AMERICAN STORAGE PROPERTIES, L.P.
3 WORLD FINANCIAL CENTER
NEW YORK, NEW YORK 10285
September 10, 1996
Dear Unitholder
The enclosed solicitation statement (the "Statement") is
being furnished to the holders of units of limited partnership
interests ("Units," the holders of which are referred to as
"Unitholders") of American Storage Properties, L.P., a Virginia
limited partnership (the "Partnership"), in connection with the
solicitation of votes by Storage Services, Inc., a Delaware
corporation ("Storage Services"), and Goodman Segar
Hogan/American Storage Properties Associates, L.P., a Virginia
limited partnership ("ASP Associates" and together with Storage
Services, the "General Partners"), on behalf of the Partnership,
to approve the sale of all the Partnership's assets to Public
Storage, Inc., a California corporation ("Purchaser"), for
$27,500,000, subject to adjustment, in cash (the "Proposed
Sale"). If the Proposed Sale is approved by the requisite vote
of Unitholders and consummated, it is expected that Unitholders
will receive approximately $565 per Unit, subject to adjustments
as set forth herein.
The Partnership and Purchaser have entered into three
substantially identical Contracts of Sale dated as of May 17,
1996 (the "Contracts of Sale"), pursuant to which the Proposed
Sale will be consummated. The Proposed Sale is conditioned upon
the simultaneous closing of all three Contracts of Sale and
approval by holders of a majority of the outstanding Units. In
accordance with Sections 16.a.(iii) and (iv) of the Amended and
Restated 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.
As explained in more detail in the Statement, the General
Partners believe that, in order to maximize distributions to
Unitholders, now is an appropriate time to dispose of all of the
Partnership's assets and subsequently dissolve the Partnership.
THE GENERAL PARTNERS BELIEVE THAT THE PROPOSED SALE IS IN THE
BEST INTERESTS OF UNITHOLDERS AND THE PARTNERSHIP AND RECOMMEND
THAT UNITHOLDERS VOTE FOR THE PROPOSED SALE. ANY DULY EXECUTED
BALLOT ("BALLOT") ON WHICH A VOTE IS NOT INDICATED (EXCEPT BROKER
NON-VOTES EXPRESSLY INDICATING A LACK OF DISCRETIONARY AUTHORITY
TO VOTE) WILL BE DEEMED A VOTE FOR THE PROPOSED SALE.
The General Partners urge Unitholders to read the entire
Statement carefully and cast their Ballot as soon as possible to
approve the Proposed Sale. PLEASE SIGN, DATE AND RETURN YOUR
BALLOT IN THE ENCLOSED ENVELOPE AS SOON AS POSSIBLE TO THE
ADDRESS LISTED ON THE BACK OF THE STATEMENT BY OCTOBER 10, 1996.
Any inquiries should be directed to First Data Investor Services
Group, Inc. at 1-800-223-3464.
Sincerely,
/s/ Paul L. Abbott /s/ Mark P. Mikuta
Paul L. Abbott Mark P. Mikuta
President President
Storage Services, Inc. American Storage Properties,
Inc., general partner of
Goodman Segar Hogan/American
Storage Properties Associates,
L.P.
AMERICAN STORAGE PROPERTIES, L.P.
3 WORLD FINANCIAL CENTER
NEW YORK, NEW YORK 10285
SOLICITATION STATEMENT
This solicitation statement (this "Statement") is being
furnished to the holders of units of limited partnership
interests ("Units," the holders of which are referred to as
"Unitholders") of American Storage Properties, L.P., a Virginia
limited partnership (the "Partnership"), in connection with the
solicitation of votes by Storage Services, Inc., a Delaware
corporation ("Storage Services"), and Goodman Segar
Hogan/American Storage Properties Associates, L.P., a Virginia
limited partnership ("ASP Associates" and together with Storage
Services, the "General Partners"), on behalf of the Partnership,
to approve the sale of all the Partnership's assets to Public
Storage, Inc., a California corporation ("Purchaser") for
$27,500,000, subject to adjustment, in cash (the "Proposed
Sale").
The Partnership and Purchaser have entered into three
substantially identical Contracts of Sale dated as of May 17,
1996 (the "Contracts of Sale"; copies of which are included
herein as Annex A), pursuant to which the Proposed Sale will be
consummated. The Proposed Sale is conditioned upon the
simultaneous closing of all three Contracts of Sale and approval
by holders of a majority of the outstanding Units. In accordance
with Sections 16.a.(iii) and (iv) of the 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 by the
Partnership and the Partnership will continue until December 31,
2010, unless earlier terminated in accordance with the
Partnership Agreement.
The approximate date on which this Statement and the
enclosed form of ballot ("Ballot") are first being mailed to
Unitholders is September 10, 1996. Only persons who were
Unitholders on September 3, 1996 (the "Record Date") will be
entitled to submit Ballots with respect to the proposals. The
solicitation will remain open until October 10, 1996 unless
extended (the "Expiration Date"). Unitholders may revoke any
previous Ballot by submitting to the Partnership, at any time
prior to the Expiration Date, a duly executed Ballot bearing a
later date. There will not be a meeting of Unitholders to
consider the Proposed Sale. Any action taken by the Partnership
will be approved through the written consent of Unitholders
voting by Ballot.
Ballots should be completed, signed and returned promptly
to: Proxy Tabulator, P.O. Box 9122, Hingham, MA 02043. A self-
addressed, prepaid envelope for return of the Ballot is included
with this Statement. This Statement is also accompanied by a
separate Ballot.
THE GENERAL PARTNERS BELIEVE THAT THE PROPOSED SALE IS IN
THE BEST INTERESTS OF UNITHOLDERS AND THE PARTNERSHIP AND
RECOMMEND THAT UNITHOLDERS VOTE FOR THE PROPOSED SALE. ANY DULY
EXECUTED BALLOT ON WHICH A VOTE IS NOT INDICATED (EXCEPT BROKER
NON-VOTES EXPRESSLY INDICATING A LACK OF DISCRETIONARY AUTHORITY
TO VOTE) WILL BE DEEMED A VOTE FOR THE PROPOSED SALE. PLEASE
SIGN, DATE AND MAIL YOUR BALLOT TODAY.
If you have any questions or need any assistance in
connection with the voting procedures, please call First Data
Investor Services Group, Inc., which is assisting the
Partnership, at 1-800-223-3464.
This Statement is dated September 10, 1996.
TABLE OF CONTENTS
Page
VOTING PROCEDURES . . . . . . . . . . . . . . . . . . . . . . 3
Record Date; Expiration Date . . . . . . . . . . . . . . 3
Required Vote . . . . . . . . . . . . . . . . . . . . . 3
Revocation of Ballots . . . . . . . . . . . . . . . . . 3
Solicitation of Ballots . . . . . . . . . . . . . . . . 3
Appraisal Rights . . . . . . . . . . . . . . . . . . . . 4
THE PARTNERSHIP . . . . . . . . . . . . . . . . . . . . . . . 5
General . . . . . . . . . . . . . . . . . . . . . . . . 5
The Properties . . . . . . . . . . . . . . . . . . . . . 5
Property Management; Fees and Compensation . . . . . . . 6
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . 8
Liquidity and Capital Resources . . . . . . . . . . . . 8
Results of Operations . . . . . . . . . . . . . . . . . . 8
THE PROPOSED SALE . . . . . . . . . . . . . . . . . . . . . . 11
General . . . . . . . . . . . . . . . . . . . . . . . . 11
Background . . . . . . . . . . . . . . . . . . . . . . . 11
General Partners' Recommendation . . . . . . . . . . . . 13
Reasons for Proposed Sale . . . . . . . . . . . . . . . 13
Effects of the Proposed Sale . . . . . . . . . . . . . . 14
Termination . . . . . . . . . . . . . . . . . . . . . . 15
Summary of the Contracts of Sale . . . . . . . . . . . . 16
Federal Income Tax Consequences . . . . . . . . . . . . 18
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . 20
SELECTED HISTORICAL FINANCIAL DATA . . . . . . . . . . . . . 21
Selected Financial Data . . . . . . . . . . . . . . . . 21
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . . . . . . . . 22
MARKET FOR PARTNERSHIP UNITS
AND RELATED UNITHOLDER MATTERS . . . . . . . . . . . . . . . 23
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . 24
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . Annex A
COMPARISON OF ACQUISITION COSTS TO APPRAISED VALUE . . . Annex B
VOTING PROCEDURES
RECORD DATE; EXPIRATION DATE
Only persons who were Unitholders on September 3, 1996 (the
"Record Date") will be entitled to submit Ballots with respect to
the proposals. Each Unitholder shall be entitled to one vote for
each Unit owned of record by such Unitholder on the Record Date.
The solicitation will remain open until October 10, 1996 unless
extended by the General Partners (the "Expiration Date"). There
will not be a meeting of Unitholders to consider the Proposed
Sale. Any action taken by the Partnership will be approved
through the written consent of Unitholders voting by Ballot.
REQUIRED VOTE
Approval of the Proposed Sale requires the affirmative vote
of Unitholders holding a majority of the Units outstanding on the
Record Date. Pursuant to the Contracts of Sale, the approval of
the Proposed Sale by Unitholders is a condition to the
consummation thereof.
As of the date of this Statement, Purchaser owns
approximately 29.1% of the outstanding Units. Pursuant to a
letter agreement dated February 9, 1996 with the Partnership,
Purchaser agreed that, prior to August 9, 1997, it would vote all
its Units on all issues in the same manner as by the majority of
all other Unitholders who vote on any such proposal.
