SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 2004 or
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[ ] 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
PUBLIC STORAGE PROPERTIES V, LTD.
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(Exact name of Registrant as specified in its charter)
California 95-3292068
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
701 Western Avenue, 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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Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
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(Title of class)
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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.
[ X ] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to the Form 10-K. [ X ]
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act) Yes [ ] No [ X ]
The aggregate market value of the voting and non-voting common equity
held by non-affiliates of the Registrant as of June 30, 2004:
Limited Partner Units, $500.00 Par Value - $24,554,000 (computed on the
basis of $1,450.00 per unit which was the highest reported sale price prior to
the quarter ended June 30, 2004).
The number of units outstanding of the registrant's classes of common equity as
of March 25, 2005:
Units of Limited Partnership Interest, $500.00 Par Value - 44,000 units
DOCUMENTS INCORPORATED BY REFERENCE
NONE
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PART I
ITEM 1. BUSINESS
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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
21E 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 Public Storage
Properties V, Ltd. (the "Partnership") to be materially different from those
expressed or implied in the forward looking statements. Such factors are
described in Item 1A, "Risk Factors" and include changes in general economic
conditions and in the markets in which the Partnership operates and the impact
of competition from new and existing storage and commercial facilities and
other storage alternatives, which could impact rents and occupancy levels at
the Partnership's facilities; the impact of the regulatory environment as well
as national, state, and local laws and regulations, which could increase the
Partnership's expense and reduce the Partnership's cash available for
distribution; and economic uncertainty due to the impact of war or terrorism
could adversely affect our business plan. We disclaim any obligation to
publicly release the results of any revisions to these forward-looking
statements reflecting new estimates, events or circumstances after the date of
this report.
General
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The Partnership is a publicly held limited partnership formed under the
California Uniform Limited Partnership Act in May 1978. The Partnership raised
$22,000,000 in gross proceeds by selling 44,000 units of limited partnership
interests ("Units") in an interstate offering, which commenced in March 1979
and completed in October 1979. The Partnership was formed to engage in the
business of developing and operating self-storage facilities offering storage
space for personal and business use.
The Partnership has reported annually to the Securities and Exchange
Commission ("SEC") on form 10-K which includes financial statements certified
by independent public accountants. The Partnership has also reported quarterly
to the SEC on Form 10-Q and includes unaudited financial statements with such
filings. The Partnership expects to continue such reporting. On an annual
basis, the Partnership mails the audited financial statements and related
footnotes, to all limited partners.
The public may read and copy any materials this Partnership files with
the SEC at the SEC's Public Reference Room at 450 Fifth Street, NW,
Washington, DC 20549. The public may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-732-0330. The
partnership does not maintain a website. However, the SEC maintains an
Internet site that contains reports, proxy and information statements, and
other information regarding issuers that file electronically with the SEC at
http://www.sec.gov.
In 1995, there were a series of mergers among Public Storage Management,
Inc. (which was the Partnership's self-storage facilities operator), Public
Storage, Inc. (which was one of the Partnership's general partners) and their
affiliates (collectively, "PSMI"), culminating in the November 16, 1995 merger
(the "PSMI Merger") of PSMI into Storage Equities, Inc., a real estate
investment trust ("REIT") organized as a California corporation. In the PSMI
Merger, Storage Equities, Inc. was renamed Public Storage, Inc. ("PSI") and
PSI acquired substantially all of PSMI's United States real estate operations
and became a co-general partner of the Partnership and the operator of the
Partnership's self-storage facilities.
The Partnership's general partners are PSI and B. Wayne Hughes ("Hughes")
(collectively referred to as the "General Partners"). Hughes has been a
general partner of the Partnership since its inception. Hughes is chairman of
the board of PSI, was chief executive officer of PSI through November 7, 2002,
and Hughes and members of his family (the "Hughes Family") are the major
shareholders of PSI.
The Partnership is managed and its investment decisions are made by
Hughes and the executive officers and directors of PSI. The limited partners
of the Partnership have no right to participate in the operation or conduct of
its business and affairs.
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The term of the Partnership is until all properties have been sold and in
any event, not later than December 31, 2038.
Investment Objectives and Policies
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The Partnership's objectives are to (i) preserve and protect invested
capital, (ii) maximize the potential for appreciation in value of its
investments, and (iii) provide for cash distributions from operations.
