<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [Fee Required]
For the fiscal year ended December 31, 1995
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or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [No Fee Required]
For the transition period from __________________ to _____________________
Commission File Number 0-14476
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PS PARTNERS, LTD
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(Exact name of registrant as specified in its charter)
California 95-3729108
- ------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
600 N. Brand Boulevard
Glendale, California 91203-1241
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 244-8080
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Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
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(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to the
Form 10-K. [X]
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DOCUMENTS INCORPORATED BY REFERENCE
NONE
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PART I
ITEM 1. BUSINESS.
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General
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PS Partners, Ltd. (the "Partnership") is a publicly held limited
partnership formed under the California Uniform Limited Partnership Act in April
1982. Commencing in September 1982, 66,000 units of limited partnership
interest (the "Units") were offered to the public in an interstate offering.
The offering was completed in January 1983.
The Partnership was formed to invest in and operate existing self-service
facilities offering storage space for personal and business use (the "mini-
warehouses") and to invest up to 30% of the net proceeds of the offering in and
operate existing office and industrial properties. The Partnership's
investments were made through general partnerships with Storage Equities, Inc.,
now known as Public Storage, Inc. ("PSI"), a real estate investment trust
organized as a corporation under the laws of California. For tax administrative
efficiency, the original general partnerships with PSI were consolidated into a
single general partnership effective December 31, 1990.
In 1995, there were a series of mergers among Public Storage Management,
Inc. (which was the Partnership's mini-warehouse operator), Public Storage, Inc.
and their affiliates (collectively, "PSMI"), culminating in the November 16,
1995 merger (the "PSMI Merger") of PSMI into Storage Equities, Inc. In the
PSMI Merger, Storage Equities, Inc.'s name was changed to Public Storage, Inc.
and it acquired substantially all of PSMI's United States real estate operations
and became the operator of the Partnership's mini-warehouse properties.
The Partnership's general partners (the "General Partners") are PSI and B.
Wayne Hughes ("Hughes"). PSI became a co-general partner in September 1993,
when PSI acquired the interest of PSI Associates, Inc. ("PSA"), an affiliate of
PSMI, relating to PSA's general partner capital contribution in the Partnership.
Hughes has been a general partner of the Partnership since its inception.
Hughes is the chairman of the board and chief executive officer of PSI, and
Hughes and members of his family (the "Hughes Family") is the major shareholder
of PSI. The Partnership is managed, and its investment decisions are made by
Hughes and the executive officers and directors of PSI. The limited partners
of the Partnership have no right to participate in the management or conduct of
its business affairs.
The Partnership's mini-warehouse properties are managed by PSI and the
Partnership's commercial properties are managed by Public Storage Commercial
Properties Group, Inc. ("PSCP"), pursuant to Management Agreements. PSI has a
95% economic interest and the Hughes Family has a 5% economic interest in PSCP.
PSI believes that it is the largest operator of mini-warehouse facilities in the
United States.
PSI's current relationship with the Partnership includes (i) the joint
ownership of the Partnership's 28 properties, (ii) PSI is a co-general partner
along with Hughes, who is chairman of the board and chief executive officer of
PSI, (iii) as of February 29, 1996, PSI owned approximately 61.65% of the
Partnership's limited partnership units and (iv) PSI is the operator of the
Partnership's mini-warehouse facilities and owns approximately 95% of the
Partnership's commercial property operator (PSCP).
Investments in Facilities
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The Partnership owns interests in 28 properties; each of such properties
was contributed to and is held in a general partnership comprised of the
Partnership and PSI. The Partnership purchased its last property in December,
1983. Reference is made to the table in Item 2 for a summary of information
about the Partnership's properties.
The Partnership believes that its operating results have benefited from
favorable industry trends and conditions. Notably, the level of new mini-
warehouse construction has decreased since 1988 while consumer demand has
increased. In addition, in recent years consolidation has occurred in the
fragmented mini-warehouse industry.
Mini-warehouses
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Mini-warehouses, which comprise the majority of the Partnership's
investments, are designed to offer accessible storage space for personal and
business use at a relatively low cost. A user rents a fully enclosed space
which is for the user's exclusive use and to which only the user has access on
an unrestricted basis during business
2
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hours. On-site operation is the responsibility of resident managers who are
supervised by area managers. Some mini-warehouses also include rentable
uncovered parking areas for vehicle storage. Leases for mini-warehouse space may
be on a long-term or short-term basis, although typically spaces are rented on a
month-to-month basis. Rental rates vary according to the location of the
property and the size of the storage space.
Users of space in mini-warehouses include both individuals and large and
small businesses. Individuals usually employ this space for storage of, among
other things, furniture, household appliances, personal belongings, motor
vehicles, boats, campers, motorcycles and other household goods. Businesses
normally employ this space for storage of excess inventory, business records,
seasonal goods, equipment and fixtures.
Mini-warehouses in which the Partnership has invested generally consist of
three to seven buildings containing an aggregate of between 147 to 1,141 storage
spaces, most of which have between 25 and 400 square feet and an interior height
of approximately 8 to 12 feet.
The Partnership experiences minor seasonal fluctuations in the occupancy
levels of mini-warehouses with occupancies higher in the summer months than in
the winter months. The Partnership believes that these fluctuations result in
part from increased moving activity during the summer.
The Partnership's mini-warehouses are geographically diversified and are
generally located in heavily populated areas and close to concentrations of
apartment complexes, single family residences and commercial developments.
However, there may be circumstances in which it may be appropriate to own a
property in a less populated area, for example, in an area that is highly
visible from a major thoroughfare and close to, although not in, a heavily
populated area. Moreover, in certain population centers, land costs and zoning
restrictions may create a demand for space in nearby less populated areas.
As with most other types of real estate, the conversion of mini-warehouses
to alternative uses in connection with a sale or otherwise would generally
require substantial capital expenditures. However, the Partnership does not
intend to convert its mini-warehouses to other uses.
Commercial Properties
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The Partnership owns and operates one multi-tenant business park located in
Signal Hill, California. The business park includes both industrial and office
space. The Partnership also owns and operates a second facility, located in
Webster/NASA ,Texas, which is a combined mini-warehouse and business park
facility.
Investment Objectives and Polices; Sale or Financing of Investments
- -------------------------------------------------------------------
The Partnership's objectives are to (i) preserve and protect invested
capital, (ii) maximize the potential for appreciation in value of its
properties, (iii) provide Federal income tax deductions so that during the early
years of property operations a portion of cash distributions may be treated as a
return of capital for tax purposes, and therefore, may not represent taxable
income to the limited partners and (iv) provide for cash distributions from
operations.
The Partnership will terminate on December 31, 2015 unless earlier
dissolved. Under the terms of the general partnership agreement with PSI, as of
December 31, 1995, PSI has the right to require the Partnership to sell all of
its properties (see Item 12(c)). The Partnership originally anticipated the
sale or financing of its properties from seven to ten years after acquisition,
i.e., between late 1990 and late 1993. However, as was originally indicated in
the prospectus relating to the Partnership's offering of Units, the actual time
of financing or sale was subject to delay. Since the completion of the
Partnership's offering in 1983, significant changes have taken place in the
financial and real estate markets that must be taken into account in considering
the timing of any proposed sale or financing, including: (i) the increased
construction of mini-warehouses from 1984 to 1988, which has increased
competition, (ii) the general deterioration of the real estate market (resulting
from a variety of factors, including changes in tax laws), which has
significantly affected property values and decreased sales activities and (iii)
the reduced sources of real estate financing. Although conditions have
improved, these developments have resulted in a reduced market for the sale and
financing of commercial real estate, making this, in the view of the
Partnership, a less than optimal time to liquidate the real estate assets of the
Partnership.
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The General Partners believe that a liquidation within the period
originally estimated would not be likely to achieve the Partnership's investment
objectives. The General Partners will continue to evaluate the advisability of
the sale or financing of the Partnership's properties. Among the factors the
General Partners would consider are the amount that might be realized from a
sale or financing, the real estate and financing markets at the time and the
prospects for changes in those markets. Currently, the General Partners do not
intend to sell any properties or liquidate the Partnership since they believe
that property values are increasing, although no assurances can be given as to
any future property values.