Accordingly, if more than approximately 21.9% of the outstanding
Units (other than those owned by the Purchaser) vote FOR the
Proposed Sale and such amount constitutes a majority, the
Proposed Sale will be approved. THE GENERAL PARTNERS BELIEVE
THAT THE PROPOSED SALE IS IN THE BEST INTERESTS OF UNITHOLDERS
AND THE PARTNERSHIP AND RECOMMEND THAT UNITHOLDERS VOTE IN FAVOR
OF THE PROPOSED SALE.
Abstentions (Units for which a duly executed Ballot has been
submitted but on which a vote is not indicated) will be deemed a
vote FOR the Proposed Sale, except that broker non-votes (Units
held by a broker or nominee for which a Ballot is submitted but
with respect to which such broker or nominee expressly indicates
that it does not have discretionary authority to vote) will be
treated as votes AGAINST the Proposed Sale.
No Federal or State regulatory requirements must be complied
with or approval must be obtained in connection with the Proposed
Sale and the Proposed Amendment.
REVOCATION OF BALLOTS
Any Unitholder delivering a Ballot pursuant to this
Statement has the power to change the vote shown on the Ballot at
any time prior to the Expiration Date by giving written notice of
such change to First Data Investor Services Group, Inc. (the
"Solicitor") or by executing a Ballot bearing a later date and
delivering it to the Solicitor. Unless the Solicitor receives
written notice of a change of the vote shown on the Ballot or a
duly executed Ballot bearing a later date, the Ballot will be
voted in the manner specified therein.
SOLICITATION OF BALLOTS
This solicitation will be made through the mail, and
officers, directors and regular employees of the General Partners
and their affiliates may solicit votes by telephone, telegram and
personal interview. Such persons will receive no additional
compensation for such services. In addition, the Partnership has
retained the Solicitor to assist in the solicitation of votes
from brokers, bank nominees, institutional holders and certain
individual holders of record. The Solicitor will receive a
customary fee from the Partnership for its services, plus
reimbursement for its out-of-pocket expenses (payable without
regard to how a Unitholder votes), together estimated to be
approximately $35,000. All additional expenses of the
solicitation of votes for the approval of the proposals including
the cost of mailing, will be borne by the Partnership. The
General Partners and the Solicitor intend to request persons
holding Units in their name or custody, or in the name of
nominees, to send solicitation materials to their principals and
request authority for the execution of the Ballots, and the
Partnership will reimburse such persons for their expense in so
doing.
Ballots should be completed, signed and returned promptly
to: Proxy Tabulator, P.O. Box 9122, Hingham, MA 02043. A self-
addressed, prepaid envelope for return of the Ballots is included
with the Solicitation Statement. This Statement is accompanied
by a separate Ballot.
APPRAISAL RIGHTS
If Unitholders entitled to vote and owning more than 50% of
the outstanding Units vote in favor of the proposal, such
approval will bind all Unitholders including those who vote
against the proposal or abstain from voting. Neither the
Partnership Agreement nor Virginia law, under which the
Partnership is governed, gives rights of appraisal or similar
rights to Unitholders who dissent from the vote of the majority
in approving or disapproving the proposals. Accordingly,
dissenting Unitholders do not have the right to have their Units
appraised and to have the value of those Units returned to them
because they disapprove of the action of a majority in interest
of the Unitholders.
THE PARTNERSHIP
GENERAL
The Partnership was formed as of May 15, 1985. The term of
the Partnership expires December 31, 2010, unless earlier
terminated in accordance with the Partnership Agreement. The
Partnership maintains its principal executive offices at 3 World
Financial Center, New York, New York 10285.
The general partners of the Partnership are ASP Associates
and Storage Services. The sole general partner of ASP Associates
is American Storage Properties, Inc., a Virginia corporation
("ASPI").
The Partnership was formed to acquire, operate and hold for
investment self-storage facilities. The Partnership invests in
self-storage facilities either directly or through investments in
other limited partnerships which invest in such facilities. The
Partnership invests primarily in existing self-service storage
facilities.
On July 22, 1986, the Partnership completed an offering of
approximately $25,000,000 worth of Units. After deducting
organization and offering expenses and initial working capital
reserves, approximately $21,450,000 was available for investment
in self-storage facilities. The Partnership has invested
$19,500,000 of such proceeds in seven self-service storage
facilities located in Virginia (the "Virginia Properties") and
general partnership interests in two limited partnerships formed
to own and operate self-service storage facilities located in
Florida (the "Florida Properties" and collectively with the
Virginia Properties, the "Properties").
THE PROPERTIES
The location, date of purchase, number of buildings,
rentable square feet, number of rental spaces and purchase price
of the Virginia Properties and the Florida Properties are set
forth below:
<TABLE>
<CAPTION>
=========================================================================================
PROPERTY LOCATION DATE OF NUMBER OF RENTABLE NUMBER OF PURCHASE
PURCHASE BUILDINGS SQ. FT. RENTABLE PRICE
SPACES
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
880 Widgeon Road May 6, 1986 11 69,915 517 $2,465,000
Norfolk, VA
- -----------------------------------------------------------------------------------------
5728 Southern Blvd. May 6, 1986 5 25,749 228 $ 800,000
Virginia Beach, VA
- -----------------------------------------------------------------------------------------
1205 W. Pembroke Ave. May 6, 1986 7 59,400 653 $2,640,000
Hampton, VA
- -----------------------------------------------------------------------------------------
1430 S. Military Hwy. May 6, 1986 5 74,695 465 $2,200,000
Chesapeake, VA
- -----------------------------------------------------------------------------------------
1717 Bloom Lane May 6, 1986 6 61,476 604 $2,250,000
Richmond, VA
- -----------------------------------------------------------------------------------------
8226 South Hwy 17-92 Dec. 9, 1986 8 69,280 641 $2,129,829
Fern Park, FL
- -----------------------------------------------------------------------------------------
235 East Oak Ridge Dec. 9, 1986 5 56,410 508 $1,658,250
Rd.
Orlando, FL
- -----------------------------------------------------------------------------------------
5440 Midlothian Dec. 29, 10 65,175 649 $1,843,150
Trnpk. 1986
Richmond, VA
- -----------------------------------------------------------------------------------------
2918 Peter's Creek Dec. 29, 5 56,524 449 $2,000,000
Rd. 1986
Roanoke, VA
=========================================================================================
</TABLE>
PROPERTY MANAGEMENT; FEES AND COMPENSATION
The General Partners and their affiliates are entitled to
receive fees and compensation for managing the Partnership's
properties pursuant to the Partnership Agreement. The amounts of
such fees and compensation were not determined in arm's-length
negotiations.
The Partnership obtains from Goodman Segar Hogan Hoffler,
L.P. ("GSHH") property management services for the Virginia
Properties and pays an annual fee therefor. The Florida
Properties are managed by Shader Brothers Corporation ("SBC"),
which is unaffiliated with the Partnership or the General
Partners. Pursuant to the Partnership Agreement, fees for such
services may not exceed the lesser of (i) those fees prevailing
for similar services in the localities where such properties are
located or (ii) 6% of gross revenues from any property. GSHH and
SBC each receive 6% of gross revenues which is the prevailing
industry market rate. During fiscal year 1995, GSHH and SBC
received $155,782 and $52,457, respectively, for providing
property management services to the Partnership.
The Partnership reimburses the General Partners or their
affiliates for (i) the actual cost to the General Partners or
their affiliates of goods and materials used for and by the
Partnership and obtained from unaffiliated third parties and (ii)
the costs incurred by the General Partners or their affiliates in
performing administrative services necessary to the prudent
operation of the Partnership; provided, however, that the amount
of such services shall not exceed the lesser of (a) the actual
cost of such services or (b) 90% of the amount which the
Partnership would be required to pay to independent third parties
for comparable services in the same geographic location. First
Data Investor Services Group, Inc. (formerly The Shareholder
Services Group, Inc.) provides partnership accounting and
investor relations services for the Partnership. Pursuant to the
Partnership Agreement, during fiscal year 1995, the General
Partners and their affiliates were entitled to receive
reimbursements aggregating $78,715.
For each fiscal year, the Partnership distributes to General
Partners 4% of Net Cash From Operations (as defined in the
Partnership Agreement) that is distributable for such year, but
only after each Unitholder has received his or her Preferred 8%
Annual Return (as defined in the Partnership Agreement). For
fiscal year 1995, the General Partners did not receive any cash
distributions from Net Cash From Operations pursuant to the
Partnership Agreement.
Other than in connection with a sale of all or substantially
all of the Partnership's assets (as in the case of the Proposed
Sale), if any of the Properties are sold, the General Partners
are entitled to receive a cash distribution equal to 1% of Net
Proceeds From Sale or Refinancing (as defined in the Partnership
Agreement) until each Unitholder has received an amount equal to
his or her Capital Contribution (as defined in the Partnership
Agreement), and cumulative distributions (including Net Cash From
Operations) equal to 25% of his or her Capital Contribution plus
a Total 11% Cumulative Annual Return (based on his or her
Adjusted Capital Investment) (both terms as defined in the
Partnership Agreement), thereafter, the General Partners will
receive 15% of the balance of Net Proceeds From Sale or
Refinancing.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
As of 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 paid
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 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 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
Three-months and six-months ended May 31, 1996 versus three-
months and six-months ended May 31, 1995
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.
Fiscal year 1995 versus fiscal year 1994
Partnership operations resulted in net income of $1,638,214
for the year ended November 30, 1995, compared with $1,553,098
for the year ended November 30, 1994. The higher net income in
1995 is primarily attributable to an increase in rental and
interest income partially offset by higher property operating
expenses.
