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OMB APPROVAL
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UNITED STATES OMB Number: 3235-0145
SECURITIES AND EXCHANGE COMMISSION Expires: October 31, 1994
WASHINGTON, D.C. 20549 Estimated average burden
hours per form .... 14.90
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SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. _________)*
Balcor/Colonial Storage Income Fund - 86
- --------------------------------------------------------------------------------
(Name of Issuer)
Interests in Limited Partnership
- --------------------------------------------------------------------------------
(Title of Class of Securities)
NONE
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(CUSIP Number)
David B.H. Martin, Jr., Hogan & Hartson L.L.P., 555 Thirteenth Street, NW,
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Washington, DC 20004, 202/637-5600
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
April 12, 1996
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Check the following box if a fee is being paid with the statement [X]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP NO. NONE 13D PAGE 2 OF 6 PAGES
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- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Public Storage, Inc.
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
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SEC USE ONLY
3
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [_]
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
California
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SOLE VOTING POWER
7
NUMBER OF 20,166.678
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
- 0 -
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 20,166.678
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
- 0 -
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
20,166.678
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
7.8%
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TYPE OF REPORTING PERSON*
14
CO
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*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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CUSIP NO. NONE PAGE 3 OF 6 PAGES
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ITEM 1. SECURITY AND ISSUER
This Statement on Schedule 13D relates to limited partnership
interests (the "Interests") in Balcor/Colonial Storage Income Fund - 86, an
Illinois Limited Partnership (the "Partnership"). The address of the principal
executive office of the Partnership is Balcor Plaza, 4849 Golf Road, Skokie,
Illinois 60077.
ITEM 2. IDENTITY AND BACKGROUND
This Statement is filed by Public Storage, Inc. (the "Company"), a
California corporation with its principal office located at 600 North Brand
Boulevard, Suite 300, Glendale, California 91203-1241. The Company is a REIT,
organized in 1980, that has invested primarily in existing mini-warehouses. The
Company has also invested to a much smaller extent in existing business parks
containing commercial and industrial rental space.
(d)-(e) During the last five years, the Company has not been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) and was not a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
the Company was not and is not subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The Company paid $1,883,422.38 to purchase 8,968.678 Interests on
April 12, 1996. Expenses (exclusive of the purchase price of the Interests) are
estimated at $125,000. The source of these funds was the Company's general
corporate funds.
ITEM 4. PURPOSE OF TRANSACTION
The Company believes that the acquisition of the Interests represents
a good investment for the Company and its shareholders. The Company has acquired
the Interests for investment purposes.
(a) On April 15, 1996, the Company disseminated to interest holders
an Offer to Purchase up to 77,000 of the outstanding Interests for $240 per
Interest (the "Offer to Purchase"). The expiration date of the Offer to Purchase
is May 14, 1996. The Offer to Purchase is annexed hereto as Exhibit 1 and is
incorporated herein by reference.
(b) Not applicable.
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CUSIP NO. NONE PAGE 4 OF 6 PAGES
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(c) On March 7, 1996, the Partnership sent a letter to interest
holders stating that its general partners had entered into a binding purchase
contract with Storage Trust Realty to sell all of the Partnership properties for
$67.1 Million (the "Contract"). The Contract is contingent upon, among other
things, approval by the holders of a majority of the outstanding Interests. The
Contract provides that the sale will be closed on May 15, 1996, subject to
extension to not later than July 15, 1996, as necessary to obtain interest
holder approval. The Company does not intend to vote the Interests it
currently owns or any Interests acquired pursuant to the Offer to Purchase for
the Contract. The Company may solicit in opposition to the Contract.
(d) The Company may seek to discuss the acquisition of Colonial
Storage Management, Inc., the manager of the Partnership's properties, or
otherwise seek to obtain the right to manage the Partnership's properties.
(e)-(j) Not applicable.
<PAGE>
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CUSIP NO. NONE PAGE 5 OF 6 PAGES
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ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) The Company beneficially owns 20,166.678 Interests in the
Partnership which represents 7.8% of the outstanding Interests.
(b) The Company has the sole power to vote 20,166.678 Interests, and
the sole power to dispose of 20,166.678 Interests, subject to the disclosure
regarding the Everest Balcor-86 Interests set forht in Item 5(c) herein.
(c) On March 21, 1996, the Company entered into an agreement with
Everest Storage Investors, LLC (the "Everest Agreement") for the purchase of
limited partnership interests in six different partnerships, including the
purchase of 10,999 Interests (the "Everest Balcor-86 Interests") for $240 per
Interest. The Everest Agreement was the result of direct negotiation between
the parties. The Everest Agreement, by its own terms, will close on a
partnership by partnership basis in one or more closings on or before
September 30, 1996. The Everest Agreement has not yet closed regarding the
Everest Balcor-86 Interests.
On April 12, 1996, the Company purchased from interest holders
8,968.678 Interests for $210 per Interest. These Interests were tendered in
response to an Offer to Purchase dated January 25, 1996, with an expiration date
of March 12, 1996, which was disseminated to interest holders by the Company.
On April 15, 1996, the Company disseminated to interest holders the
Offer to Purchase, which is annexed hereto as Exhibit 1 and incorporated herein
by reference.
(d)-(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER
On April 15, 1996, the Company disseminated to interest holders the
Offer to Purchase, which is annexed hereto as Exhibit 1 and incorporated herein
by reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1 - Offer to Purchase dated April 15, 1996
<PAGE>
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CUSIP NO. NONE PAGE 6 OF 6 PAGES
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Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement on Schedule 13D is
true, complete and correct.
Dated: April 22, 1996
PUBLIC STORAGE, INC.
By: /s/ Sarah Hass
-----------------------
Sarah Hass
Vice President
<PAGE>
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IF YOU HAVE ANY QUESTIONS ABOUT THIS OFFER, PLEASE CALL THE SOLICITING AGENT,
THE WEIL COMPANY, AT (800) 478-2605 OR PUBLIC STORAGE, INC.'S INVESTOR SERVICES
DEPARTMENT AT (800) 421-2856 OR (818) 244-8080. IF YOU NEED HELP IN COMPLETING
THE LETTER OF TRANSMITTAL, PLEASE CALL THE DEPOSITARY, THE FIRST NATIONAL BANK
OF BOSTON, AT (617) 575-3120.
