<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
and
Amendment No. 1 to
SCHEDULE 13D
Under 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 B.H. MARTIN, JR.
Hogan & Hartson L.L.P.
555 Thirteenth Street, NW
Washington, DC 20004
(202) 637-5600
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidder)
----------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Transaction Valuation * Amount of Filing Fee
- -----------------------------------------------
<S> <C>
$14,538,300 $2,908
- -----------------------------------------------
</TABLE>
* 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:
25,838.779 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: 9.3%
10) Type of Reporting Person (See Instructions): CO
-2-
<PAGE>
INTRODUCTION
------------
This filing is a combined Schedule 14D-1 Tender Offer Statement and
Amendment No. 1 to Schedule 13D. The Tender Offer Statement on Schedule 14D-1
relates to an offer to purchase by Public Storage, Inc., a California
corporation (the "Company"), up to 69,230 of the limited partnership interests
(the "Interests") of Balcor/Colonial Storage Income Fund - 85, an Illinois
Limited Partnership (the "Partnership"), at a net cash price per Interest of
$210, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated August 29, 1996 (the "Offer") and the related Letter of
Transmittal, copies of which are annexed hereto as Exhibits (a)(1) and (a)(2).
The Amendment No. 1 to Schedule 13D relates to the Company's ownership of
Interests, and amends the information on Schedule 13D dated April 22, 1996
relating to the Company's ownership of Interests.
Item 1. Security and Subject Company.
----------------------------
(a) The name of the subject company is Balcor/Colonial Storage Income Fund
- 85, defined above as the "Partnership." The address of the
Partnership's principal executive office is Balcor Plaza, 4849 Golf
Road, Skokie, Illinois 60077.
(b) The class of securities to which this Statement relates is the
Interests, as defined above. There are 276,918 outstanding Interests.
The information set forth under "Summary" and "The Offer" in the Offer
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., defined
above as the "Company." The Company is located at 701 Western Avenue,
Suite 200, Glendale, California 91201-2397. 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 2 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 and Expenses" in the Offer is incorporated
herein by reference.
(c) Not applicable.
-3-
<PAGE>
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.
Item 6. Interest in Securities of the Subject Company.
---------------------------------------------
(a) The Company beneficially owns 25,838.779 Interests in the Partnership
which represents approximately 9.3% 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: August 29, 1996 PUBLIC STORAGE, INC.
By: /s/ Harvey Lenkin
------------------
Harvey Lenkin
President
-5-
<PAGE>
Exhibit Index
-------------
Exhibit No.
- -----------
(a) (1) Offer to Purchase dated August 29, 1996.
(2) Letter of Transmittal.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
-6-
<PAGE>
Exhibit (a)(1)
IF YOU HAVE ANY QUESTIONS ABOUT THIS OFFER, PLEASE CALL THE SOLICITING AGENT,
CHRISTOPHER WEIL & COMPANY, INC., AT (800) 478-2605 OR PUBLIC STORAGE, INC.'S
INVESTOR SERVICES DEPARTMENT AT (800) 421-2856 OR (818) 244-8080. IF YOU NEED
HELP IN COMPLETING THE LETTER OF TRANSMITTAL, PLEASE CALL THE DEPOSITARY, THE
FIRST NATIONAL BANK OF BOSTON, AT (617) 575-3120.
August 29, 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
September 30, 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 SEPTEMBER 30, 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 PARTNERSHIP DISTRIBUTION
MADE HEREAFTER AND PRIOR TO THE EXPIRATION DATE. 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:
. 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,
Christopher Weil & Company, Inc., at (800) 478-2605. Any requests for
assistance or additional copies of the Offer to Purchase and the Letter of
Transmittal may be directed to the Company's Investor Services Department at
(800) 421-2856 or (818) 244-8080. If you need any help in completing the Letter
of Transmittal, please call the Depositary, The First National Bank of Boston,
at (617) 575-3120. The Soliciting Agent will receive 2% of the Offer Price for
each Interest tendered and accepted by the Company.
