-----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, TKmoqlRUFpN+DQ6kWvbhuoqCjsx14QVv1gluTWBlVWdwEhyaHaqjvp18egPAqcdX mAgmHVeFetlMQPMrkqQCUA== 0000318380-98-000009.txt : 19980116 0000318380-98-000009.hdr.sgml : 19980116 ACCESSION NUMBER: 0000318380-98-000009 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971224 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980115 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUBLIC STORAGE INC /CA CENTRAL INDEX KEY: 0000318380 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 953551121 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-08389 FILM NUMBER: 98507819 BUSINESS ADDRESS: STREET 1: 701 WESTERN AVE STREET 2: STE 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 FORMER COMPANY: FORMER CONFORMED NAME: STORAGE EQUITIES INC DATE OF NAME CHANGE: 19920703 8-K/A 1 8-K/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A Amendment No. 1 Current Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) December 24, 1997 ----------------- PUBLIC STORAGE, INC. -------------------- (Exact name of registrant as specified in its charter) California 1-8389 95-3551121 ---------- ------ ---------- (state or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation) Identification Number) 701 Western Avenue, Glendale, California 91201-2397 --------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (818) 244-8080 N/A --- (Former name or former address, if changed since last report) ITEM 5. Other Events ------------ a. HISTORICAL AND PRO FORMA FINANCIAL STATEMENTS
Page References ACQUIRED PROPERTIES: Report of Independent Auditors 4 Combined Statements of Revenues and Certain Operating Expenses for the years ended December 31, 1996, 1995 and 1994 5 Notes to Combined Statements of Revenues and Certain Operating Expenses 6 - 7 LARGO PROPERTY: Report of Independent Auditors 8 Statement of Revenues and Certain Operating Expenses for the year ended December 31, 1996 9 Notes to Statement of Revenues and Certain Operating Expenses 10 - 11 ACQUIPORT PROPERTIES: Report of Independent Auditors 12 Combined Statement of Revenues and Certain Operating Expenses for the year ended December 31, 1996 13 Notes to Combined Statement of Revenues and Certain Operating Expenses 14 - 15 GUNSTON PROPERTY: Report of Independent Auditors 16 Statement of Revenues and Certain Operating Expenses for the year ended December 31, 1996 17 Notes to Statement of Revenues and Certain Operating Expenses 18 - 19 PROPOSED ACQUISITION PROPERTIES: Report of Independent Auditors 20 Combined Statement of Revenues and Certain Operating Expenses for the year ended December 31, 1996 21 Notes to Combined Statement of Revenues and Certain Operating Expenses 22 - 25 PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS: Pro Forma Consolidated Balance Sheet at September 30, 1997 26 Notes to Pro Forma Consolidated Balance Sheet 27 Pro Forma Consolidated Statements of Income: For the nine months ended September 30, 1997 28 For the year ended December 31, 1996 29 Notes to Pro Forma Consolidated Statements of Income 30 - 33 2
b. ELECTION OF DIRECTOR 34 ITEM 7. Financial Statements and Exhibits --------------------------------- EXHIBITS 23.1 Consent of Independent Auditors. 23.2 Consent of Independent Auditors.
3 REPORT OF INDEPENDENT AUDITORS ------------------------------ To the Board of Directors Public Storage, Inc. We have audited the accompanying combined statements of rental revenues and certain operating expenses of the Acquired Properties (as defined in Note 1) ("Combined Statements") for each of the three years in the period ended December 31, 1996. The Combined Statements are the responsibility of management. Our responsibility is to express an opinion on the above mentioned combined statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Combined Statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Combined Statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall Combined Statements presentation. We believe that our audits provide a reasonable basis for our opinion. The accompanying Combined Statements were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission. In our opinion, the Combined Statements referred to above present fairly the combined rental revenue and certain operating expenses of the Acquired Properties for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Los Angeles, California December 16, 1997 4 THE ACQUIRED PROPERTIES COMBINED STATEMENTS OF RENTAL REVENUES AND CERTAIN OPERATING EXPENSES
Year Ended December 31, --------------------------------------------------------------------- 1996 1995 1994 --------------------------------------------------------------------- Rental Revenues $ 34,870,000 $ 32,366,000 $ 29,842,000 Certain Operating Expenses 11,550,000 11,163,000 10,463,000 ===================================================================== Excess Rental Revenues over Certain Operating Expenses $ 23,320,000 $ 21,203,000 $ 19,379,000 =====================================================================
See accompanying notes. 5 THE ACQUIRED PROPERTIES NOTES TO COMBINED STATEMENTS OF RENTAL REVENUES AND CERTAIN OPERATING EXPENSES 1. BACKGROUND AND BASIS OF COMBINATIONS The accompanying combined statements of rental revenues and certain operating expenses include the results of operations for the years ended December 31, 1996, 1995 and 1994 for the 69 primarily self storage properties listed below, in which Public Storage, Inc. (the "Company") acquired a controlling interest during September and October 1997. All of the properties listed below were managed by and were the Company and were acquired from affiliates of the Company. They are prepared in order to comply with Rule 3.14 of regulation S-X of the Securities and Exchange Commission. The properties acquired and covered by this report are composed of ("Acquired Properties"):
Property Location Property Location Property Location ----------------- ----------------- ----------------- Tucson, AZ Denver, CO (S. Tarmac Pkwy) Chicago, IL (Pulaski Rd) Novato, CA Denver, CO (Sheridan Blvd.) Morton Grove, IL Burbank, CA Bridgeport, CT Roselle, IL Dublin, CA Enfield, CT Schiller Park, IL (River Rd) Emeryville, CA Norwalk, CT Boston, MA Fremont, CA Washington, DC Hyde Park, MA Los Angeles, CA (La Cienega Blvd.) Boca Raton, FL Randolph, MA Los Angeles, CA (Jefferson Blvd.) Ft. Lauderdale, FL Baltimore, MD Los Angeles, CA (MLK Blvd.) Marietta, GA (Austell Rd) Odenton, MD Monterey, CA Marietta, GA (Cobb Pkwy) Prince George's Co., MD N. Hollywood, CA Arlington Heights, IL (University Dr) Madison Heights, MI Oakland, CA Bolingbrook, IL Warren, MI Pinole, CA Carol Stream, IL St. Louis, MO San Leandro, CA (Washington Ave.) Chicago Heights, IL (Western Ave.) Bridgewater, NJ San Leandro, CA (E. 14th St.) Chicago, IL (Howard St.) Mercer, NJ Santa Cruz, CA Chicago, IL (N. Broadway St.) Woodside, NY So. San Francisco, CA Chicago, IL (N. West Hwy.) Gresham, OR Stockton, CA Chicago, IL (N. Western Ave.) Portland, OR Studio City, CA Chicago, IL (Wells St.) Kent, WA Vallejo, CA Cicero, IL (Ogden Ave.) Mountlake Terrace, WA Venice, CA Des Plains, IL Olympia, WA Ventura, CA Geneva, IL Seattle, WA Denver, CO (Leetsdale Dr.) Justice, IL Milwaukee, WI
