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 June 30, 2001
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from to
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Commission File Number 0-8667
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PUBLIC STORAGE PROPERTIES, LTD.
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(Exact name of registrant as specified in its charter)
California 95-3196921
- ---------------------------------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
701 Western Ave.
Glendale, California 91201-2349
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 244-8080
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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
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INDEX
Page
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PART I. FINANCIAL INFORMATION
Condensed balance sheets at June 30, 2001
and December 31, 2000 2
Condensed statements of income for the three and
six months ended June 30, 2001 and 2000 3
Condensed statement of partners' equity (deficit) for the
six months ended June 30, 2001 4
Condensed statements of cash flows for the
six months ended June 30, 2001 and 2000 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
Item 6 Exhibits and Reports on Form 8-K 10
PUBLIC STORAGE PROPERTIES, LTD.
CONDENSED BALANCE SHEETS
June 30, December 31,
2001 2000
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(Unaudited)
ASSETS
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Cash and cash equivalents $ 187,000 $ 324,000
Rent and other receivables 43,000 74,000
Real estate facilities, at cost:
Building, land improvements and equipment 8,938,000 8,814,000
Land 2,476,000 2,476,000
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11,414,000 11,290,000
Less accumulated depreciation (7,370,000) (7,103,000)
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4,044,000 4,187,000
Other assets 67,000 79,000
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Total assets $ 4,341,000 $ 4,664,000
=============== ===============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
------------------------------------------
Accounts payable $ 118,000 $ 77,000
Deferred revenue 182,000 151,000
Note payable to commercial bank 3,925,000 6,025,000
Partners' equity (deficit):
Limited partners' equity (deficit), $500 per unit, 20,000 units
authorized, issued and outstanding 86,000 (1,180,000)
General partners' equity (deficit) 30,000 (409,000)
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Total partners' equity (deficit) 116,000 (1,589,000)
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Total liabilities and partners' equity (deficit) $ 4,341,000 $ 4,664,000
=============== ===============
See accompanying notes.
2
PUBLIC STORAGE PROPERTIES, LTD.
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- -------------------------------
2001 2000 2001 2000
------------- ------------- ------------- -------------
REVENUES:
Rental income $ 1,471,000 $ 1,347,000 $ 2,909,000 $ 2,634,000
Gain on sale of land - 69,000 - 135,000
Other income 1,000 3,000 5,000 5,000
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1,472,000 1,419,000 2,914,000 2,774,000
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COSTS AND EXPENSES:
Cost of operations 283,000 284,000 575,000 571,000
Management fees paid to affiliate 89,000 81,000 175,000 158,000
Depreciation 133,000 132,000 267,000 271,000
Administrative 16,000 26,000 44,000 55,000
Interest expense 66,000 103,000 148,000 220,000
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587,000 626,000 1,209,000 1,275,000
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NET INCOME $ 885,000 $ 793,000 $ 1,705,000 $ 1,499,000
============= ============= ============= =============
Limited partners' share of net income
($84.40 per unit in 2001 and $74.20 per
unit in 2000) $ 1,688,000 $ 1,484,000
General partners' share of net income 17,000 15,000
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$ 1,705,000 $ 1,499,000
============= =============
See accompanying notes.
3
PUBLIC STORAGE PROPERTIES, LTD.
CONDENSED STATEMENT OF PARTNERS' EQUITY (DEFICIT)
(UNAUDITED)
Total
Limited General Partners'
Partners Partners Equity
----------------- ----------------- -----------------
Balance at December 31, 2000 $ (1,180,000) $ (409,000) $ (1,589,000)
Net income 1,688,000 17,000 1,705,000
Equity transfer (422,000) 422,000 -
----------------- ----------------- -----------------
Balance at June 30, 2001 $ 86,000 $ 30,000 $ 116,000
================= ================= =================
See accompanying notes.
4
PUBLIC STORAGE PROPERTIES, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30,
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2001 2000
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Cash flows from operating activities:
Net income $ 1,705,000 $ 1,499,000
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 267,000 271,000
Gain on sale of land - (135,000)
Decrease (increase) in rent and other receivables 31,000 (23,000)
Decrease in other assets 12,000 7,000
Increase (decrease) in accounts payable 41,000 (46,000)
Increase in deferred revenue 31,000 -
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Total adjustments 382,000 74,000
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Net cash provided by operating activities 2,087,000 1,573,000
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Cash flows from investing activities:
Proceeds from sale of land - 171,000
Additions to real estate facilities (124,000) (36,000)
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Net cash (used in) provided by investing activities (124,000) 135,000
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Cash flows from financing activities:
Principal payments on note payable to commercial bank (2,100,000) (1,700,000)
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Net cash used in financing activities (2,100,000) (1,700,000)
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Net (decrease) increase in cash and cash equivalents (137,000) 8,000
Cash and cash equivalents at the beginning of the period 324,000 153,000
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Cash and cash equivalents at the end of the period $ 187,000 $ 161,000
================ ================
See accompanying notes.
5
PUBLIC STORAGE PROPERTIES, 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, 2000.
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 June 30, 2001, the results of its operations for the six
months ended June 30, 2001 and 2000 and its cash flows for the six
months then ended.
3. The results of operations for the three and six months ended June 30,
2001 are not necessarily indicative of the results expected for the
full year.