__________________
<PAGE>
. Offer Price May Not Represent Liquidation Value. Although the
-----------------------------------------------
Company has based the Offer Price, defined below, on an estimate of
the liquidation value per Interest, the Offer Price could be
substantially less than the net proceeds that would actually 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. See
"Determination of Offer Price."
. 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.
. Less Than Secondary Market Prices. The Offer Price is below
---------------------------------
certain secondary market prices for Interests. See "Market Prices
of Interests."
. 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 and the Partnership are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith each 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 and the Partnership 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, or by accessing the Commission's World Wide Web
site at http://www.sec.gov. Such material for the Company 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 BancBoston Trust The First National Bank of
Boston Company of New York Boston
Shareholder Services 55 Broadway Corporate Agency &
P.O. Box 1872 3rd Floor Reorganization
Mail Stop 45-02-53 New York, NY 10006 150 Royall Street
Boston, MA 02105 Mail Stop 45-02-53
Canton, MA 02021
(ii)
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
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........................... 18
Significant Equity Interest............................................... 18
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
PARTNERSHIP PROPERTIES.................................................... 1-1
SCHEDULE 2
DIRECTORS AND EXECUTIVE OFFICERS OF PUBLIC STORAGE, INC................... 2-1
</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.
The Company and the Partnership
Balcor/Colonial Storage The Partnership was organized in 1983 and owns
Income Fund - 85........... 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, 1995, there were
7,733 holders of record owning 276,918 Interests.
The Company owns 25,838.779 Interests (9.3% of the
outstanding 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, reduced by the amount per
Interest of any Partnership distribution (the
"Offer Price").
-1-
<PAGE>
Expiration, Withdrawal and
Proration Date............ September 30, 1996, unless extended. See "The
Offer."
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
has not finalized its plans with respect to the Partnership, but may consider
acquisition of additional Interests or of the Partnership's properties or
seeking to change the Partnership's management. 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
-----------------------------------------------
has based the Offer Price on an estimate of the liquidation value per
Interest, the Offer Price could be substantially less than the net
proceeds that would actually 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.
Less Than Secondary Market Prices. The Offer Price is below certain
---------------------------------
secondary market prices for Interests. See "Market Prices of
Interests."
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
-3-
<PAGE>
Interest Holders should consult with their own tax advisors with
specific reference to their own tax situations.
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 34.3% 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 not finalized its plans with
respect to the Partnership, the Company may take action with regard to
one or more 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. See
"Background and Purpose of the Offer -- Purpose of the Offer."
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 SEPTEMBER
30, 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. Information with regard to
the Partnership's properties is set forth in Schedule 1, attached hereto.
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 for
the year ended December 31, 1995 and the Partnership's Form 10-Q for the period
ended June 30, 1996, each of which was 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 on page (ii) of this Offer to Purchase.
-5-
<PAGE>
<TABLE>
<CAPTION>
Six
Months Ended
Year Ended December 31, June 30,
------------------------------------------ --------------
1991 1992 1993 1994 1995 1995 1996
------ ------- ------- ------- ------- ------ ------
(In thousands, except per Interest data)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Data:
Rental income............ $8,117 $ 8,600 $ 9,299 $10,067 $10,317 $5,042 $5,220
Interest income.......... 267 194 213 294 331 168 139
Net income............... 3,224 3,444 4,090 4,816 4,124 2,298 2,350
General Partners' share
of net income.......... 32 34 41 48 41 23 23
Limited Partners' per
Interest data (1):
Net income............... 11.53 12.31 14.62 17.22 14.74 8.22 8.40
Distributions............ 16.76 17.03 19.16 18.67 23.84 12.58 12.35
<CAPTION>
As of December 31, As of June 30,
----------------- --------------
1995 1996
---- ----
<S> <C> <C>
Balance Sheet Data:
Total cash and cash
equivalents............ $ 5,562,713 $ 4,612,060
Total mini-warehouse
facilities, net........ 43,428,692 42,541,137
Total assets............. 48,991,405 47,153,197
Total liabilities........ 1,631,729 931,695
Partners' capital........ 47,359,676 46,221,502
</TABLE>
______________________
(1) Limited Partners' per Interest data is based on the number of Interests
(276,918) outstanding during the year.
