<PAGE>
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
SCHEDULE 14D-1
Tender Offer Statement Pursuant To Section 14(d)(1) of
the Securities Exchange Act of 1934
---------------------------
BALCOR/COLONIAL STORAGE INCOME FUND - 85,
AN ILLINOIS LIMITED PARTNERSHIP
(Name of Subject Company)
---------------------------
PUBLIC STORAGE, INC.
(Bidder)
---------------------------
Interests in Limited Partnership
(Title of Class of Securities)
----------------------------
NONE
(CUSIP Number of Class of Securities)
----------------------------
DAVID GOLDBERG
Public Storage, Inc.
600 North Brand Boulevard
Glendale, California 91203-1241
(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
- --------------------------------------------------------------------------------
$ 14,538,300 $ 2,908
- --------------------------------------------------------------------------------
* 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 69,230 of the
outstanding Limited Partnership interests in Balcor/Colonial Storage Income Fund
- - 85, an Illinois Limited 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: 95-355121
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 Box 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: 515
Limited Partnership interests.
8) [ ] Check if the Aggregate Amount in Row 7 Excludes Certain
Shares (See Instructions).
9) Percent of Class Represented by Amount in Row 7: .19%
10) Type of Reporting Person (See Instructions): CO
-2-
<PAGE>
Item 1. Security and Subject Company.
(a) The name of the subject company is Balcor/Colonial Storage
Income Fund - 85, an Illinois Limited Partnership (the
"Partnership"), and the address of its principal executive
office is Balcor Plaza, 4849 Golf Road, Skokie, Illinois
60077.
(b) The class of securities to which this Statement relates is
the Limited Partnership interests (the "Interests") of the
Partnership. There are 276,918 outstanding Interests. The
information set forth under "Summary" and "The Offer" in the
Offer to Purchase dated January 25, 1996 (the "Offer") annexed
hereto as Exhibit (a)(1) is incorporated herein by reference.
(c) The information set forth under "Market Prices of
Interests" 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 600 North
Brand Boulevard, Glendale, California 91203-1241. The
information set forth under "Background and Purpose of the
Offer" in the Offer is incorporated herein by reference. The
information concerning the name, business address, present
principal occupation or employment and the name, principal
business and address of any corporation or other organization
in which such employment or occupation is conducted, material
occupations, positions, offices or employments during the last
5 years and citizenship of each of the executive officers and
directors of the Company are set forth on Schedule 1 to the
Offer and incorporated herein by reference.
(e)-(f) During the last 5 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 -- Background of the Offer" 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" and "The Offer -- Certain Fees" 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 "Special Considerations,"
"Background and Purpose of the Offer" and "Effects of Offer on
Non-Tendering Interest Holders" in the Offer is incorporated
herein by reference.
-3-
<PAGE>
Item 6. Interest in Securities of the Subject Company.
(a) The Company beneficially owns 515 Interests in the
Partnership which represents approximately .19% of the
outstanding Interests. To the knowledge of the Company, none
of its executive officers or directors owns any Interests in
the Partnership.
(b) The information set forth in "Background and Purpose of
the Offer -- Background of the Offer" 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 Interests in the Partnership, except as described in
Item 6 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.
The information set forth in "Background and Purpose of the
Offer -- The Company" in the Offer is incorporated herein by
reference.
Item 10. Additional Information.
(a)-(e) Not applicable.
(f) The Offer and the Letter of Transmittal, Exhibits (a)(1)
and (a)(2) 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: January 25, 1996 PUBLIC STORAGE, INC.
By: /s/ Harvey Lenkin
-----------------------------
Harvey Lenkin
President
-5-
<PAGE>
Exhibit Index
-------------
Exhibit No. Page No.
- ----------- --------
(a) (1) Offer to Purchase dated January 25, 1996. 7
(2) Letter of Transmittal. 36
(3) Form of Letters sent to Interest Holders. 40
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
-6-
<PAGE>
=======================================================================
IF YOU HAVE ANY QUESTIONS ABOUT THIS OFFER, PLEASE CALL THE SOLICITING
AGENT, THE WEIL COMPANY, AT (800) 478-2605 OR PUBLIC STORAGE, INC.'S
INVESTOR SERVICES DEPARTMENT AT (800) 421-2856 OR (818) 244-8080. IF
YOU NEED HELP IN COMPLETING THE LETTER OF TRANSMITTAL, PLEASE CALL THE
DEPOSITARY, THE FIRST NATIONAL BANK OF BOSTON, AT (617) 575-3120.
=======================================================================
January 25, 1996
Re: Tender Offer for Interests in Balcor/Colonial Storage Income Fund - 85
----------------------------------------------------------------------
Dear Interest Holders:
Public Storage, Inc. (the "Company") is offering to purchase
up to 69,230 of the limited partnership interests (the "Interests") in
Balcor/Colonial Storage Income Fund - 85 (the "Partnership") at a cash price per
Interest of $210 (the "Offer"). There will be no commissions or fees paid by you
associated with the sale.
The Offer is not conditioned upon a minimum number of
Interests being tendered. If more than 69,230 Interests are validly tendered,
the Company will only accept up to 69,230 Interests, with such Interests
purchased on a pro rata basis.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR
ANY REPRESENTATION ON BEHALF OF THE COMPANY OR TO PROVIDE ANY INFORMATION OTHER
THAN THAT CONTAINED IN THE OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL. NO
SUCH RECOMMENDATION, INFORMATION OR REPRESENTATION MAY BE RELIED UPON AS HAVING
BEEN AUTHORIZED.
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 Interests, please complete the enclosed Letter of
Transmittal and return it in the enclosed postage-paid envelope to the address
set forth on the back cover of the Offer to Purchase. The Offer will expire on
March 12, 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 69,230
Limited Partnership Interests of
Balcor/Colonial Storage Income Fund - 85, at
$210 Per Interest
by
Public Storage, Inc.
===============================================================================
THE OFFER, WITHDRAWAL RIGHTS AND THE PRORATION PERIOD WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON MARCH 12, 1996, UNLESS THE OFFER IS
EXTENDED.
===============================================================================
PUBLIC STORAGE, INC. (THE "COMPANY") IS OFFERING TO PURCHASE
UP TO 69,230 LIMITED PARTNERSHIP INTERESTS (THE "INTERESTS") OF THE OUTSTANDING
LIMITED PARTNERSHIP INTERESTS IN BALCOR/COLONIAL STORAGE INCOME FUND - 85 (THE
"PARTNERSHIP") AT A CASH PRICE PER INTEREST OF $210 (THE "OFFER"). THE OFFER
PRICE WILL BE REDUCED BY THE AMOUNT PER INTEREST OF ANY CASH DISTRIBUTION MADE
BY THE PARTNERSHIP AFTER DECEMBER 31, 1995 AND PRIOR TO THE EXPIRATION DATE,
OTHER THAN REGULAR QUARTERLY DISTRIBUTIONS NOT IN EXCESS OF $6.10 PER QUARTER.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF INTERESTS BEING
TENDERED. IF MORE THAN 69,230 INTERESTS (25% OF THE OUTSTANDING INTERESTS) ARE
VALIDLY TENDERED, THE COMPANY WILL ACCEPT ONLY 69,230 INTERESTS, WITH SUCH
INTERESTS PURCHASED ON A PRO RATA BASIS, SUBJECT TO THE TERMS AND CONDITIONS
HEREIN. A HOLDER OF INTERESTS ("INTEREST HOLDER") MAY TENDER ANY AND ALL
INTERESTS OWNED BY SUCH INTEREST HOLDER.
In their evaluation of the Offer, Interest Holders should
carefully consider the following:
o Determination of Offer Price. The Offer Price was
established by the Company and is not the result of arm's
length negotiation.
(continued on the following page)
------------------
IMPORTANT
Any Interest Holder desiring to tender Interests 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, or request his or her
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for him or her.
Any questions about the Offer may be directed to the
Soliciting Agent, The Weil Company, 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. Provided that at least 5% of the outstanding Interests are
tendered and accepted by the Company, the Soliciting Agent will receive 2% of
the Offer Price for each Interest tendered and accepted by the Company.
