western Avenue, 2nd Floor
Glendale, California 91201-2397
(818) 244-8080
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidder)
_________________
CALCULATION OF REGISTRATION FEE
================================================================================
Transaction Valuation* Amount of Filing Fee**
- --------------------------------------------------------------------------------
$7,672,000 $1,535
* This Tender Offer Statement on Schedule 14D-1 is being filed in connection
with an Offer made by Public Storage, Inc. to acquire up to 14,000 of the
outstanding units of limited partnership interest (the "Units") of PS Partners,
Ltd., a California limited partnership (the "Partnership"). The total
value of the transaction was estimated solely for purposes of calculating the
filing fee.
[__] Check box if any part of the fee is offset as provided by Rule 0-
11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: Not Applicable
Form or Registration No.:
Filing Party:
Date Filed:
<PAGE>
1) Name of Reporting Person: Public Storage, Inc.
S.S. or I.R.S. Identification No. of Above Person: 95-3551121
2) Check the Appropriate Box if a Member of a Group (See Instructions)
[__]
[__] (a)
_________________________________________________________________________
[__]
[__] (b)
_________________________________________________________________________
3) SEC Use Only
______________________________________________________________________
4) Sources of Funds (See Instructions): WC
5) [__] Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f).
6) Citizenship or Place of Organization: California
7) Aggregate Amount Beneficially Owned by Each Reporting Person: 40,784 units
of limited partnership interest.
8) [__] Check if the Aggregate Amount in Row 7 Excludes Certain Shares (See
Instructions).
9) Percent of Class Represented by Amount in Row 7: 62%
10) Type of Reporting Person (See Instructions): CO
-2-
<PAGE>
This Statement on Schedule 14D-1 also constitutes Amendment No. 1 to
Statement on Schedule 13D dated February 28, 1995, filed by Public Storage,
Inc., formerly known as Storage Equities, Inc.
Item 1. Security and Subject Companies.
------------------------------
(a) The name of the subject company is PS Partners, Ltd., a
California limited partnership (the "Partnership"), and the address of
its principal executive office is 701 Western Avenue, 2nd Floor,
Glendale, California 91201-2397.
(b) The class of securities to which this Statement relates is the units
of limited partnership interest (the "Units") of the Partnership. There
are 66,000 outstanding Units. The information set forth under
"Introduction" and "The Offer" in the Offer to Purchase dated July 26,
1996 (the "Offer") annexed hereto as Exhibit (a)(1) is incorporated
herein by reference.
(c) The information set forth under "Market Prices of Units" in the
Offer is incorporated herein by reference.
Item 2. Identity and Background.
-----------------------
(a)-(d); (g) This Statement is filed by Public Storage, Inc. (the
"Company"), a California corporation located at 701 Western Avenue, 2nd
Floor, Glendale, California 91201-2397. The information set forth under
"Background and Purpose of the Offer" in the Offer and Schedule 5
thereto is incorporated herein by reference.
(e)-(f) During the last five years, neither the Company nor, to the
Company's best knowledge, any of the persons identified in response to
2(a) has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or was a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a
result of which any such person was or is subject to a judgment, decree
or final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of
such laws.
Item 3. Past Contracts, Transactions or Negotiations with the Subject Company.
---------------------------------------------------------------------
(a)-(b) The information set forth in "Background and Purpose of the
Offer -- Relationships" and "Certain Related Transactions" in the Offer
is incorporated herein by reference.
Item 4. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
(a)-(b) The information set forth in "The Offer -- Source of Funds" in
the Offer is incorporated herein by reference.
(c) Not applicable.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder.
----------------------------------------------------------------
(a)-(g) The information set forth in "Background and Purpose of the
Offer," "Special Considerations" and "Effects of Offer on Non-Tendering
Unitholders" in the Offer is incorporated herein by reference.
-3-
<PAGE>
Item 6. Interest in Securities of the Subject Company.
---------------------------------------------
(a) The Company beneficially owns 40,784 Units of the Partnership which
represents approximately 62% of the outstanding Units. To the
knowledge of the Company, none of its executive officers or directors
owns any Units.
(b) The information set forth in "Market Prices of Units -- General" in
the Offer is incorporated herein by reference.
Item 7. Contracts, Arrangements, Understandings or Relationships with Respect to
------------------------------------------------------------------------
the Subject Company's Securities.
--------------------------------
There are no contracts, arrangements, understandings or relationships
between the Company and any person with respect to any Units of the
Partnership, except as described in items 6 and 8 hereof.
Item 8. 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 9. Financial Statements of Certain Bidders.
---------------------------------------
Not applicable.
Item 10. Additional Information.
----------------------
(a)-(e) Not applicable.
(f) The Offer and the Letter of Transmittal, Exhibits (a)(1) and (e)(1)
hereto, are incorporated herein by reference in their entirety.
Item 11. Material to be filed as Exhibits.
--------------------------------
See Exhibit Index contained herein.
-4-
<PAGE>
SIGNATURE
---------
After reasonable inquiry and to the best of its knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, correct and complete.
Dated: July 25, 1996 PUBLIC STORAGE, INC.
By: /s/ DAVID GOLDBERG
---------------------------------
David Goldberg
Senior Vice President and
General Counsel
-5-
<PAGE>
Exhibit Index
-------------
Exhibit No.
- -----------
(a) (1) Offer to Purchase dated July 26, 1996.
(2) Letter of Transmittal.
(3) Form of letters to Unitholders.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g) Letter appraisal report by Nicholson-Douglas Realty Consultants, Inc.
dated May 10, 1996.
-6-
<PAGE>
EXHIBIT 99.(a)(1)
[LETTERHEAD OF PUBLIC STORAGE]
IF YOU HAVE ANY QUESTIONS ABOUT THIS OFFER, PLEASE CALL THE SOLICITING AGENT,
CHRISTOPHER WEIL & COMPANY, INC., 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.
JULY 26, 1996
RE: TENDER OFFER FOR UNITS OF
PS Partners, Ltd., a California limited partnership
---------------------------------------------------
Dear Unitholder:
Public Storage, Inc. (the "Company") is offering to purchase up to 14,000
of the limited partnership units (the "Units") in PS Partners, Ltd., a
California limited partnership (the "Partnership") at a net cash price per Unit
of $548 (the "Offer"). There will be no commissions or fees paid by you
associated with the sale. THE COMPANY IS A GENERAL PARTNER OF THE PARTNERSHIP.
The Offer is not conditioned upon a minimum number of Units being
tendered. If more than 14,000 Units are validly tendered, the Company will only
accept 14,000 Units, with such Units purchased on a pro rata basis.
SINCE THE COMPANY IS A GENERAL PARTNER OF THE PARTNERSHIP, NO
RECOMMENDATION IS MADE TO ANY UNITHOLDER WHETHER OR NOT TO PARTICIPATE IN THE
OFFER.
The Company has enclosed an Offer to Purchase and Letter of Transmittal
which together describe the terms of the Offer. The Company urges 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 $548 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 August 28, 1996, unless extended.
We thank you for your prompt attention to this matter.
Very truly yours,
PUBLIC STORAGE, INC.
By: /s/ Harvey Lenkin
---------------------------------
Harvey Lenkin
President
<PAGE>
OFFER TO PURCHASE FOR CASH UP TO 14,000
LIMITED PARTNERSHIP UNITS OF
PS PARTNERS, LTD., A CALIFORNIA LIMITED PARTNERSHIP, AT
$548 NET PER UNIT
BY
PUBLIC STORAGE, INC.
THE OFFER, WITHDRAWAL RIGHTS AND THE PRORATION PERIOD WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON AUGUST 28, 1996, UNLESS THE OFFER IS EXTENDED.
PUBLIC STORAGE, INC. (THE "COMPANY" OR "PSI"), A GENERAL PARTNER OF THE
PARTNERSHIP, IS OFFERING TO PURCHASE UP TO 14,000 OF THE LIMITED PARTNERSHIP
UNITS (THE "UNITS") IN PS PARTNERS, LTD., A CALIFORNIA LIMITED PARTNERSHIP (THE
"PARTNERSHIP"), AT A NET CASH PRICE PER UNIT OF $548 (THE "OFFER"). THE OFFER
IS NOT CONDITIONED UPON A MINIMUM NUMBER OF UNITS BEING TENDERED. IF MORE THAN
14,000 UNITS (APPROXIMATELY 21% OF THE OUTSTANDING UNITS) ARE VALIDLY TENDERED,
THE COMPANY WILL ACCEPT ONLY 14,000 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 is a General Partner of the Partnership, no
recommendation is made to Unitholders with respect to the Offer.
. The Offer Price was established by the Company 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,
Christopher Weil & Company, Inc., at (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'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. See "The Offer - Soliciting
Agent."
____________________
<PAGE>
. The Company is, and will continue after the Offer to be, in a
position to control all voting decisions with respect to the
Partnership.
. Although the Offer Price represents the General Partners'
estimate, based on an independent limited appraisal, of the
liquidation value per Unit, the Offer Price may be less than the
amount Unitholders would actually receive upon liquidation of the
Partnership.
. The General Partners believe that the Partnership's properties,
like mini-warehouses generally, have increased in value over the
last several years and, although there can be no assurance, may
continue to appreciate in value.
. 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. See "Special
Considerations."
The Company and the Partnership are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith file reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Reports, proxy statements and other information filed by the Company and 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. Such
information for the Company can also be inspected at the New York Stock Exchange
("NYSE"), 20 Broad Street, New York, New York 10005.
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
<TABLE>
<S> <C> <C>
By Mail By Hand By Overnight Courier
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 45-02-53 3rd Floor Mail Stop 45-02-53
Boston, MA 02105 New York, NY 10006 Canton, MA 02021
</TABLE>
(ii)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY.................................................................... 1
The Companies.......................................................... 1
The Offer.............................................................. 1
Purpose of the Offer................................................... 1
Position of the General Partners With Respect to the Offer............. 1
Special Considerations................................................. 2
SPECIAL CONSIDERATIONS..................................................... 2
Conflicts of Interest with Respect to the Offer........................ 2
No Arms' Length Negotiation............................................ 2
Control of all Partnership Voting Decisions by the Company............. 3
Offer Price May Be Less than Amount Received Upon Liquidation.......... 3
Possible Increase in Value............................................. 3
Alternatives to Tendering Units........................................ 3
BACKGROUND AND PURPOSE OF THE OFFER........................................ 4
The Partnership........................................................ 4
The Company............................................................ 5
Prior Tender Offer..................................................... 5
Relationships.......................................................... 5
Purpose of the Offer................................................... 7
POSITION OF THE GENERAL PARTNERS WITH RESPECT TO THE OFFER................. 7
DETERMINATION OF OFFER PRICE............................................... 11
THE OFFER.................................................................. 11
Terms of the Offer..................................................... 11
Proration; Acceptance for Payment and Payment for Units................ 11
Procedures for Tendering Units......................................... 12
Withdrawal Rights...................................................... 13
Extension of Tender Period; Termination and Amendment.................. 13
Source of Funds........................................................ 14
Conditions of the Offer................................................ 14
Fees and Expenses...................................................... 15
Soliciting Agent....................................................... 15
Dissenters' Rights and Investor Lists.................................. 15
Federal Income Tax Consequences........................................ 15
Miscellaneous.......................................................... 16
EFFECTS OF OFFER ON NON-TENDERING UNITHOLDERS.............................. 16
Control of the Partnership............................................. 16
Effect on Trading Market............................................... 16
Partnership Status..................................................... 16
Partnership Business................................................... 16
MARKET PRICES OF UNITS..................................................... 17
General................................................................ 17
Information Obtained from Dean Witter Regarding Sales Transactions..... 18
Information From The Stanger Report Regarding Sales Transactions....... 18
Information from the Chicago Partnership Board Regarding
Sales Transactions................................................... 19
</TABLE>
(iii)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
CERTAIN RELATED TRANSACTIONS............................................... 20
Joint Venture Interests................................................ 20
General Partners' Interest............................................. 20
Property Management.................................................... 20
Limited Partner Interests.............................................. 20
SCHEDULE 1 - PARTNERSHIP DISTRIBUTIONS..................................... 1-1
SCHEDULE 2 - PROPERTY INFORMATION.......................................... 2-1
SCHEDULE 3 - PARTNERSHIP FINANCIAL STATEMENTS.............................. 3-1
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
</TABLE>
(iv)
<PAGE>
To the Holders of Limited Partnership Units of
PS Partners, Ltd., a California limited partnership
SUMMARY
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.
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 COMPANIES
PS Partners, Ltd., a
California limited partnership The Partnership, organized in 1983, owns
interests in 28 properties, all of which are
owned jointly with the Company. 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 July 1,
1996, there were approximately 1,198 holders of
record owning 66,000 Units. The Company owns
40,784 Units in the Partnership (approximately
62% of the outstanding Units).
Public Storage, Inc. The Company is a real estate investment trust
("REIT"), organized in 1980 as a California
corporation, that has invested primarily in
existing mini-warehouses. The Company is one of
the general partners of the Partnership. See
"Background and Purpose of the Offer -- The
Company" and "-- Relationships."
THE OFFER
Number of Units
Subject to Offer 14,000 (approximately 21% of the outstanding
Units)
Offer Price $548 per Unit (the "Offer Price")
Expiration, Withdrawal
and Proration Date August 28, 1996, unless extended. See "The
Offer"
PURPOSE OF THE OFFER
The Company has decided to increase its ownership of the Partnership and
has chosen to accomplish this through a tender offer on terms it believes are
attractive to the Company and its shareholders. The Company believes that the
acquisition of Units through the Offer represents a good investment to the
Company and its shareholders. 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."
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.