-6-
<PAGE>
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 June 30, 1996, the
Company had equity interests (through direct ownership, as well as general and
limited partnership and capital stock interests) in 1,068 properties located in
37 states, consisting of 1,033 mini-warehouses facilities and 35 business parks.
The Company's common stock (symbol "PSA") and nine series of preferred stock are
traded on the NYSE.
The Company's principal executive offices are located at 701 Western
Avenue, Suite 200, Glendale, California 91201-2397. Its telephone number is
(818) 244-8080. Information with regard to the Company's officers and directors
is set forth in Schedule 2, attached hereto.
Set forth below is certain summary financial data for the Company:
<TABLE>
<CAPTION>
Six months Ended
Years ended December 31, June 30,
------------------------------------------------- ---------------------
1993 1994 1995 1995 1996
--------- ----------- ------------------------- -------- -----------
Historical Pro forma(1)
----------- ------------
($ In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Operating Data:
Total revenues................. $114,680 $147,196 $212,650 $ 268,076 $91,110 $ 157,238
Depreciation and amortization.. 24,998 28,274 40,760 53,727 16,926 30,734
Interest expense............... 6,079 6,893 8,508 15,930 3,214 4,813
Minority interest in income.... 7,291 9,481 7,137 6,992 3,715 4,815
Net income..................... 28,036 42,118 70,386 108,443 29,751 70,080
<CAPTION>
December 31, 1995 June 30, 1996
----------------- -------------
<S> <C> <C>
Balance Sheet Data:
Total assets................... $1,937,461 $2,222,796
Total debt..................... 158,052 116,070
Shareholders' equity........... 1,634,503 1,939,070
</TABLE>
- ------------------------------------------
(1) Restated to reflect the pro forma impact of the November 1995
merger of Public Storage Management, Inc. into the Company. The pro forma
results presented are as if such merger occurred on January 1, 1995.
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
Between August 1995 and January 1996, informal discussions were 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 were reached.
During August and September, 1995, the Company purchased a total of
515 Interests in six secondary market transactions at prices per Interest
ranging from $224.00 to $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 First Offer, as
defined below. 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 First Offer.
On January 25, 1996, the Company commenced a tender offer to purchase
up to 69,230 Interests, 25% of the outstanding Interests, at a net cash price
per Interest of $210 (the "First Offer"). The First Offer expired on March 12,
1996. The Company accepted for payment 18,406.249 of these Interests,
representing all of the validly tendered Interests.
Beginning in April 1996 and continuing until July 1996, the Company
reinitiated informal discussions with representatives of the Partnership
regarding a possible acquisition by the Company of Colonial or the assumption by
the Company of the management of the Partnership's properties. On June 21,
1996, the Company sent a letter to a representative of the Partnership
expressing an interest in becoming the manager of the Partnership's properties.
On July 29, 1996, a representative of the Partnership sent a letter to the
Company stating that the Partnership had no plans to make a management change.
No arrangements, understandings or agreements were reached.
On June 27, 1996, the Company completed the purchase of 6,643.53
Interests at a net cash price of $210 per Interest from Everest Storage
Investors, LLC ("Everest") pursuant to a purchase agreement between the Company
and Everest. Effective July 1, 1996, the Company purchased a total of 247
Interests from twelve individual Interest Holders at a cash price of $210 per
Interest. Each of those Interest Holders contacted the Company either directly
or through an intermediary and offered to sell their respective Interests to the
Company.