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April 15, 1996
Re: Tender Offer for Interests in Balcor/Colonial Storage Income Fund
-----------------------------------------------------------------
- - 86
- ----
Dear Interest Holders:
Public Storage, Inc. (the "Company") is offering to purchase up to
77,000 of the limited partnership interests (the "Interests") in Balcor/Colonial
Storage Income Fund - 86 (the "Partnership") at a cash price per Interest of
$240 (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 77,000 Interests are validly tendered, the Company will
only accept up to 77,000 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
May 14, 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 77,000
Limited Partnership Interests of
Balcor/Colonial Storage Income Fund - 86, at
$240 Per Interest
by
Public Storage, Inc.
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THE OFFER, WITHDRAWAL RIGHTS AND THE PRORATION PERIOD WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON MAY 14, 1996, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
PUBLIC STORAGE, INC. (THE "COMPANY") IS OFFERING TO PURCHASE UP TO
77,000 LIMITED PARTNERSHIP INTERESTS (THE "INTERESTS") OF THE OUTSTANDING
LIMITED PARTNERSHIP INTERESTS IN BALCOR/COLONIAL STORAGE INCOME FUND - 86 (THE
"PARTNERSHIP") AT A CASH PRICE PER INTEREST OF $240 (THE "OFFER"). THE OFFER
PRICE WILL BE REDUCED BY THE AMOUNT PER INTEREST OF ANY PARTNERSHIP
DISTRIBUTION, OTHER THAN THE REGULAR QUARTERLY DISTRIBUTION RELATING TO
PARTNERSHIP OPERATIONS FOR THE FIRST QUARTER OF 1996. THE OFFER IS NOT
CONDITIONED UPON ANY MINIMUM NUMBER OF INTERESTS BEING TENDERED. IF MORE THAN
77,000 INTERESTS (32.5% OF THE OUTSTANDING INTERESTS, EXCLUDING INTERESTS
BENEFICIALLY OWNED BY THE COMPANY) ARE VALIDLY TENDERED, THE COMPANY WILL ACCEPT
ONLY 77,000 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,
The Weil Company, at (800) 478-2605. Any requests for assistance or additional
copies of the Offer to Purchase and the Letter of Transmittal may be directed to
the Company's Investor Services Department at (800) 421-2856 or (818) 244-8080.
If you need any help in completing the Letter of Transmittal, please call the
Depositary, The First National Bank of Boston, at (617) 575-3120. The
Soliciting Agent will receive .5% of the Offer Price for each Interest tendered
and accepted by the Company.
__________________
<PAGE>
. Offer Price May Not Represent Liquidation Value. Although the
-----------------------------------------------
Company cannot predict the future value of the Partnership's assets
on a per Interest basis, the Offer Price could be substantially
less than the net proceeds that would be realized on a per Interest
basis from a current sale of the properties or that may be realized
upon a future liquidation of the Partnership. The term of the
Partnership will expire on December 31, 2036, unless the
Partnership is dissolved sooner. See "Background and Purpose of the
Offer -- Background of the Offer" regarding a contract to purchase
the properties of the Partnership which, if consummated, would
cause a dissolution of the Partnership.
. 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 by the Company
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. See,
however, "Determination of Offer Price" for information regarding a
recent appraisal obtained by the Partnership, and "Background and
Purpose of the Offer -- Background of the Offer" regarding a
contract to purchase the properties of the Partnership which, if
consummated, would cause a dissolution of the Partnership.
. Attractive Investment for Company. The Company is making the Offer
---------------------------------
with a view to making a profit. Accordingly, there may be a
conflict between the desire of the Company to purchase Interests at
a low price and the desire of the 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 and other information with
the Securities and Exchange Commission (the "Commission"). Reports 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. Such material for
the Company can also be inspected at the New York Stock Exchange ("NYSE"), 20
Broad Street, New York, New York 10005.
(ii)
<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 45-01-19 New York, NY 10006 150 Royall Street
Boston, MA 02105 Mail Stop 45-01-19
Canton, MA 02021
(iii)
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page
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<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...................................................... 10
DETERMINATION OF OFFER PRICE................................................. 10
THE OFFER.................................................................... 11
Terms of the Offer........................................................ 11
Proration of Interests; Acceptance for Payment and Payment
for Interests............................................................ 12
Procedures for Tendering Interests........................................ 13
Withdrawal Rights......................................................... 14
Extension of Tender Period; Termination and Amendment..................... 14
Source of Funds........................................................... 16
Conditions of the Offer................................................... 16
Certain Fees and Expenses................................................. 17
Soliciting Agent.......................................................... 17
Dissenters' Rights and Investor Lists..................................... 17
Federal Income Tax Consequences........................................... 18
Miscellaneous............................................................. 19
EFFECTS OF OFFER ON NON-TENDERING INTEREST HOLDERS........................... 20
Significant Equity Interest............................................... 20
Effect on Trading Market.................................................. 20
Partnership Status........................................................ 20
Partnership Business...................................................... 20
Certain Restrictions on Transfer.......................................... 21
Effect on Exchange Act Regulation......................................... 21
MARKET PRICES OF INTERESTS................................................... 22
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.
(iv)
<PAGE>
To Interest Holders of Balcor/Colonial Storage Income Fund - 86:
SUMMARY
Interest Holders are urged to read carefully this Offer to Purchase,
including the matters discussed under "Special Considerations," and the
accompanying Letter of Transmittal before deciding whether to tender their
Interests.
Certain significant matters discussed in the Offer to Purchase are
summarized below. This summary is not intended to be a complete description and
is qualified in its entirety by reference to the more detailed information
appearing elsewhere in this Offer to Purchase. The Company is not a General
Partner of or otherwise affiliated with the Partnership. Certain information
contained herein which relates to the Partnership has been obtained from
publicly available information prepared by or on behalf of the Partnership.
Although the Company has no knowledge that would indicate that any statements
contained herein which are based on such documents are untrue, the Company
assumes no responsibility for the accuracy or completeness of such information
or for the failure by the Partnership to disclose facts or events which may have
occurred and which may have affected or may affect the significance or accuracy
of any such information but are unknown to the Company.