Although the Offer Price represents the General Partners' estimate, based on an
independent limited appraisal of the liquidation value per Unit, the Offer Price
may be less than the amount Unitholders would actually receive upon liquidation
of the Partnership. Accordingly, the Offer may not necessarily be advantageous
1
<PAGE>
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 Company 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, which currently owns 62% of the
outstanding Units and is in a position to control all Partnership
voting decisions, could own as much as 83% of the Units;
. Although the Offer Price represents the General Partners'
estimate, based on an independent limited appraisal, of the
liquidation value per Unit, the Offer Price may be less than the
amount Unitholders would actually receive upon liquidation of the
Partnership;
. The General Partners believe that the Partnership's properties,
like mini-warehouses generally, have increased in value over the
last several years and may continue to do so, although there can
be no assurance;
. 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."
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 Company, a General Partner of the Partnership, the
Company has substantial conflicts of interest with respect to the Offer.
The Company has 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 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, which is a General Partner of the Partnership, and is not
the result of arms' length negotiations between the Company 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
negotiate a higher Offer Price. The Company, the largest owner and
operator of mini-warehouses in the United States, believes that the
Offer presents an opportunity to increase, on attractive terms, its
investment in mini-warehouses in which it already has an interest.
2
<PAGE>
Control of all Partnership Voting Decisions by the Company. The
----------------------------------------------------------
Company, which currently owns 62% of the outstanding Units and is in a
position to control all Partnership voting decisions, could, after the
Offer, own as much as 83% of the Units and continue to be in a position
to 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 Company opposed and (ii) enable
the Company to take action desired by the Company but opposed by non-
tendering Unitholders. Substantially all of the Partnership's
properties are owned jointly with the Company. Conflicts could exist
between the best interests of the Partnership and the Company 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 Company, while a sale could be in the interest
of the Partnership.
Offer Price May Be Less than Amount Received Upon Liquidation. Although
-------------------------------------------------------------
the Offer Price represents the General Partners' estimate, based on an
independent limited appraisal, of the liquidation value per Unit, the
Offer Price may be less than the amount Unitholders would actually
receive upon liquidation of the Partnership. There is no present
intention to liquidate the Partnership. The Offer may not necessarily
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. The General Partners believe that the
--------------------------
Partnership's properties, like mini-warehouses generally, have increased
in value over the last several years and, although there can be no
assurance, may continue to appreciate in value.
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 $33,000,000 from the sale of 66,000 Units at $500 per Unit in a
registered public offering of the Units completed in January 1983. All of the
Partnership's net proceeds of that offering have been invested in mini-
warehouses and, to a lesser extent, business parks. The Partnership owns
interests in 28 properties, all of which are owned jointly with the Company.
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
Partnership's properties are managed by the Company and an affiliate. The
Partnership's properties, like those of the Company, are operated under the
"Public Storage" name.
For certain information on Partnership distributions and on Partnership
properties (including property operations for the six months of 1996), 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 property operating results for the six months of 1996, the
Partnership's Financial Statements and Management's Discussion and Analysis of
Financial Condition and Results of Operations included as Schedules 2, 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: 1996 1995 1995 1994 1993 1992 1991
------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $2,701 $ 2,676 $10,998 $10,692 $10,113 $ 9,477 $ 9,263
Depreciation and amortization 591 552 2,263 2,141 2,028 1,870 1,780
Net income 498 501 2,067 2,061 1,904 1,549 1,119
General partners' share of
net income 84 76 498 255 203 198 261
Limited partners' per Unit data (1):
Net income 6.27 6.44 23.77 27.36 25.77 20.47 13.00
Cash distributions 12.12 10.94 65.11 32.00 25.00 25.00 34.04
Funds from operations (2)(3) 1,565 1,626 6,671 6,677 6,040 5,116 5,039
<CAPTION>
As of March 31, As of December 31,
--------------- -----------------------------------------------
(In thousands, except per Unit data)
BALANCE SHEET DATA: 1996(3) 1995 1994 1993 1992 1991
---- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 548 $ 511 $ 1,855 $ 831 $ 816 $ 273
Total assets 35,803 36,307 39,040 39,452 40,694 42,156
Book value per Unit (3) 202.61 207.14 248.47 253.11 252.32 256.83
</TABLE>
_______________
(1) Limited Partners' per Unit data is based on the weighted average number of
Units (66,000) outstanding during the year.
(2) Funds from operations 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
4
<PAGE>
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.
THE COMPANY. The Company is a REIT, organized in 1980 as a corporation
under the laws of California, that has invested primarily in existing mini-
warehouses. The Company is the largest owner of mini-warehouses in the United
States. The Company has also invested to a much smaller extent in existing
business parks containing commercial and industrial rental space. At December
31, 1995, the Company had equity interests (through direct ownership, as well as
general and limited partnership interests and capital stock) in 1,050 properties
located in 37 states, consisting of 1,016 mini-warehouse facilities and 34
business parks. The Company's Common Stock (symbol "PSA") and nine series of
preferred stock are traded on the NYSE. Since November 1995, the Company has
been self-administered and self-managed through a merger with Public Storage
Management, Inc. ("PSMI"). At December 31, 1995, the Company had total assets,
total debt and total shareholders' equity of approximately $1.94 billion, $191
million and $1.63 billion, respectively.
The Company's principal executive offices are located at 701 Western
Avenue, Suite 200, Glendale, California 91201-2397. Its telephone number is
(818) 244-8080.
Additional information concerning the Company is set forth in the reports
on the Company, which may be obtained from the Company, the Commission or the
NYSE, in the manner described on the inside front cover to this Offer to
Purchase.
PRIOR TENDER OFFER. In February 1995, the Company acquired in a tender
offer 15,767 Units at $400 per Unit.
RELATIONSHIPS. The following chart shows the relationships among the
Partnership, the Company and the General Partners. As reflected in the table
below, the Company is controlled by B. Wayne Hughes, its chairman of the board
and chief executive officer. Mr. Hughes and the Company are the General
Partners of the Partnership, the properties of which are also managed by the
Company and an affiliate.
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[CHART OMITTED HERE]
Description of Graphic
Chart illustrating the affiliated relationships among the Partnership, the
Company and BWH: the Company is a general partner and the property manager of
the Partnership and owner of 62% of the Units in the Partnership; BWH is a
general partner of the Partnership; BWH owns 48% of the Company and Public
Shareholders own 52% of the Company.
SOLID LINES INDICATE OWNERSHIP INTERESTS AND BROKEN 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.
Partnership = PS Partners, Ltd., a California limited partnership.
Company = Public Storage, Inc., the Corporate General Partner and owner of
approximately 62% of the Units in the Partnership. Percentage of
stock ownership of the Company by BWH represents percentage of
outstanding shares of Common Stock deemed beneficially owned
(under Commission rules), as of June 30, 1996, by BWH and members
of his immediate family.
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PURPOSE OF THE OFFER. The Company, a general partner of the Partnership,
currently owns a joint venture interest (ranging from approximately 25% to 70%)
in each of the Partnership's 28 properties and, in September 1993, the Company
became a co-General Partner in the Partnership. Accordingly, the Company is
familiar with the operations and prospects of the Partnership. In addition, the
Company beneficially owns 40,784 of the 66,000 outstanding Units in the
Partnership (approximately 62%). All of these Units have been acquired since
July 1, 1990 for an aggregate purchase price of 862,022 shares of Company Common
Stock (approximately $6,482,000) and $6,616,295 in cash. Substantially all of
these Units were acquired directly from Unitholders, including 15,767 Units
acquired in tender offers completed in February 1995 at $400 per Unit, and the
balance through secondary firms of the type described below under "Market Prices
of Units -- Information From The Stanger Report Regarding Sales Transactions."
For certain additional information on recent Company purchases of Units, see
"Market Prices of Units -- General."
The Company has decided to increase its ownership of the Partnership and
has chosen to accomplish this through a tender offer on terms that the Company
believes are attractive to the Company and its shareholders. The Company
believes that it will benefit from ownership of Units acquired in the Offer and
from distributions attributable to them. None, or only a small portion, of such
distributions is expected to constitute taxable income. The Company believes
that the acquisition of Units through the Offer represents a good investment to
the Company and its Shareholders. In addition, the acquisition of Units will
assist the Company in retaining its REIT status by reducing its non-qualifying
income resulting from its November 1995 merger with PSMI.
POSITION OF THE GENERAL PARTNERS WITH RESPECT TO THE OFFER
Since the Company is a General Partner of the Partnership and there is no
independent general partner, 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."
Although the Offer Price represents the General Partners' estimate, based
on an independent limited appraisal, of the liquidation value per Unit, the
Offer Price may be less than the amount Unitholders would actually receive upon
liquidation of the Partnership. Accordingly, the Offer may not necessarily 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
because they believe that it is not an opportune time to sell mini-warehouses.
Although the General Partners originally anticipated a liquidation of the
Partnership in 1988-1991, since the completion of the Partnership's offering in
1983, significant changes have taken place in the financial and real estate
markets that must be taken into account in considering the timing of any
proposed sale or financing, including: (i) the increased construction of mini-
warehouses from 1984 to 1988, which has increased competition, (ii) the general
deterioration of the real estate market (resulting from a variety of factors,
including changes in tax laws), which has significantly affected property values
and decreased sales activities and (iii) the reduced sources of real estate
financing.
The Partnership engaged Lawrence R. Nicholson, MAI, a principal with the
firm of Nicholson-Douglas Realty Consultants, Inc. ("NDRC") to perform a limited
investigation and appraisal of the Partnership's property portfolio. In a
letter appraisal report dated May 10, 1996, NDRC indicated that, based on the
assumptions contained in the report, the aggregate market value of the
Partnership's 28 properties (consisting not only of the Partnership's interest
but also including the Company's interest), as of January 31, 1996, was
$68,100,000 ($64,200,000 for the 26 mini-warehouses and $3,900,000 for a
business park and for the business park component of combination mini-
warehouse/business park property). NDRC's report is limited in that NDRC did
not inspect the properties and relied primarily upon the income capitalization
approach in arriving at its opinion. NDRC's aggregate value conclusion
represents the 100% property interests, and although not valued separately,
includes both the interest of the Partnership in the properties, as well as the
interest of the Company, which owns a joint venture interest (ranging from about
25% to 70%) in all of the 28 properties. The analytical process that was
undertaken in the appraisal included a review of the properties' unit mix,
rental rates and historical financial statements. Following these reviews, a
stabilized level of net operating income was projected for the
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properties (an aggregate of $6,630,000 for the 26 mini-warehouses and $380,000
for the business park space). In the case of the mini-warehouses, value
estimates were then made using both a direct capitalization analysis
($66,300,000) and a discounted cash flow analysis ($62,700,000). In applying the
discounted cash flow analysis to the mini-warehouses, projections of cash flow
from each property were developed for an 11-year period ending in the year 2007.
Growth rates for income and expenses were assumed to be 3.5% per year. NDRC then
used a terminal capitalization rate of 10.5% to capitalize each property's 11th
year net operating income into a residual value at the end of the holding
period. The ten yearly cash flows plus the residual or reversionary proceeds net
of sales costs were then discounted to present worth using a discount rate of
13.25%. In the direct capitalization analysis, NDRC applied a 10% capitalization
rate to the mini-warehouses' stabilized net operating income. These value
estimates were then compared to an estimated value using a regression analysis
($63,000,000) applied to approximately 300 sales of mini-warehouses to evaluate
the reasonableness of the estimates using the direct capitalization and
discounted cash flow analysis.
The business parks were valued using a direct capitalization analysis by
applying a 10% capitalization rate to the business parks' stabilized net
operating income. NDRC has prepared other appraisals for the General Partners
and their affiliates and is expected to continue to prepare appraisals for the
General Partners and their affiliates. No environmental investigations were
conducted with respect to the limited investigation of the Partnership's
properties. Accordingly, NDRC's appraisal did not take into account any
environmental cleanup or other costs that might be incurred in connection with a
disposition of the properties. Although there can be no assurance, based on
recently completed environmental investigations, the Partnership is not aware of
any environmental contamination of its facilities material to its overall
business or financial condition. In addition to assuming compliance with
applicable environmental laws, the appraisal also assumed, among other things,
compliance with applicable zoning and use regulations and the existence of
required licenses.
Unitholders should recognize that appraisals are opinions as of the date
specified, are subject to certain assumptions and the appraised value of the
Partnership's properties may not represent their true worth or realizable value.
There can be no assurance that, if these properties were sold, they would be
sold at the appraised values; the sales price might be higher or lower than the
appraised values.
Unitholders may obtain a copy of the letter appraisal report from Public
Storage's Investor Services Department by telephoning (818) 244-8080, ext. 218.
Based on NDRC's limited appraisal (as of January 1996), the General
Partners have estimated a liquidation value per Unit of $548. This liquidation
value was calculated assuming (i) the properties owned by the Partnership and
the Company were sold at the values reflected in NDRC's report, (ii) costs of 5%
of the sales price of the properties were incurred in the sale of the properties
(exclusive of payments to General Partners), (iii) the proceeds from the
properties held jointly by the Partnership and the Company were allocated
between them in accordance with the joint venture agreement and (iv) the
Partnership's other net assets were liquidated at their book value at March 31,
1996.
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<PAGE>
The computations on which this estimated liquidation value was based are
summarized in the following table:
<TABLE>
<S> <C>
Estimated value of Partnership's interest
in properties based on NDRC's report (1) $37,762,000
Plus:
Other tangible assets (cash) (2) 751,000
Less:
Prepaid rents and security deposits (2) (419,000)
Accounts payable and accrued expenses (2) (623,000)
-----------
Net Proceeds Available for Distribution 37,471,000
Payments to General Partners (3) (938,000)
-----------
Distributions to Limited Partners $36,533,000
===========
Amount per Unit (4) $ 548
===========
</TABLE>
_______________
(1) Assumes estimated sales expenses of 5% (exclusive of payments to General
Partners) and proceeds from the sale of the jointly held properties
allocated between the Partnership and the Company based on the joint
venture agreement.
(2) As of March 31, 1996.
(3) Does not include distributions attributable to 1% capital interest in the
Partnership. Represents a real estate commission payable to the General
Partners under the Partnership Agreement. Assumes General Partners render
services in connection with the sale of the properties.
