United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended May 31, 1996
or
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Transition period from ______ to ______
Commission File Number: 0-15550
AMERICAN STORAGE PROPERTIES, L.P.
Exact Name of Registrant as Specified in its Charter
Virginia 11-2741889
State or Other Jurisdiction of
Incorporation or Organization I.R.S. Employer Identification No.
3 World Financial Center, 29th Floor,
New York, NY Attn: Andre Anderson 10285
Address of Principal Executive Offices Zip Code
(212) 526-3237
Registrant's Telephone Number, Including Area Code
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 ____
Consolidated Balance Sheets
At May 31, At November 30,
1996 1995
Assets
Self - service storage facilities, at cost:
Land $ 0 $ 3,756,319
Building and improvements 0 16,061,509
------------ ------------
0 19,817,828
Less accumulated depreciation 0 (6,010,342)
------------ ------------
0 13,807,486
Property held for disposition 13,478,406 0
Cash and cash equivalents 2,846,084 2,667,352
Other assets 165,807 149,923
------------ ------------
Total Assets $ 16,490,297 $ 16,624,761
============ ============
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 196,105 $ 120,589
Due to affiliates 33,548 53,522
Security deposits 12,173 13,050
Advance rent 139,560 115,194
Distribution payable 466,228 466,228
------------ ------------
Total Liabilities 847,614 768,583
------------ ------------
Minority Interest 0 13,985
------------ ------------
Partners' Capital (Deficit):
General Partners (129,084) (125,793)
Limited Partners 15,771,767 15,967,986
------------ ------------
Total Partners' Capital 15,642,683 15,842,193
------------ ------------
Total Liabilities and Partners' Capital $ 16,490,297 $ 16,624,761
============ ============
Consolidated Statement of Partners' Capital (Deficit)
For the six months ended May 31, 1996
Limited General
Partners Partners Total
Balance at November 30, 1995 $ 15,967,986 $ (125,793) $ 15,842,193
Net income (loss) 736,236 (3,291) 732,945
Cash distributions (932,455) 0 (932,455)
------------ ---------- ------------
Balance at May 31, 1996 $ 15,771,767 $ (129,084) $ 15,642,683
============ ========== ============
Consolidated Statements of Operations
Three months ended May 31, Six months ended May 31,
1996 1995 1996 1995
Income
Rental $ 915,357 $ 850,069 $ 1,810,316 $ 1,701,172
Interest 34,156 32,066 69,155 57,978
--------- --------- ----------- -----------
Total Income 949,513 882,135 1,879,471 1,759,150
Expenses
Property operating 278,798 280,013 569,023 555,994
Depreciation 164,481 164,125 329,080 328,320
General and administrative 186,548 38,964 248,423 75,745
--------- --------- ----------- -----------
Total Expenses 629,827 483,102 1,146,526 960,059
--------- --------- ----------- -----------
Net Income $ 319,686 $ 399,033 $ 732,945 $ 799,091
========= ========= =========== ===========
Net Income (Loss) Allocated:
To the General Partners $ (1,645) $ (1,641) $ (3,291) $ (3,283)
To the Limited Partners 321,331 400,674 736,236 802,374
--------- --------- ----------- -----------
$ 319,686 $ 399,033 $ 732,945 $ 799,091
========= ========= =========== ===========
Per limited partnership
unit (50,132 outstanding) $ 6.41 $ 8.00 $ 14.69 $ 16.01
--------- --------- ----------- -----------
Consolidated Statements of Cash Flows
For the six months ended May 31, 1996 1995
Cash Flows From Operating Activities:
Net income $ 732,945 $ 799,091
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 329,080 328,320
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Other assets (15,884) 9,290
Accounts payable and accrued expenses 75,516 15,638
Due to affiliates (19,974) (19,379)
Security deposits (877) (1,880)
Advance rent 24,366 22,950
Minority interest (13,985) 0
----------- -----------
Net cash provided by operating activities 1,111,187 1,154,030
----------- -----------
Cash Flows From Investing Activities:
Additions to real estate 0 (12,727)
----------- -----------
Net cash used for investing activities 0 (12,727)
----------- -----------
Cash Flows From Financing Activities:
Distribution paid-Limited Partners (932,455) (817,152)
----------- -----------
Net cash used for financing activities (932,455) (817,152)
----------- -----------
Net increase in cash and cash equivalents 178,732 324,151
Cash and cash equivalents, beginning of period 2,667,352 2,001,535
----------- -----------
Cash and cash equivalents, end of period $ 2,846,084 $ 2,325,686
=========== ===========
Notes to the Consolidated Financial Statements
The unaudited interim consolidated financial statements should be read in
conjunction with the Partnership's annual 1995 consolidated audited financial
statements within Form 10-K.
