SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Amendment No. 1
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 24, 1997
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PUBLIC STORAGE, INC.
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(Exact name of registrant as specified in its charter)
California 1-8389 95-3551121
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(state or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification Number)
701 Western Avenue, Glendale, California 91201-2397
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 244-8080
N/A
---
(Former name or former address, if changed since last report)
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ITEM 5. Other Events
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a. HISTORICAL AND PRO FORMA FINANCIAL STATEMENTS
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Page
References
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ACQUIRED PROPERTIES:
Report of Independent Auditors 4
Combined Statements of Revenues and Certain Operating Expenses for
the years ended December 31, 1996, 1995 and 1994 5
Notes to Combined Statements of Revenues and Certain Operating Expenses 6 - 7
LARGO PROPERTY:
Report of Independent Auditors 8
Statement of Revenues and Certain Operating Expenses for
the year ended December 31, 1996 9
Notes to Statement of Revenues and Certain Operating Expenses 10 - 11
ACQUIPORT PROPERTIES:
Report of Independent Auditors 12
Combined Statement of Revenues and Certain Operating
Expenses for the year ended December 31, 1996 13
Notes to Combined Statement of Revenues and Certain Operating Expenses 14 - 15
GUNSTON PROPERTY:
Report of Independent Auditors 16
Statement of Revenues and Certain Operating
Expenses for the year ended December 31, 1996 17
Notes to Statement of Revenues and Certain Operating Expenses 18 - 19
PROPOSED ACQUISITION PROPERTIES:
Report of Independent Auditors 20
Combined Statement of Revenues and Certain Operating
Expenses for the year ended December 31, 1996 21
Notes to Combined Statement of Revenues and Certain Operating Expenses 22 - 25
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS:
Pro Forma Consolidated Balance Sheet at September 30, 1997 26
Notes to Pro Forma Consolidated Balance Sheet 27
Pro Forma Consolidated Statements of Income:
For the nine months ended September 30, 1997 28
For the year ended December 31, 1996 29
Notes to Pro Forma Consolidated Statements of Income 30 - 33
2
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b. ELECTION OF DIRECTOR 34
ITEM 7. Financial Statements and Exhibits
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EXHIBITS
23.1 Consent of Independent Auditors.
23.2 Consent of Independent Auditors.
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3
<PAGE>
REPORT OF INDEPENDENT AUDITORS
------------------------------
To the Board of Directors
Public Storage, Inc.
We have audited the accompanying combined statements of rental revenues and
certain operating expenses of the Acquired Properties (as defined in Note 1)
("Combined Statements") for each of the three years in the period ended December
31, 1996. The Combined Statements are the responsibility of management. Our
responsibility is to express an opinion on the above mentioned combined
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Combined Statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the Combined Statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall Combined Statements presentation.
We believe that our audits provide a reasonable basis for our opinion.
The accompanying Combined Statements were prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission.
In our opinion, the Combined Statements referred to above present fairly the
combined rental revenue and certain operating expenses of the Acquired
Properties for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Los Angeles, California
December 16, 1997
4
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THE ACQUIRED PROPERTIES
COMBINED STATEMENTS OF RENTAL REVENUES AND CERTAIN OPERATING EXPENSES
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Year Ended December 31,
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1996 1995 1994
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Rental Revenues $ 34,870,000 $ 32,366,000 $ 29,842,000
Certain Operating Expenses 11,550,000 11,163,000 10,463,000
=====================================================================
Excess Rental Revenues over
Certain Operating Expenses $ 23,320,000 $ 21,203,000 $ 19,379,000
=====================================================================
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See accompanying notes.
5
<PAGE>
THE ACQUIRED PROPERTIES
NOTES TO COMBINED STATEMENTS OF RENTAL REVENUES AND CERTAIN OPERATING EXPENSES
1. BACKGROUND AND BASIS OF COMBINATIONS
The accompanying combined statements of rental revenues and
certain operating expenses include the results of operations for the
years ended December 31, 1996, 1995 and 1994 for the 69 primarily self
storage properties listed below, in which Public Storage, Inc. (the
"Company") acquired a controlling interest during September and
October 1997. All of the properties listed below were managed by and
were the Company and were acquired from affiliates of the Company.
They are prepared in order to comply with Rule 3.14 of regulation S-X
of the Securities and Exchange Commission.
The properties acquired and covered by this report are
composed of ("Acquired Properties"):
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Property Location Property Location Property Location
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<S> <C> <C> <C>
Tucson, AZ Denver, CO (S. Tarmac Pkwy) Chicago, IL (Pulaski Rd)
Novato, CA Denver, CO (Sheridan Blvd.) Morton Grove, IL
Burbank, CA Bridgeport, CT Roselle, IL
Dublin, CA Enfield, CT Schiller Park, IL (River Rd)
Emeryville, CA Norwalk, CT Boston, MA
Fremont, CA Washington, DC Hyde Park, MA
Los Angeles, CA (La Cienega Blvd.) Boca Raton, FL Randolph, MA
Los Angeles, CA (Jefferson Blvd.) Ft. Lauderdale, FL Baltimore, MD
Los Angeles, CA (MLK Blvd.) Marietta, GA (Austell Rd) Odenton, MD
Monterey, CA Marietta, GA (Cobb Pkwy) Prince George's Co., MD
N. Hollywood, CA Arlington Heights, IL (University Dr) Madison Heights, MI
Oakland, CA Bolingbrook, IL Warren, MI
Pinole, CA Carol Stream, IL St. Louis, MO
San Leandro, CA (Washington Ave.) Chicago Heights, IL (Western Ave.) Bridgewater, NJ
San Leandro, CA (E. 14th St.) Chicago, IL (Howard St.) Mercer, NJ
Santa Cruz, CA Chicago, IL (N. Broadway St.) Woodside, NY
So. San Francisco, CA Chicago, IL (N. West Hwy.) Gresham, OR
Stockton, CA Chicago, IL (N. Western Ave.) Portland, OR
Studio City, CA Chicago, IL (Wells St.) Kent, WA
Vallejo, CA Cicero, IL (Ogden Ave.) Mountlake Terrace, WA
Venice, CA Des Plains, IL Olympia, WA
Ventura, CA Geneva, IL Seattle, WA
Denver, CO (Leetsdale Dr.) Justice, IL Milwaukee, WI
</TABLE>
The combined statements of rental revenues and certain operating
expenses include only the accounts and activity of the Acquired
Properties. Items which are not comparable to the proposed future
operations of the properties have been excluded. Such items include
interest expense, depreciation, amortization, environmental costs, and
management fees charged by the Company to its affiliates.