(4) Based on 66,000 Units and 667 equivalent units (reflecting the Company's 1%
capital interest in the Partnership).
Since the Partnership's organization, all depreciation deductions relating
to the jointly held properties have been allocated to the Partnership. Under
the joint venture agreement, the Company would be entitled to a share of the
proceeds of a current sale of certain of the properties that is larger than its
proportionate interest in the properties and conversely the Partnership is
entitled to a share that is smaller. However, if the properties increase in
value, the Partnership's share of the proceeds from a sale of such properties
would more closely approximate its proportionate interest in the properties.
Although, as noted above, the original time frame for the liquidation of
the Partnership has passed, the Company is 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 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 from the peak levels of new
construction in 1984-1988. 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 and to sell
his or her Units at the General Partners' estimate of the liquidation value per
Unit, a sale of the properties and liquidation of the Partnership could result
in a higher price for Unitholders and a higher
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<PAGE>
cost to the Company, a General Partner 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 the Company has entered into merger agreements with eight
affiliated REITs under which the Company has acquired, or is acquiring, the
REITs' properties in transactions under which the REITs' shareholders were, or
are being, afforded, on a tax free basis, the opportunity to convert their
investment in the REITs into an investment in 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 all but one of the REITs' bylaws to present a proposal to its
shareholders for the sale or financing of its properties at a specified time.
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.
Unlike the Offer, an acquisition of the Partnership's properties by the
Company (or a merger of the Partnership with the Company) would lengthen the
federal income depreciation schedule of the Partnership's properties resulting
in a higher portion of the net operating income generated by the properties
being taxable and would not be in the economic interest of the Company and its
shareholders. The Company intends, from time to time, to acquire additional
Units. 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 Offer, although the General Partners have, from time to
time, considered transferring the Partnership's business parks to a separate
entity. 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, or lower, than the Offer Price. After the
Offer, the Company could own as much as 83% of the Units and thus continue to
control a sale of the properties.
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<PAGE>
DETERMINATION OF OFFER PRICE
The Offer Price has been established by the Company, which is a General
Partner of the Partnership, and is not the result of arms' length negotiations
between the Company and the Partnership. The Offer Price represents the General
Partners' estimate, based on an independent limited appraisal (as of January
1996), of the liquidation value per Unit. See "Position of the General Partners
with Respect to the Offer."
THE OFFER
TERMS OF THE OFFER. Upon the terms and subject to the conditions set forth
in this Offer to Purchase and in the related Letter of Transmittal (which
together constitute the "Offer") (including, if the Offer is extended or
amended, the terms of any such extension or amendment), the Company will accept
for payment and pay for up to 14,000 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 August 28, 1996,
unless and until the Company in its 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 Company, shall expire. Unitholders who tender their Units will not be
obligated to pay partnership transfer fees or commissions.
The Offer Price is $548 per Unit.
The Offer is conditioned on satisfaction of certain conditions as set forth
herein. The Company reserves the right (but shall not be obligated), in its
reasonable 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 Company reserves 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.
The Partnership has provided to the Company the list of Unitholders for the
purpose of disseminating the Offer. UNITHOLDERS WHOSE UNITS ARE ACCEPTED FOR
PAYMENT IN THE OFFER WILL NOT RECEIVE ANY CASH DISTRIBUTIONS PAYABLE AFTER THE
EXPIRATION DATE, INCLUDING THE DISTRIBUTION PAYABLE ON OR ABOUT SEPTEMBER 15,
1996.
The Company beneficially owns 40,784, or approximately 62%, 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 14,000, the Company, 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 14,000 Units, the Company, upon the terms and
subject to the conditions of the Offer, will accept for payment only 14,000
Units, with such Units purchased on a pro rata basis. If proration would result
in a Unitholder owning less than five Units, the Company will not accept any
Units tendered by such Unitholder in the Offer.
If proration of tendered Units is required, because of the difficulty of
determining the number of Interests validly tendered and not withdrawn, the
Company may not be able to announce the final results of such proration until at
least approximately seven business days after the Expiration Date. Subject to
the Company's obligation under Rule 14e-1(c) under the Exchange Act to pay
Unitholders the Offer Price in respect of Units tendered or return those Units
promptly after the termination or withdrawal of the Offer, the Company does not
intend to pay for any Units accepted for payment pursuant to the Offer until the
final proration results are known. Notwithstanding any such delay in payment,
no interest will be paid on the Offer Price.
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 Company 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.
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<PAGE>
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 Company shall be deemed to have accepted for
payment (and thereby purchased) tendered Units when, as and if the Company gives
oral or written notice to the Depositary of the Company's 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 Company 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 Company is unable to accept for payment,
purchase or pay for Units tendered pursuant to the Offer, then, without
prejudice to the Company's 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 Company, 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 Company 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 Company reserves the right to transfer or assign, at any time and from
time to time, in whole or in part, to one or more affiliates or direct or
indirect subsidiaries of the Company, the right to purchase Units tendered
pursuant to the Offer, but no such transfer or assignment will relieve the
Company of its 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 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 August 28, 1996 (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 Company 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 Company. Such appointment will be effective when, and only to the extent
that, the Company accepts 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
Company 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
Company reserves the right to require that, in order for Units to be deemed
validly tendered, immediately upon the Company's acceptance for payment of such
Units, the Company must
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<PAGE>
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 Company, in its sole
discretion, which determination shall be final and binding. The Company
reserves 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 Company's counsel, be unlawful. The Company also reserves the right to
waive any defect or irregularity in any tender with respect to any particular
Units of any particular Unitholder, and the Company'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 Company, 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 Company
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 September 24, 1996.
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
Company is unable to purchase or pay for Units for any reason, without prejudice
to the Company's rights under the Offer, tendered Units may be retained by the
Depositary on behalf of the Company 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 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 Company, in its sole
discretion, which determination shall be final and binding. Neither the
Company, 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 Company
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
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<PAGE>
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 Company may choose to
make any public announcement, except as provided by applicable law (including
Rule 14d-4(c) under the Exchange Act), the Company 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 Company 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 Company extends the Offer, or if the Company (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 Company's rights under the Offer, the Depositary may
retain tendered Units on behalf of the Company, 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 Company to delay
payment for Units that the Company has accepted for payment is limited by Rule
14e-1(c) under the Exchange Act, which requires that the Company 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 Company makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Company 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 Company 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. There is no assurance that, following the
Expiration Date, the Company will make another offer for Units not tendered in
the Offer.
SOURCE OF FUNDS. The Company expects that approximately $7,869,000 is
necessary to consummate the Offer, including related fees and expenses, assuming
all 14,000 Units are tendered and accepted for payment. These funds will be
available from the Company's general corporate funds.
CONDITIONS OF THE OFFER. The obligation of the Company to complete the
purchase of tendered Units is subject to each and all of the following
conditions which, in the reasonable judgment of the Company with respect to each
and every matter referred to below 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:
(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 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
14
<PAGE>
presented to limited partners of the Partnership, (vi) which, in the
reasonable 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 the value of the Units or (viii) which imposes any material
condition unacceptable to the Company;
(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
Company, is likely, directly or indirectly, to result in any of the
consequences referred to in paragraph (a) above; and
(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 leading 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.
The foregoing conditions are for the reasonable benefit of the Company.
The conditions may be waived by the Company at any time and from time to time in
its reasonable discretion. Any determination by the Company 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 has retained The First National Bank of
Boston to act as Depositary in connection with the Offer. The Company 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 will also pay all costs and expenses of printing and mailing
the Offer.
Assuming all 14,000 Units are tendered and accepted for payment, expenses
of the Offer (exclusive of the purchase price of the Units) are estimated at
$197,000, including: legal and accounting fees and expenses ($10,000), printing
($4,700), filing fees ($1,500), Depositary Agent fees and expenses ($10,000),
Soliciting Agent fees ($153,000), distribution of Offer materials ($7,200) and
miscellaneous ($10,600).
SOLICITING AGENT. The Company has retained Christopher Weil & Company,
Inc., a registered broker dealer, to answer questions and solicit responses to
this transaction and will pay Christopher Weil & Company, Inc. 2% of the Offer
Price for each Unit tendered and accepted by the Company. In addition,
Christopher Weil & Company, Inc. will be indemnified against certain
liabilities, including liabilities under the federal securities laws.
Christopher Weil & Company, Inc. has acted in a similar capacity in connection
with other tender and exchange offers by the Company 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 sale of Units for cash will be
treated for federal income tax purposes as a taxable sale of the Units
purchased. 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 and whether the
Unitholder will be able to utilize currently any capital losses that result from
the sale in the Offer. However, the Company anticipates that Unitholders who
acquired their Units in an early closing of the original offering and who
15
<PAGE>
sell all of their Units in the Offer will generally recognize a capital gain of
approximately $365 per Unit as a result of the sale (assuming a sale at the
beginning of the third quarter of 1996 based on the Company's estimate of the
Partnership's 1996 income and distributions). 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 on the sale of
all Units, 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 such 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 such 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 OFFER OR THE ACCEPTANCE THEREOF WOULD BE
ILLEGAL. HOWEVER, IF ANY SUCH JURISDICTION EXISTS, THE COMPANY MAY IN ITS
DISCRETION TAKE SUCH ACTIONS AS IT MAY DEEM NECESSARY TO MAKE THE OFFER IN SUCH
JURISDICTION.
FOLLOWING THE TERMINATION OF THE OFFER, THE COMPANY 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. THERE IS NO ASSURANCE THAT, FOLLOWING THE
EXPIRATION DATE, THE COMPANY WILL MAKE ANOTHER OFFER FOR UNITS NOT TENDERED IN
THE OFFER.
EFFECTS OF OFFER ON NON-TENDERING UNITHOLDERS
CONTROL OF THE PARTNERSHIP. After the Offer, the Company will continue to
be in a position to control the vote of the limited partners. See "Special
Considerations -- Control of all Partnership Voting Decisions by the Company."
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 Company believes the purchase of Units by the
Company, 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 managed by the Company and an affiliate.
Although after the Offer the Company may acquire additional Units thereby
increasing its 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 and
no Partnership assets have been identified for sale or financing, although the
General Partners have, from time to time, considered transferring the
Partnership's business parks to a separate entity.
16
<PAGE>
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.
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>
1994 1,045(2) 1.58% 48(2)
1995 17,180(3)(4) 26.03% 893(3)(4)
1996 (through March 31) 151(5) .23% 7(5)
</TABLE>
_______________
(1) Transfers are recorded quarterly on the Partnership's records, as of the
first day following each calendar quarter.
(2) In 1994, the Company purchased 78 Units in four transactions: 5 Units at
$270.00 per Unit (January 1), 8 Units at $275.00 per Unit (January 1), 15
Units at $250.00 per Unit (July 1) and 50 Units at $250.00 per Unit (October
1).
(3) In 1995, the Company accepted for purchase 15,767 Units tendered in response
to the Company's cash tender offer at $400 per Unit.
(4) In 1995, the Company purchased 417 Units in 20 transactions: 20 Units at
$325.00 per Unit (January 1), 5 Units at $345.00 per Unit (January 1), 20
Units at $359.18 per Unit (January 1), 20 Units at $390.00 per Unit (January
1), 20 Units at $382.00 per Unit (April 1), 205 Units at $400.00 per Unit
(April 1), 10 Units at $390.25 per Unit (July 1), 57 Units at $400.00 per
Unit (July 1) and 60 Units at $400.00 per Unit (October 1).
(5) On January 1, 1996, the Company purchased 40 Units in two transactions at
$400.00 per Unit.
On April 1, 1996, the Company purchased 75 Units in four transactions: 40
Units at $390.00 per Unit and 35 Units at $400.00 per Unit.
On July 1, 1996, the Company purchased 20 Units in one transaction at
$455.00 per Unit.
All of the purchases of Units described in notes (2), (4) and (5) above
were acquired directly from Unitholders or through secondary firms of the type
described below under "Information From The Stanger Report Regarding Sales
Transactions." On July 1, 1996, the Company purchased 20 Units at a price of
$455.00 per Unit directly from a Unitholder.
17
<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 1994, 1995 and 1996 (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>
1994
First Quarter -- -- -- --
Second Quarter -- -- -- --
Third Quarter -- -- -- --
Fourth Quarter -- -- -- --
1995
First Quarter
Second Quarter -- -- -- --
Third Quarter -- -- -- --
Fourth Quarter -- -- -- --
1996
First Quarter -- -- -- --
Second Quarter -- -- -- --
</TABLE>
_______________
(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.
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, June 1995, September 1995, December 1995 and March 1996 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 - (671) 876-4800, Fox & Henry, Inc. - (708) 325-4445, Frain
Asset Management - (800) 654-6110, Joseph Charles & Assoc., Inc. - (800) 526-
1763, Liquidity Fund - (800) 833-3360, MacKenzie-Patterson Securities - (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 Service Network - (800) 483-
0776/(813) 588-0776, Partnership Exchange Securities Company - (800) 736-
9797/(510) 763-5555, Raymond James & Associates - (800) 248-8863, The
Partnership Marketing Company - (707) 824-8600, Secondary Income Funds - (708)
325-4445, Securities Planners, Inc. - (800) 747-0088 and Sunpoint Securities,
Inc. - (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.
18
<PAGE>
The information regarding sale transactions in Units from the Stanger
Publications and Stanger is as follows:
<TABLE>
<CAPTION>
Reporting period Per Unit Transaction Price(1)
---------------- -----------------------------
High Low No. of Units(2)
---- --- ---------------
<S> <C> <C> <C>
1993
----
January 1 - March 31 $194.00 $194.00 5
April 1 - June 30 195.00 195.00 20
July 1 - September 30 145.00 145.00 6
October 1 - December 31 270.00 252.50 15
1994
----
January 1 - March 31 385.00 120.00 78
April 1 - June 30 310.00 232.00 80
July 1 - September 30 345.00 275.00 565
October 1 - October 31(3) 290.00 290.00 20
October 31 - December 31 359.18 290.00 40
1995
----
January 1 - March 31 462.50 295.00 30
April 1 - June 30 390.00 265.00 54
July 1 - September 30 350.00 170.00 25
October 1 - December 31 400.00 400.00 10
1996
----
January 1 - January 31(3) 390.00 390.00 40
February 1 - February 29(3) -- -- --
March 1 - March 31(3) 455.00 420.00 55
April 1 - April 30(3) -- -- --
May 1 - May 31(3) -- -- --
</TABLE>
- -----------------
(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.