------------------
<PAGE>
o Offer Price May Not Represent Liquidation Value. Although
the Company cannot predict the future value of the
Partnership's assets on a per Interest basis, the Offer
Price could be substantially less than the net proceeds
that would be realized on a per Interest basis from a
current sale of the properties or that may be realized
upon a future liquidation of the Partnership. The term of
the Partnership will expire on December 31, 2035, unless
the Partnership is dissolved sooner.
o No Reliance on Independent Valuation Of Interests. The
Offer Price represents the price the Company is willing to
pay for the Interests. No independent person has been
retained to evaluate or render any opinion with respect to
the fairness of the Offer Price, and no appraisals have
been obtained by the Company of any of the properties
owned by the Partnership.
o Attractive Investment for Company. The Company is making
the Offer with a view to making a profit. Accordingly,
there may be a conflict between the desire of the Company
to purchase Interests at a low price and the desire of the
Interest Holders to sell their Interests at a high price.
See "Special Considerations."
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Company with the Commission 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 7 World Trade Center, 13th
Floor, New York, New York 10048, and Citicorp Center, Suite 1400, 500 West
Madison Street, Chicago, Illinois 60661-2511. Copies of such material may also
be obtained by mail at prescribed rates from the Public Reference Room of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Such material can
also be inspected at the New York Stock Exchange ("NYSE"), 20 Broad Street, New
York, New York 10005.
The Letter of Transmittal and any other required documents
should be sent or delivered by each Interest Holder 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 Boston BancBoston Trust The First National Bank
Shareholder Services Company of New York of Boston
P.O. Box 1872 55 Broadway Corporate Agency &
Mail Stop 45-01-19 3rd Floor Reorganization
Boston, MA 02105 New York, NY 10006 150 Royall Street
Mail Stop 45-01-19
Canton, MA 02021
(ii)
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
SUMMARY..............................................................................................1
SPECIAL CONSIDERATIONS...............................................................................3
BACKGROUND AND PURPOSE OF THE OFFER..................................................................5
The Partnership................................................................................5
The Company....................................................................................7
Background of the Offer........................................................................8
Purpose of the Offer...........................................................................8
DETERMINATION OF OFFER PRICE.........................................................................9
THE OFFER............................................................................................9
Terms of the Offer.............................................................................9
Proration of Interests; Acceptance for Payment and Payment for Interests.......................10
Procedures for Tendering Interests.............................................................11
Withdrawal Rights..............................................................................12
Extension of Tender Period; Termination and Amendment..........................................12
Source of Funds................................................................................14
Conditions of the Offer........................................................................14
Certain Fees and Expenses......................................................................15
Soliciting Agent...............................................................................15
Dissenters' Rights and Investor Lists..........................................................15
Federal Income Tax Consequences................................................................16
Miscellaneous..................................................................................17
EFFECTS OF OFFER ON NON-TENDERING INTEREST HOLDERS...................................................17
Significant Equity Interest....................................................................17
Effect on Trading Market.......................................................................18
Partnership Status.............................................................................18
Partnership Business...........................................................................18
Certain Restrictions on Transfer...............................................................18
Effect on Exchange Act Regulation..............................................................19
MARKET PRICES OF INTERESTS...........................................................................20
SCHEDULE 1
DIRECTORS AND EXECUTIVE OFFICERS OF PUBLIC STORAGE, INC........................................1-1
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR
ANY REPRESENTATION ON BEHALF OF THE COMPANY OR TO PROVIDE ANY INFORMATION OTHER
THAN AS CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. NO SUCH
RECOMMENDATION, INFORMATION OR REPRESENTATION MAY BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
(iii)
<PAGE>
To Interest Holders of Balcor/Colonial Storage Income Fund - 85:
SUMMARY
Interest Holders 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
Interests.
Certain significant matters discussed in the 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 Company is not a General
Partner of or otherwise affiliated with the Partnership. Certain information
contained herein which relates to the Partnership has been obtained from
publicly available information prepared by or on behalf of the Partnership.
Although the Company has no knowledge that would indicate that any statements
contained herein which are based on such documents are untrue, the Company
assumes no responsibility for the accuracy or completeness of such information
or for the failure by the Partnership to disclose facts or events which may have
occurred and which may have affected or may affect the significance or accuracy
of any such information but are unknown to the Company.
<TABLE>
<CAPTION>
The Company and the Partnership
<S> <C>
Balcor/Colonial Storage Income Fund - 85.............. The Partnership was organized in 1983 and owns
interests in certain mini-warehouse properties. The
General Partners of the Partnership are Balcor Storage
Partners - 85 and Colonial Storage 85, Inc. The
Partnership's properties are managed by Colonial
Storage Management, Inc. ("Colonial"), an affiliate of
one of the General Partners. See "Background and
Purpose of the Offer -- The Partnership." At December
31, 1994, there were 7,749 holders of record owning
276,918 Interests. The Company owns 515 Interests.
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. See
"Background and Purpose of the Offer -- The Company."
The Offer
Number of Interests................................... 69,230 (25% of the outstanding Interests).
Offer Price........................................... $210 per Interest (the "Offer Price").
Expiration, Withdrawal and Proration Date............. March 12, 1996, unless extended. See "The Offer."
</TABLE>
-1-
<PAGE>
Purpose of the Offer
The Company believes that the acquisition of Interests
through the Offer represents a good investment for the Company and its
shareholders. The Company is acquiring the Interests for investment purposes
only and does not intend to change current management or operation of the
Partnership and has no current plans for any extraordinary transaction involving
the Partnership. The ability of the Company to influence actions on which
Limited Partners have a right to vote will depend on Interest Holders' response
to the Offer (i.e., the number of Interests tendered). See "Background and
Purpose of the Offer -- Purpose of the Offer."
Special Considerations
In their evaluation of the Offer, Interest Holders should
carefully consider the information contained under "Special Considerations."
-2-
<PAGE>
SPECIAL CONSIDERATIONS
In their evaluation of the Offer, Interest Holders should
carefully consider the following:
Determination of Offer Price. The Offer Price was established
by the Company and is not the result of arm's length
negotiation.
Offer Price May Not Represent Liquidation Value. Although the
Company cannot predict the future value of the Partnership's
assets on a per Interest basis, the Offer Price could be
substantially less than the net proceeds that would be
realized on a per Interest basis from a current sale of the
Properties or that may be realized upon a future liquidation
of the Partnership. However, the liquidity provided by the
Offer may be attractive to certain Interest Holders.
No Reliance on Independent Valuation Of Interests. The Offer
Price represents the price the Company is willing to pay for
the Interests. No independent person has been retained to
evaluate or render any opinion with respect to the fairness of
the Offer Price, and no appraisals have been obtained by the
Company of any of the properties owned by the Partnership.
Attractive Investment for Company. The Company is making the
Offer with a view to making a profit. Accordingly, there may
be a conflict between the desire of the Company to purchase
Interests at a low price and the desire of the Limited
Partners to sell their Interests at a high price. If the Offer
Price per Interest is below the ultimate per Interest
liquidation value, then the Company will benefit upon the
liquidation of the Partnership from the spread between the
Offer Price for the tendered Interests and the amount it would
receive in the liquidation. Accordingly, Interest Holders
might receive more money if they held their Interests, rather
than tender, and received proceeds from the liquidation of the
Partnership. Interest Holders, however, may prefer to receive
the Offer Price now rather than wait for uncertain future net
liquidation proceeds.
Partnership Term. In accordance with the Partnership
Agreement, the term of the Partnership will expire on December
31, 2035, unless the Partnership is dissolved sooner. The
Offer provides Interest Holders with an opportunity to
liquidate their entire investment sooner than otherwise might
be possible.
