-----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, BDKMrSwOkorOVq3BPEQ7OzPBbNOJx4037S6B7MAHu043OB8mMdtWtZuYKJkN96xN LDXnD8U/lXrkO7xjXoDSXQ== 0000277925-99-000009.txt : 19991111 0000277925-99-000009.hdr.sgml : 19991111 ACCESSION NUMBER: 0000277925-99-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991110 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUBLIC STORAGE PROPERTIES V LTD CENTRAL INDEX KEY: 0000277925 STANDARD INDUSTRIAL CLASSIFICATION: LESSORS OF REAL PROPERTY, NEC [6519] IRS NUMBER: 953292068 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-09208 FILM NUMBER: 99745122 BUSINESS ADDRESS: STREET 1: 701 WESTERN AVE STREET 2: SUITE 200 CITY: GLENDALE STATE: CA ZIP: 91201-2397 BUSINESS PHONE: 8182448080 MAIL ADDRESS: STREET 1: 701 WESTERN AVE STREET 2: SUITE 200 CITY: GLENDALE STATE: CA ZIP: 91201 10-Q 1 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, 1999 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 0-9208 ------ PUBLIC STORAGE PROPERTIES V, LTD. --------------------------------- (Exact name of registrant as specified in its charter) California 95-3292068 - ---------------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 701 Western Avenue Glendale, California 91201 - ---------------------------------------- ---------------------- (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, 1999 and December 31, 1998 2 Condensed statements of income for the three and nine months ended September 30, 1999 and 1998 3 Condensed statement of partners' equity for the nine months ended September 30, 1999 4 Condensed statements of cash flows for the nine months ended September 30, 1999 and 1998 5 Notes to condensed financial statements 6-7 Management's discussion and analysis of financial condition and results of operations 8-11 PART II. OTHER INFORMATION 12 PUBLIC STORAGE PROPERTIES V, LTD. CONDENSED BALANCE SHEETS
September 30, December 31, 1999 1998 ---------------- ---------------- (Unaudited) ASSETS ------ Cash and cash equivalents $ 229,000 $ 4,904,000 Marketable securities of affiliate (cost of $7,834,000) 13,433,000 14,433,000 Rent and other receivables 97,000 171,000 Real estate facilities, at cost: Buildings and equipment 16,015,000 15,816,000 Land (including land held for sale of $230,000) 4,714,000 4,714,000 ---------------- ---------------- 20,729,000 20,530,000 Less accumulated depreciation (11,463,000) (10,751,000) ---------------- ---------------- 9,266,000 9,779,000 Other assets 105,000 103,000 ---------------- ---------------- Total assets $ 23,130,000 $ 29,390,000 ================ ================ LIABILITIES AND PARTNERS' EQUITY -------------------------------- Accounts payable $ 311,000 $ 135,000 Deferred revenue 194,000 222,000 Note payable to commercial bank 13,755,000 - Mortgage note payable - 21,742,000 Partners' equity: Limited partners' equity, $500 per unit, 44,000 units authorized, issued and outstanding 2,429,000 514,000 General partners' equity 842,000 178,000 Other comprehensive income 5,599,000 6,599,000 ---------------- ---------------- Total partners' equity 8,870,000 7,291,000 ---------------- ---------------- Total liabilities and partners' equity $ 23,130,000 $ 29,390,000 ================ ================
See accompanying notes. 2 PUBLIC STORAGE PROPERTIES V, LTD. CONDENSED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Nine Months Ended September 30, September 30, ------------------------------ ------------------------------ 1999 1998 1999 1998 ------------- ------------- ------------- ------------- REVENUES: Rental income $ 2,010,000 $ 1,915,000 $ 5,797,000 $ 5,581,000 Dividends from marketable securities of affiliate 117,000 117,000 351,000 348,000 Other income 1,000 56,000 66,000 153,000 ------------- ------------- ------------- ------------- 2,128,000 2,088,000 6,214,000 6,082,000 ------------- ------------- ------------- ------------- COSTS AND EXPENSES: Cost of operations 471,000 453,000 1,420,000 1,400,000 Management fees paid to affiliates 120,000 113,000 346,000 332,000 Depreciation and amortization 243,000 221,000 718,000 652,000 Administrative 12,000 15,000 54,000 56,000 Interest expense 230,000 611,000 1,097,000 1,843,000 ------------- ------------- ------------- ------------- 1,076,000 1,413,000 3,635,000 4,283,000 ------------- ------------- ------------- ------------- NET INCOME $ 1,052,000 $ 675,000 $ 2,579,000 $ 1,799,000 ============= ============= ============= ============= Limited partners' share of net income ($58.02 per unit in 1999 and $40.48 per unit in 1998) $ 2,553,000 $ 1,781,000 General partners' share of net income 26,000 18,000 ------------- ------------- $ 2,579,000 $ 1,799,000 ============= =============
See accompanying notes. 3 PUBLIC STORAGE PROPERTIES V, LTD. CONDENSED STATEMENT OF PARTNERS' EQUITY (UNAUDITED)
Other Limited General Comprehensive Total Partners' Partners Partners Income Equity ----------------- ----------------- ----------------- ----------------- Balance at December 31, 1998 $ 514,000 $ 178,000 $ 6,599,000 $ 7,291,000 Change in unrealized gain of marketable equity securities - - (1,000,000) (1,000,000) Net income 2,553,000 26,000 - 2,579,000 Equity transfer (638,000) 638,000 - - ----------------- ----------------- ----------------- ----------------- Balance at September 30, 1999 $ 2,429,000 $ 842,000 $ 5,599,000 $ 8,870,000 ================= ================= ================= =================
