UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) of THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 1995 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 0-15550
AMERICAN STORAGE PROPERTIES, L.P.
(formerly Hutton/GSH American Storage Properties, L.P.)
Exact name of registrant as specified in its charter
Virginia 11-2741889
State or other jurisdiction of incorporation I.R.S. Employer
Identification No.
ATTN: Andre Anderson
3 World Financial Center, 29th Floor, New York, New York 10285
Address of principal executive offices zip code
Registrant's telephone number, including area code: (212) 526-3237
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
Title of Class
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for 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
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. (x)
Documents Incorporated by Reference:
The Prospectus of the Registrant dated September 9, 1985, as supplemented by
the Prospectus Supplement dated May 16, 1986, filed pursuant to Rules 424(b)
and 424(c), respectively, is incorporated by reference in Part III of this
Annual Report on Form 10-K.
Portions of Parts I, II, III and IV are incorporated by reference to the
Partnership's Annual Report to Unitholders for the year ended November 30,
1995, filed as an exhibit under Item 14.
PART I
Item 1. Business
(a) General
American Storage Properties, L.P. (the "Registrant" or "Partnership"), formerly
Hutton/GSH American Storage Properties, L.P. (see Item 10. "Certain Matters
Involving Affiliates"), is a Virginia limited partnership organized
pursuant to a Certificate and Agreement of Limited Partnership dated
May 15, 1985 (the "Partnership Agreement"), of which Storage Services, Inc.
("Storage Services"), formerly Hutton Storage Services, Inc. (see Item 10.
"Certain Matters Involving Affiliates"), and Goodman Segar Hogan/American
Storage Properties Associates, A California Limited Partnership ("ASP
Associates") are the general partners (together, the "General Partners"). The
Registrant is engaged in the business of acquiring, operating and holding for
investment self-service storage facilities (the "Properties"), including all
necessary or appropriate ancillary or appurtenant properties and facilities,
and any and all other activities related, necessary, appropriate or incidental
thereto. Information regarding the Properties is incorporated by reference to
Note 5 "Self-service Storage Facilities" of the Notes to the Consolidated
Financial Statements contained in the Partnership's Annual Report to
Unitholders for the year ended November 30, 1995, filed as an exhibit under
Item 14.
Commencing September 9, 1985, the Registrant began the offering of Partnership
units (the "Units") with two separate closings occurring on May 6, 1986 and
July 22, 1986. Upon termination of the offering, the Registrant had accepted
subscriptions for 50,132 Units for aggregate gross proceeds of $25,066,000.
After deducting organization and offering expenses and initial working capital
reserves, approximately $21,450,000 was available for investment in
self-service storage facilities. $19,500,000 of such proceeds has been
invested in seven self-service storage facilities and in two limited
partnerships, each of which owns a self-service storage facility. The
Registrant's commitments for the purchase of the Properties were fully funded
by November 30, 1986.
Funds held as a working capital reserve may be invested in bank certificates of
deposit, money market funds or other similar highly liquid, short-term
investments where there is appropriate safety of principal, in accordance with
the Registrant's investment objectives and policies.
The Registrant's principal investment objectives with respect to the Properties
(in no particular order of priority) are:
(1) Distributions of Net Cash From Operations derived from rental income;
(2) Capital appreciation; and
(3) Preservation and protection of capital.
Distribution of Net Cash From Operations is the Registrant's objective during
its operational phase, while preservation and appreciation of capital are the
Registrant's long-term objectives. The attainment of the Registrant's
investment objectives depends on many factors, including the successful
management of the operations of its Properties and future economic conditions
in the United States and in the localities in which the Registrant's Properties
are located.
For information regarding the marketing of the Partnership's facilities, please
refer to Item 7 "Management's Discussion and Analysis of Financial Condition
and Results of Operations" contained herein.
Users of self-storage facilities are primarily individuals, large and small
businesses and professional offices. Spaces are usually rented on a
month-to-month basis, although business tenants often have longer-term leases.
The typical occupancy period for a tenant is less than one year. Rental
periods tend to be longer in successful facilities that have been in operation
for a number of years than in newer facilities.
(b) Seasonality
Typically, the self-service storage industry experiences seasonal fluctuations,
with the peak demand occurring during the warmer months.
(c) Competition
The Registrant's self-service storage facilities face significant competition
from other similar facilities in the vicinities in which they are located
and such competition has been increasing in recent years. Competition may
continue to increase because entry into the self-service storage
market is accessible in comparison to entry into other types of real estate
investment. The Registrant's facilities may face competition from persons
who have greater financial resources than the Registrant, and also from similar
facilities owned or operated by the General Partners, their Affiliates or
the property managers managing the Registrant's facilities. Furthermore,
various limited partnerships could in the future be formed by Affiliates
of the General Partners to engage in business which may be competitive
with the Registrant.
(d) Employees
The Registrant's business is managed by the General Partners and the Registrant
has no employees.
Item 2. Properties
A description of the Properties owned by the Registrant is incorporated by
reference to Note 5 "Self-service Storage Facilities" of the Notes to the
Consolidated Financial Statements contained in the Partnership's Annual Report
to Unitholders for the year ended November 30, 1995, filed as an exhibit under
Item 14.