Tax Considerations. A sale by an Interest Holder pursuant to
the Offer will enable such Interest Holder to utilize any
unused suspended "passive" losses from the Partnership so long
as such Interest Holder disposes of his or her entire interest
in the Partnership. In addition, such losses may be used to
the extent thereof to offset gain recognized, if any, from the
tender by an Interest Holder pursuant to the Offer. An
Interest Holder would realize a taxable loss (likely a capital
loss) in connection with a tender pursuant to the Offer to the
extent that the Interest Holder's tax basis in his or her
Interest exceeds the Offer Price; on the other hand, an
Interest Holder would realize a taxable gain to the extent
that the Offer Price exceeds the Interest Holder's tax basis
in his or her Interest. The Offer may also be attractive to
Interest Holders who wish in the future to avoid the expenses,
delays and complications in filing complex income tax returns
which result from ownership of the Interests. All Interest
Holders should consult with their own tax advisors with
specific reference to their own tax situations.
-3-
<PAGE>
Voting Power. Limited Partners cannot participate in the
management or control of the Partnership's business, except
insofar as the Limited Partners are entitled to vote as
permitted by the Partnership Agreement. Pursuant to the
Partnership Agreement, the written consent of Balcor Storage
Partners - 85, an Illinois partnership and a General Partner
of the Partnership ("Balcor Storage Partners") would be
required for the Company to become a substituted Limited
Partner. Although the Offer is not contingent upon the Company
being made a substituted Limited Partner, effective upon the
Company's acceptance for payment of the tendered Interests,
the Interest Holder will grant to the Company an irrevocable
proxy to vote such Interests in such manner as the Company
shall deem proper. If the maximum number of Interests sought
are tendered and accepted for payment pursuant to the Offer,
the Company will own and be able to vote approximately 25% of
the outstanding Interests. The Company could then be in a
position to influence decisions of the Partnership on which
Limited Partners are entitled to vote. Under the Partnership
Agreement, Limited Partners are entitled to vote, subject to
certain provisions of the Partnership Agreement, to: (i)
approve any proposed sale of all or substantially all of the
real property assets of the Partnership; (ii) remove either or
both of the General Partners and elect or approve a successor
to any removed or withdrawn General Partner; (iii) dissolve
the Partnership; and (iv) approve any amendment of the
Partnership Agreement. Although the Company has no current
intention with regard to any of these matters, the Company
will vote the Interests acquired pursuant to the Offer in its
interest, which may, or may not, be in the best interests of
non-tendering Interest Holders.
Lack of Trading Market. There is no established or regular
trading market for the Interests, nor is there another
reliable standard for determining the fair market value of an
Interest. Interest Holders who desire liquidity may wish to
consider the Offer. The Offer affords Interest Holders an
opportunity to dispose of their Interests for cash, which
alternative otherwise might not be available to them. However,
the Offer Price is not intended to represent either the fair
market value of an Interest or the fair market value of the
Partnership's assets on a per Interest basis.
Alternatives to Tendering Interests. As alternatives to
tendering their Interests, Interest Holders could retain their
Interests until liquidation of the Partnership or seek a
private sale of their Interests now or later. Under the
Partnership Agreement, the Partnership can be dissolved upon
the agreement by Limited Partners holding a majority of the
then-outstanding Interests owned by Limited Partners.
Each Interest Holder must make his or her own decision
regarding the Offer based on his or her particular circumstances. Interest
Holders should consult with their respective advisors about the financial, tax,
legal and other implications to them of accepting the Offer. INTEREST HOLDERS
ARE URGED TO READ THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL
CAREFULLY BEFORE DECIDING WHETHER OR NOT TO TENDER THEIR INTERESTS.
-4-
<PAGE>
The Offer is not conditioned on the tender of a minimum number
of Interests. THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON MARCH
12, 1996, UNLESS EXTENDED (THE "EXPIRATION DATE"). INTERESTS WHICH ARE OFFERED
FOR TENDER IN THE OFFER MAY BE WITHDRAWN AT ANY TIME BEFORE THE EXPIRATION DATE.
Following the expiration of the Offer, the Company may make an offer for
Interests 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 Interests not tendered
in the Offer.
BACKGROUND AND PURPOSE OF THE OFFER
The Partnership
All information in this section regarding the Partnership has
been obtained from publicly available information prepared by, or on behalf of,
the Partnership. The Company assumes no responsibility for the accuracy of any
such information.
The Partnership is an Illinois limited partnership formed in
September 1983, which raised $69,229,500 from the sale of Limited Partnership
interests at $250 per interest. The Partnership's operations consist exclusively
of investment in and operation of income-producing mini-warehouse facilities.
The Partnership utilized the net offering proceeds to acquire
from affiliates of a General Partner 69 mini-warehouse facilities in 1985.
Additionally, the Partnership acquired from non-affiliated entities four
mini-warehouse facilities in 1986. The Partnership sold one mini-warehouse
facility in each of 1989 and 1990 and two facilities in 1993.
The General Partners of the Partnership are Balcor Storage
Partners - 85 and Colonial Storage 85, Inc. The Partnership's properties are
managed by Colonial, an affiliate of one of the General Partners of the
Partnership.
Set forth below is Selected Financial Data for the Partnership
which was excerpted from the information contained in the Partnership's Form
10-K dated December 31, 1992, the Partnership's Form 10-K dated December 31,
1994 and the Partnership's Form 10-Q dated September 30, 1995, each of which
were filed with the Commission. More comprehensive financial information is
included in these reports and other documents filed by the Partnership with the
Commission, and the following information is qualified in its entirety by
reference to such reports and other documents and all of the financial
information and notes contained therein. These reports and other documents may
be examined and copies may be obtained in the manner described below.
-5-
<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
-------------------------------------------------- ----------------
1990 1991 1992 1993 1994 1994 1995
---- ---- ---- ---- ---- ---- ----
(In thousands, except per Interest data)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Data:
Rental income................. $7,714 $8,117 $8,600 $9,299 $10,067 $7,536 $7,725
Interest income............... 302 267 194 213 294 208 250
Net income.................... 3,258 3,224 3,444 4,090 4,816 3,565 3,573
General Partners' share
of net income............... 33 32 34 41 48 36 36
Limited Partners' per
Interest data (1):
Net income.................... 11.65 11.53 12.31 14.62 17.22 12.74 12.77
Distributions................. 16.16 16.76 17.03 19.16 18.67 13.73 18.05
As of December 31, As of September 30,
----------------- -----------------
1994 1995
---- ----
<S> <C> <C>
Balance Sheet Data:
Total cash and cash
equivalents.......................... $ 5,954,473 $ 5,616,753
Total mini-warehouse
facilities, net...................... 44,809,932 43,860,372
Total assets........................... 50,764,405 49,477,125
Total liabilities...................... 927,392 1,065,164
Partners' capital...................... 49,837,013 48,411,961
- ----------------------
<FN>
(1) Limited Partners' per Interest data is based on the number of Interests
(276,918) outstanding during the year.
</FN>
</TABLE>
-6
<PAGE>
The Partnership is subject to the informational filing
requirements of the Exchange Act and is required to file reports and other
information with the Commission relating to its business, financial condition
and other matters. These reports and other information filed by the Partnership
may be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, as well
as at the Regional Offices of the Commission at 7 World Trade Center, 13th
Floor, New York, New York 10048, and Citicorp Center, Suite 1400, 500 West
Madison Street, Chicago, Illinois 60661-2511. Copies of such information can
also be obtained by mail from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
The Company
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 and capital stock interests) in 1,044
properties located in 37 states, consisting of 1,009 mini-warehouses facilities
and 35 business parks. The Company's common stock (symbol "PSA") and eight
series of preferred stock are traded on the NYSE.
The Company's principal executive offices are located at 600
North Brand Boulevard, Suite 300, Glendale, California 91203. Its telephone
number is (818) 244-8080. Information with regard to the Company's officers and
directors is set forth in Schedule 1, attached hereto.