On August 14, 1996, a representative of the Partnership contacted a
representative of the Company to determine whether the Company desired to
participate in a bid process in connection with a possible sale of the
Partnership's properties. The representative of the Company responded that he
did not know whether the Company would participate, but that he would review a
confidentiality agreement. To date, the Company has not executed a
confidentiality agreement with the Partnership. The Company may submit a bid
for the Partnership's properties.
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.
Although the Company has not finalized its plans with respect to the
Partnership, the Company may take one or more of the following
-8-
<PAGE>
actions: (1) retain the Interests for investment purposes only, (2) seek to
acquire additional Interests following the expiration of the Offer, possibly
including additional tender offers, (3) seek to acquire the Partnership's
properties, possibly including participating in any bid process initiated by the
Partnership or (4) seek to change management of the Partnership and/or its
properties. The Company's actions will depend on Interest Holders' response to
the Offer (i.e., the number of Interests tendered) and on the outcome of future
discussions with representatives of the Partnership.
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.
The Company has estimated the Offer Price using a liquidation
methodology with the following assumptions: (i) computing the estimated value
of the operating facilities by applying to the Partnership's property net
operating income (twelve months ended June 30, 1996), as reduced for estimated
capital expenditures (2.5% of rental income), a capitalization rate of 10.0%,
(ii) reduced the valuation of the properties by (a) 3% for commission payable to
the general partner, (b) 1-1/2% for estimated selling expenses and (c)
additional reserves for deferred maintenance and contingencies, (iii) adding the
Partnership's other net assets as of June 30, 1996 (consisting primarily of cash
and mortgage notes receivable) of $3,680,000, (iv) deducting the distribution
paid to Interest Holders in July 1996 of $1,731,000, (v) deducting deferred
amounts payable to the General Partner and Property Manager payable in
connection with a liquidation of the Partnership of approximately $5,740,000 and
(vi) dividing the result by the number of Interests issued and outstanding.
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 September 30, 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 Partnership distribution made hereafter and
prior to the Expiration Date. 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
-9-
<PAGE>
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 25,838.779 Interests, or approximately 9.3%
of the outstanding Interests. If all 69,230 Interests are validly tendered and
accepted for payment, the Company will own approximately 34.3% of the
outstanding Interests upon completion of the Offer.
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
-10-
<PAGE>
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.
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
September 30, 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.
-11-
<PAGE>
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.
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 October 28, 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.
-12-
<PAGE>
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 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
-13-
<PAGE>
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 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 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;
-14-
<PAGE>
(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 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 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.
(d) The Partnership shall not have entered into an agreement for
the sale of all or substantially all of its properties that would
reasonably be expected to result in a per Interest liquidating
distribution less than the Offer Price.
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 Christopher Weil & Company, Inc., a
registered broker dealer, to answer questions and solicit responses to this
transaction. The Company will pay Christopher Weil & Company, Inc. 2% of the
Offer Price for each Interest tendered and accepted by the Company. In
addition, Christopher Weil & Company, Inc. will be reimbursed for certain out-
of-
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<PAGE>
pocket expenses up to a maximum of $25,000 and will be indemnified against
certain liabilities, including liabilities under the federal securities laws.
Christopher Weil & Company, Inc. has acted in a similar capacity in connection
with other tender and exchange offers by the Company and in soliciting consents
from the limited partners of other partnerships sponsored by the 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.
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.
-16-
<PAGE>
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 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.
-17-
<PAGE>
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 34.3% 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 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.
After the Offer, the Company may acquire additional Interests thereby
increasing its ownership position in the Partnership. Other than as described
under "Background and Purpose of the Offer -- Purpose of the Offer," the Company
has no present plans or intentions with respect to the Partnership for a
liquidation, merger, sale or purchase of material assets or borrowing.
-18-
<PAGE>
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.
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>
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
October 1 - December 31 235.00 205.00 1,070
1996
----
January 1 - March 31 240.00 211.00 1,601
</TABLE>
______________
(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.
-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.
