SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1 TO
STATEMENT ON SCHEDULE 14D-1
Amendment to Tender Offer Statement Pursuant To Section 14(d)(1) of
the Securities Exchange Act of 1934
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PS PARTNERS VII, LTD.,
A CALIFORNIA LIMITED PARTNERSHIP
(Name of Subject Company)
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Public Storage, Inc.
(Bidder)
_________________
Units of Limited Partnership Interest
(Title of Class of Securities)
_________________
NONE
(CUSIP Number of Class of Securities)
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DAVID GOLDBERG
Public Storage, Inc.
701 Western Avenue, Suite 200,
Glendale, California 91201-2397
(818) 244-8080
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidder)
_________________
Introduction
This statement is an amendment to the Schedule 14D-1 which was
filed by Public Storage, Inc. ("PSI") with the Securities and Exchange
Commission on June 17, 1996 with respect to the offer by PSI to
purchase up to 10,000 of the limited partnership units ("Units") in
PS Partners VII, Ltd., a California Limited Partnership (the
"Partnership") at a net cash price per Unit of $357.
Item 10. Additional Information.
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(a)-(e) Not applicable.
(f) The third paragraph under the heading "Position of the
General Partners With Respect to the Offer" in the Offer to Purchase,
previously filed as Exhibit (a)(1) is replaced by the following:
In 1992, the Company offered Unitholders of the Partnership
(and two other affiliated Partnerships) the right to exchange their
Units for shares of the Company's Common Stock. In connection with the
exchange offer, the General Partners indicated to Unitholders that they
would continue to evaluate the advisability of the sale or financing
of the Partnership's properties and that at some point prior to the
expiration of the period originally estimated for the sale or financing
of the properties (at the end of 1995 in the case of the Partnership),
the General Partners intended to conduct an analysis to determine the
feasibility of a sale or financing of the properties, to make a
recommendation to Unitholders and to retain independent appraisers to
conduct a study of the current value of the properties. In that regard,
the Partnership engaged Lawrence R. Nicholson, MAI, a principal with the
firm of Nicholson-Douglas Realty Consultants, Inc. ("NDRC") to perform
a limited investigation and appraisal of the Partnership's property
portfolio. In a letter appraisal report dated December 7, 1995, NDRC
indicated that, based on the assumptions contained in the report, the
aggregate market value of the Partnership's 22 properties (consisting
not only of the Partnership's interest but also including the Company's
interest), as of September 30, 1995, was $65,600,000 ($60,800,000 for
the 22 mini-warehouses and $4,800,000 for the two business parks).
NDRC's report is limited in that NDRC did not inspect the properties and
relied primarily upon the income capitalization approach in arriving at
its opinion. NDRC's aggregate value conclusion represents the 100%
property interests, and although not valued separately, includes both
the interest of the Partnership in the properties, as well as the
interest of the Company, which owns a joint venture interest (ranging
from about 10% to 60%) in 20 of the 22 properties. The analytical
process that was undertaken in the appraisal included a review of the
properties' unit mix, rental rates and historical financial statements.
Following these reviews, a stabilized level of net operating income was
projected for the properties (an aggregate of $6,271,000 for the 20
mini-warehouses and $489,000 for the two business parks). In the case
of the mini-warehouses, value estimates were then made using both direct
capitalization analysis ($62,800,000) and a discounted cash flow
analysis ($60,700,000). In applying the discounted cash flow analysis
to the mini-warehouses, projections of cash flow from each property were
developed for an 11-year period ending in the year 2006. Growth rates
for income and expenses were assumed to be 3.5% per year. NDRC then
used a terminal capitalization rate of 10.5% to capitalize each
property's 11th year net operating income into a residual value at
the end of the holding period. The ten yearly cash flows plus the
residual or reversionary proceeds net of sales costs were then
discounted to present worth using a discount rate of 13.25%. In the
direct capitalization analysis, NDRC applied a 10% capitalization rate
to the mini-warehouses' stabilized net operating income. These value
estimates were then compared to an estimated value ($59,700,000) using
a regression analysis applied to a sample of approximately 300 sales of
mini-warehouses to evaluate the reasonableness of the estimates using
the direct capitalization and discounted cash flow analysis.
The business parks were valued using a direct capitalization
analysis by applying a 10% capitalization rate to the business parks'
stabilized net operating income. NDRC did not appraise the
Partnership's property destroyed in 1992. NDRC has prepared other
appraisals for the General Partners and their affiliates and is expected
to continue to prepare appraisals for the General Partners and their
affiliates. No environmental investigations were conducted with
respect to the limited investigation of the Partnership's properties.
Accordingly, NDRC's appraisal did not take into account any
environmental cleanup or other costs that might be incurred in
connection with a disposition of the properties. Although there can be
no assurance, based on recently completed environmental investigations,
the Partnership is not aware of any environmental contamination of its
facilities material to its overall business or environmental condition.
In addition to assuming compliance with applicable environmental laws,
the appraisal also assumed, among other things, compliance with
applicable zoning and use regulations and the existence of required
licenses.
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SIGNATURE
After reasonable inquiry and to the best of our knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, correct and complete.
Dated: July 11, 1996 PUBLIC STORAGE, INC.
By: /S/ HARVEY LENKIN
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Harvey Lenkin
President
