-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TgjROFbLa8hkA6/ErK0slCKCBJH9xuyEJz6mtDyUJYB+d+7BZJYdvbZwFkrOZAZn fL4+g9rfM8GjteA1tYDoyw== 0000202953-08-000008.txt : 20081114 0000202953-08-000008.hdr.sgml : 20081114 20081113173254 ACCESSION NUMBER: 0000202953-08-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20080930 FILED AS OF DATE: 20081114 DATE AS OF CHANGE: 20081113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUBLIC STORAGE PROPERTIES LTD CENTRAL INDEX KEY: 0000202953 STANDARD INDUSTRIAL CLASSIFICATION: LESSORS OF REAL PROPERTY, NEC [6519] IRS NUMBER: 953196912 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08667 FILM NUMBER: 081186217 BUSINESS ADDRESS: STREET 1: 701 WESTERN AVE STREET 2: SUITE 200 CITY: GLENDALE STATE: CA ZIP: 91201-2397 BUSINESS PHONE: (818) 244-8080 MAIL ADDRESS: STREET 1: 701 WESTERN AVE STREET 2: SUITE 200 CITY: GLENDALE STATE: CA ZIP: 91201 10-Q 1 psp3_3q0810q.txt PUBLIC STORAGE PROPERTIES, LTD. 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the period ended September 30, 2008 ------------------ or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ---------------- to -----------------. Commission File Number 0-8667 ------ PUBLIC STORAGE PROPERTIES, LTD. ------------------------------- (Exact name of registrant as specified in its charter) California 95-3196921 ---------------------------------------- ------------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 701 Western Avenue, Glendale, California 91201-2349 ---------------------------------------- ------------------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (818) 244-8080. -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of "accelerated filer" and "large accelerated filer" in Rule 12b-2 of the Exchange Act. Large Accelerated Filer [ ] Accelerated Filer [ ] Non-accelerated Filer [X] Smaller Reporting Company [ ] The Registrant is a limited partnership and issues units representing ownership of limited partner interests, with a par value of $500.00 per unit. Number of units outstanding at November 13, 2008: 20,000. PUBLIC STORAGE PROPERTIES, LTD. INDEX Pages PART I. FINANCIAL INFORMATION (Item 3 not applicable) --------------------- Item 1. Financial Statements (Unaudited) Condensed Balance Sheets at September 30, 2008 and December 31, 2007 1 Condensed Statements of Income for the Three and Nine Months Ended September 30, 2008 and 2007 2 Condensed Statement of Partners' Equity for the Nine Months Ended September 30, 2008 3 Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2008 and 2007 4 Notes to Condensed Financial Statements 5 - 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 - 13 Item 4. Controls and Procedures 14 PART II. OTHER INFORMATION (Items 2 - 5 not applicable) ----------------- Item 1. Legal Proceedings 15 Item 1A. Risk Factors 15 - 18 Item 6. Exhibits 18 PUBLIC STORAGE PROPERTIES, LTD. CONDENSED BALANCE SHEETS September 30, December 31, 2008 2007 --------------- --------------- (Unaudited) ASSETS ------
Cash and cash equivalents $ 949,000 $ 559,000 Rent and other receivables 68,000 53,000 Real estate facilities, at cost: Buildings, land improvements and equipment 10,112,000 9,878,000 Land 2,476,000 2,476,000 --------------- --------------- 12,588,000 12,354,000 Less accumulated depreciation (9,412,000) (9,299,000) --------------- --------------- 3,176,000 3,055,000 Other assets 83,000 78,000 --------------- --------------- Total assets $ 4,276,000 $ 3,745,000 =============== =============== LIABILITIES AND PARTNERS' EQUITY -------------------------------- Accounts payable $ 191,000 $ 88,000 Deferred revenue 167,000 183,000 --------------- --------------- Total liabilities 358,000 271,000 Commitments and contingencies (Note 6) Partners' equity: Limited partners' equity, $500 per unit, 20,000 units authorized, issued and outstanding 2,909,000 2,579,000 General partners' equity 1,009,000 895,000 --------------- --------------- Total partners' equity 3,918,000 3,474,000 --------------- --------------- Total liabilities and partners' equity $ 4,276,000 $ 3,745,000 =============== ===============
See accompanying notes. 1 PUBLIC STORAGE PROPERTIES, LTD. CONDENSED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended Nine Months Ended September 30, September 30, ---------------------------------- --------------------------------- 2008 2007 2008 2007 -------------- -------------- -------------- --------------
REVENUES: Rental income $ 1,928,000 $ 1,875,000 $ 5,705,000 $ 5,486,000 Other income 106,000 30,000 195,000 110,000 -------------- -------------- -------------- -------------- 2,034,000 1,905,000 5,900,000 5,596,000 -------------- -------------- -------------- -------------- COSTS AND EXPENSES: Cost of operations 363,000 374,000 1,162,000 1,162,000 Management fees paid to affiliate 116,000 112,000 342,000 329,000 Depreciation 44,000 32,000 113,000 99,000 Administrative 12,000 12,000 68,000 71,000 -------------- -------------- -------------- -------------- 535,000 530,000 1,685,000 1,661,000 -------------- -------------- -------------- -------------- NET INCOME: $ 1,499,000 $ 1,375,000 $ 4,215,000 $ 3,935,000 ============== ============== ============== ============== Limited partners' share of net income $ 1,150,000 $ 1,002,000 $ 3,239,000 $ 2,696,000 General partners' share of net income 349,000 373,000 976,000 1,239,000 -------------- -------------- -------------- -------------- $ 1,499,000 $ 1,375,000 $ 4,215,000 $ 3,935,000 ============== ============== ============== ============== Limited partners' share of net income per unit (20,000 units outstanding) $ 57.50 $ 50.10 $ 161.95 $ 134.80 ============== ============== ============== ==============
See accompanying notes. 2 PUBLIC STORAGE PROPERTIES, LTD. CONDENSED STATEMENT OF PARTNERS' EQUITY (UNAUDITED) Limited General Total Partners' Partners' Partners' Equity ----------------- ----------------- -----------------
Balance at December 31, 2007 $ 2,579,000 $ 895,000 $ 3,474,000 Net income 3,239,000 976,000 4,215,000 Cash distributions (2,800,000) (971,000) (3,771,000) Equity transfer (109,000) 109,000 - ----------------- ----------------- ----------------- Balance at September 30, 2008 $ 2,909,000 $ 1,009,000 $ 3,918,000 ================= ================= =================
See accompanying notes. 3 PUBLIC STORAGE PROPERTIES, LTD. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended September 30, ------------------------------------ 2008 2007 --------------- ---------------
Cash flows from operating activities: Net income $ 4,215,000 $ 3,935,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 113,000 99,000 (Increase) decrease in rent and other receivables (15,000) 37,000 (Increase) decrease in other assets (5,000) 15,000 Increase in accounts payable 103,000 44,000 (Decrease) increase in deferred revenue (16,000) 8,000 --------------- --------------- Total adjustments 180,000 203,000 --------------- --------------- Net cash provided by operating activities 4,395,000 4,138,000 --------------- --------------- Cash flows from investing activities: Additions to real estate facilities (234,000) (73,000) --------------- --------------- Net cash used in investing activities (234,000) (73,000) --------------- --------------- Cash flows from financing activities: Distributions paid to partners (3,771,000) (4,848,000) --------------- --------------- Net cash used in financing activities (3,771,000) (4,848,000) --------------- --------------- Net increase (decrease) in cash and cash equivalents 390,000 (783,000) Cash and cash equivalents at the beginning of the period 559,000 1,483,000 --------------- --------------- Cash and cash equivalents at the end of the period $ 949,000 $ 700,000 =============== ===============