The combined statements of rental revenues and certain operating expenses include only the accounts and activity of the Acquired Properties. Items which are not comparable to the proposed future operations of the properties have been excluded. Such items include interest expense, depreciation, amortization, environmental costs, and management fees charged by the Company to its affiliates. 6 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition: The Acquired Properties' leases are generally month to month and are accounted for as operating leases on the accrual method. Use of Estimates: The preparation of the combined statements of rental revenues and certain operating expenses in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reporting amounts of rental revenues and certain operating expenses during the reporting period. Actual results could differ from those estimates. 3. RELATED PARTY TRANSACTIONS The Company was the property operator of the above facilities that have been acquired. The Company currently operates facilities for a fee which is equal to 6% of the gross revenues of the self-storage facilities and 5% of the gross revenues of the commercial facilities managed. 7 REPORT OF INDEPENDENT AUDITORS To the Board of Directors of Public Storage, Inc. We have audited the accompanying statement of revenues and certain operating expenses of the Largo Property (as defined in Note 1) ("Statement") for the year ended December 31, 1996. The Statement is the responsibility of the property's management. Our responsibility is to express an opinion on the above mentioned statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall Statement presentation. We believe that our audit provides a reasonable basis for our opinion. The accompanying Statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission. In our opinion, the Statement presents fairly the combined revenues and certain operating expenses of the Largo Property for the year ended December 31, 1996, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Los Angeles, California October 9, 1997 8 THE LARGO PROPERTY STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES YEAR ENDED DECEMBER 31, 1996 Rental revenues $ 1,290,000 Certain operating expenses 320,000 --------------- Rental revenues in excess of certain operating expenses $ 970,000 =============== See accompanying notes. 9 THE LARGO PROPERTY NOTES TO STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES 1. BACKGROUND AND BASIS FOR PRESENTATION The accompanying statement of revenues and certain operating expenses includes the accounts of the Largo Property, located in Maryland and acquired by American Office Park Properties, Inc. ("AOPP"), a subsidiary of Public Storage, Inc. ("PSI") from an unaffiliated party in September 1997. The statement is prepared in order to comply with Rule 3.14 of Regulation S-X of the Securities and Exchange Commission. The statement of revenue and certain operating expenses includes only the accounts and activity of the Largo Property. Items which are not comparable to the proposed future operations of the property have been excluded. Such items include mortgage interest, depreciation, amortization, management fees and miscellaneous income. An audited statement is being presented for the most recent fiscal year available instead of the three most recent years based on the following factor: The property was purchased from an unaffiliated party in September 1997. Based on the investigation of the property by AOPP, it is not aware of any material factors relating to the property that would cause this financial information not to be necessarily indicative of future operating results other than the factors specifically considered by AOPP as described below. In the decision to acquire the property, AOPP considered the competition from other commercial property owners, the location, the leases, the rental rates and the occupancy level of the property. AOPP has reviewed the expenses of the property, including salaries of on-site personnel, utilities, property taxes, supplies, insurance and repairs and maintenance. AOPP expects that operating expenses in the future will be consistent to those reported for 1996. AOPP expects to be able to pass inflationary operating expense increases in future periods through to its tenants. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenues Recognition The Largo Property' leases are accounted for as operating leases. Minimum rent revenues are recognized on a straight-line basis over the respective lease term. Recoveries from tenants, which include an administrative fee, are recognized as income in the period the applicable costs are accrued. The difference between the rental income recognized on a straight-line basis and the amount collected on a cash basis is not material for any of the periods presented. Use of Estimates The preparation of the combined statement of revenues and certain operating expenses in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and certain operating expenses during the reporting periods. Actual results could differ from those estimates. 10 3. PROPERTY RENTALS Future minimum rental revenues under non-cancelable leases as of December 31, 1996 are as follows: 1997 ................................ $ 745,000 1998 ................................ 624,000 1999 ................................ 297,000 2000 ................................ 242,000 2001 ................................ 242,000 Thereafter .......................... 214,000 ---------- $ 2,364,000 11 REPORT OF INDEPENDENT AUDITORS To The Board of Directors and Shareholder of Acquiport Two Corporation and Acquiport Three Corporation We have audited the accompanying combined statement of revenues and certain operating expenses of the Acquiport Properties owned by Acquiport Two Corporation and Acquiport Three Corporation (as defined in Note 1) for the year ended December 31, 1996. The Combined Summary is the responsibility of the Company's management. Our responsibility is to express an opinion on the combined statement of revenues and certain operating expenses based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined statement of revenues and certain operating expenses are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined statement of revenues and certain operating expenses. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the combined statement of revenues and certain operating expenses. We believe that our audit provides a reasonable basis for our opinion. The accompanying combined statement of revenues and certain operating expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission. In our opinion, the combined statement of revenues and certain operating expenses presents fairly the combined revenues and certain operating expenses of the Acquiport Properties owned by Acquiport Two Corporation and Acquiport Three Corporation (as defined in Note 1) for the year ended December 31, 1996, in conformity with generally accepted accounting principles. KPMG PEAT MARWICK LLP Atlanta, Georgia February 14, 1997 12 ACQUIPORT PROPERTIES OWNED BY ACQUIPORT TWO CORPORATION AND ACQUIPORT THREE CORPORATION COMBINED STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES YEAR ENDED DECEMBER 31, 1996 Rental revenues $ 14,579,000 Certain operating expenses 3,350,000 --------------- Excess rental revenues over certain operating expenses $ 11,229,000 =============== See accompanying notes. 