4. During October 1998, we borrowed $12,400,000 from a commercial bank.
The loan is unsecured and bears interest at the London Interbank
Offering Rate ("LIBOR") plus 0.55% (4.35% as of June 30, 2001). The
loan requires monthly payments of interest and matures October 2002.
Principal may be paid, in whole or in part, at any time without penalty
or premium.
We also entered into interest rate swap agreements to reduce the impact
of changes in interest rates on a portion of its floating rate debt.
The agreement, which covers $5,000,000 of debt through October 2000,
effectively changes the interest rate exposure from floating rate to a
fixed rate of 5.205%. The second agreement, which covers $2,500,000 of
debt through October 2001 and effectively changes the interest rate
exposure from floating rate to a fixed rate of 5.33%. Market gains and
losses on the value of the swap are deferred and included in income
over the life of the contract. We record the differences paid or
received on the interest rate swap in interest expense as payments are
made or received. As of June 30, 2001 the unrealized loss on the
interest swap, if required to be liquidated was approximately $5,000.
6
5. In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133 ("SFAS 133"), "Accounting for Derivative Instruments
and Hedging Activities," as amended in June 2000 by Statement of
Financial Accounting Standards No. 138 ("SFAS 138"), "Accounting for
Certain Derivative Instruments and Certain Hedging Activities," which
requires companies to recognize all derivatives as either assets or
liabilities in the balance sheet and measure such instruments at fair
value. As amended by Statement of Financial Accounting Standards No.
137 ("SFAS 137"), "Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FASB Statement No. 133,"
the provisions of SFAS 133 will require adoption by the Partnership on
January 1, 2001. The Partnership adopted SFAS 133, as amended by SFAS
138, on January 1, 2001, and the adoption had no material impact on the
Partnership's consolidated financial statements.
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PUBLIC STORAGE PROPERTIES, LTD.,
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD LOOKING STATEMENTS
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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
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THREE AND SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO THREE AND SIX
MONTHS ENDED JUNE 30, 2000:
Our net income for the six months ended June 30, 2001 was $1,705,000
compared to $1,499,000 for the six months ended June 30, 2000, representing an
increase of $206,000 or 14%. Our net income for the three months ended June 30,
2001 was $885,000 compared to $793,000 for the three months ended June 30, 2000,
representing an increase of $92,000 or 12%. These increases are primarily a
result of increased operating results at our real estate facilities and a
decrease in interest expense.
Rental income for the six months ended June 30, 2001 was $2,909,000
compared to $2,634,000 for the six months ended June 30, 2000, representing an
increase of $275,000 or 10%. Rental income for the three months ended June 30,
2001 was $1,471,000 compared to $1,347,000 for the three months ended June 30,
2000, representing an increase of $124,000 or 9%. These increases are primarily
attributable to higher rental rates. Weighted average occupancy levels at the
mini-warehouse facilities were 92% and 96% for the six months ended June 30,
2001 and 2000, respectively. Annual realized rent for the six months ended June
30, 2001 increased to $12.41 per occupied square foot compared $10.85 per
occupied square foot for the six months ended June 30, 2000.
Cost of operations (including management fees paid to an affiliate) for
the six months ended June 30, 2001 was $750,000 compared to $729,000 for the six
months ended June 30, 2000, representing an increase of $21,000 or 3%. Cost of
operations (including management fees paid to an affiliate) for the three months
ended June 30, 2001 was $372,000 compared to $365,000 for the three months ended
8
June 30, 2000, representing a increase of $7,000 or 2%. This increase is
attributable to increases in management fees which are based on property
revenues of the Partnership.
Interest expense was $148,000 in the six months ended June 30, 2001
compared to $220,000 in the same period in 2000, a $72,000 or 32% decrease. This
decrease is mainly attributable to a lower outstanding principal balance.
LIQUIDITY AND CAPITAL RESOURCES
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Cash generated from operations ($2,087,000 for the six months ended
June 30, 2001) has been sufficient to meet all current obligations of the
Partnership.
During October 1998, we borrowed $12,400,000 from a commercial bank to
payoff other loans. The loan is unsecured and bears interest at the London
Interbank Offering Rate ("LIBOR") plus 0.55% (4.35% as of June 30, 2001). The
loan requires monthly payments of interest and mature October 2002. Principal
may be paid, in whole or in part, at any time without penalty or premium.
We have also entered into interest rate swap agreements to reduce the
impact of changes in interest rates on a portion of its floating rate debt. The
agreement, which covers $5,000,000 of debt through October 2000, effectively
changes the interest rate exposure from floating rate to a fixed rate of 5.205%.
The second agreement, which covers $2,500,000 of debt through October 2001 and
effectively changes the interest rate exposure from floating rate to a fixed
rate of 5.33%. Market gains and losses on the value of the swap are deferred and
included in income over the life of the contract. We record the differences paid
or received on the interest rate swap in interest expense as payments are made
or received. As of June 30, 2001, the unrealized loss on the interest rate swap,
if required to be liquidated was approximately $5,000.
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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:
None
(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: August 13, 2001
PUBLIC STORAGE PROPERTIES, LTD.
BY: Public Storage, Inc.
General Partner
BY: /s/ John Reyes
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John Reyes
Senior Vice President and
Chief Financial Officer
10