6
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition:
The Acquired Properties' leases are generally month to month and
are accounted for as operating leases on the accrual method.
Use of Estimates:
The preparation of the combined statements of rental revenues and
certain operating expenses in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the reporting amounts of rental revenues and
certain operating expenses during the reporting period. Actual results
could differ from those estimates.
3. RELATED PARTY TRANSACTIONS
The Company was the property operator of the above facilities
that have been acquired. The Company currently operates facilities for
a fee which is equal to 6% of the gross revenues of the self-storage
facilities and 5% of the gross revenues of the commercial facilities
managed.
7
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors
of Public Storage, Inc.
We have audited the accompanying statement of revenues and certain operating
expenses of the Largo Property (as defined in Note 1) ("Statement") for the year
ended December 31, 1996. The Statement is the responsibility of the property's
management. Our responsibility is to express an opinion on the above mentioned
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Statement is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the Statement. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall Statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
The accompanying Statement was prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission.
In our opinion, the Statement presents fairly the combined revenues and certain
operating expenses of the Largo Property for the year ended December 31, 1996,
in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Los Angeles, California
October 9, 1997
8
<PAGE>
THE LARGO PROPERTY
STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES
YEAR ENDED DECEMBER 31, 1996
Rental revenues $ 1,290,000
Certain operating expenses 320,000
---------------
Rental revenues in excess of certain operating expenses $ 970,000
===============
See accompanying notes.
9
<PAGE>
THE LARGO PROPERTY
NOTES TO STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES
1. BACKGROUND AND BASIS FOR PRESENTATION
The accompanying statement of revenues and certain operating
expenses includes the accounts of the Largo Property, located in
Maryland and acquired by American Office Park Properties, Inc.
("AOPP"), a subsidiary of Public Storage, Inc. ("PSI") from an
unaffiliated party in September 1997. The statement is prepared in
order to comply with Rule 3.14 of Regulation S-X of the Securities and
Exchange Commission.
The statement of revenue and certain operating expenses includes
only the accounts and activity of the Largo Property. Items which are
not comparable to the proposed future operations of the property have
been excluded. Such items include mortgage interest, depreciation,
amortization, management fees and miscellaneous income.
An audited statement is being presented for the most recent
fiscal year available instead of the three most recent years based on
the following factor: The property was purchased from an unaffiliated
party in September 1997. Based on the investigation of the property by
AOPP, it is not aware of any material factors relating to the property
that would cause this financial information not to be necessarily
indicative of future operating results other than the factors
specifically considered by AOPP as described below.
In the decision to acquire the property, AOPP considered the
competition from other commercial property owners, the location, the
leases, the rental rates and the occupancy level of the property.
AOPP has reviewed the expenses of the property, including
salaries of on-site personnel, utilities, property taxes, supplies,
insurance and repairs and maintenance. AOPP expects that operating
expenses in the future will be consistent to those reported for 1996.
AOPP expects to be able to pass inflationary operating expense
increases in future periods through to its tenants.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenues Recognition
The Largo Property' leases are accounted for as operating leases.
Minimum rent revenues are recognized on a straight-line basis over the
respective lease term. Recoveries from tenants, which include an
administrative fee, are recognized as income in the period the
applicable costs are accrued. The difference between the rental income
recognized on a straight-line basis and the amount collected on a cash
basis is not material for any of the periods presented.
Use of Estimates
The preparation of the combined statement of revenues and certain
operating expenses in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts of revenues and certain operating expenses
during the reporting periods. Actual results could differ from those
estimates.
10
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3. PROPERTY RENTALS
Future minimum rental revenues under non-cancelable leases as of
December 31, 1996 are as follows:
1997 ................................ $ 745,000
1998 ................................ 624,000
1999 ................................ 297,000
2000 ................................ 242,000
2001 ................................ 242,000
Thereafter .......................... 214,000
----------
$ 2,364,000
11
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REPORT OF INDEPENDENT AUDITORS
To The Board of Directors and Shareholder of
Acquiport Two Corporation and
Acquiport Three Corporation
We have audited the accompanying combined statement of revenues and certain
operating expenses of the Acquiport Properties owned by Acquiport Two
Corporation and Acquiport Three Corporation (as defined in Note 1) for the year
ended December 31, 1996. The Combined Summary is the responsibility of the
Company's management. Our responsibility is to express an opinion on the
combined statement of revenues and certain operating expenses based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the combined statement of revenues and certain operating
expenses are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the combined
statement of revenues and certain operating expenses. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the combined
statement of revenues and certain operating expenses. We believe that our audit
provides a reasonable basis for our opinion.
The accompanying combined statement of revenues and certain operating expenses
was prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission.
In our opinion, the combined statement of revenues and certain operating
expenses presents fairly the combined revenues and certain operating expenses of
the Acquiport Properties owned by Acquiport Two Corporation and Acquiport Three
Corporation (as defined in Note 1) for the year ended December 31, 1996, in
conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Atlanta, Georgia
February 14, 1997
12
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ACQUIPORT PROPERTIES OWNED BY
ACQUIPORT TWO CORPORATION AND
ACQUIPORT THREE CORPORATION
COMBINED STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES
YEAR ENDED DECEMBER 31, 1996
Rental revenues $ 14,579,000
Certain operating expenses 3,350,000
---------------
Excess rental revenues over certain operating expenses $ 11,229,000
===============
See accompanying notes.