The unaudited consolidated financial statements include all adjustments which
are, in the opinion of management, necessary to present a fair statement of
financial position as of May 31, 1996 and the results of operations and cash
flows for the six months ended May 31, 1996 and 1995 and the statement of
partners' capital (deficit) for the six months ended May 31, 1996. Results of
operations for the period are not necessarily indicative of the results to be
expected for the full year.
The following significant events have occurred subsequent to fiscal year 1995
which requires disclosure in this interim report per Regulation S-X, Rule
10-01, Paragraph (a)(5).
Tender Offer
- ------------
On March 1, 1996, Public Storage, Inc., a California corporation ("Public
Storage") commenced a tender offer to purchase up to 12,533 outstanding Units
at a net cash price of $419 per unit. On April 2, 1996, the tender offer
expired with Public Storage accepting for purchase 13,516 Units, or
approximately 26.97% of the outstanding Units.
Sale of Properties
- ------------------
On May 17, 1996, American Storage Properties, L.P. (the "Partnership"),
entered into three Contracts of Sale (together, the "Contracts of Sale") dated
as of May 17, 1996, one for the Virginia properties and two as general partner
of the Florida limited partnerships, with Public Storage, pursuant to which the
Partnership agreed to sell substantially all its assets to Public Storage for
an aggregate of $27,500,000, subject to adjustment, in cash (the "Proposed
Sale").
The Proposed Sale is conditioned upon, among other things, the simultaneous
closing of all three Contracts of Sale, except under certain circumstances, and
the approval of the proposed Sale by holders of a majority of the outstanding
units of limited partnership interests of the Partnership.
In accordance with Sections 16.a.(iii) and (iv) of the Amended and Restated
Certificate and Agreement of Limited Partnership of the Partnership (the
"Partnership Agreement"), approval of the Proposed Sale will result in the
dissolution of the Partnership. If such approval is not obtained, the Proposed
Sale will not be consummated in its present form, the Contracts of Sale will be
terminated and the Partnership will continue until December 31, 2010, unless
earlier terminated in accordance with the Partnership Agreement.
Part I, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
At May 31, 1996, the Partnership had cash and cash equivalents of $2,846,084
which were invested in money market accounts. The increase of $178,732 from
November 30, 1995 is attributable to net cash provided by operating activities
exceeding amounts used to fund cash distributions to the Limited Partners.
The Partnership expects sufficient cash flow to be generated from operations to
meet its current operating requirements. Net cash from operations is
distributed to the Limited Partners on a quarterly basis in proportion to the
number of units held by each Limited Partner. On or about July 15, 1996, the
Partnership will pay a distribution of net cash flow from operations of $9.30
per unit for the quarter ended May 31, 1996.
The Partnership acquired an interest in the Fern Park property and the Oak
Ridge property through two Limited Partnerships with affiliates of the seller
of the facilities (the "Limited Partner"). The Limited Partnership agreements
provide that net cash from operations of these two properties will be
distributed each quarter 100% to the Partnership until the Partnership has
received an amount equal to a cumulative annual 12% return ("Preferred Return")
on its capital contribution, as adjusted. The balance of any net cash from
operations will be distributed 85% to the Partnership and 15% to the Limited
Partner. The Preferred Return for Fern Park was satisfied during the third
quarter of fiscal 1995 and the balance of net cash from operations was
distributed according to the guidelines stated above. The minority share is
recorded as minority interest in the Partnership's financial statements.
Minority interest decreased to $0 at May 31, 1996 from $13,985 at
November 30, 1995, primarily due to the payment made during the second quarter
of 1996 of the minority share to the Limited Partner.
In response to a request from an unaffiliated third party, Public Storage,
Inc., a California corporation ("Public Storage"), to receive a list of the
Partnership's Unitholders, the Partnership entered into a letter agreement,
dated February 9, 1996, pursuant to which the Partnership furnished the list
and such third party agreed not to purchase more than 5% of the outstanding
Units in the open market or more than 25% of the outstanding Units pursuant to
a tender offer filed with the Securities and Exchange Commission.
On March 1, 1996, Public Storage commenced a tender offer to purchase up to
12,533 outstanding Units at a net cash price of $419 per Unit.
On April 2, 1996, the tender offer expired with Public Storage accepting for
purchase 13,516 Units, or approximately 26.97% of the outstanding Units.
Given the improvement of the self-storage industry in recent years, combined
with the strong performance of the Partnership's nine storage facilities, the
General Partners began marketing the facilities for sale during the first
quarter of 1996. The objective has been to maximize the selling price of the
properties and distribute the sales proceeds to Limited Partners. Over the past
several months, the General Partners have engaged in discussions with several
potential buyers who have expressed an interest in acquiring one or more of the
Partnership's properties. On May 17, 1996 the Partnership entered into three
substantially identical Contracts of Sale (together, the "Contracts of Sale")
with Public Storage, one for the Virginia properties and two as general partner
of the Florida limited partnerships, pursuant to which the Partnership agreed
to sell substantially all its assets to Public Storage for an aggregate of
$27,500,000, subject to adjustment, in cash (the "Proposed Sale"). The
Proposed Sale price was the highest offer received by the Partnership.
