UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the period ended June 30, 1997
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
-------
PS PARTNERS V, LTD., a California Limited Partnership
------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-397972
- ---------------------------------------- --------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
701 Western Avenue
Glendale, California 91201-2394
- ---------------------------------------- --------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 244-8080
--------------
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
-- --
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
Condensed consolidated balance sheets at June 30, 1997
and December 31, 1996 2
Condensed consolidated statements of income for the three
and six months ended June 30, 1997 and 1996 3
Condensed consolidated statements of cash flows for the
six months ended June 30, 1997 and 1996 4-5
Notes to condensed consolidated financial statements 6-7
Management's discussion and analysis of financial condition
and results of operations 8-11
PART II. OTHER INFORMATION
(Items 1 through 4 are not applicable)
Item 5 - Other Information 12
Item 6 - Exhibits and Reports on Form 8-K 12
<PAGE>
<TABLE>
<CAPTION>
PS PARTNERS V, LTD.,
a California Limited Partnership
CONDENSED CONSOLIDATED BALANCE SHEET
June 30, December 31,
1997 1996
--------------------------------------
(Unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 587,000 $ 453,000
Rent and other receivables 91,000 160,000
Real estate facilities, at cost:
Land 16,100,000 25,610,000
Buildings and equipment 55,836,000 80,098,000
--------------------------------------
71,936,000 105,708,000
Less accumulated depreciation (25,596,000) (36,248,000)
--------------------------------------
46,340,000 69,460,000
Investment in real estate entity 22,559,000 -
Other assets 148,000 283,000
--------------------------------------
$ 69,725,000 $ 70,356,000
======================================
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 424,000 $ 806,000
Advance payments from renters 431,000 413,000
Mortgage notes payable - -
Minority interest in general partnerships 31,250,000 31,057,000
Partners' equity:
Limited partners' equity, $500 per unit, 148,000
units authorized, issued and outstanding 37,148,000 37,603,000
General partners' equity 472,000 477,000
--------------------------------------
Total partners' equity 37,620,000 38,080,000
--------------------------------------
$ 69,725,000 $ 70,356,000
======================================
</TABLE>
See accompanying notes.
2
<PAGE>
<TABLE>
<CAPTION>
PS PARTNERS V, LTD.,
a California Limited Partnership
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
-----------------------------------------------------------------
1997 1996 1997 1996
-----------------------------------------------------------------
REVENUE:
<S> <C> <C> <C> <C>
Rental income $ 3,368,000 $ 3,944,000 $ 6,653,000 $ 7,779,000
Equity in income of real estate entity 253,000 - 432,000 -
Interest income 7,000 29,000 12,000 54,000
-----------------------------------------------------------------
3,628,000 3,973,000 7,097,000 7,833,000
-----------------------------------------------------------------
COSTS AND EXPENSES:
Cost of operations 980,000 1,332,000 1,999,000 2,605,000
Management fees 202,000 229,000 399,000 452,000
Depreciation and amortization 651,000 952,000 1,298,000 1,896,000
Interest expense - 72,000 - 143,000
Administrative 42,000 41,000 63,000 60,000
-----------------------------------------------------------------
1,875,000 2,626,000 3,759,000 5,156,000
-----------------------------------------------------------------
Income before minority interest 1,753,000 1,347,000 3,338,000 2,677,000
Minority interest in income (922,000) (868,000) (1,804,000) (1,692,000)
-----------------------------------------------------------------
NET INCOME $ 831,000 $ 479,000 $ 1,534,000 $ 985,000
=================================================================
Limited partners' share of net income
($8.93 per unit in 1997 and $5.25
per unit in 1996) $ 1,321,000 $ 777,000
General partners' share of net income 213,000 208,000
---------------------------------
$ 1,534,000 $ 985,000
=================================
</TABLE>
See accompanying notes.