Following are the Partnership's investment practices and policies. The
Partnership does not anticipate making any additional investments other than
maintenance capital expenditures and does not anticipate liquidating the
investments it now holds. While a vote of the limited partners is generally
required to change the Partnership's investment policies, the General Partners
hold a majority of the limited partnership units, and as a result, the General
Partners could change these policies through their vote.
* Our investments consist of (i) 14 self-storage facilities, (ii) a
parcel of vacant land, (iii) 533,334 shares of Public Storage,
Inc. common stock and (iv) 17,331 depositary shares of Public
Storage, Inc. Equity Stock, Series A. All of these investments are
in real estate or real estate entities holding real estate located
in the United States. See "Self-storage Facilities" and Item 2
"Properties" for further information. On March 31, 2005, the
Partnership distributed substantially all of the shares of Public
Storage, Inc. common stock and depositary shares of Public
Storage, Equity Stock, Series A, on a pro-rata basis to all
unitholders of record as of January 1, 2005. These investments
were acquired both for income and capital gains.
* There is no limitation on the amount or percentage of assets,
which can be invested in any specific person.
The Partnership does not anticipate issuing senior securities, making
loans to other persons, investing in the securities of other issuers for the
purpose of exercising control, underwriting the securities of other issuers,
engaging in the purchase and sale of investments (with the exception of
distributing its holdings of Public Storage securities to unitholders as noted
above), offering securities in exchange for property, or repurchasing or
otherwise reacquiring its outstanding securities. The partnership may consider
borrowing money with the intent of using the proceeds for distribution to
partners.
Self-storage Facilities
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Self-storage facilities are designed to offer accessible storage space
for personal and business use at a relatively low cost. A user rents a fully
enclosed space which is for the user's exclusive use and to which only the
user has access on an unrestricted basis during business hours. On-site
operation is the responsibility of property managers who are supervised by
district managers. Some self-storage facilities also include rentable
uncovered parking areas for vehicle storage. Leases for self-storage space may
be on a long-term or short-term basis, although typically spaces are rented on
a month-to-month basis. Rental rates vary according to the location of the
property and the size of the storage space.
Users of space in self-storage facilities include both individuals and
large and small businesses. Individuals usually employ this space for storage
of, among other things, furniture, household appliances, personal belongings,
motor vehicles, boats, campers, motorcycles and other household goods.
Businesses normally employ this space for storage of excess inventory,
business records, seasonal goods, equipment and fixtures.
Self-storage facilities in which the Partnership has invested generally
consist of three to seven buildings containing an aggregate of between 323 to
814 storage spaces, most of which have between 25 and 400 square feet and an
interior height of approximately 8 to 12 feet.
The Partnership experiences minor seasonal fluctuations in the occupancy
levels of self-storage facilities with occupancies higher in the summer months
than in the winter months. The Partnership believes that these fluctuations
result in part from increased moving activity during the summer.
3
The Partnership's self-storage facilities are located in California,
Florida and Georgia and are generally located in heavily populated areas and
close to concentrations of apartment complexes, single family residences and
commercial developments. However, there may be circumstances in which it may
be appropriate to own a property in a less populated area, for example, in an
area that is highly visible from a major thoroughfare and close to, although
not in, a heavily populated area. Moreover, in certain population centers,
land costs and zoning restrictions may create a demand for space in nearby
less populated areas.
As with most other types of real estate, the conversion of self-storage
facilities to alternative uses in connection with a sale or otherwise would
generally require substantial investment. However, the Partnership does not
intend to convert its self-storage facilities to other uses.
Commercial Property
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The Partnership owns one commercial property, a business park located in
San Francisco, California, on the same parcel of land as the Partnership's
self-storage facility. The commercial property represents less than 4% of the
Partnership's revenues and less than 1% of the Partnership's assets based on
original cost.
Operating Strategies
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The Partnership's self-storage facilities are operated by PSI under the
"Public Storage" name, which the Partnership believes is the most recognized
name in the self-storage industry. The major elements of the Partnership's
operating strategies are as follows:
o Capitalize on "Public Storage's" name recognition. PSI, together with
its predecessor, has more than 20 years of operating experience in the
self-storage business. PSI has informed the Partnership that it is the
largest self-storage facility operator in the United States in terms
of both number of facilities and rentable space operated. PSI believes
that its marketing and advertising programs improve its competitive
position in the market. PSI's in-house Yellow Pages staff designs and
places advertisements in directories in virtually every market in
which it operates. Customers calling either PSI's toll-free telephone
referral system, (800) 44-STORE, or a self-storage facility are
directed to PSI's reservation system where a trained representative
discusses with the customer space requirements, price and location
preferences and also informs the customer of other products and
services provided by PSI. The telephone reservation system supports
rental activity at all of the Partnership's properties.
o Maintain high occupancy levels and increase annual realized rents.