See accompanying notes. 4 PUBLIC STORAGE PROPERTIES V, LTD. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30, ------------------------------------ 1999 1998 --------------- --------------- Cash flows from operating activities: Net income $ 2,579,000 $ 1,799,000 Adjustments to reconcile net income to net cash provided by operating activities Depreciation 712,000 652,000 Decrease (increase) in rent and other receivables 74,000 (48,000) Amortization of prepaid loan fees - 61,000 Increase (decrease) in other assets (2,000) 1,000 Increase in accounts payable 176,000 181,000 Decrease in deferred revenue (28,000) - --------------- --------------- Total adjustments 932,000 847,000 --------------- --------------- Net cash provided by operating activities 3,511,000 2,646,000 --------------- --------------- Cash flow from investing activities: Purchase of marketable securities of affiliate - (435,000) Additions to real estate facilities (199,000) (380,000) --------------- --------------- Net cash used in investing activities (199,000) (815,000) --------------- --------------- Cash flow from financing activities: Note proceeds from commercial bank 17,000,000 - Principal payments on note to commercial bank (3,245,000) - Principal payments on mortgage note payable (21,742,000) (392,000) --------------- --------------- Net cash used in financing activities (7,987,000) (392,000) --------------- --------------- Net (decrease) increase in cash and cash equivalents (4,675,000) 1,439,000 Cash and cash equivalents at beginning of period 4,904,000 2,963,000 --------------- --------------- Cash and cash equivalents at end of period $ 229,000 $ 4,402,000 =============== =============== Supplemental schedule of non-cash investing and financing activities: Decrease in fair value of marketable securities $ 1,000,000 $ 1,361,000 =============== =============== Other comprehensive income $ (1,000,000) $ (1,361,000) =============== ===============
See accompanying notes. 5 PUBLIC STORAGE PROPERTIES V, 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, 1998. 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, 1999, the results of its operations for the three and nine months ended September 30, 1999 and 1998 and its cash flows for the nine months then ended. 3. The results of operations for the three and nine months ended September 30, 1999 are not necessarily indicative of the results expected for the full year. 4. Marketable securities at September 30, 1999 consist of 533,334 shares of common stock of Public Storage, Inc., a publicly traded real estate investment trust and a general partner of the Partnership. The Partnership has designated its portfolio of marketable securities as available for sale. Accordingly, at September 30, 1999, the Partnership has recorded the marketable securities at fair value, based upon the closing quoted prices of the securities at September 30, 1999. Changes in market value of marketable securities are reflected as unrealized gains or losses directly in Partners' Equity and accordingly have no effect on net income. 5. On April 1, 1999, the Partnership borrowed $17,000,000 from a commercial bank. The proceeds of the loan were used to repay the Partnership's mortgage debt. The loan is unsecured and bears interest at the London Interbank Offering Rate ("LIBOR") rounded up to the nearest .125% plus 0.60% to 1.20% depending on the Partnership's interest coverage ratio (6.10% at September 30, 1999). The loan requires monthly payments of interest and matures April 2003. Principal may be paid, in whole or in part, at any time without penalty or premium. 6 5. (Continued) The Partnership has entered into an interest rate swap agreement to reduce the impact of changes in interest rates on a portion of its floating rate debt. The agreement, which covers $15,000,000 of debt through April, 2002 effectively changes the interest rate exposure from floating rate to a fixed rate of 5.64% plus 0.60% to 1.20% based on the Partnership's interest coverage ratio (6.24% as of September 30, 1999). Market gains and losses on the value of the swap are deferred and included in income over the life of the contract. The Partnership records the differences paid or received on the interest rate swap in interest expense as payments are made or received. As of September 30, 1999, the unrealized gain on the interest rate swap, if required to be liquidated, was approximately $300,000. 6. The partnership holds excess land in Florida with a carrying value of $230,000. There are no improvements on the land. The property has been listed for sale with a broker. 7 PUBLIC STORAGE PROPERTIES V, LTD. 