Rental income totalled $3,494,224 for the year ended
November 30, 1995, compared to $3,363,560 for the year ended
November 30, 1994. The increase in rental income can be
attributed in part to increased rental rates at several of the
Partnership's properties, particularly the Mechanicsville and
Midlothian facilities, as well as higher occupancy levels at
certain properties, particularly Hampton, Mechanicsville and
Widgeon. Interest income totalled $126,270 for the year ended
November 30, 1995, compared to $56,620 for the year ended
November 30, 1994. The increase is primarily due to higher
interest rates earned in 1995 as well as higher cash balances
maintained by the Partnership in 1995 compared to 1994.
Property operating expenses totalled $1,153,216 for the year
ended November 30, 1995, compared with $1,066,654 for the year
ended November 30, 1994. The increase is primarily due to higher
costs for routine repairs and maintenance, and higher payroll
costs incurred at the Virginia properties. In addition, the
Partnership recognized higher real estate tax expense in 1995.
General and administrative expenses totalled $155,796 for
the year ended November 30, 1995, largely unchanged from $149,076
for the year ended November 30, 1994.
Fiscal year 1994 versus fiscal year 1993
Partnership operations resulted in net income of $1,553,098
for the year ended November 30, 1994, compared with $1,399,148
for the year ended November 30, 1993. The higher net income in
1994 is primarily attributable to an increase in rental income
partially offset by higher
property operating expenses.
Rental income totalled $3,363,560 for the year ended
November 30, 1994, compared to $3,115,039 for the year ended
November 30, 1993. The increase is primarily attributable to
higher occupancies at all Virginia properties, as well as
increased rental rates at the Virginia properties, particularly
Mechanicsville, Arrowhead and Widgeon.
Property operating expenses totalled $1,066,654 for the year
ended November 30, 1994, compared with $950,280 for the year
ended November 30, 1993. The increase in 1994 is attributed
primarily to an increase in repairs and maintenance and
management fees, and higher payroll costs incurred at the
Virginia properties associated with performance bonuses paid to
on-site managers. In addition, the Partnership recognized higher
real estate tax expense in 1994.
General and administrative expenses totalled $149,076 for
the year ended November 30, 1994, compared with $152,353 for the
year ended November 30, 1993. The decrease in 1994 is primarily
attributable to lower transfer agent fees and appraisal costs
recognized in 1994, which were partially offset by an increase in
professional fees.
THE PROPOSED SALE
GENERAL
The General Partners believe that the sale of the Properties
is appropriate in order to meet a primary Partnership objective
of maximizing distributions to Unitholders. The General Partners
believe that the Properties should be sold now to maximize the
amount of Unitholders' distributions. The Properties are
attractive to potential buyers because they have been operated
effectively by the General Partners since 1986 and the occupancy
rates and rental rates are comparatively high. In addition, the
currently increasing level of competition in self-service storage
facilities favors a current sale of the properties to maximize
the consideration received and ultimately distributed to
Unitholders. Certain proceeds of the Proposed Sale relating to
the Florida Properties will be distributed to limited partners of
the limited partnerships that own the Florida Properties.
If the requisite approval of the Proposed Sale by
Unitholders 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. Given the purchase price provided for in
the Proposed Sale, the General Partners do not believe it would
be beneficial to continue to market the Properties for sale if
the Proposed Sale is not approved by Unitholders. In such event,
the Partnership will continue to be operated as it has in the
past.
BACKGROUND
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
Properties for sale early in 1996. The General Partners
identified those entities known to own and/or operate storage
facilities which, according to industry information, may have had
the desire and capability to purchase the Properties. Over
several weeks, the General Partners contacted numerous entities
involved in real estate ownership and/or property management in
order to explore a potential sale of all or substantially all of
the Partnership's assets.
On February 9, 1996, the Partnership entered into a letter
agreement with Purchaser, pursuant to which, among other things,
the Partnership provided Purchaser with a list of Unitholders
names and addresses in contemplation of Purchaser commencing a
tender offer for outstanding Units. In order to avoid disrupting
the possible sale of all or substantially all of the
Partnership's assets and any required vote of Unitholders,
Purchaser agreed, among other things, to vote any Units held by
it on all issues in the same manner as voted by the majority of
all other Unitholders who vote on any such proposal until August
9, 1997.
On March 1, 1996, Purchaser commenced a tender offer to
purchase from Unitholders up to 12,533 Units (approximately 25%
of the outstanding Units) of the Partnership at a purchase price
of $419 per Unit.
On March 14, 1996, the General Partners sent a letter to
Unitholders stating, among other things, that the price being
offered by Purchaser was approximately 96.6% of the Partnership's
estimated net asset value of $433.57 per Unit as of November 30,
1995 and the General Partners took no position as to whether
Unitholders should tender their Units.
Between January and March, 1996, in marketing the
Properties, the General Partners furnished non-public information
to several potential acquirors, entered into confidentiality
agreements in connection therewith and responded to several due
diligence inquiries. In connection with distributing such
information and in order to facilitate the sale of the
Properties, the General Partners requested that all potential
acquirors submit proposals to purchase the Properties by March
29, 1996. On such date, the General Partners received non-
binding proposals from two of the several potential acquirors
from which the General Partners had solicited bids. During the
month of April, the General Partners and one bidder held
discussions and negotiations with respect to a potential
transaction.
On April 2, 1996, Purchaser's tender offer expired with
approximately 31.9% the outstanding Units having been tendered.
After adjusting for certain prohibited transfers and pro-ration,
Purchaser accepted for purchase 13,516, or approximately 27%, of
the outstanding Units at a purchase price of $419 per Unit. See
"Security Ownership of Certain Beneficial Owners and Management."
The purchase price represents approximately 74% of the
consideration, approximately $565 per Unit, expected to be paid
in the liquidation.
On April 4, 1996, the Purchaser and the Partnership entered
into a Confidentiality Agreement, pursuant to which, on April 23,
1996, the Partnership furnished the Purchaser with the same non-
public information that had previously been provided to other
bidders.
On May 6, 1996 the Purchaser sent a letter to the
Partnership stating its intention to make an offer in writing for
all of the Partnership's assets by the end of the week. On May
8, 1996, the Purchaser sent a non-binding letter to the
Partnership offering to purchase substantially all of the
Partnership's assets for $27,500,000, which amount exceeded other
proposals received by the Partnership.
On May 10, 1996, the Partnership responded to the offer by
sending a letter to the Purchaser which specified the terms and
conditions on which the Partnership would be willing to enter
into an agreement with Purchaser to sell all the Partnership's
assets.
Between May 13, 1996 and May 17, 1996, counsel to, and
representatives of, the Partnership negotiated with counsel to,
and representatives of, the Purchaser in respect of the terms and
conditions of the Contracts of Sale.
On May 17, 1996, the Partnership and Purchaser entered into
all three Contracts of Sale pursuant to which Purchaser agreed to
purchase, subject to certain conditions, all of the Properties
for $27,500,000 million in cash, subject to adjustment. See
"Summary of the Contracts of Sale." Simultaneously with the
execution of the Contracts of Sale, the Purchaser paid a down
payment of $2,000,000 to the escrow agent.
On May 30, 1996, pursuant to a letter agreement with the
Partnership, the Purchaser agreed to vote all of its Units in
favor of the Proposed Sale and the Partnership agreed, only for
purposes of the Proposed Sale, to allow the Purchaser to vote its
Units in favor of the Proposed Sale, notwithstanding the letter
agreement dated February 9, 1996 between the parties. On
September 4, 1996, however, the Partnership and the Purchaser
agreed that the Purchaser would vote all of its Units as required
by the February 9, 1996 letter agreement with the Partnership.
See "Voting Procedures -- Required Vote."
On June 17, 1996, the Partnership received from Purchaser a
defect notice pursuant to the Contracts of Sale which specified
certain title, structural and environmental defects with respect
to the Properties in an amount equal to $149,175. On September
4, 1996, pursuant to the Contracts of Sale, the Partnership and
the Purchaser reduced the purchase price by $149,175 and the
Purchaser waived certain conditions to the closing of the
Proposed Sale.
GENERAL PARTNERS' RECOMMENDATION
The General Partners believe that, in order to maximize
distributions to Unitholders, now is an appropriate time to
dispose of all of the Partnership's assets and subsequently
dissolve the Partnership. THE GENERAL PARTNERS BELIEVE THAT THE
PROPOSED SALE IS IN THE BEST INTERESTS OF UNITHOLDERS AND THE
PARTNERSHIP AND RECOMMEND THAT UNITHOLDERS VOTE IN FAVOR OF THE
PROPOSED SALE.
REASONS FOR PROPOSED SALE
The Properties are attractive to potential buyers because
they have been operated effectively by the General Partners since
1986 and the current economic occupancy and rental rates are
comparatively high. The market for self-service storage
facilities has improved significantly over the last four years,
as evidenced by the following average occupancy and rental rates
for the Properties for the years ended November 30 as indicated.