Subject to market conditions, the Partnership generally seeks to
achieve average occupancy levels in excess of 90% and to eliminate
promotions prior to increasing rental rates. Average occupancy for the
Partnership's self-storage facilities was 90% in 2004 and 2003. Annual
realized rents per occupied square foot increased from $12.32 in 2003
to $12.73 in 2004.
o Systems and controls. PSI has an organizational structure and a
property operation system which links its corporate office with each
self-storage facility. This enables PSI to obtain daily information
from each facility and to achieve efficiencies in operations and
maintain control over its space inventory, rental rates, promotional
discounts and delinquencies. Expense management is achieved through
centralized payroll and accounts payable systems and a comprehensive
property tax appeals department, and PSI has an extensive internal
audit program designed to ensure proper handling of cash collections.
o Professional property operation. There are approximately 4,100 persons
who render services for the Public Storage system, primarily personnel
engaged in property operations, substantially all of whom are employed
by a clearing company that provides certain administrative and
cost-sharing services to PSI and others owners of properties operated
by PSI.
Property Operator
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The Partnership's self-storage facilities are managed by PSI (as
successor to PSMI) pursuant to a Management Agreement. The Partnership's
commercial property is managed by PS Business Parks, L.P. ("PSBP"), pursuant
to a Management Agreement. PSBP is an operating partnership formed to own and
operate business parks in which PSI has a significant economic interest. The
general partner of PSBP is PS Business Parks, Inc., a REIT traded on the
American Stock Exchange.
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Under the supervision of the Partnership, PSI and PSBP coordinate the
operation of the facilities, establish rental policies and rates, direct
marketing activity and direct the purchase of equipment and supplies,
maintenance activity and the selection and engagement of all vendors, supplies
and independent contractors.
PSI and PSBP engage, at the expense of the Partnership, employees for the
operation of the Partnership's facilities, including property managers,
assistant managers, relief managers, and billing and maintenance personnel.
Some or all of these employees may be employed on a part-time basis and may
also be employed by other persons, partnerships, real estate investment trusts
or other entities owning facilities operated by PSI and PSBP.
In the purchasing of services such as advertising (including broadcast
media advertising) and insurance, PSI and PSBP attempt to achieve economies by
combining the resources of the various facilities that it operates. Facilities
operated by PSI have historically carried comprehensive insurance, including
fire, earthquake, liability and extended coverage.
PSI and PSBP have systems for managing space inventories, accounting and
handling delinquent accounts, including a computerized network linking PSI
operated facilities. Each project manager is furnished with detailed operating
procedures and typically receives facilities management training from PSI.
Form letters covering a variety of circumstances are also supplied to the
project managers. A record of actions taken by the project managers when
delinquencies occur is maintained.
The Partnership's facilities are typically advertised via signage, yellow
pages, flyers and broadcast media advertising (television and radio) in
geographic areas in which many of the Partnership's facilities are located.
Broadcast media and other advertising costs are charged to the Partnership's
facilities located in geographic areas affected by the advertising. From time
to time, PSI and PSBP adopt promotional programs, such as temporary rent
reductions, in selected areas or for individual facilities.
For as long as the Management Agreement between the Partnership and PSI
is in effect, PSI has granted the Partnership a non-exclusive license to use
two PSI service marks and related designs including the "Public Storage" name
in conjunction with rental and operation of facilities managed pursuant to the
Management Agreement. Upon termination of the Management Agreement, the
Partnership would no longer have the right to use the service marks and
related designs. The General Partners believe that the loss of the right to
use the service marks and related designs could have a material adverse effect
on the Partnership's business.
The Management Agreement between the Partnership and PSI provides that
the Management Agreement may be terminated without cause upon 60 days written
notice by the Partnership or six months notice by PSI. The Management
Agreement between the Partnership and PSBP provides that the Management
Agreement may be terminated (i) without cause upon 60 days written notice by
the Partnership and upon seven years notice by PSBP and (ii) at any time by
either party for cause.