<TABLE>
<CAPTION>
The Company and the Partnership
<S> <C>
Balcor/Colonial Storage
Income Fund - 86.......... The Partnership was organized in 1986 and owns
interests in certain mini-warehouse and
office/warehouse properties. The General Partners
of the Partnership are Balcor Storage Partners -
86 and Colonial Storage 86, 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
8,950 holders of record owning 256,904 Interests.
The Company owns 9,167.678 Interests. Assuming
the purchase of the Everest Interests (defined
below), the Company will own 20,166.678 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."
</TABLE>
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<PAGE>
The Offer
<TABLE>
<S> <C>
Number of Interests............................................ 77,000 (32.5% of the outstanding Interests,
excluding Interests beneficially owned by the
Company).
Offer Price.................................................... $240 per Interest (the "Offer Price").
Expiration, Withdrawal and Proration Date ..................... May 14, 1996, unless extended. See "The Offer."
</TABLE>
Purpose of the Offer
The Company believes that the acquisition of Interests through the Offer
represents a good investment for the Company and its shareholders. The Company
is acquiring the Interests for investment purposes and has not finalized its
plans with respect to the Partnership. The Company's plans with respect to the
Partnership and the Company's ability to influence actions on which Interest
Holders have a right to vote, will depend on Interest Holders' response to the
Offer (i.e., the number of Interests tendered). See "Background and Purpose of
the Offer -- Purpose of the Offer."
Special Considerations
In their evaluation of the Offer, Interest Holders should carefully
consider the information contained under "Special Considerations."
-2-
<PAGE>
SPECIAL CONSIDERATIONS
In their evaluation of the Offer, Interest Holders should carefully
consider the following:
Determination of Offer Price. The Offer Price was established by the
----------------------------
Company and is not the result of arm's length negotiation.
Offer Price May Not Represent Liquidation Value. Although the Company
-----------------------------------------------
cannot predict the future value of the Partnership's assets on a per
Interest basis, the Offer Price could be substantially less than the
net proceeds that would be realized on a per Interest basis from a
current sale of the Partnership's 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.
See "Background and Purpose of the Offer -- Background of the Offer"
regarding a contract to purchase the properties of the Partnership
which, if consummated, would cause a dissolution of the Partnership.
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 by the Company 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. See, however, "Determination of
Offer Price" for information regarding a recent appraisal obtained by
the Partnership, and "Background and Purpose of the Offer --
Background of the Offer" regarding a contract to purchase the
properties of the Partnership which, if consummated, would cause a
dissolution of the Partnership.
Attractive Investment for Company. The Company is making the Offer
---------------------------------
with a view to making a profit. Accordingly, there may be a conflict
between the desire of the Company to purchase Interests at a low price
and the desire of the Interest Holders 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, 2036, 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. The Partnership has entered into a
purchase contract to sell all of the Partnership properties which
provides that the sale will be closed on May 15, 1996, subject to
extension to not later than July 15, 1996 as necessary to obtain
investor approval. See "Background and Purpose of the Offer --
Background of the Offer." Such a sale of all of the Partnership
properties, if consummated, would cause a dissolution of the
Partnership.
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
-3-
<PAGE>
Partnership so long as such Interest Holder disposes of his or her
entire interest in the Partnership. In addition, such losses may be
used to the extent thereof to offset gain recognized, if any, from the
tender by an Interest Holder pursuant to the Offer. An Interest Holder
would realize a taxable loss (likely a capital loss) in connection
with a tender pursuant to the Offer to the extent that the Interest
Holder's tax basis in his or her Interest exceeds the Offer Price; on
the other hand, an Interest Holder would realize a taxable gain to the
extent that the Offer Price exceeds the Interest Holder's tax basis in
his or her Interest. The Offer may also be attractive to Interest
Holders who wish in the future to avoid the expenses, delays and
complications in filing complex income tax returns which result from
ownership of the Interests. All Interest Holders should consult with
their own tax advisors with specific reference to their own tax
situations.
Voting Power. Interest Holders cannot participate in the management
------------
or control of the Partnership's business, except insofar as Interest
Holders are entitled to vote as permitted by the Partnership
Agreement. Pursuant to the Partnership Agreement, the written consent
of Balcor Storage Partners - 86, 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 33.5% of
the outstanding Interests. Assuming, in addition, the purchase of the
Everest Interests (defined below), the Company will own and be able to
vote approximately 37.8% of the outstanding Interests. The Company
could then be in a position to influence decisions of the Partnership
on which Interest Holders are entitled to vote. Under the Partnership
Agreement, Interest Holders are entitled to vote, subject to certain
provisions of the Partnership Agreement, to: (i) approve any proposed
sale of all or substantially all 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; (iv) approve any amendment of
the Partnership Agreement; and (v) convert the Partnership into a real
estate investment trust. Except as described under "Background and
Purpose of the Offer -- Purpose of the Offer," the Company has no
current intention with regard to any of these matters. The Company
will vote the Interests acquired pursuant to the Offer in its
interest, which may, or may not, be in the best interests of non-
tendering Interest Holders.
Lack of Trading Market. There is no established or regular trading
----------------------
market for the Interests, nor is there another reliable standard for
determining the fair market value of an Interest. Interest Holders
who desire liquidity may wish to consider the Offer. The Offer
affords Interest Holders an opportunity to dispose of their Interests
for cash, which alternative otherwise might not be available to them.
However, the Offer Price is not intended to represent either the fair
market value of an Interest or the fair market value of the
Partnership's assets on a per Interest basis.
Alternatives to Tendering Interests. As alternatives to tendering
-----------------------------------
their Interests, Interest Holders could retain their Interests until
liquidation of the Partnership or seek a private sale of their
Interests now or later. Under the Partnership Agreement, the
Partnership can be dissolved upon the agreement by Interest
-4-
<PAGE>
Holders holding a majority of the then-outstanding Interests owned by
Interest Holders.
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.
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 MAY 14,
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 May 1986,
which raised $64,226,000 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 and office/warehouse
facilities.
The Partnership acquired four mini-warehouse properties in 1986 and
seven mini-warehouse properties in 1987 from affiliates of one of the General
Partners. In addition, the Partnership acquired from non-affiliated entities
four mini-warehouse facilities in 1987 and nine mini-warehouse facilities in
1988. 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 -
86 and Colonial Storage 86, Inc. The Partnership's properties are managed by
Colonial, an affiliate of one of the General Partners of the Partnership.