See accompanying notes. 4 PUBLIC STORAGE PROPERTIES, LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 1. DESCRIPTION OF THE BUSINESS Public Storage Properties, Ltd. (the "Partnership") is a publicly held limited partnership formed under the California Uniform Limited Partnership Act in November 1976. The Partnership raised $10,000,000 in gross proceeds by selling 20,000 units of limited partnership interest ("Units") in an interstate offering, which commenced in October 1977 and completed in January 1978. The general partners in the Partnership are Public Storage, formerly Public Storage, Inc., ("PS") and B. Wayne Hughes ("Hughes"). The Partnership was formed to engage in the business of developing and operating self-storage facilities for personal and business use. The Partnership owns nine self-storage facilities located in California. The accompanying unaudited condensed financial statements have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") on the same basis as our audited annual financial statements and, in our opinion reflect all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial information set forth therein. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although we believe that the following disclosures, when read in conjunction with the audited financial statements and notes thereto as of December 31, 2007, are adequate to make the information presented not misleading. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PARTNERSHIP MATTERS Use of Estimates: ----------------- The preparation of the financial statements in conformity with U.S. generally accepted accounting principles 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. Revenue and Expense Recognition: -------------------------------- Rental income, which is generally earned pursuant to month-to-month leases for storage space, is recognized as earned. Promotional discounts are recognized as a reduction to rental income over the promotional period, which is generally during the first month of occupancy. Late charges and administrative fees are recognized as income when collected. Interest income is recognized as earned. We accrue for property tax expense based upon estimates and historical trends. If these estimates are incorrect, the timing of expense recognition could be affected. Cost of operations, general and administrative expense, as well as television, yellow page, and other advertising expenditures are expensed as incurred. Allocation of Net Income: ------------------------- The general partners' share of net income consists of amounts attributable to their 1% capital contribution and an additional percentage of cash flow (as defined) which relates to the general partners' share of cash distributions as set forth in the Partnership Agreement (Note 4). All remaining net income is allocated to the limited partners. 5 PUBLIC STORAGE PROPERTIES, LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) Per unit data is based on the weighted average number of the limited partnership units (20,000) outstanding during the period. Cash and Cash Equivalents: -------------------------- For financial statement purposes, the Partnership considers all highly liquid financial instruments such as short-term treasury securities or investment grade short-term commercial paper with remaining maturities of three months or less at the date of acquisition to be cash equivalents. Real Estate Facilities and Evaluation of Asset Impairment: ---------------------------------------------------------- Real estate facilities are recorded at cost. Costs associated with the development, construction, renovation and improvement of properties are capitalized. Interest, property taxes, and other costs associated with the development incurred during the construction period are capitalized as building cost. Expenditures for repairs and maintenance are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the buildings and improvements, which are generally between 5 and 25 years. At September 30, 2008, all of the real estate facilities have been in service longer than 25 years, and accordingly the original development cost of such buildings is fully depreciated at September 30, 2008. We evaluate our real estate for impairment on a quarterly basis. We first evaluate these assets for indicators of impairment such as a) a significant decrease in the market price of real estate, b) a significant adverse change in the extent or manner in which real estate is being used or in its physical condition, c) a significant adverse change in legal factors or the business climate that could affect the value of the real estate, d) an accumulation of costs significantly in excess of the amount originally projected for the acquisition of or construction of the real estate, or e) a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of the real estate. When any such indicators of impairment are noted, we compare the carrying value of the real estate to the future estimated undiscounted cash flows attributable to the real estate. If the real estate's recoverable amount is less than the related carrying value, then an impairment charge is booked for the excess of carrying value over the real estate's estimated fair value. Our evaluations have identified no such impairments at September 30, 2008. Any real estate facility, which we expect to sell or dispose of prior to its previously estimated useful life is stated at the lower of its estimated net realizable value, less cost to sell, or its carrying value. Accounting for Casualty Losses: ------------------------------- Our policy is to record casualty losses or gains in the period the casualty occurs equal to the difference between (a) the book value of assets destroyed and (b) insurance proceeds, if any, that we expect to receive in accordance with our insurance contracts. Potential insurance proceeds that are subject to uncertainties, such as interpretation of deductible provisions of the governing agreements or the estimation of costs of restoration, are treated as a contingent proceeds in accordance with Statement of Financial Accounting Standards No. 5 ("SFAS 5"), and not recorded until the uncertainties are satisfied. Deferred Revenue: ----------------- Deferred revenue totaling $167,000 at September 30, 2008 ($183,000 at December 31, 2007), consists of prepaid rents, which are recognized when earned. 