Set forth below is certain summary financial data for the
Company:
<TABLE>
<CAPTION>
Nine months Ended
Year ended December 31, September 30,
-------------------------------------------- --------------------------------
1994 1995
1992 1993 1994 (Pro forma)(1) 1994 1995 (Pro forma)(1)
---- ---- ---- -------------- ---- ---- --------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Data:
Total revenues.............. $ 97,448 $ 114,680 $147,196 $248,441 $106,089 $148,048 $197,032
Depreciation and amortization 22,405 24,998 28,274 51,022 20,532 27,887 39,809
Interest expense............ 9,834 6,079 6,893 16,350 4,455 5,249 11,797
Minority interest in income. 6,895 7,291 9,481 6,918 7,795 5,449 5,304
Net income.................. 15,123 28,036 42,118 96,621 29,884 49,221 79,980
December 31, 1994 September 30, 1995
------------------------- -------------------------------
Actual Pro forma(1) Actual Pro forma(1)
------ ------------ ------ ------------
Balance Sheet Data:
Total assets.................... 820,309 -- $1,190,061 $1,829,157
Total debt...................... 77,235 -- 110,689 189,170
Shareholders' equity............ 587,786 -- 922,941 1,479,081
- --------------------------
<FN>
(1) Gives effect to (i) the issuance and investment of approximately $500
million of additional capital through the issuance of preferred stock and
common stock in public offerings, (ii) the issuance of common stock in
connection with the mergers of Public Storage Properties VI, VII and VIII,
Inc. into the Company and (iii) a November 1995 business combination, as
if such transactions were completed at the beginning of the period. See
the Company's Report on Form 8-K dated November 16, 1995.
</FN>
</TABLE>
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 inside the front cover of this
Offer to Purchase.
-7-
<PAGE>
Background of the Offer
Beginning in August 1995 and continuing to date, informal
discussions have been held between officers and agents of the Company and
representatives of the Partnership regarding the acquisition by the Company of
the assets of or interests in the Partnership and in an affiliated partnership,
Balcor/Colonial Storage Income Fund - 86, and a possible acquisition by the
Company of the business of Colonial, by merger or otherwise. No arrangements,
understandings or agreements have been reached.
Beginning in August 1995, the Company purchased in secondary
market transactions the following Interests in the Partnership:
Purchase Date Interests Price Per Interest
------------- --------- ------------------
08/02/95 40 $224.05
08/14/95 40 228.14
08/30/95 4 224.00
09/11/95 240 229.00
09/26/95 91 228.14
09/27/95 100 230.00
At the end of November 1995, the Company wrote to the
Partnership to request a list of the names and addresses of and interests held
by all Partners. The Company requested this list so that it could make the
Offer. The Partnership responded by letter in early December 1995 declining to
furnish the requested list and seeking further information. In early January
1996 the Company, through counsel, repeated its request for the list. The
Partnership agreed to provide the list to the Company for the purpose of making
the Offer.
Subsequently, there were discussions between officers and
agents of the Company and representatives of the Partnership in which the
Company was advised that Everest Storage Investors, LLC had commenced a tender
offer to purchase up to 4.9% of the Interests at $175 per interest. The Company
advised the Partnership that it intended to make the Offer.
Purpose of the Offer
The Company is acquiring the Interests for investment purposes
only and does not intend to change current management or operation of the
Partnership and has no current plans for any extraordinary transactions
involving the Partnership. The ability of the Company to influence actions on
which Limited Partners have a right to vote will depend on Interest Holders'
response to the Offer (i.e., the number of Interests tendered).
Following the completion of the Offer, the Company may acquire
additional Interests. Any such acquisitions may be made through private
purchases, through one or more future tender offers or by any other means deemed
advisable by the Company. Any such acquisitions may be at a price higher or
lower than the Offer Price. The Company has no current intentions with regard to
any of the matters upon which Limited Partners are entitled to vote under the
Partnership Agreement.
-8-
<PAGE>
DETERMINATION OF OFFER PRICE
The Offer Price has been established by the Company and is not
the result of arm's length negotiations between the Company and the Partnership.
The Company established the Offer Price based on its own independent analysis of
the Partnership.
In connection with the Offer, the Company performed an
analysis of the Partnership by (i) applying to the Partnership's properties net
operating income (nine months ended September 30, 1995 annualized), as adjusted
for the Partnership's general and administrative expenses and a reduction for
estimated capital expenditures (2.5% of rental income), a capitalization rate of
10.5%, (ii) adding the Partnership's other net assets, primarily cash and cash
equivalents and (iii) deducting the distribution paid to Interest Holders in
October 1995. Based on this analysis, the Company arrived at an Offer Price of
$210.
THE OFFER
Terms of the Offer
Upon the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms of any such extension
or amendment), the Company will accept for payment and pay for up to 69,230
Interests. The term "Expiration Date" shall mean 5:00 P.M., New York City time,
on March 12, 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.
The Offer Price is $210 per Interest. The Offer Price will be
reduced by the amount per Interest of any distribution made by the Partnership
after December 31, 1995 and prior to the Expiration Date, other than regular
quarterly distributions not in excess of $6.10 per quarter. Interest Holders who
tender their Interests will not be obligated to pay partnership transfer fees or
commissions.
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 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 Interests 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 Interests validly
tendered, (iii) extend the Offer and, subject to the right of Interest Holders
to withdraw Interests until the Expiration Date, retain the Interests that have
been tendered during the period or periods for which the Offer is extended or
(iv) amend the Offer.
The Company currently owns 515 Interests, or approximately
.19% of the outstanding Interests. If all 69,230 Interests are validly tendered
and accepted for payment, the Company will own approximately 25.2% of the
outstanding Interests upon completion of the Offer.
-9-
<PAGE>
Proration of Interests; Acceptance for Payment and Payment for Interests
If the number of Interests validly tendered prior to the
Expiration Date and not withdrawn is not more than 69,230 Interests, the
Company, upon the terms and subject to the conditions of the Offer, will accept
for payment all Interests so tendered. If the number of Interests validly
tendered and not withdrawn prior to the Expiration Date is more than 69,230
Interests, the Company, upon the terms and subject to the conditions of the
Offer, will accept for payment only 69,230 Interests, with such Interests
purchased on a pro rata basis according to the number of Interests validly
tendered and not properly withdrawn by each Interest Holder prior to the
Expiration Date, with adjustments to avoid purchases of prorated fractional
Interests.
If proration of tendered Interests 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 Interest Holders the Offer Price in respect of Interests tendered or
return those Interests promptly after the termination or withdrawal of the
Offer, the Company does not intend to pay for any Interests 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,
Interests validly tendered and not withdrawn in accordance with the Offer, as
promptly as practicable following the Expiration Date. In all cases, payment for
Interests 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 Interests when, as and if
the Company gives oral or written notice to the Depositary of the Company's
acceptance for payment of such Interests pursuant to the Offer. No tender of
Interests will be deemed to have been validly made until all defects and
irregularities have been cured or waived. Upon the terms and subject to the
conditions of the Offer, payment for Interests 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 Interest Holders for the purpose of
receiving payment from the Company and transmitting payment to tendering
Interest Holders. Under no circumstances will interest be paid on the Offer
Price by reason of any delay in making such payment.
If any tendered Interests are not accepted for payment
pursuant to the Offer for any reason, the Letter of Transmittal with respect to
such Interests not purchased will be destroyed by the Depositary. If acceptance
for payment of, or payment for, any Interests tendered pursuant to the Offer is
delayed or the Company is unable to accept for payment, or pay for, Interests
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 Interests, subject to any limitations of applicable law, and
such Interests may not be withdrawn except to the extent that the tendering
Interest Holders are entitled to withdrawal rights as described in the Offer.
If, prior to the Expiration Date, the Company shall increase
the consideration offered to Interest Holders pursuant to the Offer, such
increased consideration shall be paid for all Interests accepted for payment
pursuant to the Offer, whether or not such Interests were tendered prior to such
increase.
-10-
<PAGE>
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 Interests
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 Interest Holders to receive payment for Interests validly tendered and
accepted for payment pursuant to the Offer.
Procedures for Tendering Interests
For Interests 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 one of its addresses set forth on the back cover of this Offer to
Purchase on or prior to the Expiration Date. In order for a tendering Interest
Holder to participate in the Offer, Interests must be validly tendered and not
withdrawn prior to the Expiration Date, which is 5:00 P.M., New York City time,
on March 12, 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 Interest
Holder, 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 for timely delivery.