Competition
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Most of the Partnership's properties are self-storage facilities, which
generated 96% of the Partnership's rental income during 2004. Local market
conditions play a significant role in how competition will affect the
Partnership's operations. Competition from other self-storage and other
storage alternatives in the market areas in which the Partnership operates is
significant and has affected the occupancy levels, rental rates and operating
expenses of certain of the Partnership's facilities. Any increase in
availability of funds for investment in real estate may accelerate
competition. Further development of self-storage facilities may intensify
competition among operators of self-storage facilities in the market areas in
which the Partnership operates. In addition to competition from self-storage
facilities operated by PSI, there are other publicly traded REITs and numerous
regional and local operators. The Partnership believes that the significant
operating and financial experience of PSI and the "Public Storage" name
recognition should enable the Partnership to continue to compete effectively
with other entities.
Other Business Activities
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A corporation that reinsures policies against losses to goods stored by
tenants in PSI's storage facilities was purchased by PSI from Mr. Hughes and
members of his family (the "Hughes Family") on December 31, 2001. We believe
that the availability of insurance reduces our potential liability to tenants
for losses to their goods from theft or destruction. This corporation receives
the premiums and bears the risks associated with the re-insurance.
5
A subsidiary of PSI sells locks and boxes and rents trucks to the general
public and tenants to be used in securing their spaces and moving their goods.
The subsidiary of PSI receives the revenues and bears the cost of the
activities. We believe that the availability of locks and boxes for sale and
the rental of trucks promote the rental of self-storage spaces.
Federal Income Tax
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Public Storage Properties V, Ltd. is treated as a partnership for Federal
income tax purposes with the taxable income of the entity allocated to each
partner in accordance with the partnership agreement.
Employees
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There are approximately 20 persons who render services on behalf of the
Partnership. These persons include property managers, assistant managers,
relief managers, area managers, and administrative and maintenance personnel.
Some employees may be employed on a part-time basis and may be employed by
other persons, partnerships, REITs or other entities owning facilities
operated by PSI.
ITEM 1A. RISK FACTORS
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In addition to the other information in our Form 10-K, you should
consider the following factors in evaluating the Partnership:
THE GENERAL PARTNERS HAVE A SIGNIFICANT DEGREE OF CONTROL OVER THE
PARTNERSHIP.
Public Storage, Inc. is a general partner and beneficially owns
approximately 33.5% of our outstanding limited partnership units. In addition,
B. Wayne Hughes, General Partner of the Partnership, and Chairman of PSI and
members of his family beneficially own 28.2% of the limited partnership units.
As a result, the General Partners have a significant degree of control over
matters submitted to a vote of our unitholders, including amending our
organizational documents, dissolving the Partnership and approving other such
transactions.
SINCE OUR BUSINESS CONSISTS PRIMARILY OF OPERATING REAL ESTATE, WE ARE
SUBJECT TO REAL ESTATE OPERATING RISKS.
The value of our investments may be reduced by general risks of real
estate ownership. Since we derive substantially all of our income from real
estate operations, we are subject to the general risks of owning real
estate-related assets, including:
o lack of demand for rental spaces or units in a locale;
o changes in general economic or local conditions;
o natural disasters, such as earthquakes;
o potential terrorist attacks;
o changes in supply of or demand for similar or competing facilities in
an area;
o the impact of environmental protection laws;
o changes in interest rates and availability of permanent mortgage funds
which may render the sale or financing of a property difficult
or unattractive; and,
o changes in tax, real estate and zoning laws.
There is significant competition among self-storage facilities and from
other storage alternatives. Most of our properties are self-storage
facilities, which generated substantially all of our revenue for the year
ended December 31, 2004. Local market conditions will play a significant part
in how competition will affect us. Competition in the market areas in which
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many of our properties are located from other self-storage facilities and
other storage alternatives is significant and has affected the occupancy
levels, rental rates and operating expenses of some of our properties. Any
increase in availability of funds for investment in real estate may accelerate
competition. Further development of self-storage facilities may intensify
competition among operators of self-storage facilities in the market areas in
which we operate.