<TABLE>
<CAPTION>
AVERAGE ECONOMIC OCCUPANCY AVERAGE RENTAL RATE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1995 1994 1993 1992
CHESAPEAKE 88% 94% 83% 73% $5.76 $5.28 $4.66 $4.02
FERN PARK 86 90 94 93 7.39 7.32 6.75 6.51
HAMPTON 93 89 80 76 7.19 6.65 5.83 5.54
NORFOLK
(WIDGEON) 97 95 87 81 6.62 6.07 5.22 4.86
OAK RIDGE 91 90 92 92 6.28 6.03 5.67 6.05
RICHMOND
(MECHANICS-
VILLE) 95 91 76 67 7.65 6.43 5.00 4.49
RICHMOND
(MIDLOTHIAN) 78 78 73 71 6.45 4.94 4.50 4.26
ROANOKE 93 94 89 86 6.47 5.72 5.34 5.08
VIRGINIA
BEACH
(ARROWHEAD) 95 97 93 92 6.61 6.84 5.77 5.66
WEIGHTED
AVERAGE 91% 90% 85% 81% $6.71 $6.16 $5.38 $5.10
</TABLE>
(Economic occupancy rates have been determined by dividing actual
rental income received by scheduled rental income (assuming full
occupancy at full scheduled rates) for the indicated calendar
period. Average effective annual rent per square foot for the
facilities is determined by dividing actual rental income
received by net rentable area (in square feet).)
While economic occupancy and rental rates are currently
high, there can be no assurance that they will continue to be in
the foreseeable future. Competition in the self-service storage
market remains significant as new persons enter the market. The
currently increasing level of competition in self-service storage
facilities favors a current sale of the Properties in order to
maximize the consideration received in such a sale and ultimately
distributed to Unitholders.
The General Partners have determined that selling all the
assets and dissolving the Partnership at this time better
facilitates the Partnership's goals rather than continuing to
manage the Properties. See "The Proposed Sale -- Effects of the
Proposed Sale." The future level of competition may continue to
increase because entry into the self-service storage market is
relatively accessible in comparison to entry into other types of
real estate investments. In addition, the Partnership faces
competition from persons who have greater financial resources
than the Partnership. Selling all of the Properties at this time
eliminates risks about the uncertainty of owning storage
properties in the future.
In addition, Bach Thoreen McDermott Incorporated ("Bach
Thoreen"), an independent appraisal firm retained by the
Partnership, appraised the Properties at $19,900,000, which
appraisal assumed a hypothetical sale of all of the Properties on
November 30, 1995 at a price based upon their value as rental
properties. Bach Thoreen is engaged in the business of providing
independent appraisals of real property. Bach Thoreen was
selected by the Partnership based on its reputation in the
national real estate industry. No limitations were imposed by
the Partnership upon Bach Thoreen with respect to the
investigations made or procedures followed by Bach Thoreen. The
General Partners believe that one possible reason that the
purchase price for the Proposed Sale, $27,500,000, exceeds the
aggregate appraised values of the Properties is that current
demand by buyers of self-storage facilities greatly exceeds
historical levels, so that competition has resulted in much
higher prices than the historical levels reflected in the
appraised values. Another possible reason is that the appraised
values were determined for each Property individually and the
sale of the Properties as a portfolio has resulted in a higher
price than if each Property were sold separately. The General
Partners and their affiliates have engaged Bach Thoreen during
the past two years to appraise other properties owned by their
affiliates and expect to continue to engage them to perform
appraisals in the future. The appraisal of Bach Thoreen shall be
made available for inspection and copying at the principal
executive offices of the Partnership at 3 World Financial Center,
New York, New York 10285 during regular business hours by any
interested Unitholder or his or her representative who has been
duly authorized in writing.
EFFECTS OF THE PROPOSED SALE
After the sale of the Properties, the Partnership will,
under the terms of the Partnership Agreement, be dissolved.
Pursuant to the Partnership Agreement, the General Partners will
apply and distribute the Partnership's available cash balances in
the following order of priority:
(i) To pay (or make provision for the payment of) all
creditors of the Partnership. These include the attorney's
fees incurred in connection with the dissolution; the fees
of Arthur Andersen, LLP, independent accountants to the
Partnership; the fees of the Partnership's transfer agent
and paying Agent (the "Paying Agent"); and other
miscellaneous transaction fees and costs. Also, the
Partnership will pay for the costs of this proxy
solicitation such as filing, mailing, photocopying and
solicitation fees.
(ii) To pay all creditors of the Partnership that are
General Partners. The Partnership is also required to
reimburse the General Partners for certain administrative,
office and other expenses that have accrued. At February
29, 1996, these accrued and unpaid reimbursable expenses
were approximately $30,000 and, by the date of the Proposed
Sale, are expected to be approximately $46,000. The General
Partners will also set aside approximately $650,000 of the
remaining liquidation proceeds and cash available in reserve
for contingent and unforeseen liabilities, including any
potential purchase price adjustments at closing.
(iii) After the payment (or the provision for payment)
of all debts, liabilities and obligations of the
Partnership, the remaining sale proceeds and cash available
at liquidation of approximately $28,322,000 will be
deposited with the Paying Agent for the purpose of making a
liquidating distribution to Unitholders of approximately
$565 per Unit and to the General Partners in the aggregate
amount of $286,000, in each case, in accordance with their
respective capital account balances, as adjusted for all
Partnership operations up to and including the Proposed
Sale.
The distribution will represent a return of capital for
federal income tax purposes to the extent that it does not exceed
a Unitholder's tax basis in his Unit. See "Federal Income Tax
Consequences." The Partnership will seek to distribute such net
proceeds as promptly as practicable following the closing of the
Proposed Sale.
The General Partners' share of the net proceeds and cash
available at liquidation will be approximately $286,000. If the
Proposed Sale is approved and the Partnership is subsequently
dissolved, the General Partners will no longer be entitled to
receive fees and other compensation for managing the Partnership
and the Properties as set forth in the Partnership Agreement.
See "The Partnership -- Property Management; Fees and
Compensation."
The Partnership's calculation of cash available at
liquidation is set forth below:
Sale Proceeds . . . . . . . . . . . . . . . . . . . . $27,500,000
Cash and Receivables . . . . . . . . . . . . . . . . $2,470,000
Less Closing Costs and other liabilities:
Potential Closing Adjustment . . . . . . . . . . . $500,000
Expenses of Proxy Solicitation . . . . . . . . . . . $35,000
Legal Fees and Expenses . . . . . . . . . . . . . $125,000
Accounting Fees . . . . . . . . . . . . . . . . . . $40,000
Limited Partner Distribution Payable . . . . . . . $466,000
Other Liabilities . . . . . . . . . . . . . . . . $196,000
Net Proceeds of Proposed Sale
and Cash Available at Liquidation . . . . . . . . . . $28,608,000
The above analysis excludes net cash from operations
received after February 29, 1996. All net cash from operations
received after February 29,1996 will be distributed to
Unitholders as cash from operations.
TERMINATION
The Partnership will terminate when (i) the liquid assets of
the Partnership, after payment or due provision for all debts,
liabilities and obligations of the Partnership, have been
distributed to the General Partners and Unitholders as set forth
above, and (ii) the Certificate of Limited Partnership, dated May
15, 1985, has been cancelled in the manner required under
Virginia law.
SUMMARY OF THE CONTRACTS OF SALE
General
The Partnership has entered into the three substantially
identical Contracts of Sale with Purchaser, which is unaffiliated
with the Partnership, except by virtue of its ownership of 13,464
Units, or the General Partners. The Contracts of Sale were
arrived at after extensive arms length negotiation. The
Purchaser is a California corporation organized to own real
property. The address of Purchaser is 701 Western Avenue, Suite
200, Glendale, California 91201.
The Contracts of Sale provide for the sale to Purchaser of
all of the Partnership's right, title and interest in the
Properties, the improvements and any fixtures and personalty,
presently existing and located thereon and therein and certain
agreements relating to the Properties used by the Partnership in
connection therewith. One Contract of Sale was entered into by
the Partnership in respect of the seven Virginia Properties and
two were entered into by the Partnership, as general partner, in
respect of each of the two Florida Properties which the
Partnership owns indirectly through its general partner interests
in the two partnerships. See "The Partnership -- The
Properties." The Properties comprise substantially all of the
assets of the Partnership. Purchaser will not assume any of the
Partnership's liabilities except those arising after the Proposed
Sale under ongoing rental agreements and those relating to pro-
rated taxes and other expenses which Purchaser has agreed to pay
pursuant to the Contracts of Sale.
Purchase Price
Pursuant to the Contracts of Sale, the Partnership will sell
the Properties to Purchaser for an aggregate purchase price of
$27,500,000, subject to adjustment as described below. Purchaser
has already paid into escrow $2,000,000 as a downpayment (the
"Downpayment"), and the balance of the purchase price will be
paid in cash at the closings which are scheduled to occur
simultaneously two days after the Expiration Date.
Inspection
Purchaser had until June 16, 1996 (the "Inspection Period")
to complete an inspection of the Properties and certain documents
and other materials provided by the Partnership. The Inspection
Period was extended by the Partnership and the Purchaser until
June 17, 1996. On June 17, 1996, the Partnership received from
Purchaser a defect notice pursuant to the Contracts of Sale which
specified certain title, structural and environmental defects
with respect to the Properties in an amount equal to $149,175.
Warranties and Representations
Except to the extent expressly stated in the Contracts of
Sale, the Partnership will sell the Properties to Purchaser
pursuant to the Contracts of Sale on an "AS IS" basis, with all
faults, without any representation or warranty of any kind or
nature. In the Contracts of Sale, the Partnership made limited
representations and warranties, including, without limitation,
warranties and representations as to the following matters: (i)
title matters, (ii) organization and authority, (iii) litigation
and (iv) rent rolls.
Adjustments at Closing
Certain real estate and other taxes, utility charges, fuel
charges, base rents and other rental payments for the month of
closing, costs associated with telephone listings and other
prepaid advertising shall be apportioned to the closing date.