By executing a Letter of Transmittal as set forth above, a
tendering Interest Holder irrevocably constitutes and appoints the Company and
any designee of the Company as the true and lawful attorney in fact and proxy of
such Interest Holder, in the manner set forth in the Letter of Transmittal, with
full power of substitution, to the full extent of such Interest Holder's rights
with respect to the Interests tendered by such Interest Holder and accepted for
payment by the Company. All such proxies will be considered coupled with an
interest in the tendered Interests. Such appointment will be effective when, and
only to the extent that, the Company accepts such Interests for payment. Upon
such acceptance for payment, (i) all prior proxies given by such Interest Holder
with respect to such Interests will, without further action, be revoked, except
the irrevocable proxy granted to the General Partners pursuant to Article XXI of
the Partnership Agreement, (ii) no subsequent proxies may be given (and if given
will not be effective) and (iii) the Company will be empowered to exercise all
voting and other rights of such Interest Holder with respect to such Interests
as the Company in its sole discretion may deem proper at any meeting of Interest
Holders, by written consent or otherwise. The Offer is not contingent upon the
Company being made a substituted Limited Partner. If the Company is not made a
substituted Limited Partner, upon acceptance for payment of the Interests, the
Company shall be entitled to the full rights and benefits of an assignee of the
Interests, including, but not limited to, all economic benefits of ownership and
all voting rights.
All questions as to the validity, form, eligibility (including
time of receipt) and acceptance for payment of any tender of Interests pursuant
to the procedures described above will be determined in the discretion of the
Company, 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 Interests tendered may be unlawful in the
opinion of the Company's counsel. The Company also reserves the right to waive
any defect or irregularity in any tender with respect to any particular
Interests of any particular Interest Holder, 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 Interests or will incur any
liability for failure to give any such notification.
-11-
<PAGE>
Assignees must provide documentation to the Depositary which
demonstrates, to the satisfaction of the Company, such person's status as an
assignee of an Interest.
A tender of Interests pursuant to any of the procedures
described above will constitute a binding agreement between the tendering
Interest Holder and the Company upon the terms and subject to the conditions of
the Offer, including the tendering Interest Holder's representation and warranty
that such Interest Holder owns the Interests being tendered.
Withdrawal Rights
Except as otherwise provided in the Offer, all tenders of
Interests pursuant to the Offer are irrevocable, provided that Interests
tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date. Tenders of Interests not accepted for payment by the Company
pursuant to the Offer may also be withdrawn at any time after March 24, 1996.
For withdrawal to be effective, a written or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of the addresses 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
Interests to be withdrawn, the number of Interests 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 acceptance for payment of, or payment for, Interests is
delayed for any reason or if the Company is unable to accept for payment, or pay
for, Interests for any reason, without prejudice to the Company's rights under
the Offer, tendered Interests may be retained by the Depositary on behalf of the
Company and may not be withdrawn except to the extent that tendering Interest
Holders 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 Interests properly withdrawn will be deemed not to be
validly tendered for purposes of the Offer. Withdrawn Interests 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 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 Interests by giving oral or written notice of such extension to the
Depositary (during any such extension all Interests previously tendered and not
withdrawn will remain subject to the Offer), (ii) to terminate the Offer and not
accept for payment any Interests 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 Interests not theretofore
accepted for
-12-
<PAGE>
payment or paid for, by giving oral or written notice of such termination or
delay to the Depositary and (iv) to amend the Offer in any respect (including,
without limitation, by increasing or decreasing the consideration offered or the
number of Interests 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., New York City 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) and Rule 14d-6(d) 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 Interest
Holders 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 Interests) is delayed in its
payment for Interests or is unable to pay for Interests pursuant to the Offer
for any reason, then, without prejudice to the Company's rights under the Offer,
the Depositary may retain tendered Interests on behalf of the Company, and such
Interests may not be withdrawn except to the extent tendering Interest Holders
are entitled to withdrawal rights as described in the Offer. However, the
ability of the Company to delay payment for Interests 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 increases or decreases the number of Interests
being sought or the consideration to be paid for Interests, and the Offer is
scheduled to expire before the expiration of a period of 10 business days from,
and including, the date that notice of such increase or decrease is first
published, sent or given, the Offer will be extended until, at a minimum, the
expiration of such period of 10 business days. 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 period of 10 business days is required to allow for adequate
dissemination to security holders and for investor response.
The Company also reserves the right, in its discretion, in the
event any of the conditions of the Offer shall not have been satisfied and so
long as Interests have not theretofore been accepted for payment, to delay
(except as otherwise required by applicable law) acceptance for payment of or
payment for Interests or to terminate the Offer and not accept for payment or
pay for Interests.
Following the termination of the Offer, the Company may make
an offer for Interests not tendered in this Offer, which may be on terms similar
or different from those described in
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<PAGE>
the Offer. There is no assurance that, following the Expiration Date, the
Company will make another offer for Interests not tendered in the Offer.
Source of Funds
The Company expects that approximately $14,913,300 is
necessary to consummate the Offer, including related fees and expenses, assuming
all 69,230 of the Interests are tendered and accepted for payment.
These funds will be available from the Company's general corporate funds.
Conditions of the Offer
Notwithstanding any other provisions of the Offer, subject to
the applicable rules of the Commission, and in addition to (and not in
limitation of) the Company's rights to extend and amend the Offer at any time in
its sole discretion, the obligation of the Company to complete the purchase of
tendered Interests 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 Interests, 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
Interests illegal, (iv) resulting in a delay in the ability of
the Company to accept for payment or pay for some or all of
the Interests, (v) imposing material limitations on the
ability of the Company effectively to acquire or hold or to
exercise full rights of ownership of the Interests, including
the right to vote the Interests purchased by the Company on
all matters properly presented to 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 the value of the Interests 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 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 not 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
-14-
<PAGE>
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.
The foregoing conditions are for the benefit of the Company
and may be asserted by the Company in its reasonable discretion 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 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. 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. 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
Interest Holders.
Certain 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 69,230 Interests are tendered and accepted for
payment by the Company, expenses of the Offer (exclusive of the purchase price
of the Interests) are estimated at $375,000: including legal and accounting fees
and expenses ($15,000), printing ($10,000), Depositary fees and expenses
($20,000), Soliciting Agent fees and expenses ($300,000), distribution of Offer
materials ($15,000) and miscellaneous ($15,000).
Soliciting Agent
The Company has retained The Weil Company, a registered broker
dealer, to answer questions and solicit responses to this transaction. Provided
that at least 5% of the outstanding Interests are tendered and accepted by the
Company, the Company will pay The Weil Company 2% of the Offer Price for each
Interest tendered and accepted by the Company. In addition, The Weil Company
will be reimbursed for certain out-of-pocket expenses up to a maximum of $25,000
and will be indemnified against certain liabilities, including liabilities under
the federal securities laws. The Weil Company has acted in a similar capacity in
connection with other tender and exchange offers by the Company and in
soliciting consents from the limited partners of other partnerships sponsored by
the Company or its affiliates.
Dissenters' Rights and Investor Lists
Neither the Partnership Agreement nor Illinois law provides
any right for Interest Holders to have their respective Interests appraised or
redeemed in connection with or as a result of the Offer. Each Interest Holder
has the opportunity to make an individual decision on whether or not to tender
in the Offer. Under the Partnership Agreement, (i) the Partnership shall furnish
a list of names and addresses of and Interests held by all Partners to any
Limited Partner who requests such a list in writing for any proper purpose, such
cost to be borne by the requesting Limited Partner, and (ii) the books and
records of the Partnership shall be open to the inspection and examination of
the Partners or their duly authorized representatives during reasonable business
hours at the principal office of the Partnership.
-15-
<PAGE>
Federal Income Tax Consequences
Tax Treatment of a Tender of Interests by an Interest Holder.