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 was $455 per Unit during the period July
17, 1995 to July 17, 1996.
According to CPB, all prices are amounts paid by buyers and, due to
transaction costs, 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.
19
<PAGE>
CERTAIN RELATED TRANSACTIONS
JOINT VENTURE INTERESTS. The Company currently owns a joint venture
interest (ranging from approximately 25% to 70%) in all of the Partnership's 28
properties. Under the joint ventures, certain special allocation rules apply
and the Company has the right to compel the sale of the properties. See Note
(1) to the Notes to Consolidated Financial Statements (Schedule 3 to this Offer
to Purchase).
GENERAL PARTNERS' INTEREST. The Company and Mr. Hughes are General
Partners of the Partnership. The Company receives incentive distributions equal
to 10% of the Partnership's cash flow and has a subordinated interest in
proceeds from sales or financings of properties. In 1993, 1994 and 1995, the
General Partners received from the Partnership $185,000, $237,100 and $482,300,
respectively, in respect of their incentive distributions. 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 managed by the
Company and an affiliate pursuant to management agreements under which the
property managers receive 6% and 5% of gross revenues from operations of the
mini-warehouses and commercial properties, respectively. In 1993, 1994 and
1995, the property managers received $599,000, $633,000 and $649,000,
respectively, from the Partnership.
LIMITED PARTNER INTERESTS. Of the 66,000 outstanding Units, 40,784
(approximately 62%) are beneficially owned by the Company. All of these Units
have been acquired since July 1990 for an aggregate purchase price of 862,022
shares of Company Common Stock (approximately $6,482,000) and $6,616,295 in
cash. Substantially all of these Units were acquired directly from Unitholders,
including Units acquired in a tender offer completed in February 1995, and the
balance 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.
701 Western Avenue, Suite 200
Glendale, California 91201-2397
By: /s/ Harvey Lenkin
-----------------------------------
Harvey Lenkin
President
July 26, 1996
20
<PAGE>
SCHEDULE 1
PARTNERSHIP DISTRIBUTIONS
PARTNERSHIP DISTRIBUTIONS. The following table sets forth the
distributions paid per Unit (original purchase price $500) in the periods
indicated below:
<TABLE>
<CAPTION>
Distributions
----------------
<S> <C>
1993:
First Quarter $ 6.25
Second Quarter 6.25
Third Quarter 6.25
Fourth Quarter 6.25
1994:
First Quarter 6.25
Second Quarter 6.25
Third Quarter 9.75
Fourth Quarter 9.75
1995:
First Quarter 9.75
Second Quarter 10.80
Third Quarter 33.75(1)
Fourth Quarter 10.80
1996:
First Quarter 10.80
Second Quarter 10.80
</TABLE>
_______________
(1) Includes a special distribution of excess cash of $22.95 per Unit.
1-1
<PAGE>
SCHEDULE 2
PROPERTY INFORMATION
The following table sets forth information as of December 31, 1995, about
properties owned by the Partnership. All of the properties were acquired
jointly with the Company and contributed to a general partnership comprised of
the Partnership and the Company.
<TABLE>
<CAPTION>
Net Number Approximate
Rentable of Date of % of
Location Square Feet Spaces Acquisition Ownership
-------- ----------- ------ ----------- ----------
<S> <C> <C> <C> <C>
ARIZONA
Tucson
N. Romero Rd. 63,400 585 11/02/83 72.5%
CALIFORNIA
Campbell
Salmar Ave.(1) 52,300 379 11/10/83 50.0
Sacramento
Folsom 36,900 406 12/30/82 58.7
Signal Hill
Junipero (2) 67,900 36 12/29/83 75.0
Ventura
Walker 51,900 526 06/17/83 68.8
COLORADO
Aurora
Hanover Way 39,400 334 11/18/83 70.0
Colorado Springs
Delta Drive 26,500 147 05/13/83 59.7
Colorado Springs
Edison Ave. 83,000 542 11/02/83 72.5
Colorado Springs
Mount View 51,600 427 11/02/83 72.5
Colorado Springs
Platte Ave. 50,400 478 01/04/83 51.6
Thornton
York St. 66,900 602 11/02/83 72.5
CONNECTICUT
Southington
Spring St. 42,600 491 09/08/83 46.5%
DELAWARE
Dover
Jeffric 51,400 587 09/20/83 50.0
New Castle
New Churchmans Rd 64,900 667 09/20/83 50.0
Newark
Bellevue Rd. 62,600 748 09/20/83 50.0
FLORIDA
Orlando
J. Young Parkway 56,500 537 10/13/83 70.0
Semoran
Extra 82,200 733 01/31/83 50.8
</TABLE>
2-1
<PAGE>
<TABLE>
<CAPTION>
Net Number Approximate
Rentable of Date of % of
Location Square Feet Spaces Acquisition Ownership
-------- ----------- ------ ----------- -----------
<S> <C> <C> <C> <C>
INDIANA
Ft. Wayne
Bluffton Rd. 42,000 447 09/20/83 70.0
Ft. Wayne
W. Colliseum 67,600 599 09/20/83 70.0
Hobart
Ridge Rd. 81,100 470 08/31/83 70.0
NEW JERSEY
Blackwood
Peters Lane 64,100 594 03/29/83 44.2
NEW YORK
Vailsgate
Route 94 37,200 354 04/22/83 41.6
OKLAHOMA
Oklahoma City
Reno Ave. 62,900 478 11/02/83 72.5
OREGON
Portland
Halsey 34,200 367 12/30/82 58.7
PENNSYLVANIA
Langhorne
S. Flower Mill 98,800 1,141 09/20/83 50.0
Southhampton
Jaymor 93,000 785 09/13/83 30.0
TEXAS
Webster
Gulf Freeway 75,100 609 09/01/83 60.4%
Webster
NASA Rd. (3)
mini-warehouse 97,000 934 11/10/83 70.0
business park 20,700 20 11/10/83 70.0
</TABLE>
_______________
(1) Partially condemned during 1992. The condemnation resulted in a $795,000
and $298,000 gain in 1992 and 1993, respectively, $459,000 and $149,000 of
which was allocated to the Partnership in 1992 and 1993, respectively.
(2) Business park.
(3) Property combines mini-warehouse and business park space.
The weighted average occupancy levels for the mini-warehouse and business
park facilities were 89% and 91%, respectively, in 1995 compared to 90% for both
in 1994. The monthly average realized rent per square foot for the mini-
warehouse and business park facilities was $.59 and $.65, respectively, in 1995
compared to $.57 and $.63, respectively, in 1994.
2-2
<PAGE>
SUMMARY OF HISTORICAL INFORMATION RELATING TO PROPERTIES OF PS PARTNERS, LTD.
RENTAL INCOME AND OPERATING EXPENSES BEFORE DEPRECIATION
(Does Not Reflect Capital Improvements)
<TABLE>
<CAPTION>
For the Six Months Ended June 30,
---------------------------------
1996 1995
--------------- ---------------
<S> <C> <C>
MINI-WAREHOUSES:
Rental Income $5,190,000 $5,027,000
Operating Expenses 2,022,000 1,867,000
---------- ----------
Excess of Rental Income over
Operating Expenses $3,168,000 $3,160,000
========== ==========
BUSINESS PARKS:
Rental Income $ 325,000 $ 322,000
Operating Expenses 149,000 153,000
---------- ----------
Excess of Rental Income over
Operating Expenses $ 176,000 $ 169,000
========== ==========
TOTALS FOR MINI-WAREHOUSES AND
BUSINESS PARKS:
Rental Income $5,515,000 $5,349,000
Operating Expenses 2,171,000 2,020,000
---------- ----------
Excess of Rental Income over
Operating Expenses $3,344,000 $3,329,000
========== ==========
</TABLE>
2-3
<PAGE>
SCHEDULE 3
PARTNERSHIP FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
References
----------
<S> <C>
Report of independent auditors................................ F-1
Consolidated balance sheets at December 31, 1995 and 1994..... F-2
For the years ended December 31, 1995, 1994 and 1993
Consolidated statements of income.......................... F-3
Consolidated statements of partners' equity................ F-4
Consolidated statements of cash flows...................... F-5
Notes to consolidated financial statements.................... F-6
Condensed consolidated balance sheets at March 31, 1996 and
December 31, 1995.......................................... F-9
Condensed consolidated statements of income for three
months ended March 31, 1996 and 1995....................... F-10
Condensed consolidated statements of cash flows for the
three months ended March 31, 1996 and 1995................. F-11
Notes to condensed consolidated financial statements.......... F-12
</TABLE>
3-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners
PS Partners, Ltd., a California limited partnership
We have audited the consolidated balance sheets of PS Partners, Ltd., a
California limited partnership, as of December 31, 1995 and 1994 and the related
consolidated statements of income, partners' equity, and cash flows for each of
the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of PS
Partners, Ltd., a California limited partnership, at December 31, 1995 and 1994,
and the consolidated results of its operations and its cash flows for each of
the three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
March 11, 1996
Los Angeles, California
F-1
<PAGE>
PS PARTNERS, LTD.
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 511,000 $ 1,855,000
Rent and other receivables 121,000 57,000
Real estate facilities, at cost:
Land 11,855,000 11,855,000
Buildings and equipment 45,866,000 45,063,000
------------ ------------
57,721,000 56,918,000
Less accumulated depreciation (22,175,000) (19,913,000)
------------ ------------
35,546,000 37,005,000
Other assets 129,000 123,000
------------ ------------
$ 36,307,000 $ 39,040,000
============ ============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 746,000 $ 486,000
Advance payments from renters 391,000 405,000
Minority interest in general partnerships 21,317,000 21,540,000
Partners' equity:
Limited partners' equity, $500 per unit,
66,000 units authorized, issued and
outstanding 13,671,000 16,399,000
General partners' equity 182,000 210,000
------------ ------------
Total partners' equity 13,853,000 16,609,000
------------ ------------
$ 36,307,000 $ 39,040,000
============ ============
</TABLE>
See accompanying notes.
F-2
<PAGE>
PS PARTNERS, LTD.
CONSOLIDATED STATEMENTS OF INCOME
For the years ended December 31, 1995, 1994, and 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
REVENUE:
Rental income $10,905,000 $10,645,000 $10,078,000
Interest income 93,000 47,000 35,000
----------- ----------- -----------
10,998,000 10,692,000 10,113,000
----------- ----------- -----------
COSTS AND EXPENSES:
Cost of operations 3,378,000 3,283,000 3,177,000
Management fees 649,000 633,000 599,000
Depreciation and amortization 2,263,000 2,141,000 2,028,000
Interest expense - - 196,000
Administrative 84,000 99,000 101,000
Environmental costs 216,000 - -
----------- ----------- -----------
6,590,000 6,156,000 6,101,000
----------- ----------- -----------
Income before minority interest
and gain on condemnation 4,408,000 4,536,000 4,012,000
Minority interest in income (including allocated
gain of $149,000 on condemnation in 1993) 2,341,000 2,475,000 2,406,000
Income before gain on condemnation 2,067,000 2,061,000 1,606,000
Gain on condemnation of real estate facility - - 298,000
----------- ----------- -----------
NET INCOME $ 2,067,000 $ 2,061,000 $ 1,904,000
=========== =========== ===========
Limited partners' share of net income
($23.77, $27.36, and $25.77 per unit in 1995,
1994, and 1993, respectively) $ 1,569,000 $ 1,806,000 $ 1,701,000
General partners' share of net income 498,000 255,000 203,000
----------- ----------- -----------
$ 2,067,000 $ 2,061,000 $ 1,904,000
=========== =========== ===========
</TABLE>
See accompanying notes.
F-3
<PAGE>
PS PARTNERS, LTD.
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
For the years ended December 31, 1995, 1994, and 1993
<TABLE>
<CAPTION>
Limited General
Partners Partners Total
-------- -------- -----
<S> <C> <C> <C>
Balances at December 31, 1992 $16,653,000 $ 212,000 $16,865,000
Net income 1,701,000 203,000 1,904,000
Distributions (1,649,000) (201,000) (1,850,000)
----------- --------- -----------
Balances at December 31, 1993 16,705,000 214,000 16,919,000
Net income 1,806,000 255,000 2,061,000
Distributions (2,112,000) (259,000) (2,371,000)
----------- --------- -----------
Balances at December 31, 1994 16,399,000 210,000 16,609,000
Net income 1,569,000 498,000 2,067,000
Distributions (4,297,000) (526,000) (4,823,000)
----------- --------- -----------
Balances at December 31, 1995 $13,671,000 $ 182,000 $13,853,000
=========== ========= ===========
</TABLE>
See accompanying notes.