13 ACQUIPORT PROPERTIES OWNED BY ACQUIPORT TWO CORPORATION AND ACQUIPORT THREE CORPORATION NOTES TO COMBINED STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES 1. BACKGROUND AND BASIS FOR COMBINATION The accompanying combined statement of revenues and certain operating expenses includes the accounts of certain of the industrial, office and retail real estate assets ("Acquiport Properties") acquired by American Office Park Properties, Inc. ("AOPP"), a subsidiary of Public Storage, Inc. ("PSI") from Acquiport Two Corporation (a wholly-owned subsidiary of a state pension fund) and Acquiport Three Corporation (a wholly-owned subsidiary of a state pension fund) in December 1997. The statement is prepared in order to comply with Rule 3.14 of Regulation S-X of the Securities and Exchange Commission. The Acquiport Properties are composed of: Laguna Hills Commerce Center Laguna Hills, CA Lake Forest Commerce Center Lake Forest, CA Parkway Commerce Center Hayward, CA Canada Business Center Lake Forest, CA Cerritos Industrial Center Cerritos, CA Buena Park Buena Park, CA The combined statement of revenues and certain operating expenses includes only the accounts and activity of the Acquiport Properties. Items which are not comparable to the proposed future operations of the Acquiport Properties have been excluded. Such items include mortgage interest, depreciation, management fees and interest income. An audited statement is being presented for the most recent fiscal year available instead of the three most recent years based on the following factor: The Acquiport Properties were acquired from an unaffiliated party. Based on the investigation of the Acquiport Properties by AOPP, the Company is not aware of any material factors relating to the Acquiport Properties that would cause this financial information not to be necessarily indicative of future operating results other than the factors specifically considered by AOPP as described below. In the decision to acquire the Acquiport Properties, AOPP considered the competition from other commercial property owners, the location, the leases, the rental rates and the occupancy level of the properties. AOPP has reviewed the expenses of the Acquiport Properties, including salaries of on-site personnel, utilities, property taxes, supplies, insurance and repairs and maintenance. AOPP expects that property tax expenses will be approximately $380,000 (unaudited) higher in the future than amounts included in operating expenses for the year ended December 31, 1996. AOPP expects to be able to pass inflationary operating expense increases in future periods through to its tenants through expense recoveries. 14 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenues Recognition The Acquiport Properties' leases are accounted for as operating leases. Minimum rent revenues are recognized on a method which approximates straight-line basis over the respective lease term. Recoveries from tenants, which include an administrative fee, are recognized as income in the period the applicable costs are accrued. Allowance for Uncollectible Accounts Management periodically evaluates amounts billed to tenants and accrued recoveries from tenants and adjusts the allowance for doubtful accounts to reflect the amounts estimated to be uncollectible. Amounts determined to be uncollectible are included in operating expenses. Use of Estimates The preparation of the combined statement of revenues and certain operating expenses in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and certain operating expenses during the reporting periods. Actual results could differ from those estimates. 3. PROPERTY RENTALS Future minimum rental revenues under non-cancelable leases as of December 31, 1996 are as follows: 1997 .................................... $ 12,288,000 1998 .................................... 8,213,000 1999 .................................... 5,483,000 2000 .................................... 3,534,000 2001 .................................... 1,541,000 Thereafter .............................. 355,000 --------------- $ 31,414,000 =============== 15 REPORT OF INDEPENDENT AUDITORS To the Board of Directors of Public Storage, Inc. We have audited the accompanying statement of revenues and certain operating expenses of the Gunston Property (as defined in Note 1) ("Statement") for the year ended December 31, 1996. The Statement is the responsibility of the property's management. Our responsibility is to express an opinion on the above mentioned statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall Statement presentation. We believe that our audit provides a reasonable basis for our opinion. The accompanying Statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission. In our opinion, the Statement presents fairly the revenues and certain operating expenses of the Gunston Property for the year ended December 31, 1996, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Los Angeles, California November 10, 1997 16 THE GUNSTON PROPERTY Statement of Revenues and Certain Operating Expenses Year ended December 31,1996 Rental revenues $ 2,071,000 Certain operating expenses (325,000) Interest expense (1,009,000) --------------- Rental revenues in excess of certain operating and interest expenses $ 737,000 =============== See accompanying notes. 17 THE GUNSTON PROPERTY NOTES TO STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES 1. BACKGROUND AND BASIS FOR PRESENTATION The accompanying statement of revenues and certain operating expenses includes the accounts of the Gunston Property, located in Virginia and proposed to be acquired by American Office Park Properties, Inc. ("AOPP"), a subsidiary of Public Storage, Inc. ("PSI"). The statement is prepared in order to comply with Rule 3.14 of Regulation S-X of the Securities and Exchange Commission. The statement of revenue and certain operating expenses includes only the accounts and activity of the Gunston Property. Items which are not comparable to the proposed future operations of the property have been excluded. Such items include depreciation, amortization, management fees and miscellaneous income. An audited statement is being presented for the most recent fiscal year available instead of the three most recent years based on the following factor: The property is a proposed acquisition from an unaffiliated party. Based on the investigation of the property by AOPP, the Company is not aware of any material factors relating to the property that would cause this financial information not to be necessarily indicative of future operating results other than the factors specifically considered by AOPP as described below. In the decision to acquire the property, AOPP considered the competition from other commercial property owners, the location, the leases, the rental rates and the occupancy level of the property. AOPP has reviewed the expenses of the property, including salaries of on-site personnel, utilities, property taxes, supplies, insurance and repairs and maintenance. AOPP expects that certain expenses will be approximately $200,000 (unaudited) per annum higher in the future than amounts incurred under the 1996 ownership structure of the prior owner. AOPP expects to be able to pass inflationary operating expense increases in future periods through to its tenants through expense recoveries. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenues Recognition The Gunston Property leases are accounted for as operating leases. Minimum rent revenues are recognized on a straight-line basis over the respective lease term. Recoveries from tenants, which include an administrative fee, are recognized as income in the period the applicable costs are accrued. The difference between the rental income recognized on a straight-line basis and the amount collected on a cash basis is not material for any of the periods presented. Use of Estimates The preparation of the combined statement of revenues and certain operating expenses in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and certain operating expenses during the reporting periods. Actual results could differ from those estimates. 18 3. MORTGAGE DEBT The property provides collateral for a mortgage note with an approximate outstanding balance at December 31, 1996 of $12,752,000. The mortgage note bears interest at 7.625% and is due May 2004. 4. PROPERTY RENTALS Future minimum rental revenues under non-cancelable leases as of December 31, 1996 are as follows: 1997 .................................... $ 1,818,000 1998 .................................... 1,827,000 1999 .................................... 1,742,000 2000 .................................... 1,149,000 2001 .................................... 1,110,000 Thereafter .............................. 910,000 --------------- $ 8,556,000 =============== 19 REPORT OF INDEPENDENT AUDITORS To the Board of Directors of Public Storage, Inc. We have audited the accompanying combined statement of revenues and certain operating expenses of the Proposed Acquisition Properties (as defined in Note 1) ("Combined Statement") for the year ended December 31, 1996. The Combined Statement is the responsibility of the property's management. Our responsibility is to express an opinion on the above mentioned statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Combined Statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Combined Statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall Combined Statement presentation. We believe that our audit provides a reasonable basis for our opinion. The accompanying Combined Statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission. In our opinion, the Combined Statement presents fairly the combined revenues and certain operating expenses of the Proposed Acquisition Properties for the year ended December 31, 1996, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Los Angeles, California December 19, 1997 20 PROPOSED ACQUISITION PROPERTIES COMBINED STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES YEAR ENDED DECEMBER 31, 1996 Rental revenues $ 3,584,000 Certain operating expenses (1,044,000) Interest expense (937,000) ------------------- Rental revenues in excess of certain operating and interest expenses $ 1,603,000 =================== See accompanying notes. 21 PROPOSED ACQUISTION PROPERTIES NOTES TO COMBINED STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES 1. BACKGROUND AND BASIS FOR PRESENTATION The accompanying combined statement of revenues and certain operating expenses includes the accounts of two properties located in Virginia (collectively "Proposed Acquisition Properties") and proposed to be acquired by American Office Park Properties, Inc. ("AOPP"), a subsidiary of Public Storage, Inc ("PSI"). The properties are owned by different owners but have a common property manager. The statement is prepared in order to comply with Rule 3.14 of Regulation S-X of the Securities and Exchange Commission. The combined statement of revenue and certain operating expenses includes only the accounts and activity of the Proposed Acquisition Properties. Items which are not comparable to the proposed future operations of the properties have been excluded. Such items include depreciation, amortization, management fees and miscellaneous income. An audited statement is being presented for the most recent fiscal year available instead of the three most recent years based on the following factor: The properties are proposed acquisitions from unaffiliated parties. Based on the investigation of the property by AOPP, the Company is not aware of any material factors relating to the properties that would cause this financial information not to be necessarily indicative of future operating results other than the factors specifically considered by AOPP as described below. In the decision to acquire the properties, AOPP considered the competition from other commercial property owners, the location, the leases, the rental rates and the occupancy level of the properties. AOPP has reviewed the expenses of the property, including salaries of on-site personnel, utilities, property taxes, supplies, insurance and repairs and maintenance. AOPP expects that certain operating expenses, will be approximately $190,000 (unaudited) higher in the future than amounts reported for 1996. AOPP expects to be able to pass inflationary operating expense increases in future periods through to its tenants through expense recoveries. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenues Recognition The Proposed Acquisition Properties leases are accounted for as operating leases. Minimum rent revenues are recognized on a straight-line basis over the respective lease term. Recoveries from tenants, which include an administrative fee, are recognized as income in the period the applicable costs are accrued. The difference between the rental income recognized on a straight-line basis and the amount collected on a cash basis is not material for any of the periods presented. Use of Estimates The preparation of the combined statement of revenues and certain operating expenses in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and certain operating expenses during the reporting periods. Actual results could differ from those estimates. 22 3. MORTGAGE DEBT The two properties provide collateral for mortgage notes. The notes have an aggregate outstanding balance of approximately $14,814,000 at December 31, 1996. The notes bear interest at rates ranging from 7.125% to 8.125% (7.50% weighted average interest rate). The loans mature in July 2005 and May 2006. 4. PROPERTY RENTALS Future minimum rental revenues under non-cancelable leases as of December 31, 1996 are as follows: 1997 .................................... $ 2,755,000 1998 .................................... 2,633,000 1999 .................................... 2,201,000 2000 .................................... 2,117,000 2001 .................................... 1,751,000 Thereafter .............................. 