Purchaser will be given a credit for all security deposits and
pre-paid rents. After the closing, for a period of 60 days,
Purchaser and the Partnership shall seek to collect all past due
rental payments and the Partnership shall be entitled to receive
all of such amount, except rent for the month in which the
closing occurred, in which case, the Partnership shall receive
its pro-rata share of such amount.
During the Inspection Period, Purchaser had been entitled to
notify the Partnership of certain material structural defects,
title defects or material misstatements in the financial
statements and rent roll provided by the Partnership to Purchaser
in respect of the Properties and to reduce the purchase price of
the Proposed Sale by up to $500,000; provided, however, the
Contracts of Sale provide for arbitration in the event the
Partnership disagrees with the reasons for, or the amount of,
Purchaser's reduction in the purchase price. In addition, the
Contracts of Sale provide that if during the Inspection Period,
the Purchaser had notified the Partnership of certain material
environmental defects in respect of the Properties, Purchaser
would have been entitled to reduce the purchase price of the
Proposed Sale without limitation. To the extent Purchaser
reduced the purchase price of the Proposed Sale in accordance
with the terms of this paragraph, the amount of consideration
received by Unitholders per Unit will be reduced pro rata.
On June 17, 1996, the Partnership received from Purchaser a
defect notice pursuant to the Contracts of Sale which specified
certain title, structural and environmental defects with respect
to the Properties in an amount equal to $149,175. On September
4, 1996, pursuant to the Contracts of Sale, the Partnership and
the Purchaser reduced the purchase price by $149,175 and the
Purchaser waived all conditions to the closing of the Proposed
Sale.
Closing and Conditions
The consummation of the transactions contemplated by each of
the Contracts of Sale is conditioned upon the simultaneous
closing of the transactions contemplated by the other two
Contracts of Sale. The obligations of the parties to consummate
the Proposed Sale are also subject to the fulfillment of certain
conditions on or before the date of the closing. The conditions
to the Partnership's obligations to consummate the Proposed Sale
include the affirmative vote of Unitholders holding a majority of
the outstanding Units.
If all conditions in the Contracts of Sale are either
satisfied or waived, the consummation of the Proposed Sale will
take place pursuant thereto. The Purchaser has waived certain
conditions to its obligation to consummate the Proposed Sale.
Expenses
The Partnership and the Purchaser have agreed to split
evenly the cost of obtaining title commitments, surveys, phase I
environmental site assessments and transfer taxes and charges up
to $200,000. The Partnership will pay the amount of such costs
in excess of $200,000 until such amount equals $400,000. The
Partnership and Purchaser will split evenly such costs in excess
of $400,000.
Termination
If the Purchaser refuses to consummate the Proposed Sale in
accordance with the terms of the Contracts of Sale, the
Partnership shall be entitled to either (a) seek to enforce the
Contracts of Sale through specific performance or (b) receive the
Down Payment, plus out-of-pocket costs and expenses relating to
the Proposed Sale (including, without limitation, reasonable
attorneys' fees and expenses).
If the Partnership refuses to consummate the Proposed Sale
in accordance with the terms of the Contracts of Sale, the
Purchaser shall be entitled to either (a) seek to enforce the
Contracts of Sale through specific performance or (b) receive
$750,000 and the Downpayment, plus out-of-pocket costs and
expenses relating to the Proposed Sale (including, without
limitation, reasonable attorneys' fees and expenses).
If the requisite vote of Unitholders in favor of the
Proposed Sale is not obtained pursuant to this Statement and the
General Partners continue to recommend that Unitholders vote in
favor of the Proposed Sale, the Purchaser shall be entitled to
receive the Downpayment, plus out-of-pocket costs and expenses
relating to the Proposed Sale (including, without limitation,
reasonable attorneys' fees and expenses).
The Partnership and Purchaser may both terminate the
Contracts of Sale if a court of competent jurisdiction issues a
binding final order permanently preventing the Proposed Sale, the
Proposed Sale is not approved by the requisite vote of
Unitholders or the closings do not occur on or before November
17, 1996; provided that the party seeking to terminate is not in
material breach.
FEDERAL INCOME TAX CONSEQUENCES
General
The following discussion is a summary of the material
federal income tax consequences of the Proposed Sale and
dissolution of the Partnership to Unitholders that are United
States individual taxpayers or domestic corporate taxpayers who
hold Units as capital assets. The discussion does not summarize
the tax consequences peculiar to nonresident foreign investors,
tax exempt entities, persons who hold Units as inventory or as
dealer property or other persons subject to special treatment
under federal income tax laws. No ruling has been or will be
requested from the Internal Revenue Service as to the federal
income tax matters discussed herein. The actual tax consequences
to a particular Unitholder will depend on the Unitholder's
circumstances. Accordingly, Unitholders are urged to consult
their tax advisors with respect to the tax consequences to them
of the Proposed Sale and dissolution. Further, persons who are
assignees or successors in interest with respect to the
Partnership interest of another person should consult their tax
advisors with respect to the tax consequences to them of the
Proposed Sale and dissolution. The discussion below is based
upon the Internal Revenue Code of 1986, as amended (the "Code"),
existing judicial decisions, administrative regulations and
published rulings, each of which is subject to change, possibly
on a retroactive basis. No assurance can be given that future
legislative, judicial or administrative changes would not
adversely affect the tax consequences to Unitholders of the
Proposed Sale and dissolution.
Income from the Proposed Sale and Partnership Operations
All items of income, gain, loss, deduction or credit
recognized by the Partnership, including income, gain or loss
resulting from the transfer of the Partnership's Properties,
whether recognized prior to the Proposed Sale or during the
period of dissolution, will continue to be allocated among the
Partners as provided in the Partnership Agreement. Each
Unitholder will continue to receive Partnership income tax
information to enable the distributive share of all such
Partnership taxable items allocated during the period of
dissolution to be reported.
Receipt of Liquidating Distributions
Because the liquidating distribution will consist entirely
of cash, a Unitholder will recognize a tax gain (or tax loss)
equal to the amount by which the Unitholder's tax basis in such
Units is less than (or greater than) the amount of the
liquidating distributions. A Unitholder's tax basis in its Units
will generally equal the price originally paid for the Units (or
the tax basis of the property exchanged for the Units) increased
by his or her distributive share of Partnership taxable income
(including any Partnership income or gain resulting from the
transfer of the Properties) and decreased by the distributive
share of Partnership taxable losses (including any Partnership
loss resulting from the transfer of the Properties), the amount
of cash distributed to the Unitholders and any decrease in such
Unitholder's share of partnership liabilities. Gain or loss
recognized by a Unitholder upon liquidation of the Partnership is
generally treated as gain or loss from the sale or exchange of a
capital asset.
Taxation of Gains and Losses
Individual and corporate taxpayers may utilize capital
losses to offset capital gains; however a Unitholder's capital
losses can be deducted only to the extent of a Unitholder's
capital gains plus, in the case of noncorporate Unitholders,
ordinary income of up to $3,000. Noncorporate Unitholders may
carry over a net capital loss for an unlimited time until the
loss is exhausted. Corporate Unitholders may be allowed to carry
the unused capital losses to the three preceding tax years and to
the five following tax years.
Passive Activity Loss Provisions
The passive loss limitations generally provide that
individuals, estates, trusts and certain closely held
corporations and personal service corporations can deduct losses
from passive activities only to the extent of their income from
such passive activities or investments. Passive activities are,
in general, business activities in which a taxpayer does not
materially participate, such as those of the Partnership.
However, losses with respect to the Partnership that were
previously disallowed to a Unitholder under the passive activity
loss rules may be used to offset income or gain from the Proposed
Sale, and to the extent not used to offset such income or gain,
generally may be deducted by such Unitholder in the taxable year
in which the liquidation of the Partnership is completed. In
addition, deductions previously disallowed to a Unitholder by
certain other limitations may be allowed to the extent of income
and gain recognized in the Proposed Sale.
FINANCIAL STATEMENTS
The audited balance sheets of the Partnership at November
30, 1995 and 1994 and the audited consolidated statements of
operations, statements of partners'capital (deficit) and
statements of cash flows for the years ended November 30, 1995,
1994 and 1993, including notes thereto, and the unaudited balance
sheet at May 31,1995 and 1996 and the statements of operations,
statements of partners' capital (deficit) and statements of cash
flows for each of the six months ended May 31, 1996 and 1996 are
included herein as Annex A. The unaudited interim financial
statements from which this data is derived include all
adjustments, consisting of normal recurring accruals, which the
General Partners consider necessary for a fair presentation of
the financial position and results of operations for these
periods.
SELECTED HISTORICAL FINANCIAL DATA
The following selected historical financial data for each of
the years in the five-year period ended November 30, 1995, has
been derived from the Partnership's financial statements audited
by Arthur Andersen, LLP, an independent certified public
accountant. The selected financial data with respect to the
balance sheets at May 31, 1996 and 1995, and the statements of
operations for each of the six months then ended, is unaudited.
The unaudited interim financial statements from which this data
is derived include all adjustments, consisting of only normal
recurring accruals, which the General Partners consider necessary
for a fair presentation of the financial position and results of
operations for these periods. The selected financial data set
forth below should be read in conjunction with the audited and
unaudited financial statements and related notes included in the
Partnership's Annual Report on Form 10-K of the Partnership for
the fiscal year ended November 30, 1995 (the "Form 10-K") and the
Quarterly Report on Form 10-Q for the fiscal quarter ended May
31, 1996 (the "Form 10-Q") and the financial statements included
elsewhere in this Statement.