Set forth below is Selected Financial Data for the Partnership which
was excerpted from the information contained in the Partnership's Form 10-K
dated December 31, 1995, which was filed with the Commission. More
comprehensive financial information is included in this report and other
documents filed by the Partnership with the Commission, and the following
information is qualified in its entirety by reference to such report and other
documents and all of the financial information and notes contained therein.
This report and other documents may be examined and copies may be obtained in
the manner described below.
-5-
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
1991 1992 1993 1994 1995
------ ----------- ------ ------ ------
(In thousands, except per Interest data)
<S> <C> <C> <C> <C> <C>
Operating Data:
Rental income............ $6,838 $7,175 $7,704 $8,385 $8,822
Interest income.......... 133 77 60 97 145
Net income............... 2,339 2,650 3,149 3,910 4,269
General Partners' share
of net income.......... 23 27 31 39 43
Limited Partners' per
Interest data (1):
Net income............... 9.01 10.21 12.14 15.07 16.45
Distributions............ 16.12 16.49 17.07 17.89 19.91
<CAPTION>
As of December 31,
------------------
1995
----
Balance Sheet Data:
Total cash and cash
equivalents............ $ 3,775,644
Total mini-warehouse
facilities, net........ 41,768,686
Total assets............. 45,544,330
Total liabilities........ 872,197
Partners' capital........ 44,672,133
</TABLE>
______________________
(1) Limited Partners' per Interest data is based on the number of Interests
(256,904) outstanding during the year.
-6-
<PAGE>
The Partnership is subject to the informational filing requirements of
the Exchange Act and is required to file reports and other information with the
Commission relating to its business, financial condition and other matters.
These reports and other information filed by the Partnership may be inspected
and copied at the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the
Regional Offices of the Commission at 7 World Trade Center, 13th Floor, New
York, New York 10048, and Citicorp Center, Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661-2511. Copies of such information can also be obtained
by mail from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates.
The Company
The Company is a REIT, organized in 1980 as a corporation under the
laws of California, that has invested primarily in existing mini-warehouses.
The Company is the largest owner of mini-warehouses in the United States. The
Company has also invested to a much smaller extent in existing business parks
containing commercial and industrial rental space. At December 31, 1995, the
Company had equity interests (through direct ownership, as well as general and
limited partnership and capital stock interests) in 1,044 properties located in
37 states, consisting of 1,009 mini-warehouses facilities and 35 business parks.
The Company's common stock (symbol "PSA") and eight series of preferred stock
are traded on the NYSE.
The Company's principal executive offices are located at 600 North
Brand Boulevard, Suite 300, Glendale, California 91203. Its telephone number
is (818) 244-8080. Information with regard to the Company's officers and
directors is set forth in Schedule 2, attached hereto.
Set forth below is certain summary financial data for the Company:
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------------
1992 1993 1994 1995
---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C>
Operating Data:
Total revenues................ $ 97,448 $ 114,680 $ 147,196 $ 202,134
Depreciation and amortization. 22,405 24,998 28,274 40,760
Interest expense.............. 9,834 6,079 6,893 8,508
Minority interest in income... 6,895 7,291 9,481 7,137
Net income.................... 15,123 28,036 42,118 70,386
<CAPTION>
December 31, 1995
-------------------------
Actual
------
<S> <C>
Balance Sheet Data:
Total assets.................. $ 1,937,461
Total debt.................... 190,585
Shareholders' equity.......... 1,634,508
</TABLE>
Additional information concerning the Company is set forth in the
reports on the Company, which may be obtained from the Company, the Commission
or the NYSE, in the manner described inside the front cover of this Offer to
Purchase.
-7-
<PAGE>
Background of the Offer
On July 27, 1993, the President of the Company sent a letter to the
President of Balcor Storage Partners - 86 setting forth a proposal to purchase
the Partnership's properties for $41.5 million. The Company was subsequently
informed through a business associate that the Partnership was not interested in
the proposal.
On September 28, 1993, the President of the Company sent a letter to
the President of Balcor Storage Partners - 86 stating that the Company was
prepared to make an offer for the Interests and requesting the General Partner
to confirm that the Partnership would remain neutral in connection with such an
offer. On October 11, 1993, the President of Balcor Storage Partners - 86 sent
a letter to the President of the Company stating that the Partnership was not in
a position to state whether it would remain neutral in connection with an offer
by the Company, that it had rejected the offer described in the Company's July
27 letter out of a belief that the price offered was insufficient to provide
adequate returns to investors, and that the General Partners would consider
selling properties owned by the Partnership where such sales were in the best
interests of the Partnership.
On October 19, 1993, the President of the Company sent a letter to the
President of Balcor Storage Partners - 86 stating that the Company was prepared
to make a tender offer for the Interests on the following terms: (1) the offer
would be for up to 62,000 Interests; (2) the offer would be for $161.54 cash per
Interest (this price was based on the Company's July 27, 1993 offer for the
Partnership's properties); and (3) the offer would be commenced promptly and
would be conditioned upon the General Partner's agreement to substitute the
Company as a Limited Partner. On November 3, 1993, the President of Balcor
Storage Partners - 86 sent a letter to the President of the Company stating that
the Partnership did not wish to discourage occasional purchases of Interests by
the Company, but that it had a fiduciary duty to assure compliance with the
publicly traded partnership rules for tax purposes.
On November 8, 1993, the President of the Company sent a letter to the
President of Balcor Storage Partners - 86 offering to furnish to the General
Partner a tax opinion satisfactory to the General Partner and its counsel that
the Company's proposed offer should not cause the Partnership to be taxed as a
"publicly traded partnership" within the meaning of the applicable tax statutes
and rules. On November 16, 1993, the President of Balcor Storage Partners - 86
responded by letter to the President of the Company referencing the General
Partner's prior letters indicating additional concerns regarding the Company's
proposal, and stating that the General Partner continued to believe that the
Company's offer was insufficient and would not provide a fair return to Limited
Partners. The letter concluded with a statement that the General Partner was
not in a position to remain neutral to the Company's proposed offer for the
Interests.
No agreements, understandings or arrangements were reached.