2,195,000 --------------- $ 13,652,000 =============== 23 PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS During 1997, Public Storage, Inc. ("PSI") acquired real estate facilities which in the aggregate are significant to PSI's financial statements. The following unaudited pro forma consolidated financial statements were prepared to reflect the impact of these acquisitions on PSI's consolidated financial statements which include the following. Property acquisitions from affiliated entities: * In September 1997, PSI acquired limited partnership interests in an affiliated partnership for approximately $57 million in cash. The acquisition of this interest combined with PSI's pre-existing ownership interest, increased PSI's ownership in the partnership in excess of 50%. Due to PSI's acquired controlling interest in the partnership, PSI began to include the partnership in its consolidated financial statements. The partnership owns 35 self-storage facilities and one commercial property managed by PSI and a majority owned subsidiary of PSI (American Office Park Properties, Inc. or "AOPP"), respectively. * In October 1997, PSI acquired all of the limited partnership interests in ten affiliated partnerships for approximately $29.7 million in cash. As a result of the acquisition, combined with PSI's existing co-general partnership interest, PSI gained a controlling interest in the partnerships and will include the partnerships in its consolidated financial statements. The partnerships collectively own ten self-storage facilities managed by PSI. * In April 1997 and November 1997, PSI acquired limited partnership interests in two affiliated partnerships for an aggregate cost of approximately $40.7 million in cash. The partnerships jointly own 24 self-storage facilities and 2 commercial properties. The acquisition of these interests combined with PSI's pre-existing ownership interest, increased PSI's ownership in each of these partnerships in excess of 50%. Due to PSI's acquired controlling interest in the partnerships, PSI will begin to include the partnerships in its consolidated financial statements. Acquisitions from third parties: * In September 1997, AOPP acquired one commercial property (the "Largo Property") from an unaffiliated third party for an aggregate cost of $10,374,000, consisting of cash of $10,050,000 and the issuance of 12,000 limited partnership units having a value of $324,000. * In December 1997, AOPP reached agreements in principle to acquire three commercial properties (the "Gunston Property" and "Proposed Acquisitions") from unaffiliated third parties for an aggregate cost of $54,338,000, consisting of cash totaling $19,900,000, the issuance of 279,200 limited partnership units having a value of $7,538,000 and the assumption of $26,900,000 of mortgage debt. * On December 24, 1997, AOPP completed a transaction under which it issued 4,482,852 shares of its common stock ($118,655,000) to a subsidiary of a state pension fund, and the subsidiary of the state pension fund, through a merger and contribution, transferred to AOPP six commercial properties and $1,000,000 cash. AOPP incurred approximately $3,300,000 in transaction costs. As a result of the transaction, AOPP acquired six commercial properties (the "Acquiport Properties"). Separate historical financial statements for the properties acquired from affiliated entities (the "Acquired Properties"), the Largo Property, the Gunston Property, the Proposed Acquisitions, and the Acquiport Properties are located elsewhere in this Form 8-K. In addition to adjustments to reflect impact of the aforementioned property acquisitions, pro forma adjustments were made to reflect certain business combinations which were completed during fiscal 1997, including: 24 * In April 1997, the PSI completed merger transactions with Public Storage Properties XIV, Inc. ("PSP XIV") and Public Storage Properties XV, Inc. ("PSP XV") whereby PSI acquired all of the outstanding shares of each entity for an aggregate cost of approximately $120.4 million, consisting of the issuance of approximately 2,231,000 shares of PSI common stock ($64.2 million valuation), approximately $18.0 million in cash and $38.2 million bookvalue of PSI's existing investment in these entities. * In June 1997, the PSI completed merger transactions with Public Storage Properties XVI, Inc. ("PSP XVI"), Public Storage Properties XVII, Inc. ("PSP XVII"), Public Storage Properties XVIII, Inc. ("PSP XVIII"), and Public Storage Properties XIX, Inc. ("PSP XIX") whereby PSI acquired all of the outstanding shares of each entity for an aggregate cost of approximately $284.6 million, consisting of the issuance of approximately 5,450,000 shares of PSI common stock ($147.8 million valuation) , approximately $50.8 million in cash and $86.0 million bookvalue of PSI's existing investment in these entities. The pro forma consolidated balance sheet at September 30, 1997 has been prepared to reflect (i) the property acquisitions which occurred subsequent to September 30, 1997 and (ii) the proposed acquisitions of the real estate facilities. The pro forma consolidated statement of income for the nine months ended September 30, 1997 and the year ended December 31, 1996 have been prepared assuming (i) property acquisitions and proposed property acquisitions and (ii) the business combinations, as if all such transactions were completed at the beginning 1996. The pro forma adjustments are based upon available information and upon certain assumptions as set forth in the notes to the pro forma consolidated financial statements that PSI believes are reasonable in the circumstances. The pro forma condensed consolidated financial statements and accompanying notes should be read in conjunction with the historical consolidated financial statements of PSI and do not purport to represent what PSI's results of operations would actually have been if the transactions in fact had occurred at the beginning of the respective periods or to project PSI's results of operations for any future date or period. 25
PUBLIC STORAGE, INC. PRO FORMA CONSOLIDATED BALANCE SHEET September 30, 1997 (Unaudited) Pro forma Adjustments ------------------------------- Acquisition of Mergers with real estate Affiliated PSI facilities Entities PSI ASSETS (Historical) (Note 1) (Note 2) (Pro Forma) ---------------- ---------------- -------------- ------------ (Amounts in thousands, except share and per share amounts) Cash and cash equivalents $ 90,763 $ (70,900) $ - $ 19,863 Investments in real estate entities 231,962 (44,131) - 187,831 Real estate facilities, net of accumulated 2,496,541 291,263 - 2,787,804 depreciation Construction in process 51,358 - - 51,358 Intangible assets, net 215,272 - - 215,272 Other assets 68,631 - - 68,631 ---------------- ---------------- -------------- ------------ Total assets $ 3,154,527 $ 176,232 $ - $ 3,330,759 ================ ================ ============== ============ LIABILITIES AND SHAREHOLDERS' EQUITY Notes payable $ 100,349 $ 26,900 $ - $ 127,249 Accrued and other liabilities 71,664 - - 71,664 Minority interest 190,695 149,332 - 340,027 Shareholders' equity: Preferred Stock, $0.01 par value, 50,000,000 shares authorized, 13,313,009 shares outstanding 923,484 - - 923,484 Common stock, $0.10 par value, 200,000,000 shares authorized: Common Stock (102,991,059 issued and outstanding) 10,299 - - 10,299 Class B (7,000,000 issued and outstanding) 700 - - 700 Paid-in capital 1,847,745 - - 1,847,745 Cumulative net income 529,537 - - 529,537 Cumulative distribution paid (519,946) - - (519,946) ---------------- ---------------- -------------- ------------ Total shareholders' equity 2,791,819 - - 2,791,819 ---------------- ---------------- -------------- ------------ Total liabilities and shareholders' equity $ 3,154,527 $ 176,232 $ - $ 3,330,759 ================ ================ ============== ============ Book value per Common Share $ 17.43 $ 17.43 ============== =============