Item 3. Legal Proceedings
Neither the Registrant nor any of the Properties is subject to any material
pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter of the fiscal year ended November 30, 1995, no matter
was submitted to a vote of security holders, through the solicitation of
proxies or otherwise.
PART II
Item 5. Market for Registrant's Limited Partnership Units and Related
Stockholder Matters
(a) Market Information - No public trading market has developed for the
Units, and it is not anticipated that such a market will develop in
the future.
(b) Number of Unitholders - As of November 30, 1995, the number of holders
of Units was 2,698.
(c) Dividends - Distributions of Net Cash From Operations are made quarterly,
from rental income with respect to the Registrant's investment in
the Properties, as well as from interest on short-term investments.
Information regarding quarterly cash distributions is incorporated by
reference to the section entitled Message to Investors of the Partnership's
Annual Report to Unitholders for the year ended November 30, 1995, filed as
an exhibit under Item 14.
Item 6. Selected Financial Data
Incorporated by reference to the section entitled Message to Investors of the
Partnership's Annual Report to Unitholders for the year ended November 30,
1995, filed as an exhibit under Item 14.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
As of November 30, 1995, the Partnership had cash and cash equivalents of
$2,667,352 which were invested in money market accounts. The increase of
$665,817 from November 30, 1994 is attributable to net cash provided by
operating activities exceeding amounts used to fund additions to real estate
and cash distributions to the Limited Partners.
Accounts payable and accrued expenses increased from $86,485 at November 30,
1994 to $120,589 at November 30, 1995. The increase is primarily attributable
to the timing of payments for property appraisals, legal fees and real estate
taxes.
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. The Partnership has made
quarterly distributions to the Limited Partners totalling $1,691,955 with
respect to the four quarters ended November 30, 1995, an increase of $57,651
from the prior year. Due to improving Partnership operations and the
relatively stable weighted average occupancy of the Partnership's nine
properties, the General Partners were able to increase the quarterly cash
distribution rate in the fourth quarter of 1995 from its previous level of
$8.15 per Unit to $9.30 per Unit. The General Partners received no cash
distributions in fiscal years 1995 and 1994.
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 of
$16,058 is recorded as minority interest expense in the Partnership's financial
statements. Of this amount, $13,985 was payable to the Limited Partner as of
November 30, 1995.
Certain age-related repairs and capital improvements which are required at the
properties are being funded from the Partnership's cash reserves and cash flow
from operations. Future cash distributions will depend on the adequacy of cash
flow from operations and the level of cash reserves following 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.
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 have begun marketing the facilities for sale. The objective
is to maximize the selling price of the properties and distribute the sales
proceeds to Limited Partners. While it is the General Partners' goal to sell
the properties prior to the end of 1996 and while the General Partners are
engaged in discussions with potential buyers, there is no assurance any of the
properties will be sold or that any particular price can be obtained.
In response to a request from an unaffiliated third party 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.
Results of Operations
1995 versus 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.
1994 versus 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 average occupancy rate and average effective annual rental rate per square
foot for the Properties are presented below for the year ended November 30 of
the indicated years.
Average Occupancy Average Rental Rate
1995 1994 1993 1995 1994 1993
Chesapeake 88% 94% 83% $5.76 $5.28 $4.66
Fern Park 86 90 94 7.39 7.32 6.75
Hampton 93 89 80 7.19 6.65 5.83
Norfolk
(Widgeon) 97 95 87 6.62 6.07 5.22
Oak Ridge 91 90 92 6.28 6.03 5.67
Richmond
(Mechanicsville) 95 91 76 7.65 6.43 5.00
Richmond
(Midlothian) 78 78 73 6.45 4.94 4.50
Roanoke 93 94 89 6.47 5.72 5.34
Virginia Beach
(Arrowhead) 95 97 93 6.61 6.84 5.77
Weighted Average 91% 90% 85% $6.71 $6.16 $5.38
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).
Item 8. Financial Statements and Supplementary Data
Incorporated by reference to the Partnership's Annual Report to Unitholders for
the year ended November 30, 1995, filed as an exhibit under Item 14.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Storage Services Inc. Storage Services Inc. ("Storage Services"), formerly
Hutton Storage Services, Inc., is a Delaware corporation formed on April 29,
1985. The names of and the positions held by the directors and executive
officers of Storage Services are set forth below. There are no family
relationships between any officers and directors listed below.
Certain officers and directors of Storage Services are now serving (or in the
past have served) as officers or directors of entities which act as general
partners of a number of real estate limited partnerships which have sought
protection under the provisions of the Federal Bankruptcy Code. The
partnerships which have filed bankruptcy petitions own real estate which has
been adversely affected by the economic conditions in the markets in which that
real estate is located and, consequently, the partnerships sought the
protection of the bankruptcy laws to protect the partnerships' assets from
losses through foreclosure.
Name Office
Paul L. Abbott Director, President, Chief Executive Officer
and Chief Financial Officer
James L. Greig Vice President
Robert J. Hellman Vice President
Paul L. Abbott, 50, is a Managing Director of Lehman Brothers. Mr. Abbott
joined Lehman Brothers in August 1988, and is responsible for investment
management of residential, commercial and retail real estate. Prior to joining
Lehman Brothers, Mr. Abbott was a real estate consultant and a senior officer
of a privately held company specializing in the syndication of private real
estate limited partnerships. From 1974 through 1983, Mr. Abbott was an officer
of two life insurance companies and a director of an insurance agency
subsidiary. Mr. Abbott received his formal education in the undergraduate and
graduate schools of Washington University in St. Louis.