PSI, a general partner of the Partnership, recently completed a tender
offer for Units in the Partnership. See Item 12
Operating Strategies
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The Partnership's mini-warehouses are operated by PSI under the "Public
Storage" name, which the Partnership believes is the most recognized name in the
mini-warehouse industry. The major elements of the Partnership's operating
strategies are as follows:
. Capitalize on Public Storage's name recognition. PSI, together with its
predecessor, has more than 20 years of operating experience in the mini-
warehouse business. PSI has informed the Partnership that it is the
largest mini-warehouse facility operator in the United States in terms of
both number of facilities and rentable space operated. In the past eight
years, in excess of $56 million has been expended promoting the "Public
Storage" name. PSI believes that its marketing and advertising programs
improve its competitive position in the market. PSI believes that it is
the only mini-warehouse operator regularly using television advertising
in several major markets around the country, and its in-house Yellow
Pages staff designs and places advertisements in approximately 700
directories. In addition, PSI offers a toll-free referral system, 800-
44-STORE, which services approximately 100,000 calls per year from
potential customers inquiring as to the nearest Public Storage mini-
warehouse.
. Maintain high occupancy levels and increase realized rents. Subject to
market conditions, the Partnership generally seeks to achieve average
occupancy levels in excess of 90% and to eliminate promotions prior to
increasing rental rates. Average occupancy for the Partnership's mini-
warehouses has decreased from 90% in 1994 to 89% in 1995. Realized
monthly rents per square foot increased from $.57 in 1994 to $.59 in
1995. The Partnership has increased rental rates in many markets where
it has achieved high occupancy levels and eliminated or minimized
promotions.
. Systems and controls. PSI has an organizational structure and a
property operation system, "CHAMP" (Computerized Help and Management
Program), which links its corporate office with each mini-warehouse.
This enables PSI to obtain daily information from each mini-warehouse and
to achieve efficiencies in operations and maintain control over its space
inventory, rental rates, promotional discounts and delinquencies.
Expense management is achieved through centralized payroll and accounts
payable systems and a comprehensive property tax appeals department, and
PSI has an extensive internal audit program designed to ensure proper
handling of cash collections.
. Professional property operation. In addition to the approximately 120
support personnel at the Public Storage corporate offices, there are
approximately 2,700 on-site personnel who manage the day-to-day
operations of the mini-warehouse in the Public Storage system. These on-
site personnel are supervised by 107 district managers, 14 regional
managers and three divisional managers (with an average of 12 years
experience in the mini-warehouse industry) who report to the president of
the mini-warehouse property operator (who has 11 years of experience with
the Public Storage organization). PSI carefully selects and extensively
trains the operational and support personnel and offers them a
progressive career path. See "Property Operators."
4
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Property Operators
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The Partnership's mini-warehouse properties are managed by PSI and the
Partnership's commercial properties are managed by PSCP pursuant to Management
Agreements.
Under the supervision of the Partnership, PSI and PSCP coordinate the
operation of the facilities, establish rental policies and rates, direct
marketing activity and direct the purchase of equipment and supplies,
maintenance activity, and the selection and engagement of all vendors, supplies
and independent contractors.
PSI and PSCP engage, at the expense of the Partnership, employees for the
operation of the Partnership's facilities, including resident managers,
assistant managers, relief managers, and billing and maintenance personnel.
Some or all of these employees may be employed on a part-time basis and may also
be employed by other persons, partnerships, REITs or other entities owning
facilities operated by PSI or PSCP.
In the purchasing of services such as advertising (including broadcast
media advertising) and insurance, PSI and PSCP attempt to achieve economies by
combining the resources of the various facilities that they operate. Facilities
operated by PSI and PSCP have historically carried comprehensive insurance,
including fire, earthquake, liability and extended coverage.
PSI has developed systems for space inventory, accounting and handling
delinquent accounts, including a computerized network linking PSI operated
facilities. Each project manager is furnished with detailed operating
procedures and typically receives facilities management training from PSI. Form
letters covering a variety of circumstances are also supplied to the project
managers. A record of actions taken by the project managers when delinquencies
occur is maintained.
The Partnership's facilities are typically advertised via signage, yellow
pages, flyers and broadcast media advertising (television and radio) in
geographic areas in which many of the Partnership's facilities are located.
Broadcast media and other advertising costs are charged to the Partnership's
facilities located in geographic areas affected by the advertising. From time
to time, PSI or PSCP adopt promotional programs, such as temporary rent
reductions, in selected areas or for individual facilities.
For as long as the respective Management Agreement is in effect, PSI has
granted the Partnership a non-exclusive license to use two PSI service marks and
related designs (and PSCP has granted the Partnership a non-exclusive license to
use a PSI service mark and related designs), including the "Public Storage"
name, in conjunction with rental and operation of facilities managed pursuant to
the Management Agreement. Upon termination of the respective Management
Agreement, the Partnership would no longer have the right to use the service
marks and related designs except as described below. The General Partners
believe that the loss of the right to use the service marks and related designs
could have a material adverse effect on the Partnership's business.
Each Management Agreement provides that the Management Agreement may be
terminated without cause upon 60 days written notice by the Partnership and upon
seven years notice by PSI or PSCP, as the case may be. Each Management
Agreement may also be terminated at any time by either party for cause, but if
terminated for cause by the Partnership, the Partnership retains the right to
use the service marks and related designs until a date seven years after such
termination.
Competition
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Competition in the market areas in which the Partnership operates is
significant and affects the occupancy levels, rental rates and operating
expenses of certain of the Partnership facilities. Competition may be
accelerated by any increase in availability of funds for investment in real
estate. Recent increases in plans for development of mini-warehouses is
expected to further intensify competition among mini-warehouse operators in
certain market areas. In addition to competition from mini-warehouses operated
by PSI, there are three other national firms and numerous regional and local
operators. The Partnership believes that the significant operating and
financial experience of PSI's executive officers and directors and the "Public
Storage" name, should enable the Partnership to continue to compete effectively
with other entities.
5
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Other Business Activities
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A corporation owned by the Hughes Family reinsures policies against losses
to goods stored by tenants in the Partnership's mini-warehouses. The
Partnership believes that the availability of insurance reduces the potential
liability of the Partnership to tenants for losses to their goods from theft or
destruction. This corporation receives the premiums and bears the risks
associated with the insurance.
A corporation, in which PSI has a 95% economic interest and the Hughes
Family has a 5% economic interest, sells locks, boxes and tape to tenants to be
used in securing their spaces and moving their goods. PSI believes that the
availability of locks, boxes and tape for sale promotes the rental of spaces.
Employees
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There are 87 persons who render services on behalf of the Partnership.
These persons include resident managers, assistant managers, relief managers,
district managers, and administrative personnel. Some or all of these employees
may be employed on a part-time basis and may also be employed by other persons,
partnerships, REITs or other entities owning facilities operated by PSI or PSCP.
ITEM 2. PROPERTIES.
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The following table sets forth information as of December 31, 1995 about
properties owned by the Partnership. All of these properties were acquired
jointly with PSI and were contributed to a general partnership comprised of the
Partnership and PSI.
<TABLE>
<CAPTION>
Net Number Approximate
Rentable of Date of % of
Location Square Feet Spaces Acquisition Ownership
- ----------------------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C>
ARIZONA
Tucson 63,400 585 11/02/83 72.5%
N. Romero Rd.
CALIFORNIA
Campbell 52,300 379 11/10/83 50.0
Salmar Ave.(1)
Sacramento 36,900 406 12/30/82 58.7
Folsom
Signal Hill 67,900 36 12/29/83 75.0
Junipero (2)
Ventura 51,900 526 06/17/83 68.8
Walker
COLORADO
Aurora 39,400 334 11/18/83 70.0
Hanover Way
Colorado Springs 26,500 147 05/13/83 59.7
Delta Drive
Colorado Springs 83,000 542 11/02/83 72.5
Edison Ave.
Colorado Springs 51,600 427 11/02/83 72.5
Mount View
Colorado Springs 50,400 478 01/04/83 51.6
Platte Ave.
Thornton 66,900 602 11/02/83 72.5
York St.
</TABLE>
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<TABLE>
<CAPTION>
Net Number Approximate
Rentable of Date of % of
Location Square Feet Spaces Acquisition Ownership
- ----------------------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C>
CONNECTICUT
Southington 42,600 491 09/08/83 46.5%
Spring St.
DELAWARE
Dover 51,400 587 09/20/83 50.0
Jeffric
New Castle 64,900 667 09/20/83 50.0
New Churchmans Rd
Newark 62,600 748 09/20/83 50.0
Bellevue Rd.
FLORIDA
Orlando 56,500 537 10/13/83 70.0
J. Young Parkway
Semoran 82,200 733 01/31/83 50.8
Extra
INDIANA
Ft. Wayne 42,000 447 09/20/83 70.0
Bluffton Rd.
Ft. Wayne 67,600 599 09/20/83 70.0
W. Colliseum
Hobart 81,100 470 08/31/83 70.0
Ridge Rd.
NEW JERSEY
Blackwood 64,100 594 03/29/83 44.2
Peters Lane
NEW YORK
Vailsgate 37,200 354 04/22/83 41.6
Route 94
OKLAHOMA
Oklahoma City 62,900 478 11/02/83 72.5
Reno Ave.