6 PUBLIC STORAGE PROPERTIES, LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) Environmental Cost: ------------------- The Partnership's policy is to accrue environmental assessments and/or remediation costs when it is probable that such efforts will be required and the related costs can be reasonably estimated. Although there can be no assurance, we are not aware of any environmental contamination at any of our facilities, which, individually or in the aggregate, would be material to our overall business, financial condition or results of operations. Income Taxes: ------------- Public Storage Properties, Ltd. is treated as a partnership for federal and state income tax purposes with the taxable income of the entity allocated to each partner in accordance with the partnership agreement. Accordingly no federal income tax expense is recorded by the Partnership. Recent Accounting Pronouncements and Guidance: ---------------------------------------------- As of November 13, 2008, there have been no recent accounting pronouncements and guidance, which were not effective for implementation prior to September 30, 2008, that would have a material impact upon reporting the operations or financial position of the Partnership. Segment Reporting: ------------------ The Partnership only has one reportable segment as defined within Statement of Financial Accounting Standards No. 131. 3. CASH DISTRIBUTIONS The Partnership Agreement requires that cash available for distribution (cash flow from all sources less cash necessary for any obligations or capital improvements) needs to be distributed at least quarterly. During the three months ended September 30, 2008, we paid distributions to the limited and general partners totaling $1,000,000 ($50.00 per unit) and $347,000, respectively. During the nine months ended September 30, 2008, we paid distributions to the limited and general partners totaling $2,800,000 ($140.00 per unit) and $971,000, respectively. Future distribution rates may be adjusted to levels which are supported by operating cash flow after capital improvements and any other obligations. 4. PARTNERS' EQUITY PS and Hughes are general partners of the Partnership. In 1995, Hughes contributed his ownership and rights to distributions from the Partnership to BWH Marina Corporation II, a corporation wholly-owned by Hughes. In 2002, BWH Marina Corporation II sold its interests to H-G Family Corporation. As such, Mr. Hughes continues to act as a general partner but receives no direct compensation or other consideration from the Partnership. The general partners have a 1% interest in the Partnership. In addition, the general partners have an 8% interest in cash distributions attributable to operations (exclusive of distributions attributable to sale and financing proceeds until the limited partners recover all of their initial investment). Thereafter, the general partners have a 25% interest in all cash distributions (including sale and financing proceeds). In 1985, the limited partners recovered all of their initial investment. All subsequent cash distributions are being made 25.75% (including the 1% interest) to the general partners and 74.25% to the limited partners. Transfers of equity are made periodically to reconcile the partners' equity accounts to the provisions of the Partnership Agreement. These transfers have no effect on the results of operations or distributions to partners. 7 PUBLIC STORAGE PROPERTIES, LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 5. RELATED PARTY TRANSACTIONS Management Agreement and Shared Expenses with PS: ------------------------------------------------- The Partnership has a Management Agreement with PS pursuant to which PS operates the self-storage facilities for a fee equal to 6% of the facilities' gross revenue (as defined). For the three and nine months ended September 30, 2008, the Partnership paid PS $116,000 and $342,000, respectively, and $112,000 and $329,000 for the same periods in 2007, respectively, under this Management Agreement. The Management Agreement between the Partnership and PS provides that the Management Agreement may be terminated without cause upon 60 days written notice by the Partnership or nine months notice by PS. The Partnership's facilities, along with facilities owned by PS and its affiliates, are managed and marketed jointly by PS in order to take advantage of scale and other efficiencies. As a result, significant components of cost of operations, such as payroll costs, advertising and promotion, data processing and insurance expenses are shared and allocated among the properties using methodologies meant to fairly allocate such costs based upon the related activities. The total of such expenses, substantially all of which are included in cost of operations in our accompanying condensed statements of income, amounted to $159,000 and $177,000 for the three months ended September 30, 2008 and 2007, respectively. For the nine months ended September 30, 2008 and 2007, the total of such expenses were $572,000 and $599,000, respectively. Ownership Interest by the General Partners ------------------------------------------ PS owns 6,169 Limited Partnership Units ("Units"), as to which PS has sole voting and dispositive power. Hughes and members of his family (the "Hughes Family") own 6,105 Units. Hughes owns 6,025 Units, as to which Hughes has sole voting and dispositive power, through a wholly-owned corporation and Tamara Hughes Gustavson, an adult daughter of Hughes, owns 80 Units as to which Tamara Hughes Gustavson has sole voting and dispositive power. PS has an option to acquire 25 of the Units held by Hughes and the 80 Units held by Tamara Hughes Gustavson. PS intends to exercise its option to acquire these Units before the end of 2008. In addition, there are 196 Units owned by PS Orangeco Partnerships, Inc., a corporation in which Hughes Family owns approximately 48% of the voting stock, PS owns 46% and members of PS's management and related individuals own approximately 6%. Captive Insurance Activities with PS ------------------------------------ The Partnership has a 0.9% ownership interest in STOR-Re Mutual Insurance Corporation ("STOR-Re"), which was formed in 1994 as an association captive insurance company, and is controlled by PS. The Partnership accounts for its investment in STOR-Re, which is included in other assets, on the accompanying condensed balance sheets, on the cost method, and has received no distributions during the nine months ended September 30, 2008. STOR-Re provides limited property and liability insurance coverage to the Partnership, PS, and affiliates for losses occurring before April 1, 2004. STOR-Re was succeeded with respect to these activities for losses occurring after March 31, 2004 by a wholly owned subsidiary of PS (collectively, this entity and STOR-Re are referred to as the "Captive Entities"). Liabilities for losses and loss adjustment expenses include an amount determined from loss reports and individual cases and an amount, 8 PUBLIC STORAGE PROPERTIES, LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) based on recommendations from an outside actuary that is a member of the American Academy of Actuaries, using a frequency and severity method, for losses incurred but not reported. Determining the liability for unpaid losses and loss adjustment expense is based upon estimates and while we believe that the amount is adequate, the ultimate loss may be in excess of or less than the amounts provided. The methods for making such estimates and for establishing the resulting liability are reviewed quarterly. Other Activities with PS ------------------------ PS owns PS Insurance Company - Hawaii, Ltd. ("PSIC"), a corporation that reinsures policies against losses to goods stored by tenants in the Partnership's and PS' storage facilities. PSIC receives the premiums and bears the risks associated with the re-insurance. The Partnership receives