The tender of Interests for cash pursuant to the Offer will be treated for
federal income tax purposes as a taxable sale of such tendered Interests. The
particular tax consequences of the tender for an Interest Holder will depend
upon a number of factors related to the particular Interest Holder's tax
situation, including the Interest Holder's adjusted tax basis in his or her
Interests. The gain or loss recognized by an Interest Holder upon a sale of
Interests pursuant to the Offer will be based on the difference between the cash
received by the Interest Holder and the Interest Holder's adjusted tax basis in
such Interests. See "Basis of Interests" below. To the extent that the amount
realized exceeds the Interest Holder's adjusted basis for the Interests sold,
the Interest Holder will recognize gain. To the extent that the amount realized
is less than the Interest Holder's adjusted basis for the Interests sold, the
Interest Holder will recognize a loss. INTEREST HOLDERS SHOULD CONSULT WITH
THEIR OWN TAX ADVISORS TO DETERMINE THE TAX CONSEQUENCES TO THEM OF A SALE OF
THEIR INTERESTS PURSUANT TO THE OFFER IN LIGHT OF THEIR SPECIFIC TAX SITUATION.
Except as described below, any gain or loss recognized upon a
sale of Interests will be treated as gain or loss attributable to the sale or
disposition of a capital asset. An Interest Holder would recognize ordinary
income, however, to the extent that the amount realized upon the sale of an
Interest that is considered attributable to the Interest Holder's share of the
"unrealized receivables" of the Partnership, as defined in Section 751 of the
Internal Revenue Code of 1986, as amended (the "Code"), exceeds the basis
attributable to those assets. "Unrealized receivables" include, to the extent
not previously includable in Partnership income, any rights to payment for
services rendered or to be rendered and also any amounts that would be subject
to recapture as ordinary income (for example, depreciation recapture with
respect to personal property) if the Partnership had sold its assets at their
fair market value at the time of the sale of an Interest. To the extent an
Interest Holder recognizes a capital loss, such loss can be applied to offset
capital gains from other sources. Individuals may use capital losses in excess
of capital gains to offset up to $3,000 of ordinary income in any single year
($1,500 for a married individual filing a separate return). Any capital losses
that are not used currently can be carried forward and used in subsequent years.
A corporation's capital losses in excess of current capital gains generally may
be carried back three years, with any remaining unused portion available to be
carried forward for five years.
Basis of Interests. In general, an Interest Holder had an
initial tax basis in his or her Interests ("Initial Basis") equal to cash
investment in the Partnership (plus his or her proportionate share of the
Partnership's nonrecourse liabilities at the time he or she acquired his or her
Interests). An Interest Holder's Initial Basis generally has been increased by
(a) such Interest Holder's share of Partnership taxable income and (b) any
increases in his or her share of liabilities of the Partnership. Generally, such
Interest Holder's Initial Basis has been decreased (but not below zero) by (i)
his or her share of Partnership cash distributions, (ii) any decreases in his or
her share of liabilities of the Partnership, (iii) his or her share of losses of
the Partnership, and (iv) his or her share of nondeductible expenditures of the
Partnership that are not chargeable to capital. (Because "syndication costs" are
chargeable to capital and not deductible for tax purposes, an Interest Holder's
basis in his or her Interests would include his or her share of the syndication
costs incurred by the Partnership at formation.)
Passive Activity Income. If an Interest Holder disposes of his
or her entire interest in the Partnership, such Interest Holder will be able to
utilize any unused suspended "passive" losses from the Partnership (net of any
gain recognized on the disposition) to offset income, including income from
sources other than the sale of an Interest recognized by such Interest Holder.
Gain, if any, recognized by an Interest Holder in connection
with the sale of an Interest pursuant to the Offer will constitute "passive
-16-
<PAGE>
activity income" for purposes of the "passive activity loss" limitation rules.
Accordingly, such income generally may be offset by losses from all sources,
including suspended passive losses with respect to the Partnership and passive
or active losses from other activities.
Loss, if any, recognized by an Interest Holder in connection
with the sale of less than all of an Interest Holder's Interests pursuant to the
Offer may be subject to limitation under the passive loss rules. Each Interest
Holder should consult with his or her own tax advisor concerning whether, and
the extent to which, the Interest Holder has available suspended "passive
activity" losses from either the Partnership or other investments that may be
used to offset gain from a sale of Interests pursuant to the Offer and whether
any losses recognized are subject to limitation under the passive loss rules.
Backup Withholding. A taxable Interest Holder (other than
corporations and certain foreign individuals) who tenders Interests may be
subject to 31% backup withholding unless the Interest Holder provides his or her
taxpayer identification number ("TIN") and certifies that he or she is not
subject to backup withholding. An Interest Holder who is subject to backup
withholding must contact the Company as set forth in the Letter of Transmittal.
If backup withholding applies, the Company will withhold 31% from payments to
such Interest Holder. See the Letter of Transmittal.
Miscellaneous
THE OFFER IS BEING MADE TO ALL INTEREST HOLDERS, PROVIDED,
HOWEVER, THAT THE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS BE ACCEPTED FROM
OR ON BEHALF OF) INTEREST HOLDERS 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.
Pursuant to Rule 14d-3 under the Exchange Act, the Company has
filed with the Commission a Tender Offer Statement on Schedule 14D-1, together
with exhibits, furnishing certain additional information with respect to the
Offer. Such Statement and any amendments thereto, including exhibits, may be
inspected and copies may be obtained at the same places and in the same manner
as set forth above with respect to information concerning the Partnership
(except that they will not be available at the regional offices of the
Commission).
EFFECTS OF OFFER ON NON-TENDERING INTEREST HOLDERS
Significant Equity Interest
After the Offer, the Company could own up to approximately
25.2% of the Interests. Pursuant the Partnership Agreement, the written consent
of Balcor Storage Partners would be required for the Company to become a
substituted Limited Partner. Although the Offer is not contingent upon the
Company being made a substituted Limited Partner, effective upon the Company's
acceptance for payment of the tendered Interests, the Interest Holder will grant
to the Company an irrevocable proxy to vote such Interests in such manner as the
Company shall deem proper. The Company could then be in a position to influence
decisions of the Partnership on which Limited Partners are entitled to vote.
Limited Partners cannot participate in the management or control of the
Partnership's business, except insofar as the Limited Partners are entitled to
vote as
-17-
<PAGE>
permitted by the Partnership Agreement. Under the Partnership Agreement, Limited
Partners may vote, subject to certain provisions of the Partnership Agreement,
to: (i) approve any proposed sale of all or substantially all of the real
property assets of the Partnership; (ii) remove either or both of the General
Partners and elect or approve a successor to any removed or withdrawn General
Partner; (iii) dissolve the Partnership; and (iv) approve any amendment of the
Partnership Agreement. The Company will vote the Interests acquired pursuant to
this Offer according to its interest, which may or may not be in the best
interests of non-tendering Interest Holders.
Effect on Trading Market
There is no established public trading market for the
Interests, and it is not anticipated that one will develop. Accordingly, a
reduction in the number of Interest Holders should not materially further
restrict the Interest Holders' ability to find purchasers for their Interests.
Partnership Status
The Company does not believe that the purchase of Interests by
the Company, as proposed, will adversely affect whether the Partnership is
classified as a partnership for federal income tax purposes.
Partnership Business
The Company does not believe that the Offer will materially
affect the operation of the properties owned by the Partnership.
Although after the Offer the Company may acquire additional
Interests thereby increasing its ownership position in the Partnership, the
Company has no present plans or intentions with respect to the Partnership for a
liquidation, a merger, a sale or purchase of material assets or borrowings.
Certain Restrictions on Transfer
The Partnership Agreement restricts transfers of Interests if,
in the opinion of Balcor Storage Partners, such transfer would result in the
termination of the Partnership pursuant to Section 708(b)(1)(B) of the Code
(which termination would occur if 50% or more of the total interests in
Partnership capital and profits are transferred within a 12-month period).
Consequently, sales of Interests on the secondary market and in private
transactions during the 12-month period following completion of the Offer may be
restricted, and the Partnership may not process any requests for recognition of
transfers or substitution of Limited Partners upon a transfer of Interests
during such 12-month period if Balcor Storage Partners believes such transfer
causes a termination of the Partnership pursuant to Section 708(b)(1)(B) of the
Code. Based on the number of Interests for which the Offer to Purchase is being
made (representing 25% of the outstanding Interests), and taking into account
normal historical levels of transfers of Interests (to the extent known to the
Company), the Company does not believe this restriction will be violated, and
hence the Company does not believe that sales pursuant to the Offer will cause
the Partnership to terminate for tax purposes. The Company does not intend to
purchase Interests to the extent such purchase would cause a termination of the
Partnership. Non-tendering Interest Holders should consult their own tax
advisors regarding the tax consequences in their particular situations of a
termination of the Partnership.
