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 0-9208
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PUBLIC STORAGE PROPERTIES V, LTD.
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(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
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(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
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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 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 10
PUBLIC STORAGE PROPERTIES V, LTD.
CONDENSED BALANCE SHEETS
June 30, December 31,
2001 2000
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(Unaudited)
ASSETS
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Cash and cash equivalents $ 389,000 $ 410,000
Marketable securities of affiliate (cost of $8,181,000) 16,238,000 13,357,000
Rent and other receivables 219,000 136,000
Real estate facilities, at cost:
Buildings and equipment 16,690,000 16,546,000
Land 4,714,000 4,714,000
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21,404,000 21,260,000
Less accumulated depreciation (13,159,000) (12,661,000)
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8,245,000 8,599,000
Other assets 90,000 95,000
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Total assets $ 25,181,000 $ 22,597,000
================ ================
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Accounts payable $ 322,000 $ 176,000
Deferred revenue 234,000 232,000
Note payable to commercial bank 4,500,000 7,600,000
Partners' equity:
Limited partners' equity, $500 per unit, 44,000 units
authorized, issued and outstanding 8,961,000 6,989,000
General partners' equity 3,107,000 2,424,000
Other comprehensive income 8,057,000 5,176,000
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Total partners' equity 20,125,000 14,589,000
---------------- ----------------
Total liabilities and partners' equity $ 25,181,000 $ 22,597,000
================ ================
See accompanying notes.
2
PUBLIC STORAGE PROPERTIES V, LTD.
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- -------------------------------
2001 2000 2001 2000
------------- ------------- ------------- -------------
REVENUES:
Rental income $ 2,202,000 $ 2,018,000 $ 4,347,000 $ 3,974,000
Dividends from marketable securities of affiliate 128,000 128,000 256,000 254,000
Other income 2,000 2,000 4,000 4,000
------------- ------------- ------------- -------------
2,332,000 2,148,000 4,607,000 4,232,000
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COSTS AND EXPENSES:
Cost of operations 470,000 521,000 947,000 990,000
Management fees paid to affiliates 131,000 120,000 259,000 237,000
Depreciation and amortization 244,000 241,000 498,000 481,000
Administrative 17,000 29,000 49,000 53,000
Interest expense 92,000 166,000 199,000 365,000
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954,000 1,077,000 1,952,000 2,126,000
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NET INCOME $ 1,378,000 $ 1,071,000 $ 2,655,000 $ 2,106,000
============= ============= ============= =============
Limited partners' share of net income ($59.75 per
unit in 2001 and $47.39 per unit in 2000) $ 2,629,000 $ 2,085,000
General partners' share of net income 26,000 21,000
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$ 2,655,000 $ 2,106,000
============= =============
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, 2000 $ 6,989,000 $ 2,424,000 $ 5,176,000 $ 14,589,000
Change in unrealized gain of marketable equity
securities - - 2,881,000 2,881,000
Net income 2,629,000 26,000 - 2,655,000
Equity transfer (657,000) 657,000 - -
----------------- ----------------- ----------------- -----------------
Balance at June 30, 2001 $ 8,961,000 $ 3,107,000 $ 8,057,000 $ 20,125,000
================= ================= ================= =================
See accompanying notes.
4
PUBLIC STORAGE PROPERTIES V, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30,
------------------------------------
2001 2000
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Cash flows from operating activities:
Net income $ 2,655,000 $ 2,106,000
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 498,000 475,000
Increase in rent and other receivables (83,000) (25,000)
Amortization of prepaid loan fees 5,000 6,000
Increase in accounts payable 146,000 89,000
Increase (decrease) in deferred revenue 2,000 (10,000)
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Total adjustments 568,000 535,000
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Net cash provided by operating activities 3,223,000 2,641,000
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Cash flow from investing activities:
Additions to real estate facilities (144,000) (117,000)
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Net cash used in investing activities (144,000) (117,000)
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Cash flow from financing activities:
Principal payments on note to commercial bank (3,100,000) (2,420,000)
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Net cash used in financing activities (3,100,000) (2,420,000)
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Net (decrease) increase in cash and cash equivalents (21,000) 104,000
Cash and cash equivalents at beginning of period 410,000 302,000
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Cash and cash equivalents at end of period $ 389,000 $ 406,000
=============== ===============
Supplemental schedule of non-cash activities:
Receipt of stock dividend:
Marketable securities $ - $ 347,000
=============== ===============
Rent and other receivables $ - $ (347,000)
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Increase in fair market value of marketable securities:
Marketable securities $ 2,881,000 $ 413,000
=============== ===============
Other comprehensive income $ 2,881,000 $ 413,000
=============== ===============
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, 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. Marketable securities at June 30, 2001 consist of 533,334 shares of
common stock and 17,331 shares of Equity Stock, Series A of Public
Storage, Inc., a publicly traded real estate investment trust and a
general partner of the Partnership. We have designated our portfolio of
marketable securities as available for sale. Accordingly, at June 30,
2001, we have recorded the marketable securities at fair value, based
upon the closing quoted prices of the securities at June 29, 2001.
