UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 [Fee Required]
For the fiscal year ended December 31, 1999
-----------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 [No Fee Required]
For the transition period from to
--------------- ---------------
Commission File Number 0-14477
-------
PS PARTNERS VI, LTD., a California Limited Partnership
------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-3950440
- ---------------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
701 Western Avenue
Glendale, California 91201-2394
- ---------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 244-8080
--------------
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 such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to the
Form 10-K. [X]
- --------------------------------------------------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
NONE
<PAGE>
PART I
ITEM 1. BUSINESS.
---------
FORWARD LOOKING STATEMENTS
- --------------------------
When used within this document, the words "expects," "believes,"
"anticipates," "should," "estimates," and similar expressions are intended to
identify "forward-looking statements" within the meaning of that term in Section
27A of the Securities Exchange Act of 1933, as amended, and in Section 21F of
the Securities Exchange Act of 1934, as amended. Such forward-looking statements
involve known and unknown risks, uncertainties, and other factors, which may
cause the actual results and performance of the Partnership to be materially
different from those expressed or implied in the forward looking statements.
Such factors include the impact of competition from new and existing real estate
facilities which could impact rents and occupancy levels at the real estate
facilities that the Partnership has an interest in; the Partnership's ability to
effectively compete in the markets that it does business in; the impact of the
regulatory environment as well as national, state, and local laws and
regulations including, without limitation, those governing Partnerships; and the
impact of general economic conditions upon rental rates and occupancy levels at
the real estate facilities that the Partnership has an interest in.
GENERAL
- -------
PS Partners VI, Ltd. (the "Partnership") is a publicly held limited
partnership formed under the California Revised Limited Partnership Act.
Commencing in October 1985, 150,000 units of limited partnership interest (the
"Units") were offered to the public in an interstate offering. The offering was
completed in June 1986.
The Partnership was formed to invest in and operate existing
self-service facilities offering storage space for personal and business use
(the "mini-warehouses") and to invest up to 40% of the net proceeds of the
offering in and operate existing office and industrial properties. The
Partnership's real estate investments consist of wholly-owned facilities and an
investment in a general partnership (SEI/PSP VI Joint Ventures, the "Joint
Venture") with Public Storage, Inc. ("PSI"), a real estate investment trust
("REIT") organized as a corporation under the laws of California
The Partnership's general partners (the "General Partners") are PSI and
B. Wayne Hughes ("Hughes"). Hughes is the chairman of the board and chief
executive officer of PSI, and Hughes and members of his family (the "Hughes
Family") are the major shareholders of PSI. The Partnership is managed, and its
investment decisions are made by Hughes and the executive officers and directors
of PSI. The limited partners of the Partnership have no right to participate in
the management or conduct of its business affairs. PSI believes that it is the
largest operator of mini-warehouse facilities in the United States.
Through 1996, the business parks of the Joint Venture were managed by
Public Storage Commercial Properties Group, Inc. ("PSCPG") pursuant to a
Management Agreement. In January 1997, the Joint Venture, PSI and other related
partnerships transferred a total of 35 business parks to PS Business Parks, L.P.
("PSBPLP"), formerly known as American Office Park Properties, L.P., an
operating partnership formed to own and operate business parks in which PSI has
a significant interest. Included among the properties transferred were the
business parks of the Joint Venture in exchange for a partnership interest in
PSBPLP. Until March 17, 1998, the general partner of PSBPLP was American Office
Park Properties, Inc., an affiliate of PSI. On March 17, 1998, American Office
Park Properties, Inc. was merged into Public Storage Properties XI, Inc., which
changed its name to PS Business Parks, Inc. ("PSBP"). PSBP is a REIT affiliated
with PSI, and is publicly traded on the American Stock Exchange. As a result of
the merger, PSBP became the general partner of PSBPLP (which changed its name
from American Office Park Properties, L.P. to PS Business Parks, L.P.). See Item
13.
PSI's current relationship with the Partnership includes (i) the joint
ownership of 30 of the Partnership's 32 properties (which excludes the
properties transferred to PSBPLP in January 1997), (ii) PSI is a co-general
partner along with Hughes, who is chairman of the board and chief executive
officer of PSI, (iii) as of January 1, 2000, PSI owned approximately 61.48% of
2
<PAGE>
the Partnership's limited partnership units and (iv) PSI is the operator of the
32 properties in which the Partnership has an interest (these 32 properties are
referred to collectively hereinafter as the "Mini-Warehouse Properties").
INVESTMENT OBJECTIVES AND POLICIES
- ----------------------------------
The Partnership's objectives are to (i) preserve and protect invested
capital, (ii) maximize the potential for appreciation in value of its
investments, (iii) provide Federal income tax deductions so that during the
early years of property operations a portion of cash distributions may be
treated as a return of capital for tax purposes, and therefore, may not
represent taxable income to the limited partners, and (iv) provide for cash
distributions from operations.
The Partnership will terminate on December 31, 2038, unless dissolved
earlier. Under the terms of the general partnership agreement with PSI, PSI has
the right to require the Partnership to sell all of the properties owned by the
Joint Venture (see Item 12(c)).
The Partnership engaged Lawrence R. Nicholson, MAI, a principal with
the firm of Nicholson-Douglas Realty Consultants, Inc. ("NDRC") to perform a
limited investigation and appraisal of the properties owned by the Partnership
and Joint Venture. In a letter appraisal report dated December 31, 1996, NDRC
indicated that, based on the assumptions contained in the report, the aggregate
market value of the Mini-Warehouse Properties (consisting not only of the
Partnership's interest but also including PSI's interest), as of December 31,
1996, was $75,000,000. NDRC's report is limited in that NDRC did not inspect the
properties and relied primarily upon the income capitalization approach in
arriving at its opinion. NDRC's aggregate value conclusion represents the 100%
property interests, and although not valued separately, includes both the
interest of the Partnership in the properties, as well as the interest of PSI,
which owns a joint venture interest (ranging from about 50% to 77%) in 30 of the
Mini-Warehouse Properties. The analytical process that was undertaken in the
appraisal included a review of the properties' unit mix, rental rates and
historical financial statements. Following these reviews, a stabilized level of
net operating income was projected for the Mini-Warehouse Properties (an
aggregate of $7,282,000). Value estimates were then made using both a direct
capitalization analysis ($76,400,000) and a discounted cash flow analysis
($74,700,000). In applying the discounted cash flow analysis to the
mini-warehouses, projections of cash flow from each property were developed for
an 11-year period ending in the year 2007. Growth rates for income and expenses
were assumed to be 3.5% per year. NDRC then used a terminal capitalization rate
of 10.0% to capitalize each property's 11th year net operating income into a
residual value at the end of the holding period. The ten yearly cash flows plus
the residual or reversionary proceeds net of sales costs were then discounted to
present worth using a discount rate of 12.5%. In the direct capitalization
analysis, NDRC applied a 9.5% capitalization rate to the mini-warehouses'
stabilized net operating income. These value estimates were then compared to an
estimated value ($74,000,000) using a regression analysis applied to
approximately 300 sales of mini-warehouses to evaluate the reasonableness of the
estimates using the direct capitalization and discounted cash flow analysis.
NDRC has prepared other appraisals for the General Partners and their
affiliates and is expected to continue to prepare appraisals for the General
Partners and their affiliates. No environmental investigations were conducted
with respect to the limited investigation of the Partnership's properties.
Accordingly, NDRC's appraisal did not take into account any environmental
cleanup or other costs that might be incurred in connection with a disposition
of the properties. Although there can be no assurance, based on recently
completed environmental investigations (see Item 2), the Partnership is not
aware of any environmental contamination of its facilities material to its
overall business or financial condition. In addition to assuming compliance with
applicable environmental laws, the appraisal also assumed, among other things,
compliance with applicable zoning and use regulations and the existence of
required licenses.
3
<PAGE>
Limited Partners should recognize that appraisals are opinions as of
the date specified, are subject to certain assumptions and the appraised value
of the Partnership's properties may not represent their true worth or realizable
value. There can be no assurance that, if these properties were sold, they would
be sold at the appraised values; the sales price might be higher or lower than
the appraised values.
COMPETITION
- -----------
Competition in the market areas in which the Partnership operates is
significant and affects the occupancy levels, rental rates and operating
expenses of certain of the Partnerships facilities. Recent increases in
development of mini-warehouse facilities have intensified the competition among
mini-warehouse operators in many market areas in which the Partnership operates.
In recent years consolidation has occurred in the fragmented mini-warehouse
industry.
The Partnership believes that the significant operating and financial
experience of PSI's officers and directors, combined with the Partnership's
geographic diversity, economies of scale and the "Public Storage" name, should
enable the Partnership to continue to compete effectively with other entities.
BUSINESS ATTRIBUTES
- -------------------
Under PSI operation, the Partnership's facilities are part of a
comprehensive distribution system encompassing standardized procedures,
integrated reporting and information networks and centralized marketing. This
distribution system is designed to maximize revenue through pricing and
occupancy. The distribution system was significantly enhanced during 1996 with
the introduction and implementation of the national telephone reservation center
and new facility management software.
NATIONAL TELEPHONE RESERVATION SYSTEM: Commencing in early 1996, PSI
began to implement a national telephone reservation system designed to provide
added customer service and maximize utilization of available mini-warehouse
space. Customers calling either the PSI's toll-free telephone referral system,
(800) 44-STORE, or a mini-warehouse facility are directed to the national
reservation system where a representative discusses with the customer space
requirements, price and location.
PSI believes that the national telephone reservation system has
enhanced the Partnership's ability to effectively market mini-warehouse and is
primarily responsible for the Partnership's increasing occupancy levels and
realized rental rates experienced at the mini-warehouse facilities during the
past three years.
ECONOMIES OF SCALE: PSI is the largest provider of mini-warehouse space
in the industry. As of December 31, 1999, PSI operated 1,358 mini-warehouse
facilities (including 35 managed for third parties) in 37 states and had over
663,000 spaces rented. The size and scope of the PSI's operations have enabled
it to achieve a consistently high level of profit margins and low level of
administrative costs relative to revenues.
BRAND NAME RECOGNITION: The Partnership's operations are conducted
under the "Public Storage" brand name, which the Partnership believes is the
most recognized and established name in the mini-warehouse industry. PSI manages
mini-warehouse operations conducted in 37 states, giving it national recognition
and prominence. PSI focuses its operations within those states in the major
metropolitan markets. This concentration establishes PSI as one of the dominant
providers of storage space in each market that it operates in and enables it to
use a variety of promotional activities, such as television and radio
advertising as well as targeted discounting and referrals, which are generally
not economically viable to its competitors.
4
<PAGE>
INVESTMENTS IN FACILITIES
- -------------------------
The Partnership owns interests in 32 properties (excluding the
properties transferred to PSBPLP in January 1997); 30 of such properties are
owned by the Joint Venture. Reference is made to the table in Item 2 for a
summary of information about the Partnership's properties.
MINI-WAREHOUSES
- ---------------
Mini-warehouses, which comprise the majority of the Partnership's
investments, are designed to offer accessible storage space for personal and
business use at a relatively low cost. A user rents a fully enclosed space which
is for the user's exclusive use and to which only the user has access on an
unrestricted basis during business hours. On-site operation is the
responsibility of resident managers who are supervised by area managers. Some
mini-warehouses also include rentable uncovered parking areas for vehicle
storage. Leases for mini-warehouse space may be on a long-term or short-term
basis, although typically spaces are rented on a month-to-month basis. Rental
rates vary according to the location of the property and the size of the storage
space.
Users of space in mini-warehouses include both individuals and large
and small businesses. Individuals usually employ this space for storage of,
among other things, furniture, household appliances, personal belongings, motor
vehicles, boats, campers, motorcycles and other household goods. Businesses
normally employ this space for storage of excess inventory, business records,
seasonal goods, equipment and fixtures.