3
<PAGE>
<TABLE>
<CAPTION>
PS PARTNERS V, LTD.,
a California Limited Partnership
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30,
----------------------------------
1997 1996
----------------------------------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 1,534,000 $ 985,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 1,298,000 1,896,000
Decrease (increase) in rent and other receivables 69,000 (8,000)
Decrease (increase) in other assets 135,000 (33,000)
Decrease in accounts payable (382,000) (167,000)
Increase in advance payments from renters 18,000 4,000
Equity in income of real estate entity (432,000) -
Minority interest in income 1,804,000 1,692,000
----------------------------------
Total adjustments 2,510,000 3,384,000
----------------------------------
Net cash provided by operating activities 4,044,000 4,369,000
----------------------------------
Cash flows from investing activities:
Investment in real estate entity (33,000) -
Additions to real estate facilities (272,000) (407,000)
----------------------------------
Net cash used in investing activities (305,000) (407,000)
----------------------------------
Cash flows from financing activities:
Principal payments on mortgage notes payable - (23,000)
Distributions to holder of minority interest (1,611,000) (1,474,000)
Distributions to partners (1,994,000) (1,994,000)
----------------------------------
Net cash used in financing activities (3,605,000) (3,491,000)
----------------------------------
Net increase in cash and cash equivalents 134,000 471,000
Cash and cash equivalents at the beginning of the period 453,000 2,059,000
----------------------------------
Cash and cash equivalents at the end of the period $ 587,000 $ 2,530,000
==================================
</TABLE>
See accompanying notes.
4
<PAGE>
<TABLE>
<CAPTION>
PS PARTNERS V, LTD.,
a California Limited Partnership
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Continued)
Six Months Ended
June 30,
---------------------------------
1997 1996
---------------------------------
Supplemental schedule of noncash investing and financing activities:
<S> <C> <C>
Investment in real estate entity $ (22,094,000) $ -
Transfer of real estate facilities for interest in real estate entity 22,094,000 -
</TABLE>
See accompanying notes.
5
<PAGE>
PS PARTNERS V, LTD.,
a California Limited Partnership
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
1. The accompanying unaudited condensed consolidated financial statements
have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although
management believes that the disclosures contained herein are adequate
to make the information presented not misleading. These unaudited
condensed consolidated financial statements should be read in
conjunction with the financial statements and related notes appearing
in the Partnership's Form 10-K for the year ended December 31, 1996.
2. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments, consisting
of only normal accruals, necessary to present fairly the Partnership's
financial position at June 30, 1997, the results of operations for the
three and six months ended June 30, 1997 and 1996 and cash flows for
the six months then ended.
3. The results of operations for the three and six months ended June 30,
1997 are not necessarily indicative of the results to be expected for
the full year.
4. Effective January 2, 1997, Public Storage, Inc. ("PSI"), the
Partnership's general partner, formed a new private real estate
investment trust named American Office Park Properties, Inc. ("AOPP")
which will focus its investment efforts on the ownership and
management of commercial properties (also referred to as business park
facilities). In connection with the formation of AOPP, PSI and
affiliated partnerships transferred commercial properties to a newly
created partnership underlying AOPP in exchange for limited
partnership interests (AOPP and the underlying partnership
collectively referred to as the "New REIT"). The Partnership
participated in the initial transaction by exchanging its two
commercial properties, one of which was owned jointly by the
Partnership and PSI, for 697,000 limited partnership units, which
represented approximately 10.4% of the initial capitalization of the
partnership underlying AOPP.
The number of limited partnership units received by the Partnership
was based on the relative fair market value of the Partnership's
commercial properties exchanged compared to the aggregate of all other
real estate assets exchanged for limited partnership units in the
6
<PAGE>
PS PARTNERS V, LTD.,
a California Limited Partnership
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
underlying partnership. The Partnership's limited partnership units,
pursuant to the terms and conditions of the governing documents, are
convertible into shares of common stock of AOPP.
4. (Continued)
The general partners believe that the concentration of PSI's, the
Partnership's and affiliate entities' commercial properties into a
single entity will create a vehicle which should facilitate future
growth in this segment of the real estate industry. PSI, the
Partnership and the affiliates transferring real estate assets to the
New REIT will participate in the growth through their ownership
interests in the New REIT.
The Partnership accounts for its investment in New REIT using the
equity method of accounting; accordingly, equity in earnings of real
estate entity, as reflected on the Partnership's statement of income
for the three and six months ended June 30, 1997, reflects the
Partnership's pro rata share of the earnings of the New REIT. The
investment was initially recorded at the Partnership's net book value
of its properties exchanged for limited partnership units. The
investment is subsequently adjusted for the Partnership's pro rata
share of income and distributions from the underlying partnership of
the New REIT.