a fee (an "Access Fee") from PSIC in return for providing access to the tenants for the placement of insurance policies. This Access Fee is based on the number of spaces the Partnership has to rent. Included in other income on our accompanying statements of income for these Access Fees are $99,000 and $14,000 for the three months ended September 30, 2008 and 2007, respectively, and $160,000 and $43,000 for the nine months ended September 30, 2008 and 2007, respectively. Such Access Fees for the three and nine months ended September 30, 2008 include additional Access Fees paid by PSIC totaling $34,000 for amounts earned in the year ended December 31, 2007, and $23,000 for amounts earned in the six months ended June 30, 2008. These additional Access Fees were paid in the three months ended September 30, 2008 as a result of a change in PSIC's accounting estimates which determine such fees. A subsidiary of PS sells locks and boxes and rents trucks to the general public and tenants to be used in securing their spaces and moving their goods. The subsidiary of PS receives the revenues and bears the cost of the activities. 6. COMMITMENTS AND CONTINGENCIES Legal Proceedings: ------------------ Brinkley v. Public Storage, Inc. (filed April 2005) (Superior Court of --------------------------------------------------------------------------- California - Los Angeles County) -------------------------------- The plaintiff sued PS on behalf of a purported class of California non-exempt employees based on various California wage and hour laws and seeking monetary damages and injunctive relief. In May 2006, a motion for class certification was filed seeking to certify five subclasses. Plaintiff sought certification for alleged meal period violations, rest period violations, failure to pay for travel time, failure to pay for mileage reimbursement, and for wage statement violations. In October 2006, the Court declined to certify three out of the five subclasses. The Court did, however, certify subclasses based on alleged meal period and wage statement violations. Subsequently, PS filed a motion for summary judgment seeking to dismiss the matter in its entirety. On June 22, 2007, the Court granted the PS' summary judgment motion as to the causes of action relating to the subclasses certified and dismissed those claims. The only surviving claims are those relating to the named plaintiff. The plaintiff has filed an appeal to the Court's June 22, 2007 summary judgment ruling. On October 28, 2008, the Court of Appeals sustained the trial court's ruling. Other Items ----------- PS and the Partnership are a party to various claims, complaints, and other legal actions that have arisen in the normal course of business from time to time, that are not described above. We believe that it is unlikely that the outcome of these other pending legal proceedings including employment and tenant claims, in the aggregate, will have a material adverse effect upon the operations or financial position of the Partnership. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS ------------------------------------------------------------------------ OF OPERATIONS ------------- The following should be read in conjunction with the Partnership's condensed financial statements and notes thereto. Forward Looking Statements: This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. All statements in this document, other than statements of historical fact, are forward-looking statements which may be identified by the use of the words "expects," "believes," "anticipates," "plans," "would," "should," "may," "estimates" and similar expressions. These forward-looking statements involve known and unknown risks and uncertainties, which may cause Public Storage Properties, Ltd.'s (the "Partnership") actual results and performance to be materially different from those expressed or implied in the forward-looking statements. As a result, you should not rely on any forward-looking statements in this report, or which management may make orally or in writing from time to time, as predictions of future events nor guarantees of future performance. We caution you not to place undue reliance on forward-looking statements, which speak only as the date of this report or as of the dates indicated in the statements. All of our forward-looking statements, including those in this report, are qualified in their entirely by this statement. We expressly disclaim any obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, new estimates, or other factors, events or circumstances after the date of this document, except where expressly required by law. Accordingly, you should use caution in relying on past forward-looking statements to anticipate future results. Factors and risks that may impact our future results and performance include, but are not limited to, those described in Item 1A, "Risk Factors" and in our other filings with the Securities and Exchange Commission. ("SEC"). These risks include, among others, the following: o general risks associated with the ownership and operation of real estate including changes in demand, potential liability for environmental contamination, adverse changes in tax, real estate and zoning laws and regulations, and the impact of natural disasters; o risks associated with downturns in the local economies in the markets in which we operate; o the impact of competition from new and existing self-storage and commercial facilities and other storage alternatives; o the impact of the regulatory environment as well as national, state, and local laws and regulations; o disruptions or shutdowns of our automated processes and systems; and o economic uncertainty due to the impact of war or terrorism. The risks included here are not exhaustive as it is not possible for management to predict all possible risk factors that may exist or emerge from time to time. Investors should refer to our future reports and other information filed from time to time with the SEC for additional information. OVERVIEW - -------- The self-storage industry is highly fragmented and is composed predominantly of numerous local and regional operators. Competition in the markets in which we operate is significant and has increased over the past several years due to additional development of self-storage facilities. We believe that the increase in competition has had a negative impact to the Partnership's occupancy levels and rental rates in many markets. However, we believe that the Partnership's affiliation with Public Storage ("PS") provides several distinguishing characteristics that enable the Partnership to compete effectively with other owners and operators. 