James L. Greig, 47, Vice President, joined Lehman Brothers in 1987, and is
engaged in asset management for commercial and residential real estate. From
1984 to 1987, Mr. Greig was a Regional Vice President of the asset management
arm of Integrated Resources, Inc. From 1980 to 1984, he was a Vice President of
Landauer Associates, Inc., real estate consultants, where he managed the real
property investments of overseas and domestic pension funds and was involved in
various assignments for major mortgage lenders. He was employed in the real
estate and mortgage loan area of New York Life Insurance Company from 1978 to
1980, and with Helmsley-Spear, Inc. from 1973 to 1978. Mr. Greig received a
B.A. degree from Syracuse University, and an M.A. from New York University. He
holds a Certified Property Manager (CPM) designation from the Institute of Real
Estate Management.
Robert J. Hellman, 41, is a Senior Vice President of Lehman Brothers and is
responsible for investment management of retail and commercial real estate.
Since joining Lehman Brothers in 1983, Mr. Hellman has been involved in a wide
range of activities involving real estate and direct investments including
origination of new investment products, restructurings, asset management and
the sale of commercial, retail and residential properties. Prior to joining
Lehman Brothers, Mr. Hellman worked in strategic planning for Mobil Oil
Corporation and was an associate with an international consulting firm. Mr.
Hellman received a bachelor's degree from Cornell University, a master's degree
from Columbia University, and a law degree from Fordham University.
ASP Associates ASP Associates is a California limited partnership formed on May
14, 1985, the sole general partner of which is American Storage Properties,
Inc. ("ASP, Inc."), a wholly-owned subsidiary of Goodman Segar Hogan, Inc.
("GSH"). The names of and the positions held by the directors and executive
officers of ASP, Inc. are as set forth below.
Name Office
Robert M. Stanton Chairman of the Board
Mark P. Mikuta President
John L. Cote Vice President and Treasurer
Julie R. Adie Vice President and Secretary
Robert M. Stanton, 57, is the retired Chairman and Chief Executive Officer of
GSH, a diversified commercial real estate company headquartered in Norfolk,
Virginia. Mr. Stanton joined GSH in 1966 and retired from the company in 1993.
He is currently President of Stanton Partners, Inc., a real estate investment
and advisory firm. Mr. Stanton serves as a Trustee of the Urban Land Institute
(ULI) and is a past Trusted and State Director of the International Council of
Shopping Centers (ICSC). He was chairman of the 1981 edition of The Dollars
and Cents of Shopping Centers, published by ULI. Mr. Stanton co-authored The
Valuation of Shopping Centers, published by the American Institute of Real
Estate Appraisers. Currently, he serves on the advisory board of Norfolk
Southern Corporation and is Chairman of the Greater Norfolk Corporation. He
holds the Certified Property Manager (CPM) designation conferred by the
Institute of Real Estate Management. Mr. Stanton also serves as Chairman o f
American Storage Properties, L.P. A graduate of Old Dominion University with a
B.A. Degree in Banking and Finance, he has served as Rector of the Board of
Visitors.
Mark P. Mikuta, 37, is Chief Financial Officer of Goodman Segar Hogan, Inc. and
is Controller of Dominion Capital, Inc., a wholly owned subsidiary of Dominion
Resources. Mr. Mikuta joined Dominion Resources in 1987. Prior to joining
Dominion Resources, he was an internal auditor with Virginia Commonwealth
University in Richmond, Virginia from 1980 to 1987 and an accountant with
Coopers & Lybrand from 1977 to 1980. Mr. Mikuta earned a bachelor of science
degree in accounting from the University of Richmond in 1977. He is a
Certified Public Accountant (CPA) and Certified Financial Planner (CFP) in the
state of Virginia and a member of the American Institute of Certified Public
Accountants.
John L. Cote, 51, is a Vice President of GSH and Senior Vice President of
Goodman Segar Hogan Hoffler, L.P. ("GSHH"). He heads that company's Asset
Management Division, where he is responsible for a portfolio of office, retail
and industrial properties throughout the southeastern United States. Prior to
joining GSHH, Mr.Cote was Vice President of Armada-Hoffler Holding, Co., a real
estate developer and construction company located in Chesapeake, Virginia. He
was employed by Armada-Hoffler from 1979 through 1993. He holds a B.S. in
Political Science from the University of Southern Mississippi.
Julie R. Adie, 41, is a Vice President of GSH and a Vice President of GSHH.
She is responsible for investment management of a commercial real estate
portfolio for GSHH's Asset Management Division. Prior to GSHH, Ms. Adie was an
asset manager with Aetna Real Estate Investors from 1986 to 1988. Ms. Adie
practiced as an attorney from 1978 through 1984 and is currently a member of
the Virginia Bar Association. She holds a B.A. from Duke University, a Juris
Doctor from University of Virginia and an M.B.A. from Dartmouth College.