-18-
<PAGE>
Effect on Exchange Act Regulation
The Interests are currently registered under the Exchange Act.
Registration under the Exchange Act may be terminated upon application of the
Partnership to the Commission if there are fewer than 300 holders of interests
of record. The Company does not believe that the Offer will result in the
termination of registration of the Interests under the Exchange Act.
-19-
<PAGE>
MARKET PRICES OF INTERESTS
The Interests 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 Interests. Secondary sales activity for the
Interests has been limited and sporadic. Therefore, a reduction in the number of
Interest Holders should not materially further restrict the Interest Holders'
ability to find purchasers for their Interests. The Company does not have
information regarding the prices at which all secondary sales transactions in
the Interests have been effectuated. Various organizations offer to purchase and
sell limited partnership interests (such as the Interests) 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
Interests), including the prices at which such secondary sales transactions are
effectuated.
The information regarding sale transactions in Interests from The
Stanger Report is as follows:
<TABLE>
<CAPTION>
Reporting Period Per Interest Transaction Price(1) No. of
---------------- -------------------------------- ------
High Low Interests(2)
---- --- ------------
<S> <C> <C> <C>
1993
----
January 1 - March 31 $ 158.00 $ 118.00 281
April 1 - June 30 163.00 113.00 494
July 1 - September 30 181.00 127.75 312
October 1 - December 31 189.00 145.00 829
1994
----
January 1 - March 31 192.00 157.00 1,476
April 1 - June 30 200.00 100.00 1,157
July 1 - September 30 210.00 174.00 958
October 1 - December 31 220.86 150.00 (Not Available)
1995
----
January 1 - March 31 221.00 188.00 1,054
April 1 - June 30 260.00 190.00 1,079
July 1 - September 30 234.50 202.00 1,183
- --------------
<FN>
(1) The Company does not know whether the transaction prices shown are before
or after commissions.
(2) The Company does not know the number of transactions.
</FN>
</TABLE>
-20-
<PAGE>
* * *
No person has been authorized to make any recommendation or
representation on behalf of the Company or to provide any information other than
that contained herein or in the Letter of Transmittal. No such recommendation,
information or representation may be relied upon as having been authorized.
PUBLIC STORAGE, INC.
600 North Brand Boulevard, Suite 300
Glendale, California 91203-1241
By: /s/Harvey Lenkin
-------------------------------
Harvey Lenkin
President
January 25, 1996
-21-
<PAGE>
<TABLE>
SCHEDULE 1
DIRECTORS AND EXECUTIVE OFFICERS OF PUBLIC STORAGE, INC.
<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) 600 North Brand Boulevard Executive Officer
Suite 300 11/91 - present
Glendale, CA 91203-1241
Real estate investment
Harvey Lenkin Public Storage, Inc. President
(Executive Officer and Director) 11/91 - present
Real estate investment
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
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
Marvin M. Lotz Public Storage, Inc. Senior Vice President
(Executive Officer) from 11/16/95
Real estate investment Officer of predecessor of the
Company
9/83-11/95
Mary Jayne Howard Public Storage, Inc. Senior Vice President
(Executive Officer) from 11/16/95
Real estate investment Officer of predecessor of the
Company
1-1
<PAGE>
David Goldberg
(Executive Officer) Public Storage, Inc. Senior Vice President and General
Counsel from 11/16/95
Real estate investment Counsel to the Company
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
John Reyes Public Storage, Inc. Vice President from 11/13/95
(Executive Officer) Controller 2/92 - present
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 Company President
(Director) Self Storage Management Company 1977 - present
5221 West 102nd Street
Los Angeles, CA 90045
Develops and operates 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
1-2
<PAGE>
William C. Baker Carolina Restaurant Chairman and Chief Executive
(Director) Enterprises, 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
Operates and franchises restaurants
Private investor
3/88-1/92
Uri P. Harkham The Jonathan Martin Fashion Group President and Chief Executive
(Director) 1157 South Crocker Street Officer
Los Angeles, CA 90021 1975 - present
Designs, manufactures and markets
women's clothing
Harkham Properties Chairman of the Board
1157 South Crocker Street 1978 - present
Los Angeles, CA 90021
Real estate
Berry Holmes Private investor since 1985
(Director)
</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.
1-3
<PAGE>
The Letter of Transmittal and any other required documents
should be sent or delivered by each Interest Holder 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 Boston BancBoston Trust The First National Bank
Shareholder Services Company of New York of Boston
P.O. Box 1872 55 Broadway Corporate Agency &
Mail Stop 45-01-19 3rd Floor Reorganization
Boston, MA 02105 New York, NY 10006 150 Royall Street
Mail Stop 45-01-19
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:
The Weil Company
(800) 478-2605
Any requests for assistance or additional copies of the Offer
to Purchase and the Letter of Transmittal may be directed to the Company at its
address and telephone number set forth below:
Public Storage, Inc.
600 North Brand Boulevard, Suite 300
Glendale, California 91203-1241
(800) 421-2856
(818) 244-8080
<PAGE>
LETTER OF TRANSMITTAL
To Purchase Limited Partnership Interests of
Balcor/Colonial Storage Income Fund - 85,
an Illinois limited partnership
Pursuant to the Offer to Purchase dated January 25, 1996
of Public Storage, Inc.
- -------------------------------------------------------------------------------
DESCRIPTION OF INTERESTS TENDERED
Name and Address of Registered Holder Number of Interests Tendered
- ------------------------------------- ---------------------------
*
-------------------------
*
Unless otherwise indicated, it
will be assumed that all
Interests held by the
registered holder are being
tendered.
- -------------------------------------------------------------------------------
THIS OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON MARCH 12, 1996,
UNLESS EXTENDED. INTERESTS TENDERED PURSUANT TO THIS OFFER MAY BE WITHDRAWN AT
ANY TIME PRIOR TO THE EXPIRATION OF THIS OFFER.
This Letter of Transmittal is to be executed and returned to The First National
Bank of Boston (the "Depositary") at one of the following addresses:
<TABLE>
<CAPTION>
<S> <C> <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 of
Boston Company of New York Boston Boston
Shareholder Services 55 Broadway Corporate Agency & Shareholder Services
P.O. Box 1872 3rd Floor Reorganization (617) 575-3120
Mail Stop 45-01-19 New York, NY 10006 150 Royall Street
Boston, MA 02105 Mail Stop 45-01-19
Canton, MA 02021
</TABLE>
Delivery of this instrument to an address other than as set forth above will not
constitute a valid delivery. The accompanying instructions should be read
carefully before this Letter of Transmittal is completed.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
The undersigned hereby tenders to Public Storage, Inc., a California
corporation (the "Company"), the above-described limited partnership interests
(the "Interests") of Balcor/Colonial Storage Income Fund - 85, an Illinois
limited partnership (the "Partnership"), for $210 per Interest in cash in
accordance with the terms and subject to the conditions of the Company's Offer
to Purchase dated January 25, 1996 (the "Offer to Purchase"), and in this Letter
of Transmittal (which together with the Offer to Purchase and any supplements or
amendments constitutes the "Offer"). The undersigned hereby acknowledges receipt
of the Offer to Purchase. Capitalized terms used but not defined herein have the
respective meanings assigned in the Offer to Purchase.