13
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ACQUIPORT PROPERTIES OWNED BY
ACQUIPORT TWO CORPORATION AND
ACQUIPORT THREE CORPORATION
NOTES TO COMBINED STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES
1. BACKGROUND AND BASIS FOR COMBINATION
The accompanying combined statement of revenues and certain operating
expenses includes the accounts of certain of the industrial, office and
retail real estate assets ("Acquiport Properties") acquired by American
Office Park Properties, Inc. ("AOPP"), a subsidiary of Public Storage,
Inc. ("PSI") from Acquiport Two Corporation (a wholly-owned subsidiary
of a state pension fund) and Acquiport Three Corporation (a
wholly-owned subsidiary of a state pension fund) in December 1997. The
statement is prepared in order to comply with Rule 3.14 of Regulation
S-X of the Securities and Exchange Commission.
The Acquiport Properties are composed of:
Laguna Hills Commerce Center Laguna Hills, CA
Lake Forest Commerce Center Lake Forest, CA
Parkway Commerce Center Hayward, CA
Canada Business Center Lake Forest, CA
Cerritos Industrial Center Cerritos, CA
Buena Park Buena Park, CA
The combined statement of revenues and certain operating expenses
includes only the accounts and activity of the Acquiport Properties.
Items which are not comparable to the proposed future operations of the
Acquiport Properties have been excluded. Such items include mortgage
interest, depreciation, management fees and interest income.
An audited statement is being presented for the most recent fiscal year
available instead of the three most recent years based on the following
factor: The Acquiport Properties were acquired from an unaffiliated
party. Based on the investigation of the Acquiport Properties by AOPP,
the Company is not aware of any material factors relating to the
Acquiport Properties that would cause this financial information not to
be necessarily indicative of future operating results other than the
factors specifically considered by AOPP as described below.
In the decision to acquire the Acquiport Properties, AOPP considered
the competition from other commercial property owners, the location,
the leases, the rental rates and the occupancy level of the properties.
AOPP has reviewed the expenses of the Acquiport Properties, including
salaries of on-site personnel, utilities, property taxes, supplies,
insurance and repairs and maintenance. AOPP expects that property tax
expenses will be approximately $380,000 (unaudited) higher in the
future than amounts included in operating expenses for the year ended
December 31, 1996. AOPP expects to be able to pass inflationary
operating expense increases in future periods through to its tenants
through expense recoveries.
14
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenues Recognition
The Acquiport Properties' leases are accounted for as operating leases.
Minimum rent revenues are recognized on a method which approximates
straight-line basis over the respective lease term. Recoveries from
tenants, which include an administrative fee, are recognized as income
in the period the applicable costs are accrued.
Allowance for Uncollectible Accounts
Management periodically evaluates amounts billed to tenants and
accrued recoveries from tenants and adjusts the allowance for doubtful
accounts to reflect the amounts estimated to be uncollectible. Amounts
determined to be uncollectible are included in operating expenses.
Use of Estimates
The preparation of the combined statement of revenues and certain
operating expenses in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts of revenues and certain operating expenses
during the reporting periods.
Actual results could differ from those estimates.
3. PROPERTY RENTALS
Future minimum rental revenues under non-cancelable leases as of
December 31, 1996 are as follows:
1997 .................................... $ 12,288,000
1998 .................................... 8,213,000
1999 .................................... 5,483,000
2000 .................................... 3,534,000
2001 .................................... 1,541,000
Thereafter .............................. 355,000
---------------
$ 31,414,000
===============
15
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REPORT OF INDEPENDENT AUDITORS
To the Board of Directors
of Public Storage, Inc.
We have audited the accompanying statement of revenues and certain operating
expenses of the Gunston Property (as defined in Note 1) ("Statement") for the
year ended December 31, 1996. The Statement is the responsibility of the
property's management. Our responsibility is to express an opinion on the above
mentioned statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Statement is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the Statement. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall Statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
The accompanying Statement was prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission.
In our opinion, the Statement presents fairly the revenues and certain operating
expenses of the Gunston Property for the year ended December 31, 1996, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Los Angeles, California
November 10, 1997
16
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THE GUNSTON PROPERTY
Statement of Revenues and Certain Operating Expenses
Year ended December 31,1996
Rental revenues $ 2,071,000
Certain operating expenses (325,000)
Interest expense (1,009,000)
---------------
Rental revenues in excess of certain operating and
interest expenses $ 737,000
===============
See accompanying notes.
17
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THE GUNSTON PROPERTY
NOTES TO STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES
1. BACKGROUND AND BASIS FOR PRESENTATION
The accompanying statement of revenues and certain
operating expenses includes the accounts of the Gunston Property,
located in Virginia and proposed to be acquired by American Office Park
Properties, Inc. ("AOPP"), a subsidiary of Public Storage, Inc.
("PSI"). The statement is prepared in order to comply with Rule 3.14 of
Regulation S-X of the Securities and Exchange Commission.
The statement of revenue and certain operating
expenses includes only the accounts and activity of the Gunston
Property. Items which are not comparable to the proposed future
operations of the property have been excluded. Such items include
depreciation, amortization, management fees and miscellaneous income.
An audited statement is being presented for the most recent
fiscal year available instead of the three most recent years based on
the following factor: The property is a proposed acquisition from an
unaffiliated party. Based on the investigation of the property by AOPP,
the Company is not aware of any material factors relating to the
property that would cause this financial information not to be
necessarily indicative of future operating results other than the
factors specifically considered by AOPP as described below.
In the decision to acquire the property, AOPP considered the
competition from other commercial property owners, the location, the
leases, the rental rates and the occupancy level of the property.
AOPP has reviewed the expenses of the property, including
salaries of on-site personnel, utilities, property taxes, supplies,
insurance and repairs and maintenance. AOPP expects that certain
expenses will be approximately $200,000 (unaudited) per annum higher in
the future than amounts incurred under the 1996 ownership structure of
the prior owner. AOPP expects to be able to pass inflationary operating
expense increases in future periods through to its tenants through
expense recoveries.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenues Recognition
The Gunston Property leases are accounted for as
operating leases. Minimum rent revenues are recognized on a
straight-line basis over the respective lease term. Recoveries from
tenants, which include an administrative fee, are recognized as income
in the period the applicable costs are accrued. The difference between
the rental income recognized on a straight-line basis and the amount
collected on a cash basis is not material for any of the periods
presented.