SELECTED FINANCIAL DATA
For the periods indicated
(dollars in thousands except per Unit data)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED FOR THE YEARS ENDED,
(UNAUDITED)
---------------------- -----------------------------------------------
MAY 31, MAY 31, NOV. 30, NOV. 30, NOV.30, NOV. 30, NOV. 30,
1996 1995 1995 1994 1993 1992 1991
---------------------- -----------------------------------------------
STATEMENT OF
OPERATIONS DATA:
<S> <C> <C> <C> <C> <C> <C> <C>
Total Income $ 1,879 $ 1,759 $ 3,620 $ 3,420 $ 3,147 $ 2,952 $ 2,857
Net Income 733 799 1,638 1,553 1,399 1,129 1,051
Net Income per
Limited
Partnership Unit 14.69 16.01 32.81 31.11 28.04 22.65 21.10
BALANCE SHEET DATA:
Total Assets at
Period-end 16,490 16,556 16,625 16,556 16,629 16,875 17,436
Cash Distributions
per Limited
Partnership
Unit* 18.60 16.30 33.75 32.60 32.60 32.60 32.60
Book value per
Unit 436.15 414.76 433.57 408.53 400.48 370.04 409.54
- -----------------------------------------------------------------------------------------
</TABLE>
* As approved for payment during the period.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
On September 3, 1996, the Record Date, there were 50,132
Units issued and outstanding and entitled to vote. As of the
Record Date, neither the General Partners nor any officer or
director of their affiliates owned any Units.
The following table sets forth certain information as of the
Record Date with respect to the beneficial ownership of Units of
the Partnership by each Unitholder known by the Partnership to
own beneficially more than 5% of the outstanding Units:
AMOUNT AND NATURE
NAME AND ADDRESS OF OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP HOLDING
Public Storage, Inc. 14,608 29.1*
600 North Brand
Boulevard
Glendale, California,
91203-1241
_________________
* On February 9, 1996, pursuant to a letter agreement with the
Partnership, the Purchaser agreed that prior to August 9,
1997, it would vote all its Units on all issues in the same
manner as by the majority of all other Unitholders who vote
on any such proposal. Accordingly, if more than
approximately 21.9% of the outstanding Units (other than
those owned by the Purchaser) vote FOR the Proposed Sale and
such amount constitutes a majority, the Proposed Sale will
be approved
MARKET FOR PARTNERSHIP UNITS
AND RELATED UNITHOLDER MATTERS
The Units of the Partnership are not listed on a public
exchange. No public market for the exchange of Units exists and
none is expected in the future. From time to time, the Units are
traded in an informal secondary market, however, such prices may
not reflect the fair market value of the Units due to extremely
low trading volume.
DISTRIBUTIONS
Cash distributions to Unitholders totaled $33.75 and $32.60
per Unit in fiscal years 1994 and 1995. Cash distributions for
1995 were funded solely by cash flow from operations. The
following table sets forth the cash distributions per Unit paid
to Unitholders during each quarter for the fiscal years 1994 and
1995.
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
1994 $ 8.15 $ 8.15 $ 8.15 $ 8.15 $ 32.60
1995 $ 8.15 $ 8.15 $ 8.15 $9.30 $33.75
ADDITIONAL INFORMATION
This Statement does not purport to be a complete description
of all agreements and matters relating to the condition of the
Partnership, its Properties and the transactions described
herein. The Form 10-K and the Form 10-Q provide additional
information regarding the Partnership. With respect to
statements contained in this Statement as to the content of the
Form 10-K, the Form 10-Q and any contract or other document filed
as an exhibit to the Form 10-K and the Form 10-Q, each such
statement is qualified in all respects by reference to the Form
10-K, the Form 10-Q, and such exhibit and the schedules thereto,
all of which may be obtained without charge upon written request
to the Partnership. If making such a request, please send it to:
American Storage Properties, L.P., 3 World Financial Center, New
York, New York 10285, Attn: Andre Anderson.
By Order of the General Partners
STORAGE SERVICES, INC.
/s/ Paul L. Abbott
Paul L. Abbott
President
GOODMAN SEGAR HOGAN/AMERICAN STORAGE
PROPERTIES ASSOCIATES, L.P.
By: American Storage Properties,
Inc., its general partner
/s/ Mark P. Mikuta
Mark P. Mikuta
President
ANNEX A
[Letterhead of Arthur Andersen LLP]
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
American Storage Properties, L.P.:
We have audited the accompanying consolidated balance sheets of
American Storage Properties, L.P. (a Virginia limited
partnership) and consolidated ventures as of November 30, 1995
and 1994, and the related consolidated statements of operations,
partners' capital and cash flows for each of the three years in
the period ended November 30, 1995. These financial statements
are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the 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 financial
position of American Storage Properties, L.P. and consolidated
ventures as of November 30, 1995 and 1994, and the results of
their operations and their cash flows for each of the three years
in the period ended November 30, 1995, in conformity with
generally accepted accounting principles.
/s/ Arthur Andersen LLP
Boston, Massachusetts
January 8, 1996
American Storage Properties, L.P.
and Consolidated Ventures
CONSOLIDATED BALANCE SHEETS
UNAUDITED
ASSETS MAY 31, 1996 NOV. 30, 1995 NOV. 30, 1994
- -----------------------------------------------------------------------
Self-service storage
facilities, at cost:
Land $ -- $ 3,756,319 $ 3,756,319
Buildings and
improvements -- 16,061,509 16,005,525
----------------------------------------------
19,817,828 19,761,844
Less accumulated
depreciation -- (6,010,342) (5,353,132)
----------------------------------------------
-- 13,807,486 14,408,712
Property held for
disposition 13,478,406 -- --
Cash and cash equivalents 2,846,084 2,667,352 2,001,535
Other assets 165,807 149,923 146,233
- -----------------------------------------------------------------------
TOTAL ASSETS $16,490,297 $16,624,761 $16,556,480
------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
- -----------------------------------------------------------------------
Liabilities:
Accounts payable and
accrued expenses$ 196,105 $ 120,589 $ 86,485
Due to affiliates 33,548 53,522 35,157
Security deposits 12,173 13,050 15,804
Advance rent 139,560 115,194 114,524
Distribution payable 466,228 466,228 408,576
--------------------------------
Total Liabilities 847,614 768,583 660,546
--------------------------------
Minority interest -- 13,985 --
--------------------------------
Partners' Capital (Deficit):
General Partners (129,084) (125,793) (119,221)
Limited Partners 15,771,767 15,967,986 16,015,155
________________________________________________________________________
Total Partners' Capital 15,642,683 15,842,193 15,895,934
-----------------------------------------------------------------------
TOTAL LIABILITIES AND
PARTNERS' CAPITAL $16,490,297 $16,624,761 $16,556,480
-----------------------------------
See accompanying notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS
(FOR THE PERIODS INDICATED)
SIX SIX
MONTHS MONTHS YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
MAY 31, MAY 31, NOV. 30, NOV. 30, NOV. 30,
1996 1995 1995 1994 1993
INCOME (UNAUDITED) (UNAUDITED)
- -----------------------------------------------------------------------------
Rental $1,810,316 $1,701,172 $3,494,224 $3,363,560 $3,115,039
Interest 69,155 57,978 126,270 56,620 32,176
- -----------------------------------------------------------------------------
Total Income 1,879,471 1,759,150 3,620,494 3,420,180 3,147,215
---------------------------------------------------------
EXPENSES
- -----------------------------------------------------------------------------
Property operating $569,023 $555,994 1,153,216 1,066,654 950,280
Depreciation and
Amortization 329,080 328,320 657,210 651,352 645,434
General and admin-
istrative 248,423 75,745 155,796 149,076 152,353
- -----------------------------------------------------------------------------
Total Expenses 1,146,526 960,059 1,966,222 1,867,082 1,748,067
---------------------------------------------------------
Income before
minority interest 732,945 799,091 1,654,272 1,553,098 1,399,148
Minority Interest -- -- (16,058) -- --
---------------------------------------------------------
NET INCOME $732,945 $799,091 $1,638,214 $1,553,098 $1,399,148
---------------------------------------------------------
NET INCOME (LOSS) ALLOCATED:
- -----------------------------------------------------------------------------
To the General
Partners $(3,291) $( 3,283) $ (6,572) $(6,514) $ (6,454)
To the Limited
Partners 36,236 802,374 1,644,786 1,559,612 1,405,602
---------------------------------------------------------
$732,945 $799,091 $1,638,214 $1,553,098 $1,399,148
--------------------------------------------------------
PER LIMITED PARTNERSHIP
UNIT(50,132 OUT-
STANDING) $14.69 $16.01 $32.81 $31.11 $28.04
-------------------------------------------------------
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
For the years ended November 30, 1995, 1994 and 1993, and the six months
ended May 31, 1996
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
- ----------------------------------------------------------------------------
BALANCE AT DECEMBER 1, 1992 $(106,253) $16,318,549 $16,212,296
Net income (loss) (6,454) 1,405,602 1,399,148
Cash distributions -- (1,634,304) (1,634,304)
- -----------------------------------------------------------------------------
BALANCE AT NOVEMBER 30, 1993 (112,707) 16,089,847 15,977,140
Net income (loss) (6,514) 1,559,612 1,553,098
Cash distributions -- (1,634,304) (1,634,304)
- -----------------------------------------------------------------------------
BALANCE AT NOVEMBER 30, 1994 (119,221) 16,015,155 15,895,934
Net income (loss) (6,572) 1,644,786 1,638,214
Cash distributions -- (1,691,955) (1,691,955)
- -----------------------------------------------------------------------------
BALANCE AT NOVEMBER 30, 1995 $(125,793 $15,967,986 $15,842,193
Net income (loss) (unaudited) (3,291) 736,236 732,945
Cash distributions (unaudited) -- (932,455) (932,455)
---------------------------------------
BALANCE AT MAY 31, 1996 (unaudited) $(129,084) $15,771,767 $15,642,683
See accompanying notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended November 30, 1995, 1994 and 1993 and six months ended
May 31, 1996 and 1995
<TABLE>
<CAPTION>
SIX SIX
MONTHS MONTHS YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
MAY 31, MAY 31, NOV. 30, NOV. 30, NOV. 30,
1996 1995 1995 1994 1993
CASH FLOWS FROM OPERATING
ACTIVITIES: (UNAUDITED) (UNAUDITED)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net income $732,945 $799,091 $1,638,214 $1,553,098 $1,399,148
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Minority interest (13,985) -- 16,058 -- --
Depreciation 329,080 328,320 657,210 651,352 645,434
Increase (decrease) in cash
arising from changes in
operating assets and
liabilities:
Other assets (15,884) 9,290 (3,690) (41,767) (1,398)
Accounts payable and
accrued expenses 75,516 15,638 34,104 296 17,063
Due to affiliates (19,974) (19,379) 18,365 16,603 (32,912)
Security deposits (877) (1,880) (2,754) (5,149) (5,488)
Advance rent 24,366 22,950 670 (3,252) 10,590
--------------------------------------------------------------
Net cash provided by operating
activities 1,111,187 1,154,030 2,358,177 2,171,181 2,032,437
---------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
- ------------------------------------------------------------------------------------------------
Additions to real estate -- (12,727) (55,984) (97,794) (98,691)
--------------------------------------------------------------
Net cash used for investing
activities -- (12,727) (55,984) (97,794) (98,691)
---------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------------------------------------------------------------------
Distributions paid - Minority
interest -- -- (2,073) -- --
Distributions paid - Limited
Partners (932,445) (817,152) (1,634,303) (1,634,304) (1,634,304)
-----------------------------------------------------------------
Net cash used for financing
activities (932,455) (817,152) (1,636,376) (1,634,304) (1,634,304)
-----------------------------------------------------------------
Net increase in cash and cash
equivalents 178,732 324,151 665,817 439,083 299,442
Cash and cash equivalents,
at beginning of period 2,667,352 2,001,535 2,001,535 1,562,452 1,263,010
-----------------------------------------------------------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $2,846,084 $2,325,686 $2,667,352 $2,001,535 $1,562,452
-----------------------------------------------------------------
<FN>
See accompanying notes to the consolidated financial statements.