OREGON
Portland 34,200 367 12/30/82 58.7
Halsey
PENNSYLVANIA
Langhorne 98,800 1,141 09/20/83 50.0
S. Flower Mill
Southhampton 93,000 785 09/13/83 30.0
Jaymor
</TABLE>
7
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<TABLE>
<CAPTION>
Net Number Approximate
Rentable of Date of % of
Location Square Feet Spaces Acquisition Ownership
- ----------------------- ----------- ------- ----------- -----------
<S> <C> <C> <C> <C>
TEXAS
Webster 75,100 609 09/01/83 60.4%
Gulf Freeway
Webster (3)
NASA Rd.
mini-warehouse 97,000 934 11/10/83 70.0
business park 20,700 20 11/10/83 70.0
</TABLE>
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(1) Partially condemned during 1992. The condemnation resulted in a $795,000
and $298,000 gain in 1992 and 1993, respectively, $459,000 and $149,000 of
which was allocated to the Partnership in 1992 and 1993, respectively. See
Note 2 to the Consolidated Financial Statements following.
(2) Business Park Facility.
(3) Combined Mini-warehouse and Office Space.
The weighted average occupancy levels for the mini-warehouse and business
park facilities were 89% and 91%, respectively, in 1995 compared to 90% , for
both, in 1994. The monthly average realized rent per square foot for the mini-
warehouse and business park facilities was $.59 and $.65, respectively, in 1995
compared to $.57 and $.63, respectively, in 1994.
Substantially all of the Partnership's facilities were acquired prior to
the time that it was customary to conduct extensive environmental investigations
in connection with the property acquisitions. During the fourth quarter of
1995, an independent environmental consulting firm completed environmental
assessments on the Partnership's properties to evaluate the environmental
condition of, and potential environmental liabilities of such properties. Based
on the assessments, the Partnership believes that it is probable that it will
incur costs totaling $179,000 (in addition, approximately $37,000 was expended
for the assessments) for known environmental remediation requirements which the
Partnership has accrued and expensed at the end of 1995. The Partnership
expects to expend these funds over the next twelve months. Although there can
be no assurance, the Partnership is not aware of any environmental contamination
of its facilities which individually or in the aggregate would be material to
the Partnership's overall business, financial condition, or results of
operations.
ITEM 3. LEGAL PROCEEDINGS.
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No material legal proceeding is pending against the Partnership.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
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No matters were submitted to a vote of security holders during the fourth
quarter of 1995.
8
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PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S COMMON EQUITY AND RELATED STOCKHOLDER
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MATTERS.
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The Partnership has no common stock.
The Units are not listed on any national securities exchange or quoted on
the NASDAQ System, and there is no established public trading market for the
Units. Secondary sales activity for the Units has been limited and sporadic.
The General Partners monitor transfers of the Units (a) because the admission of
the transferee as a substitute limited partner requires the consent of the
General Partners under the Partnership's Amended and Restated Agreement of
Limited Partnership, (b) in order to ensure compliance with safe harbor
provisions to avoid treatment as a "publicly traded partnership" for tax
purposes and (c) because PSI has purchased Units. However, the General Partners
do not have information regarding the prices at which all secondary sale
transactions in the Units have been effectuated. Various organizations offer to
purchase and sell limited partnership interests (including securities of the
type such as the Units) 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 Units), including the prices at
which such secondary sales transactions are effectuated.
In addition, Dean Witter Reynolds Inc., the dealer-manager for the
Partnership's initial offering of Units, has certain information with regard to
sale transactions in the Units.
Exclusive of the General Partners' interest in the Partnership, as of
December 31, 1995, there were approximately 1,205 record holders of Units.
On February 28, 1995, PSI completed a cash tender offer, in which PSI
acquired 15,767 of the 66,000 outstanding limited partnership Units in the
Partnership at $400 per Unit. As of February 29 1996, PSI owned 40,689 Units in
the Partnership (61.65% of the outstanding Units).
The Partnership makes quarterly distributions of all "Cash Available for
Distribution" and will make distributions of "Cash from Sales or Refinancings".
Cash Available for Distribution is cash flow from all sources less cash
necessary for any obligations or capital improvements or reserves.
Reference is made to Items 6 and 7 hereof for information on the amount of
such distributions.
9
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ITEM 6. SELECTED FINANCIAL DATA.
------------------------
<TABLE>
<CAPTION>
For the Year Ended December 31,
--------------------------------------------------
1995 1994 1993 1992 1991
-------- ------- -------- ------ --------
(In thousands, except per Unit data)
<S> <C> <C> <C> <C> <C>
Revenues $10,998 $10,692 $10,113 $ 9,477 $ 9,263
Depreciation and amortization 2,263 2,141 2,028 1,870 1,780
Interest expense - - 196 477 433
Net income 2,067 2,061 1,904 1,549 1,119
Limited partners' share 1,569 1,806 1,701 1,351 858
General partners' share 498 255 203 198 261
Limited partners'
per unit data (a)
Net income $ 23.77 $ 27.36 $ 25.77 $ 20.47 $ 13.00
Cash distributions (b) (c) $ 65.10 $ 32.00 $ 25.00 $ 25.00 $ 34.04
As of December 31,
- ------------------
Cash and cash equivalents $ 511 $ 1,855 $ 831 $ 816 $ 273
Total assets 36,307 39,040 39,452 40,694 42,156
Mortgage notes payable - - - 2,157 3,989
</TABLE>
(a) Limited Partners' per unit data is based on the weighted average number of
units (66,000) outstanding during the year.
(b) The General Partners distributed, concurrent with the distributions for the
fourth quarter of 1991, a portion of the operating reserve of the
Partnership estimated to be $8.10 per Unit.
(c) The General Partners distributed, concurrently with the distributions for
the third quarter of 1995, a portion of the operating cash reserve of the
Partnership estimated to be $22.95 per Unit.
10
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------- ---------------------------------------------------------------
RESULTS OF OPERATIONS.
---------------------
Results of Operations
- ---------------------
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994:
The Partnership's net income in 1995 was $2,067,000 compared to $2,061,000
in 1994, representing an increase of $6,000. The increase was primarily due to
improved property operations at the Partnership's real estate facilities
combined with reduced minority interest in income for those properties held
jointly with PSI, partially offset by increased environmental costs.
Property net operating income (rental income less cost of operations and
management fees and excluding depreciation expense) increased approximately
$149,000 or 2% in 1995 compared to 1994, as rental income increased by $260,000
or 2%, and cost of operations (including management fees) increased by $111,000
or 3%.
Rental income for the Partnership's mini-warehouse operations was
$10,256,000 in 1995 compared to $10,039,000 in 1994, representing an increase of
$217,000, or 2%. The increase in rental income was primarily attributable to
increased rental rates. The weighted average occupancy levels at the mini-
warehouse facilities were 89% in 1995 compared to 90% in 1994. The monthly
average realized rent per square foot for the mini-warehouse facilities was $.59
in 1995 compared to $.57 in 1994. Costs of operations (including management
fees) for the mini-warehouses increased $103,000 or 3%, to $3,735,000 in 1995
from $3,632,000 in 1994. Accordingly, for the Partnership's mini-warehouse
operations, property net operating income increased by $114,000 or 2% from
$6,407,000 in 1994 to $6,521,000 in 1995.
Rental income for the Partnership's business park operations was $649,000
in 1995 compared to $606,000 in 1994, representing an increase of $43,000 or 7%.
The increase in rental income was primarily attributable to increased rental
rates, combined with increased occupancy levels. The weighted average occupancy
levels at the business park facilities were 91% in 1995 compared to 90% in 1994.
The monthly average realized rent per square foot for the business park
facilities was $.65 in 1995 compared to $.63 in 1994. Cost of operations
(including management fees) for the business parks increased $8,000 or 3% to
$292,000 in 1995 from $284,000 in 1994. Accordingly, for the Partnership's
business park facilities, property net operating income increased by $35,000 or
11% from $322,000 in 1994 to $357,000 in 1995.
Substantially all of the Partnership's facilities were acquired prior to
the time that it was customary to conduct extensive environmental investigations
in connection with the property acquisitions. During the fourth quarter of
1995, an independent environmental consulting firm completed environmental
assessments on the Partnership's properties to evaluate the environmental
condition of, and potential environmental liabilities of such properties. Based
on the assessments, the Partnership believes that it is probable that it will
incur costs totaling $179,000 (in addition, approximately $37,000 was expended
for the assessments) for known environmental remediation requirements which the
Partnership has accrued and expensed at the end of 1995. The Partnership
expects to expend these funds over the next twelve months. Although there can
be no assurance, the Partnership is not aware of any environmental contamination
of its facilities which individually or in the aggregate would be material to
the Partnership's overall business, financial condition, or results of
operations.