The Mini-Warehouse Properties generally consist of three to seven
buildings containing an aggregate of between 192 to 1,194 storage spaces, most
of which have between 25 and 400 square feet and an interior height of
approximately 8 to 12 feet.
The Mini-Warehouse Properties experience minor seasonal fluctuations in
the occupancy levels of mini-warehouses with occupancies higher in the summer
months than in the winter months. The Partnership believes that these
fluctuations result in part from increased moving activity during the summer.
The Mini-Warehouse Properties are geographically diversified and are
generally located in heavily populated areas and close to concentrations of
apartment complexes, single family residences and commercial developments.
However, there may be circumstances in which it may be appropriate to own a
property in a less populated area, for example, in an area that is highly
visible from a major thoroughfare and close to, although not in, a heavily
populated area. Moreover, in certain population centers, land costs and zoning
restrictions may create a demand for space in nearby less populated areas.
As with most other types of real estate, the conversion of
mini-warehouses to alternative uses in connection with a sale or otherwise would
generally require substantial capital expenditures. However, the Partnership and
the Joint Venture do not intend to convert the Mini-Warehouse Properties to
other uses.
MINI-WAREHOUSE PROPERTY OPERATOR
- --------------------------------
The Mini-Warehouse Properties are managed by PSI pursuant to a
Management Agreement.
Under the supervision of the Partnership and the Joint Venture, PSI
coordinates the operation of the facilities, establishes rental policies and
rates, directs marketing activity and directs the purchase of equipment and
supplies, maintenance activity, and the selection and engagement of all vendors,
supplies and independent contractors.
PSI engages, at the expense of the property owners, employees for the
operation of the owners' facilities, including resident managers, assistant
managers, relief managers, and billing and maintenance personnel. Some or all of
these employees may be employed on a part-time basis and may also be employed by
other persons, partnerships, REITs or other entities owning facilities operated
by PSI.
5
<PAGE>
In the purchasing of services such as advertising (including broadcast
media advertising) and insurance, PSI attempts to achieve economies by combining
the resources of the various facilities that it operates. Facilities operated by
PSI have historically carried comprehensive insurance, including fire,
earthquake, liability and extended coverage.
PSI has developed systems for space inventory, accounting and handling
delinquent accounts, including a computerized network linking PSI operated
facilities. Each project manager is furnished with detailed operating procedures
and typically receives facilities management training from PSI. Form letters
covering a variety of circumstances are also supplied to the project managers. A
record of actions taken by the project managers when delinquencies occur is
maintained.
The Mini-Warehouse Properties are typically advertised via signage,
yellow pages, flyers and broadcast media advertising (television and radio) in
geographic areas in which many of the facilities are located. Broadcast media
and other advertising costs are charged to the facilities located in geographic
areas affected by the advertising. From time to time, PSI adopts promotional
programs, such as temporary rent reductions, in selected areas or for individual
facilities.
For as long as the Management Agreement is in effect, PSI has granted
the Partnership and the Joint Venture non-exclusive license to use two PSI
service marks and related designs, including the "Public Storage" name, in
conjunction with rental and operation of facilities managed pursuant to the
Management Agreement. Upon termination of the Management Agreement, the
Partnership and the Joint Venture would no longer have the right to use the
service marks and related designs. The General Partners believe that the loss of
the right to use the service marks and related designs could have a material
adverse effect on the Partnership's business.
The Management Agreement with PSI provides that the Management
Agreement may be terminated without cause upon 60 days written notice by either
party.
OTHER BUSINESS ACTIVITIES
- -------------------------
A corporation owned by the Hughes Family reinsures policies against
losses to goods stored by tenants in the Mini-Warehouse Properties. The
Partnership believes that the availability of insurance reduces the potential
liability of the Partnership and the Joint Venture to tenants for losses to
their goods from theft or destruction. This corporation receives the premiums
and bears the risks associated with the insurance.
A corporation, in which PSI had a 95% economic interest and the Hughes
Family has a 5% economic interest, sells locks, boxes, and tape to tenants to be
used in securing their spaces and moving their goods. PSI believes that the
availability of locks, boxes, and tape for sale promotes the rental of spaces.
EMPLOYEES
- ---------
There are 111 persons who render services on behalf of the Partnership
and the Joint Venture. These persons include resident managers, assistant
managers, relief managers, district managers, and administrative personnel. Some
of these employees may be employed on a part time basis and may also be employed
by other persons, partnerships, REITs, or other entities owning facilities
operated by PSI or PSBPLP.
6
<PAGE>
ITEM 2. PROPERTIES.
-----------
The following table sets forth information as of December 31, 1999
about properties owned by the Mini-Warehouse Properties.
Net Number
Rentable of Date of Ownership
Location Square Feet Spaces Acquisition Percentage
- ----------------------------- ----------- ------ ----------- ----------
ALABAMA
Anniston
Whiteside 25,200 246 10-01-86 76.2%
Birmingham
Bessemer - Midfield 19,300 289 10-01-86 76.2
Birmingham
Centerpoint Rd. 41,600 329 10-01-86 76.2
Birmingham
Gadson Highway- 20,800 192 10-01-86 76.2
Roebuck Plaza
Birmingham
Lorna Rd.- Hoover 35,400 326 10-01-86 76.2
Birmingham
Mini-warehouse 53,900 462 10-01-86 76.2
Rd.- Riverchase
Birmingham
Oporto-Eastwood 36,900 261 10-01-86 76.2
Birmingham
Oxmoor Blvd. 39,100 338 10-01-86 76.2
Greensprings
Birmingham
Pebble Creek - Forestdale 30,200 314 10-01-86 76.2
Birmingham
27th Place S. - Highland 19,600 267 10-01-86 76.2
Huntsville
Drake 43,400 362 10-01-86 76.2
Huntsville
Leeman 43,800 395 10-01-86 76.2
CALIFORNIA
Fremont
Peralta 39,100 418 10-24-86 70.0
Sacramento
Franklin Blvd. 50,400 526 05-29-86 67.6
West Los Angeles
Purdue Ave. 51,000 636 07-01-86 50.0
GEORGIA
Jonesboro
Jonesboro Rd. 33,400 275 10-23-86 50.0
KANSAS
Kansas City
So. 44th 76,900 583 09-10-86 72.7
7
<PAGE>
Net Number
Rentable of Date of Ownership
Location Square Feet Spaces Acquisition Percentage
- ----------------------------- ----------- ------ ----------- ----------
MARYLAND
Capital Heights
Central Ave. 54,400 632 07-15-86 50.0%
Laurel
Ft. Meade Rd. 35,100 477 08-20-86 50.0
MICHIGAN
Pontiac
Dixie Hwy. 60,400 544 07-01-86 70.0
MISSOURI
St. Louis
Kirkham 30,600 396 04-10-86 57.4
St. Louis
Reavis Barracks 29,100 317 04-10-86 57.4
TEXAS
Fort Worth
East Loop 36,100 314 04-10-86 100.0
Houston
Fairdale 118,800 1,194 10-01-86 70.0
Houston
Glenvista 59,200 619 10-01-86 70.0
Houston
Gulfton 103,600 882 10-01-86 70.0
Houston
N. Freeway 96,500 877 10-01-86 70.0
Houston
Rogerdale 115,000 1,006 10-01-86 70.0
Houston
S. Gessner 111,100 1,008 10-01-86 70.0
Houston
West Park 52,200 418 10-01-86 70.0
Richland Hills
Baker Blvd. 55,800 408 06-24-86 50.0
UTAH
West Valley
So. 3600 St. 65,900 565 06-10-86 100.0
The weighted average occupancy level for the Mini-Warehouse Properties
remained stable at 92% in 1998 and 1999. The annual average realized rent per
square foot for the Mini-Warehouse Properties was $8.16 in 1999 compared to
$7.96 in 1998.
Substantially all of the facilities were acquired prior to the time
that it was customary to conduct environmental investigations in connection with
property acquisitions. During the fourth quarter of 1995, an independent
environmental consulting firm completed environmental assessments on the
Mini-Warehouse Properties to evaluate the environmental condition of, and
potential environmental liabilities of, such properties. Although there can be
no assurance, the Partnership is not aware of any environmental contamination of
any of its property sites which individually or in the aggregate would be
8
<PAGE>
material to the Partnership's overall business, financial condition, or results
of operations.
ITEM 3. LEGAL PROCEEDINGS.
------------------
No material legal proceeding is pending against the Partnership and the
Joint Venture.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
----------------------------------------------------
No matters were submitted to a vote of security holders during the
fourth quarter of 1999.
9
<PAGE>
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S COMMON EQUITY AND RELATED STOCKHOLDER
------------------------------------------------------------------
MATTERS.
--------
The Partnership has no common stock.
The Units are not listed on any national securities exchange or quoted
on the NASDAQ System, and there is no established public trading market for the
Units. Secondary sales activity for the Units has been limited and sporadic. The
General Partners monitor transfers of the Units (a) because the admission of the
transferee as a substitute limited partner requires the consent of the General
Partners under the Partnership's Amended and Restated Agreement of Limited
Partnership, (b) in order to ensure compliance with safe harbor provisions to
avoid treatment as a "publicly traded partnership" for tax purposes and (c)
because PSI has purchased Units. However, the General Partners do not have
information regarding the prices at which all secondary sale transactions in the
Units have been effectuated. Various organizations offer to purchase and sell
limited partnership interests (including securities of the type such as the
Units) in secondary sales transactions. Various publications such as The Stanger
Report summarize and report information (on a monthly, bimonthly or less
frequent basis) regarding secondary sales transactions in limited partnership
interests (including the Units), including the prices at which such secondary
sales transactions are effectuated.
Exclusive of the General Partners' interest in the Partnership, as of
December 31, 1999, there were approximately 2,415 record holders of Units.
The Partnership makes quarterly distributions of all "Cash Available
for Distribution" and will make distributions of all "Cash from Sales or
Refinancing." Cash Available for Distribution is cash flow from all sources less
cash necessary for any obligations or capital improvements or reserves.
Reference is made to Items 6 and 7 hereof for information on the amount
of such distributions.
10
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
------------------------
<TABLE>
<CAPTION>
For the Years Ended December 31,
------------------------------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
(In thousands, except per Unit data)
<S> <C> <C> <C> <C> <C>
Total Revenues $ 3,586 $ 3,527 $ 3,186 $ 2,778 $ 2,584
Depreciation and amortization 146 134 130 125 106
Net income 3,030 2,985 2,680 2,293 2,077
Limited partners' share 2,445 2,558 2,158 1,873 1,660
General partners' share 585 427 522 420 417
Limited partners'
per unit data (a)
Net income $ 16.30 $ 17.05 $ 14.39 $ 12.49 $ 11.07
Cash distributions (b) $ 33.30 $ 23.80 $ 29.74 $ 23.80 $ 23.80
As of December 31,
- ------------------
Cash and cash equivalents $ 2,092 $ 2,388 $ 1,144 $ 1,867 $ 1,785
Total assets $ 35,177 $ 37,702 $ 38,715 $ 40,997 $ 42,742
- ----------
</TABLE>
(a) Limited Partners' per unit data is based on the weighted average number of
units outstanding during the period (150,000 units).
(b) The General Partners distributed, concurrent with the distribution for the
fourth quarter of 1997, a portion of the operating reserve estimated to be
$5.94 per Unit. The General Partners distributed, concurrent with the
distribution for the first quarter of 1999, a portion of the operating
reserve estimated to be $9.50 per Unit.
11
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS.