10 PS is the largest owner and operator of self-storage facilities in the United States ("U.S."). All of the PS facilities in the U.S. are operated under the "Public Storage" brand name, which we believe is the most recognized and established name in the self-storage industry. Market concentration establishes PS as one of the dominant providers of self-storage space in most markets in which PS operates and enables PS to use a variety of promotional activities, such as television advertising as well as targeted discounting and referrals, which are generally not economically viable to most competitors of PS, as well as more substantial, well-placed yellow page advertisements than can many of its competitors. We will continue to focus our growth strategies on improving the operating performance of our existing self-storage properties primarily through increases in revenues achieved through the telephone reservation center and associated marketing efforts. We expect potential future increases in rental income to come primarily from increases in realized rent rather than increases in occupancy, although there can be no assurance. CRITICAL ACCOUNTING POLICIES ---------------------------- IMPAIRMENT OF REAL ESTATE Substantially all of our assets consist of real estate. On a quarterly basis, we evaluate our real estate for impairment. The evaluation of real estate for impairment requires determining whether indicators of impairment exist, which is a subjective process. When any indicators of impairment are found, the evaluation then entails projections of future operating cash flows, which also involves significant judgment. We identified no such impairments at September 30, 2008. However, future events, or facts and circumstances that currently exist, that we have not yet identified, could cause us to conclude in the future that our real estate is impaired. Any resulting impairment loss could have a material adverse impact on our financial condition and results of operations. ESTIMATED USEFUL LIVES OF LONG-LIVED ASSETS Substantially all of our assets consist of depreciable, long-lived assets. We record depreciation expense with respect to these assets based upon their estimated useful lives. Any change in the estimated useful lives of those assets, caused by functional or economic obsolescence or other factors, could have a material adverse impact on our financial condition or results of operations. ACCRUALS FOR CONTINGENCIES We are exposed to business and legal liability risks with respect to events that have occurred, but in accordance with U.S. generally accepted accounting principles, we have not accrued for such potential liabilities because the loss is either not probable or not estimable or because we are not aware of the event. Future events and the result of pending litigation could result in such potential losses becoming probable and estimable, which could have a material, adverse impact on our financial condition or results of operations. Some of these potential losses, which we are aware of, are described in Notes 5 and 6 to the Partnership's September 30, 2008 condensed financial statements. ACCRUALS FOR OPERATING EXPENSES We accrue for property tax expense and other operating expenses based upon estimates and historical trends and current and anticipated local and state government rules and regulations. If these estimates and assumptions are incorrect, our expenses could be misstated. Cost of operations, general and administrative expense, as well as television, yellow page, and other advertising expenditures are expensed as incurred. 11 RESULTS OF OPERATIONS - --------------------- THREE MONTHS ENDED SEPTEMBER 30, 2008 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2007: The Partnership's net income for the three months ended September 30, 2008 was $1,499,000 compared to $1,375,000 for the three months ended September 30, 2007, representing an increase of $124,000 or 9.0%. Rental income for the three months ended September 30, 2008 was $1,928,000 compared to $1,875,000 for the three months ended September 30, 2007, representing an increase of $53,000 or 2.8%. The increase in rental income was a result of improvements in realized rent per square foot and in occupancies. Weighted average occupancy levels at the self-storage facilities were 92.0% and 90.4% for the three months ended September 30, 2008 and 2007, respectively. Annual realized rent for the three months ended September 30, 2008 increased to $16.21 per occupied square foot, as compared to $16.11 per occupied square foot for the three months ended September 30, 2007. Other income was $106,000 for the three months ended September 30, 2008, as compared to $30,000 for the same period in 2007. Included in other income for the three months ended September 30, 2008 are additional access fees paid by PS Insurance Company - Hawaii, Ltd. ("PSIC"), a corporation owned by PS (described more fully in Note 5 to the Partnership's September 30, 2008 condensed financial statements). Included in other income on our accompanying statements of income for these access fees are $99,000 and $14,000 for the three months ended September 30, 2008 and 2007, respectively, and $160,000 and $43,000 for the nine months ended September 30, 2008 and 2007, respectively. Such access fees for the three and nine months ended September 30, 2008 include additional access fees paid by PSIC totaling $34,000 for amounts earned in the year ended December 31, 2007, and $23,000 for amounts earned in the six months ended June 30, 2008. These additional access fees were paid in the three months ended September 30, 2008 as a result of a change in PSIC's accounting estimates which determine such fees. Cost of operations, including management fees paid to an affiliate, (see Note 5 to the Partnership's September 30, 2008 condensed financial statements) for the three months ended September 30, 2008 was $479,000 compared to $486,000 for the three months ended September 30, 2007, representing a decrease of $7,000 or 1.4%. For the three months ended September 30, 2008, advertising and promotion expenses decreased by $10,000 or 16.9% compared to the same period in 2007. This decrease is due to a significant reduction in television advertising as compared to the same period in 2007. Also during the three months ended September 30, 2008, payroll, property taxes, office and insurance expenses decreased compared to the same period in 2007, offset by increases in repairs and maintenance and utilities expenses. Depreciation expense was $44,000 and $32,000 for the three months ended September 30, 2008 and 2007, respectively. NINE MONTHS ENDED SEPTEMBER 30, 2008 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2007: The Partnership's net income for the nine months ended September 30, 2008 was $4,215,000 compared to $3,935,000 for the nine months ended September 30, 2007, representing an increase of $280,000 or 7.1%. Rental income for the nine months ended September 30, 2008 was $5,705,000 compared to $5,486,000 for the nine months ended September 30, 2007, representing an increase of $219,000 or 4.0%. The increase in rental income was a result of improvements in realized rent per square foot and in occupancies. Weighted average occupancy levels at the self-storage facilities were 91.9% and 90.5% for the nine months ended September 30, 2008 and 2007, respectively. Annual realized rent for the nine months ended September 30, 2008 increased to $16.04 per occupied square foot, as compared to $15.71 per occupied square foot for the nine months ended September 30, 2007. Other income was $195,000 for the nine months ended September 30, 2008, as compared to $110,000 for the same period in 2007. Included in other income for the nine months ended September 30, 2008 are additional access fees paid by PSIC 12 totaling $34,000 for amounts earned in the year ended December 31, 2007, and $23,000 for amounts earned in the six months ended June 30, 2008, as noted above. Cost of operations, including management fees paid to an affiliate, (see Note 5 to the Partnership's September 30, 2008 condensed financial statements) for the nine months ended September 30, 2008 was $1,504,000 compared to $1,491,000 for the nine months ended September 30, 2007, representing an increase of $13,000 or 0.9%. For the nine months ended September 30, 2008, increases in utilities, repairs and maintenance and management fee expenses were mostly offset by reductions in insurance, advertising and promotion and offices expenses. Depreciation expense was $113,000 and $99,000 for the nine months ended September 30, 2008 and 2007, respectively. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Cash generated from operations ($4,395,000 for the nine months ended September 30, 2008) has been sufficient to meet all current obligations of the Partnership. Capital improvements totaled $234,000 and $73,000 for the nine months ended September 30, 2008 and 2007, respectively. The Partnership does not anticipate issuing senior securities, making loans to other persons, investing in the securities of other issuers for the purpose of exercising control, underwriting the securities of other issuers, engaging in the purchase and sale of investments, offering securities in exchange for property, or repurchasing or otherwise reacquiring its outstanding securities. The Partnership may consider borrowing money with the intent of using the proceeds for distribution to partners. As of September 30, 2008, the Partnership has no debt and none of the Partnership's self-storage facilities are encumbered. DISTRIBUTIONS The Partnership Agreement requires that cash available for distribution (cash flow from all sources less cash necessary for any obligations or capital improvement needs) be distributed at least quarterly. We paid distributions to the limited and general partners totaling $1,000,000 ($50.00 per unit) and $347,000, respectively, for the three months ended September 30, 2008. During the nine months ended September 30, 2008, we paid distributions to the limited and general partners totaling $2,800,000 ($140.00 per unit) and $971,000, respectively. Future distribution rates may be adjusted to levels which are supported by operating cash flow after capital improvements and any other necessary obligations. 13 ITEM 4. CONTROLS AND PROCEDURES ----------------------- Public Storage maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports the Partnership files and submits under the Securities Exchange Act of 1934, as amended, ("Exchange Act") is recorded, processed, summarized and reported within the time periods specified in accordance with SEC guidelines and that such information is communicated to the Partnership's management, including Public Storage's Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure based on the definition of "disclosure controls and procedures" in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures in reaching that level of reasonable assurance. As of the end of the fiscal quarter covered by this report, Public Storage carried out an evaluation, under the supervision and with the participation of the Partnership's management, including Public Storage's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Partnership's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on that evaluation, Public Storage's Chief Executive Officer and Chief Financial Officer concluded that the Partnership's disclosure controls and procedures were effective. There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter to which this report relates that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting. 14 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS ----------------- The information set forth under the heading "Legal Proceedings" in Note 6 to our September 30, 2008 condensed financial statements in this Form 10-Q is incorporated by reference in this Item 1. ITEM 1A. RISK FACTORS ------------ In addition to the other information in this Quarterly Report on Form 10-Q, you should consider the risks described below that we believe may be material to investors in evaluating the Partnership. This section contains forward-looking statements, and in considering these statements, you should refer to the qualifications and limitations on our forward-looking statements that are described in Forward Looking Statements at the beginning of Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. THE GENERAL PARTNERS CONTROL THE PARTNERSHIP AS A GROUP. Public Storage is a general partner and beneficially owns approximately 31.4% of our outstanding limited partnership units. In addition, B. Wayne Hughes, General Partner of the Partnership, and Chairman of PS and members of his family beneficially own 31.5% of the limited partnership units. As a result, the General Partners, as a group, control matters submitted to a vote of our unitholders, including amending our organizational documents, dissolving the Partnership and approving other such transactions. SINCE OUR BUSINESS CONSISTS PRIMARILY OF OPERATING REAL ESTATE, WE ARE SUBJECT TO REAL ESTATE OPERATING RISKS. The value of our investments may be reduced by general risks of real estate ownership. Since we derive substantially all of our income from real estate operations, we are subject to the general risks of owning real estate-related assets, including: o lack of demand for rental spaces or units in a locale; o changes in general economic or local conditions; o natural disasters, such as earthquakes; o potential terrorist attacks; o changes in supply of or demand for similar or competing facilities in an area; o the impact of environmental protection laws; o changes in interest rates and availability of permanent mortgage funds which may render the sale or financing of a property difficult or unattractive; o increases in insurance premiums, property tax assessments and other operating and maintenance expenses; o adverse changes in tax, real estate and zoning laws and regulations; and o tenant and employment-related claims. There is significant competition among self-storage facilities and from other storage alternatives. All of our properties are self-storage facilities, 15 which generated substantially all of our revenue for the nine month period ended September 30, 2008. Local market conditions will play a significant part in how competition will affect us. Competition in the market areas in which many of our properties are located from other self-storage facilities and other storage alternatives is significant and has affected the occupancy levels, rental rates and operating expenses of our properties. Any increase in availability of funds for investment in real estate may accelerate competition. Further development of self-storage facilities may intensify competition among operators of self-storage facilities in the market areas in which we operate. We may incur significant environmental costs and liabilities. As an owner and operator of real properties, under various federal, state and local environmental laws, we are required to clean up spills or other releases of hazardous or toxic substances on or from our properties. Certain environmental laws impose liability whether or not the owner knew of, or was responsible for, the presence of the hazardous or toxic substances. In some cases, liability may not be limited to the value of the property. The presence of