Minority interest in income decreased by $134,000 in 1995 compared to 1994.
This decrease was primarily attributed to the allocation of depreciation and
amortization expense (pursuant to the partnership agreement with respect to
those real estate facilities which are jointly owned by PSI) to PSI of $465,000
compared to $327,000 for 1995 and 1994, respectively, partially offset by an
increase in operations at the Partnership's real estate facilities owned jointly
with PSI.
11
<PAGE>
YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993:
The Partnership's net income in 1994 was $2,061,000 compared to $1,904,000
in 1993, representing an increase of $157,000. Net income in 1993 includes a
gain on the condemnation of a real estate facility totaling $298,000.
Accordingly, income prior to the gain increased by $455,000 in 1994 compared to
1993. The increase was primarily due to improved property operations at the
Partnership's real estate facilities combined with reduced interest expense,
partially offset by increased depreciation expense.
Property net operating income (rental income less cost of operations and
management fees and excluding depreciation expense) increased approximately
$427,000 or 7% in 1994 compared to 1993, as rental income increased by $567,000
or 6%, and cost of operations (including management fees) increased by $140,000
or 4%.
Rental income for the Partnership's mini-warehouse operations was
$10,039,000 in 1994 compared to $9,451,000 in 1993, representing an increase of
$588,000, or 6%. The increase in rental income was primarily attributable to
increased occupancy levels at the mini-warehouse facilities, combined with
increased rental rates. The weighted average occupancy levels at the mini-
warehouse facilities were 90% in 1994 compared to 89% in 1993. The monthly
average realized rent per square foot for the mini-warehouse facilities was $.57
in 1994 compared to $.54 in 1993. Costs of operations (including management
fees) for the mini-warehouses increased $164,000 or 5%, to $3,632,000 in 1994
from $3,468,000 in 1993. Accordingly, for the Partnership's mini-warehouse
operations, property net operating income increased by $424,000 or 7% from
$5,983,000 in 1993 to $6,407,000 in 1994.
Rental income for the Partnership's business park operations was $606,000
in 1994 compared to $627,000 in 1993, representing a decrease of $21,000 or 3%.
The decrease in rental income was primarily attributable to decreased rental
rates, partially offset by increased occupancy levels. The weighted average
occupancy levels at the business park facilities were 90% in 1994 compared to
88% in 1993. The monthly average realized rent per square foot for the business
park facilities was $.63 in 1994 compared to $.65 in 1993. Cost of operations
(including management fees) for the business parks decreased $24,000 or 8% to
$284,000 in 1994 from $308,000 in 1993. Accordingly, for the Partnership's
business park facilities, property net operating income increased by $3,000 or
1% from $319,000 in 1993 to $322,000 in 1994.
During 1993, the Partnership prepaid all of its mortgage notes payable. As
a result of the 1993 reductions in mortgage notes payable, there was no
interest expense in 1994 compared to $196,000 in 1993.
In 1992, a mini-warehouse facility located in Campbell, California was
partially condemned by a governmental authority exercising its right of eminent
domain. The partial condemnation of the facility, which is jointly owned by the
Partnership (50% ownership) and PSI (50% ownership), resulted in a gain of
$795,000 in 1992 of which $459,000 was allocated to the Partnership in
accordance with the joint venture agreement. The Partnership contested the
initial condemnation proceeds of $1,524,000 and in June 1993 agreed to a final
settlement in which an additional amount of $396,000 was paid to the
Partnership. Accordingly, the Partnership recognized a gain of $298,000 (net of
related expenses) in 1993 of which $149,000 has been allocated to PSI and
included in minority interest in income.
Liquidity and Capital Resources
- -------------------------------
The Partnership has adequate sources of cash to finance its operations,
both on a short-term and long-term basis, primarily by internally generated cash
from property operations combined with cash on-hand at December 31, 1995 of
approximately $511,000.
Cash flows from operating activities ($6,846,000 for the year ended
December 31, 1995) have been sufficient to meet all current obligations of the
Partnership. Total capital improvements were $803,000, $694,000 and $717,000 in
1995, 1994 and 1993, respectively. During 1996, the Partnership anticipates
approximately $909,000 of capital improvements (of which $372,000 represents
PSI's joint venture share). During 1995, the Partnership's property manager
commenced a program to enhance the visual appearance of the mini-warehouse
facilities managed by it. Such
12
<PAGE>
enhancements will include new signs, exterior color schemes, and improvements to
the rental offices. Included in the 1996 capital improvement budget are
estimated costs of $163,000 for such enhancements.
The Partnership expects to continue making quarterly distributions. Total
distributions paid to the General Partners and the limited partners (including
per Unit amounts) for 1995 and prior years were as follows:
<TABLE>
<CAPTION>
Total Per Unit
---------- --------
<S> <C> <C>
1995 $4,823,000 $65.10
1994 2,371,000 32.00
1993 1,850,000 25.00
1992 1,850,000 25.00
1991 2,522,000 34.04
1990 347,000 4.70
1989 2,223,000 30.00
1988 2,222,000 30.00
1987 2,222,000 30.00
1986 2,407,000 32.50
1985 2,963,000 40.00
1984 2,963,000 40.00
1983 2,407,000 32.50
</TABLE>
Distributions were reduced significantly in 1990 in order to payoff short-
term borrowings as well as the prepayment of long-term borrowings. In 1991, the
General Partners distributed a portion of the operating cash reserve of the
Partnership. The operating reserve that was distributed was estimated at $8.10
per unit. During 1992, 1993 and 1994, the distribution level was adjusted to a
level supported by property operations after reduction for funds needed for
capital improvements, debt service and necessary cash reserves. The 1995
distribution includes a portion of the operating cash reserve of the
Partnership, estimated to be $22.95 per Unit. The 1996 distributions are
estimated to be $43.20 per Unit, assuming no material change in property
operations.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
-------------------------------------------
The Partnership's financial statements are included elsewhere herein.
Reference is made to the Index to Consolidated Financial Statements and
Financial Statement Schedules in Item 14(a).
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
----------------------------------------------------
None.
13
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP.
---------------------------------------------------
The Partnership has no directors or executive officers.
The Partnership's General Partners are PSI and B. Wayne Hughes. PSI,
acting through its directors and executive officers, and Mr. Hughes manage and
make investment decisions for the Partnership. The Partnership's properties are
operated by PSI and PSCP, a subsidiary of PSI.
The names of all directors and executive officers of PSI, the offices held
by each of them with PSI, and their ages and business experience during the past
five years are as follows:
<TABLE>
<CAPTION>
Name Positions with PSI
- --------------------- -----------------------------------------------------
<S> <C>
B. Wayne Hughes Chairman of the Board and Chief Executive Officer
Harvey Lenkin President and Director
Ronald L. Havner, Jr Senior Vice President and Chief Financial Officer
Hugh W. Horne Senior Vice President
Obren B. Gerich Senior Vice President
Marvin M. Lotz Senior Vice President
Mary Jayne Howard Senior Vice President
David Goldberg Senior Vice President and General Counsel
John Reyes Vice President and Controller
Sarah Hass Vice President and Secretary
Robert J. Abernethy Director
Dann V. Angeloff Director
William C. Baker Director
Uri P. Harkham Director
Berry Holmes Director
</TABLE>
B. Wayne Hughes, age 62, a general partner of the Partnership, has been a
director of PSI since its organization in 1980 and was President and Co-Chief
Executive Officer from 1980 until November 1991 when he became Chairman of the
Board and sole Chief Executive Officer. Mr. Hughes has been a director of
Storage Properties, Inc. ("SPI"), a real estate investment trust whose
investment adviser is PSI, since 1989. Since 1990, Mr. Hughes has been Chairman
of the Board of Public Storage Properties X, Inc., Public Storage Properties XI,
Inc., Public Storage Properties XII, Inc., Public Storage Properties XIV, Inc.,
Public Storage Properties XV, Inc., Public Storage Properties XVI, Inc., Public
Storage Properties XVII, Inc., Public Storage Properties XVIII, Inc., Public
Storage Properties XIX, Inc., Public Storage Properties XX, Inc., Partners
Preferred Yield, Inc., Partners Preferred Yield II, Inc. and Partners Preferred
Yield III, Inc. (collectively, the "Public Storage Properties REITs"), real
estate investment trusts organized by affiliates of PSMI. Mr. Hughes has been
active in the real estate investment field for over 25 years.