F-4
<PAGE>
PS PARTNERS, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1995, 1994, and 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,067,000 $ 2,061,000 $ 1,904,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 2,263,000 2,141,000 2,028,000
Gain on condemnation of a real estate facility - - (298,000)
(Increase) decrease in rent and other receivables (64,000) (9,000) 20,000
Increase in other assets (7,000) (2,000) (74,000)
Increase (decrease) in accounts payable 260,000 (5,000) 91,000
(Decrease) increase in advance payments from renters (14,000) (39,000) 24,000
Minority interest in income 2,341,000 2,475,000 2,406,000
----------- ----------- -----------
Total adjustments 4,779,000 4,561,000 4,197,000
----------- ----------- -----------
Net cash provided by operating activities 6,846,000 6,622,000 6,101,000
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from condemnation of a real estate facility - - 298,000
Additions to real estate facilities (803,000) (694,000) (717,000)
----------- ----------- -----------
Net cash used in investing activities (803,000) (694,000) (419,000)
----------- ----------- -----------
Cash flows from financing activities:
Principal payments on mortgage notes payable - - (2,157,000)
Distributions to holder of minority interest (2,564,000) (2,533,000) (1,660,000)
Distributions to partners (4,823,000) (2,371,000) (1,850,000)
----------- ----------- -----------
Net cash used in financing activities (7,387,000) (4,904,000) (5,667,000)
----------- ----------- -----------
Net (decrease) increase in cash and cash equivalents (1,344,000) 1,024,000 15,000
Cash and cash equivalents at the beginning of the year 1,855,000 831,000 816,000
----------- ----------- -----------
Cash and cash equivalents at the end of the year $ 511,000 $ 1,855,000 $ 831,000
=========== =========== ===========
</TABLE>
See accompanying notes.
F-5
<PAGE>
PS PARTNERS, LTD.,
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
1. Summary of Significant Accounting Policies and Partnership Matters
------------------------------------------------------------------
Description of Partnership
--------------------------
PS Partners, Ltd. (the "Partnership") was formed with the proceeds of
an interstate public offering. PSI Associates II, Inc. ("PSA"), an
affiliate of Public Storage Management, Inc., organized the Partnership
along with B. Wayne Hughes ("Hughes"). In September 1993, Storage Equities,
Inc., now known as Public Storage, Inc. ("PSI") acquired the interest of
PSA relating to its general partner capital contribution in the Partnership
and was substituted as a co-general partner in place of PSA.
In 1995, there were a series of mergers among Public Storage
Management, Inc. (which was the Partnership's mini-warehouse operator),
Public Storage, Inc. and their affiliates (collectively, "PSMI"),
culminating in the November 16, 1995 merger (the "PSMI Merger") of PSMI
into Storage Equities, Inc. In the PSMI Merger, Storage Equities, Inc.'s
name was changed to Public Storage, Inc. and it acquired substantially all
of PSMI's United States real estate operations and became the operator of
the Partnership's mini-warehouse properties.
The Partnership has invested in existing mini-warehouse storage
facilities which offer self-service storage spaces for lease, usually on a
month-to-month basis, to the general public and, to a lesser extent, in
existing business park facilities which offer industrial and office space
for lease.
The Partnership has ownership interests in 28 properties; all of which
are owned jointly through general partnerships (the "Joint Ventures") with
PSI. The Partnership is the managing general partner of the Joint Ventures,
with ownership interests in the Joint Ventures ranging from 30% to 75%.
Basis of Presentation
---------------------
The consolidated financial statements include the accounts of the
Partnership and the Joint Ventures. PSI's ownership interest in the Joint
Ventures is shown as minority interest in general partnerships in the
accompanying consolidated balance sheets. All significant intercompany
balances and transactions have been eliminated.
Minority interest in income represents PSI's share of net income with
respect to the Joint Ventures. Under the terms of the partnership
agreements all depreciation and amortization with respect to each Joint
Venture is allocated solely to the Partnership until the limited partners
recover their initial capital contribution. Thereafter, all depreciation
and amortization is allocated solely to PSI until it recovers its initial
capital contribution. All remaining depreciation and amortization is
allocated to the Partnership and PSI in proportion to their ownership
percentages.
Depreciation and amortization allocated to PSI was $465,000 in 1995,
$327,000 in 1994 and $275,000 in 1993. The allocation of depreciation and
amortization to PSI has the effect of reducing minority interest in income
and has no effect on the reported depreciation and amortization expense.
Under the terms of the partnership agreements, for property
acquisitions in which PSI issued convertible securities to the sellers for
its interest, PSI's rights to receive cash flow distributions from the
partnerships for any year after the first year of operation are
subordinated to cash distributions to the Partnership equal to a cumulative
annual 7% of its cash investment (not compounded). These agreements also
specify that upon sale or refinancing of a property for more
F-6
<PAGE>
1. Summary of Significant Accounting Policies and Partnership Matters
------------------------------------------------------------------
(continued)
-----------
Basis of Presentation (continued)
---------------------------------
than its original purchase price, distribution of proceeds to PSI is
subordinated to the return to the Partnership of the amount of its cash
investment and the 7% distribution described above.
In addition to the above provisions, PSI has the right to compel the
sale of each property in the general partnerships at any time after seven
years from the date of acquisition at not less than its independently
determined fair market value provided the Partnership receives its share of
the net sales proceeds solely in cash. PSI's right to require the
Partnership to sell all of its properties became exercisable in 1990.
Depreciation and Amortization
-----------------------------
The Partnership depreciates the buildings and equipment on the
straight-line method over estimated useful lives of 25 and 5 years,
respectively. Leasing commissions relating to business park properties are
expensed when incurred.
Revenue Recognition
-------------------
Property rents are recognized as earned.
Allocation of Net Income
------------------------
The General Partners' share of net income consists of an amount
attributable to their 1% capital contribution and an additional percentage
of cash flow (as defined, see Note 3) which relates to the General
Partners' share of cash distributions as set forth in the Partnership
Agreement. All remaining net income is allocated to the limited partners.
Per Unit Data
-------------
Per unit data is based on the number of limited partnership units
(66,000) outstanding during the year.
Cash Distributions
------------------
The Partnership Agreement provides for quarterly distributions of cash
flow from operations (as defined). Cash distributions per unit were $ 65.10
for 1995, $32.00 for 1994 and $25.00 for 1993.
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.
Environmental Cost
------------------
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
fourth quarter of 1995, an independent environmental consulting firm
completed environmental assessments on the Partnership's properties to
evaluate the environmental condition of, and potential environmental
liabilities of such properties. Based on the assessments, the Partnership
believes that it is probable that it will incur costs totaling $179,000 (in
addition, approximately $37,000 was expended for the assessments) for known
environmental remediation requirements which the Partnership has accrued
and expensed at the end of 1995. The Partnership expects to expend these
funds over the next twelve months. Although there can be no assurance,
F-7
<PAGE>
1. Summary of Significant Accounting Policies and Partnership Matters
------------------------------------------------------------------
(continued)
-----------
the Partnership is not aware of any environmental contamination of its
facilities which individually or in the aggregate would be material to the
Partnership's overall business, financial condition, or results of
operations.
2. Real Estate Facilities
----------------------
During 1992, a mini-warehouse facility located in Campbell, California was
partially condemned by a governmental authority exercising its right of
eminent domain. The partial condemnation of the facility, which is owned
jointly by the Partnership (50% ownership) and PSI (50% ownership),
resulted in gross condemnation of approximately $1,524,000 and a
corresponding gain of approximately $795,000 in 1992.
The Partnership contested the initial condemnation proceeds and in
June 1993 agreed to a final settlement in which an additional amount of
$396,000 was paid to the Partnership. Accordingly, the Partnership
recognized a gain of $298,000 (net of related expenses) in 1993 of which
$149,000 has been allocated to PSI and included in minority interest in
income.
3. General Partners' Equity
------------------------
The General Partners have a 1% interest in the Partnership. In
addition, the General Partners have a 10% interest in cash distributions
attributable to operations, exclusive of distributions attributable to
sales and refinancing proceeds.
Proceeds from sales and refinancings will be distributed entirely to
the limited partners until the limited partners recover their investment
plus a cumulative 8% annual return (not compounded); thereafter, the
General Partners have a 15% interest in remaining proceeds.
4. Related Party Transactions
--------------------------
PSI operates the Partnership's mini-warehouses for a "management fee"
equal to 6% of gross revenue (as defined) and Public Storage Commercial
Properties Group, Inc. ("PSCP") operates the commercial properties for a
"management fee" of 5% of gross revenue (as defined).
PSI has a 95% economic interest and Hughes and family members of
Hughes have a 5% economic interest in PSCP.
5. Taxes Based on Income
---------------------
Taxes based on income are the responsibility of the individual
partners and, accordingly, the Partnership's consolidated financial
statements do not reflect a provision for such taxes.
Taxable net income was $3,415,000, $2,992,000 and $2,667,000 for the
years ended December 31, 1995, 1994 and 1993, respectively. The difference
between taxable income and book income is primarily related to timing
differences in depreciation expense.
F-8
<PAGE>
PS PARTNERS, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 548,000 $ 511,000
Rent and other receivables 72,000 121,000
Real estate facilities, at cost:
Land 11,855,000 11,855,000
Buildings and equipment 45,963,000 45,866,000
------------ ------------
57,818,000 57,721,000
Less accumulated depreciation (22,766,000) (22,175,000)
------------ ------------
35,052,000 35,546,000
Other assets 131,000 129,000
------------ ------------
$ 35,803,000 $ 36,307,000
============ ============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 623,000 $ 746,000
Advance payments from renters 419,000 391,000
Minority interest in general partnerships 21,210,000 21,317,000
Partners' equity:
Limited partners' equity, $500 per unit, 66,000
units authorized, issued and outstanding 13,372,000 13,671,000
General partner's equity 179,000 182,000
------------ ------------
Total partners' equity 13,551,000 13,853,000
------------ ------------
$ 35,803,000 $ 36,307,000
============ ============
</TABLE>
See accompanying notes.
F-9
<PAGE>
PS PARTNERS, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1996 1995
---------- ----------
<S> <C> <C>
REVENUE:
Rental income $2,695,000 $2,647,000
Interest income 6,000 29,000
---------- ----------
2,701,000 2,676,000
---------- ----------
COSTS AND EXPENSES:
Cost of operations 961,000 864,000
Management fees 160,000 158,000
Depreciation and amortization 591,000 552,000
Administrative 15,000 28,000
---------- ----------
1,727,000 1,602,000
---------- ----------
Income before minority interest 974,000 1,074,000
Minority interest in income 476,000 573,000
---------- ----------
NET INCOME $ 498,000 $ 501,000
========== ==========
Limited partners' share of net income
($6.27 per unit in 1996 and $6.44
per unit in 1995) $ 414,000 $ 425,000
General partner's share of net income 84,000 76,000
---------- ----------
$ 498,000 $ 501,000
========== ==========
</TABLE>
See accompanying notes.
F-10
<PAGE>
PS PARTNERS, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1996 1995
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 498,000 $ 501,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 591,000 552,000
Decrease in rent and other receivables 49,000 13,000
Increase in other assets (2,000) (6,000)
Decrease in accounts payable (123,000) (68,000)
Increase (decrease) in advance payments from renters 28,000 (13,000)
Minority interest in income 476,000 573,000
---------- ----------
Total adjustments 1,019,000 1,051,000
---------- ----------
Net cash provided by operating activities 1,517,000 1,552,000
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate facilities (97,000) (48,000)
---------- ----------
Net cash used in investing activities (97,000) (48,000)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to holder of minority interest (583,000) (656,000)
Distributions to partners (800,000) (722,000)
---------- ----------
Net cash used in financing activities (1,383,000) (1,378,000)
---------- ----------
Net increase in cash and cash equivalents 37,000 126,000
Cash and cash equivalents at the beginning of the period 511,000 1,855,000
---------- -----------
Cash and cash equivalents at the end of the period $ 548,000 $ 1,981,000
========== ===========
</TABLE>
See accompanying notes.
F-11
<PAGE>
PS PARTNERS, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
1. The accompanying unaudited condensed consolidated 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 consolidated 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, 1995.
2. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments, consisting of
only normal accruals, necessary to present fairly the Partnership's
financial position at March 31, 1996, the results of operations for the
three months ended March 31, 1996 and 1995 and cash flows for the three
months then ended.
3. The results of operations for the three months ended March 31, 1996 are not
necessarily indicative of the results to be expected for the full year.
F-12
<PAGE>
SCHEDULE 4
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF THE PARTNERSHIP
Results of Operations
- ---------------------
Three months ended March 31, 1996 compared to three months ended March 31,
1995: The Partnership's net income was $498,000 and $501,000 for the three
months ended March 31, 1996 and 1995, respectively, representing a decrease of
$3,000. The decrease was primarily due to a decrease in operating results at
the Partnership's mini-warehouse facilities, combined with a decrease in
interest income, partially offset by a decrease in operations at the
Partnership's real estate facilities owned jointly with PSI.
Net property income (rental income less cost of operations and management
fees and excluding depreciation) for the three months ended March 31, 1996
decreased $51,000 or 3%, as rental income increased $48,000 or 2%, and costs of
operations (including management fees and excluding depreciation expense)
increased $99,000 or 10% compared to the same period in 1995.
Rental income for the Partnership's mini-warehouse operations was
$2,539,000 compared to $2,491,000 for the three months ended March 31,1996 and
1995, respectively, representing an increase of $48,000, or 2%. The increase in
rental income was primarily attributable to increased rental rates. The
weighted average occupancy levels at the mini-warehouse facilities was 87% for
both the three months ended March 31, 1996 and 1995. The monthly average
realized rent per square foot for the mini-warehouse facilities was $.60
compared to $.58 for the three months ended March 31, 1996 and 1995,
respectively. Costs of operations (including management fees) for the mini-
warehouses increased $107,000 or 11%, to $1,052,000 from $945,000 for the three
months ended March 31, 1996 and 1995, respectively. This increase was the
result of increases in repairs and maintenance and property tax expenses.
Accordingly, for the Partnership's mini-warehouse operations, property net
operating income decreased $59,000 or 4% from $1,546,000 to $1,487,000 for the
three months ended March 31, 1995 and 1996, respectively.