Certain Matters Involving Affiliates
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 this sale, Shearson changed its name to Lehman Brothers Inc. ("Lehman").
The transaction did not affect the ownership of the Partnership or
the Partnership's General Partners. 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 reference 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 sixty-two percent stock interest and H.K. Associates, L.P.,
an affiliate of Armada/Hoffler ("HK"), with a thirty-eight percent stock
interest. The remaining ninety-nine percentage interests in GSHH are limited
partnership interests owned fifty percent by GSH and forty-nine percent by HK.
The transaction did not affect the ownership of the ASP, Inc. general partner.
Item 11. Executive Compensation
Neither of the General Partners of the Registrant nor any of the directors and
officers of the General Partners or their affiliates received any compensation
from the Registrant during 1995. See Item 13 below with respect to a
description of certain costs of the General Partners and their affiliates
reimbursed by the Registrant.
Item 12. Security Ownership of Certain Beneficial Owners and Management
No person is known by the Registrant to be the beneficial owner of more than
five percent of the Units of the Registrant. Neither of the General Partners
of the Registrant nor any of the directors and officers of their Affiliates
owns any Units.
Item 13. Certain Relationships and Related Transactions
The General Partners and their Affiliates have received substantial fees and
compensation for managing the Properties pursuant to the Partnership Agreement.
Such fees and compensation were not determined in arm's-length negotiations.
For a description of all the types of compensation, fees, or other
distributions that may or will be paid by the Registrant or others to the
General Partners or their Affiliates in connection with the operations of the
Registrant, reference is made to the material contained on pages 13 through 17
of the Prospectus, under the section captioned "Compensation and Fees", and
pages 77 through 79 of the Prospectus under the section captioned "Offering and
Sale of the Units" which sections are incorporated herein by reference thereto.
Storage Services and ASP Associates did not receive any cash distributions from
Net Cash From Operations during fiscal year 1995 in accordance with the terms
of the Partnership Agreement. Please refer to Note 3 "Partnership Agreement"
of the Notes to the Consolidated Financial Statements contained in the
Partnership's Annual Report to Unitholders for the year ended November 30,
1995, filed as an exhibit under Item 14.
Pursuant to Section 12(g) of Registrant's Certificate and Agreement of Limited
Partnership, the General Partners may be reimbursed by the Registrant for
certain of their costs as described on page A-19 of the Prospectus, which
description is incorporated herein by reference thereto. First Data Investor
Services Group (formerly The Shareholder Services Group) provides partnership
accounting and investor relations services for the Partnership. Prior to May
1993, these services were provided by a former subsidiary of Lehman. Pursuant
to such provision, during the year ended November 30, 1995, the General
Partners and their affiliates were entitled to receive reimbursements
aggregating $78,715. As of November 30, 1995, $25,193 of this amount had been
paid to the General Partners with the remaining $53,522 still to be paid.
Please refer to Note 4 "Transactions with Related Parties" of the Notes to the
Consolidated Financial Statements contained in the Partnership's Annual Report
to Unitholders for the year ended November 30, 1995, filed as an exhibit under
Item 14.
PART IV
Item 14. Exhibits, Financial Statements Schedules and Reports on Form 8-K
(a) (1) Financial Statements: Page
Independent Auditors' Report
Report of Arthur Andersen LLP. (1)
Consolidated Balance Sheets - At November 30, 1995
and 1994 (1)
Consolidated Statements of Income - For the years
ended November 30, 1995, 1994 and 1993 (1)
Consolidated Statements of Partners' Capital
(Deficit) - For the years ended November 30, 1995,
1994 and 1993 (1)
Consolidated Statements of Cash Flows - For the years
ended November 30, 1995, 1994 and 1993 (1)
Notes to Consolidated Financial Statements (1)
(1) Incorporated by reference to the Partnership's Annual Report to
Unitholders for the year ended November 30, 1995, which is filed as
an exhibit under Item 14.
(a) (2) Financial Statement Schedules:
Independent Auditor's Report on Schedule III and Schedule III - Real
Estate and Accumulated Depreciation.
No other schedules are presented because the information is not
applicable or is included in the financial statements or notes
thereto.
(a) (3) Exhibit Index
3.1 Form of Amended and Restated Certificate and Agreement of Limited
Partnership (incorporated by reference to Exhibit 3.2 to the
Registrant's Registration Statement on Form S-11, File No. 2-98071)
3.2 First Amendment to Amended and Restated Certificate and Agreement
of Limited Partnership (incorporated by reference to Exhibit 3.3 to
Post-Effective Amendment No. 2 to Registrant's Registration
Statement on Form S-11, File No. 2-98071)
3.3 Second Amendment to Amended and Restated Certificate and Agreement
of Limited Partnership (incorporated by reference to Exhibit 3.4
to Post-Effective Amendment No. 2 to Registrant's Registration
Statement on Form S-11, File No. 2-98071)
10.1 Form of Management Agreement to be entered into between the
Registrant and any Affiliate providing certain services to
the Registrant (incorporated by reference to Exhibit 10.4 to
the Registrant's Registration Statement on Form S-11, File No.