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993.
1. ORGANIZATION
American Storage Properties, L.P. (the "Partnership") was
organized as a Limited Partnership under the laws of the
Commonwealth of Virginia pursuant to a Certificate and
Agreement of Limited Partnership dated and filed May 15, 1985
(the "Partnership Agreement"). The Partnership was formed for
the purpose of acquiring and operating self-service storage
facilities. The General Partners of the Partnership are
Storage Services Inc., an affiliate of Lehman Brothers (see
below), and Goodman Segar Hogan/American Storage Properties, a
California Limited Partnership ("ASP Associates"), an
affiliate of Goodman Segar Hogan Hoffler, L.P. (see below).
The Partnership will continue until December 31, 2010, unless
terminated sooner in accordance with the terms of the
Partnership Agreement.
On July 31, 1993, Shearson Lehman Brothers Inc. ("Shearson")
sold certain of its domestic retail brokerage and asset
management businesses to Smith Barney, Harris Upham & Co.
Incorporated ("Smith Barney"). Subsequent to the sale,
Shearson changed its name to Lehman Brothers Inc. ("Lehman
Brothers"). The transaction did not affect the ownership of
the General Partner. However, the assets acquired by Smith
Barney included the name "Hutton." Consequently, effective
August 3, 1995, the name of the Partnership was changed to
American Storage Properties, L.P. to delete any reference to
"Hutton." Additionally, effective July 31, 1993, the Hutton
Storage Services, Inc. general partner changed its name to
Storage Services Inc. to delete any references to "Hutton".
On August 1, 1993, Goodman Segar Hogan Incorporated ("GSH")
transferred all of its leasing, management and sales
operations to Goodman Segar Hogan Hoffler, L.P., a Virginia
limited partnership ("GSHH"). On that date, the leasing,
management and sales operations of a portfolio of properties
owned by the principals of Armada/Hoffler were also obtained
by GSHH. The General Partner of GSHH is Goodman Segar Hogan
Hoffler, Inc., a Virginia corporation ("GSHH Inc."), which has
a one percent interest in GSHH. The stockholders of GSHH Inc.
are GSH with a 62% stock interest and H.K. Associates, L.P.,
an affiliate of Armada/Hoffler ("HK"), with a 38% stock
interest. The remaining 99% interests in GSHH are limited
partnership interests owned 50% by GSH and 49% by HK. The
transaction did not affect the ownership of the General
Partner.
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION The accompanying consolidated financial
statements include the accounts of the Partnership and its
ventures, American Storage Properties, (Fern Park) L.P. ("Fern
Park") and American Storage Properties (Oak Ridge) L.P. ("Oak
Ridge"). Intercompany accounts and transactions between the
Partnership and the ventures have been eliminated in
consolidation.
SELF-SERVICE STORAGE FACILITIES Self-service storage
facilities are recorded at cost less accumulated depreciation,
which includes the initial purchase price of the property plus
closing costs, acquisition and legal fees and other
miscellaneous acquisition costs.
DEPRECIATION Depreciation is computed using the straight-line
method over the estimated useful lives of 20 to
25 years for Buildings and Improvements and five years for
Furniture and Fixtures. Included in the cost basis of
Buildings and Improvements at November 30, 1995 and 1994 is
$156,995 and $156,955, respectively, of Furniture and
Fixtures.
ACCOUNTING FOR IMPAIRMENT In March 1995, the Financial
Accounting Standards Board issued Statement of Financial
Accounting Standards No. 121 , "Accounting for the Impairment
of Long-Lived Assets and Long-Lived Assets to Be Disposed Of"
("FAS 121"), which requires impairment losses to be recorded
on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the
assets' carrying amount. FAS 121 also addresses the
accounting for long-lived assets that are expected to be
disposed of. The Partnership has adopted FAS 121 in the
fourth fiscal quarter of 1995. Based on current
circumstances, the adoption had no impact on the financial
statements.
LEASES Leases are generally on a month-to-month basis and are
accounted for as operating leases.
CASH AND CASH EQUIVALENTS Cash and cash equivalents consist
of short-term, highly liquid investments that have original
maturities of three months or less. The carrying amount
approximates fair value because of the short maturity of these
investments.
OTHER ASSETS Other assets consist primarily of accrued rent
receivable and prepaid real estate taxes.
INCOME TAXES No provision for income taxes has been made in
the financial statements since such taxes are the
responsibility of the individual partners rather than that of
the Partnership.
RECLASSIFICATIONS Certain reclassifications have been made to
the 1994 financial statements to conform with the 1995
presentation. Such reclassifications have no effect on
previously reported net income.
USE OF ESTIMATES The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
3. PARTNERSHIP AGREEMENT
The Partnership Agreement provides that the net cash from
operations, as defined, for each fiscal year will be
distributed on a quarterly basis, first to the Limited
Partners until each Limited Partner has received an 8% annual
noncumulative return based on contributed capital. The net
cash from operations will then be distributed to the General
Partners until the General Partners have received an amount
equal to 4% of the net cash from operations distributed to all
partners. The balance of net cash from operations will then
be distributed 96% to the Limited Partners and 4% to the
General Partners. As the 8% noncumulative return has not been
satisfied as of November 30, 1995, substantially all of the
income of the Partnership has been allocated to the Limited
Partners.
Net proceeds from sales or refinancings will be distributed
99% to the Limited Partners and 1% to the General Partners
until each Limited Partner has received an amount equal to his
adjusted capital investment, as defined, and an 11% cumulative
annual return thereon. The balance of the net proceeds will
then be distributed 85% to the Limited Partners and 15% to the
General Partners.
Income before depreciation and amortization for any fiscal
year will be allocated in substantially the same manner as net
cash from operations. Losses and depreciation and
amortization for any fiscal year will be allocated 99% to the
Limited Partners and 1% to the General Partners.