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, we borrowed $17,000,000 from a commercial bank. The
proceeds of the loan were used to repay our mortgage debt. The loan is
unsecured and bears interest at the London Interbank Offering Rate
("LIBOR") plus 0.60% to 1.20% depending on our interest coverage ratio
(4.40% at June 30, 2001). 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)
We have entered into an interest rate swap agreement to reduce the
impact of changes in interest rates on a portion of our floating rate
debt. The agreement, which covers $5,000,000 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 our interest
coverage ratio (6.24% as of June 30, 2001). 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 $70,000.
6. 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.
7
PUBLIC STORAGE PROPERTIES V, 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
- ---------------------
THREE AND SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE AND SIX
MONTHS ENDED JUNE 30, 1999:
Our net income for the six months ended June 30, 2001 was $2,655,000
compared to $2,106,000 for the six months ended June 30, 2000, representing an
increase of $549,000 or 26%. Our net income for the three months ended June 30,
2001 was $1,378,000 compared to $1,071,000 for the three months ended June 30,
2000, representing an increase of $307,000 or 29%. 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 $4,347,000
compared to $3,974,000 for the six months ended June 30, 2000, representing an
increase of $373,000 or 9%. Rental income for the three months ended June 30,
2001 was $2,202,000 compared to $2,018,000 for the three months ended June 30,
2000, representing an increase of $184,000 or 9%. These increases are primarily
attributable to higher rental rates. Weighted average occupancy levels at the
mini-warehouse facility were 92% and 94% for the six months ended June 30, 2001
and 2000, respectively. Annual realized rent at the mini-warehouse facilities
for the six months ended June 30, 2001 increased to $12.20 per occupied square
foot from $11.02 per occupied square foot for the six months ended June 30,
2000. Weighted average occupancy levels at the business park facility were 98%
and 99% for the six months ended June 30, 2001 and 2000, respectively. Annual
realized rent at our business park facility for the six months ended June 30,
8
2001 increased to $21.78 per occupied square foot from $16.88 per occupied
square foot for the six months ended June 30, 2000.
Cost of operations (including management fees paid to affiliate) for
the six months ended June 30, 2001 was $1,206,000 compared to $1,227,000 for the
six months ended June 30, 2000, representing an decrease of $21,000 or 2%. Cost
of operations (including management fees paid to affiliate) for the three months
ended June 30, 2001 was $601,000 compared to $641,000 for the three months ended
June 30, 2000, representing an decrease of $40,000 or 6%. This decrease is
mainly attributable to decreases in payroll expenses.
Interest expense was $199,000 in the six months ended June 30, 2001
from $365,000 in the same period in 2000, a $166,000 or 45% decrease. This
decrease is mainly attributable to a lower outstanding principal balance.
LIQUIDITY AND CAPITAL RESOURCES
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Cash flows from operating activities ($3,223,000 for the six months
ended June 30, 2001) have been sufficient to meet all current obligations of the
Partnership.
At June 30, 2001, we held 533,334 shares of common stock and 17,331
shares of Equity Stock, Series A of Public Storage, Inc. with a fair value
totaling $16,238,000 (cost basis of $8,181,000 at June 30, 2001). We recognized
$256,000 in dividends for the six months ended June 30, 2001.
On April 1, 1999, we borrowed $17,000,000 from a commercial bank. The
proceeds of the loan were used to repay our mortgage debt. The loan is unsecured
and bears interest at the London Interbank Offering Rate ("LIBOR") .125% plus
0.60% to 1.20% depending on our interest coverage ratio (4.40% at June 30,
2001). 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.
We have entered into an interest rate swap agreement to reduce the
impact of changes in interest rates on a portion of our floating rate debt. The
agreement, which covers $5,000,000 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 our interest coverage ratio (6.24% at June 30,
2001). 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 $70,000.
9
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:
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 V, 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