-----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, WhKpD+rV5fz9mlFBGXXYd7uqEHgTssVszncU8e3dJNLnw2GySR/KwZOH6nklc/vZ ZX4oX67ToPfwREv4ncrLvw== 0000898430-95-002244.txt : 19951119 0000898430-95-002244.hdr.sgml : 19951119 ACCESSION NUMBER: 0000898430-95-002244 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUBLIC STORAGE PARTNERS II LTD CENTRAL INDEX KEY: 0000275915 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING & COURIER SERVICES (NO AIR) [4210] IRS NUMBER: 953146963 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08676 FILM NUMBER: 95589343 BUSINESS ADDRESS: STREET 1: 600 N BRAND BLVD CITY: GLENDALE STATE: CA ZIP: 91203 BUSINESS PHONE: 8182448080 MAIL ADDRESS: STREET 1: 600 NORTH BRAND BLVD STREET 2: SUITE 300 CITY: GLENDALE STATE: CA ZIP: 91203 10-Q 1 FORM 10-Q PERIOD 9/30/95 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, 1995 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 0-8676 ------ PUBLIC STORAGE PARTNERS II, LTD. ----------------------------------------------------- (Exact name of registrant as specified in its charter) California 95-3146963 - ---------------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 600 N. Brand Boulevard Glendale, California 91203 - ---------------------------------------- ---------------------- (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. Yes X No ----- ----- INDEX
Page ---- PART I. FINANCIAL INFORMATION Condensed balance sheets at September 30, 1995 and December 31, 1994 2 Condensed statements of operations for the three and nine months ended September 30, 1995 and 1994 3 Condensed statement of partners' deficit for the nine months ended September 30, 1995 4 Condensed statements of cash flows for the nine months ended September 30, 1995 and 1994 5 Notes to condensed financial statements 6-7 Management's discussion and analysis of financial condition and results of operations 8-9 PART II. OTHER INFORMATION 10-11
PUBLIC STORAGE PARTNERS II, LTD. CONDENSED BALANCE SHEETS
September 30, December 31, 1995 1994 -------------- ------------- (Unaudited) ASSETS ------ Cash and cash equivalents $ 242,000 $ 159,000 Marketable securities of affiliate at market value (cost of $68,000) 93,000 72,000 Rent and other receivables 25,000 32,000 Real estate facilities at cost: Building, land improvements and equipment 3,234,000 3,194,000 Land 1,267,000 1,267,000 ----------- ----------- 4,501,000 4,461,000 Less accumulated depreciation (2,226,000) (2,117,000) ----------- ----------- 2,275,000 2,344,000 ----------- ----------- Other assets 199,000 206,000 ----------- ----------- Total assets $ 2,834,000 $ 2,813,000 =========== =========== LIABILITIES AND PARTNERS' DEFICIT --------------------------------- Accounts payable $ 25,000 $ 10,000 Deferred revenue 80,000 74,000 Notes payable 8,988,000 9,384,000 Partners' deficit: Limited partners' deficit, $500 per unit, 10,000 units authorized, 9,890 issued and outstanding (4,661,000) (4,939,000) General partner's deficit (1,623,000) (1,720,000) Unrealized gain on marketable securities 25,000 4,000 ----------- ----------- Total partners' deficit (6,259,000) (6,655,000) ----------- ----------- Total liabilities and partners' deficit $ 2,834,000 $ 2,813,000 =========== ===========
see accompanying notes. 2 PUBLIC STORAGE PARTNERS II, LTD. CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
Three Months Ended Nine Months Ended September 30, September 30, ------------------------ -------------------------- 1995 1994 1995 1994 --------- ------------ ---------- ------------- REVENUES: Rental income $558,000 $551,000 $1,646,000 $1,642,000 Dividends and other income (including dividends from marketable securities of affiliate) 2,000 2,000 7,000 2,000 -------- -------- ---------- ---------- 560,000 553,000 1,653,000 1,644,000 -------- -------- ---------- ---------- COSTS AND EXPENSES: Costs of operations 107,000 106,000 315,000 311,000 Management fees paid to affiliate 33,000 34,000 99,000 99,000 Depreciation and amortization 37,000 36,000 109,000 103,000 Administrative 9,000 8,000 37,000 27,000 Interest expense 236,000 255,000 718,000 781,000 -------- -------- ---------- ---------- 422,000 439,000 1,278,000 1,321,000 -------- -------- ---------- ---------- NET INCOME $138,000 $114,000 $ 375,000 $ 323,000 ======== ======== ========== ========== Limited partners' share of net income ($37.51 per unit in 1995 and $32.25 per unit in 1994) $ 371,000 $ 319,000 General partner's share of net income 4,000 4,000 ---------- ---------- $ 375,000 $ 323,000 ========== ==========
see accompanying notes. 3 PUBLIC STORAGE PARTNERS II, LTD. CONDENSED STATEMENT OF PARTNERS' DEFICIT (UNAUDITED)