Harvey Lenkin, age 59, became President and a director of PSI in November
1991. He has been President of the Public Storage Properties REITs since 1990.
He was President of PSMI from January 1978 until September 1988, when he became
Chairman of the Board of PSMI and assumed overall responsibility for investment
banking and investor relations. In 1989, Mr. Lenkin became President and a
director of SPI.
Ronald L. Havner Jr., age 38, a certified public accountant, became an
officer of PSI in 1990, Chief Financial Officer in November 1991 and Senior Vice
President of PSI in November 1995. He was an officer of PSMI from 1986 to 1995
and Chief Financial Officer of PSMI and its affiliates from 1991 to November
1995. Mr. Havner has been an officer of SPI since 1989 and Chief Financial
Officer of SPI since November 1991. He has been a Vice President of the Public
Storage Properties REITS since 1990 and was Controller from 1990 to November
1995 when he became Chief Financial Officer.
14
<PAGE>
Hugh W. Horne, age 51, has been a Vice President of PSI since 1980 and was
Secretary of PSI from 1980 until February 1992 and became Senior Vice President
of PSI in November 1995. He was an officer of PSMI from 1973 to November 1995.
Mr. Horne has been a Vice President of SPI since 1989 and of the Public Storage
Properties REITs since 1993. He is responsible for managing all aspects of
property acquisition for PSI.
Obren B. Gerich, age 56, a certified public accountant and certified
financial planner, has been a Vice President of PSI since 1980 and became Senior
Vice President of PSI in November 1995. He was Chief Financial Officer of PSI
until November 1991. Mr. Gerich was an officer of PSMI from 1975 to November
1995. Mr. Gerich has been Vice President and Secretary of SPI since 1989 and
was Chief Financial Office of SPI until November 1991. He has been Vice
President and Secretary of the Public Storage Properties REITS since 1990 and
was Chief Financial Officer until November 1995.
Marvin M. Lotz, age 53, has had overall responsibility for Public Storage's
mini-warehouse operations since 1988. He became a Senior Vice President of PSI
in November 1995. Mr. Lotz was an officer of PSMI with responsibility for
property acquisitions from 1983 until 1988.
Mary Jayne Howard, age 50, has had overall responsibility for Public
Storage's commercial property operations since December 1985. She became a
Senior Vice President of PSI in November 1995.
David Goldberg, age 46, joined PSMI's legal staff in June 1991, rendering
services on behalf of PSI and PSMI. He became a Senior Vice President and
General Counsel of PSI in November 1995. From December 1982 until May 1991, he
was a partner in the law firm of Sachs & Phelps, then counsel to PSI and PSMI.
John Reyes, age 35, a certified public accountant, joined PSMI in 1990 and
has been the Controller of PSI since 1992. He became a Vice President of PSI in
November 1995. From 1983 to 1990, Mr. Reyes was employed by Ernst & Young.
Sarah Hass, age 40, became Secretary of PSI in February 1992. She became a
Vice President of PSI in November 1995. She joined PSMI's legal department in
June 1991, rendering services on behalf of PSI and PSMI. From 1987 until May
1991, her professional corporation was a partner in the law firm of Sachs &
Phelps, then counsel to PSI and PSMI, and from April 1986 until June 1987, she
was associated with that firm, practicing in the area of securities law. From
September 1979 until September 1985, Ms. Hass was associated with the law firm
of Rifkind & Sterling, Incorporated.
Robert J. Abernethy, age 55, is President of American Standard Development
Company and of Self-Storage Management Company, which develop and operate mini-
warehouses. Mr. Abernethy has been a director of PSI since its organization.
He is a member of Johns Hopkins University and of the Los Angeles County
Metropolitan Transportation Authority and a former member of the board of
directors of the Metropolitan Water District of Southern California.
Dann V. Angeloff, age 60, is President of the Angeloff Company, a corporate
financial advisory firm. The Angeloff Company has rendered, and is expected to
continue to render, financial advisory and securities brokerage services for
PSI. Mr. Angeloff is the general partner of a limited partnership that owns a
mini-warehouse operated by PSI and which secures a note owned by PSI. Mr.
Angeloff has been a director of PSI since its organization. He is a director of
Compensation Resource Group, Datametrics Corporation, Nicholas/Applegate Growth
Equity Fund, Nicholas/Applegate Investment Trust, Royce Medical Company, Seda
Specialty Packaging Corp., and SPI.
William C. Baker, age 62, became a director of PSI in November 1991. From
April 1993 through May 1995, Mr. Baker was President of Red Robin International,
Inc., an operator and franchiser of casual dining restaurants in the United
States and Canada. Since January 1992, he has been Chairman and Chief Executive
Officer of Carolina Restaurant Enterprises, Inc., a franchisee of Red Robin
International, Inc. From 1976 to 1988, he was a principal shareholder and
Chairman and Chief Executive Officer of Del Taco, Inc., an operator and
franchiser of fast food restaurants in California. Mr. Baker is a director of
Santa Anita Realty Enterprises, Inc., Santa Anita Operating Company and Callaway
Golf Company.
15
<PAGE>
Uri P. Harkham, age 47, became a director of PSI in March 1993. Mr.
Harkham has been the President and Chief Executive Officer of the Jonathan
Martin Fashion Group, which specializes in designing, manufacturing and
marketing women's clothing, since its organization in 1976. Since 1978, Mr.
Harkham has been the Chairman of the Board of Harkham Properties, a real estate
firm specializing in buying and managing fashion warehouses in Los Angeles and
Australia.
Berry Holmes, age 65, is a private investor. Mr. Holmes has been a
director of PSI since its organization. He was President and a director of
Financial Corporation of Santa Barbara and Santa Barbara Savings and Loan
Association through 1983 and was a consultant with Santa Barbara Savings and
Loan Association during 1984. Mr. Holmes is a director of SPI.
Pursuant to Articles 16 and 17 of the Partnership's Amended Certificate and
Agreement of Limited Partnership (the "Partnership Agreement"), a copy of which
is included in the Partnership's prospectus included in the Partnership's
Registration Statement, File No. 2-77224, each of the General Partners
continues to serve until (i) death, insanity, insolvency, bankruptcy or
dissolution, (ii) withdrawal with the consent of the other general partner and a
majority vote of the limited partners, or (iii) removal by a majority vote of
the limited partners.
Each director of PSI serves until he resigns or is removed from office by
PSI, and may resign or be removed from office at any time with or without cause.
Each officer of PSI serves until he resigns or is removed by the board of
directors of PSI. Any such officer may resign or be removed from office at any
time with or without cause.
There have been no events under any bankruptcy act, no criminal
proceedings, and no judgments or injunctions material to the evaluation of the
ability of any director or executive officer of PSI during the past five years.
ITEM 11. EXECUTIVE COMPENSATION.
----------------------
The Partnership has no subsidiaries, directors or officers. See Item 13
for a description of certain transactions between the Partnership and the
General Partners and their affiliates.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
--------------------------------------------------------------
(a) At February 29, 1996, PSI owned 5% or more of the Units of the
Partnership:
<TABLE>
<CAPTION>
Title Name and Address Amount of Beneficial Percent
of Class of Beneficial Owner Ownership of Class
- --------------------- -------------------------- --------------------- --------
<S> <C> <C> <C>
Units of Limited Public Storage, Inc. 40,689 units 61.65%
Partnership Interest 600 North Brand Blvd.
Glendale, California 91203
</TABLE>
The Partnership is not aware of any other beneficial owners of more
than 5% of the Units.
On February 28, 1995, PSI completed a cash tender offer in which PSI
acquired 15,767 of the 66,000 outstanding limited partnership units in the
Partnership at $400 per Unit.
(b) The Partnership has no officers and directors.
The General Partners (or their predecessor-in-interest) have
contributed $333,000 to the capital of the Partnership representing 1% of
the aggregate capital contributions and as a result participate in the
distributions to the limited partners and in the Partnership's profits and
losses in the same proportion that the general partners' capital
contribution bears to the total capital contribution. Information
regarding ownership of the Units by PSI, a General Partner, is set forth
under section (a) above. The directors and executive officers of PSI, as a
group, do not own any Units.
16
<PAGE>
(c) The Partnership knows of no contractual arrangements, the operation of
the terms of which may at a subsequent date result in a change in control
of the Partnership, except for articles 16, 17 and 21.1 of the
Partnership's Amended Certificate and Agreement of Limited Partnership, a
copy of which is included in the Partnership's prospectus included in the
Partnership's Registration Statement File No. 2-77224. Those articles
provide, in substance, that the limited partners shall have the right, by
majority vote, to remove a general partner and that a general partner may
designate a successor with the consent of the other general partner and a
majority of the limited partners.