Beginning in August 1995 and continuing until 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 - 85, and a possible acquisition by the
Company of the business of Colonial, the Partnership's property manager, by
merger or otherwise. No arrangements, understandings or agreements were
reached.
-8-
<PAGE>
Beginning in September 1995, the Company purchased in secondary market
transactions the following Interests in the Partnership:
<TABLE>
<CAPTION>
Purchase Date Interests Price Per Interest
------------- --------- ------------------
<S> <C> <C>
09/27/95 163 $219.00
09/28/95 28 217.51
10/04/95 8 215.00
</TABLE>
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 an offer to purchase the
Interests. 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
tender offers.
Subsequently, there were discussions between officers and agents of
the Company and representatives of the Partnership in which the Company was
advised that Everest Storage Investors, LLC ("Everest") had commenced a tender
offer to purchase up to 4.9% of the Interests at $160 per interest. The Company
advised the Partnership that it too intended to make a tender offer.
On January 25, 1996, the Company disseminated an offer to purchase up
to 64,226 Interests, 25% of the outstanding Interests, at a net cash price per
Interest of $200 (the "First Offer").
On January 29, 1996, the Partnership sent a letter to Interest Holders
in which the General Partners advised Interest Holders to defer making a
determination as to whether to accept or reject the First Offer, and stating
that the General Partners would respond in writing to Interest Holders with
respect to the First Offer on or before February 9, 1996.
On February 7, 1996, the Partnership sent a letter to Interest Holders
and filed a Schedule 14D-9 with the Commission in which the General Partners
stated that they were "expressing no opinion and are remaining neutral" with
respect to the First Offer. The General Partners also referenced a report
prepared for the Partnership by the Valuation Counselors Group and Darby &
Associates, Joint Venture (the "Darby Report") setting forth a preliminary
estimate of a present value per Interest of $280 as of December 31, 1995, based
upon an estimate of the present value of the Partnership's future cash flows and
the sale of the Partnership's assets at year-end 2000, adjusted for (A) the
current assets and current liabilities of the Partnership, (B) the present value
of the Partnership's administrative costs, including management fees, and
(C) the anticipated costs of dissolution and termination of the Partnership. The
General Partners indicated that this calculation does not represent the amount
an Interest Holder would receive if the Partnership were to sell its remaining
assets in the near future.
On February 23, 1996, the Partnership sent a letter to Interest
Holders and filed Amendment No. 1 to its Schedule 14D-9 stating that its
position with respect to the First Offer had not changed and informing Interest
Holders of a non-binding proposal from Storage Trust Realty ("STR") to purchase
all of the Partnership's properties for a purchase price of $61 million.
On March 7, 1996, the Partnership sent a letter to Interest Holders
and filed Amendment No. 2 to its Schedule 14D-9 stating that the General
Partners had entered into a binding purchase contract with STR to sell all of
the Partnership properties for $67.1 million (the "Contract"). The Contract is
contingent upon, among other things, approval by the holders of a majority of
the outstanding Interests. The Contract provides that the sale will be closed
on May 15,
-9-
<PAGE>
1996, subject to extension to not later than July 15, 1996, as necessary to
obtain Interest Holder approval. The General Partners estimated that if the sale
is consummated and if no adjustments to the purchase price are made, such sale
(together with the distributable cash in the Partnership) would result in a
liquidating distribution to Interest Holders of approximately $255 per Interest,
after deducting professional fees, commissions and dissolution expenses. The
General Partners indicated, however, that even in the event such sale is
consummated, there can be no assurance that this level of liquidating
distribution will actually be paid to Interest Holders.
The First Offer expired on March 12, 1996. At the expiration of the
First Offer, 9,679.698 Interests, representing approximately 3.77% of the
outstanding Interests, had been tendered. The Company accepted for payment
8,968.678 of these Interests, representing all of the validly tendered
Interests. Subsequent to the expiration of the First Offer, the Company offered
to purchase for $240 per Interest the Interests acquired by Everest in its
tender offer, and on March 21, 1996, the Company and Everest entered into an
agreement for the purchase of 10,999 Interests (the "Everest Interests") at that
price. The Company owns 9,167.678 Interests, or approximately 3.6% of the
outstanding Interests. Assuming the purchase of the Everest Interests, the
Company will own 20,166.678 Interests, or approximately 7.8% of the outstanding
Interests.
Purpose of the Offer
The Company believes that the acquisition of Interests through the
Offer represents a good investment for the Company and its shareholders. The
Company is acquiring the Interests for investment purposes and has not finalized
its plans with respect to the Partnership. The Company's plans with respect to
the Partnership and the Company's ability to influence actions on which Interest
Holders have a right to vote, will depend on Interest Holders' response to the
Offer (i.e., the number of Interests tendered). The Company does not intend to
vote the Interests it currently owns or any Interests acquired in the Offer for
the Contract. The Company may solicit opposition to the Contract. Depending on
the number of Interests acquired by the Company in the Offer, the Company may
seek to renew discussions regarding the acquisition of Colonial or otherwise
seek to obtain the right to manage the Partnership's properties.
Following the completion of the Offer, the Company may acquire
additional Interests. Any such acquisitions may be made through private
purchases, through one or more future tender offers or by any other means deemed
advisable by the Company. Any such acquisitions may be at a price higher or
lower than the Offer Price.
DETERMINATION OF OFFER PRICE
The Offer Price has been established by the Company and is not the
result of arm's length negotiations between the Company and the Partnership.
The Company established the Offer Price based on its own independent analysis of
the Partnership.
In connection with the First Offer, the Company performed an analysis
of the Partnership by (i) applying to the Partnership's properties net operating
income (nine months ended September 30, 1995 annualized), as adjusted for the
Partnership's general and administrative expenses and a reduction for estimated
capital expenditures (2.5% of rental income), a capitalization rate of 10.5%,
(ii) adding the Partnership's other net assets, primarily cash and cash
equivalents and (iii) deducting the distribution paid to Interest Holders in
October 1995. Based on this analysis, the Company arrived at a price of $200.