<PAGE>
PS PARTNERS V, LTD.,
a California Limited Partnership
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations:
- ----------------------
THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE MONTHS ENDED JUNE 30, 1996:
The Partnership's net income for the three months ended June 30, 1997 was
$831,000 compared to $479,000 for the three months ended June 30, 1996,
representing an increase of $352,000, or 73%. Excluding the 1996 operations for
the Partnership's business park facilities as compared to the 1997 equity in
income of real estate entity, the increase is due to an increase in the
Partnership's mini-warehouse operations, combined with a decrease in interest
expense, partially offset by an increase in minority interest in income for
those properties held in joint venture with PSI.
Rental income for the Partnership's mini-warehouse operations was
$3,368,000 compared to $3,186,000 for the three months ended June 30, 1997 and
1996, respectively, representing an increase of $182,000, or 6%. The increase in
rental income was primarily attributable to increased rental rates and occupancy
levels at the mini-warehouse facilities. The monthly average realized rent per
square foot for the mini-warehouse facilities was $.67 compared to $.64 for the
three months ended June 30, 1997 and 1996, respectively. The weighted average
occupancy levels at the mini-warehouse facilities increased from 93% to 94% for
the three months ended June 30, 1996 and 1997, respectively. Cost of operations
(including management fees) increased $37,000, or 3%, to $1,182,000 from
$1,145,000 for the three months ended June 30, 1997 and 1996, respectively. This
increase was primarily attributable to an increase in property tax expense.
Accordingly, for the Partnership's mini-warehouse operations, property net
operating income increased by $145,000, or 7%, from $2,041,000 to $2,186,000 for
the three months ended June 30, 1996 and 1997, respectively.
Effective January 2, 1997, Public Storage, Inc. ("PSI"), the Partnership's
general partner, formed a new private real estate investment trust named
American Office Park Properties, Inc. ("AOPP") which will focus its investment
efforts on the ownership and management of commercial properties. In connection
with the formation of AOPP, PSI and affiliated partnerships transferred
commercial properties to a newly created partnership underlying AOPP in exchange
for limited partnership interests (AOPP and the underlying partnership
collectively referred to as the "New REIT"). The Partnership participated in the
initial transaction by exchanging its two commercial properties, one of which
was owned jointly by the Partnership and PSI, for 697,000 limited partnership
units, which represented approximately 10.4% of the initial capitalization of
the partnership underlying AOPP.
8
<PAGE>
PS PARTNERS V, LTD.,
a California Limited Partnership
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Partnership accounts for its investment in New REIT using the equity
method of accounting. The following table summarizes the Partnership's equity in
earnings from its investment in the New REIT for the three months ended June 30,
1997 compared to the operation of the exchanged business park facilities for the
three months ended June 30, 1996:
Three Months Ended June 30,
----------------------------
1997 1996
----------- ------------
Equity in earnings of real estate entity $ 253,000 $ -
Rental income - 758,000
Cost of operations - 416,000
----------- ------------
Net operating income 253,000 342,000
Depreciation - 309,000
----------- ------------
$ 253,000 $ 33,000
=========== ============
Depreciation and amortization attributable to the Partnership's
mini-warehouse facilities increased $8,000 from $643,000 to $651,000 for the
three months ended June 30, 1996 and 1997, respectively. This increase was
primarily attributable to the depreciation of capital expenditures made during
1996 and 1997.
Minority interest in income increased $54,000, or 6%, to $922,000 from
$868,000 for the three months ended June 30, 1997 and 1996, respectively. This
increase was primarily attributable to an increase in operations at the
Partnership's real estate facilities owned jointly with PSI.
Interest expense in 1996 represents interest on the Partnership's mortgage
note payable that was paid off in September 1996.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996:
The Partnership's net income for the six months ended June 30, 1997 was
$1,534,000 compared to $985,000 for the six months ended June 30, 1996,
representing an increase of $549,000, or 56%. Excluding the 1996 operations for
the Partnership's business park facilities as compared to the 1997 equity in
income of real estate entity, the increase is due to an increase in the
Partnership's mini-warehouse operations, combined with a decrease in interest
expense, partially offset by an increase in minority interest in income for
those properties held in joint venture with PSI.