Subject to, and effective upon, acceptance for payment of the Interests
tendered hereby in accordance with the terms and subject to the conditions of
the Offer, the undersigned hereby sells, assigns, transfers, conveys and
delivers to the Company, all right, title and interest in and to such Interests
tendered hereby and accepted for payment pursuant to the Offer and any and all
non-cash distributions, other Interests or other securities issued or issuable
in respect thereof on or after January 25, 1996 including, without limitation,
all rights in and claims to any Partnership profits and losses, voting rights,
rights to be substituted as a Limited Partner of the Partnership and other
benefits of any nature whatsoever distributable or allocable to each such
tendered Interest under the Partnership Agreement. The undersigned hereby
appoints the Depositary the true and lawful agent and attorney-in-fact of the
undersigned with respect to such Interests and (and any and all non-cash
distributions, other Interests or securities issued or issuable in respect
thereof on or after January 25, 1996), 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 Interests (and any such non-cash
distributions, other Interests or securities), to or upon the order of the
Company, (b) present such Interests (and any such non-cash distributions, other
Interests or securities) for transfer on the books of the Partnership and (c)
receive all benefits and otherwise exercise all rights of
<PAGE>
beneficial ownership of such Interests (and any such non-cash distributions,
other Interests 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, transfer, convey and deliver the Interests tendered
hereby (and any and all non-cash distributions, other Interests or securities
issued or issuable in respect thereof on or after January 25, 1996) and that
when the same are accepted for payment 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, transfer, conveyance and delivery of
the Interests tendered hereby and any and all non-cash distributions, other
Interests or other securities issued or issuable in respect of such Interests on
or after January 25, 1996. In addition, the undersigned shall promptly remit and
transfer to the Depositary for the account of the Company any and all non-cash
distributions, other Interests or other securities issued to the undersigned on
or after January 25, 1996 in respect of the Interests 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 non-cash distributions, other
Interests 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 understands that under certain circumstances set forth
in the Offer, and subject to the applicable rules of the Securities and Exchange
Commission, the Company may not be required to accept for payment any of the
tendered Interests. In such event, the undersigned understands that any Letter
of Transmittal for Interests not accepted for payment will be destroyed by the
Company.
The undersigned understands that, if proration is required pursuant to
the terms of the Offer, the Company will accept for payment from among those
Interests validly tendered prior to or on the Expiration Date and not properly
withdrawn, the maximum number of Interests permitted pursuant to the Offer on a
pro rata basis, with adjustments to avoid purchases of prorated fractional
Interests.
The undersigned hereby irrevocably constitutes and appoints the Company
and any designee of the Company as the true and lawful attorney-in-fact and
proxy of the undersigned with respect to such Interests 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 Interests
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
Interests or securities issued or issuable in respect thereof on or after
January 25, 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 and power of attorney is coupled with an
interest in the Interests tendered hereby, is irrevocable and is granted in
consideration of, and is effective upon, the acceptance for payment of such
Interests 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 Interests (and any such non-cash distributions,
other Interests or securities), other than the irrevocable proxy granted to the
General Partners pursuant to Article XXI of the Partnership Agreement, and no
subsequent proxies will be given (and if given will be deemed not to be
effective) with respect thereto by the undersigned.
The undersigned understands that tenders of Interests pursuant to 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
hereunder shall be binding upon the heirs, executors, administrators, legal and
personal representatives, successors and assigns of the undersigned. This tender
is irrevocable except as stated in the Offer, however, Interests tendered
pursuant to the Offer may be withdrawn at any time prior to the Expiration Date.
The undersigned hereby certifies, under penalties of perjury, that (1)
the number shown on this form below the undersigned's signature is my correct
Taxpayer Identification Number and (2) I am not subject to backup withholding
either (a) because I have not been notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as a result of a failure to
report all interest or dividends, (b) the IRS has notified me that I am no
longer subject to backup withholding, or (c) I am exempt from backup
withholding.
The undersigned hereby also certifies, under penalties of perjury, that
the undersigned, if an individual, is not a nonresident alien for purposes of
U.S. income taxation, and if not an individual, is not a foreign corporation,
foreign partnership, foreign trust, or foreign estate (as those terms are
defined in the Code and Income Tax Regulations). The undersigned understands
that this certification may be disclosed to the IRS by the Company and that any
false statements contained herein could be punished by fine, imprisonment, or
both.
ANY INTEREST HOLDER WHO DESIRES TO TENDER HIS OR HER INTERESTS BUT IS
UNABLE TO CERTIFY ANY OF THE STATEMENTS SET FORTH ABOVE SHOULD CONTACT THE
COMPANY AT (800) 421-2856 OR (818) 244-8080 FOR FURTHER INSTRUCTIONS.
-2-
<PAGE>
Please issue the payment for the Interests 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.
- --------------------------------------------------------------------------------
TENDER OF INTERESTS IN OFFER
The undersigned tenders Interests in the Offer on the terms described above.
SIGN HERE
Signature(s) ------------------------------------------------------------------
------------------------------------------------------------------
Social Security or Taxpayer Identification Number ----------------------------
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 or corporations or others acting in a
fiduciary or representative capacity, please provide the following information.
See Instruction 3.)
Name
---------------------------------------------------------------------
---------------------------------------------------------------------
(Please print)
Capacity (full title)
-----------------------------------------------------------
Address
------------------------------------------------------------------------
Zip Code
- --------------------------------------------------------------------------------
SPECIAL MAILING INSTRUCTIONS
To be completed ONLY if payment is to be issued to the registered holders(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 March 12, 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 Interest Holder,
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. All
tendering Interest Holders, by execution of this Letter of Transmittal, waive
any right to receive any notice of the acceptance of their Interests for
payment.
2. Partial Tenders. If fewer than all the Interests held by an Interest
Holder are to be tendered, fill in the number of Interests which are to be
tendered in the section entitled "Number of Interests Tendered." All Interests
held by an Interest Holder 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 Interests, the signature(s) must correspond exactly with the
Interest Holder's registration.
(b) If any of the Interests are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
(c) If any Interests 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. Transfer Taxes. Except as set forth in this Instruction 4, the
Company will pay or cause to be paid any transfer taxes with respect to the
transfer and sale of Interests to it pursuant to the Offer. If payment of the
Offer Price is to be made to any person other than the registered holder, the
amount of any 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 Offer Price unless satisfactory evidence of the payment of such taxes
or exemption therefrom is submitted.
5. Special Mailing Instructions. If payment for the Interests 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 Company or the Soliciting
Agent at their respective telephone numbers set forth below.
7. Irregularities. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance of any tender of Interests 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 Interests (i) determined by it not to be in the
appropriate form or (ii) the acceptance for purchase of Interests 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 March 12, 1996,
unless extended.
THE DEPOSITARY: THE SOLICITING AGENT: THE COMPANY:
THE FIRST NATIONAL BANK OF BOSTON THE WEIL COMPANY PUBLIC STORAGE, INC.
Shareholder Services (800) 379-4662 Investor Services
P.O. Box 1872 Department
Mail Stop 45-01-19 (800) 421-2856
Boston, Massachusetts 02105 (818) 244-8080
(617) 575-3120
-4-
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January 25, 1996
Re: Tender Offer for Interests in
Balcor/Colonial Storage Income Fund - 85
Dear Interest Holder:
As an Interest Holder in Balcor/Colonial Storage Income Fund -
85 (the "Partnership"), Public Storage, Inc. (the "Company") mailed to you an
Offer to Purchase dated January 25, 1996 wherein the Company is offering to
purchase for cash limited partnership interests in 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 the Company in the
enclosed postage-paid envelope, or
2. Call The Weil Company, the company retained by Public
Storage, Inc. to assist Interest Holders 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
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Harvey Lenkin
President
Enclosures
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Tender Offer for Interests in Balcor/Colonial Storage Income
Fund - 85
Please return to: Public Storage, Inc.
P.O. Box 25039
Glendale, CA 91221-9985
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Name and address of registered holder Telephone number
--------------------------
--------------------------
Convenient time to contact
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Public Storage, Inc.
600 N. Brand Blvd., Suite 300
P.O Box 25050
Glendale, California 91221-5050
Tel: (818) 244-8080
Enclosed is an Offer to Purchase for cash Limited Partnership interests in
Balcor/Colonial Storage Income Fund - 85 by Public Storage, Inc. dated January
25, 1996. If you are a beneficial owner of interests in Balcor/Colonial Storage
Income Fund - 85 and would like to participate in the Offer to Purchase, please
contact the registered holder of the interests.
January 25, 1996
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