We may incur significant environmental costs and liabilities. As an owner
and operator of real properties, under various federal, state and local
environmental laws, we are required to clean up spills or other releases of
hazardous or toxic substances on or from our properties. Certain environmental
laws impose liability whether or not the owner knew of, or was responsible
for, the presence of the hazardous or toxic substances. In some cases,
liability may not be limited to the value of the property. The presence of
these substances, or the failure to properly remediate any resulting
contamination, whether from environmental or microbial issues, also may
adversely affect the owner's or operator's ability to sell, lease or operate
its property or to borrow using its property as collateral.
We have conducted preliminary environmental assessments on the
Partnership's properties to evaluate the environmental condition of, and
potential environmental liabilities associated with, our properties. These
assessments generally consist of an investigation of environmental conditions
at the property (not including soil or groundwater sampling or analysis), as
well as a review of available information regarding the site and publicly
available data regarding conditions at other sites in the vicinity. In
connection with these property assessments, we have become aware that prior
operations or activities at some facilities or from nearby locations have or
may have resulted in contamination to the soil or groundwater at these
facilities. In this regard, some of our facilities are or may be the subject
of federal or state environment investigations or remedial actions. Although
we cannot provide any assurance, based on the preliminary environmental
assessments, we believe we have funds available to cover any liability from
environmental contamination or potential contamination and we are not aware of
any environmental contamination of our facilities material to our overall
business, financial condition or results of operation.
There has been an increasing number of claims and litigation against
owners and managers of rental properties relating to moisture infiltration,
which can result in mold or other property damage. When we receive a complaint
concerning moisture infiltration, condensation or mold problems and/or become
aware that an air quality concern exists, we implement corrective measures in
accordance with guidelines and protocols we have developed with the assistance
of outside experts. We seek to work proactively with our tenants to resolve
moisture infiltration and mold-related issues, subject to our contractual
limitations on liability for such claims. However, we can provide no assurance
that material legal claims relating to moisture infiltration and the presence
of, or exposure to, mold will not arise in the future.
Property taxes can increase and cause a decline in yields on investments.
Each of our properties is subject to real property taxes. These real property
taxes may increase in the future as property tax rates change and as our
properties are assessed or reassessed by tax authorities. Such increases could
adversely impact our profitability.
We must comply with the Americans with Disabilities Act and fire and
safety regulations, which can require significant expenditures. All our
properties must comply with the Americans with Disabilities Act and with
related regulations (the "ADA"). The ADA has separate compliance requirements
for "public accommodations" and "commercial facilities," but generally
requires that buildings be made accessible to persons with disabilities.
Various state laws impose similar requirements. A failure to comply with the
ADA or similar state laws could result in government imposed fines on us and
the award of damages to individuals affected by the failure. In addition, we
must operate our properties in compliance with numerous local fire and safety
regulations, building codes, and other land use regulations. Compliance with
these requirements can require us to spend substantial amounts of money, which
would reduce cash otherwise available for distribution to shareholders.
Failure to comply with these requirements could also affect the marketability
of our real estate facilities.
TERRORIST ATTACKS AND THE POSSIBILITY OF WIDER ARMED CONFLICT MAY HAVE AN
ADVERSE IMPACT ON OUR BUSINESS AND OPERATING RESULTS AND COULD DECREASE THE
VALUE OF OUR ASSETS.
Terrorist attacks and other acts of violence or war, such as those that
took place on September 11, 2001, could have a material adverse impact on our
business and operating results. There can be no assurance that there will not
be further terrorist attacks against the United States or its businesses or
interests. Attacks or armed conflicts that directly impact one or more of our
properties could significantly affect our ability to operate those properties
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and thereby impair our operating results. Further, we may not have insurance
coverage for losses caused by a terrorist attack. Such insurance may not be
available, or if it is available and we decide to obtain such terrorist
coverage, the cost for the insurance may be significant in relationship to the
risk overall. In addition, the adverse effects that such violent acts and
threats of future attacks could have on the U.S. economy could similarly have
a material adverse effect on our business and results of operations. Finally,
further terrorist acts could cause the United States to enter into a wider
armed conflict, which could further impact our business and operating results.
DEVELOPMENTS IN CALIFORNIA MAY HAVE AN ADVERSE IMPACT ON OUR BUSINESS
AND OPERATING RESULTS AND COULD DECREASE THE VALUE OF OUR ASSETS.
A majority of the Partnership's properties are located in California.