701 Western Avenue, Suite 200
Glendale, California 91201-2397
By: /s/ Harvey Lenkin
-----------------------------------
Harvey Lenkin
President
August 29, 1996
-21-
<PAGE>
SCHEDULE 1
PARTNERSHIP PROPERTIES
As of December 31, 1995, the Partnership owned the properties described
below.
<TABLE>
<CAPTION>
Net Rentable
Land Area Area No. of
Location (Acres) (Square Feet) Rentable Spaces
- -------- --------- ------------- ---------------
<S> <C> <C> <C>
3233 East Highway 80 1.3 22,450 156
Odessa, Texas
2306 North Collins Boulevard 1.7 26,098 248
Arlington, Texas
3107 South Lake Drive 1.1 19,230 152
Texarkana, Texas
6715 Wolflin Road 1.6 21,080 217
Amarillo, Texas
7800 North Broadway 2.4 35,880 260
Oklahoma City, Oklahoma
1604 Camp Lane 1.9 32,942 299
Albany, Georgia
1005 West Cotton 2.2 24,002 208
Longview, Texas
6046 Financial Drive 2.2 34,708 285
Norcross, Georgia
1320 Norwood Drive 1.8 29,220 251
Bedford, Texas
5311 Apex Highway 3.0 23,000 252
Durham, North Carolina
218 Eisenhower Drive 1.5 21,716 206
Savannah, Georgia
132 Slaton Highway 1.9 16,840 113
Lubbock, Texas
2960 South Cobb Drive 1.8 28,892 255
Smyrna, Georgia
3513 Highway 45 North 2.0 24,980 186
Meridian, Mississippi
</TABLE>
1-1
<PAGE>
<TABLE>
<CAPTION>
Net Rentable
Land Area Area No. of
Location (Acres) (Square Feet) Rentable Spaces
- -------- --------- ------------- ---------------
<S> <C> <C> <C>
3194 South Campbell Avenue 1.7 25,360 233
Springfield, Missouri
1440 North Hairston Road 2.3 30,117 270
Stone Mountain, Georgia
3472 Hillsboro Road 1.9 31,600 315
Durham, North Carolina
4615 West Beryl Road 1.7 28,750 295
Raleigh, North Carolina
2826 South Clack Street 2.4 32,038 266
Abilene, Texas
1301 South Stemmons 1.2 21,900 162
Lewisville, Texas
2316 Highway 19 North 2.3 27,880 215
Meridian, Mississippi
3016 South Cooper 1.5 24,912 193
Arlington, Texas
2215 West Southwest Loop 223 2.5 28,301 248
Tyler, Texas
2000 Country Club Drive 2.0 35,379 253
Carrollton, Texas
2331 South Collins Boulevard 2.0 31,396 276
Arlington, Texas
2990 Pio Nono Avenue 1.7 26,998 220
Macon, Georgia
5513 East Lancaster 1.3 22,104 210
Fort Worth, Texas
5121 North Street 2.0 17,483 147
Nacogdoches, Texas
4917 California Parkway, S.E. 1.7 27,132 247
Fort Worth, Texas
1881 Gordon Highway 1.6 22,464 229
Augusta, Georgia
</TABLE>
1-2
<PAGE>
<TABLE>
<CAPTION>
Net Rentable
Land Area Area No. of
Location (Acres) (Square Feet) Rentable Spaces
- -------- --------- ------------- ---------------
<S> <C> <C> <C>
3208 East Park Row 2.1 35,505 319
Arlington, Texas
5502 Chapel Hill Boulevard 1.7 26,800 260