Unrealized Gain on Total Limited General Marketable Partners' Partners Partner Securities Deficit ------------ ------------- ---------- ------------ Balance at December 31, 1994 $(4,939,000) $(1,720,000) $ 4,000 $(6,655,000) Change in unrealized gain on marketable securities - - 21,000 21,000 Net income 371,000 4,000 - 375,000 Equity transfer (93,000) 93,000 - - ----------- ----------- ------- ----------- Balance at September 30, 1995 $(4,661,000) $(1,623,000) $25,000 $(6,259,000) =========== =========== ======= ===========
see accompanying notes. 4 PUBLIC STORAGE PARTNERS II, LTD. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30, --------------------------- 1995 1994 ---------- -------------- Cash flows from operating activities: Net income $ 375,000 $ 323,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 109,000 103,000 Decrease (increase) in rent and other receivables 7,000 (6,000) Decrease in prepaid loan fees 8,000 8,000 (Increase) decrease in other assets (1,000) 36,000 Increase in accounts payable 15,000 13,000 Increase (decrease) in deferred revenue 6,000 (14,000) --------- --------- Total adjustments 144,000 140,000 --------- --------- Net cash provided by operating activities 519,000 463,000 --------- --------- Cash flows from investing activities: Additions to real estate facilities (40,000) (40,000) --------- --------- Net cash used in investing activities (40,000) (40,000) --------- --------- Cash flows from financing activities: Proceeds from note payable - 850,000 Principal payment on note payable to affiliate - (850,000) Principal payments on note payable (396,000) (303,000) --------- --------- Net cash used in financing activities (396,000) (303,000) --------- --------- Net increase in cash and cash equivalents 83,000 120,000 Cash and cash equivalents at the beginning of the period 159,000 90,000 --------- --------- Cash and cash equivalents at the end of the period $ 242,000 $ 210,000 ========= ========= SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Increase in fair value of marketable securities $ (25,000) $ - ========= ========= Unrealized gain on marketable securities $ 25,000 $ - ========= =========
see accompanying notes. 5 PUBLIC STORAGE PARTNERS II, LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 1. The accompanying unaudited condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures contained herein are adequate to make the information presented not misleading. These unaudited condensed financial statements should be read in conjunction with the financial statements and related notes appearing in the Partnership's Form 10-K for the year ended December 31, 1994. 2. In the opinion of management, the accompanying unaudited condensed financial statements reflect all adjustments, consisting of only normal accruals, necessary to present fairly the Partnership's financial position at September 30, 1995, the results of its operations for the three and nine months ended September 30, 1995 and 1994 and its cash flows for the nine months then ended. 3. The results of operations for the three and nine months ended September 30, 1995 are not necessarily indicative of the results expected for the full year. 4. Marketable securities at September 30, 1995 consist of 5,000 common shares of Storage Equities, Inc. ("SEI"), a publicly traded real estate investment trust, whose investment advisor is an affiliate of Public Storage, Inc. (a general partner of the Partnership). FASB Statement No. 115, "Accounting for Certain Investments in Debt and Equity Securities," requires marketable securities to be classified as trading or available for sale. The Partnership has designated its portfolio of marketable securities as available for sale. Accordingly, at September 30, 1995, the Partnership has recorded the marketable securities at fair value and, based upon the closing quoted price of the securities at September 30, 1995, recorded a corresponding unrealized gain totaling $25,000 as a credit to Partnership equity. 5. Substantially all of the Partnership's facilities were acquired prior to the time that it was customary to conduct environmental investigations in connection with property acquisitions. During the six month 6 period ended June 30, 1995, the Partnership completed environmental assessments on its properties. Those assessments indicated that the Partnership's property sites do not have any significant environmental issues which would have a materially adverse effect on the Company's financial position. Included in administrative expenses on the statements of operations for nine months ended September 30, 1995 is approximately $9,000 incurred in connection with the environmental assessments. 