The Proposed Sale is conditioned upon, among other things, the simultaneous
closing of all three Contracts of Sale, except under certain circumstances, and
the approval of the proposed Sale by holders of a majority of the outstanding
units of limited partnership interests of the Partnership. To obtain such
approval, the General Partner will solicit a vote of the Limited Partners
regarding the Proposed Sale. It is expected that solicitation materials will
be mailed to limited partners during the third quarter of 1996.
In accordance with Sections 16.a.(iii) and (iv) of the Amended and Restated
Certificate and Agreement of Limited Partnership of the Partnership (the
"Partnership Agreement"), approval of the Proposed Sale will result in the
dissolution of the Partnership. If such approval is not obtained, the Proposed
Sale will not be consummated in its present form, the Contracts of Sale will be
terminated and the Partnership will continue until December 31, 2010, unless
earlier terminated in accordance with the Partnership Agreement.
In view of the Proposed Sale, the Partnership's self-storage facilities at
cost, less accumulated depreciation at May 31, 1996, have been recorded on the
Partnership's Balance Sheet as "Property held for disposition." Property held
for disposition at May 31, 1996 was $13,478,406.
Certain age-related repairs and capital improvements which are required at the
properties have historically been funded from the Partnership's cash reserves
and cash flow from operations. Due to the impending sale of the properties,
major repairs and capital improvements projects previously budgeted for 1996
have been deferred. Should the Proposed Sale not occur, management will
reevaluate the need for these capital improvements. Future cash distributions
will depend on the adequacy of cash flow from operations and the level of cash
reserves following any capital improvements and could be reduced should market
conditions negatively impact occupancy or rental rates. The amount of future
cash distributions to the Limited Partners will be determined quarterly
following a review of the Partnership's operations and cash requirements.
Results of Operations
Partnership operations resulted in net income of $319,686 and $732,945 for the
three and six months ended May 31, 1996, respectively, compared with $399,033
and $799,091 for the three and six months ended May 31, 1995, respectively. The
lower net income for the 1996 periods is primarily attributable to higher
property operating and general and administrative expenses, which were
partially offset by an increase in rental and interest income.
Rental income totaled $915,357 and $1,810,316 for the three and six months
ended May 31, 1996, respectively, compared to $850,069 and $1,701,172 for the
three and six months ended May 31, 1995, respectively. The increase in rental
income can be attributed in part to increased rental rates at several of the
Partnership's properties, as well as higher occupancy levels at certain
properties. Interest income totaled $34,156 and $69,155 for the three and six
months ended May 31, 1996, respectively, compared to $32,066 and $57,978 for
the three and six months ended May 31, 1995, respectively. The increase is due
to higher cash balances maintained by the Partnership during fiscal 1996.
Property operating expenses totaled $278,798 and $569,023 for the three and six
months ended May 31, 1996, respectively, compared with $280,013 and $555,994
for the three and six months ended May 31, 1995, respectively. The increase
for the six month period is primarily due to higher costs for routine repairs
and maintenance at the properties during the first quarter of 1996. The
decrease for the three-month period is primarily due to lower costs for routine
repairs and maintenance at the properties during the second quarter of 1996.
General and administrative expenses totaled $186,548 and $248,423 for the three
and six months ended May 31, 1996, respectively, compared with $38,964 and
$75,745 for the three and six months ended May 31, 1995, respectively. The
increase is primarily due to an increase in audit, legal and other professional
fees due to the costs incurred in connection with the Proposed Sale and
preparation of solicitation materials. The increase is also due in part to
higher salary reimbursements in 1996.
The average weighted occupancy at the Partnership's properties was 93% at
May 31, 1996, compared with 90% at May 31, 1995.
Part II Other Information
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits -
(27) Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8- K were filed
during the quarter ended May 31, 1996.
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.
AMERICAN STORAGE PROPERTIES, L.P.
BY: STORAGE SERVICES INC.
General Partner
Date: July 15, 1996 BY: /s/ Paul L. Abbott
------------------
Director, President, Chief
Executive Officer and
Chief Financial Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Nov-30-1995
<PERIOD-END> May-31- 1996
<CASH> 2,846,084
<SECURITIES> 000
<RECEIVABLES> 000
<ALLOWANCES> 000
<INVENTORY> 000
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<PP&E> 000
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000
000
<OTHER-SE> 15,642,683
<TOTAL-LIABILITY-AND-EQUITY> 16,490,297
<SALES> 1,810,316
<TOTAL-REVENUES> 1,879,471
<CGS> 000
<TOTAL-COSTS> 569,023
<OTHER-EXPENSES> 577,503
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> 732,945
<INCOME-TAX> 000
<INCOME-CONTINUING> 732,945
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 732,945
<EPS-PRIMARY> 14.69
<EPS-DILUTED> 14.69
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