The Partnership owns interests in 28 properties, all of these
properties are held in a general partnership comprised of the Partnership
and PSI. Under the terms of the partnership agreement relating to the
ownership of the properties, PSI has the right to compel a sale of each
property at any time after seven years from the date of acquisition at not
less than its independently determined fair market value provided the
Partnership receives its share of the net sales proceeds solely in cash.
As of December 31, 1995, PSI has the right to require the Partnership to
sell all of the joint venture properties on these terms.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
----------------------------------------------
The Partnership Agreement provides that the General Partners and their
affiliates are entitled to the following compensation:
1. Incentive distributions equal to 10% of Cash Flow from Operations.
2. Provided the limited partners have received distributions equal to 100%
of their investment plus a cumulative 8% per year (not compounded) on
their investment (reduced by distributions other than from Cash Flow
from Operations), subordinated incentive distributions equal to 15% of
remaining Cash from Sales or Refinancings.
3. Provided the limited partners have received distributions equal to 100%
of their capital contributions plus a cumulative 6% per year (not
compounded) on their investment (reduced by distributions other than
distributions from Cash Flow from Operations), brokerage commissions at
the lesser of 3% of the sales price of a property or 50% of a
competitive commission.
During 1995, approximately $482,000 was paid to PSI with respect items 1,
2, and 3 above. The Partnership owns interests in 28 properties; all of these
properties are held in a general partnership comprised of the Partnership and
PSI.
The Partnership has Management Agreements with PSI (as successor-in-
interest to PSMI) and PSCP. Under the Management Agreements, the Partnership
pays PSI (and previously paid PSMI) a fee of 6% of the gross revenues of the
mini-warehouse spaces operated for the Partnership and pays PSCP a fee of 5% of
the gross revenues of the Partnership's non-mini-warehouse space. During 1995,
the Partnership paid or accrued fees of $538,000 to PSMI, $78,000 to PSI and
$33,000 to PSCP pursuant to the Management Agreements.
17
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
---------------------------------------------------------------
(a) List of Documents filed as part of the Report.
1. Financial Statements: See Index to Consolidated Financial
Statements and Financial Statement Schedules.
2. Financial Statement Schedules: See Index to Consolidated
Financial Statements and Financial Statement Schedules.
3. Exhibits: See Exhibit Index contained herein.
(b) Reports on Form 8-K:
None
(c) Exhibits: See Exhibit Index contained herein.
18
<PAGE>
PS PARTNERS, LTD.,
INDEX TO EXHIBITS
3.1 Amended Certificate and Agreement of Limited Partnership. Previously filed
with the Securities and Exchange Commission as Exhibit A to the
Partnership's Prospectus included in Registration Statement No. 2-77224
and incorporated herein by reference.
10.1 Amended Management Agreement dated February 21, 1995, between Storage
Equities, Inc. and Public Storage Management, Inc. Previously filed with
the Securities and Exchange Commission as an exhibit to the Partnership's
Annual Report on Form 10-K for the year ended December 31, 1994 and
incorporated herein by reference.
10.2 Amended Management Agreement dated February 21, 1995 between Storage
Equities, Inc. and Public Storage Commercial Properties Group, Inc.
Previously filed with the Securities and Exchange Commission as an exhibit
to the Partnership's Annual Report on Form 10-K for the year ended
December 31, 1994 and incorporated herein by reference.
10.3 Participation Agreement dated as of September 14, 1982, among Storage
Equities, Inc., the Partnership, Public Storage, Inc., B. Wayne Hughes and
Kenneth Q. Volk, Jr. Previously filed with the Securities and Exchange
Commission as an exhibit to Storage Equities, Inc.'s Annual Report on Form
8-K dated September 14, 1982 and incorporated herein by reference.
27 Financial data schedule. Filed herewith.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Partnership has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
PS PARTNERS, LTD.
Dated: March 25, 1996 By: Public Storage, Inc., General Partner
By: /s/ B. Wayne Hughes
--------------------------------------
B. Wayne Hughes, Chairman of the Board
/s/ B. Wayne Hughes
--------------------------------------
B. Wayne Hughes, General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Partnership in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
- --------------------------- ------------------------------- ------------
<S> <C> <C>
/s/ B. Wayne Hughes Chairman of the Board and Chief March 25, 1996
- --------------------------- Executive Officer of Public
B. Wayne Hughes Storage, Inc. and General
Partner (principal executive
officer)
/s/ Harvey Lenkin President and Director March 25, 1996
- --------------------------- of Public Storage, Inc.
Harvey Lenkin
/s/ Ronald L. Havner, Jr. Senior Vice President and Chief March 25, 1996
- --------------------------- Financial Officer
Ronald L. Havner, Jr. of Public Storage, Inc.
(principal financial officer)
/s/ John Reyes Vice President and Controller of March 25, 1996
- --------------------------- Public Storage, Inc. (principal
John Reyes accounting officer)
/s/ Robert J. Abernethy Director of Public Storage, Inc. March 25, 1996
- ---------------------------
Robert J. Abernethy
/s/ Dann V. Angeloff Director of Public Storage, Inc. March 25, 1996
- ---------------------------
Dann V. Angeloff
/s/ William C. Baker Director of Public Storage, Inc. March 25, 1996
- ---------------------------
William C. Baker
/s/ Uri P. Harkham Director of Public Storage, Inc. March 25, 1996
- ---------------------------
Uri P. Harkham
/s/ Berry Holmes Director of Public Storage, Inc. March 25, 1996
- ---------------------------
Berry Holmes
</TABLE>
20
<PAGE>
PS PARTNERS, LTD.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
(Item 14 (a))
<TABLE>
<CAPTION>
Page
References
----------
<S> <C>
Report of Independent Auditors F-1
Consolidated Financial Statements and Schedules:
Consolidated Balance Sheets as of December 31, 1995 and 1994 F-2
For the years ended December 31, 1995, 1994 and 1993:
Consolidated Statements of Income F-3
Consolidated Statements of Partners' Equity F-4
Consolidated Statements of Cash Flows F-5
Notes to Consolidated Financial Statements F-6 - F-8
Schedule
III- Real Estate and Accumulated Depreciation F-9 - F-11
</TABLE>
All other schedules have been omitted since the required information is not
present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the consolidated
financial statements or the notes thereto.
21
<PAGE>
Report of Independent Auditors
The Partners
PS Partners, Ltd.
We have audited the consolidated balance sheets of PS Partners, Ltd. as of
December 31, 1995 and 1994 and the related consolidated statements of income,
partners' equity, and cash flows for each of the three years in the period ended
December 31, 1995. Our audits also included the financial statement schedule
listed in the Index at Item 14(a). These financial statements and schedule are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements and schedule 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 financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of PS
Partners, Ltd. at December 31, 1995 and 1994, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
ERNST & YOUNG LLP
Los Angeles, CA
March 11, 1996
F-1
<PAGE>
PS PARTNERS, LTD.
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 511,000 $ 1,855,000
Rent and other receivables 121,000 57,000
Real estate facilities, at cost:
Land 11,855,000 11,855,000
Buildings and equipment 45,866,000 45,063,000
------------ ------------
57,721,000 56,918,000
Less accumulated depreciation (22,175,000) (19,913,000)
------------ ------------
35,546,000 37,005,000
Other assets 129,000 123,000
------------ ------------
$ 36,307,000 $ 39,040,000
============ ============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 746,000 $ 486,000
Advance payments from renters 391,000 405,000
Minority interest in general partnerships 21,317,000 21,540,000
Partners' equity:
Limited partners' equity, $500 per
unit, 66,000 units authorized, issued
and outstanding 13,671,000 16,399,000
General partners' equity 182,000 210,000
------------ ------------
Total partners' equity 13,853,000 16,609,000
------------ ------------
$ 36,307,000 $ 39,040,000
============ ============
</TABLE>
See accompanying notes.
F-2
<PAGE>
PS PARTNERS, LTD.
CONSOLIDATED STATEMENTS OF INCOME
For the years ended December 31, 1995, 1994, and 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
REVENUE:
Rental income $10,905,000 $10,645,000 $10,078,000
Interest income 93,000 47,000 35,000
----------- ----------- -----------
10,998,000 10,692,000 10,113,000
----------- ----------- -----------
COSTS AND EXPENSES:
Cost of operations 3,378,000 3,283,000 3,177,000
Management fees 649,000 633,000 599,000
Depreciation and amortization 2,263,000 2,141,000 2,028,000
Interest expense - - 196,000
Administrative 84,000 99,000 101,000
Environmental costs 216,000 - -
----------- ----------- -----------
6,590,000 6,156,000 6,101,000
----------- ----------- -----------
Income before minority interest
and gain on condemnation 4,408,000 4,536,000 4,012,000
Minority interest in income (including
allocated gain of $149,000 on
condemnation in 1993) 2,341,000 2,475,000 2,406,000
----------- ----------- -----------
Income before gain on condemnation 2,067,000 2,061,000 1,606,000
Gain on condemnation of real estate
facility - - 298,000
----------- ----------- -----------
NET INCOME $ 2,067,000 $ 2,061,000 $ 1,904,000
============ =========== ===========
Limited partners' share of net income
($23.77, $27.36, and $25.77 per
unit in 1995, 1994, and 1993,
respectively) $ 1,569,000 $ 1,806,000 $ 1,701,000
General partners' share of net income 498,000 255,000 203,000
----------- ----------- -----------
$ 2,067,000 $ 2,061,000 $ 1,904,000
=========== =========== ===========
</TABLE>
See accompanying notes.