2-98071)
13.1 Annual Report to Unitholders for the year ended November 30, 1995
27.1 Financial Data Schedule
99.1 Portions of the prospectus of the Registrant dated September 9, 1985,
as supplemented by the Prospectus Supplement dated May 16, 1986,
files pursuant to Rules 424(b) and 424(c), respectively
(b) Reports on Form 8-K filed in the fourth quarter of fiscal 1995:
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMERICAN STORAGE PROPERTIES, L.P.
BY: Goodman Segar Hogan/American
Storage Properties Associates,
a California Limited Partnership
General Partner
BY: American Storage Properties, Inc.
General Partner
Date: February 28, 1996 BY: s/Robert M. Stanton/
Name: Robert M. Stanton
Title: Chairman of the Board
BY: Storage Services, Inc.
General Partner
BY: s/Paul L. Abbott/
Name: Paul L. Abbott
Title: Director, President, Chief Executive
Officer and Chief Financial Officer
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.
STORAGE SERVICES, INC.
A General Partner
Date: February 28, 1996 BY: s/Paul L. Abbott/
Name: Paul L. Abbott
Title: Director, President, Chief Executive
Officer and Chief Financial Officer
Date: February 28, 1996 BY: s/James L. Greig/
Name: James L. Greig
Title: Vice President
Date: February 28, 1996 BY: s/Robert J. Hellman/
Name: Robert J. Hellman
Title: Vice President
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.
GOODMAN SEGAR HOGAN/AMERICAN STORAGE
PROPERTIES ASSOCIATES
A California Limited Partnership
A General Partner
BY: American Storage Properties, Inc.
General Partner
Date: February 28, 1996 BY: s/Robert M. Stanton/
Name: Robert M. Stanton
Title: Chairman of the Board
Date: February 28, 1996 BY: s/Mark P. Mikuta/
Name: Mark P. Mikuta
Title: President
Date: February 28, 1996 BY: s/John L. Cote/
Name: John L. Cote
Title: Vice President and Treasurer
Date: February 28, 1996 BY: s/Julie R. Adie/
Name: Julie R. Adie
Title: Vice President and Secretary
EXHIBIT 13.1
AMERICAN STORAGE PROPERTIES, L.P.
1995 ANNUAL REPORT
American Storage Properties, L.P. (the "Partnership"), formerly Hutton/GSH
American Storage Properties, L.P., was formed in 1985 to acquire, operate
and hold for investment self-storage facilities. A total of $19,500,000 was
invested in nine properties. The average occupancy levels of each of the
Partnership's self-storage facilities for the years ended November 30, 1995
and 1994 were as follows:
Average
Rentable Occupancy
Property Location Spaces 1995 1994
Arrowhead Virginia Beach, VA 228 95% 97%
Chesapeake Chesapeake, VA 439 88% 94%
Hampton Hampton, VA 657 93% 89%
Mechanicsville Richmond, VA 604 95% 91%
Midlothian Richmond, VA 651 78% 78%
Roanoke Roanoke, VA 449 93% 94%
Widgeon Norfolk, VA 518 97% 95%
Fern Park Fern Park, FL 761 86% 90%
Oak Ridge Orlando, FL 589 91% 90%
Weighted Average Occupancy 91% 90%
Administrative Inquiries Performance Inquiries/Form 10-Ks
Address Changes/Transfers First Data Investor Services Group
Service Data Corporation P.O. Box 1527
2424 South 130th Circle Boston, Massachusetts 02104-1527
Omaha, Nebraska 68144 Attn: Financial Communications
800-223-3464 (select option 1) 800-223-3464 (select option 2)
Contents
1 Message to Investors
4 Consolidated Financial Statements
7 Notes to Consolidated Financial Statements
11 Report of Independent Public Accountants
12 Net Asset Valuation
MESSAGE TO INVESTORS
Real estate markets in general continued to improve during 1995, with
self-storage emerging as one of the strongest industry sectors. Operations at
the Partnership's facilities have benefitted from this overall improvement,
as the weighted average occupancy at the Partnership's nine properties increased
slightly to 91% for the year ended November 30, 1995 compared with 90% in 1994.
Moreover, higher rental income earned by the Partnership enabled the General
Partners to increase the quarterly cash distribution for the fourth quarter
of 1995 to $9.30 per Unit from its previous level of $8.15 per Unit.
Additional information regarding cash distributions is included on page 2 of
this report.
Overview
The performance of the national self-storage industry remained strong
throughout 1995, as increased rental rates and stable occupancy levels
translated to overall higher profits. However, the sustained health of U.S.
storage markets has encouraged the development of new facilities to slowly
resume. While this is expected to intensify competition, many market analysts
believe it is unlikely that construction will return to the levels of the late
1980s. According to industry publication Inside Self-Storage, developers and
lenders are more selective in choosing a location and building a quality
facility and managing it effectively. Even with the additional supply entering
the market, the flat occupancy levels of 1995 indicate that demand is also
increasing as new projects are being absorbed. Furthermore, the 1995-1996
Annual Self-Storage Almanac reported that many analysts expect that the
self-storage sector will continue to strengthen during 1996, with average
projections of a 4.7% gain in overall occupancy rates.