Use of Estimates
The preparation of the combined statement of
revenues and certain operating expenses in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of revenues and
certain operating expenses during the reporting periods. Actual results
could differ from those estimates.
18
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3. MORTGAGE DEBT
The property provides collateral for a mortgage note
with an approximate outstanding balance at December 31, 1996 of
$12,752,000. The mortgage note bears interest at 7.625% and is due May
2004.
4. PROPERTY RENTALS
Future minimum rental revenues under non-cancelable leases as of
December 31, 1996 are as follows:
1997 .................................... $ 1,818,000
1998 .................................... 1,827,000
1999 .................................... 1,742,000
2000 .................................... 1,149,000
2001 .................................... 1,110,000
Thereafter .............................. 910,000
---------------
$ 8,556,000
===============
19
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors
of Public Storage, Inc.
We have audited the accompanying combined statement of revenues and certain
operating expenses of the Proposed Acquisition Properties (as defined in Note 1)
("Combined Statement") for the year ended December 31, 1996. The Combined
Statement is the responsibility of the property's management. Our responsibility
is to express an opinion on the above mentioned statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Combined Statement is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the Combined Statement. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall Combined Statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
The accompanying Combined Statement was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission.
In our opinion, the Combined Statement presents fairly the combined revenues and
certain operating expenses of the Proposed Acquisition Properties for the year
ended December 31, 1996, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Los Angeles, California
December 19, 1997
20
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PROPOSED ACQUISITION PROPERTIES
COMBINED STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES
YEAR ENDED DECEMBER 31, 1996
Rental revenues $ 3,584,000
Certain operating expenses (1,044,000)
Interest expense (937,000)
-------------------
Rental revenues in excess of certain operating and
interest expenses $ 1,603,000
===================
See accompanying notes.
21
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PROPOSED ACQUISTION PROPERTIES
NOTES TO COMBINED STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES
1. BACKGROUND AND BASIS FOR PRESENTATION
The accompanying combined statement of revenues and
certain operating expenses includes the accounts of two properties
located in Virginia (collectively "Proposed Acquisition Properties")
and proposed to be acquired by American Office Park Properties, Inc.
("AOPP"), a subsidiary of Public Storage, Inc ("PSI"). The properties
are owned by different owners but have a common property manager. The
statement is prepared in order to comply with Rule 3.14 of Regulation
S-X of the Securities and Exchange Commission.
The combined statement of revenue and certain
operating expenses includes only the accounts and activity of the
Proposed Acquisition Properties. Items which are not comparable to the
proposed future operations of the properties have been excluded. Such
items include depreciation, amortization, management fees and
miscellaneous income.
An audited statement is being presented for the most recent
fiscal year available instead of the three most recent years based on
the following factor: The properties are proposed acquisitions from
unaffiliated parties. Based on the investigation of the property by
AOPP, the Company is not aware of any material factors relating to the
properties that would cause this financial information not to be
necessarily indicative of future operating results other than the
factors specifically considered by AOPP as described below.
In the decision to acquire the properties, AOPP considered the
competition from other commercial property owners, the location, the
leases, the rental rates and the occupancy level of the properties.
AOPP has reviewed the expenses of the property, including
salaries of on-site personnel, utilities, property taxes, supplies,
insurance and repairs and maintenance. AOPP expects that certain
operating expenses, will be approximately $190,000 (unaudited) higher
in the future than amounts reported for 1996. AOPP expects to be able
to pass inflationary operating expense increases in future periods
through to its tenants through expense recoveries.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenues Recognition
The Proposed Acquisition Properties leases are
accounted for as operating leases. Minimum rent revenues are recognized
on a straight-line basis over the respective lease term. Recoveries
from tenants, which include an administrative fee, are recognized as
income in the period the applicable costs are accrued. The difference
between the rental income recognized on a straight-line basis and the
amount collected on a cash basis is not material for any of the periods
presented.
Use of Estimates
The preparation of the combined statement of
revenues and certain operating expenses in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of revenues and
certain operating expenses during the reporting periods. Actual results
could differ from those estimates.
22
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3. MORTGAGE DEBT
The two properties provide collateral for mortgage
notes. The notes have an aggregate outstanding balance of approximately
$14,814,000 at December 31, 1996. The notes bear interest at rates
ranging from 7.125% to 8.125% (7.50% weighted average interest rate).
The loans mature in July 2005 and May 2006.
4. PROPERTY RENTALS
Future minimum rental revenues under non-cancelable leases as of
December 31, 1996 are as follows:
1997 .................................... $ 2,755,000
1998 .................................... 2,633,000
1999 .................................... 2,201,000
2000 .................................... 2,117,000
2001 .................................... 1,751,000
Thereafter .............................. 2,195,000
---------------
$ 13,652,000
===============
23
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PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
During 1997, Public Storage, Inc. ("PSI") acquired real estate facilities
which in the aggregate are significant to PSI's financial statements. The
following unaudited pro forma consolidated financial statements were prepared to
reflect the impact of these acquisitions on PSI's consolidated financial
statements which include the following.
Property acquisitions from affiliated entities:
* In September 1997, PSI acquired limited partnership interests in an
affiliated partnership for approximately $57 million in cash. The
acquisition of this interest combined with PSI's pre-existing
ownership interest, increased PSI's ownership in the partnership in
excess of 50%. Due to PSI's acquired controlling interest in the
partnership, PSI began to include the partnership in its consolidated
financial statements. The partnership owns 35 self-storage facilities
and one commercial property managed by PSI and a majority owned
subsidiary of PSI (American Office Park Properties, Inc. or "AOPP"),
respectively.
* In October 1997, PSI acquired all of the limited partnership interests
in ten affiliated partnerships for approximately $29.7 million in
cash. As a result of the acquisition, combined with PSI's existing
co-general partnership interest, PSI gained a controlling interest in
the partnerships and will include the partnerships in its consolidated
financial statements. The partnerships collectively own ten
self-storage facilities managed by PSI.
* In April 1997 and November 1997, PSI acquired limited partnership
interests in two affiliated partnerships for an aggregate cost of
approximately $40.7 million in cash. The partnerships jointly own 24
self-storage facilities and 2 commercial properties. The acquisition
of these interests combined with PSI's pre-existing ownership
interest, increased PSI's ownership in each of these partnerships in
excess of 50%. Due to PSI's acquired controlling interest in the
partnerships, PSI will begin to include the partnerships in its
consolidated financial statements.