--------------
FORWARD LOOKING STATEMENTS
- --------------------------
When used within this document, the words "expects," "believes,"
"anticipates," "should," "estimates," and similar expressions are intended to
identify "forward-looking statements" within the meaning of that term in Section
27A of the Securities Exchange Act of 1933, as amended, and in Section 21F of
the Securities Exchange Act of 1934, as amended. Such forward-looking statements
involve known and unknown risks, uncertainties, and other factors, which may
cause the actual results and performance of the Partnership to be materially
different from those expressed or implied in the forward looking statements.
Such factors include the impact of competition from new and existing real estate
facilities which could impact rents and occupancy levels at the real estate
facilities that the Partnership has an interest in; the Partnership's ability to
effectively compete in the markets that it does business in; the impact of the
regulatory environment as well as national, state, and local laws and
regulations including, without limitation, those governing Partnerships; and the
impact of general economic conditions upon rental rates and occupancy levels at
the real estate facilities that the Partnership has an interest in.
RESULTS OF OPERATIONS
- ---------------------
YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998:
The Partnership's net income was $3,030,000 in 1999 compared to
$2,985,000 in 1998, representing an increase of $45,000, or 1.5%. The increase
is due primarily to the Partnership's share of an improvement in operations of
the mini-warehouses in which the Partnership has an interest (the
"Mini-Warehouse Properties").
PROPERTY OPERATIONS: Rental income for the Partnership's wholly-owned
mini-warehouse properties was $585,000 in 1999 compared to $573,000 during 1998,
representing an increase of $12,000, or 2.1%. Cost of operations (including
management fees) increased $4,000, or 1.5%, to $272,000 in 1999 from $268,000
during 1998. Accordingly, for the Partnership's mini-warehouse operations,
property net operating income increased by $8,000, or 2.6%, from $305,000 in
1998 to $313,000 in 1999.
EQUITY IN EARNINGS OF REAL ESTATE ENTITIES: Equity in earnings of real
estate entities was $2,887,000 in 1999 as compared to $2,847,000 during 1998,
representing an increase of $40,000, or 1.4%. This increase was due primarily to
the Partnership's share of improved operating results at the Joint Venture's
mini-warehouse properties.
DEPRECIATION AND AMORTIZATION: Depreciation and amortization
attributable to the Mini-Warehouse Properties increased $12,000, or 9.0% from
$134,000 in 1998 to $146,000 during 1999. This increase was primarily
attributable to the depreciation of capital expenditures made during 1999.
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997:
The Partnership's net income was $2,985,000 in 1998 compared to
$2,680,000 in 1997, representing an increase of $305,000, or 11.4%. The increase
is due primarily to the Partnership's share of an improvement in operations of
the mini-warehouses in which the Partnership has an interest (the
"Mini-Warehouse Properties").
PROPERTY OPERATIONS: Rental income for the Partnership's wholly-owned
mini-warehouse properties was $573,000 in 1998 compared to $579,000 during 1997,
representing a decrease of $6,000, or 1.0%. Cost of operations (including
management fees) increased $30,000, or 12.6%, to $268,000 in 1998 from $238,000
during 1997. Accordingly, for the Partnership's mini-warehouse operations,
property net operating income decreased by $36,000, or 10.6%, from $341,000 in
1997 to $305,000 in 1998.
EQUITY IN EARNINGS OF REAL ESTATE ENTITIES: Equity in earnings of real
estate entities was $2,847,000 in 1998 as compared to $2,500,000 during 1997,
representing an increase of $347,000, or 13.9%. This increase was due primarily
to the Partnership's share of improved operating results at the Joint Venture's
mini-warehouse properties.
12
<PAGE>
DEPRECIATION AND AMORTIZATION: Depreciation and amortization
attributable to the Mini-Warehouse Properties increased $4,000, or 3.1% from
$130,000 in 1997 to $134,000 during 1998. This increase was primarily
attributable to the depreciation of capital expenditures made during 1998.
SUPPLEMENTAL PROPERTY DATA
During 1999 and 1998, a majority of the Partnership's net income was
from the Partnership's share of the operating results of the Mini-Warehouse
Properties. Therefore, in order to evaluate the Partnership's operating results,
the General Partners analyze the operating performance of the Mini-Warehouse
Properties.
YEAR ENDED DECEMBER 31, 1999 COMPARED TO THE YEAR ENDED DECEMBER 31,
1998: Rental income for the Mini-Warehouse Properties was $12,608,000 in 1999
compared to $12,333,000 during 1998, representing an increase of $275,000, or
2.2%. The increase in rental income was primarily attributable to increased
rental rates. The annual average realized rent per square foot was $8.16 in 1999
compared to $7.96 in 1998. The weighted average occupancy levels remained stable
at 92% in 1998 and 1999. Cost of operations (including management fees)
increased $254,000, or 5.4%, to $4,941,000 during 1999 from $4,687,000 in 1998.
This increase was primarily attributable to increases in advertising, property
tax and payroll expenses. Accordingly, for the Mini-Warehouse Properties,
property net operating income increased by $21,000, or 0.3%, from $7,646,000 in
1998 to $7,667,000 during 1999.
YEAR ENDED DECEMBER 31, 1998 COMPARED TO THE YEAR ENDED DECEMBER 31,
1997: Rental income for the Mini-Warehouse Properties was $12,333,000 in 1998
compared to $11,746,000 during 1997, representing an increase of $587,000, or
5.0%. The increase in rental income was primarily attributable to increased
rental rates, combined with increased average occupancy levels. The annual
average realized rent per square foot was $7.96 in 1998 compared to $7.63 in
1997. The weighted average occupancy levels increased from 91% in 1997 to 92% in
1998. Cost of operations (including management fees) increased $366,000, or
8.5%, to $4,687,000 during 1998 from $4,321,000 in 1997. This increase was
primarily attributable to increases in advertising, property tax, payroll, and
repairs and maintenance expenses. Accordingly, for the Mini-Warehouse
Properties, property net operating income increased by $221,000, or 3.0%, from
$7,425,000 in 1997 to $7,646,000 during 1998.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Partnership has adequate sources of cash to finance its operations,
both on a short-term and long-term basis, primarily by internally generated cash
from property operations and distributions from Real Estate Entities combined
with cash on hand at December 31, 1999 of $2,092,000.
Cash flows from operating activities and distributions from Real Estate
($5,379,000 for the year ended December 31, 1999) have been sufficient to meet
all current obligations of the Partnership. Total capital improvements for the
Partnership's wholly-owned properties were $69,000, $37,000, and $38,000 in
1999, 1998, and 1997, respectively. During 2000, the Partnership anticipates
approximately $38,000 of capital improvements to the Partnership's wholly-owned
properties.
13
<PAGE>
Total distributions paid to the General Partners and the limited
partners (including per Unit amounts) for 1999 and prior years were as follows:
Total Per Unit
---------- --------
1999 $5,606,000 33.30
1998 4,007,000 23.80
1997 5,007,000 29.74
1996 4,008,000 23.80
1995 4,007,000 23.80
1994 4,007,000 23.80
1993 3,265,000 19.40
1992 3,026,000 17.97
1991 4,041,000 24.00
1990 3,523,000 20.93
1989 3,368,000 20.00
1988 3,629,000 21.55
1987 4,418,000 26.25
1986 3,544,000 24.87
The Partnership, in prior years, made distributions based on
anticipated operating cash flows. The General Partners distributed, concurrently
with the distributions for the fourth quarter of 1991, a portion of the
operating reserve of the Partnership and adjusted the on-going distribution
level. The operating reserve that was distributed was estimated at $4.00 per
Unit. The 1997 distribution includes a special distribution of cash reserves of
approximately $5.94 per Unit. The 1999 distribution includes a special
distribution of cash reserves of approximately $9.50 per Unit. Future
distribution levels will be based on cash available for distributions (cash flow
from all sources, less cash necessary for capital improvement needs and to
establish reserves).
IMPACT OF YEAR 2000
- -------------------
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date sensitive systems may recognize
the Year 2000 as 1900 or some other date, resulting in errors when information
using Year 2000 dates is processed. In addition, similar problems may arise in
some systems which use certain dates in 1999 to represent something other than a
date. Although the change in date to the Year 2000 has occurred and no Year 2000
Issues have been identified, it is not possible to conclude that all aspects of
the Year 2000 Issue that may affect the entity, including those related to
customers, suppliers, or other third parties, have been fully resolved.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
------------------------------------------------------------
None.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
--------------------------------------------
The Partnership's financial statements are included elsewhere herein.
Reference is made to the Index to Financial Statements and Financial Statement
Schedules in Item 14(a).
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
-----------------------------------------------------
None.
14
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP.
----------------------------------------------------
The Partnership has no directors or executive officers.
The Partnership's General Partners are PSI and B. Wayne Hughes. PSI,
acting through its directors and executive officers, and Mr. Hughes manage and
make investment decisions for the Partnership. The Mini-Warehouse Properties are
managed by PSI pursuant to a Management Agreement. Through 1996, the business
parks of the Joint Venture were managed by a predecessor of PSBPLP pursuant to a
Management Agreement. In January 1997, the Joint Venture transferred its
business parks to PSBPLP in exchange for a partnership interest in PSBPLP.
The names of all directors and executive officers of PSI, the offices
held by each of them with PSI, and their ages and business experience during the
past five years are as follows:
Name Positions with PSI
- -------------------------- -------------------------------------------------
B. Wayne Hughes Chairman of the Board and Chief Executive Officer
Harvey Lenkin President and Director
Marvin M. Lotz Senior Vice President and Director
B. Wayne Hughes, Jr. Vice President and Director
John Reyes Senior Vice President and Chief Financial Officer
Carl B. Phelps Senior Vice President
Obren B. Gerich Senior Vice President
David Goldberg Senior Vice President and General Counsel
A. Timothy Scott Senior Vice President and Tax Counsel
David P. Singelyn Vice President and Treasurer
Sarah Hass Vice President and Secretary
Robert J. Abernethy Director
Dann V. Angeloff Director
William C. Baker Director
Thomas J. Barrack Jr. Director
Uri P. Harkham Director
Daniel C. Staton Director
B. Wayne Hughes, age 66, a general partner of the Partnership, has been
a director of PSI since its organization in 1980 and was President and Co-Chief
Executive Officer from 1980 until November 1991 when he became Chairman of the
Board and sole Chief Executive Officer. Mr. Hughes has been active in the real
estate investment field for over 30 years. He is the father of B. Wayne Hughes,
Jr.
Harvey Lenkin, age 63, has been employed by PSI for 22 years and became
President and a director of PSI in November 1991. Mr. Lenkin has been a director
of PS Business Parks, Inc. ("PSBP"), an affiliated REIT, since March 16, 1998
and was President of PSBP (formerly Public Storage Properties XI, Inc.) from
1990 until March 16, 1998. He is a member of the Board of Governors of the
National Association of Real Estate Investment Trusts (NAREIT).
Marvin M. Lotz, age 57, became a director of PSI in May 1999. He has
had overall responsibility for Public Storage's mini-warehouse operations since
1988. He became a Senior Vice President of PSI in November 1995. Mr. Lotz was an
officer of PSI with responsibility for property acquisitions from 1983 until
1988.
B. Wayne Hughes, Jr., age 40 became director of PSI in January 1998. He
has been employed by the Company since 1989 and has been a Vice President -
Acquisitions of PSI since 1992. Mr. Hughes, Jr. is involved in the coordination
16
<PAGE>
and direction of PSI's acquisition and development activities. He is the son of
B. Wayne Hughes.
John Reyes, age 39, a certified public accountant, joined PSI in 1990
and was Controller of PSI from 1992 until December 1996 when he became Chief
Financial Officer. He became a Vice President of PSI in November 1995 and a
Senior Vice President of PSI in December 1996. From 1983 to 1990, Mr. Reyes was
employed by Ernst & Young.