As a result of the improving market conditions and the strong operating
performance of the Partnership's nine storage facilities, the General Partners
have begun marketing the facilities for sale. Our objective is to maximize the
selling price of the properties and distribute the sales proceeds to limited
partners. While our goal is to sell the properties prior to the end of 1996
and while we are engaged in discussions with potential buyers, there is no
assurance any of the properties will be sold or that any particular price can
be obtained. We will inform you of any significant developments in future
correspondence.
Portfolio Performance
The Virginia Properties
Aggressive and responsive management has been instrumental to the positive
performance of the Partnership's Virginia facilities over the last several
years. Management has strived to consistently provide clientele with optimum
service by adjusting quickly to meet the needs of tenants and proactively
implementing capital upgrades to ensure that the properties offer conveniences
comparable to those of newer facilities. This approach has led to a weighted
average occupancy at the Virginia properties of 91% in 1995, unchanged from
1994. Management's strategy for enhancing revenues during 1995 also included
the implementation of rental rate increases at several properties and the
minimal use of discounting on select unit sizes.
During 1995, new storage facilities opened near the Widgeon and Chesapeake
properties, and the Mechanicsville facility will face new competition early in
1996. We currently anticipate that the impact of these competitors will be
minimal, given the strength of these markets.
The Florida Properties
Many of the strategies utilized at the Virginia properties have also been
effective at the Partnership's two facilities located in Florida. Given the
competitive conditions in the Florida self-storage markets, an adaptable
management style has been critical in solidifying the respective market
positions of the Oak Ridge and Fern Park properties. During 1995, management
instituted rental rate increases at both properties in an effort to boost
revenues. This approach was successful at the Oak Ridge facility, where
occupancy rates remained high. However, due to the closing of a local military
base during the second half of 1995, the Fern Park facility experienced a 4%
decline in average occupancy for the year. Nonetheless, revenue at the
property declined only slightly, and operations are expected to remain stable
during 1996.
Property Improvements
An ongoing program of maintenance and capital improvements is intrinsic to our
strategy for consistently providing a high-quality product and competing
effectively with newer self-storage facilities. Upgrades completed at the
Partnership's properties during 1995 included the installation of 120 new doors
at the Arrowhead facility and painting the building's exterior. Twenty doors
were replaced at the Widgeon facility, and further steps were taken to increase
sales and service to clients by establishing a customer service counter in the
property's management office. Other projects undertaken during the year
include roof repairs at the Hampton and Midlothian properties, and the
installation of controlled access security gates at the Arrowhead, Hampton and
Chesapeake facilities. The General Partners remain committed to making
cost-effective upgrades to each of the properties in order to enhance the
long-term value of the facilities and will consider improvements for 1996
depending on the outcome of our marketing efforts.
Cash Distributions
The Partnership paid total cash distributions of $33.75 per $465 Unit for the
year ended November 30, 1995, including a fourth quarter distribution in the
amount of $9.30 per Unit paid to Limited Partners on January 19, 1996. As
previously reported, due to improving operations at the Partnership's nine
properties, the General Partners were able to increase the quarterly cash
distribution rate in the fourth quarter of 1995 from its previous level of
$8.15 per Unit. Cash distributions for 1995 were funded solely by cash flow
from operations. Cumulative cash distributions as of year-end 1995 totalled
$367.22 and $358.85 per Unit for first and second close investors,
respectively. These amounts include a $35 per Unit return of capital paid
to investors in 1987. The level of future cash distributions will be reviewed
and determined on a quarterly basis.
Quarterly Cash Distributions Per Limited Partnership Unit
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
Financial Highlights
For the year ended November 30, 1995, Partnership operations resulted in total
income of $3,620,494 and net income of $1,638,214, compared with total income
of $3,420,180 and net income of $1,553,098 for the year ended November 30,
1994. The increases in both total income and net income during 1995 are
primarily attributable to a 4% increase in rental income resulting from higher
rental rates at several of the Partnership's properties, particularly the
Mechanicsville and Midlothian facilities, as well as higher occupancy levels
at certain properties, combined with a minimal use of rental concessions. In
addition, cash flow, which is determined by adding back the non-cash expense
of depreciation to net income, increased from $2,204,450 for the year ended
November 30, 1994 to $2,295,424 for the year ended November 30, 1995, largely
due to higher rental and interest income.
Selected Partnership financial data for the years ended November 30, 1995,
1994, 1993, 1992 and 1991 are shown on the chart on the following page. This
data should be read in conjunction with the Partnership's financial statements
included in this report.
Selected Financial Data
For the periods ended November 30,
(dollars in thousands except per Unit data)
1995 1994 1993 1992 1991
Total Income $ 3,620 $ 3,420 $ 3,147 $ 2,952 $ 2,857
Net Income 1,638 1,553 1,399 1,129 1,051
Total Assets at Period-end 16,625 16,556 16,629 16,875 17,436
Net Income per Limited
Partnership Unit 32.81 31.11 28.04 22.65 21.10
Cash Distributions per
Limited Partnership
Unit * 33.75 32.60 32.60 32.60 32.60
* As approved for payment during the 12 months ended November 30.