Acquisitions from third parties:
* In September 1997, AOPP acquired one commercial property (the "Largo
Property") from an unaffiliated third party for an aggregate cost of
$10,374,000, consisting of cash of $10,050,000 and the issuance of
12,000 limited partnership units having a value of $324,000.
* In December 1997, AOPP reached agreements in principle to acquire
three commercial properties (the "Gunston Property" and "Proposed
Acquisitions") from unaffiliated third parties for an aggregate cost
of $54,338,000, consisting of cash totaling $19,900,000, the issuance
of 279,200 limited partnership units having a value of $7,538,000 and
the assumption of $26,900,000 of mortgage debt.
* On December 24, 1997, AOPP completed a transaction under which it
issued 4,482,852 shares of its common stock ($118,655,000) to a
subsidiary of a state pension fund, and the subsidiary of the state
pension fund, through a merger and contribution, transferred to AOPP
six commercial properties and $1,000,000 cash. AOPP incurred
approximately $3,300,000 in transaction costs. As a result of the
transaction, AOPP acquired six commercial properties (the "Acquiport
Properties").
Separate historical financial statements for the properties acquired from
affiliated entities (the "Acquired Properties"), the Largo Property, the Gunston
Property, the Proposed Acquisitions, and the Acquiport Properties are located
elsewhere in this Form 8-K.
In addition to adjustments to reflect impact of the aforementioned property
acquisitions, pro forma adjustments were made to reflect certain business
combinations which were completed during fiscal 1997, including:
24
<PAGE>
* In April 1997, the PSI completed merger transactions with Public
Storage Properties XIV, Inc. ("PSP XIV") and Public Storage Properties
XV, Inc. ("PSP XV") whereby PSI acquired all of the outstanding shares
of each entity for an aggregate cost of approximately $120.4 million,
consisting of the issuance of approximately 2,231,000 shares of PSI
common stock ($64.2 million valuation), approximately $18.0 million in
cash and $38.2 million bookvalue of PSI's existing investment in these
entities.
* In June 1997, the PSI completed merger transactions with Public
Storage Properties XVI, Inc. ("PSP XVI"), Public Storage Properties
XVII, Inc. ("PSP XVII"), Public Storage Properties XVIII, Inc. ("PSP
XVIII"), and Public Storage Properties XIX, Inc. ("PSP XIX") whereby
PSI acquired all of the outstanding shares of each entity for an
aggregate cost of approximately $284.6 million, consisting of the
issuance of approximately 5,450,000 shares of PSI common stock ($147.8
million valuation) , approximately $50.8 million in cash and $86.0
million bookvalue of PSI's existing investment in these entities.
The pro forma consolidated balance sheet at September 30, 1997 has been prepared
to reflect (i) the property acquisitions which occurred subsequent to September
30, 1997 and (ii) the proposed acquisitions of the real estate facilities.
The pro forma consolidated statement of income for the nine months ended
September 30, 1997 and the year ended December 31, 1996 have been prepared
assuming (i) property acquisitions and proposed property acquisitions and (ii)
the business combinations, as if all such transactions were completed at the
beginning 1996.
The pro forma adjustments are based upon available information and upon certain
assumptions as set forth in the notes to the pro forma consolidated financial
statements that PSI believes are reasonable in the circumstances. The pro forma
condensed consolidated financial statements and accompanying notes should be
read in conjunction with the historical consolidated financial statements of PSI
and do not purport to represent what PSI's results of operations would actually
have been if the transactions in fact had occurred at the beginning of the
respective periods or to project PSI's results of operations for any future date
or period.
25
<PAGE>
<TABLE>
<CAPTION>
PUBLIC STORAGE, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
September 30, 1997
(Unaudited)
Pro forma Adjustments
-------------------------------
Acquisition of Mergers with
real estate Affiliated
PSI facilities Entities PSI
ASSETS (Historical) (Note 1) (Note 2) (Pro Forma)
---------------- ---------------- -------------- ------------
(Amounts in thousands, except share and per share amounts)
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 90,763 $ (70,900) $ - $ 19,863
Investments in real estate entities 231,962 (44,131) - 187,831
Real estate facilities, net of accumulated 2,496,541 291,263 - 2,787,804
depreciation
Construction in process 51,358 - - 51,358
Intangible assets, net 215,272 - - 215,272
Other assets 68,631 - - 68,631
---------------- ---------------- -------------- ------------
Total assets $ 3,154,527 $ 176,232 $ - $ 3,330,759
================ ================ ============== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable $ 100,349 $ 26,900 $ - $ 127,249
Accrued and other liabilities 71,664 - - 71,664
Minority interest 190,695 149,332 - 340,027
Shareholders' equity:
Preferred Stock, $0.01 par value, 50,000,000 shares
authorized, 13,313,009 shares outstanding 923,484 - - 923,484
Common stock, $0.10 par value, 200,000,000
shares authorized:
Common Stock (102,991,059 issued and outstanding) 10,299 - - 10,299
Class B (7,000,000 issued and outstanding) 700 - - 700
Paid-in capital 1,847,745 - - 1,847,745
Cumulative net income 529,537 - - 529,537
Cumulative distribution paid (519,946) - - (519,946)
---------------- ---------------- -------------- ------------
Total shareholders' equity 2,791,819 - - 2,791,819
---------------- ---------------- -------------- ------------
Total liabilities and shareholders' equity $ 3,154,527 $ 176,232 $ - $ 3,330,759
================ ================ ============== ============
Book value per Common Share $ 17.43 $ 17.43
============== =============
</TABLE>
See Accompanying Notes to Pro Forma Consolidated Balance Sheet.
26
<PAGE>
PUBLIC STORAGE, INC.
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
September 30, 1997
(Unaudited)
1. Acquisition of real estate facilities:
-------------------------------------
Subsequent to September 30, 1997, PSI and AOPP (a majority owned subsidiary
of PSI), completed several acquisitions of real estate facilities and had
agreements in principle to acquire several other real estate facilities.