Chapel Hill, North Carolina
3654 West Pioneer Parkway 2.3 34,176 253
Arlington, Texas
1311 Northwest Loop 281 2.0 24,940 200
Longview, Texas
3125 Cherry Street North 1.3 21,500 258
Winston-Salem, North Carolina
1010 Holiday Hill Drive 2.6 42,578 354
North Midland, Texas
95 Green Street 1.2 19,940 192
Warner Robins, Georgia
2115 Silas Creek Parkway 1.7 25,350 305
Winston-Salem, North Carolina
3120 Knickerbocker Road 1.8 19,425 151
San Angelo, Texas
2302 Parkview Drive 1.1 19,575 180
San Angelo, Texas
8457 Roswell Road 3.9 60,240 466
Dunwoody, Georgia
5717 Will Ruth Avenue 2.0 33,056 260
El Paso, Texas
1513 Denman Street 1.5 14,362 119
Lufkin, Texas
9303 Abercorn Extension 3.0 34,080 277
Savannah, Georgia
1850 North Clack Street 1.2 17,280 99
Abilene, Texas
7012 Glenwood 1.5 25,200 192
Raleigh, North Carolina
</TABLE>
1-3
<PAGE>
<TABLE>
<CAPTION>
Net Rentable
Land Area Area No. of
Location (Acres) (Square Feet) Rentable Spaces
- -------- --------- ------------- ---------------
<S> <C> <C> <C>
3730 West Wendover Avenue 1.7 30,600 289
Greensboro, North Carolina
2305 East Lohman Avenue 1.3 17,380 175
Las Cruces, New Mexico
4000 I-40 East 1.6 21,860 218
Amarillo, Texas
4701 Osborne Drive 1.3 18,900 173
El Paso, Texas
3229 Highway 80 2.1 31,120 211
Mesquite, Texas
1510 West 7th Street 1.0 13,640 124
Clovis, New Mexico
914 N.E. 8th Street 1.8 27,940 206
Grand Prairie, Texas
7469 Tara Boulevard 1.8 29,082 221
Jonesboro, Georgia
871 North Forest 2.5 23,379 200
Amarillo, Texas
5808 Highway 271 South 1.1 14,680 123
Fort Smith, Arkansas
5604 Tinker Diagonal 1.6 27,901 278
Midwest City, Oklahoma
3751 Longmire Way 2.1 29,780 300
Doraville, Georgia
818 South Clack Street 1.5 16,340 165
Abilene, Texas
8400 Canyon Drive 2.2 17,570 157
Amarillo, Texas
3121 Washington Road 1.4 28,138 255
Augusta, Georgia
4011 Midland Boulevard 1.9 26,580 174
Fort Smith, Arkansas
</TABLE>
1-4
<PAGE>
<TABLE>
<CAPTION>
Net Rentable
Land Area Area No. of
Location (Acres) (Square Feet) Rentable Spaces
- -------- --------- ------------- ---------------
<S> <C> <C> <C>
4141 Snapfinger Woods Drive 2.7 36,580 336
Decatur, Georgia
1808 Hampton Road 2.8 28,621 247
Texarkana, Texas
4155 Milgen Road 1.5 24,624 215
Columbus, Georgia
426 South College Drive 2.3 28,131 290
Wilmington, North Carolina
1412 Poinsett Highway 1.6 19,300 200
Greenville, South Carolina
2815 White Horse Road 2.6 31,500 309
Greenville, South Carolina
1515 Mt. Zion Road 5.0 64,539 666
Morrow, Georgia
</TABLE>
1-5
<PAGE>
SCHEDULE 2
DIRECTORS AND EXECUTIVE OFFICERS OF PUBLIC STORAGE, INC.