Summary
Given the consistently strong performance of the Partnership's nine storage
facilities and the overall healthy industry conditions for storage properties
nationwide, we believe that the properties are well-positioned in their
respective markets. In light of these factors, the General Partners have
begun marketing the facilities for sale. However, there can be no assurance
that any sales will be completed or that any particular price for the
properties can be obtained. In the interim, the General Partners will continue
to effectively manage the Partnership's properties by seeking to maintain high
occupancy levels and implementing rental rate increases as conditions permit in
order to maximize profitability. We will keep you updated on significant
developments affecting your investment in future reports.
Sincerely,
s/Paul L. Abbott/ s/Robert M. Stanton/
Paul L. Abbott Robert M. Stanton
President Chairman
Storage Services Inc. American Storage Properties, Inc.
General Partner of Goodman Segar Hogan/
American Storage Properties Associates
February 28, 1996
Consolidated Balance Sheets November 30, 1995 and 1994
Assets 1995 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
Cash and cash equivalents 2,667,352 2,001,535
Other assets 149,923 146,233
Total Assets $ 16,624,761 $ 16,556,480
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 120,589 $ 86,485
Due to affiliates 53,522 35,157
Security deposits 13,050 15,804
Advance rent 115,194 114,524
Distribution payable 466,228 408,576
Total Liabilities 768,583 660,546
Minority interest 13,985 0
Partners' Capital (Deficit):
General Partners (125,793) (119,221)
Limited Partners 15,967,986 16,015,155
Total Partners' Capital 15,842,193 15,895,934
Total Liabilities and Partners' Capital $ 16,624,761 $ 16,556,480
Consolidated Statements of Operations
For the years ended November 30, 1995, 1994 and 1993
Income 1995 1994 1993
Rent $ 3,494,224 $ 3,363,560 $ 3,115,039
Interest 126,270 56,620 32,176
Total Income 3,620,494 3,420,180 3,147,215
Expenses
Property operating 1,153,216 1,066,654 950,280
Depreciation 657,210 651,352 645,434
General and administrative 155,796 149,076 152,353
Total Expenses 1,966,222 1,867,082 1,748,067
Income before minority interest 1,654,272 1,553,098 1,399,148
Minority interest (16,058) 0 0
Net Income $ 1,638,214 $ 1,553,098 $ 1,399,148
Net Income (Loss) Allocated:
To the General Partners $ (6,572) $ (6,514) $ (6,454)
To the Limited Partners 1,644,786 1,559,612 1,405,602
$ 1,638,214 $ 1,553,098 $ 1,399,148
Per limited partnership unit
(50,132 outstanding) $ 32.81 $ 31.11 $ 28.04
Consolidated Statements of Partners' Capital (Deficit)
For the years ended November 30, 1995, 1994 and 1993
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 0 (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 0 (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 0 (1,691,955) (1,691,955)
Balance at November 30, 1995 $ (125,793) $ 15,967,986 $ 15,842,193
Consolidated Statements of Cash Flows
For the years ended November 30, 1995, 1994 and 1993
Cash Flows from Operating Activities: 1995 1994 1993
Net income $ 1,638,214 $ 1,553,098 $ 1,399,148
Adjustments to reconcile net income
to net cash provided by operating
activities:
Minority interest 16,058 0 0
Depreciation 657,210 651,352 645,434
Increase (decrease) in cash
arising from changes in operating
assets and liabilities:
Other assets (3,690) (41,767) (1,398)
Accounts payable and
accrued expenses 34,104 296 17,063
Due to affiliates 18,365 16,603 (32,912)
Security deposits (2,754) (5,149) (5,488)
Advance rent 670 (3,252) 10,590
Net cash provided by operating
activities 2,358,177 2,171,181 2,032,437
Cash Flows from Investing Activities:
Additions to real estate (55,984) (97,794) (98,691)
Net cash used for investing activities (55,984) (97,794) (98,691)
Cash Flows from Financing Activities:
Distributions
paid - Minority interest (2,073) 0 0
Distributions
paid - Limited Partners (1,634,303) (1,634,304) (1,634,304)
Net cash used for financing
activities (1,636,376) (1,634,304) (1,634,304)
Net increase in cash and cash
equivalents 665,817 439,083 299,442
Cash and cash equivalents, at
beginning of year 2,001,535 1,562,452 1,263,010
Cash and cash equivalents at
end of year $ 2,667,352 $ 2,001,535 $ 1,562,452
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 $ 0 $ 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:
Number of
Date of Number of Rentable Rentable Purchase
Property Location Purchase Buildings Sq.Ft. Spaces Price
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
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 Partners he 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.
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.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
January 8, 1996
Comparison of Acquisition Costs to Appraised Value and Determination of
Net Asset Value Per $465 Unit at November 30, 1995 (Unaudited)
Partnership's
Share of
Nov 30,
Date of Acquisition 1995 Appraised
Property Acquisition Cost (1) Value (2)
880 Widgeon Rd., Norfolk, VA 05-06-86 $ 2,707,157 $ 2,400,000
5728 Southern Blvd.,
Virginia Beach, VA 05-06-86 881,535 800,000
1205 W. Pembroke Ave., Hampton, VA 05-06-86 2,898,923 2,600,000
1430 S. Military Hwy.,
Chesapeake, VA 05-06-86 2,416,649 2,300,000
1717 Bloom Lane, Richmond, VA 05-06-86 2,471,503 2,500,000
235 East Oak Ridge Rd., Orlando, FL 12-09-86 1,758,755 2,500,000
8226 South Hwy. 17-92, Fern Park, FL 12-09-86 2,145,016 2,800,000
5440 Midlothian Trnpk., Richmond, VA 12-29-86 2,012,324 2,000,000
2918 Peter's Creek Rd., Roanoke, VA 12-29-86 2,126,745 2,000,000
$19,418,607 19,900,000
Cash and cash equivalents 2,667,352
Other assets 149,923
22,717,275
Less:
Total liabilities and minority interest (782,569)
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 appraised 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. Fiduciaries 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.