See Accompanying Notes to Pro Forma Consolidated Balance Sheet. 26 PUBLIC STORAGE, INC. NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET September 30, 1997 (Unaudited) 1. Acquisition of real estate facilities: ------------------------------------- Subsequent to September 30, 1997, PSI and AOPP (a majority owned subsidiary of PSI), completed several acquisitions of real estate facilities and had agreements in principle to acquire several other real estate facilities. The following table summarizes the acquisitions and proposed acquisitions which have not been reflected in the September 30, 1997 historical balance sheet of PSI:
Proposed Acquired Gunston Acquiport Acquisition Properties Property Properties Properties Total ----------- ----------- ----------- ------------- ----------- (Amounts in thousands) Cost of Real estate facilities $ 118,270 $ 21,187 $118,655 $33,151 $ 291,263 =========== =========== =========== ============= ============ Consideration: Cash $ 48,700 $ 1,700 $ 2,300 $ 18,200 $ 70,900 Existing investment 44,131 - - - 44,131 Assumption of debt - 12,165 - 14,735 26,900 Minority interest 25,439 7,322 116,355 216 149,332 ----------- ----------- ----------- ------------- ----------- $ 118,270 $ 21,187 $118,655 $33,151 $ 291,263 =========== =========== =========== ============= ============
The following pro forma adjustments have been made to reflect the above property acquisitions and proposed property acquisitions as if such acquisitions were consummated on September 30, 1997: (in 000's) ----------- * Real estate facilities has been adjusted to reflect the acquisition cost of the properties acquired and proposed to be acquired............$ 291,263 ========== * Cash and cash equivalents has been decreased to reflect the cash portion of the proposed acquisition cost...............................$ (70,900) =========== * Investments in real estate entities has been adjusted to reflect the reclassification to real estate ...................................$ (44,131) ========== * Notes payable has been increased to reflect the principal balance of related notes expected to be assumed by PSI in connection with the proposed acquisitions of properties................$ 26,900 ========== * Minority interest has been increased to reflect the issuance of equity (limited partnership units and common stock) of AOPP in connection with the acquisition and proposed acquisition of properties.............................................................$ 149,332 ==========
2. Merger Pro Forma Adjustments ---------------------------- The impact to the historical consolidated balance sheet for each of the business combination transactions with PSP XIV, PSP XV, PSPXVI, PSP XVII, PSP XVIII, and PSP XIX are reflected in the historical amounts, accordingly, no pro forma adjustments have been made. 27
PUBLIC STORAGE, INC. PRO FORMA CONSOLIDATED STATEMENT OF INCOME For the Nine Months Ended September 30, 1997 (Unaudited) Pro Forma Adjustments --------------------------- Acquisition of real estate REIT PSI facilities Mergers PSI (Historical) Note 1 Note 2 (Pro forma) ------------- ------------- ------------- ------------- (Amounts in thousands, except per share amounts) REVENUES: Rental Income: Self-storage facilities $ 274,161 $ 27,984 $ 21,302 $ 323,447 Commercial properties 27,694 17,058 4,490 49,242 Portable self-storage 4,140 - - 4,140 Equity in earnings of real estate 14,681 (3,603) (3,662) 7,416 entities Facility management fees 8,298 (1,694) (1,503) 5,101 Interest and other Income 7,651 - - 7,651 ------------- ------------- ------------- ------------- 336,625 39,745 20,627 396,997 ------------- ------------- ------------- ------------- EXPENSES: Cost of operations: Self-storage facilities 82,746 9,158 7,974 99,878 Commercial properties 11,034 4,304 2,069 17,407 Portable self-storage 25,325 - - 25,325 Cost of managing facilities 1,294 (424) (234) 636 Depreciation and amortization 64,375 9,009 4,932 78,316 General and administrative 5,205 - - 5,205 Interest expense 5,821 1,549 - 7,370 ------------- ------------- ------------- ------------- 195,800 23,596 14,741 234,137 ------------- ------------- ------------- ------------- Income before minority interest in income 140,825 16,149 5,886 162,860 Minority interest in income (7,708) (9,808) - (17,516) Net Income $ 133,117 $ 6,341 $ 5,886 $ 145,344 ============= ============= ============= ============= Net income allocable to preferred shareholders $ 68,134 $ 8,000 $ - $ 76,134 Net income allocable to Common Stock shareholders 64,983 (1,659) 5,886 69,210 ------------- ------------- ------------- ------------- Net Income $ 133,117 $ 6,341 $ 5,886 $ 145,344 ============= ============= ============= ============= PER SHARE OF COMMON STOCK: Net Income $ 0.67 N/A N/A $ 0.67 ============= ============= ============= ============= Weighted Average Shares 97,154 - 5,605 102,759 ============= ============= ============= =============
See Accompanying Notes to Pro Forma Consolidated Statements of Income. 28
PUBLIC STORAGE, INC. PRO FORMA CONSOLIDATED STATEMENT OF INCOME For the Year Ended December 31, 1996 (Unaudited) Pro Forma Adjustments ------------------------------ Acquisition of real estate REIT PSI facilities Mergers PSI (Historical) Note 1 Note 2 (Pro forma) ------------- ------------- ------------- ------------- (Amounts in thousands, except per share amounts) REVENUES: Rental Income: Self-storage facilities $ 270,429 $ 34,464 $ 48,762 $ 353,655 Commercial properties 23,576 21,930 9,982 55,488 Portable self-storage 421 - - 421 Equity in earnings of real estate 22,121 (3,042) (8,032) 11,047 entities Facility management fees 14,428 (2,088) (3,425) 8,915 Interest and other Income 7,976 - 123 8,099 ------------- ------------- ------------- ------------- 338,951 51,264 47,410 437,625 ------------- ------------- ------------- ------------- EXPENSES: Cost of operations: Self-storage facilities 82,494 11,892 18,066 112,452 Commercial properties 10,750 5,757 4,014 20,521 Portable self-storage 1,247 - - 1,247 Cost of managing facilities 2,575 (522) (611) 1,442 Depreciation and amortization 64,967 12,010 11,581 88,558 General and administrative 5,524 - - 5,524 Interest expense 8,482 1,946 - 10,428 ------------- ------------- ------------- ------------- 176,039 31,083 33,050 240,172 ------------- ------------- ------------- ------------- Income before minority interest in income 162,912 20,181 14,360 197,453 Minority interest in income (9,363) (12,139) - (21,502) ------------- ------------- ------------- ------------- Net Income $ 153,549 $ 8,042 $ 14,360 $ 175,951 ============= ============= ============= ============= Net income allocable to preferred shareholders $ 68,599 $ 12,000 $ - $ 80,599 Net income allocable to Common Stock shareholders 84,950 (3,958) 14,360 95,352 ------------- ------------- ------------- ------------- Net Income $ 153,549 $ 8,042 $ 14,360 $ 175,951 ============= ============= ============= ============= Per share of Common Stock: Net Income $ 1.10 N/A N/A $ 1.06 ============= ============= ============= ============= Weighted Average Shares 77,358 - 12,281 89,639 ============= ============= ============= =============