On February 7, 1996, the Partnership filed a Schedule 14D-9 with the
Commission that referenced a preliminary estimate contained in the Darby Report
that, as of December 31,
-10-
<PAGE>
1995, the value of an Interest was $280, based upon an estimate of the present
value of the Partnership's future cash flows and the sale of the Partnership's
assets at year-end 2000, adjusted for (A) the current assets and current
liabilities of the Partnership, (B) the present value of the Partnership's
administrative costs, including management fees, and (C) the anticipated costs
of dissolution and termination of the Partnership. The Partnership indicated
that this calculation does not represent the amount an Interest Holder would
receive if the Partnership were to sell its remaining assets in the near future.
Subsequent to the expiration of the First Offer, the Company offered
to purchase for $240 per Interest the Interests acquired by Everest in its
tender offer, and on March 21, 1996, the Company and Everest entered into an
agreement for the purchase of 10,999 Interests at that price.
As described under "Background and Purpose of the Offer -- Background
of the Offer," if the properties are sold pursuant to the Contract, and no
adjustments are made, the General Partners estimate that the sale would result
in a liquidating distribution of $255 per Interest. The Company has
unilaterally adjusted this amount to reflect the possibility that Interest
Holders will not receive a liquidating distribution in that amount and has
arrived at an Offer Price of $240. The Offer Price reflects a capitalization
rate of approximately 8.74% to Partnership's net operating income for the period
and after the adjustments described above (compared to a capitalization rate of
10.5% at a price of $200 per Interest).
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 77,000
Interests. The term "Expiration Date" shall mean 5:00 P.M., New York City time,
on May 14, 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 $240 per Interest. The Offer Price will be reduced
by the amount per Interest of any Partnership distribution, other than the
regular quarterly distribution relating to Partnership operations for the first
quarter of 1996. Interest Holders who tender their Interests will not be
obligated to pay partnership transfer fees or commissions.
The Offer is conditioned on satisfaction of certain conditions as set
forth herein. The Company reserves the right (but shall not be obligated), in
its discretion, to waive any or all of such conditions. If, by the Expiration
Date, any or all of such conditions have not been satisfied or waived, the
Company reserves the right (but shall not be obligated) to (i) decline to
purchase any of the Interests tendered and terminate the Offer, (ii) waive all
the unsatisfied conditions and, subject to complying with applicable rules and
regulations of the Commission, purchase all Interests validly tendered,
(iii) extend the Offer and, subject to the right of Interest Holders to withdraw
Interests until the Expiration Date, retain the Interests that have been
tendered during the period or periods for which the Offer is extended or
(iv) amend the Offer.
The Company owns 9,167.678 Interests, or approximately 3.6% of the
outstanding Interests. If all 77,000 Interests are validly tendered and
accepted for payment, the Company will own approximately 33.5% of the
outstanding Interests upon completion of the Offer. Assuming, in
-11-
<PAGE>
addition, the purchase of the Everest Interests, the Company will own 97,166.678
Interests, or approximately 37.8% of the outstanding Interests.
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 77,000 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 77,000 Interests, the
Company, upon the terms and subject to the conditions of the Offer, will accept
for payment only 77,000 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
validly tendered or return those Interests promptly after the termination or
withdrawal of the Offer, the Company does not intend to pay for any Interests
accepted for payment pursuant to the Offer until the final proration results are
known. Notwithstanding any such delay in payment, no interest will be paid on
the Offer Price.
Upon the terms and subject to the conditions of the Offer (including,
if the Offer is extended or amended, the terms and conditions of any extension
or amendment), the Company will accept for payment, and will pay for, Interests
validly tendered and not withdrawn in accordance with the Offer, as promptly as
practicable following the Expiration Date. In all cases, payment for Interests
purchased pursuant to the Offer will be made only after timely receipt by the
Depositary of a properly completed and duly executed Letter of Transmittal and
any other documents required by the Letter of Transmittal.
For purposes of the Offer, the Company shall be deemed to have
accepted for payment (and thereby purchased) tendered Interests when, as and if
the Company gives oral or written notice to the Depositary of the Company's
acceptance for payment of such Interests pursuant to the Offer. No tender of
Interests will be deemed to have been validly made until all defects and
irregularities have been cured or waived. Upon the terms and subject to the
conditions of the Offer, payment for Interests purchased pursuant to the Offer
will in all cases be made by deposit of the purchase price with the Depositary,
which will act as agent for the tendering Interest Holders for the purpose of
receiving payment from the Company and transmitting payment to tendering
Interest Holders. Under no circumstances will interest be paid on the Offer
Price by reason of any delay in making such payment.
If any tendered Interests are not accepted for payment pursuant to the
Offer for any reason, the Letter of Transmittal with respect to such Interests
not purchased will be destroyed by the Depositary. If acceptance for payment
of, or payment for, any Interests tendered pursuant to the Offer is delayed or
the Company is unable to accept for payment, or pay for, Interests tendered
pursuant to the Offer, then, without prejudice to the Company's rights under the
Offer (but subject to compliance with Rule 14e-1(c)) under the Exchange Act),
the Depositary may, nevertheless, on behalf of the Company, retain tendered
Interests, subject to any limitations of applicable law, and such Interests may
not be withdrawn except to the extent that the tendering Interest Holders are
entitled to withdrawal rights as described in the Offer.
-12-
<PAGE>
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 May 14,
1996 (unless extended).
The method of delivery of the Letter of Transmittal and all other
required documents is at the option and risk of the tendering Interest Holder,
and delivery will be deemed made only when actually received by the Depositary.
If delivery is by mail, registered mail, with return receipt requested, properly
insured, is recommended. In all cases, sufficient time should be allowed for
timely delivery.
By executing a Letter of Transmittal as set forth above, a tendering
Interest Holder irrevocably constitutes and appoints the Company and any
designee of the Company as the true and lawful attorney in fact and proxy of
such Interest Holder, in the manner set forth in the Letter of Transmittal, with
full power of substitution, to the full extent of such Interest Holder's rights
with respect to the Interests tendered by such Interest Holder and accepted for
payment by the Company. All such proxies will be considered coupled with an
interest in the tendered Interests. Such appointment will be effective when,
and only to the extent that, the Company accepts such Interests for payment.