AMERICAN STORAGE PROPERTIES, L.P.
Schedule III - Real Estate and Accumulated Depreciation
December 31, 1995
Cost Capitalized
Subsequent
Initial Cost to Partnership To Acquisition
Buildings and Buildings and
Description Encumbrances Land Improvements Improvements
Self service storage
facilities:
Partnership Owned:
Va Beach $ 0 $ 151,165 $ 722,441 $ 125,706
Hampton 0 306,343 2,553,577 36,738
Chesapeake 0 327,656 2,076,833 82,779
Richmond - Bloom Ln. 0 340,017 2,113,107 12,211
Norfolk 0 302,270 2,371,404 74,584
Richmond - Midlothian 0 553,763 1,453,322 68,779
Roanoke 0 640,485 1,481,025 2,179
0 2,621,699 12,771,709 402,976
Consolidated Ventures:
Oak Ridge 0 488,836 1,269,919 14,593
Fern Park 0 645,784 1,499,232 103,079
$ 0 $ 3,756,319 $ 15,540,860 $ 520,648
(5)
AMERICAN STORAGE PROPERTIES, L.P.
Schedule III - Real Estate and Accumulated Depreciation
December 31, 1995
Gross Amount at Which Carried at Close of Period
Buildings and Accumulated
Description Land Improvements Total Depreciation
Self service storage
facilities:
Partnership Owned:
Va Beach 151,165 848,147 999,312 291,167
Hampton 306,343 2,590,315 2,896,658 995,582
Chesapeake 327,656 2,159,612 2,487,268 849,330
Richmond - Bloom Ln. 340,017 2,125,318 2,465,335 818,005
Norfolk 302,270 2,445,988 2,748,258 942,635
Richmond - Midlothian 553,763 1,522,101 2,075,864 544,782
Roanoke 640,485 1,483,205 2,123,690 529,869
2,621,699 13,174,686 15,796,385 4,971,370
Consolidated Ventures:
Oak Ridge 488,836 1,284,512 1,773,348 462,145
Fern Park 645,784 1,602,311 2,248,095 576,827
$ 3,756,319 $ 16,061,509 $ 19,817,828 $ 6,010,342
(1) (2)
AMERICAN STORAGE PROPERTIES, L.P.
Schedule III - Real Estate and Accumulated Depreciation
December 31, 1995
Life on which
Depreciation
in Latest
Date of Date Income Statements
Description Construction Acquired is Computed
Self service storage
facilities:
Partnership Owned:
Va Beach 1974 5/6/86 (3)
Hampton 1979 5/6/86 (3)
Chesapeake 1981 5/6/86 (4)
Richmond - Bloom Ln. 1983 5/6/86 (3)
Norfolk 1973 - 1975 5/6/86 (4)
Richmond - Midlothian 1975 12/29/86 (3)
Roanoke 1981 12/29/86 (3)
Consolidated Ventures:
Oak Ridge 1985 12/9/86 (3)
Fern Park 1985 12/9/86 (3)
(1) Represents aggregate cost for both financial reporting and Federal income
tax purposes.
(2) The amount of accumulated depreciation for Federal income tax purposes is
$6,528,569.
(3) Buildings and improvements - 25 years.
(4) Buildings and improvements - 20 - 25 years.
(5) Include capitalized acquisition costs.
A reconciliation of the carrying amount of real estate and accumulated
depreciation for the years ended December 31, 1995, 1994 and 1993:
Real Estate investments: 1995 1994 1993
Beginning of year $ 19,761,844 $ 19,664,050 $ 19,565,359
Additions 55,984 97,794 98,691
End of year $ 19,817,828 $ 19,761,844 $ 19,664,050
Accumulated Depreciation:
Beginning of year $ 5,353,132 $ 4,701,780 $ 4,056,346
Depreciation expense 657,210 651,352 654,434
End of year $ 6,010,342 5,353,132 $ 4,710,780
REPORT OF INDEPENDENT PUBLIC ACCOUNTS ON SCHEDULE
TO CONSOLIDATED FINANCIAL STATEMENTS
To the Partners of American Storage Properties, L.P.:
We have audited, in accordance with generally accepted auditing standards, the
consolidated financial statements included in American Storage Properties,
L.P.'s annual report to unitholders, incorporated by reference in this Form
10-K, and have issued our report thereon dated January 8, 1996. Our audit was
made for the purpose of forming an opinion on those consolidated financial
statements taken as a whole. Schedule III is the responsibility of the
Partnership's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
consolidated financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic consolidated financial
statements and, in our opinion, fairly states, in all material respects, the
financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
January 8, 1996
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