The following table summarizes the acquisitions and proposed acquisitions
which have not been reflected in the September 30, 1997 historical balance
sheet of PSI:
<TABLE>
<CAPTION>
Proposed
Acquired Gunston Acquiport Acquisition
Properties Property Properties Properties Total
----------- ----------- ----------- ------------- -----------
(Amounts in thousands)
<S> <C> <C> <C> <C> <C>
Cost of Real estate facilities $ 118,270 $ 21,187 $118,655 $33,151 $ 291,263
=========== =========== =========== ============= ============
Consideration:
Cash $ 48,700 $ 1,700 $ 2,300 $ 18,200 $ 70,900
Existing investment 44,131 - - - 44,131
Assumption of debt - 12,165 - 14,735 26,900
Minority interest 25,439 7,322 116,355 216 149,332
----------- ----------- ----------- ------------- -----------
$ 118,270 $ 21,187 $118,655 $33,151 $ 291,263
=========== =========== =========== ============= ============
</TABLE>
<TABLE>
<CAPTION>
The following pro forma adjustments have been made to reflect the above
property acquisitions and proposed property acquisitions as if such
acquisitions were consummated on September 30, 1997:
<S> <C> <C>
(in 000's)
-----------
* Real estate facilities has been adjusted to reflect the acquisition
cost of the properties acquired and proposed to be acquired............$ 291,263
==========
* Cash and cash equivalents has been decreased to reflect the cash
portion of the proposed acquisition cost...............................$ (70,900)
===========
* Investments in real estate entities has been adjusted to reflect
the reclassification to real estate ...................................$ (44,131)
==========
* Notes payable has been increased to reflect the principal
balance of related notes expected to be assumed by PSI in
connection with the proposed acquisitions of properties................$ 26,900
==========
* Minority interest has been increased to reflect the issuance
of equity (limited partnership units and common stock) of AOPP
in connection with the acquisition and proposed acquisition of
properties.............................................................$ 149,332
==========
</TABLE>
2. Merger Pro Forma Adjustments
----------------------------
The impact to the historical consolidated balance sheet for each of the
business combination transactions with PSP XIV, PSP XV, PSPXVI, PSP XVII,
PSP XVIII, and PSP XIX are reflected in the historical amounts,
accordingly, no pro forma adjustments have been made.
27
<PAGE>
<TABLE>
<CAPTION>
PUBLIC STORAGE, INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the Nine Months Ended September 30, 1997
(Unaudited)
Pro Forma Adjustments
---------------------------
Acquisition of
real estate REIT
PSI facilities Mergers PSI
(Historical) Note 1 Note 2 (Pro forma)
------------- ------------- ------------- -------------
(Amounts in thousands, except per share amounts)
REVENUES:
Rental Income:
<S> <C> <C> <C> <C>
Self-storage facilities $ 274,161 $ 27,984 $ 21,302 $ 323,447
Commercial properties 27,694 17,058 4,490 49,242
Portable self-storage 4,140 - - 4,140
Equity in earnings of real estate 14,681 (3,603) (3,662) 7,416
entities
Facility management fees 8,298 (1,694) (1,503) 5,101
Interest and other Income 7,651 - - 7,651
------------- ------------- ------------- -------------
336,625 39,745 20,627 396,997
------------- ------------- ------------- -------------
EXPENSES:
Cost of operations:
Self-storage facilities 82,746 9,158 7,974 99,878
Commercial properties 11,034 4,304 2,069 17,407
Portable self-storage 25,325 - - 25,325
Cost of managing facilities 1,294 (424) (234) 636
Depreciation and amortization 64,375 9,009 4,932 78,316
General and administrative 5,205 - - 5,205
Interest expense 5,821 1,549 - 7,370
------------- ------------- ------------- -------------
195,800 23,596 14,741 234,137
------------- ------------- ------------- -------------
Income before minority interest in
income 140,825 16,149 5,886 162,860
Minority interest in income (7,708) (9,808) - (17,516)
Net Income $ 133,117 $ 6,341 $ 5,886 $ 145,344
============= ============= ============= =============
Net income allocable to preferred
shareholders $ 68,134 $ 8,000 $ - $ 76,134
Net income allocable to Common Stock
shareholders 64,983 (1,659) 5,886 69,210
------------- ------------- ------------- -------------
Net Income $ 133,117 $ 6,341 $ 5,886 $ 145,344
============= ============= ============= =============
PER SHARE OF COMMON STOCK:
Net Income $ 0.67 N/A N/A $ 0.67
============= ============= ============= =============
Weighted Average Shares 97,154 - 5,605 102,759
============= ============= ============= =============
</TABLE>
See Accompanying Notes to Pro Forma Consolidated Statements of Income.
28
<PAGE>
<TABLE>
<CAPTION>
PUBLIC STORAGE, INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the Year Ended December 31, 1996
(Unaudited)
Pro Forma Adjustments
------------------------------
Acquisition of
real estate REIT
PSI facilities Mergers PSI
(Historical) Note 1 Note 2 (Pro forma)
------------- ------------- ------------- -------------
(Amounts in thousands, except per share amounts)
REVENUES:
Rental Income:
<S> <C> <C> <C> <C>
Self-storage facilities $ 270,429 $ 34,464 $ 48,762 $ 353,655
Commercial properties 23,576 21,930 9,982 55,488
Portable self-storage 421 - - 421
Equity in earnings of real estate 22,121 (3,042) (8,032) 11,047
entities
Facility management fees 14,428 (2,088) (3,425) 8,915
Interest and other Income 7,976 - 123 8,099
------------- ------------- ------------- -------------
338,951 51,264 47,410 437,625
------------- ------------- ------------- -------------
EXPENSES:
Cost of operations:
Self-storage facilities 82,494 11,892 18,066 112,452
Commercial properties 10,750 5,757 4,014 20,521
Portable self-storage 1,247 - - 1,247
Cost of managing facilities 2,575 (522) (611) 1,442
Depreciation and amortization 64,967 12,010 11,581 88,558
General and administrative 5,524 - - 5,524
Interest expense 8,482 1,946 - 10,428
------------- ------------- ------------- -------------
176,039 31,083 33,050 240,172
------------- ------------- ------------- -------------
Income before minority interest in
income 162,912 20,181 14,360 197,453
Minority interest in income (9,363) (12,139) - (21,502)
------------- ------------- ------------- -------------
Net Income $ 153,549 $ 8,042 $ 14,360 $ 175,951
============= ============= ============= =============
Net income allocable to preferred
shareholders $ 68,599 $ 12,000 $ - $ 80,599
Net income allocable to Common Stock
shareholders 84,950 (3,958) 14,360 95,352
------------- ------------- ------------- -------------
Net Income $ 153,549 $ 8,042 $ 14,360 $ 175,951
============= ============= ============= =============
Per share of Common Stock:
Net Income $ 1.10 N/A N/A $ 1.06
============= ============= ============= =============
Weighted Average Shares 77,358 - 12,281 89,639
============= ============= ============= =============
</TABLE>
See Accompanying Notes to Pro Forma Consolidated Statements of Income.