<TABLE>
<CAPTION>
Name of Director Employer/Address/ Current Position/
or Executive Officer Nature of Business Dates of Employment
- --------------------------- --------------------------- ----------------------
<S> <C> <C>
B. Wayne Hughes Public Storage, Inc. Chairman of the Board
(Executive Officer and 701 Western Avenue and Chief Executive
Director) Suite 200 Officer
Glendale, CA 91201-2397 11/91 - present
Real estate investment
Harvey Lenkin Public Storage, Inc. President
(Executive Officer and 11/91 - present
Director) 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
</TABLE>
2-1
<PAGE>
<TABLE>
<CAPTION>
Name of Director Employer/Address/ Current Position/
or Executive Officer Nature of Business Dates of Employment
- --------------------------- --------------------------- ----------------------
<S> <C> <C>
David Goldberg Public Storage, Inc. Senior Vice President
(Executive Officer) and General Counsel
Real estate investment from 11/16/95
Counsel to the Company
6/91-11/95
Obren B. Gerich Public Storage, Inc. Vice President 1980 -
(Executive Officer) present Chief
Real estate investment Financial Officer
1980-10/91
John Reyes Public Storage, Inc. Vice President from
(Executive Officer) 11/13/95
Real estate investment Controller 2/92 -
present
Sarah Hass Public Storage, Inc. Vice President from
(Executive Officer) 11/13/95
Real estate investment Secretary 2/92 -
present
Robert J. Abernethy American Standard President
(Director) Development Company 1977 - present
Self Storage Management
Company
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
</TABLE>
2-2
<PAGE>
<TABLE>
<CAPTION>
Name of Director Employer/Address/ Current Position/
or Executive Officer Nature of Business Dates of Employment
- --------------------------- --------------------------- ----------------------
<S> <C> <C>
William C. Baker Santa Anita Realty Chairman and Chief
(Director) Enterprises, Inc. Executive Officer
301 West Huntington Drive 3/96 - present
Suite 405
Arcadia, CA 91007
Real estate investment
trust that operates the
Santa Anita Racetrack
Carolina Restaurant Chairman and Chief
Enterprises, Inc. Executive 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
Uri P. Harkham The Jonathan Martin President and Chief
(Director) Fashion Group Executive Officer
1157 South Crocker Street 1975 - present
Los Angeles, CA 90021
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
</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.
2-3
<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 BancBoston Trust The First National Bank of
Boston Company of New York Boston
Shareholder Services 55 Broadway Corporate Agency &
P.O. Box 1872 3rd Floor Reorganization
Mail Stop 45-02-53 New York, NY 10006 150 Royall Street
Boston, MA 02105 Mail Stop 45-02-53
Canton, MA 02021
Any questions about the Offer to Purchase may be directed to the
Soliciting Agent at its telephone number set forth below:
The Soliciting Agent for the Offer is:
Christopher Weil & Company, Inc.
(800) 478-2605
Any requests for assistance or additional copies of the Offer to
Purchase and the Letter of Transmittal may be directed to the Company at its
address and telephone number set forth below:
Public Storage, Inc.
701 Western Avenue, Suite 200
Glendale, California 91201-2397
(800) 421-2856
(818) 244-8080
<PAGE>
Exhibit (a)(2)
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 August 29, 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 SEPTEMBER 30, 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>
<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 45-02-53 New York, NY 10006 150 Royall Street
Boston, MA 02105 Mail Stop 45-02-53
Canton, MA 02021
</TABLE>
Delivery of this instrument to an address other than as set forth above will not
constitute a valid delivery. The accompanying instructions should be read
carefully before this Letter of Transmittal is completed.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
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 August 29, 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 August 29, 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 August 29, 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 August 29, 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 August 29, 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 August 29, 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 August
29, 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.
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<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.
The Internal Revenue Service does not require your consent to any provision of
this document other than the certifications required to avoid backup
withholding.
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
- --------------------------------------------------------------------------------
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<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 September 30, 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 September 30, 1996,
unless extended.
<TABLE>
<S> <C> <C>
THE DEPOSITARY: THE SOLICITING AGENT: THE COMPANY:
THE FIRST NATIONAL BANK OF BOSTON CHRISTOPHER WEIL & COMPANY, INC. PUBLIC STORAGE, INC.
Shareholder Services (800) 379-4662 Investor Services Department
P.O. Box 1872 (800) 421-2856
Mail Stop 45-02-53 (818) 244-8080
Boston, Massachusetts 02105
(617) 575-3120
</TABLE>
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