Carl B. Phelps, age 61, became a Senior Vice President of PSI in
January 1998 with overall responsibility for property acquisition and
development. From June 1991 until joining PSI, he was a partner in the law firm
of Andrews & Kurth, L.L.P., which performed legal services for PSI. From
December 1982 through May 1991, his professional corporation was a partner in
the law firm of Sachs & Phelps, then counsel to PSI.
Obren B. Gerich, age 61, a certified public accountant, has been a Vice
President of PSI since 1980 and became Senior Vice President of PSI in November
1995. He was Chief Financial Officer of PSI until November 1991.
David Goldberg, age 50, joined PSI's legal staff in June 1991. He
became Senior Vice President and General Counsel of PSI in November 1995. From
December 1982 until May 1991, he was a partner in the law firm of Sachs &
Phelps, then counsel to PSI.
A. Timothy Scott, age 48, became a Senior Vice President and Tax
Counsel of PSI and Vice President and Tax Counsel of the Public Storage REITs in
November 1996. From June 1991 until joining PSI, Mr. Scott practiced tax law as
a shareholder of the law firm of Heller, Ehrman, White & McAuliffe, counsel to
PSI. Prior to June 1991, his professional corporation was a partner in the law
firm of Sachs & Phelps, then counsel to PSI.
David P. Singleyn, age 38, a certified public accountant, has been
employed by PSI since 1989 and became Vice President and Treasurer of PSI in
November 1995. From 1987 to 1989, Mr. Singelyn was Controller of Winchell's
Donut Houses, L.P.
Sarah Hass, age 44, became Secretary of PSI in February 1992. She
became a Vice President of PSI in November 1995. She joined PSI's legal
department in June 1991, rendering services on behalf of PSI. From 1987 until
May 1991, her professional corporation was a partner in the law firm of Sachs &
Phelps, then counsel to PSI, and from April 1986 until June 1987, she was
associated with that firm, practicing in the area of securities law. From
September 1979 until September 1985, Ms. Hass was associated with the law firm
of Rifkind & Sterling, Incorporated.
Robert J. Abernethy, age 60, has been President of American Standard
Development Company and of Self-Storage Management Company, which develop and
operate mini-warehouses, since 1976 and 1977, respectively. Mr. Abernethy has
been a director of PSI since its organization in 1980. He is a member of the
board of trustees of Johns Hopkins University, a director of Marathon National
Bank and a California Transportation Commissioner. Mr. Abernethy is a former
member of the board of directors of the Los Angeles County Metropolitan
Transportation Authority and the Metropolitan Water District of Southern
California and a former Planning Commissioner and Telecommunications
Commissioner and former Vice-Chairman of the Economic Development Commission of
the City of Los Angeles.
Dann V. Angeloff, age 64, has been President of the Angeloff Company, a
corporate financial advisory firm, since 1976. The Angeloff Company has
rendered, and is expected to continue to render, financial advisory and
securities brokerage services for PSI. Mr. Angeloff is the general partner of a
limited partnership that owns a mini-warehouse operated by PSI and which secures
a note owned by PSI. Mr. Angeloff has been a director of PSI since its
organization in 1980. He is a director of AremisSoft Corporation, Balboa Capital
Corporation, Compensation Resource Group, Nicholas/Applegate Growth Equity Fund,
16
<PAGE>
ReadyPac Produce, Inc., Royce Medical Company, topjobs.net plc and WorldxChange
Communications, Inc. He was a director of SPI from 1989 until June 1996.
William C. Baker, age 66, became a director of PSI in November 1991.
From January 1999 until June 1999, Mr. Baker was President and Chief Executive
Officer of Los Angeles Turf Club, Incorporated, which operates the Santa Anita
Racetrack and is wholly-owned subsidiary of Magna International Inc. Since
August 1998, he has been President of Meditrust Operating Company, a paired
share real estate investment trust. From November 1997 until December 1998, he
was Chairman of the Board and Chief Executive Officer of The Santa Anita
Companies, Inc., a wholly-owned subsidiary of Meditrust Operating Company which
then operated the Santa Anita Racetrack. From August 1996 until November 1997,
he was Chairman of the Board and Chief Executive Officer of Santa Anita
Operating Company and Chairman of the Board of Santa Anita Realty Enterprises,
Inc., the companies which were merged with Meditrust in November 1997. From
April 1993 through May 1995, Mr. Baker was President of Red Robin International,
Inc., an operator and franchiser of casual dining restaurants in the United
States and Canada. From January 1992 through December 1995 he was Chairman and
Chief Executive Officer of Carolina Restaurant Enterprises, Inc., a franchisee
of Red Robin International, Inc. Since 1991, he has been Chairman of the Board
of Coast Newport Properties, a real estate brokerage company. From 1976 to 1988,
he was a principal shareholder and Chairman and Chief Executive Officer of Del
Taco, Inc., an operator and franchiser of fast food restaurants in California.
Mr. Baker is a director of Callaway Golf Company and Meditrust Operating
Company.
Thomas J. Barrack, Jr., age 52, became a director of PSI in February
1998. Mr. Barrack has been the Chairman and Chief Executive Officer of Colony
Capital, Inc. since September, 1991. Colony Capital, Inc. is one of the largest
real estate investors in America, having acquired properties in the U.S., Europe
and Asia. Prior to founding Colony Capital, Inc., from 1987 to 1991, Mr. Barrack
was a principal with the Robert M. Bass Group, Inc., the principal investment
vehicle for Robert M. Bass of Fort Worth, Texas. From 1985 to 1987, Mr. Barrack
was President of Oxford Ventures, Inc., a Canadian-based real estate development
company. From 1984 to 1985 he was a Senior Vice President at E. F. Hutton
Corporate Finance in New York. Mr. Barrack was appointed by President Ronald
Reagan as Deputy Under Secretary at the U.S. Department of the Interior from
1982 to 1983. Mr. Barrack currently is a director of Continental Airlines, Inc.
and Kennedy-Wilson, Inc.
Uri P. Harkham, age 51, became a director of PSI in March 1993. Mr.
Harkham has been the President and Chief Executive Officer of the Jonathan
Martin Fashion Group, which specializes in designing, manufacturing and
marketing women's clothing, since its organization in 1976. Since 1978, Mr.
Harkham has been the Chairman of the Board of Harkham Properties, a real estate
firm specializing in buying and managing fashion warehouses in Los Angeles.
Daniel C. Staton, age 47, became a director of PSI on March 12, 1999 in
connection with the merger of Storage Trust Realty, a real estate investment
trust, with PSI. Mr. Staton was Chairman of the Board of Trustees of Storage
Trust Realty from February 1998 until March 12, 1999 and a Trustee of Storage
Trust Realty from November 1994 until March 12, 1999. He is President of Walnut
Capital Partners, an investment and venture capital company. Mr. Staton was the
Chief Operating Officer and Executive Vice President of Duke Realty Investments,
Inc. from 1993 to 1997 and a director of Duke Realty Investments, Inc. from 1993
until August 1999. From 1981 to 1983, Mr. Staton was a principal owner of Duke
Associates, the predecessor of Duke Realty Investments, Inc. Prior to joining
Duke Associates in 1981, he was a partner and general manager of his own moving
company, Gateway Van & Storage, Inc. in St. Louis, Missouri. Form 1986 to 1988,
Mr. Staton served as president of the Greater Cincinnati Chapter of the National
Association of Industrial and Office Parks.
Pursuant to Articles 16 and 17 of the Partnership's Amended and
Restated Agreement of Limited Partnership (the "Partnership Agreement"), a copy
of which is included in the Partnership's prospectus included in the
Partnership's Registration Statement, File No. 2-98968, each of the General
Partners continues to serve until (i) death, insanity, insolvency, bankruptcy or
dissolution, (ii) withdrawal with the consent of the other general partner and a
majority vote of the limited partners, or (iii) removal by a majority vote of
the limited partners.
17
<PAGE>
Each director of PSI serves until he resigns or is removed from office
by PSI, and may resign or be removed from office at any time with or without
cause. Each officer of PSI serves until he resigns or is removed by the board of
directors of PSI. Any such officer may resign or be removed from office at any
time with or without cause.
There have been no events under any bankruptcy act, no criminal
proceedings, and no judgments or injunctions material to the evaluation of the
ability of any director or executive officer of PSI during the past five years.
ITEM 11. EXECUTIVE COMPENSATION.
-----------------------
The Partnership has no subsidiaries, directors or officers. See Item 13
for a description of certain transactions between the Partnership and the
General Partners and their affiliates.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
---------------------------------------------------------------
(a) At January 1, 2000, PSI beneficially owned more than 5% of the
Units of the Partnership:
Title Amount of Percent
of Name and Address of Beneficial of
Class Beneficial Owner Ownership Class
- ---------------- ------------------------- ---------------- ----------
Units of Limited Public Storage, Inc.
Partnership 701 Western Avenue
Interest Glendale, CA 91201-2394 92,223 Units (1) 61.48% (1)
- ----------
(1) These Units are held of record by SEI Arlington Acquisition Corporation, a
wholly-owned subsidiary of PSI.
In September 1997, PSI completed a cash tender offer, which had
commenced in July 1997, pursuant to which PSI acquired a total of 13,075
additional limited partnership units at $351 per Unit.
The Partnership is not aware of any other beneficial owners of more
than 5% of the Units.
(b) The Partnership has no officers and directors.
The General Partners (or their predecessor-in-interest) have
contributed $747,000 to the capital of the Partnership representing 1% of the
aggregate capital contributions and as a result participate in the distributions
to the limited partners and in the Partnership's profits and losses in the same
proportion that the general partners' capital contribution bears to the total
capital contribution. Information regarding ownership of the Units by PSI, a
General Partner, is set forth under section (a) above.
(c) The Partnership knows of no contractual arrangements, the operation
of the terms of which may at a subsequent date result in a change in control of
the Partnership, except for articles 16, 17 and 21.1 of the Partnership's
Amended Certificate and Agreement of Limited Partnership, a copy of which is
included in the Partnership's prospectus included in the Partnership's
Registration Statement File No. 2-98968. Those articles provide, in substance,
that the limited partners shall have the right, by majority vote, to remove a
general partner and that a general partner may designate a successor with the
consent of the other general partner and a majority of the limited partners.
The Partnership owns interests in 32 properties (which exclude the
properties transferred to PSBPLP in January 1997); 30 of such properties are
held in a general partnership comprised of the Partnership and PSI. Under the
terms of the partnership agreement relating to the ownership of the properties,
18
<PAGE>
PSI has the right to compel a sale of each property at any time after seven
years from the date of acquisition at not less than its independently determined
fair market value provided the Partnership receives its share of the net sales
proceeds solely in cash. As of December 31, 1999, PSI has the right to require
the Partnership to sell all of the Joint Venture's properties on these terms.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
-----------------------------------------------
The Partnership Agreement provides that the General Partners and their
affiliates are entitled to the following compensation:
1. Incentive distributions equal to 10% of Cash Flow from Operations.
2. Provided the limited partners have received distributions equal to 100%
of their investment plus a cumulative 8% per year (not compounded) on
their investment (reduced by distributions other than from Cash Flow
from Operations), subordinated incentive distributions equal to 15% of
remaining Cash from Sales or Refinancings.
3. Provided the limited partners have received distributions equal to 100%
of their capital contributions plus a cumulative 6% per year (not
compounded) on their investment (reduced by distributions other than
distributions from Cash Flow from Operations), brokerage commissions at
the lesser of 3% of the sales price of a property or 50% of a
competitive commission.