Rental income for the Partnership's mini-warehouse operations was
$6,653,000 compared to $6,292,000 for the six months ended June 30, 1997 and
1996, respectively, representing an increase of $361,000, or 6%. The increase in
9
<PAGE>
PS PARTNERS V, LTD.,
a California Limited Partnership
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
rental income was primarily attributable to increased rental rates at the
mini-warehouse facilities. The monthly average realized rent per square foot for
the mini-warehouse facilities was $.68 compared to $.64 for the six months ended
June 30, 1997 and 1996, respectively. The weighted average occupancy levels at
the mini-warehouse facilities remained stable at 92% for the six months ended
June 30, 1996 and 1997. Cost of operations (including management fees) increased
$82,000, or 4%, to $2,398,000 from $2,316,000 for the six months ended June 30,
1997 and 1996, respectively. This increase was primarily attributable to
increases in property tax, advertising, and management fee expenses, partially
offset by a decrease in repairs and maintenance expenses. Accordingly, for the
Partnership's mini-warehouse operations, property net operating income increased
by $279,000, or 7%, from $3,976,000 to $4,255,000 for the six months ended June
30, 1996 and 1997, respectively.
The following table summarizes the Partnership's equity in earnings from
its investment in the New REIT for the six months ended June 30, 1997 compared
to the operation of the exchanged business park facilities for the six months
ended June 30, 1996:
Six Months Ended June 30,
---------------------------
1997 1996
----------- ----------
Equity in earnings of real estate entity $ 432,000 $ -
Rental income - 1,487,000
Cost of operations - 741,000
----------- ----------
Net operating income 432,000 746,000
Depreciation - 629,000
----------- ----------
$ 432,000 $ 117,000
----------- ----------
Depreciation and amortization attributable to the Partnership's
mini-warehouse facilities increased $31,000 from $1,267,000 to $1,298,000 for
the six months ended June 30, 1996 and 1997, respectively. This increase was
primarily attributable to the depreciation of capital expenditures made during
1996 and 1997.
Minority interest in income was $1,804,000 in 1997 compared to $1,692,000
in 1996, representing an increase of $112,000, or 7%. This increase was
primarily attributable to an increase in operations at the Partnership's real
estate facilities owned jointly with PSI.
Interest expense in 1996 represents interest on the Partnership's mortgage
note payable that was paid off in September 1996.
10
<PAGE>
PS PARTNERS V, LTD.,
a California Limited Partnership
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 from internally generated
cash from property operations and cash reserves. Cash generated from operations
($4,044,000 for the six months ended June 30, 1997) has been sufficient to meet
all current obligations of the Partnership.
During 1997, the Partnership anticipates approximately $1,004,000 of
capital improvements (of which $428,000 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. Such enhancements
include new signs, exterior color schemes, and improvements to the rental
offices. This program continued in 1997. Total capital improvements were
$272,000 for the six months ended June 30, 1997 of which $187,000 represents the
Partnership's share.
The Partnership paid distributions to the limited and general partners
totaling $1,776,000 ($12.00 per unit) and $218,000, respectively, during the
first six months of 1997. Future distribution rates may be adjusted to levels
which are supported by operating cash flow after capital improvements and any
other necessary obligations.
11
<PAGE>
PART II. OTHER INFORMATION
ITEMS 1 through 4 are not applicable.
Item 5 Other Information
In August 1997, PSI completed a cash tender offer, which had commenced in
June 1997, pursuant to which PSI acquired a total of 13,847 additional limited
partnership units at $355 per Unit.
Item 6 Exhibits and Reports on Form 8-K
(a) The following Exhibits are included herein:
(27) Financial Data Schedule
(b) Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATED: August 13, 1997
PS PARTNERS V, LTD.,
a California Limited Partnership
BY: Public Storage, Inc.
General Partner
BY: /s/ John Reyes
-----------------------------------------
Senior Vice President and Chief Financial
Officer of Public Storage, Inc.
(principal financial and accounting
officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000763541
<NAME> PS PARTNERS V, LTD.
<MULTIPLIER> 1
<CURRENCY> U.S. $
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 587,000
<SECURITIES> 0
<RECEIVABLES> 91,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 678,000
<PP&E> 71,936,000
<DEPRECIATION> (25,596,000)
<TOTAL-ASSETS> 69,725,000
<CURRENT-LIABILITIES> 855,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 37,620,000
<TOTAL-LIABILITY-AND-EQUITY> 69,725,000
<SALES> 0
<TOTAL-REVENUES> 7,097,000
<CGS> 0
<TOTAL-COSTS> 2,398,000
<OTHER-EXPENSES> 1,361,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,534,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,534,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,534,000
<EPS-PRIMARY> 8.93
<EPS-DILUTED> 8.93
</TABLE>