Rental income for the Partnership's business park operations remained
stable at $156,000 for the three months ended March 31, 1996 and 1995. The
weighted average occupancy levels at the business park facilities was 93%
compared to 92% for the three months ended March 31, 1996 and 1995,
respectively. The monthly average realized rent per square foot for the
business park facilities was $.60 compared to $.65 for the three months ended
March 31, 1996 and 1995, respectively. Cost of operations (including management
fees) for the business parks decreased $8,000 or 10%, to $69,000 from $77,000
for the three months ended March 31, 1996 and 1995, respectively. Accordingly,
for the Partnership's business park facilities, property net operating income
increased by $8,000 or 10%, from $79,000 to $87,000 for the three months ended
March 31, 1995 and 1996, respectively.
Administrative expenses decreased $13,000 from $28,000 in 1995 to $15,000
in 1996. This decrease is principally a result of decreases in accounting and
state provision for tax expenses.
Minority interest in income decreased $97,000 to $476,000 from $573,000 for
the three months ended March 31, 1996 and 1995, respectively. This decrease was
primarily attributable to the allocation of depreciation and amortization
expense (pursuant to the partnership agreement with respect to those real estate
facilities which are jointly owned with PSI) to PSI of $167,000 for the three
months ended March 31, 1996 compared to $102,000 for the same period in 1995,
combined with a decrease in operations at the Partnership's real estate
facilities owned jointly with PSI.
Year ended December 31, 1995 compared to year ended December 31, 1994: The
Partnership's net income in 1995 was $2,067,000 compared to $2,061,000 in 1994,
representing an increase of $6,000. The increase was primarily due to improved
property operations at the Partnership's real estate facilities combined with
reduced minority interest in income for those properties held jointly with PSI,
partially offset by increased environmental costs.
Property net operating income (rental income less cost of operations and
management fees and excluding depreciation expense) increased approximately
$149,000 or 2% in 1995 compared to 1994, as rental income increased by $260,000
or 2%, and cost of operations (including management fees) increased by $111,000
or 3%.
4-1
<PAGE>
Rental income for the Partnership's mini-warehouse operations was
$10,256,000 in 1995 compared to $10,039,000 in 1994, representing an increase of
$217,000, or 2%. The increase in rental income was primarily attributable to
increased rental rates. The weighted average occupancy levels at the mini-
warehouse facilities were 89% in 1995 compared to 90% in 1994. The monthly
average realized rent per square foot for the mini-warehouse facilities was $.59
in 1995 compared to $.57 in 1994. Costs of operations (including management
fees) for the mini-warehouses increased $103,000 or 3%, to $3,735,000 in 1995
from $3,632,000 in 1994. Accordingly, for the Partnership's mini-warehouse
operations, property net operating income increased by $114,000 or 2% from
$6,407,000 in 1994 to $6,521,000 in 1995.
Rental income for the Partnership's business park operations was $649,000
in 1995 compared to $606,000 in 1994, representing an increase of $43,000 or 7%.
The increase in rental income was primarily attributable to increased rental
rates, combined with increased occupancy levels. The weighted average occupancy
levels at the business park facilities were 91% in 1995 compared to 90% in 1994.
The monthly average realized rent per square foot for the business park
facilities was $.65 in 1995 compared to $.63 in 1994. Cost of operations
(including management fees) for the business parks increased $8,000 or 3% to
$292,000 in 1995 from $284,000 in 1994. Accordingly, for the Partnership's
business park facilities, property net operating income increased by $35,000 or
11% from $322,000 in 1994 to $357,000 in 1995.
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 fourth quarter of
1995, an independent environmental consulting firm completed environmental
assessments on the Partnership's properties to evaluate the environmental
condition of, and potential environmental liabilities of such properties. Based
on the assessments, the Partnership believes that it is probable that it will
incur costs totaling $179,000 (in addition, approximately $37,000 was expended
for the assessments) for known environmental remediation requirements which the
Partnership has accrued and expensed at the end of 1995. The Partnership
expects to expend these funds over the next twelve months. Although there can
be no assurance, the Partnership is not aware of any environmental contamination
of its facilities which individually or in the aggregate would be material to
the Partnership's overall business, financial condition, or results of
operations.
Minority interest in income decreased by $134,000 in 1995 compared to 1994.
This decrease was primarily attributed to the allocation of depreciation and
amortization expense (pursuant to the partnership agreement with respect to
those real estate facilities which are jointly owned by PSI) to PSI of $465,000
compared to $327,000 for 1995 and 1994, respectively, partially offset by an
increase in operations at the Partnership's real estate facilities owned jointly
with PSI.
Year ended December 31, 1994 compared to year ended December 31, 1993: The
Partnership's net income in 1994 was $2,061,000 compared to $1,904,000 in 1993,
representing an increase of $157,000. Net income in 1993 includes a gain on the
condemnation of a real estate facility totaling $298,000. Accordingly, income
prior to the gain increased by $455,000 in 1994 compared to 1993. The increase
was primarily due to improved property operations at the Partnership's real
estate facilities combined with reduced interest expense, partially offset by
increased depreciation expense.
Property net operating income (rental income less cost of operations and
management fees and excluding depreciation expense) increased approximately
$427,000 or 7% in 1994 compared to 1993, as rental income increased by $567,000
or 6%, and cost of operations (including management fees) increased by $140,000
or 4%.
Rental income for the Partnership's mini-warehouse operations was
$10,039,000 in 1994 compared to $9,451,000 in 1993, representing an increase of
$588,000, or 6%. The increase in rental income was primarily attributable to
increased occupancy levels at the mini-warehouse facilities, combined with
increased rental rates. The weighted average occupancy levels at the mini-
warehouse facilities were 90% in 1994 compared to 89% in 1993. The monthly
average realized rent per square foot for the mini-warehouse facilities was $.57
in 1994 compared to $.54 in 1993. Costs of operations (including management
fees) for the mini-warehouses increased $164,000 or 5%, to $3,632,000 in 1994
from $3,468,000 in 1993. Accordingly, for the Partnership's mini-warehouse
operations, property net operating income increased by $424,000 or 7% from
$5,983,000 in 1993 to $6,407,000 in 1994.
4-2
<PAGE>
Rental income for the Partnership's business park operations was $606,000
in 1994 compared to $627,000 in 1993, representing a decrease of $21,000 or 3%.
The decrease in rental income was primarily attributable to decreased rental
rates, partially offset by increased occupancy levels. The weighted average
occupancy levels at the business park facilities were 90% in 1994 compared to
88% in 1993. The monthly average realized rent per square foot for the business
park facilities was $.63 in 1994 compared to $.65 in 1993. Cost of operations
(including management fees) for the business parks decreased $24,000 or 8% to
$284,000 in 1994 from $308,000 in 1993. Accordingly, for the Partnership's
business park facilities, property net operating income increased by $3,000 or
1% from $319,000 in 1993 to $322,000 in 1994.
During 1993, the Partnership prepaid all of its mortgage notes payable. As
a result of the 1993 reductions in mortgage notes payable, there was no
interest expense in 1994 compared to $196,000 in 1993.
In 1992, a mini-warehouse facility located in Campbell, California was
partially condemned by a governmental authority exercising its right of eminent
domain. The partial condemnation of the facility, which is jointly owned by the
Partnership (50% ownership) and PSI (50% ownership), resulted in a gain of
$795,000 in 1992 of which $459,000 was allocated to the Partnership in
accordance with the joint venture agreement. The Partnership contested the
initial condemnation proceeds of $1,524,000 and in June 1993 agreed to a final
settlement in which an additional amount of $396,000 was paid to the
Partnership. Accordingly, the Partnership recognized a gain of $298,000 (net of
related expenses) in 1993 of which $149,000 has been allocated to PSI and
included in minority interest in income.
Liquidity and Capital Resources
- -------------------------------
The Partnership has adequate sources of cash to finance its operations,
both on a short-term and long-term basis, primarily from internally generated
cash from property operations with cash on-hand at March 31, 1996 of $548,000.
Cash flows from operating activities ($1,517,000 for the three months ended
March 31, 1996 and $6,846,000 for the year ended December 31, 1995) have been
sufficient to meet all current obligations of the Partnership. During 1996, the
Partnership anticipates approximately $909,000 of capital improvements (of which
$372,000 represents PSI's joint venture share). During 1995, the Partnership's
property manager commenced a program to enhance the visual appearance of the
mini-warehouse facilities managed by it. Such enhancements will include new
signs, exterior color schemes, and improvements to the rental offices. Included
in the 1996 capital improvement budget are estimated costs of $163,000 for such
enhancements. Total capital improvements were $97,000 for the three months
ended March 31, 1996 of which $69,000 represents the Partnership's share.
The Partnership expects to continue making quarterly distributions. Total
distributions paid to the General Partners and the limited partners (including
per Unit amounts) for the first quarter of 1996 and for 1995 and prior years
were as follows:
<TABLE>
<CAPTION>
Total Per Unit
---------- --------
<S> <C> <C>
1996 (through March 31) $ 800,000 $10.80
1995 4,823,000 65.10
1994 2,371,000 32.00
1993 1,850,000 25.00
1992 1,850,000 25.00
1991 2,522,000 34.04
1990 347,000 4.70
1989 2,223,000 30.00
1988 2,222,000 30.00
1987 2,222,000 30.00
1986 2,407,000 32.50
1985 2,963,000 40.00
1984 2,963,000 40.00
1983 2,407,000 32.50
</TABLE>
4-3
<PAGE>
Distributions were reduced significantly in 1990 in order to payoff short-
term borrowings as well as the prepayment of long-term borrowings. In 1991, the
General Partners distributed a portion of the operating cash reserve of the
Partnership. The operating reserve that was distributed was estimated at $8.10
per unit. During 1992, 1993 and 1994, the distribution level was adjusted to a
level supported by property operations after reduction for funds needed for
capital improvements, debt service and necessary cash reserves. The 1995
distribution includes a portion of the operating cash reserve of the
Partnership, estimated to be $22.95 per Unit. The 1996 distributions are
estimated to be $43.20 per Unit, assuming no material change in property
operations.
4-4
<PAGE>
SCHEDULE 5
DIRECTORS AND EXECUTIVE OFFICERS OF PUBLIC STORAGE, INC.
<TABLE>
<CAPTION>
Name of Director Employer/Address/ Current Position/
or Executive Officer Nature of Business Dates of Employment *
- -------------------- ------------------ -------------------
<S> <C> <C>
B. Wayne Hughes Public Storage, Inc. Chairman of the Board and Chief
(Executive Officer and Director) 701 Western Avenue, Suite 200 Executive Officer
Glendale, CA 91201-2397 11/91-present
President and Chief Executive
Real estate investment Officer of PSI
1978-11/95
Officer of PSI and affiliates
1972-11/95
Harvey Lenkin Public Storage, Inc. President
(Executive Officer and Director) 11/91-present
Real estate investment Vice President of PSI
1988-11/95
Officer of PSI
1978-11/95
Ronald L. Havner, Jr. Public Storage, Inc. Senior Vice President
(Executive Officer) from 11/13/95
Real estate investment Chief Financial Officer
11/91-present
Vice President
7/90-11/13/95
Officer of PSI and affiliates
1986-11/95 (chief financial
officer 1991-11/95)
Hugh W. Horne Public Storage, Inc. Senior Vice President
(Executive Officer) from 11/13/95
Real estate investment Vice President
1980-11/13/95
Secretary
1980-2/92
Officer of PSI and affiliates
1973-11/95
Marvin M. Lotz Public Storage, Inc. Senior Vice President
(Executive Officer) from 11/16/95
Real estate investment Officer of affiliates of PSI
9/83-11/95
Mary Jayne Howard Public Storage, Inc. Senior Vice President
(Executive Officer) from 11/16/95
Real estate investment Officer of affiliates of PSI
12/85-11/95
</TABLE>
5-1
<PAGE>
<TABLE>
<CAPTION>
Name of Director Employer/Address/ Current Position/
or Executive Officer Nature of Business Dates of Employment *
- -------------------- ------------------ -------------------
<S> <C> <C>
David Goldberg Public Storage, Inc. Senior Vice President and General
(Executive Officer) Counsel from 11/16/95
Real estate investment Counsel to PSI
6/91-11/95
Obren B. Gerich Public Storage, Inc. Vice President 1980-present
(Executive Officer) Chief Financial Officer
Real estate investment 1980-10/91
Officer of PSI
1975-11/95
John Reyes Public Storage, Inc. Vice President and Controller
(Executive Officer) from 11/13/95
Real estate investment
Sarah Hass Public Storage, Inc. Vice President from 11/13/95
(Executive Officer) Secretary 2/92-present
Real estate investment
Robert J. Abernethy American Standard Development President
(Director) Company; Self Storage 1977-present
Management Company
5221 West 102nd Street
Los Angeles, CA 90045
Developer and operator of mini-
warehouses
Dann V. Angeloff The Angeloff Company President
(Director) 727 West Seventh Street 1976-present
Suite 331
Los Angeles, CA 90017
Corporate financial advisory firm
</TABLE>
5-2
<PAGE>
<TABLE>
<CAPTION>
Name of Director Employer/Address/ Current Position/
or Executive Officer Nature of Business Dates of Employment *
- -------------------- ------------------ -------------------
<S> <C> <C>
William C. Baker Santa Anita Realty Chairman and Chief Executive
(Director) Enterprises, Inc. Officer
301 West Huntington Drive 3/96-present
Suite 405
Arcadia, CA 91007
Real estate investment trust
that operates the Santa
Anita Racetrack
Carolina Restaurant Enterprises, Chairman and Chief Executive
Inc. Officer
3 Lochmoor Lane 1/92-present
Newport Beach, CA 92660
Franchisee of Red Robin
International, Inc.
Red Robin International, Inc. President
28 Executive Park, Suite 200 4/93-5/95
Irvine, CA 92714
Operate and franchise restaurants
Uri P. Harkham The Jonathan Martin Fashion President and Chief Executive
(Director) Group Officer
1157 South Crocker Street 1975-present
Los Angeles, CA 90021
Design, manufacture and market
women's clothing
Harkham Properties Chairman of the Board
1157 South Crocker Street 1978-present
Los Angeles, CA 90021
Real estate
</TABLE>
To the knowledge of the Company, all of the foregoing persons are
citizens of the United States, except Uri P. Harkham, who is a citizen of
Australia.