During 1999, approximately $561,000 was paid to PSI with respect to
items 1, 2, and 3 above. The Partnership owns interests in 32 properties (which
exclude the properties transferred to PSBPLP in January 1997); 30 of such
properties are held in a general partnership comprised of the Partnership and
PSI.
The Partnership and the Joint Venture have a Management Agreement with
PSI pursuant to which the Partnership and the Joint Venture pay PSI a fee of 6%
of the gross revenues of the mini-warehouse spaces operated for the Partnership
and the Joint Venture. During 1999, the Partnership and the Joint Venture paid
fees of $756,000 to PSI pursuant to the Management Agreement.
Through 1996, the Joint Venture's business parks were managed by a
predecessor of PSBPLP pursuant to a Management Agreement which provides for the
payment of a fee by the Partnership of 5% of the gross revenues of the
commercial space operated for the Joint Venture. In January 1997, the Joint
Venture and PSI and other related partnerships transferred a total of 35
business parks to PSBPLP, an operating partnership formed to own and operate
business parks in which PSI has a significant interest. Included among the
properties transferred were the Joint Venture's business parks in exchange for a
partnership interest in PSBPLP. The general partner of PSBPLP is PS Business
Parks, Inc., a REIT traded on the American Stock Exchange.
19
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
----------------------------------------------------------------
(a) List of Documents filed as part of the Report.
1. Financial Statements: See Index to Financial Statements and
Financial Statement Schedules.
2. Financial Statement Schedules: See Index to Financial Statements
and Financial Statement Schedules.
3. Exhibits: See Exhibit Index contained herein.
(b) Reports on Form 8-K:
None
(c) Exhibits: See Exhibit Index contained herein.
20
<PAGE>
PS PARTNERS VI, LTD.,
A CALIFORNIA LIMITED PARTNERSHIP
INDEX TO EXHIBITS
3.1 Amended and Restated Agreement of Limited Partnership. Previously filed
with the Securities and Exchange Commission as an Exhibit to the
Storage Equities, Inc. Registration Statement No. 33-43750 and
incorporated herein by reference.
10.1 Second Amended and Restated Management Agreement dated November 16,
1995, between the Partnership and Public Storage Management, Inc.
Previously filed with the Securities and Exchange Commission as an
exhibit to PS Partners, Ltd.'s Annual Report on Form 10-K for the year
ended December 31, 1996 and incorporated herein by reference.
10.2 Amended Management Agreement dated February 21, 1995 between Storage
Equities, Inc. and Public Storage Commercial Properties Group, Inc.
Previously filed with the Securities and Exchange Commission as an
exhibit to the Partnership's Annual Report on Form 10-K for the year
ended December 31, 1994, and incorporated herein by reference.
10.3 Participation Agreement dated as of October 18, 1985, among Storage
Equities, Inc., the Partnership, Public Storage, Inc., B. Wayne Hughes
and Kenneth Q. Volk, Jr. Previously filed with the Securities and
Exchange Commission as an exhibit to Storage Equities, Inc.'s Annual
Report on Form 10-K dated November 30, 1985 and incorporated herein by
reference.
27 Financial data schedule. filed herewith.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Partnership has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
PS PARTNERS VI, LTD.
a California Limited Partnership
Dated: March 28, 2000 By: Public Storage, Inc., General Partner
By: /s/ B. Wayne Hughes
-------------------
B. Wayne Hughes, Chairman of the Board
By: /s/ B. Wayne Hughes
--------------------
B. Wayne Hughes, General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Partnership in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
- --------------------------------- -------------------------------------------------- ----------------
<S> <C> <C>
/s/ B. Wayne Hughes Chairman of the Board and Chief March 28, 2000
- --------------------------------- Executive Officer of Public Storage, Inc. and
B. Wayne Hughes General Partner (principal executive officer)
/s/ Harvey Lenkin President and Director March 28, 2000
- --------------------------------- of Public Storage, Inc.
Harvey Lenkin
/s/ Marvin M. Lotz Senior Vice President and Director March 28, 2000
- --------------------------------- of Public Storage, Inc.
Marvin M. Lotz
/s/ B. Wayne Hughes, Jr. Vice President and Director March 28, 2000
- --------------------------------- of Public Storage, Inc.
B. Wayne Hughes, Jr.
/s/ John Reyes Senior Vice President and Chief Financial Officer March 28, 2000
- --------------------------------- of Public Storage, Inc. (principal financial
John Reyes officer and principal accounting officer)
/s/ Robert J. Abernethy Director of Public Storage, Inc. March 28, 2000
- ---------------------------------
Robert J. Abernethy
/s/ Dann V. Angeloff Director of Public Storage, Inc. March 28, 2000
- ---------------------------------
Dann V. Angeloff
Director of Public Storage, Inc. March 28, 2000
- ---------------------------------
William C. Baker
Director of Public Storage, Inc. March 28, 2000
- ---------------------------------
Thomas J. Barrack, Jr.
/s/ Uri P. Harkham Director of Public Storage, Inc. March 28, 2000
- ---------------------------------
Uri P. Harkham
/s/ Daniel C. Staton Director of Public Storage, Inc. March 28, 2000
- ---------------------------------
Daniel C. Staton
</TABLE>
22
<PAGE>
PS PARTNERS VI, LTD.
a California Limited Partnership
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
(Item 14 (a))
Page
References
----------
PS PARTNERS VI, LTD.
Report of Independent Auditors F-1
Financial Statements and Schedule:
Balance Sheets as of December 31, 1999 and 1998 F-2
For the years ended December 31, 1999, 1998 and 1997:
Statements of Income F-3
Statements of Partners' Equity F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6 - F-10
Schedule
Schedule III - Real Estate and Accumulated Depreciation F-11 - F-12
Financial Statements of 50 percent or less owned persons required pursuant to
Rule 3-09:
PS BUSINESS PARKS, INC. - PS Business Parks, Inc. is a registrant with the
Securities and Exchange Commission and its filings can be accessed through
the Securities and Exchange Commission.
SEI/PSP VI JOINT VENTURES
Report of Independent Auditors F-13
Financial Statements:
Balance Sheets as of December 31, 1999 and 1998 F-14
For the years ended December 31, 1999, 1998 and 1997:
Statements of Income F-15
Statements of Partners' Equity F-16
Statements of Cash Flows F-17 - F-18
Notes to Financial Statements F-19 - F-22
Schedule
Schedule III - Real Estate and Accumulated Depreciation F-23 - F-25
All other schedules have been omitted since the required information is
not present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the financial
statements or the notes thereto.
23
<PAGE>
Report of Independent Auditors
The Partners
PS Partners VI, Ltd., a California Limited Partnership
We have audited the balance sheets of PS Partners VI, Ltd., a California Limited
Partnership, as of December 31, 1999 and 1998 and the related statements of
income, partners' equity, and cash flows for each of the three years in the
period ended December 31, 1999. Our audits also included the financial statement
schedule listed in the Index at Item 14(a). These financial statements and
schedule are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 financial statements referred to above present fairly, in
all material respects, the financial position of PS Partners VI, Ltd., a
California Limited Partnership, at December 31, 1999 and 1998, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.
ERNST & YOUNG LLP
February 14, 2000
Los Angeles, California
F-1
<PAGE>
PS PARTNERS VI, LTD.
a California Limited Partnership
BALANCE SHEETS
December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
---------------------------------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 2,092,000 $ 2,388,000
Rent and other receivables 5,000 3,000
Real estate facilities, at cost:
Land 404,000 404,000
Buildings and equipment 2,887,000 2,818,000
---------------------------------------
3,291,000 3,222,000
Less accumulated depreciation (1,560,000) (1,414,000)
---------------------------------------
1,731,000 1,808,000
Investment in real estate entities 31,345,000 33,498,000
Other assets 4,000 5,000
---------------------------------------
$ 35,177,000 $ 37,702,000
=======================================
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 122,000 $ 70,000
Advance payments from renters 10,000 11,000
Partners' equity:
Limited partners' equity, $500 per unit, 150,000
units authorized, issued and outstanding 34,598,000 37,148,000
General partners' equity 447,000 473,000
---------------------------------------
Total partners' equity 35,045,000 37,621,000
---------------------------------------
$ 35,177,000 $ 37,702,000
=======================================
</TABLE>
See accompanying notes.
F-2
<PAGE>
PS PARTNERS VI, LTD.
a California Limited Partnership
STATEMENTS OF INCOME
For the years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
-----------------------------------------------------------
REVENUE:
<S> <C> <C> <C>
Rental income $ 585,000 $ 573,000 $ 579,000
Equity in earnings of real estate entities 2,887,000 2,847,000 2,500,000
Interest income 114,000 107,000 107,000
-----------------------------------------------------------
3,586,000 3,527,000 3,186,000
-----------------------------------------------------------
COSTS AND EXPENSES:
Cost of operations 237,000 234,000 203,000
Management fees 35,000 34,000 35,000
Depreciation and amortization 146,000 134,000 130,000
Administrative 138,000 140,000 138,000
-----------------------------------------------------------
556,000 542,000 506,000
-----------------------------------------------------------
NET INCOME $ 3,030,000 $ 2,985,000 $ 2,680,000
===========================================================
Limited partners' share of net income
($16.30, $17.05, and $14.39 per unit in
1999, 1998, and 1997, respectively) $ 2,445,000 $ 2,558,000 $ 2,158,000
General partners' share of net income 585,000 427,000 522,000
-----------------------------------------------------------
$ 3,030,000 $ 2,985,000 $ 2,680,000
===========================================================
</TABLE>
See accompanying notes.
F-3
<PAGE>
PS PARTNERS VI, LTD.
a California Limited Partnership
STATEMENTS OF PARTNERS' EQUITY
For the years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
Limited General
Partners Partners Total
-----------------------------------------------------------
<S> <C> <C> <C>
Balances at December 31, 1996 $ 40,464,000 $ 506,000 $ 40,970,000
Net income 2,158,000 522,000 2,680,000
Distributions (4,462,000) (545,000) (5,007,000)
-----------------------------------------------------------
Balances at December 31, 1997 38,160,000 483,000 38,643,000
Net income 2,558,000 427,000 2,985,000
Distributions (3,570,000) (437,000) (4,007,000)
-----------------------------------------------------------
Balances at December 31, 1998 37,148,000 473,000 37,621,000
Net income 2,445,000 585,000 3,030,000
Distributions (4,995,000) (611,000) (5,606,000)
-----------------------------------------------------------
Balances at December 31, 1999 $ 34,598,000 $ 447,000 $ 35,045,000
===========================================================
</TABLE>
See accompanying notes.
F-4
<PAGE>
PS PARTNERS VI, LTD.
a California Limited Partnership
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
--------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $3,030,000 $2,985,000 $2,680,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 146,000 134,000 130,000
(Increase) decrease in rent and other receivables (2,000) 1,000 5,000
Decrease in other assets 1,000 - 5,000
Increase in accounts payable 52,000 7,000 46,000
(Decrease) increase in advance payments from renters (1,000) 2,000 (1,000)
Equity in earnings of real estate entities (2,887,000) (2,847,000) (2,500,000)
--------------------------------------------------------
Total adjustments (2,691,000) (2,703,000) (2,315,000)
--------------------------------------------------------
Net cash provided by operating activities 339,000 282,000 365,000
--------------------------------------------------------
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
Distributions from real estate entities 5,040,000 5,006,000 3,957,000
Additions to real estate facilities (69,000) (37,000) (38,000)
--------------------------------------------------------
Net cash provided by investing activities 4,971,000 4,969,000 3,919,000
--------------------------------------------------------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Distributions to partners (5,606,000) (4,007,000) (5,007,000)
--------------------------------------------------------
Net cash used in financing activities (5,606,000) (4,007,000) (5,007,000)
--------------------------------------------------------
Net (decrease) increase in cash and cash equivalents (296,000) 1,244,000 (723,000)
Cash and cash equivalents at the beginning of the period 2,388,000 1,144,000 1,867,000
--------------------------------------------------------
Cash and cash equivalents at the end of the period $2,092,000 $2,388,000 $1,144,000
========================================================
</TABLE>
See accompanying notes.