29
<PAGE>
PUBLIC STORAGE, INC.
NOTES TO PRO FORMA STATEMENTS OF INCOME
(Unaudited)
1. Acquisition of real estate facilities
-------------------------------------
* In September through November 1997, PSI acquired 69 self-storage
facilities and 3 commercial properties by gaining control and
acquiring the majority interest in several affiliated limited
partnerships. These properties are collectively referred to as the
"Acquired Properties."
* In September 1997, AOPP acquired one commercial property (the "Largo
Property") from an unaffiliated third party for an aggregate cost of
$10,374,000. On December 24, 1997, AOPP completed a transaction under
which it issued 4,482,852 shares of its common stock ($118,655,000) to
a subsidiary of a state pension fund, and the subsidiary of the state
pension fund, through a merger and contribution, transferred to AOPP
six commercial properties and $1,000,000 cash.
* In December 1997, AOPP reached agreements in principle to acquire
three commercial properties (the "Gunston Property" and "Proposed
Acquisitions") from unaffiliated third parties for an aggregate cost
of $54,338,000.
The following pro forma adjustments have been made to the pro forma
consolidated statements of income to reflect the above property
acquisitions and proposed acquisitions as if the transactions were
completed as of January 1, 1996.
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 1997 December 31, 1996
------------------ -----------------
(in 000's)
<S> <C> <C>
* Rental income - self-storage facilities has been increased to
reflect to pro forma rental income of the self-storage
properties acquired from Acquired
Properties............................................................. $ 27,984 $ 34,464
========= =========
* Rental income - commercial properties has been increased to
reflect the pro forma rental income of the properties, as if
these facilities were owned by PSI throughout the entire period
presented:
* Rental income for the entire period base properties'
historical operations:
Acquired Properties .............................................. $ 308 $ 406
Largo property.................................................... 952 1,290
Acquiport properties............................................. 11,107 14,579
Gunston property.................................................. 1,698 2,071
Proposed Acquisitions............................................. 2,993 3,584
---------- -----------
$ 17,058 $ 21,930
========= ==========
* Prior to acquiring the Acquired Properties, PSI accounted for
its existing investment in these properties using the equity
method. Accordingly, a pro forma adjustment has been made to
"Equity in earnings of real estate entities" to eliminate the
historical earnings recognized from the
partnerships owning the properties..................................... $ (3,603) $ (3,042)
========= =========
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 1997 December 31, 1996
------------------ -----------------
(in 000's)
<S> <C> <C>
* Facility management fees has been decreased to reflect the
elimination of the historical management fees recognized with
respect to the Acquired Properties which as a result of
acquiring the properties will no longer be recognized.................. $ (1,694) $ (2,088)
========= =========
* Cost of operations - self-storage facilities has
been increased to reflect
* pro forma cost of operations of the
self-storage properties acquired from the
Acquired Properties.................................................. $ 8,734 $ 11,370
* estimated additional management costs
expected to be incurred.............................................. 424 522
---------- ----------
$ 9,158 $ 11,892
========== ==========
* Cost of operations - has been increased to reflect the pro
forma cost of operations of these properties, as if they were
owned by AOPP throughout the entire period presented:
* Cost of operations for the entire period base properties'
historical operations:
Acquired Properties.............................................. $ 120 $ 180
Largo............................................................ 230 320
Acquiport Properties............................................. 2,541 3,350
Gunston Property................................................. 173 325
Proposed Acquisitions............................................ 821 1,044
* Plus: Pro forma adjustment to reflect
additional estimated personnel cost to manage
the facilities and property taxes................................... 419 538
---------- ----------
$ 4,304 $ 5,757
========= =========
* Cost of facility management has been decreased to reflect the
reduction in management expense corresponding to the reduction
in facility management fee revenue..................................... $ (424) $ (522)
========== ==========
* Depreciation has been increased to reflect
depreciation expense for each of the periods........................... $ 9,009 $ 12,010
========= =========
* Interest expense has been increased to reflect the historical
interest expense for each of the periods presented with respect
to the assumption of mortgage notes payable ........................... $ 1,549 $ 1,946
========= ========
* Minority interest in income has been increased to reflect the
incremental earnings of the real estate acquisitions allocated
to interests in the properties not owned by PSI....................... $ (9,808) $ (12,139)
========== ==========
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 1997 December 31, 1996
------------------ -----------------
(in 000's)
<S> <C> <C>
* In August 1997, PSI issued approximately $150 million of
preferred stock having a fixed dividend coupon of 8.0%. A
portion of the net proceeds were used to finance the cash
portion of the acquisition cost of the real estate properties. A
pro forma adjustment has been made to increase the income
allocation to the preferred shareholders to reflect the
incremental cost of capital to finance the cash portion of
the acquisition ....................................................... $ 8,000 $ 12,000
========== ==========
</TABLE>
2. REIT Mergers
------------
During April 1997 and June 1997, PSI completed merger transactions with
five affiliated REITs (collectively the "PSP REITs"). The following pro
forma adjustments have been made assuming the merger transactions with the
PSP REITs were completed at the beginning of the year ended December 31,
1996:
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 1997 December 31, 1996
------------------ -----------------
(in 000's)
<S> <C> <C>
* A pro forma adjustment has been made to reflect the PSP REITs
historical rental income - self-storage facilities for the
period prior to the merging with PSI................................... $ 21,302 $ 48,762
============ ===========
* A pro forma adjustment has been made to