_______________
* The term "PSI" includes Public Storage, Inc. (formerly Storage Equities,
Inc.) and its predecessors and their affiliates.
5-3
<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
By Mail By Hand By Overnight Courier
The First National Bank of BancBoston Trust The First National Bank of
Boston Company of New York Boston
Shareholder Services 55 Broadway Corporate Agency &
P.O. Box 1872 3rd Floor Reorganization
Mail Stop 45-02-53 New York, NY 10006 150 Royall Street
Boston, MA 02105 Mail Stop 45-02-53
Canton, MA 02021
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:
Christopher Weil & Company, Inc.
(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.
701 Western Avenue, Suite 200
Glendale, California 91201-2397
(800) 421-2856
(818) 244-8080
<PAGE>
EXHIBIT 99.(a)(2)
LETTER OF TRANSMITTAL
To Purchase Limited Partnership Units of PS Partners, Ltd.,
a California limited partnership
Pursuant to the Offer to Purchase dated July 26, 1996
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 WEDNESDAY, AUGUST
28, 1996, 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>
<S> <C> <C> <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 45-02-53 New York, NY 10006 150 Royall Street
Boston, MA 02105 Mail Stop 45-02-53
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 $548 per Unit in cash the above-described units
of limited partnership interest (the "Units") of PS Partners, 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 July 26, 1996 (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 July 26, 1996 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 July 26, 1996) 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 July 26, 1996. 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 July 26,
1996 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 the General
Partner of the Partnership, the Company is controlled by B. Wayne Hughes and the
General Partner of the Partnership makes 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
Partner believes 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 to effectively 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 July 26, 1996), 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 August 28, 1996, 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 AUGUST 28, 1996,
UNLESS EXTENDED.
THE DEPOSITARY: THE SOLICITING AGENT FOR THE OFFER IS:
THE FIRST NATIONAL BANK OF BOSTON CHRISTOPHER WEIL & COMPANY, INC.
Shareholder Services (800) 478-2605
P.O. Box 1872
Mail Stop 45-02-53
Boston, Massachusetts 02105
(617) 575-3120
-4-
<PAGE>
EXHIBIT 99.(a)(3)
[LETTERHEAD OF PUBLIC STORAGE]
July 26, 1996
Re: Tender Offer for Units of
PS Partners, Ltd.
---------------------------
Dear Unitholder:
As a Unitholder of PS Partners, Ltd. (the "Partnership"), Public Storage,
Inc. ("PSI") mailed to you on July 26, 1996 an Offer to Purchase dated July 26,
1996 wherein PSI is offering to purchase for cash limited partnership units of
the Partnership.
Your telephone number is not part of our records. We would like to answer
any questions you may have regarding the Offer to Purchase and could do so if
you would either:
1. Provide us with your telephone number and a convenient time to
contact you by filling in and returning the enclosed card to PSI in
the enclosed postage-paid envelope, or
2. Call Christopher Weil & Company, Inc., the company retained by Public
Storage, Inc. to assist limited partners in understanding the Offer
to Purchase, at (800) 478-2605.
Thank you for your prompt attention to this matter.
Very truly yours,
PUBLIC STORAGE, INC.
By: /s/ Harvey Lenkin
--------------------------------
Harvey Lenkin
President
Enclosures
<PAGE>
Tender Offer for Units of PS Partners, Ltd.
Please return to: Public Storage, Inc.
P.O. Box 25039
Glendale, CA 91221-9985
Name and address of registered holder
Telephone number
Convenient time to contact
<PAGE>
[LETTERHEAD OF PUBLIC STORAGE]
Enclosed is an Offer to Purchase for cash limited partnership units of PS
Partners, Ltd. by Public Storage, Inc. dated July 26, 1996. If you are a
beneficial owner of units in PS Partners, Ltd. and would like to participate in
the Offer to Purchase, please contact the registered holder of the units.
July 26, 1996
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EXHIBIT 99.(g)
[LETTERHEAD OF NICHOLSON-DOUGLAS REALTY CONSULTANTS, INC.]
May 10, 1996
Public Storage, Inc.
Glendale, California
Subject: PS PARTNERS I
We have completed a limited appraisal of the real estate identified above and
submit our findings in the following Restricted Appraisal Report. We understand
this opinion of value will be utilized in conjunction with financial reporting
requirements.
The following report is a Restricted Appraisal Report which is intended to
comply with the reporting requirements set forth under Standards Rule 2-2(c) of
the Uniform Standards of Professional Appraisal Practice for a Restricted
Appraisal Report. As such, it presents only summary discussions of the data,
reasoning, and analyses that were used in the appraisal process to develop the
appraiser's opinion of value. Supporting documentation concerning the data,
reasoning, and analyses is retained in the appraiser's file. The depth of
discussion contained in this report is specific to the needs of the client and
for the intended use stated below. The appraiser is not responsible for
unauthorized use of this report.
Furthermore, as agreed, this report is the result of a limited appraisal process
in that certain allowable departures from specific guidelines of the Uniform
Standards of Appraisal Practice were invoked. The intended user of this report
is warned that the reliability of the value conclusion provided may be impacted
to the degree there is a departure from specific guidelines of USPAP. The
appraisal is limited in that we have relied primarily on the Income
Capitalization Approach to value; the results were then compared to the
indicated value via a Regression Technique of sales of comparable self-storage
facilities.
The analytical process that was undertaken included a review of the properties
unit mix, rental rates and historical financial statements. Following these
reviews a stabilized level of net operating income was forecast for the
properties. A value estimate was then made using both the Direct Capitalization
Approach and the Discounted Cash Flow Approach; in instances where the occupancy
rates were not at stabilized levels, we have relied upon a Discounted Cash Flow
analysis. As additional support, a Regression Analysis was conducted using 338
sales of self storage properties. Based upon a correlation of the methodologies,
for all properties that were stabilized, we arrived at an opinion of the
aggregate market value for the 29-property portfolio.
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Historical operating statements, unit mix, net rentable area, rental rates, and
property-specific data for the properties appraised were furnished by Public
Storage, Inc. These financial operating statements and other information have
been accepted without further verification as correctly representing operations
and conditions of the subject properties.
Assets included within the scope of our valuation include land, land
improvements, building improvements, and all fixed service equipment. Assets
excluded are furniture, fixtures, machinery or equipment, personal property,
supplies, materials on hand, inventories, company records, and any current or
intangible assets that may exist.
We have made no investigations of, nor assume any responsibility for the
existence or impact of any hazardous substance, which may or may not be present
on the properties, in the development of our limited appraisal opinion.
Market value is generally defined as:
"the most probable price which a property should bring in a competitive and
open market under all conditions requisite to a fair sale, the buyer and
seller each acting prudently and knowledgeably, and assuming the price is not
affected by undue stimulus. Implicit in this definition is the consummation
of a sale as of a specified date and the passing of title from seller to buyer
under conditions whereby:
1. Buyer and seller are typically motivated;
2. Both parties are well informed or well advised and acting in what they
consider their own best interests;
3. A reasonable time is allowed for exposure in the open market;
4. Payment is made in terms of cash in U.S. dollars or in terms of financial
arrangements comparable thereto; and
5. The price represents the normal consideration for the property sold
unaffected by special or creative financing or sales concessions granted
by anyone associated with the sale."
Fee Simple Interest (Estate) is defined as:
"Absolute ownership unencumbered by any other interest or estate, subject only
to the limitations imposed by the governmental powers of taxation, eminent
domain, police power, and escheat."
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NICHOLSON-DOUGLAS REALTY CONSULTANTS, INC.
Correspondent Offices in 19 Cities Nationwide
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As used herein, NDRC's aggregate Market Value opinion is defined as our opinion
that the aggregated market value estimate is likely to fall within a (plus)
(minus) 10% range of the total aggregate market value estimate if a complete,
independent appraisal were performed on the same properties.
The properties that were the subject of this appraisal were not personally
inspected.
Based on the limited investigations and analyses as described in this Restricted
Appraisal Report, it is our opinion, as of January 31, 1996, that the Aggregate
Market Value, or most probable selling price, of the fee simple interest in the
29-property subject portfolio, is represented in the amount of:
SIXTY EIGHT MILLION ONE HUNDRED THOUSAND DOLLARS
($68,100,000)
Our compensation was not contingent upon the reporting of a predetermined value
or direction in value that favors the cause of the client, the amount of the
value estimate, the attainment of a stipulated result, the occurrence of a
subsequent event, or the approval of a loan. This appraisal assignment was not
based on a requested minimum valuation, a specific valuation, or the approval of
a loan.
Attached to this letter report please find the following exhibits:
Exhibit A - Assumptions and Limiting Conditions
B - Appraisal Certification
C - Qualifications of Appraisers
General Service Conditions
The undersigned certifies that they have the professional qualifications and
competency necessary to complete this appraisal assignment in an appropriate
manner.
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NICHOLSON-DOUGLAS REALTY CONSULTANTS, INC.
Correspondent Offices in 19 Cities Nationwide
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No investigation was made of the title to, or any liabilities against the
property appraised.
This report has been prepared in accordance with the specifications agreed upon.
We hope that you will find the details of this narrative appraisal relevant to
your needs, and we would be happy to answer questions you might have.
Respectfully submitted,
Nicholson-Douglas Realty Consultants, Inc.
Duncan O. Douglas Lawrence R. Nicholson, MAI
Principal Principal
Professional Assistance by
Ann M. Donohoo
attachments
96006.
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NICHOLSON-DOUGLAS REALTY CONSULTANTS, INC.
Correspondent Offices in 19 Cities Nationwide
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EXHIBIT A
Assumptions and Limiting Conditions
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NICHOLSON-DOUGLAS REALTY CONSULTANTS, INC.
Correspondent Offices in 19 Cities Nationwide
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ASSUMPTIONS AND LIMITING CONDITIONS
As agreed upon with the client prior to the preparation of this appraisal, this
is a Limited Appraisal; it invokes the Departure Provision of the Uniform
Standards of Professional Appraisal Practice. As such, information pertinent to
the valuation has not been considered and/or the full valuation process has not
been applied. Depending on the type and degree of limitations, the reliability
of the value conclusion provided herein may be reduced.
This is a Restricted Report which is intended to comply with the reporting
requirements set forth under Standard Rule 2-2(c) of the Uniform Standards of
Professional Appraisal Practice for a Restricted Appraisal Report. As such, it
does not include discussion of the data, reasoning, and analyses that were used
in the appraisal process to develop the appraiser's opinion of value. Supporting
documentation concerning the data, reasoning, and analyses is retained in the
appraiser's file. The information contained in this report is specific to the
needs of the client and for the intended use stated in this report. The
appraiser is not responsible for unauthorized use of the report.
No responsibility is assumed for matters legal in nature. No investigation has
been made of the title to or any liabilities against the property appraised. The
appraisal presumes, unless otherwise noted, that the owner's claim is valid, the
property rights are good and marketable, and there are no encumbrances which
cannot be cleared through normal processes.
To the best of our knowledge, all data set forth in this report are true and
accurate. Although gathered from reliable sources, no guarantee is made nor
liability assumed for the accuracy of any data, opinions, or estimates
identified as being furnished by others which have been used in formulating this
analysis.
Land areas and descriptions used in this appraisal were either obtained from
public records or furnished by the client and have not been verified by legal
counsel or a licensed surveyor. The land description is included for
identification purposes only and should not be used in a conveyance or other
legal document without proper verification by an attorney.
No soil analysis or geological studies were ordered or made in conjunction with
this report, nor were any water, oil, gas, coal, or other subsurface mineral and
use rights or conditions investigated.
Substances such as asbestos, urea-formaldehyde foam insulation, other chemicals,
toxic wastes, or other potentially hazardous materials could, if present,
adversely affect the value of the property. Unless otherwise stated in this
report, the existence of hazardous substance, which may or may not be present on
or in the property, was not considered by the appraiser in the development of
the conclusion of value. The stated value estimate is predicated on the
assumption that there is no material on or in the property that would cause such
a loss in value. No responsibility is assumed for any such conditions, and the
client has been advised that the appraiser is not qualified to detect such
substances, quantify the impact on values, or develop the remediation cost.
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NICHOLSON-DOUGLAS REALTY CONSULTANTS, INC.
Correspondent Offices in 19 Cities Nationwide
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Assumptions and Limiting Conditions, page 2
No environmental impact study has been ordered or made. Full compliance with
applicable federal, state, and local environmental regulations and laws is
assumed unless otherwise stated, defined, and considered in the report. It is
also assumed that all required licenses, consents, or other legislative or
administrative authority from any local, state, or national government or
private entity organization either have been or can be obtained or renewed for
any use which the report covers.
Site plans are presented only as aids in visualizing the property and its
environment. Although the material was prepared using the best available data,
it should not be considered as a survey or scaled for size.
It is assumed that all applicable zoning and use regulations and restrictions
have been complied with unless a nonconformity has been stated, defined, and
considered in the appraisal report. Further, it is assumed that the utilization
of the land and improvements is within the boundaries of the property described
and that no encroachment or trespass exists unless noted in the report.
The value or values presented in this report are based upon the premises
outlined herein and are valid only for the purpose or purposes stated.
The date of value to which the conclusions and opinions expressed apply is set
forth in this report. Unless otherwise noted, this date represents the last date
of our physical inspection of the property. The value opinion herein rendered is
based on the status of the national business economy and the purchasing power of
the U.S. dollar as of that date.
Testimony or attendance in court or at any other hearing is not required by
reason of this appraisal unless arrangements are previously made within a
reasonable time in advance therefor.
One or more of the signatories of this appraisal report is a member or candidate
of the Appraisal Institute. The Bylaws and Regulations of the Institute require
each member and candidate to control the use and distribution of each appraisal
report signed by them.
Except as specifically presented in the letter of transmittal, possession of
this report or any copy thereof does not carry with it the right of publication.