F-5
<PAGE>
PS PARTNERS VI, LTD.
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
1. Summary of Significant Accounting Policies and Partnership Matters
------------------------------------------------------------------
Description of Partnership
--------------------------
PS Partners VI, Ltd., a California Limited Partnership (the
"Partnership") was formed with the proceeds of an interstate public
offering. PSI Associates II, Inc. ("PSA"), an affiliate of Public
Storage Management, Inc., organized the Partnership along with B. Wayne
Hughes ("Hughes"). In September 1993, Storage Equities, Inc., now known
as Public Storage, Inc. ("PSI"), a California corporation, acquired the
interest of PSA relating to its general partner capital contribution in
the Partnership and was substituted as a co-general partner in place of
PSA.
In 1995, there was a series of mergers among Public Storage
Management, Inc. (which was the Partnership's mini-warehouse operator),
Public Storage, Inc. and their affiliates (collectively, "PSMI"),
culminating in the November 16, 1995 merger (the "PSMI Merger") of PSMI
into Storage Equities, Inc. In the PSMI Merger, Storage Equities, Inc.
was renamed Public Storage, Inc. and it acquired substantially all of
PSMI's United States real estate operations and became the operator of
the mini-warehouse properties in which the Partnership has an interest.
The Partnership has invested in existing mini-warehouse
storage facilities which offer self-service storage spaces for lease,
usually on a month-to-month basis, to the general public and, to a
lesser extent, in existing business park facilities which offer
industrial and office space for lease.
The Partnership has ownership interests in 32 properties in 9
states (collectively referred to as the "Mini-Warehouse Properties"),
which exclude two properties transferred to PS Business Parks, L.P.
("PSBPLP") in January 1997. 30 of the properties are owned by SEI/PSP
VI Joint Ventures (the "Joint Venture"), a general partnership between
the Partnership and PSI. The Partnership is the managing general
partner of the Joint Venture, with ownership interests in the
individual properties of the Joint Venture ranging from 50% to 76.2%.
As used hereinafter, the Joint Venture and PSBPLP are referred
to as the "Real Estate Entities."
Basis of Presentation
---------------------
The financial statements include the accounts of the
Partnership. The accounts of the Joint Venture, which the Partnership
does not control, are not consolidated with the Partnership and the
Partnership's interest in the Joint Venture is accounted for on the
equity method.
The Partnership does not control the Joint Venture because PSI
has significant control rights with respect to the management of the
properties, including the right to compel the sale of each property in
the Joint Venture and the right to require the Partnership to submit
operating budgets.
Under the terms of the general partnership agreement of the
Joint Venture all depreciation and amortization with respect to each
property is allocated solely to the Partnership until the limited
partners recover their initial capital contribution. Thereafter, all
depreciation and amortization is allocated solely to PSI until it
recovers its initial capital contribution. All remaining depreciation
and amortization is allocated to the Partnership and PSI in proportion
to their ownership percentages.
F-6
<PAGE>
1. Summary of Significant Accounting Policies and Partnership Matters
------------------------------------------------------------------
(Continued)
-----------
Under the terms of the partnership agreements, PSI has the
right to compel the sale of each property in the general partnerships
at any time after seven years from the date of acquisition at not less
than its independently determined fair market value provided the
Partnership receives its share of the net proceeds solely in cash.
PSI's right to require the Partnership to sell all of the properties
owned jointly with the Partnership has been exercisable in all periods
presented.
Under the terms of the general partnership agreement of the
Joint Venture, for property acquisitions in which PSI issued
convertible securities to the sellers for its interest, PSI's right to
receive cash flow distributions for any year after the first year of
operation are subordinated to cash distributions to PSP VI equal to a
cumulative annual 7% of its cash investment (not compounded). In
addition, upon sale or refinancing of a property for more than its
original purchase price, distribution of proceeds to PSI is
subordinated to the return to PSP VI of the amount of its cash
investment and the 7% distribution described above.
Depreciation and amortization
-----------------------------
The Partnership and the Joint Venture depreciate the buildings
and equipment on a straight-line method over estimated useful lives of
25 and 5 years, respectively. Leasing commissions relating to business
park properties are expensed when incurred.
Revenue Recognition
-------------------
Property rents are recognized as earned.
Allocation of Net Income
------------------------
The General Partners' share of net income consists of an
amount attributable to their 1% capital contribution and an additional
percentage of cash flow (as defined, see Note 4) which relates to the
General Partners' share of cash distributions as set forth in the
Partnership Agreement. All remaining net income is allocated to the
limited partners.
Per Unit Data
-------------
Per unit data is based on the number of limited partner units
(150,000) outstanding during the periods presented.
Cash Distributions
------------------
The Partnership Agreement provides for quarterly distributions
of cash flow from operations (as defined). Cash distributions per
limited partner unit were $33.30, $23.80, and $29.74 for 1999, 1998,
and 1997, respectively.
Cash and Cash Equivalents
-------------------------
For financial statement purposes, the Partnership considers
all highly liquid investments purchased with a maturity of three months
or less to be cash equivalents.
F-7
<PAGE>
1. Summary of Significant Accounting Policies and Partnership Matters
------------------------------------------------------------------
(Continued)
-----------
Environmental Cost
------------------
Substantially all of the real estate facilities in which the
Partnership has an interest were acquired prior to the time that it was
customary to conduct extensive environmental investigations in
connection with the property acquisitions. During the fourth quarter of
1995, an independent environmental consulting firm completed
environmental assessments on the properties of the Partnership and the
Joint Venture to evaluate the environmental condition of, and potential
environmental liabilities of such properties. Although there can be no
assurance, the Partnership is not aware of any environmental
contamination of the Mini-Warehouse Properties which individually or in
the aggregate would be material to the Partnership's overall business,
financial condition, or results of operations.
Segment Reporting
-----------------
Effective January 1, 1998, the Partnership adopted SFAS No.
131, "Disclosure about Segments of an Enterprise and Related
Information." SFAS No. 131 established standards for the way public
business enterprises report information about operating segments in
annual financial statements and requires that those enterprises report
selected information about operating segments in interim financial
reports. SFAS No. 131 also establishes standards for related
disclosures about products and services, geographic areas and major
customers. The Partnership only has one reportable segment as defined
within SFAS No. 131, therefore the adoption of SFAS No. 131 had no
effect on the Partnership's disclosures.
Use of Estimates
----------------
The preparation of the financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
Derivatives
-----------
In June 1998, the Financial Accounting Standards Board issued
Statement No. 133, Accounting for Derivative Instruments and Hedging
Activities, which is required to be adopted in years beginning after
June 15, 2000. Management does not anticipate that the adoption of the
new Statement will have significant effect on earnings or the financial
position of the Partnership.
2. Real Estate Facilities
----------------------
In 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121 ("Statement 121"),
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of." Statement 121 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.
Statement 121 also addresses the method of accounting for long-lived
assets that are expected to be disposed. The Partnership adopted
Statement 121 in 1996 and the adoption had no effect.
F-8
<PAGE>
2. Real Estate Facilities (Continued)
----------------------------------
In January 1997, the Partnership and PSI and other related
partnerships transferred a total of 35 business parks to PSBPLP, an
operating partnership formed to own and operate business parks in which
PSI has a significant interest. Included among the properties
transferred were the Joint Venture's business parks in exchange for a
partnership interest in PSBPLP. The general partner of PSBPLP is PS
Business Parks, Inc. ("PSBP").
3. Investment in Real Estate Entities
----------------------------------
During 1999, 1998, and 1997, the Partnership recognized
earnings from the Real Estate Entities of $2,887,000, $2,847,000 and
$2,500,000, respectively, and received cash distributions totaling
$5,040,000, $5,006,000, and $3,957,000, respectively from the Real
Estate Entities.
The accounting policies of the Real Estate Entities are similar
to that of the Partnership. Summarized combined financial data with
respect to the Real Estate Entities are as follows:
1999 1998
------------ ------------
For the year ended December 31,
Total revenues $141,819,000 $103,067,000
Minority interest in income 16,110,000 11,208,000
Net income 46,716,000 34,872,000
At December 31,
Total assets, net of accumulated depreciation $961,490,000 $769,096,000
Total liabilities 59,579,000 67,738,000
Total minority interest 289,949,000 153,015,000
Total equity 611,962,000 548,343,000
The increase in the size of the combined financial position
and operating results, respectively, of the Real Estate Entities for
the year ended December 31, 1999 and at December 31, 1999,
respectively, as compared to prior periods, is the result of the
additional properties acquired by PSBPLP during 1998 and 1999.
Financial statements of the Joint Venture are filed with the
Partnership's Form 10-K for 1999, in Item 14. PS Business Parks, Inc.
is a registrant with the Securities and Exchange Commission, and its
filings can be accessed through the Securities and Exchange Commission.
4. General Partners' Equity
------------------------
The General Partners have a 1% interest in the Partnership. In
addition, the General Partners have a 10% interest in cash
distributions attributable to operations, exclusive of distributions
attributable to sales and refinancing proceeds.
Proceeds from sales and refinancings will be distributed
entirely to the limited partners until the limited partners recover
their investment plus a cumulative 8% annual return (not compounded);
thereafter, the General Partners have a 15% interest in remaining
proceeds.
F-9
<PAGE>
5. Related Party Transactions
--------------------------
The Partnership has a management agreement with PSI whereby
PSI operates the Mini-Warehouse Properties for a fee equal to 6% of the
facilities' monthly gross revenue (as defined).
In January 1997, the Joint Venture transferred its business
park facilities to PSBPLP in exchange for a partnership interest in
PSBPLP. PSI has a significant economic interest in PSBPLP and PSBP.
6. Leases
------
The Partnership has invested primarily in existing
mini-warehouse storage facilities which offer self-service storage
spaces for lease to the general public. Leases for such space are
usually on a month-to-month basis.
7. Taxes Based on Income
---------------------
Taxes based on income are the responsibility of the individual
partners and, accordingly, the Partnership's financial statements do
not reflect a provision for such taxes.
Unaudited taxable net income was $2,982,000, $2,705,000 and
$5,448,000 for the years ended December 31, 1999, 1998 and 1997,
respectively. The difference between taxable income and book income is
primarily related to timing differences in depreciation expense.
F-10
<PAGE>
PS PARTNERS VI, LTD.
A CALIFORNIA LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
Costs
Initial Cost subsequent
--------------------------------- to acquisition
Date Building & Building &
Acquired Description Encumbrances Land Improvement Improvements
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
4/86 Fort Worth/East Loop $- $196,000 $804,000 $268,000
6/86 West Valley/So. 3600 - 208,000 1,552,000 263,000
----------------------------------------------------------------
$- $ 404,000 $ 2,356,000 $ 531,000
================================================================
</TABLE>
<TABLE>
<CAPTION>
Gross Carrying Amount
At December 31, 1999
--------------------------------------------------------------
Date Building & Accumulated
Acquired Description Land Improvements Total Depreciation
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
4/86 Fort Worth/East Loop $196,000 $1,072,000 $1,268,000 $562,000
6/86 West Valley/So. 3600 208,000 1,815,000 2,023,000 998,000
---------------------------------------------------------------
$ 404,000 $ 2,887,000 $ 3,291,000 $ 1,560,000
===============================================================
</TABLE>
F-11
<PAGE>
PS PARTNERS VI, LTD.