4. TRANSACTIONS WITH RELATED PARTIES
The following is a summary of the amounts paid or accrued to
the General Partners and their affiliates during the years
ended November 30, 1995, 1994 and 1993:
UNPAID AT
NOVEMBER 30, EARNED
---------------------------------
1995 1995 1994 1993
---------------------------------------------------------------------
Reimbursement of:
Out-of-pocket
expenses $ -- $ 3,088 $ 5,420 $ 7,008
Administrative
salaries and
expenses 53,522 75,627 57,572 58,182
---------------------------------------------------------------------
$ 53,522 $78,715 $62,992 $65,190
The above amounts were paid or accrued to the General Partners
and their affiliates as follows:
UNPAID AT
NOVEMBER 30, EARNED
---------------------------------
1995 1995 1994 1993
---------------------------------------------------------------------
Storage Services Inc.
and affiliates $44,980 $ 45,914 $ 29,292 $ 29,814
ASP Associates and
affiliates 8,542 32,801 33,700 35,376
---------------------------------------------------------------------
$53,522 $ 78,715 $ 62,992 $ 65,190
5. SELF-SERVICE STORAGE FACILITIES
Self-service storage facilities consist of nine properties
acquired either directly or, in two cases, through investments
in other limited partnerships as follows:
<TABLE>
<CAPTION>
NUMBER OF
DATE OF NUMBER OF RENTABLE RENTABLE PURCHASE
PROPERTY LOCATION PURCHASE BUILDINGS SQ. FT. SPACES PRICE
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
880 Widgeon Road May 6, 1986 11 70,430 518 $ 2,465,000
Norfolk, VA
5728 Southern Blvd. May 6, 1986 5 25,749 228 $ 800,000
Virginia Beach, VA
1205 W. Pembroke Ave. May 6, 1986 7 59,680 657 $ 2,640,000
Hampton, VA
1430 S. Military Hwy. May 6, 1986 5 75,015 439 $ 2,200,000
Chesapeake, VA
1717 Bloom Lane May 6, 1986 6 61,603 604 $ 2,250,000
Richmond, VA
8226 South Hwy 17-92 Dec. 9, 1986 8 69,280 761 $ 2,129,829
Fern Park, FL
235 East Oak Ridge Rd. Dec. 9, 1986 5 56,410 589 $ 1,658,250
Orlando, FL
5440 Midlothian Trnpk. Dec. 29, 1986 10 65,600 651 $ 1,843,150
Richmond, VA
2918 Peter's Creek Rd. Dec. 29, 1986 5 56,524 449 $ 2,000,000
Roanoke, VA
--------------------------------------------------------------------------------------------
</TABLE>
INVESTMENT IN LIMITED PARTNERSHIP On December 9, 1986, the
Partnership executed a purchase agreement to acquire an
interest in two self-service storage facilities located in
Fern Park, Florida, and Orlando, Florida, through two
Limited Partnerships, Fern Park and Oak Ridge, with
affiliates of the seller of the facilities. The two
facilities were acquired for initial purchase prices of
$2,026,750 and $1,658,250, respectively, and future
additional contingent amounts of up to $173,250 and
$141,750, respectively, based upon the achievement of
certain cash flow levels. These amounts were placed in an
escrow account. In 1988, upon the expiration of the
contingency period, the cash flow level required for a
partial payment was achieved by the Fern Park property, and
as a result, $103,079 was released as an addition to the
original purchase price of the property. The remaining
amounts of $70,171 and $141,750 for Fern Park and Oak Ridge,
respectively, were returned to the Partnership. The initial
purchase price of each property was disbursed by the
Partnership to the respective Limited Partnerships as a
capital contribution.
The Limited Partnership agreements substantially provide
that:
i. Net cash from operations 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. The
balance of net cash from operations was distributed
according to the guidelines stated above. The minority
share of $16,058 is recorded as minority interest expense
in the financial statements. $13,985 of the minority share
was payable to the Limited Partner as of November 30, 1995.
As the Preferred Return for Oak Ridge has not been
satisfied as of November 30, 1995, substantially all of the
income of the Limited Partnership has been allocated to the
Partnership.
ii. Cash proceeds from capital transactions will be distributed
100% to the Partnership until the Partnership has received
any shortfalls in its preferred return as well as 125% of
its aggregate cash investment. The remaining cash will be
distributed 85% to the Partnership and 15% to the Limited
Partner.
iii. Taxable income will be allocated in substantially the
same manner as net cash from operations. Tax losses will
generally be allocated 85% to the Partnership and 15% to the
Limited Partner.
6. RECONCILIATION OF NET INCOME TO TAXABLE INCOME
For the years ending November 30, 1995, 1994 and 1993, net
income reported in the consolidated financial statements
exceeded taxable income by $54,705, $43,260 and $13,413
respectively. As of November 30, 1995, the tax basis of total
assets and liabilities is $19,152,672 and $988,017,
respectively. These differences are a result of differences
between the tax basis and financial statement reporting
requirements. Different methods of depreciating real estate
are used for tax purposes as compared to those used for
financial statement purposes.
ANNEX B
COMPARISON OF ACQUISITION COSTS TO APPRAISED
VALUE AND DETERMINATION OF NEW ASSET VALUE
PER $465 UNIT AT NOVEMBER 30, 1995 (UNAUDITED)
Partnership's
Share of
Nov 30,
1995
Date of Acquisition Appraised
Property Acquisition Cost Value (2)
___________________________________________________________________________
800 Widgeon Rd.,
Norfolk, VA 05-06-86 $ 2,707,157 $ 2,400,000
5728 Southern Blvd., 05-06-86 881,535 800,000
Virginia Beach, VA
1205 W. Pembroke Ave., 05-06-86 2,898,923 2,600,000
Hampton, VA
1430 S. Military Hwy., 05-06-86 2,416,649 2,300,000
Chesapeake, VA
1717 Bloom Lane, 05-06-86 2,471,503 2,500,000
Richmond, VA
235 East Oak Ridge Rd., 12-09-86 1,758,755 2,500,000
Orlando, FL
8226 South Hwy. 17-92, 12-09-86 2,145,016 2,800,000
Fern Park, FL
5440 Midlothian Trnpk., 12-29-86 2,012,324 2,000,000
Richmond, VA
2918 Peter's Creek Rd., 12-29-86 2,126,745 2,000,000
Roanoke, VA
------------ -----------
$ 19,418,607 19,900,000
-----------
Cash and cash equivalents 2,667,352
Other assets 149,923
-----------
22,717,275
Less:
Total liabilities and (782,569)
minority interest ------------
Partnership Net Asset Value (3) $21,934,706
------------
Net Asset Value Allocated:
Limited Partners $21,735,706
General Partners 199,000
------------
$21,934,706
------------
Net Asset Value Per Unit
(50,132 units outstanding) $433,57
------------
(1) The Acquisition Cost consists of the purchase price plus the
General Partners' acquisition fees, noncompetition fees paid to
the Sellers, and other capitalized costs.
(2) This represents the Partnership's share of the November 30,
1995 Appraised Values which were determined by an independent
property appraisal firm.
(3) The Net Asset Value assumes a hypothetical sale at November 30,
1995 of all the Partnership's properties at a price based upon
their value as a rental property as determined by an
independent property appraisal firm, and the distribution of
the proceeds of such sale, combined with the Partnership's cash
after liquidation of the Partnership's liabilities, to the
Partners.
Limited Partners should note that appraisals are only estimates
of current value and actual values realizable upon sale may be
significantly different. A significant factor in establishing an
appraisal value is the actual selling price for properties which
the appraiser believes are comparable. In addition, the
appraised value does not reflect the actual costs which would be
incurred in selling the properties. As a result of these factors
and the illiquid nature of an investment in Units of the
Partnership, the variation between the appraised value of the
Partnership's properties and the price at which Units of the
Partnership could be sold is likely to be significant. Fiduciary
of Limited Partners which are subject to ERISA or other
provisions of law requiring valuations of Units should consider
all relevant factors, including, but not limited to Net Asset
Value per Unit, in determining the fair market value of the
investment in the Partnership for such purposes.
YOUR VOTE IS IMPORTANT
PLEASE SIGN, DATE AND MAIL YOUR BALLOT PROMPTLY
IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE
Any questions or request for assistance or additional copies
of the materials used in this solicitation (including the
Solicitation Statement and the Ballot), may be directed to
First Data Investor Services Group, Inc at 1-800-223-3464.
You may also contact your broker, dealer, commercial bank or
trust company for assistance concerning the solicitation.
FIRST DATA INVESTOR SERVICES GROUP, INC
CALL TOLL-FREE 1-800-223-3464
[Front]
AMERICAN STORAGE PROPERTIES, L.P.
BALLOT SOLICITED BY THE GENERAL PARTNERS
The undersigned, acting with regard to all units of limited
partnership interests held of American Storage Properties,
L.P. (the "Partnership") which the undersigned was entitled to
vote in all capacities on September 3, 1996, hereby votes as
indicated on the reverse side hereof, in regard to the sale of
all the Partnership's assets in accordance with the terms of
each of the Contracts of Sale, dated as of May 17, 1996,
between the Partnership and Public Storage, Inc. (the
"Proposed Sale").
THE GENERAL PARTNERS RECOMMEND THAT YOU VOTE FOR THE
PROPOSED SALE. IF YOU WISH TO VOTE IN ACCORDANCE WITH THE
GENERAL PARTNERS' RECOMMENDATION, JUST SIGN ON THE REVERSE
SIDE. YOU NEED NOT MARK ANY BOXES. IF NO SPECIFICATION IS
MADE, BALLOT WILL BE CONSIDERED A VOTE FOR THE PROPOSED SALE.
[Reverse]
PLEASE MARK, SIGN, DATE AND RETURN THIS BALLOT PROMPTLY, USING
THE ENCLOSED ENVELOPE.
TO APPROVE THE PROPOSED SALE. IF THE PROPOSED SALE IS
APPROVED AND CONSUMMATED, THE PARTNERSHIP WILL BE DISSOLVED
AND LIQUIDATED IN ACCORDANCE WITH ITS CERTIFICATE AND
AGREEMENT OF LIMITED PARTNERSHIP.
FOR AGAINST WITHHELD
___ ___ ___
/__/ /__/ /__/
The undersigned acknowledges receipt of the Solicitation
Statement.
Please sign exactly as your name appears hereon. Joint owners
should each sign. When signing as attorney, executor, trustee
or guardian, please give full title as such.
Signature: ____________________
Date: ____________________
Signature: ____________________
Date: ____________________