Upon such acceptance for payment, (i) all prior proxies given by such Interest
Holder with respect to such Interests will, without further action, be revoked,
except the irrevocable proxy granted to the General Partners pursuant to
Article XXI of the Partnership Agreement, (ii) no subsequent proxies may be
given (and if given will not be effective) and (iii) the Company will be
empowered to exercise all voting and other rights of such Interest Holder with
respect to such Interests as the Company in its sole discretion may deem proper
at any meeting of Interest Holders, by written consent or otherwise. The Offer
is not contingent upon the Company being made a substituted Limited Partner. If
the Company is not made a substituted Limited Partner, upon acceptance for
payment of the Interests, the Company shall be entitled to the full rights and
benefits of an assignee of the Interests, including, but not limited to, all
economic benefits of ownership and all voting rights.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for payment of any tender of Interests pursuant to the
procedures described above will be determined in the discretion of the Company,
which determination shall be final and binding. The Company reserves the
absolute right to reject any or all tenders if not in proper form or if the
acceptance of, or payment for, the Interests tendered may be unlawful in the
opinion of the Company's counsel. The Company also reserves the right to waive
any defect or irregularity in any tender with respect to any particular
Interests of any particular Interest Holder, and the Company's
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<PAGE>
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 June 14, 1996.
For withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of the
addresses set forth on the back cover of this Offer to Purchase. Any such
notice of withdrawal must specify the name of the person who tendered the
Interests to be withdrawn, the number of Interests to be withdrawn, and must be
signed by the person(s) who signed the Letter of Transmittal in the same manner
as the Letter of Transmittal was signed. The signature(s) on the notice of
withdrawal must be guaranteed by an eligible guarantor institution (a bank,
stockbroker, savings and loan association or credit union with membership in an
approved signature guarantee medallion program).
If acceptance for payment of, or payment for, Interests is delayed for
any reason or if the Company is unable to accept for payment, or pay for,
Interests for any reason, without prejudice to the Company's rights under the
Offer, tendered Interests may be retained by the Depositary on behalf of the
Company and may not be withdrawn except to the extent that tendering Interest
Holders are entitled to withdrawal rights as set forth herein, subject to
Rule 14e-1(c) under the Exchange Act, which provides that no person who makes a
tender offer shall fail to pay the consideration offered or return the
securities deposited by or on behalf of security holders promptly after the
termination or withdrawal of the tender offer.
All questions as to the form and validity (including timeliness of
receipt) of notices of withdrawal will be determined by the Company, in its sole
discretion, which determination shall be final and binding. Neither the
Company, the Depositary, nor any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
will incur any liability for failure to give any such notification.
Any Interests properly withdrawn will be deemed not to be validly
tendered for purposes of the Offer. Withdrawn Interests may be re-tendered,
however, by following any of the procedures described in the Offer at any time
prior to the Expiration Date.
Extension of Tender Period; Termination and Amendment
The Company expressly reserves the right, in its discretion, at any
time and from time to time, (i) to extend the period of time during which the
Offer is open and thereby delay
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<PAGE>
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 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
-15-
<PAGE>
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 $18,675,000 is necessary to
consummate the Offer, including related fees and expenses, assuming all 77,000
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 validly
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;
(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
-16-
<PAGE>
(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.
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 77,000 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 $195,000: including legal and accounting fees and
expenses ($15,000), printing ($10,000), Depositary fees and expenses ($20,000),
Soliciting Agent fees and expenses ($120,000), distribution of Offer materials
($15,000) and miscellaneous ($15,000).
Soliciting Agent
The Company has retained The Weil Company, a registered broker dealer,
to answer questions and solicit responses to this transaction. The Company will
pay The Weil Company .5% of the Offer Price for each Interest tendered and
accepted by the Company. In addition, The Weil Company will be reimbursed for
certain out-of-pocket expenses up to a maximum of $25,000 and will be
indemnified against certain liabilities, including liabilities under the federal
securities laws. The Weil Company has acted in a similar capacity in connection
with other tender and exchange offers by the Company and in soliciting consents
from the limited partners of other partnerships sponsored by the Company or its
affiliates.
Dissenters' Rights and Investor Lists
Neither the Partnership Agreement nor Illinois law provides any right
for Interest Holders to have their respective Interests appraised or redeemed in
connection with or as a result of the Offer. Each Interest Holder has the
opportunity to make an individual decision on whether or not to tender in the
Offer. Under the Partnership Agreement, (i) the Partnership shall furnish a
-17-
<PAGE>
list of names and addresses of and Interests held by all Partners to any
Interest Holder who requests such a list in writing for any proper purpose, such
cost to be borne by the requesting Interest Holder, 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.
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.)
-18-
<PAGE>
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.
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).
-19-
<PAGE>
EFFECTS OF OFFER ON NON-TENDERING INTEREST HOLDERS
Significant Equity Interest
After the Offer, the Company could own up to approximately 33.5% of
the Interests. Assuming, in addition, the purchase of the Everest Interests,
the Company could own up to approximately 37.8% 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 Interest Holders are entitled to vote. Interest Holders cannot
participate in the management or control of the Partnership's business, except
insofar as the Interest Holders are entitled to vote as permitted by the
Partnership Agreement. Under the Partnership Agreement, Interest Holders 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; (iv) approve any amendment of the Partnership
Agreement; and (v) convert the Partnership into a real estate investment trust.
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. See "Background and Purpose of the Offer -- Purpose of the
Offer" for further description of the Company's intentions regarding the
Interests.
Effect on Trading Market
There is no established public trading market for the Interests, and
it is not anticipated that one will develop. Accordingly, a reduction in the
number of Interest Holders should not materially further restrict the Interest
Holders' ability to find purchasers for their Interests.
Partnership Status
The Company does not believe that the purchase of Interests by the
Company, as proposed, will adversely affect whether the Partnership is
classified as a partnership for federal income tax purposes.
Partnership Business
The Company does not believe that the Offer will materially affect the
operation of the properties owned by the Partnership.
Although after the Offer the Company may acquire additional Interests
thereby increasing its ownership position in the Partnership, the Company has no
present plans or intentions with respect to the Partnership for a liquidation, a
merger, a sale or purchase of material assets or borrowings.
-20-
<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 30% of the outstanding Interests), and taking into account
normal historical levels of transfers of Interests (to the extent known to the
Company) and the Company's recent purchases of Interests, 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.
-21-
<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 recently purchased 8,968.678
Interests at $200 per Interest through an Offer to Purchase distributed to
Interest Holders. The Company also recently agreed to purchase 10,999 Interests
at $240 per Interest from Everest. 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.