F-3
<PAGE>
PS PARTNERS, LTD.
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
For the years ended December 31, 1995, 1994, and 1993
<TABLE>
<CAPTION>
Limited General
Partners Partners Total
------------ ---------- ------------
<S> <C> <C> <C>
Balances at December 31, 1992 $16,653,000 $ 212,000 $16,865,000
Net income 1,701,000 203,000 1,904,000
Distributions (1,649,000) (201,000) (1,850,000)
----------- --------- -----------
Balances at December 31, 1993 16,705,000 214,000 16,919,000
Net income 1,806,000 255,000 2,061,000
Distributions (2,112,000) (259,000) (2,371,000)
----------- --------- -----------
Balances at December 31, 1994 16,399,000 210,000 16,609,000
Net income 1,569,000 498,000 2,067,000
Distributions (4,297,000) (526,000) (4,823,000)
----------- --------- -----------
Balances at December 31, 1995 $13,671,000 $ 182,000 $13,853,000
=========== ========= ===========
</TABLE>
See accompanying notes.
F-4
<PAGE>
PS PARTNERS, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1995, 1994, and 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,067,000 $ 2,061,000 $ 1,904,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 2,263,000 2,141,000 2,028,000
Gain on condemnation of a real estate facility - - (298,000)
(Increase) decrease in rent and other receivables (64,000) (9,000) 20,000
Increase in other assets (7,000) (2,000) (74,000)
Increase (decrease) in accounts payable 260,000 (5,000) 91,000
(Decrease) increase in advance payments from renters (14,000) (39,000) 24,000
Minority interest in income 2,341,000 2,475,000 2,406,000
----------- ----------- -----------
Total adjustments 4,779,000 4,561,000 4,197,000
----------- ----------- -----------
Net cash provided by operating activities 6,846,000 6,622,000 6,101,000
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from condemnation of a real estate facility - - 298,000
Additions to real estate facilities (803,000) (694,000) (717,000)
----------- ----------- -----------
Net cash used in investing activities (803,000) (694,000) (419,000)
----------- ----------- -----------
Cash flows from financing activities:
Principal payments on mortgage notes payable - - (2,157,000)
Distributions to holder of minority interest (2,564,000) (2,533,000) (1,660,000)
Distributions to partners (4,823,000) (2,371,000) (1,850,000)
----------- ----------- -----------
Net cash used in financing activities (7,387,000) (4,904,000) (5,667,000)
----------- ----------- -----------
Net (decrease) increase in cash and cash equivalents (1,344,000) 1,024,000 15,000
Cash and cash equivalents at the beginning of the year 1,855,000 831,000 816,000
----------- ----------- -----------
Cash and cash equivalents at the end of the year $ 511,000 $ 1,855,000 $ 831,000
=========== =========== ===========
</TABLE>
See accompanying notes.
F-5
<PAGE>
PS PARTNERS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. Summary of Significant Accounting Policies and Partnership Matters
------------------------------------------------------------------
Description of Partnership
--------------------------
PS Partners, Ltd. (the "Partnership") was formed with the proceeds of
an interstate public offering. PSI Associates II, Inc. ("PSA"), an
affiliate of Public Storage Management, Inc., organized the Partnership
along with B. Wayne Hughes ("Hughes"). In September 1993, Storage
Equities, Inc., now known as Public Storage, Inc. ("PSI") acquired the
interest of PSA relating to its general partner capital contribution in the
Partnership and was substituted as a co-general partner in place of PSA.
In 1995, there were a series of mergers among Public Storage
Management, Inc. (which was the Partnership's mini-warehouse operator),
Public Storage, Inc. and their affiliates (collectively, "PSMI"),
culminating in the November 16, 1995 merger (the "PSMI Merger") of PSMI
into Storage Equities, Inc. In the PSMI Merger, Storage Equities, Inc.'s
name was changed to Public Storage, Inc. and it acquired substantially all
of PSMI's United States real estate operations and became the operator of
the Partnership's mini-warehouse properties.
The Partnership has invested in existing mini-warehouse storage
facilities which offer self-service storage spaces for lease, usually on a
month-to-month basis, to the general public and, to a lesser extent, in
existing business park facilities which offer industrial and office space
for lease.
The Partnership has ownership interests in 28 properties; all of
which are owned jointly through general partnerships (the "Joint Ventures")
with PSI. The Partnership is the managing general partner of the Joint
Ventures, with ownership interests in the Joint Ventures ranging from 30%
to 75%.
Basis of Presentation
---------------------
The consolidated financial statements include the accounts of the
Partnership and the Joint Ventures. PSI's ownership interest in the Joint
Ventures is shown as minority interest in general partnerships in the
accompanying consolidated balance sheets. All significant intercompany
balances and transactions have been eliminated.
Minority interest in income represents PSI's share of net income with
respect to the Joint Ventures. Under the terms of the partnership
agreements all depreciation and amortization with respect to each Joint
Venture is allocated solely to the Partnership until the limited partners
recover their initial capital contribution. Thereafter, all depreciation
and amortization is allocated solely to PSI until it recovers its initial
capital contribution. All remaining depreciation and amortization is
allocated to the Partnership and PSI in proportion to their ownership
percentages.
Depreciation and amortization allocated to PSI was $465,000 in 1995,
$327,000 in 1994 and $275,000 in 1993. The allocation of depreciation and
amortization to PSI has the effect of reducing minority interest in income
and has no effect on the reported depreciation and amortization expense.
Under the terms of the partnership agreements, for property
acquisitions in which PSI issued convertible securities to the sellers for
its interest, PSI's rights to receive cash flow distributions from the
partnerships for any year after the first year of operation are
subordinated to cash distributions to the Partnership equal to a cumulative
annual 7% of its cash investment (not compounded). These agreements also
specify that upon sale or refinancing of a property for more than its
original purchase price, distribution of proceeds to PSI is subordinated to
the return to the Partnership of the amount of its cash investment and the
7% distribution described above.
F-6
<PAGE>
PS PARTNERS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. Summary of Significant Accounting Policies and Partnership Matters
------------------------------------------------------------------
(continued)
-----------
Basis of Presentation (continued)
----------------------------------
In addition to the above provisions, PSI has the right to compel the
sale of each property in the general partnerships at any time after seven
years from the date of acquisition at not less than its independently
determined fair market value provided the Partnership receives its share of
the net sales proceeds solely in cash. PSI's right to require the
Partnership to sell all of its properties became exercisable in 1990.
Depreciation and Amortization
-----------------------------
The Partnership depreciates the buildings and equipment on the
straight-line method over estimated useful lives of 25 and 5 years,
respectively. Leasing commissions relating to business park properties are
expensed when incurred.
Revenue Recognition
-------------------
Property rents are recognized as earned.
Allocation of Net Income
------------------------
The General Partners' share of net income consists of an amount
attributable to their 1% capital contribution and an additional percentage
of cash flow (as defined, see Note 3) which relates to the General
Partners' share of cash distributions as set forth in the Partnership
Agreement. All remaining net income is allocated to the limited partners.
Per Unit Data
-------------
Per unit data is based on the number of limited partnership units
(66,000) outstanding during the year.
Cash Distributions
------------------
The Partnership Agreement provides for quarterly distributions of cash
flow from operations (as defined). Cash distributions per unit were
$65.10 for 1995, $32.00 for 1994 and $25.00 for 1993.
Cash and Cash Equivalents
-------------------------
For financial statement purposes, the Partnership considers all highly
liquid investments purchased with a maturity of three months or less to be
cash equivalents.
Environmental Cost
------------------
Substantially all of the Partnership's facilities were acquired prior
to the time that it was customary to conduct extensive environmental
investigations in connection with the property acquisitions. During the
fourth quarter of 1995, an independent environmental consulting firm
completed environmental assessments on the Partnership's properties to
evaluate the environmental condition of, and potential environmental
liabilities of such properties. Based on the assessments, the Partnership
believes that it is probable that it will incur costs totaling $179,000 (in
addition, approximately $37,000 was expended for the assessments) for known
environmental remediation requirements which the Partnership has accrued
and expensed at the end of 1995. The Partnership expects to expend these
funds over the next twelve months. Although there can be no assurance, the
Partnership is not aware of any environmental contamination of its
facilities which individually or in the aggregate would be material to the
Partnership's overall business, financial condition, or results of
operations.