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 - --------------------- THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998: The Partnership's net income for the nine months ended September 30, 1999 was $2,579,000 compared to $1,799,000 for the nine months ended September 30, 1998, representing an increase of $780,000 or 43%. The Partnership's net income for the three months ended September 30, 1999 was $1,052,000 compared to $675,000 for the three months ended September 30, 1998, representing an increase of $377,000 or 56%. These increases are primarily a result of increased operating results at the Partnership's mini-warehouse facilities combined with decreased interest expense. Rental income for the nine months ended September 30, 1999 was $5,797,000 compared to $5,581,000 for the nine months ended September 30, 1998, representing an increase of $216,000 or 4%. Rental income for the three months ended September 30, 1999 was $2,010,000 compared to $1,915,000 for the three months ended September 30, 1998, representing an increase of $95,000 or 5%. The increases for the three and nine months ended September 30, 1999 are attributable to increases in rental rates at the Partnership's mini-warehouse and business park facilities. Average annualized realized rent at the mini-warehouse facilities for the nine months ended September 30, 1999 increased to $10.75 per occupied square foot from $10.32 per occupied square foot for the nine months ended September 30, 1998. Weighted average occupancy levels at the mini-warehouse facility were 94% for each of the nine months ended September 30, 1999 and 1998. Rental income at the Partnership's San Francisco business park 8 facility increased by $9,000 for the nine months ended September 30, 1999 compared to the same period in 1998 due to increased rental rates. Average annualized realized rent for the nine months ended September 30, 1999 increased to $16.05 per occupied square foot from $15.00 per occupied square foot for the nine months ended September 30, 1998. Weighted average occupancy levels at the business park facility were 96% and 98% for the nine months ended September 30, 1999 and 1998, respectively. Interest and other income decreased $87,000 for the nine months ended September 30, 1999 compared to the same period in 1998. The decrease is primarily a result of the increase in the pay down of the Partnership note payable, which resulted in lower cash balances and consequently less interest earned. Dividend income from marketable securities of affiliate increased $3,000 for the nine months ended September 30, 1999 compared to the same period in 1998 due to an increase in the number of shares owned in 1999 compared to the same period in 1998. Cost of operations (including management fees paid to affiliate) for the nine months ended September 30, 1999 was $1,766,000 compared to $1,732,000 for the nine months ended September 30, 1998, representing an increase of $34,000 or 2%. Cost of operations (including management fees paid to affiliate) for the three months ended September 30, 1999 was $591,000 compared to $566,000 for the three months ended September 30, 1998, representing a increase of $25,000 or 4%. This increase is mainly attributable to increases in management fees and advertising and promotion expenses. Interest expense was $1,097,000 in the nine months ended September 30, 1999 from $1,843,000 in the same period in 1998, a $746,000 or 40% decrease. This decrease is mainly attributable to a lower outstanding principal balance and reduced interest rates on the Partnership's debt resulting from a refinancing of the Partnership's debt. See Liquidity and Capital Resources for a discussion of the refinancing of the Partnership's indebtedness in the second quarter of 1999. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Cash flows from operating activities ($3,511,000 for the nine months ended September 30, 1999) have been sufficient to meet all current obligations of the Partnership. At September 30, 1999, the Partnership held 533,334 shares of common stock (marketable securities) with a fair value totaling $13,433,000 (cost basis of $7,834,000 at September 30, 1999) in Public Storage, Inc. The Partnership recognized $351,000 in dividends for the nine months ended September 30, 1999. On April 1, 1999, the Partnership borrowed $17,000,000 from a commercial bank. The proceeds of the loan were used to repay the Partnership's mortgage debt. The loan is unsecured and bears interest at the London Interbank Offering Rate ("LIBOR") rounded up to the nearest .125% plus 0.60% to 1.20% 9 depending on the Partnership's interest coverage ratio (6.10% at September 30, 1999). The loan requires monthly payments of interest and matures April 2003. Principal may be paid, in whole or in part, at any time without penalty or premium. The Partnership has entered into an interest rate swap agreement to reduce the impact of changes in interest rates on a portion of its floating rate debt. The agreement, which covers $15,000,000 of debt through April, 2002 effectively changes the interest rate exposure from floating rate to a fixed rate of 5.64% plus 0.60% to 1.20% based on the Partnership's interest coverage ratio (6.24% at September 30, 1999). Market gains and losses on the value of the swap