A CALIFORNIA LIMITED PARTNERSHIP
REAL ESTATE RECONCILIATION
SCHEDULE III (CONTINUED)
(A) The following is a reconciliation of cost and related accumulated
depreciation.
<TABLE>
<CAPTION>
GROSS CARRYING COST RECONCILIATION
Years Ended December 31,
-------------------------------------------------------
1999 1998 1997
-------------------------------------------------------
<S> <C> <C> <C>
Balance at beginning of the period $ 3,222,000 $ 3,185,000 $ 3,147,000
Additions during the period:
Improvements, etc. 69,000 37,000 38,000
-------------------------------------------------------
Balance at the close of the period $ 3,291,000 $ 3,222,000 $ 3,185,000
=======================================================
ACCUMULATED DEPRECIATION RECONCILIATION
Years Ended December 31,
-------------------------------------------------------
1999 1998 1997
-------------------------------------------------------
Balance at beginning of the period $ 1,414,000 $ 1,280,000 $ 1,150,000
Additions during the period:
Depreciation 146,000 134,000 130,000
-------------------------------------------------------
Balance at the close of the period $ 1,560,000 $ 1,414,000 $ 1,280,000
=======================================================
</TABLE>
(B) The aggregate cost of real estate for Federal income tax purposes is
$3,287,000.
F-12
<PAGE>
Report of Independent Auditors
The Partners
SEI/PSP VI Joint Ventures
We have audited the balance sheets of the SEI/PSP VI Joint Ventures as of
December 31, 1999 and 1998 and the related statements of income, partners'
equity and cash flows for each of the three years in the period ended December
31, 1999. Our audits also included the financial statement schedule listed in
the Index at Item 14 (a). These financial statements and schedule are the
responsibility of the Joint Ventures' management. Our responsibility is to
express an opinion on these financial statements and schedule based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 financial statements referred to above present fairly, in
all material respects, the financial position of the SEI/PSP VI Joint Ventures
at December 31, 1999 and 1998, and the results of its operations and cash flows
for each of the three years in the period ended December 31, 1999, in conformity
with accounting principles generally accepted in the United States. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
ERNST & YOUNG LLP
February 14, 2000
Los Angeles, CA
F-13
<PAGE>
SEI/PSP VI JOINT VENTURES
a California Limited Partnership
BALANCE SHEETS
December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
--------------------------------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $160,000 $255,000
Rent and other receivables 81,000 78,000
Real estate facilities, at cost:
Land 17,214,000 17,214,000
Buildings and equipment 55,104,000 54,320,000
--------------------------------------
72,318,000 71,534,000
Less accumulated depreciation (30,159,000) (27,083,000)
--------------------------------------
42,159,000 44,451,000
Investment in real estate entity 15,237,000 14,785,000
Other assets 112,000 113,000
--------------------------------------
$57,749,000 $59,682,000
======================================
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $952,000 $871,000
Advance payments from renters 366,000 373,000
Partners' equity:
PS Partners VI, Ltd. 31,345,000 33,498,000
Public Storage, Inc. 25,086,000 24,940,000
--------------------------------------
Total partners' equity 56,431,000 58,438,000
--------------------------------------
$57,749,000 $59,682,000
======================================
</TABLE>
See accompanying notes.
F-14
<PAGE>
SEI/PSP VI JOINT VENTURES
a California Limited Partnership
STATEMENTS OF INCOME
For the years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
-----------------------------------------------------
REVENUE:
<S> <C> <C> <C>
Rental income $12,023,000 $11,760,000 $11,167,000
Equity in earnings of real estate entity 1,183,000 1,047,000 734,000
-----------------------------------------------------
13,206,000 12,807,000 11,901,000
-----------------------------------------------------
COSTS AND EXPENSES:
Cost of operations 3,948,000 3,713,000 3,413,000
Management fees 721,000 706,000 670,000
Depreciation and amortization 3,076,000 2,916,000 2,820,000
-----------------------------------------------------
7,745,000 7,335,000 6,903,000
-----------------------------------------------------
NET INCOME $5,461,000 $5,472,000 $4,998,000
=====================================================
Partners' share of net income:
PS Partners VI, Ltd.'s share $2,887,000 $2,847,000 $2,500,000
Public Storage Inc.'s share 2,574,000 2,625,000 2,498,000
-----------------------------------------------------
$5,461,000 $5,472,000 $4,998,000
=====================================================
</TABLE>
See accompanying notes.
F-15
<PAGE>
SEI/PSP VI JOINT VENTURES
a California Limited Partnership
STATEMENTS OF PARTNERS' EQUITY
For the years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
PS Partners Public Storage
VI, Ltd. Inc. Total
-----------------------------------------------------------
<S> <C> <C> <C>
Balances at December 31, 1996 $37,114,000 $24,177,000 $61,291,000
Net income 2,500,000 2,498,000 4,998,000
Distributions (3,957,000) (2,112,000) (6,069,000)
-----------------------------------------------------------
Balances at December 31, 1997 35,657,000 24,563,000 60,220,000
Net income 2,847,000 2,625,000 5,472,000
Distributions (5,006,000) (2,248,000) (7,254,000)
-----------------------------------------------------------
Balances at December 31, 1998 33,498,000 24,940,000 58,438,000
Net income 2,887,000 2,574,000 5,461,000
Distributions (5,040,000) (2,428,000) (7,468,000)
-----------------------------------------------------------
Balances at December 31, 1999 $31,345,000 $25,086,000 $56,431,000
===========================================================
</TABLE>
See accompanying notes.
F-16
<PAGE>
SEI/PSP VI JOINT VENTURES
a California Limited Partnership
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
-------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $5,461,000 $5,472,000 $4,998,000
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 3,076,000 2,916,000 2,820,000
(Increase) decrease in rent and other receivables (3,000) 3,000 6,000
Decrease (increase) in other assets 1,000 (3,000) 90,000
Increase (decrease) in accounts payable 81,000 128,000 (212,000)
(Decrease) increase in advance payments from renters (7,000) 41,000 (8,000)
Equity in earnings of real estate entity (1,183,000) (1,047,000) (734,000)
-------------------------------------------------
Total adjustments 1,965,000 2,038,000 1,962,000
-------------------------------------------------
Net cash provided by operating activities 7,426,000 7,510,000 6,960,000
-------------------------------------------------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Distributions from real estate entity 731,000 802,000 300,000
Additions to real estate facilities (784,000) (1,012,000) (1,162,000)
-------------------------------------------------
Net cash used in investing activities (53,000) (210,000) (862,000)
-------------------------------------------------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Distributions to partners (7,468,000) (7,254,000) (6,069,000)
-------------------------------------------------
Net cash used in financing activities (7,468,000) (7,254,000) (6,069,000)
-------------------------------------------------
Net (decrease) increase in cash and cash equivalents (95,000) 46,000 29,000
Cash and cash equivalents at the beginning of the period 255,000 209,000 180,000
-------------------------------------------------
Cash and cash equivalents at the end of the period $160,000 $255,000 $209,000
=================================================
</TABLE>
See accompanying notes.
F-17
<PAGE>
SEI/PSP VI JOINT VENTURES
a California Limited Partnership
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1999, 1998, and 1997
(Continued)
<TABLE>
<CAPTION>
1999 1998 1997
-------------------------------------------
Supplemental schedule of noncash investing and financing activities:
<S> <C> <C> <C>
Investment in real estate entity $- $- $(14,106,000)
Transfer of real estate facilities for interest in real estate entity,
net - - 14,106,000
</TABLE>
See accompanying notes.
F-18
<PAGE>
SEI/PSP VI JOINT VENTURES
a California Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
1. Description of Partnership
--------------------------
SEI/PSP VI Joint Ventures (the "Joint Venture") was formed on
December 31, 1990 in connection with the consolidation of 14 separate
general partnerships between Public Storage Inc. ("PSI") and PS
Partners VI, Ltd. ("PSP VI"). The Joint Venture, through its
predecessor general partnerships, invested in existing mini-warehouse
facilities which offer self-service storage spaces for lease, usually
on a month-to-month basis, to the general public and, to a lesser
extent, in existing business park facilities which offer industrial and
office space for lease.
The Joint Venture owns 30 properties (referred to hereinafter
as the "Mini-Warehouses"), which excludes two properties which were
transferred to PS Business Parks, L.P. ("PSBPLP") in January 1997. PSP
VI is the managing general partner of the Joint Venture, with its
ownership interests in the properties of the Joint Venture ranging from
50% to 76.2%.
2. Summary of Significant Accounting Policies and Partnership Matters
------------------------------------------------------------------
Basis of Presentation
---------------------
The financial statements include the accounts of the Joint
Venture.
Under the terms of the general partnership agreement of the
Joint Venture, for property acquisitions in which PSI issued
convertible securities to the sellers for its interest, PSI's right to
receive cash flow distributions for any year after the first year of
operation are subordinated to cash distributions to PSP VI equal to a
cumulative annual 7% of its cash investment (not compounded). In
addition, upon sale or refinancing of a property for more than its
original purchase price, distribution of proceeds to PSI is
subordinated to the return to PSP VI of the amount of its cash
investment and the 7% distribution described above.
Depreciation and Amortization
-----------------------------
The Joint Venture depreciates the buildings and equipment on a
straight-line method over estimated useful lives of 25 and 5 years,
respectively. Leasing commissions relating to business park properties
are expensed when incurred.
Revenue Recognition
-------------------
Property rents are recognized as earned.
Allocation of Net Income to PSP VI and PSI
------------------------------------------
Net income prior to depreciation is allocated to PSP VI and
PSI based upon their relative ownership interest in each property and
the results of each property.
Under the terms of the general partnership agreement of the
Joint Venture all depreciation and amortization with respect to each
Joint Venture is allocated solely to PSP VI until it recovers its
initial capital contribution. Thereafter, all depreciation and
amortization is allocated solely to PSI until it recovers its initial
capital contribution. All remaining depreciation and amortization is
allocated to PSP VI and PSI in proportion to their ownership
percentages.
F-19
<PAGE>
2. Summary of Significant Accounting Policies and Partnership Matters
------------------------------------------------------------------
(Continued)
-----------
Cash Distributions
------------------
The general partnership agreement of the Joint Venture
provides for regular distributions of cash flow from operations (as
defined).
Cash and Cash Equivalents
-------------------------
For financial statement purposes, the Joint Venture considers
all highly liquid investments purchased with a maturity of three months
or less to be cash equivalents.
Environmental Cost
------------------
Substantially all of the real estate facilities in which the
Joint Venture has an interest were acquired prior to the time that it
was customary to conduct extensive environmental investigations in
connection with the property acquisitions. During the fourth quarter of
1995, an independent environmental consulting firm completed
environmental assessments on the Joint Venture's properties to evaluate
the environmental condition of, and potential environmental liabilities
of such properties. Although there can be no assurance, the Joint
Venture is not aware of any environmental contamination of the
Mini-Warehouses which individually or in the aggregate would be
material to the Joint Venture's overall business, financial condition,
or results of operations.
Segment Reporting
-----------------
Effective January 1, 1998, the Joint Venture adopted SFAS No.
131, "Disclosure about Segments of an Enterprise and Related
Information." SFAS No. 131 established standards for the way public
business enterprises report information about operating segments in
annual financial statements and requires that those enterprises report
selected information about operating segments in interim financial
reports. SFAS No. 131 also establishes standards for related
disclosures about products and services, geographic areas and major
customers. The Joint Venture only has one reportable segment as defined
within SFAS No. 131, therefore the adoption of SFAS No. 131 had no
effect on the Joint Venture's disclosures.