reflect the PSP REITs historical rental income
- commercial properties for the period prior to
the merging with PSI................................................... $ 4,490 $ 9,982
============ ===========
* Prior to merging into PSI, PSI accounted for its existing
investment in the PSP REITs using the equity method. A pro forma
adjustment has been made to eliminate the historical earnings
with respect to the PSP REITs.......................................... $ (3,662) $ (8,032)
============ ===========
* Facility management fees has been decreased to reflect the
elimination the historical management fees recognized with
respect to the Acquired Properties which as a result of
acquiring the properties will no longer be recognized.................. $ (1,503) $ (3,425)
=========== ========
* A pro forma adjustment has been made to
reflect the PSP REITs historical interest and
other income........................................................... $ - $ 123
============ ===========
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 1997 December 31, 1996
------------------ -----------------
(in 000's)
<S> <C> <C>
* A pro forma adjustment has been made to reflect the PSP REITs
historical cost of operations - self-storage facilities for the
period prior to the merging with PSI................................... $ 7,974 $ 18,066
============ ===========
* A pro forma adjustment has been made to reflect the PSP REITs
historical cost of operations - commercial properties for the
period prior to the merging with PSI................................... $ 2,069 $ 4,014
============ ===========
* Cost of facility management has been decreased to reflect the
reduction in management expense corresponding to the reduction
in facility management fee revenue..................................... $ (234) $ (611)
============ ===========
* Depreciation and amortization was increased to reflect the pro
form depreciation expense with respect to the real estate
facilities acquired (less amounts reflected in the historical
amounts)............................................................... $ 4,932 $ 11,581
============ ===========
* In addition to cash, PSI issued approximately 7,681,000 common
shares as part of the acquisition cost of the PSP REIT mergers.
In addition, to fund the cash portion of the costs, PSI issued in
March 1997, 4,600,000 shares of common stock raising net proceeds
of approximately $126 million. Weighted average common share
outstanding has been increased as follows:
* Weighed average common share issued in
the PSP REIT mergers as if shares were
outstanding for the entire period.................................... 7,681 7,681
* Weighted average common shares issued to
finance the cash portion of the merger cost.......................... 4,600 4,600
* Less weighted average shares already
included in the historical amounts................................... (6,676) -
------------ -----------
5,605 12,281
============ ===========
</TABLE>
33
<PAGE>
b. ELECTION OF DIRECTOR
On January 6, 1998, the Board of Directors of Public Storage, Inc. (the
"Company") increased the number of authorized directors of the Company from six
to seven and elected B. Wayne Hughes, Jr. as a director of the Company. B. Wayne
Hughes, Jr., age 38, has been a Vice President - Acquisitions of the Company
since 1992. He is the son of B. Wayne Hughes.
34
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Public Storage, Inc.
Date: January 15, 1998 By: /s/ John Reyes
--------------
John Reyes
Senior Vice President and
Chief Financial Officer
35
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
on Form S-8 (No. 33-36004) of Public Storage, Inc., formerly Storage Equities,
Inc., pertaining to the 1990 Stock Option Plan, the Registration Statement on
Form S-8 (No. 33-55541) pertaining to the 1994 Stock Option Plan, the
Registration Statement on Form S-8 (No. 333-13463) pertaining to the 1996 Stock
Option and Incentive Plan, the Registration Statements on Form S-3 (Nos.
333-18395 and 333-41123) and in the related prospectus and the Registration
Statement on Form S-4 (No. 33-64971) and in the related prospectus of (i) our
report dated February 25, 1997 with respect to the consolidated financial
statements and schedules of Public Storage, Inc. included in the Annual Report
(Form 10-K) for 1996 filed with the Securities and Exchange Commission, (ii) our
report dated December 16, 1997 on the combined statements of revenues and
certain operating expenses of the Acquired Properties for each of the three
years in the period ended December 31, 1996, our report dated October 9, 1997 on
the statement of revenues and certain operating expenses of the Largo Property
for the year ended December 31, 1996, our report dated November 10, 1997 on the
statement of revenues and certain operating expenses of the Gunston Property for
the year ended December 31, 1996, and our report dated December 19, 1997 on the
combined statement of revenues and certain operating expenses of the Proposed
Acquisition Properties for the year ended December 31, 1996, each of which is
included in the Current Report on Form 8-K, as amended by a Form 8-K/A, each
dated December 24, 1997 of Public Storage, Inc. and (iii) our report dated
February 18, 1997 with respect to the financial statements of Public Storage
Properties XVI, Inc., our report dated February 18, 1997 with respect to the
financial statements of Public Storage Properties XVII, Inc., our report dated
February 18, 1997 with respect to the financial statements of Public Storage
Properties XVIII, Inc. and our report dated February 18, 1997 with respect to
the financial statements of Public Storage Properties XIX, Inc., which are
included in the Registration Statement on Form S-4 (No. 333-26959) of Public
Storage, Inc.
ERNST & YOUNG LLP
January 15, 1998
Los Angeles, California
36
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
on Form S-8 (No. 33-36004) of Public Storage, Inc., formerly Storage Equities,
Inc., pertaining to the 1990 Stock Option Plan, the Registration Statement on
Form S-8 (No. 33-55541) pertaining to the 1994 Stock Option Plan, the
Registration Statement on Form S-8 (No. 333-13463) pertaining to the 1996 Stock
Option and Incentive Plan, the Registration Statements on Form S-3 (Nos.
333-18395 and 333-41123) and in the related prospectus and Registration
Statement on Form S-4 (No. 33-64971) and in the related prospectus of our report
dated February 14, 1997 on the combined summary of historical information
relating to revenues and certain operating expenses of the Acquiport Properties
which is included in the Current Report on Form 8-K, as amended by a Form 8-K/A,
each dated December 24, 1997 of Public Storage, Inc.
KPMG PEAT MARWICK LLP
January 15, 1998
303 Peachtree Street, NE
Atlanta, GA 30308
37
<PAGE>