2. Real Estate Facilities
----------------------
During 1992, a mini-warehouse facility located in Campbell, California
was partially condemned by a governmental authority exercising its right of
eminent domain. The partial condemnation of the facility, which is owned
jointly by the Partnership (50% ownership) and PSI (50% ownership),
resulted in gross condemnation of approximately $1,524,000 and a
corresponding gain of approximately $795,000 in 1992.
F-7
<PAGE>
PS PARTNERS, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
2. Real Estate Facilities (continued)
----------------------------------
The Partnership contested the initial condemnation proceeds and in
June 1993 agreed to a final settlement in which an additional amount of
$396,000 was paid to the Partnership. Accordingly, the Partnership
recognized a gain of $298,000 (net of related expenses) in 1993 of which
$149,000 has been allocated to PSI and included in minority interest in
income.
3. General Partners' Equity
------------------------
The General Partners have a 1% interest in the Partnership. In
addition, the General Partners have a 10% interest in cash distributions
attributable to operations, exclusive of distributions attributable to
sales and refinancing proceeds.
Proceeds from sales and refinancings will be distributed entirely to
the limited partners until the limited partners recover their investment
plus a cumulative 8% annual return (not compounded); thereafter, the
General Partners have a 15% interest in remaining proceeds.
4. Related Party Transactions
--------------------------
PSI operates the Partnership's mini-warehouses for a "management fee"
equal to 6% of gross revenue (as defined) and Public Storage Commercial
Properties Group, Inc. ("PSCP") operates the commercial properties for a
"management fee" of 5% of gross revenue (as defined).
PSI has a 95% economic interest and Hughes and family members of
Hughes have a 5% economic interest in PSCP.
5. Taxes Based on Income
---------------------
Taxes based on income are the responsibility of the individual
partners and, accordingly, the Partnership's consolidated financial
statements do not reflect a provision for such taxes.
Taxable net income was $3,415,000, $2,992,000 and $2,667,000 for the
years ended December 31, 1995, 1994 and 1993, respectively. The difference
between taxable income and book income is primarily related to timing
differences in depreciation expense.
F-8
<PAGE>
PS PARTNERS, LTD
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
Initial Cost Costs Gross Carrying Amount
subsequent At December 31, 1995
---------------------- to acquisition ------------------------------------------------
Date Encum- Building & Building & Building & Accumulated
Acquired Description brances Land Improvement Improvements Land Improvements Total Depreciation
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mini-warehouses
----------------
1/83 Platte - 409,000 953,000 122,000 409,000 1,075,000 1,484,000 549,000
5/83 Delta Drive - 67,000 481,000 94,000 67,000 575,000 642,000 282,000
12/82 Port/Halsey - 357,000 1,150,000 (476,000) 357,000 674,000 1,031,000 333,000
12/82 Sacto/Folsom - 396,000 329,000 406,000 396,000 735,000 1,131,000 365,000
1/83 Semoran - 442,000 1,882,000 100,000 442,000 1,982,000 2,424,000 1,019,000
3/83 Blackwood - 213,000 1,559,000 97,000 213,000 1,656,000 1,869,000 832,000
10/83 Orlando J. Y.
Parkway - 383,000 1,512,000 172,000 383,000 1,684,000 2,067,000 819,000
9/83 Southington - 124,000 1,233,000 171,000 124,000 1,404,000 1,528,000 681,000
4/83 Vailsgate - 103,000 990,000 180,000 103,000 1,170,000 1,273,000 561,000
6/83 Ventura - 658,000 1,734,000 34,000 658,000 1,768,000 2,426,000 878,000
9/83 Southhampton - 331,000 1,738,000 377,000 331,000 2,115,000 2,446,000 1,024,000
9/83 Webster/Keystone - 449,000 1,688,000 386,000 449,000 2,074,000 2,523,000 969,000
9/83 Dover - 107,000 1,462,000 249,000 107,000 1,711,000 1,818,000 804,000
9/83 Newcastle - 227,000 2,163,000 246,000 227,000 2,409,000 2,636,000 1,155,000
9/83 Newark - 208,000 2,031,000 121,000 208,000 2,152,000 2,360,000 1,038,000
9/83 Langhorne - 263,000 3,549,000 165,000 263,000 3,714,000 3,977,000 1,806,000
8/83 Hobart - 215,000 1,491,000 206,000 215,000 1,697,000 1,912,000 802,000
9/83 Ft. Wayne/
W. Coliseum - 160,000 1,395,000 15,000 160,000 1,410,000 1,570,000 689,000
9/83 Ft. Wayne/Bluffton - 88,000 675,000 84,000 88,000 759,000 847,000 363,000
11/83 Aurora - 505,000 758,000 172,000 505,000 930,000 1,435,000 432,000
11/83 Campbell - 1,820,000 1,408,000 (749,000) 1,379,000 1,100,000 2,479,000 519,000
11/83 Col Springs/Ed
(Coulter) - 471,000 1,640,000 (71,000) 471,000 1,569,000 2,040,000 760,000
11/83 Col Springs/Mv
(Coulter) - 320,000 1,036,000 69,000 320,000 1,105,000 1,425,000 544,000
11/83 Thorton (Coulter) - 418,000 1,400,000 (13,000) 418,000 1,387,000 1,805,000 672,000
11/83 Oklahoma City
(Coulter) - 454,000 1,030,000 559,000 454,000 1,589,000 2,043,000 747,000
11/83 Tucson (Coulter) - 343,000 778,000 416,000 343,000 1,194,000 1,537,000 540,000
</TABLE>
F-9
<PAGE>
PS PARTNERS, LTD
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
Initial Cost Costs Gross Carrying Amount
subsequent At December 31, 1995
---------------------- to acquisition ------------------------------------------------
Date Encum- Building & Building & Building & Accumulated
Acquired Description brances Land Improvement Improvements Land Improvements Total Depreciation
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Business park
----------------
12/83 Signal Hill/
Bus. Park - 1,195,000 2,220,000 708,000 1,195,000 2,928,000 4,123,000 1,350,000
Mini-warehouse
& business park
----------------
11/83 Webster/Nasa - 1,570,000 2,457,000 843,000 1,570,000 3,300,000 4,870,000 1,642,000
-------------------------------------------------------------------------------------------------------
TOTAL $ - $12,296,000 $40,742,000 $4,683,000 $11,855,000 $45,866,000 $57,721,000 $22,175,000
=======================================================================================================
</TABLE>
F-10
<PAGE>
PS PARTNERS, LTD.
A CALIFORNIA LIMITED PARTNERSHIP
REAL ESTATE RECONCILIATION
SCHEDULE III (CONTINUED)
(a) The following is a reconciliation of cost and related accumulated
depreciation.
GROSS CARRYING COST RECONCILIATION
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------------
1995 1994 1993
------------------------------------------
<S> <C> <C> <C>
Balance at beginning of
the period $56,918,000 $56,224,000 $55,507,000
Additions during the period:
Improvements, etc. 803,000 694,000 717,000
Deductions during the period:
Partial condemnation - - -
------------------------------------------
Balance at close of the period $57,721,000 $56,918,000 $56,224,000
==========================================
</TABLE>
ACCUMULATED DEPRECIATION RECONCILIATION
<TABLE>
<CAPTION>
------------------------------------------
1995 1994 1993
------------------------------------------
<S> <C> <C> <C>
Balance at beginning of
the period $19,913,000 $17,772,000 $15,744,000
Additions during the period:
Depreciation 2,262,000 2,141,000 2,028,000
Deductions during the period
Partial condemnation - - -
------------------------------------------
$22,175,000 $19,913,000 $17,772,000
==========================================
</TABLE>
(b) The aggregate cost of real estate for Federal income tax purposes is
$57,132,000.
F-11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 511,000
<SECURITIES> 0
<RECEIVABLES> 121,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 632,000
<PP&E> 57,721,000
<DEPRECIATION> (22,175,000)
<TOTAL-ASSETS> 36,307,000
<CURRENT-LIABILITIES> 1,137,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 13,853,000
<TOTAL-LIABILITY-AND-EQUITY> 36,307,000
<SALES> 10,905,000
<TOTAL-REVENUES> 10,998,000
<CGS> 4,027,000
<TOTAL-COSTS> 4,027,000
<OTHER-EXPENSES> 2,563,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,067,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,067,000
<EPS-PRIMARY> 23.77
<EPS-DILUTED> 0
</TABLE>