Use of Estimates
----------------
The preparation of the financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
Derivatives
-----------
In June 1998, the Financial Accounting Standards Board issued
Statement No. 133, Accounting for Derivative Instruments and Hedging
Activities, which is required to be adopted in years beginning after
June 15, 2000. Management does not anticipate that the adoption of the
new Statement will have significant effect on earnings or the financial
position of the Partnership.
F-20
<PAGE>
3. Real Estate Facilities
----------------------
In 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121 ("Statement 121"),
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of." Statement 121 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.
Statement 121 also addresses the method of accounting for long-lived
assets that are expected to be disposed. The Joint Venture adopted
Statement 121 in 1996 and the adoption had no effect.
In January 1997, the Joint Venture, PSI and other affiliated
partnerships of PSI transferred a total of 35 business parks to PSBPLP,
an operating partnership formed to own and operate business parks in
which PSI has a significant interest. Included among the properties
transferred were the Joint Venture's business parks in exchange for a
partnership interest in PSBPLP. The general partner of PSBPLP is PS
Business Parks, Inc. ("PSBP").
4. Investment in real estate entity
--------------------------------
In 1999, 1998, and 1997, the Joint Venture recognized
$1,183,000, $1,047,000, and $734,000, respectively, in equity in
earnings of real estate entities with respect to the investment in
PSBPLP, described in Note 3 above.
The accounting policies of PSBPLP are similar to that of the
Joint Venture. Summarized combined financial data with respect to
PSBPLP is as follows:
1999 1998
------------ -----------
For the year ended December 31,
Total revenues $128,613,000 $90,260,000
Minority interest in income 16,110,000 11,208,000
Net income 41,255,000 29,400,000
At December 31,
Total assets, net of accumulated depreciation $903,741,000 $709,414,000
Total liabilities 58,261,000 66,494,000
Total minority interest 289,949,000 153,015,000
Total equity 555,531,000 489,905,000
The increase in the size of the combined financial position
and operating results, respectively, of the Real Estate Entity for the
year ended December 31, 1999 and at December 31, 1999, respectively, as
compared to prior periods, is the result of the additional properties
acquired by PSBPLP during 1998 and 1999.
PS Business Parks, Inc., which owns PSBPLP, is a registrant
with the Securities and Exchange Commission, and its filings can be
accessed through the Securities and Exchange Commission.
F-21
<PAGE>
5. Related Party Transactions
-------------------------
The Joint Venture has a management agreement with PSI whereby
PSI operates the Mini-Warehouses for a fee equal to 6% of the
facilities' monthly gross revenue (as defined).
In January 1997, the Joint Venture transferred its business
park facilities to PSBPLP in exchange for a partnership interest in
PSBPLP. PSI has a significant economic interest in PSBPLP and PSBP.
6. Leases
------
The Joint Venture has invested primarily in existing
mini-warehouse storage facilities which offer self-service storage
spaces for lease to the general public. Leases for such space are
usually on a month-to-month basis.
7. Taxes Based on Income
---------------------
Taxes based on income are the responsibility of PSP VI and PSI
and, accordingly, the Joint Venture's financial statements do not
reflect a provision for such taxes.
Unaudited taxable net income was $4,411,000, $4,620,000 and $5,283,000
for the years ended December 31, 1999, 1998 and 1997, respectively. The
difference between taxable income and book income is primarily related
to timing differences in depreciation expense.
F-22
<PAGE>
SEI/PSP VI JOINT VENTURES
A CALIFORNIA LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
Costs
Initial Cost subsequent
--------------------------------- to acquisition
Date Building & Building &
Acquired Description Encumbrances Land Improvement Improvements
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
4/86 St. Louis/Kirkham $- $199,000 $1,001,000 $235,000
4/86 St. Louis/Reavis - 192,000 958,000 230,000
6/86 Richland Hills - 543,000 857,000 450,000
5/86 Sacramento/Franklin Blvd. - 872,000 978,000 455,000
7/86 West LA/Purdue Ave. - 2,415,000 3,585,000 353,000
7/86 Capital Heights/Central Ave. - 649,000 3,851,000 375,000
10/86 Peralta/Fremont - 851,000 1,074,000 316,000
7/86 Pontiac/Dixie Hwy. - 259,000 2,091,000 110,000
8/86 Laurel/Ft. Meade Rd. - 475,000 1,475,000 304,000
9/86 Kansas City/S. 44th. - 509,000 1,906,000 498,000
10/86 Birmingham/Highland - 89,000 786,000 253,000
10/86 Birmingham/Riverchase - 262,000 1,338,000 442,000
10/86 Birmingham/Eastwood - 166,000 1,184,000 271,000
10/86 Birmingham/Forestdale - 152,000 948,000 252,000
10/86 Birmingham/Centerpoint - 265,000 1,305,000 282,000
10/86 Birmingham/Roebuck Plaza - 101,000 399,000 238,000
10/86 Birmingham/Greensprings - 347,000 1,173,000 382,000
10/86 Birmingham/Hoover-Lorna - 372,000 1,128,000 387,000
10/86 Midfield/Bessemer - 170,000 355,000 254,000
10/86 Huntsville/Leeman Ferry Rd. - 158,000 992,000 338,000
10/86 Huntsville/Drake - 253,000 1,172,000 293,000
10/86 Anniston/Whiteside - 59,000 566,000 200,000
10/86 Houston/Glenvista - 595,000 1,043,000 479,000
10/86 Houston/I-45 - 704,000 1,146,000 755,000
10/86 Houston/Rogerdale - 1,631,000 2,792,000 672,000
10/86 Houston/Gessner - 1,032,000 1,693,000 809,000
10/86 Houston/Richmond-Fairdale - 1,502,000 2,506,000 975,000
</TABLE>
<TABLE>
<CAPTION>
Gross Carrying Amount
At December 31, 1999
--------------------------------------------------------------
Date Building & Accumulated
Acquired Description Land Improvements Total Depreciation
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
4/86 St. Louis/Kirkham $199,000 $1,236,000 $1,435,000 $668,000
4/86 St. Louis/Reavis 192,000 1,188,000 1,380,000 651,000
6/86 Richland Hills 543,000 1,307,000 1,850,000 754,000
5/86 Sacramento/Franklin Blvd. 872,000 1,433,000 2,305,000 805,000
7/86 West LA/Purdue Ave. 2,415,000 3,938,000 6,353,000 2,126,000
7/86 Capital Heights/Central Ave. 649,000 4,226,000 4,875,000 2,285,000
10/86 Peralta/Fremont 851,000 1,390,000 2,241,000 740,000
7/86 Pontiac/Dixie Hwy. 259,000 2,201,000 2,460,000 1,183,000
8/86 Laurel/Ft. Meade Rd. 475,000 1,779,000 2,254,000 940,000
9/86 Kansas City/S. 44th. 509,000 2,404,000 2,913,000 1,331,000
10/86 Birmingham/Highland 89,000 1,039,000 1,128,000 551,000
10/86 Birmingham/Riverchase 262,000 1,780,000 2,042,000 1,002,000
10/86 Birmingham/Eastwood 166,000 1,455,000 1,621,000 784,000
10/86 Birmingham/Forestdale 152,000 1,200,000 1,352,000 630,000
10/86 Birmingham/Centerpoint 265,000 1,587,000 1,852,000 842,000
10/86 Birmingham/Roebuck Plaza 101,000 637,000 738,000 352,000
10/86 Birmingham/Greensprings 347,000 1,555,000 1,902,000 828,000
10/86 Birmingham/Hoover-Lorna 372,000 1,515,000 1,887,000 794,000
10/86 Midfield/Bessemer 170,000 609,000 779,000 329,000
10/86 Huntsville/Leeman Ferry Rd. 158,000 1,330,000 1,488,000 733,000
10/86 Huntsville/Drake 253,000 1,465,000 1,718,000 768,000
10/86 Anniston/Whiteside 59,000 766,000 825,000 426,000
10/86 Houston/Glenvista 595,000 1,522,000 2,117,000 851,000
10/86 Houston/I-45 704,000 1,901,000 2,605,000 1,159,000
10/86 Houston/Rogerdale 1,631,000 3,464,000 5,095,000 1,802,000
10/86 Houston/Gessner 1,032,000 2,502,000 3,534,000 1,394,000
10/86 Houston/Richmond-Fairdale 1,502,000 3,481,000 4,983,000 1,963,000
</TABLE>
F-23
<PAGE>
SEI/PSP VI JOINT VENTURES
A CALIFORNIA LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
Costs
Initial Cost subsequent
--------------------------------- to acquisition
Date Building & Building &
Acquired Description Encumbrances Land Improvement Improvements
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
10/86 Houston/Gulfton $- $1,732,000 $3,036,000 $1,061,000
10/86 Houston/Westpark - 503,000 854,000 256,000
10/86 Jonesboro - 157,000 718,000 269,000
----------------------------------------------------------------
$- $17,214,000 $42,910,000 $12,194,000
================================================================
</TABLE>
<TABLE>
<CAPTION>
Gross Carrying Amount
At December 31, 1999
--------------------------------------------------------------
Date Building & Accumulated
Acquired Description Land Improvements Total Depreciation
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
10/86 Houston/Gulfton $1,732,000 $4,097,000 $5,829,000 $2,378,000
10/86 Houston/Westpark 503,000 1,110,000 1,613,000 565,000
10/86 Jonesboro 157,000 987,000 1,144,000 525,000
----------------------------------------------------------------
$17,214,000 $55,104,000 $72,318,000 $30,159,000
================================================================
</TABLE>
F-24
<PAGE>
SEI/PSP VI JOINT VENTURES
A CALIFORNIA LIMITED PARTNERSHIP
REAL ESTATE RECONCILIATION
SCHEDULE III (CONTINUED)
(A) The following is a reconciliation of cost and related accumulated
depreciation.
<TABLE>
<CAPTION>
GROSS CARRYING COST RECONCILIATION
Years Ended December 31,
-----------------------------------------------------
1999 1998 1997
-----------------------------------------------------
<S> <C> <C> <C>
Balance at beginning of the period $ 71,534,000 $ 70,522,000 $ 90,082,000
Additions during the period:
Improvements, etc. 784,000 1,012,000 1,162,000
Deductions during the period:
Disposition of real estate - - (20,722,000)
-----------------------------------------------------
Balance at the close of the period $ 72,318,000 $ 71,534,000 $ 70,522,000
=====================================================
ACCUMULATED DEPRECIATION RECONCILIATION
Years Ended December 31,
-----------------------------------------------------
1999 1998 1997
-----------------------------------------------------
Balance at beginning of the period $ 27,083,000 $ 24,167,000 $ 27,963,000
Additions during the period:
Depreciation 3,076,000 2,916,000 2,820,000
Deductions during the period:
Disposition of real estate - - (6,616,000)
-----------------------------------------------------
Balance at the close of the period $ 30,159,000 $ 27,083,000 $ 24,167,000
=====================================================
</TABLE>
(B) The aggregate cost of real estate for Federal income tax purposes is
$72,345,000.
F-25
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000773281
<NAME> PS PARTNERS VI, LTD.
<MULTIPLIER> 1
<CURRENCY> U.S. $
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 2,092,000
<SECURITIES> 0
<RECEIVABLES> 5,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,097,000
<PP&E> 3,291,000
<DEPRECIATION> (1,560,000)
<TOTAL-ASSETS> 35,177,000
<CURRENT-LIABILITIES> 132,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 35,045,000
<TOTAL-LIABILITY-AND-EQUITY> 35,177,000
<SALES> 0
<TOTAL-REVENUES> 3,586,000
<CGS> 0
<TOTAL-COSTS> 272,000
<OTHER-EXPENSES> 284,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,030,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,030,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,030,000
<EPS-BASIC> 16.30
<EPS-DILUTED> 16.30
</TABLE>