No portion of this report (especially any conclusion to use, the identity of the
appraiser or the firm with which he/she is connected, or any reference to the
Appraisal Institute or the designations awarded by this shall be disseminated to
the public through prospectus, advertising, public relations, news, or any other
means of communication without the written consent and approval of Nicholson-
Douglas Realty Consultants, Inc.
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NICHOLSON-DOUGLAS REALTY CONSULTANTS, INC.
Correspondent Offices in 19 Cities Nationwide
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EXHIBIT B
Appraisal Certification
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NICHOLSON-DOUGLAS REALTY CONSULTANTS, INC.
Correspondent Offices in 19 Cities Nationwide
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APPRAISAL CERTIFICATION
I certify that, to the best of my knowledge and belief:
. the statements of fact contained in this report are true and accurate.
. the reported analyses, opinions, and conclusions are limited only by the
reported assumptions and limiting conditions, and are my personal,
unbiased professional analyses, opinions, and conclusions.
. I have no present or prospective interest in the properties that are the
subject of this report, and I have no personal interest or bias with
respect to the parties involved.
. my compensation is not contingent upon the reporting of a predetermined
value or direction in value that favors the cause of the client, the
amount of the value estimate, the attainment of a stipulated result, or
the occurrence of a subsequent event.
. my analyses, opinions, and conclusions were developed, and this report
has been prepared, in conformity with the requirements of the Code of
Professional Ethics and the Standards of Professional Appraisal Practice
of the Appraisal Institute and in conformance with the Uniform Standards
of Professional Appraisal Practice.
. I certify that the use of this report is subject to the requirements of
the Appraisal Institute relating to review by its duly authorized
individuals.
. I have not made a personal inspection of the properties that are the
subject of this report.
. unless noted in this report, no one else has provided significant
professional assistance to the person signing this report.
. I certify that as of the date of this report, I have competed the
requirements under the continuing education program of the Appraisal
Institute.
. this appraisal assignment was not based on a requested minimum
valuation, a specific valuation, or the approval of a loan.
Lawrence R. Nicholson, MAI
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NICHOLSON-DOUGLAS REALTY CONSULTANTS, INC.
Correspondent Offices in 19 Cities Nationwide
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APPRAISAL CERTIFICATION
I certify that, to the best of my knowledge and belief:
. the statements of fact contained in this report are true and accurate.
. the reported analyses, opinions, and conclusions are limited only by the
reported assumptions and limiting conditions, and are my personal,
unbiased professional analyses, opinions, and conclusions.
. I have no present or prospective interest in the properties that are the
subject of this report, and I have no personal interest or bias with
respect to the parties involved.
. my compensation is not contingent upon the reporting of a predetermined
value or direction in value that favors the cause of the client, the
amount of the value estimate, the attainment of a stipulated result, or
the occurrence of a subsequent event.
. my analyses, opinions, and conclusions were developed, and this report
has been prepared, in conformity with the requirements of the Code of
Professional Ethics and the Standards of Professional Appraisal Practice
of the Appraisal Institute and in conformance with the Uniform Standards
of Professional Appraisal Practice.
. I certify that the use of this report is subject to the requirements of
the Appraisal Institute relating to review by its duly authorized
individuals.
. I have not made a personal inspection of the properties that are the
subject of this report.
. unless noted in this report, no one else has provided significant
professional assistance to the person signing this report.
. this appraisal assignment was not based on a requested minimum
valuation, a specific valuation, or the approval of a loan.
Duncan O. Douglas
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NICHOLSON-DOUGLAS REALTY CONSULTANTS, INC.
Correspondent Offices in 19 Cities Nationwide
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APPRAISAL CERTIFICATION
I certify that, to the best of my knowledge and belief:
. the statements of fact contained in this report are true and accurate.
. the reported analyses, opinions, and conclusions are limited only by the
reported assumptions and limiting conditions, and are my personal,
unbiased professional analyses, opinions, and conclusions.
. I have no present or prospective interest in the properties that are the
subject of this report, and I have no personal interest or bias with
respect to the parties involved.
. my compensation is not contingent upon the reporting of a predetermined
value or direction in value that favors the cause of the client, the
amount of the value estimate, the attainment of a stipulated result, or
the occurrence of a subsequent event.
. my analyses, opinions, and conclusions were developed, and this report
has been prepared, in conformity with the requirements of the Code of
Professional Ethics and the Standards of Professional Appraisal Practice
of the Appraisal Institute and in conformance with the Uniform Standards
of Professional Appraisal Practice.
. I certify that the use of this report is subject to the requirements of
the Appraisal Institute relating to review by its duly authorized
individuals.
. I have not made a personal inspection of the properties that are the
subject of this report.
. unless noted in this report, no one else has provided significant
professional assistance to the person signing this report.
. this appraisal assignment was not based on a requested minimum
valuation, a specific valuation, or the approval of a loan.
Ann M. Donohoo
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NICHOLSON-DOUGLAS REALTY CONSULTANTS, INC.
Correspondent Offices in 19 Cities Nationwide
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EXHIBIT C
APPRAISER QUALIFICATIONS
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NICHOLSON-DOUGLAS REALTY CONSULTANTS, INC.
Correspondent Offices in 19 Cities Nationwide
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LAWRENCE R. NICHOLSON, MAI
NICHOLSON-DOUGLAS REALTY CONSULTANTS, INC.
PRINCIPAL
EXPERIENCE Principal of Nicholson-Douglas Realty Consultants, Inc., a
Milwaukee-based real estate appraisal and consulting firm
dedicated to providing reliable and well documented valuations,
feasibility and market studies, and other real estate consulting
services in a personal and timely manner.
Prior to forming Nicholson-Douglas Realty Consultants, Mr.
Nicholson was National Managing Director of the Real Estate
Advisory Group (REAG) of American Appraisal Associates. As an
operating unit of the world's largest independent valuation
consulting firm, REAG specialized in providing appraisal,
consulting, and market research services nationwide.
Mr. Nicholson has extensive experience with a variety of property
types including office buildings, regional malls, shopping
centers, apartment complexes, hotels, self storage facilities,
business/industrial parks, developmental land, restaurants, and
light and heavy industrial facilities. He has developed a national
reputation for innovative market research and valuation
techniques.
Local, regional and national clientele includes financial
institutions, law firms, insurance companies, pension funds and
pension fund managers, corporations, and governmental agencies,
among others.
ACADEMIC University of Wisconsin - Madison
BACKGROUND Master of Science - Real Estate Appraisal and Investment
Analysis
Bachelor of Business
Administration - Finance & Real Estate
Northwestern University
Management coursework
Appraisal Institute
Numerous real estate appraisal courses
COURT
EXPERIENCE Mr. Nicholson has provided expert testimony concerning the market
value of real estate and partnership interests. He has given
depositions, provided expert testimony and litigation support on
the value of hotels, office buildings, regional malls, shopping
centers, developmental land and industrial facilities.
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NICHOLSON-DOUGLAS REALTY CONSULTANTS, INC.
Correspondent Offices in 19 Cities Nationwide
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LAWRENCE R. NICHOLSON, MAI
PROFESSIONAL QUALIFICATIONS, CONTINUED
PROFESSIONAL
AFFILIATIONS Appraisal Institute
MAI Designation (#8077)
Board of Directors, Badger Chapter (former)
Chairperson - Public Relations Committee (former)
Ethics Administration Division - Assistant Regional
Member
Nonresidential Appraisal Reports Grader (former)
The Appraisal Foundation
Appraisal Standards Board - Technical Issues Task Force
State Certifications
Wisconsin Certified General Appraiser (#116)
Illinois Certified General Appraiser (#153-000752)
Minnesota Certified Federal General Appraiser
(#4000643)
National Council of Real Estate Investment Fiduciaries
(NCREIF)
Valuation Committee
University of Wisconsin Real Estate Alumni Association
PUBLICATIONS, BOOKS
AND SPEECHES Mr. Nicholson has authored articles and has been quoted as
an expert in numerous real estate industry publications
including The Appraisal Journal, Pension World, National
Real Estate Investor, The Real Estate Finance Journal,
Urban Land, Pensions & Investments, Commercial Investment
Real Estate Journal, Commercial Property News, Real Estate
Forum, Midwest Real Estate News, Crain's Chicago Business,
and The Institutional Real Estate Letter. Mr. Nicholson has
also co-authored a chapter regarding real estate valuation
issues is the book The Annual Review of Investment Banking.
Additionally, Mr. Nicholson has given speeches regarding
current real estate valuation issues.
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NICHOLSON-DOUGLAS REALTY CONSULTANTS, INC.
Correspondent Offices in 19 Cities Nationwide
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DUNCAN O. DOUGLAS
NICHOLSON-DOUGLAS REALTY CONSULTANTS, INC.
PRINCIPAL
EXPERIENCE Principal of Nicholson-Douglas Realty Consultants, Inc., a
Milwaukee-based real estate appraisal and consulting firm
dedicated to providing reliable and well documented valuations,
feasibility and market studies, and other real estate consulting
services in a personal and timely manner.
Mr. Douglas has extensive experience with a variety of property
types including office buildings, regional malls, shopping
centers, apartment complexes, hotels, self storage facilities,
business/industrial parks, developmental land, restaurants, and
industrial facilities. He is responsible for a variety of client
services including client-specific research projects, real estate
valuation and consulting, expert testimony, feasibility and
marketability studies.
Prior to the establishment of Nicholson-Douglas Realty
Consultants, Inc., Mr. Douglas was the Director of Research for
the Real Estate Advisory Group, a Senior Appraiser for American
Appraisal Associates, Inc., a Senior Commercial Appraiser for
Comerica Bank, Detroit, and had spent several years appraising
real estate in Southern Ontario.
Mr. Douglas has appraised properties for purchase price
allocation, income and estate tax settlement, year-end financial
reporting, litigation, and financing purposes. Property interests
he has appraised include fee simple, leased fee, leasehold,
partial and partnership interests, as well as valuing
participating mortgages.
He is an expert in the conception, development, and maintenance of
databases tailored to the investment real estate field. He designs
and implements report format, report presentation, and computer
modeling techniques for appraising investment real estate. He was
instrumental in developing and refining demand side analysis, a
technique for forecasting growth in commercial real estate market
segments.
Local, regional and national clients include the pension funds,
banks, hospitality concerns, legal and accounting firms, as well
as government agencies.
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NICHOLSON-DOUGLAS REALTY CONSULTANTS, INC.
Correspondent Offices in 19 Cities Nationwide
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DUNCAN O. DOUGLAS
PROFESSIONAL QUALIFICATIONS, CONTINUED
ACADEMIC Fanshawe College
BACKGROUND Associate - Real Estate/Urban Affairs
PROFESSIONAL
AFFILIATIONS Associate Member of Appraisal Institute - M87-2712
Course work Includes: 1A1 Real Estate Appraisal Principals
1A2 Basic Valuation Procedures
SPP Standards of Professional Practice
Capitalization Theory & Techniques
Part A
Capitalization Theory & Techniques
Part B
Case Studies in Real Estate Valuation
Report Writing and Valuation Analysis
The Appraisers Legal Liabilities
Appraising Troubled Properties
FIRREA: Overview and Practical
Applications
Environmental Risk and the Real Estate
Appraisal Process
Understanding Limited Appraisals and
Appraisal Reporting Options-General
State Certifications
Wisconsin Certified General Appraiser (#175)
Michigan Certified Appraiser (#1201003105)
Georgia Certified General Real Property Appraiser (#005334)
National Council of Real Estate Investment Fiduciaries (NCREIF)
Research Committee
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NICHOLSON-DOUGLAS REALTY CONSULTANTS, INC.
Correspondent Offices in 19 Cities Nationwide
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Ann M. Donohoo
Nicholson-Douglas Realty Consultants, Inc.,
EXPERIENCE Staff appraiser with Nicholson-Douglas Realty Consultants, Inc.,
a Milwaukee-based real estate appraisal and consulting firm
dedicated to providing reliable and well documented valuations,
feasibility and market studies, and other real estate consulting
services in a personal and timely manner.
ACADEMIC University of Wisconsin - Madison
BACKGROUND Bachelor of Business Administration -Real Estate and Urban
Land Economics
Bachelor of Business Administration -Human Resource
Management
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NICHOLSON-DOUGLAS REALTY CONSULTANTS, INC.
Correspondent Offices in 19 Cities Nationwide
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GENERAL SERVICE CONDITIONS
The service(s) provided by Nicholson-Douglas Realty Consultants, Inc. have been
performed in accordance with professional appraisal standards. Our compensation
was not contingent in any way upon our conclusions of value. We have assumed,
without independent verification, the accuracy of all data provided to us. We
have acted as an independent contractor and, although it is not our normal
practice, we reserved the right to use subcontractors. All files, work papers,
or documents developed by us during the course of the engagement are our
property. We will retain this data for at least seven years.
Our report is to be used only for the purpose stated herein; any use or reliance
for any other purpose, by you or third parties, is invalid. You may show our
report in its entirety to those third parties who need to review the information
contained herein. Except as specifically presented in the letter of transmittal,
no reference to our name or our report, in whole or in part, in any document you
prepare and/or distribute to third parties may be made without our prior written
consent.
You agree to indemnify and hold us harmless against and from any and all losses,
claims, actions, damages, expenses, or liabilities, including reasonable
attorneys' fees, to which we may become subject in connection with this
engagement. You will not be liable for our negligence. Your obligation for
indemnification and reimburse ment shall extend to any controlling person of
Nicholson-Douglas Realty Consultants, Inc., or any subcontractor, affiliate, or
agent.
We reserve the right to include your company/firm name in our client list, but
we will maintain the confidentiality of all conversations, documents provided to
us, and the contents of our reports, subject to legal or administrative process
or proceedings. These conditions can only be modified by written documents
executed by both parties.
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NICHOLSON-DOUGLAS REALTY CONSULTANTS, INC.
Correspondent Offices in 19 Cities Nationwide