these substances, or the failure to properly remediate any resulting contamination, whether from environmental or microbial issues, also may adversely affect the owner's or operator's ability to sell, lease or operate its property or to borrow using its property as collateral. We have conducted preliminary environmental assessments on the Partnership's properties to evaluate the environmental condition of, and potential environmental liabilities associated with, our properties. These assessments generally consist of an investigation of environmental conditions at the property (not including soil or groundwater sampling or analysis), as well as a review of available information regarding the site and publicly available data regarding conditions at other sites in the vicinity. In connection with these property assessments, we have become aware that prior operations or activities at some facilities or from nearby locations have or may have resulted in contamination to the soil or groundwater at these facilities. In this regard, some of our facilities are or may be the subject of federal or state environment investigations or remedial actions. Although we cannot provide any assurance, based on the preliminary environmental assessments, we believe we have funds available to cover any liability from environmental contamination or potential contamination and we are not aware of any environmental contamination of our facilities material to our overall business, financial condition or results of operation. There has been an increasing number of claims and litigation against owners and managers of rental properties relating to moisture infiltration, which can result in mold or other property damage. When we receive a complaint concerning moisture infiltration, condensation or mold problems and/or become aware that an air quality concern exists, we implement corrective measures in accordance with guidelines and protocols we have developed with the assistance of outside experts. We seek to work proactively with our tenants to resolve moisture infiltration and mold-related issues, subject to our contractual limitations on liability for such claims. However, we can provide no assurance that material legal claims relating to moisture infiltration and the presence of, or exposure to, mold will not arise in the future. Property taxes can increase and cause a decline in cash flows and profitability. Each of our properties is subject to real property taxes. These taxes may increase in the future as property tax rates or assessed property values change, and any such rate or assessment changes could increase tax expense and adversely impact our cash flow and profitability. All of the Partnership's properties, which are located in California, are assessed at amounts significantly lower than their current fair value, due primarily to long-standing statutory limits on annual increases to assessed values. There is a risk that these assessments could be increased to fair value in certain circumstances, such as i) changes in laws, regulations, or changes in interpretations thereof, or ii) changes in ownership of the Partnership's limited partner units or general partner units that could constitute a change in control (as that termed is defined by the applicable law) of the underlying properties. We must comply with the Americans with Disabilities Act and fire and safety regulations, which can require significant expenditures. All our properties must comply with the Americans with Disabilities Act and with related regulations (the "ADA"). The ADA has separate compliance requirements for "public accommodations" and "commercial facilities," but generally requires that buildings be made accessible to persons with disabilities. Various state laws impose similar requirements. A failure to comply with the ADA or similar state laws could result in government imposed fines on us and the award of damages to individuals affected by the failure. In addition, we must operate our properties in compliance with numerous local fire and safety regulations, building codes, and other land use regulations. Compliance with these requirements can require 16 us to spend substantial amounts of money, which would reduce cash otherwise available for distribution to shareholders. Failure to comply with these requirements could also affect the marketability of our real estate facilities. We incur liability from tenant and employment-related claims. From time to time we must resolve tenant claims and employment-related claims by corporate level and field personnel. PUBLIC STORAGE'S ACQUISITION OF SHURGARD OR OTHER POTENTIAL ACQUISITIONS OR DEVELOPMENT OF PROPERTIES MAY SUBJECT THE PARTNERSHIP TO ADDITIONAL RISKS. In August 2006, Public Storage completed the acquisition of Shurgard Storage Centers, Inc. ("Shurgard"), a publicly held REIT that had interests in approximately 646 self-storage facilities located in the United States ("U.S.") and Europe and acquires and develops other real estate facilities as part of its ongoing operations. Such acquisitions, including the Shurgard merger, do not change the financial interests of the Partnership. However, because the self-storage facilities of the Partnership and Public Storage are managed by Public Storage, together with the newly acquired self-storage facilities, individual Partnership properties may experience a decrease in move-ins, reductions to rental rates, increases to promotional discounts, or other negative impacts to revenues in the short and/or long term due to the competitive impact of Public Storage management of the newly acquired facilities, particularly with respect to those facilities that are close to the Partnership's facilities. SOME OF OUR REVENUES INVOLVE BUSINESSES THAT ARE SUBJECT TO GOVERNMENTAL REGULATION WHICH COULD REDUCE OUR PROFITABILITY OR LIMIT OUR GROWTH. We receive revenues related to the offering of insurance products to our tenants. These products are offered through an affiliate of PS, which holds Limited Lines Self Storage Insurance Agent licenses from a number of individual state Departments of Insurance and are subject to state governmental regulation and supervision. This state governmental supervision could reduce our profitability or limit our growth by increasing the costs of regulatory compliance, limiting or restricting the products or services we provide or the methods by which we provide products and services, or subjecting our businesses to the possibility of regulatory actions or proceedings. The continued ability of this affiliate to maintain these Limited Lines Self Storage Insurance Agent licenses in the jurisdictions in which it is licensed depends on its compliance with the rules and regulations promulgated from time to time by the regulatory authorities in each of these jurisdictions. Furthermore, state insurance departments may investigate insurance activities. In all jurisdictions, the applicable laws and regulations are subject to amendment or interpretation by regulatory authorities. Generally, such authorities are vested with relatively broad discretion to grant, renew and revoke licenses and approvals and to implement regulations. Accordingly, this affiliate may be precluded or temporarily suspended from carrying on some or all of these activities or otherwise fined or penalized in a given jurisdiction. No