See Accompanying Notes to Pro Forma Consolidated Statements of Income. 29 PUBLIC STORAGE, INC. NOTES TO PRO FORMA STATEMENTS OF INCOME (Unaudited) 1. Acquisition of real estate facilities ------------------------------------- * In September through November 1997, PSI acquired 69 self-storage facilities and 3 commercial properties by gaining control and acquiring the majority interest in several affiliated limited partnerships. These properties are collectively referred to as the "Acquired Properties." * In September 1997, AOPP acquired one commercial property (the "Largo Property") from an unaffiliated third party for an aggregate cost of $10,374,000. On December 24, 1997, AOPP completed a transaction under which it issued 4,482,852 shares of its common stock ($118,655,000) to a subsidiary of a state pension fund, and the subsidiary of the state pension fund, through a merger and contribution, transferred to AOPP six commercial properties and $1,000,000 cash. * In December 1997, AOPP reached agreements in principle to acquire three commercial properties (the "Gunston Property" and "Proposed Acquisitions") from unaffiliated third parties for an aggregate cost of $54,338,000. The following pro forma adjustments have been made to the pro forma consolidated statements of income to reflect the above property acquisitions and proposed acquisitions as if the transactions were completed as of January 1, 1996.
Nine Months Ended Year Ended September 30, 1997 December 31, 1996 ------------------ ----------------- (in 000's) * Rental income - self-storage facilities has been increased to reflect to pro forma rental income of the self-storage properties acquired from Acquired Properties............................................................. $ 27,984 $ 34,464 ========= ========= * Rental income - commercial properties has been increased to reflect the pro forma rental income of the properties, as if these facilities were owned by PSI throughout the entire period presented: * Rental income for the entire period base properties' historical operations: Acquired Properties .............................................. $ 308 $ 406 Largo property.................................................... 952 1,290 Acquiport properties............................................. 11,107 14,579 Gunston property.................................................. 1,698 2,071 Proposed Acquisitions............................................. 2,993 3,584 ---------- ----------- $ 17,058 $ 21,930 ========= ========== * Prior to acquiring the Acquired Properties, PSI accounted for its existing investment in these properties using the equity method. Accordingly, a pro forma adjustment has been made to "Equity in earnings of real estate entities" to eliminate the historical earnings recognized from the partnerships owning the properties..................................... $ (3,603) $ (3,042) ========= =========
30
Nine Months Ended Year Ended September 30, 1997 December 31, 1996 ------------------ ----------------- (in 000's) * Facility management fees has been decreased to reflect the elimination of the historical management fees recognized with respect to the Acquired Properties which as a result of acquiring the properties will no longer be recognized.................. $ (1,694) $ (2,088) ========= ========= * Cost of operations - self-storage facilities has been increased to reflect * pro forma cost of operations of the self-storage properties acquired from the Acquired Properties.................................................. $ 8,734 $ 11,370 * estimated additional management costs expected to be incurred.............................................. 424 522 ---------- ---------- $ 9,158 $ 11,892 ========== ========== * Cost of operations - has been increased to reflect the pro forma cost of operations of these properties, as if they were owned by AOPP throughout the entire period presented: * Cost of operations for the entire period base properties' historical operations: Acquired Properties.............................................. $ 120 $ 180 Largo............................................................ 230 320 Acquiport Properties............................................. 2,541 3,350 Gunston Property................................................. 173 325 Proposed Acquisitions............................................ 821 1,044 * Plus: Pro forma adjustment to reflect additional estimated personnel cost to manage the facilities and property taxes................................... 419 538 ---------- ---------- $ 4,304 $ 5,757 ========= ========= * Cost of facility management has been decreased to reflect the reduction in management expense corresponding to the reduction in facility management fee revenue..................................... $ (424) $ (522) ========== ========== * Depreciation has been increased to reflect depreciation expense for each of the periods........................... $ 9,009 $ 12,010 ========= ========= * Interest expense has been increased to reflect the historical interest expense for each of the periods presented with respect to the assumption of mortgage notes payable ........................... $ 1,549 $ 1,946 ========= ======== * Minority interest in income has been increased to reflect the incremental earnings of the real estate acquisitions allocated to interests in the properties not owned by PSI....................... $ (9,808) $ (12,139) ========== ==========
31
Nine Months Ended Year Ended September 30, 1997 December 31, 1996 ------------------ ----------------- (in 000's) * In August 1997, PSI issued approximately $150 million of preferred stock having a fixed dividend coupon of 8.0%. A portion of the net proceeds were used to finance the cash portion of the acquisition cost of the real estate properties. A pro forma adjustment has been made to increase the income allocation to the preferred shareholders to reflect the incremental cost of capital to finance the cash portion of the acquisition ....................................................... $ 8,000 $ 12,000 ========== ==========
2. REIT Mergers ------------ During April 1997 and June 1997, PSI completed merger transactions with five affiliated REITs (collectively the "PSP REITs"). The following pro forma adjustments have been made assuming the merger transactions with the PSP REITs were completed at the beginning of the year ended December 31, 1996:
Nine Months Ended Year Ended September 30, 1997 December 31, 1996 ------------------ ----------------- (in 000's) * A pro forma adjustment has been made to reflect the PSP REITs historical rental income - self-storage facilities for the period prior to the merging with PSI................................... $ 21,302 $ 48,762 ============ =========== * A pro forma adjustment has been made to reflect the PSP REITs historical rental income - commercial properties for the period prior to the merging with PSI................................................... $ 4,490 $ 9,982 ============ =========== * Prior to merging into PSI, PSI accounted for its existing investment in the PSP REITs using the equity method. A pro forma adjustment has been made to eliminate the historical earnings with respect to the PSP REITs.......................................... $ (3,662) $ (8,032) ============ =========== * Facility management fees has been decreased to reflect the elimination the historical management fees recognized with respect to the Acquired Properties which as a result of acquiring the properties will no longer be recognized.................. $ (1,503) $ (3,425) =========== ======== * A pro forma adjustment has been made to reflect the PSP REITs historical interest and other income........................................................... $ - $ 123 ============ ===========
32
Nine Months Ended Year Ended September 30, 1997 December 31, 1996 ------------------ ----------------- (in 000's) * A pro forma adjustment has been made to reflect the PSP REITs historical cost of operations - self-storage facilities for the period prior to the merging with PSI................................... $ 7,974 $ 18,066 ============ =========== * A pro forma adjustment has been made to reflect the PSP REITs historical cost of operations - commercial properties for the period prior to the merging with PSI................................... $ 2,069 $ 4,014 ============ =========== * Cost of facility management has been decreased to reflect the reduction in management expense corresponding to the reduction in facility management fee revenue..................................... $ (234) $ (611) ============ =========== * Depreciation and amortization was increased to reflect the pro form depreciation expense with respect to the real estate facilities acquired (less amounts reflected in the historical amounts)............................................................... $ 4,932 $ 11,581 ============ =========== * In addition to cash, PSI issued approximately 7,681,000 common shares as part of the acquisition cost of the PSP REIT mergers. In addition, to fund the cash portion of the costs, PSI issued in March 1997, 4,600,000 shares of common stock raising net proceeds of approximately $126 million. Weighted average common share outstanding has been increased as follows: * Weighed average common share issued in the PSP REIT mergers as if shares were outstanding for the entire period.................................... 7,681 7,681 * Weighted average common shares issued to finance the cash portion of the merger cost.......................... 4,600 4,600 * Less weighted average shares already included in the historical amounts................................... (6,676) - ------------ ----------- 5,605 12,281 ============ ===========
33 b. ELECTION OF DIRECTOR On January 6, 1998, the Board of Directors of Public Storage, Inc. (the "Company") increased the number of authorized directors of the Company from six to seven and elected B. Wayne Hughes, Jr. as a director of the Company. B. Wayne Hughes, Jr., age 38, has been a Vice President - Acquisitions of the Company since 1992. He is the son of B. Wayne Hughes. 34 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Public Storage, Inc. Date: January 15, 1998 By: /s/ John Reyes -------------- John Reyes Senior Vice President and Chief Financial Officer 35 EX-23.1 2 CONSENT OF INDEPENDENT AUDITORS Exhibit 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 33-36004) of Public Storage, Inc., formerly Storage Equities, Inc., pertaining to the 1990 Stock Option Plan, the Registration Statement on Form S-8 (No. 33-55541) pertaining to the 1994 Stock Option Plan, the Registration Statement on Form S-8 (No. 333-13463) pertaining to the 1996 Stock Option and Incentive Plan, the Registration Statements on Form S-3 (Nos. 333-18395 and 333-41123) and in the related prospectus and the Registration Statement on Form S-4 (No. 33-64971) and in the related prospectus of (i) our report dated February 25, 1997 with respect to the consolidated financial statements and schedules of Public Storage, Inc. included in the Annual Report (Form 10-K) for 1996 filed with the Securities and Exchange Commission, (ii) our report dated December 16, 1997 on the combined statements of revenues and certain operating expenses of the Acquired Properties for each of the three years in the period ended December 31, 1996, our report dated October 9, 1997 on the statement of revenues and certain operating expenses of the Largo Property for the year ended December 31, 1996, our report dated November 10, 1997 on the statement of revenues and certain operating expenses of the Gunston Property for the year ended December 31, 1996, and our report dated December 19, 1997 on the combined statement of revenues and certain operating expenses of the Proposed Acquisition Properties for the year ended December 31, 1996, each of which is included in the Current Report on Form 8-K, as amended by a Form 8-K/A, each dated December 24, 1997 of Public Storage, Inc. and (iii) our report dated February 18, 1997 with respect to the financial statements of Public Storage Properties XVI, Inc., our report dated February 18, 1997 with respect to the financial statements of Public Storage Properties XVII, Inc., our report dated February 18, 1997 with respect to the financial statements of Public Storage Properties XVIII, Inc. and our report dated February 18, 1997 with respect to the financial statements of Public Storage Properties XIX, Inc., which are included in the Registration Statement on Form S-4 (No. 333-26959) of Public Storage, Inc. ERNST & YOUNG LLP January 15, 1998 Los Angeles, California 36 EX-23.2 3 CONSENT OF INDEPENDENT AUDITORS Exhibit 23.2 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 33-36004) of Public Storage, Inc., formerly Storage Equities, Inc., pertaining to the 1990 Stock Option Plan, the Registration Statement on Form S-8 (No. 33-55541) pertaining to the 1994 Stock Option Plan, the Registration Statement on Form S-8 (No. 333-13463) pertaining to the 1996 Stock Option and Incentive Plan, the Registration Statements on Form S-3 (Nos. 333-18395 and 333-41123) and in the related prospectus and Registration Statement on Form S-4 (No. 33-64971) and in the related prospectus of our report dated February 14, 1997 on the combined summary of historical information relating to revenues and certain operating expenses of the Acquiport Properties which is included in the Current Report on Form 8-K, as amended by a Form 8-K/A, each dated December 24, 1997 of Public Storage, Inc. KPMG PEAT MARWICK LLP January 15, 1998 303 Peachtree Street, NE Atlanta, GA 30308 37 -----END PRIVACY-ENHANCED MESSAGE-----