Due in part to the inefficiency of the secondary markets, there can be no
assurances that future secondary trades will occur or result in similar prices.
The information regarding sale transactions in Interests from The
Stanger Report is as follows:
<TABLE>
<CAPTION>
Reporting Period Per Interest Transaction Price(1) No. of
---------------- --------------------------------- ------
High Low Interests(2)
---- --- ------------
<S> <C> <C> <C>
1993
----
January 1 - March 31 $162.00 $120.00 365
April 1 - June 30 166.00 115.00 433
July 1 - September 30 183.00 140.00 416
October 1 - December 31 187.00 142.00 608
1994
----
January 1 - March 31 200.00 150.00 428
April 1 - June 30 199.00 175.00 441
July 1 - September 30 199.00 169.00 996
October 1 - December 31 205.00 140.00 (Not Available)
1995
----
January 1 - March 31 210.00 150.00 495
April 1 - June 30 218.03 175.00 700
July 1 - September 30 229.00 180.00 502
September 1 - November 30 225.00 195.00 701
</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.
-22-
<PAGE>
* * *
No person has been authorized to make any recommendation or
representation on behalf of the Company or to provide any information other than
that contained herein or in the Letter of Transmittal. No such recommendation,
information or representation may be relied upon as having been authorized.
PUBLIC STORAGE, INC.
600 North Brand Boulevard, Suite 300
Glendale, California 91203-1241
By: /s/ Harvey Lenkin
--------------------------
Harvey Lenkin
President
April 15, 1996
-23-
<PAGE>
SCHEDULE 1
PARTNERSHIP PROPERTIES
As of December 31, 1995, the Partnership owned the properties described below:
<TABLE>
<CAPTION>
Net
Rentable
Land Area No. of
Area (Square Rentable
Location (Acres) Feet) Spaces
-------- ------- --------- ------
<S> <C> <C> <C>
201 Cobb Parkway 3.1 47,980 431
Marietta, Georgia
6390 Winchester Road 2.3 39,444 360
Memphis, Tennessee
5675 Summer Avenue 2.4 46,010 377
Memphis, Tennessee (1)
2064 Briarcliff 2.8 45,700 174
Atlanta, Georgia (2)
4333 Jackson Drive 3.1 72,572 612
Garland, Texas
321 East Buckingham Road 2.1 40,701 299
Garland, Texas
3218 South Garnett Road 3.7 57,540 464
Tulsa, Oklahoma
5708 Fort Caroline Road 3.7 67,925 768
Jacksonville, Florida
3401 Avenue K 4.7 87,654 897
Plano, Texas (3)
4301 and 4324 Poplar Level Road 4.1 81,892 798
Louisville, Kentucky (4)
2719 Morse Road 4.3 62,190 518
Columbus, Ohio
5036 Cleveland Avenue 5.0 65,086 583
Fort Myers, Florida
3281 Western Branch Boulevard 5.5 75,201 747
Chesapeake, Virginia
</TABLE>
1-1
<PAGE>
<TABLE>
<CAPTION>
Net
Rentable
Land Area No. of
Area (Square Rentable
Location (Acres) Feet) Spaces
-------- ------- --------- ------
<S> <C> <C> <C>
2300 Kangaroo Drive 4.0 47,502 657
Durham, North Carolina
23 W 650 Roosevelt Road 5.6 48,145 550
Winfield, Illinois (5)
1131 Semoran Boulevard 3.9 67,159 641
Casselberry, Florida
36 Pine Knoll Road 4.2 50,325 446
Greenville, South Carolina (6)
750 East Third Street 3.3 55,700 450
Lexington, Kentucky
1900 U.S. Highway 19 South 5.4 80,732 748
Tarpon Springs, Florida
7415 West Dean Road 11.7 205,190 1,107
Milwaukee, Wisconsin (7)
W229 N590 Foster Court and 3.0 49,632 219
N5 W22966 Bluemound Road
Waukesha, Wisconsin (8)
3120 Breckenridge Lane 2.1 34,490 329
Louisville, Kentucky
2275 South Semoran Boulevard 1.9 30,050 345
Orlando, Florida
11195 Alpharetta Highway 9.1 113,310 680
Roswell, Georgia
</TABLE>
(1) The property consists of 374 units of mini-warehouse space and 3
units of office/warehouse space.
(2) The property consists of 156 units of mini-warehouse space and 18
units of office/warehouse space.
(3) The property consists of 855 units of mini-warehouse space and 42
paved parking spaces.
(4) 4301 and 4324 Poplar Level Road were purchased as one unit.
(5) The property consists of 455 units of mini-warehouse space and 95
parking spaces.
(6) The property consists of 433 units of mini-warehouse space and 13
units of office/warehouse space.
(7) The property consists of 694 units of mini-warehouse space and 413
paved parking spaces.
(8) The property consists of 209 units of mini-warehouse space and 10
units of office/warehouse space.
1-2
<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 600 North Brand Boulevard and Chief Executive
Director) Suite 300 Officer
Glendale, CA 91203-1241 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 Carolina Restaurant Chairman and Chief
(Director) Enterprises,Inc. Executive Officer
3 Lochmoor Lane 1/92 - present
Newport Beach, CA 92660
Franchisee of Red Robin
International, Inc.
Red Robin International, President
Inc. 4/93-5/95
28 Executive Park, Suite
200
Irvine, CA 92714
Operates and franchises
restaurants
Private investor 3/88-1/92
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
Berry Holmes Private investor since 1985
(Director)
</TABLE>
To the knowledge of the Company, all of the foregoing persons are
citizens of the United States, except Uri P. Harkham, who is a citizen of
Australia.
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 45-01-19 New York, NY 10006 150 Royall Street
Boston, MA 02105 Mail Stop 45-01-19
Canton, MA 02021
Any questions about the Offer to Purchase may be directed to the
Soliciting Agent at its telephone number set forth below:
The Soliciting Agent for the Offer is:
The Weil Company
(800) 478-2605
Any requests for assistance or additional copies of the Offer to
Purchase and the Letter of Transmittal may be directed to the Company at its
address and telephone number set forth below:
Public Storage, Inc.
600 North Brand Boulevard, Suite 300
Glendale, California 91203-1241
(800) 421-2856
(818) 244-8080