6. PSI, the general partner of the Partnership, and Public Storage Management, Inc. ("PSMI"), the Partnership's mini-warehouse property manager, have entered into an Agreement and Plan of Reorganization by and among PSI, PSMI and SEI, dated as of June 30, 1995, pursuant to which PSMI would be merged into SEI. Prior to the merger, substantially all of the United States real estate interests of PSI, together with Public Storage Commercial Properties Group, Inc. and Public Storage Advisers, Inc. (SEI's investment adviser), will be combined with PSMI. Upon completion of the merger, which is scheduled to occur in November 1995, SEI would replace PSI as a general partner of the Partnership. The merger is subject to a number of conditions. In November 1995, the Management Agreement with PSMI was amended to provide that upon demand from PSMI or SEI made prior to December 15, 1995, the Partnership agrees to prepay (within 15 days after such demand) up to 12 months of management fees (based on the management fees for the calendar year immediately preceding such prepayment) discounted at the rate of 14% per year to compensate for early payment. 7 PUBLIC STORAGE PARTNERS II, LTD. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS --------------------- THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED TO THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1994: The Partnership's net income for the nine months ended September 30, 1995 was $375,000 compared to $323,000 for the nine months ended September 30, 1994, representing an increase of $52,000, or 16%. The Partnership's net income for the three months ended September 30, 1995 was $138,000 compared to $114,000 for the three months ended September 30, 1994, representing an increase of $24,000, or 21%. These increases are primarily a result of decreased interest expense due to lower outstanding loan balances in 1995 compared to 1994. Rental income was $1,646,000 compared to $1,642,000 for the nine months ended September 30, 1995 and 1994, respectively, representing an increase of $4,000. Rental income was $558,000 compared to $551,000 for the three months ended September 30, 1995 and 1994, respectively, representing an increase of $7,000. The slight increase for the nine months ended is primarily attributable to higher occupancy levels partially as a result of lowering rental rates at three of the Partnership's four facilities. The weighted average occupancy levels at the mini-warehouse facilities were 83% and 80% for the nine months ended September 30, 1995 and 1994, respectively. Realized rent for the nine months ended September 30, 1995 decreased to $.86 per occupied square foot from $.90 per occupied square foot for the nine months ended September 30, 1994. Cost of operations (including management fees paid to an affiliate) increased $4,000 to $414,000 from $410,000 for the nine months ended September 30, 1995 and 1994, respectively. This increase is mainly attributable to increases in payroll offset by a decrease in repairs and maintenance. Cost of operations (including management fees paid to an affiliate) remained stable for the three months ended September 30, 1995 and 1994 respectively. Administrative expenses increased $10,000 for the nine months ended September 30, 1995 compared to the same period in 1994 primarily as the result of cost incurred on environmental assessments on the Partnership's properties. Substantially all of the Partnership's facilities were acquired prior to the time that it was customary to conduct extensive environmental investigations in connection with the property 8 acquisitions. During the first quarter of 1995, the Partnership commenced environmental assessments on its properties. The result of those assessments have been completed. However, the Partnership is not presently aware of any significant environmental matters with respect to any of its properties which would have a materially adverse effect on the Partnership's financial position. LIQUIDITY AND CAPITAL RESOURCES ------------------------------- Cash generated from operations ($519,000 for the nine months ended September 30, 1995) has been sufficient to meet all current obligations of the Partnership. In the fourth quarter of 1990, quarterly distributions were discontinued to enable the Partnership to make principal repayments that commenced in 1990 and will continue through 1996, at which time the remaining principal balance is due. At September 30, 1995 the Partnership held 5,000 shares of common stock (marketable securities) with a fair value totaling $93,000 (cost basis of $68,000 at September 30, 1995) in Storage Equities, Inc. ("SEI"), a publicly traded real estate investment trust, whose investment advisor is an affiliate of Public Storage, Inc. (a general partner of the Partnership). The Partnership recognized $1,000 and $3,000 in dividends for the three and nine months ended September 30, 1995 and included these amounts in other income on the condensed Statements of Operations. As of September 30, 1995, SEI's stock price per share has increased $5.00 over the Partnership's cost resulting in a $25,000 increase in the aggregate value of these securities. 