assurances can be given that our businesses can continue to be conducted in any given jurisdiction as it has been conducted in the past. For the year ended December 31, 2007, revenues from our tenant reinsurance business represented approximately 1.4% of our 2007 revenues. For the three and nine months ended September 30, 2008, revenues from our tenant reinsurance business represented approximately 5.4% and 3.1% of revenues, respectively. TERRORIST ATTACKS AND THE POSSIBILITY OF WIDER ARMED CONFLICT MAY HAVE AN ADVERSE IMPACT ON OUR BUSINESS AND OPERATING RESULTS AND COULD DECREASE THE VALUE OF OUR ASSETS. Terrorist attacks and other acts of violence or war, such as those that took place on September 11, 2001, could have a material adverse impact on our business and operating results. There can be no assurance that there will not be further terrorist attacks against the U.S. or its businesses or interests. Attacks or armed conflicts that directly impact one or more of our properties could significantly affect our ability to operate those properties and thereby impair our operating results. Further, we may not have insurance coverage for losses caused by a terrorist attack. Such insurance may not be available, or if it is available and we decide to obtain such terrorist coverage, the cost for the insurance may be significant in relationship to the risk overall. In addition, the adverse effects that such violent acts and threats of future attacks could have on the U.S. economy could similarly have a material adverse 17 effect on our business and results of operations. Finally, further terrorist acts could cause the U.S. to enter into a wider armed conflict, which could further impact our business and operating results. DEVELOPMENTS IN CALIFORNIA MAY HAVE AN ADVERSE IMPACT ON OUR BUSINESS AND OPERATING RESULTS AND COULD DECREASE THE VALUE OF OUR ASSETS. All of the Partnership's properties are located in California. California is facing budgetary problems. Action that may be taken in response to these problems, such as an increase in property taxes on commercial properties, could adversely impact our business and results of operations. In addition, the Partnership could be adversely impacted by efforts to reenact legislation mandating medical insurance for employees of California businesses and members of their families. INCREASES IN INTEREST RATES MAY ADVERSELY AFFECT THE PRICE OF OUR PARTNERSHIP UNITS. One of the factors that influence the market price of our partnership units is the annual rate of distributions that we pay on the securities, as compared with interest rates. An increase in interest rates may lead purchasers of partnership units to demand higher annual distribution rates, which could adversely affect the market price of our partnership units. WE HAVE BECOME INCREASINGLY DEPENDENT UPON AUTOMATED PROCESSES AND THE INTERNET AND ARE FACED WITH SYSTEM SECURITY RISKS. We have become increasingly centralized and dependent upon automated information technology processes. As a result, we could be severely impacted by a catastrophic occurrence, such as a natural disaster or a terrorist attack. In addition, a portion of our business operations are conducted over the Internet, increasing the risk of viruses that could cause system failures and disruptions of operations. Experienced computer programmers may be able to penetrate our network security and misappropriate our confidential information, create system disruptions or cause shutdowns. OUR OWNERSHIP INTEREST IN STOR-RE MAY LOSE VALUE OR BECOME A LIABILITY. The Partnership has a 0.9% ownership interest in STOR-Re Mutual Insurance Corporation ("STOR-Re"), which was formed in 1994 as an association captive insurance company, and is controlled by PS. STOR-Re provided limited property and liability insurance coverage to the Partnership, PS, and affiliates of PS for losses occurring prior to April 1, 2004. Liabilities for losses and loss adjustment expenses include an amount determined from loss reports and individual cases and an amount, based on recommendations from an outside actuary that is a member of the American Academy of Actuaries, using a frequency and severity method, for losses incurred but not reported. Determining the liability for unpaid losses and loss adjustment expense is based upon estimates and while we believe that the amount is adequate, the ultimate loss may be in excess of or less than the amounts provided, which may result in a reduction in the value of the Partnership's investment or could result in future payments to STOR-Re if its reserves were determined to be inadequate. ITEM 6. EXHIBITS -------- Exhibits required by Item 601 of Regulation S-K are listed in the attached Exhibit Index, and are filed herewith or incorporated herein by reference. 18 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DATED: November 13, 2008 PUBLIC STORAGE PROPERTIES, LTD. BY: Public Storage General Partner BY: /s/ John Reyes --------------- John Reyes Senior Vice President and Chief Financial Officer 19 Exhibit No. Exhibit Index - ----------- ------------- 31.1 Rule 13a-14(a) Certification. Filed herewith. 31.2 Rule 13a-14(a) Certification. Filed herewith. 32 Section 1350 Certifications. Filed herewith. 20 EX-31 2 psp33q08exb311.txt CEO Exhibit 31.1 RULE 13a-14(a) CERTIFICATION I, Ronald L. Havner, Jr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Public Storage Properties, Ltd.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) [paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986] c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or person performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ Ronald L. Havner, Jr. - ----------------------------------- Name Ronald L. Havner, Jr. Title Chief Executive Officer of Public Storage, Corporate General Partner Date November 13, 2008 EX-31 3 psp33q08exb312.txt CFO Exhibit 31.2 RULE 13a-14(a) CERTIFICATION I, John Reyes certify that: 1. I have reviewed this quarterly report on Form 10-Q of Public Storage Properties, Ltd.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) [paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986] c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or person performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ John Reyes - ---------------------------------- Name John Reyes Title Chief Financial Officer of Public Storage, Corporate General Partner Date: November 13, 2008 EX-32 4 psp33q08exb32.txt CEO AND CFO Exhibit 32 SECTION 1350 CERTIFICATION In connection with the Quarterly Report on Form 10-Q of Public Storage Properties, Ltd. (the "Partnership") for the quarter ended September 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Ronald L. Havner, Jr., as Chief Executive Officer of Public Storage corporate general partner, and John Reyes, as Chief Financial Officer of Public Storage corporate general partner, each hereby certifies, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. /s/ Ronald L. Havner, Jr. - ------------------------------------ Name: Ronald L. Havner, Jr. Title: Chief Executive Officer of Public Storage Corporate General Partner Date: November 13, 2008 /s/ John Reyes - ------------------------------------ Name: John Reyes Title: Chief Financial Officer of Public Storage Corporate General Partner Date: November 13, 2008 -----END PRIVACY-ENHANCED MESSAGE-----