are deferred and included in income over the life of the contract. The Partnership records the differences paid or received on the interest rate swap in interest expense as payments are made or received. As of September 30, 1999, the unrealized gain on the interest rate swap, if required to be liquidated, was approximately $300,000. Year 2000 System Issues - ----------------------- The Partnership utilizes Public Storage, Inc.'s ("PSI") information systems in connection with a cost sharing and administrative services agreement. PSI has completed an assessment of all of its hardware and software applications to identify susceptibility to what is commonly referred to as the "Y2K Issue" whereby certain computer programs have been written using two digits rather than four to define the applicable year. Any of the PSI's computer programs or hardware with the Y2K Issue that have date-sensitive applications or embedded chips may recognize a date using "00" as the year 1900 rather than the year 2000, resulting in miscalculations or system failure causing disruptions of operations. PSI has two phases in its process with respect to each of its systems; i) assessment, whereby PSI evaluates whether the system is Y2K compliant and identifies the plan of action with respect to remediating any Y2K issues identified and ii) implementation, whereby PSI completes the plan of action prepared in the assessment phase and verifies that Y2K compliance has been achieved. Implementations have been completed on PSI's critical applications that impact the Partnership, such as the general ledger, property operations, and related systems. Contingency plans have been developed for use in case PSI's assessment did not identify all Y2K issues, or if the implementation were subsequently determined to not fully remediate Y2K issues that were identified. While PSI presently believes that the impact of the Y2K Issue on its systems can be mitigated, if PSI's plan for ensuring Year 2000 compliance and the related contingency plans were to fail, be insufficient, or not be implemented on a timely basis, Partnership operations could be materially impacted. Certain of PSI's other non-computer related systems that may be impacted by the Y2K Issue, such as security systems, have been evaluated. Based upon its evaluation, PSI has no reason to believe that lack of compliance or failure of required solutions would materially impact the Partnership's operations. 10 The Partnership exchanges electronic data with certain outside vendors in the banking and payroll processing areas. The Partnership has been advised by these vendors that their systems are Year 2000 compliant. The Partnership is not aware of any other vendors, suppliers, or other external agents with a Y2K Issue that would materially impact the Partnership's results of operations, liquidity, or capital resources. However, the Partnership has no means of ensuring that external agents will be Year 2000 compliant, and there can be no assurance that PSI has identified all such external agents. The inability of external agents to complete their Year 2000 compliance process in a timely fashion could materially impact the Partnership. The effect of non-compliance by external agents is not determinable. The cost of PSI's year 2000 compliance activities (which primarily consists of the costs of new systems) to be allocated to the Partnership is estimated at approximately $67,185. These costs are capitalized. PSI's year 2000 compliance efforts have not resulted in any significant deferrals in other information system projects. The costs of the projects and the date on which PSI expects to achieve Year 2000 Compliance are based upon management's best estimates, and were derived utilizing numerous assumptions of future events. There can be no assurance that these estimates will be achieved, and actual results could differ materially from those anticipated. There can be no assurance that PSI has identified all potential Y2K Issues either within the Partnership, at PSI or at external agents. In addition, the impact of the Y2K issue on governmental entities and utility providers and the resultant impact on the Partnership, as well as disruptions in the general economy, may be material but cannot be reasonably determined or quantified. 11 PART II. OTHER INFORMATION Items 1 through 5 are inapplicable. Item 6 Exhibits and Reports on Form 8-K. (a) The following exhibit is included herein: (27) Financial Data Schedule (b) Form 8-K None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DATED: November 9, 1999 PUBLIC STORAGE PROPERTIES V, LTD. BY: Public Storage, Inc. General Partner BY: /s/ John Reyes -------------- John Reyes Senior Vice President and Chief Financial Officer 12 EX-27 2 FDS --
5 0000277925 Public Storage Properties V, Ltd. 1 US 9-mos Dec-31-1999 Jan-1-1999 Sep-30-1999 1 229,000 13,433,000 97,000 0 0 13,864,000 20,729,000 (11,463,000) 23,130,000 505,000 13,755,000 0 0 0 8,870,000 23,130,000 0 6,214,000 0 1,766,000 772,000 0 1,097,000 2,579,000 0 2,579,000 0 0 0 2,579,000 58.02 58.02
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