9 PART II. OTHER INFORMATION ITEMS 1 through 5 are inapplicable. ITEM 6 Exhibits and Reports on Form 8-K (a) The following exhibits are included herein: (10) Amendment to Management Agreement among Public Storage Management, Inc., Storage Equities, Inc. and the Partnership, dated as of November 13, 1995. (27) Financial Data Schedule (b) Form 8 - K None. 10 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, 1995 PUBLIC STORAGE PARTNERS II, LTD. BY: Public Storage, Inc. General Partner BY: /s/ Ronald L. Havner, Jr. ---------------------------- Ronald L. Havner, Jr. Vice President and Chief Financial Officer (principal accounting and financial officer) 11 EX-10 2 AMENDMENT TO MGMT AGREEMENT EXHIBIT 10 AMENDMENT TO MANAGEMENT AGREEMENTS This Amendment to Management Agreements is executed as of November 13, 1995, by and among Public Storage Management, Inc. ("PSMI"), Storage Equities, Inc. ("SEI") and each of the entities whose name appears on the signature pages hereof under the designation "Owners" (collectively, the "Owners" and individually, an "Owner"). A. At various dates between May 1976 and May 1978, PSMI and each of the Owners entered into Management Agreements (collectively, the "Management Agreements") providing for the management by PSMI of the mini-warehouses owned by the Owners and monthly payments of management fees equal to 6% of the gross revenues generated by Owners' mini-warehouses. B. SEI and PSMI have entered into an Agreement and Plan of Reorganization dated as of June 30, 1995 pursuant to which PSMI would be merged with and into SEI. Upon completion of the merger, SEI will manage the mini-warehouses owned by the Owners. C. The general partners of the Owners believe that the Owners' prepayment of management fees on the terms set forth in this Amendment is financially beneficial to the Owners, and the parties hereto desire to modify each of the Management Agreements to provide for such prepayment. Now, therefore, the parties agree as follows: 1. The following shall be added as the last two sentences of the first paragraph of Section 4 of each of the Management Agreements: "Upon demand from SEI or PSMI made prior to December 15, 1995, each of the Owners agrees to pay within 15 days after such demand in advance up to 12 months of management fees discounted at the rate of 14% per year (based on the management fees for the comparable period during the calendar year immediately preceding such prepayment). The property manager shall be deemed to have earned such prepayments at the time of payment thereof, and Owners shall not be entitled to a return of such prepayment, or any portion thereof, under any circumstances. In addition, the property manager shall not be entitled to any further or additional payment of management fees for a period with respect to which a prepayment is made hereunder because the actual gross revenues for such period would have resulted in a higher management fee had such prepayment not been made." 2. Other than as set forth in this Amendment, all of the provisions contained in each of the Management Agreements are hereby ratified and approved. 1 In witness whereof, the undersigned have executed this Amendment, as of the day and year first above written. "PSMI" PUBLIC STORAGE MANAGEMENT, INC. By: /s/ Ronald L. Havner, Jr. ------------------------- Ronald L. Havner, Jr., Vice President "SEI" STORAGE EQUITIES, INC. By: /s/ B. Wayne Hughes ------------------- B. Wayne Hughes, Chairman of the Board "Owners" PUBLIC STORAGE PARTNERS, LTD. By: Public Storage, Inc. General Partner By: /s/ Ronald L. Havner, Jr. ------------------------- Ronald L. Havner, Jr., Vice President PUBLIC STORAGE PARTNERS II, LTD. By: Public Storage, Inc. General Partner By: /s/ Ronald L. Havner, Jr. ------------------------- Ronald L. Havner, Jr., Vice President 2 PUBLIC STORAGE PROPERTIES, LTD. By: Public Storage, Inc. General Partner By: /s/ Ronald L. Havner, Jr. ------------------------- Ronald L. Havner, Jr., Vice President PUBLIC STORAGE PROPERTIES IV, LTD. By: Public Storage, Inc. General Partner By: /s/ Ronald L. Havner, Jr. ------------------------- Ronald L. Havner, Jr., Vice President PUBLIC STORAGE PROPERTIES V, LTD. By: Public Storage, Inc. General Partner By: /s/ Ronald L. Havner, Jr. ------------------------- Ronald L. Havner, Jr., Vice President 3 EX-27 3 FINANCIAL DATA SCHEDULE
5 9-MOS DEC-31-1994 SEP-30-1995 242,000 93,000 25,000 0 0 360,000 4,501,000 (2,226,000) 2,834,000 105,000 8,988,000 0 0 0 (6,259,000) 2,834,000 0 1,653,000 0 523,000 37,000 0 718,000 375,000 0 375,000 0 0 0 375,000 37.51 0
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