California is facing serious budgetary problems. Action that may be taken in
response to these problems, such as an increase in property taxes on
commercial properties, could adversely impact our business and results of
operations. In addition, the Partnership could be adversely impacted by
efforts to reenacted legislation mandating medical insurance for employees of
California businesses and members of their families.
INCREASES IN INTEREST RATES MAY ADVERSELY AFFECT THE PRICE OF OUR
PARTNERSHIP UNITS.
One of the factors that influences the market price of our partnership
units is the annual rate of distributions that we pay on the securities, as
compared with interest rates. An increase in interest rates may lead
purchasers of partnership units to demand higher annual distribution rates,
which could adversely affect the market price of our partnership units.
OUR OWNERSHIP INTEREST IN STOR-RE MAY LOSE VALUE OR BECOME A LIABILITY.
The Partnership has a 1.4% ownership interest in STOR-Re Mutual Insurance
Corporation ("STOR-Re"), which was formed in 1994 as an association captive
insurance company, and is controlled by PSI. STOR-Re provided limited property
and liability insurance coverage to the Partnership, PSI, and affiliates of
PSI for losses occurring prior to April 1, 2004. Liabilities for losses and
loss adjustment expenses include an amount determined from loss reports and
individual cases and an amount, based on recommendations from an outside
actuary that is a member of the American Academy of Actuaries, using a
frequency and severity method, for losses incurred but not reported.
Determining the liability for unpaid losses and loss adjustment expense is
based upon estimates and while we believe that the amount is adequate, the
ultimate loss may be in excess of or less than the amounts provided, which may
result in a reduction in the value of the Partnership's investment or could
result in future payments to STOR-Re if its reserves were determined to be
inadequate. Financial data with respect to STOR-Re is included in Note 5 to
the Partnership's December 31, 2004 financial statements.
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ITEM 2. PROPERTIES
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The following table sets forth information as of December 31, 2004
about properties owned by the Partnership:
Size of Net Rentable Numbers of Completion
Location Parcel Area Spaces Date of Purchase Date
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CALIFORNIA
Belmont 2.74 acres 46,000 sq. ft 451 May 14, 1979 Dec. 1979
Carson- Carson Street 2.30 acres 43,000 sq. ft 389 Oct. 9, 1979 Jan. 1980
Palmdale 3.48 acres 56,000 sq. ft. 461 July 31, 1979 Jan. 1980
Pasadena - Fair Oaks 2.17 acres 71,000 sq. ft 814 Aug. 24, 1979 Mar. 1980
Sacramento - Carmichael 3.12 acres 45,000 sq. ft 451 Dec. 7, 1979 July 1980
Sacramento - Florin 3.99 acres 70,000 sq. ft 580 Mar. 30, 1979 June 1980
San Jose - Capitol Quimby 2.24 acres 36,000 sq. ft. 331 Nov. 21, 1979 July 1980
San Jose - Felipe 1.60 acres 52,000 sq. ft. 453 Oct. 9, 1979 Dec. 1980
So. San Francisco - Spruce 3.03 acres 44,000 sq. ft. 370 June 27, 1979 Nov. 1980
FLORIDA
Miami - Perrine 1.71 acres - - May 31, 1979 Jan. 1980
Miami - 27 th Ave. 3.07 acres 63,000 sq. ft. 624 Oct. 11, 1979 May 1980
Miami - 29th Ave. 1.82 acres 35,000 sq. ft. 323 May 1, 1979 Oct. 1979
GEORGIA
Atlanta - Montreal Road 3.14 acres 57,000 sq. ft. 462 July 9, 1979 June 1980
Atlanta - Mountain Industrial
Blvd. 3.10 acres 51,000 sq. ft. 458 Oct. 30, 1979 Sept. 1980
Marietta - Cobb Parkway 3.61 acres 68,000 sq. ft. 554 Apr. 20, 1979 Oct. 1979
The weighted average occupancy for the self-storage facilities was 90%
during both 2003 and 2004.
In August 1992, the buildings at a self-storage facility located in
Miami, Florida were completely destroyed by Hurricane Andrew. The Partnership
received insurance proceeds totaling $2,881,000, which included an amount for
the replacement cost of the destroyed buildings as well as for business
interruption. In 1993, the General Partners decided that it would be more
beneficial to the Partnership, given the condition of the market area of the
self-storage, to cease operations at this location and therefore, decided not
to reconstruct the buildings. Accordingly, in 1993 the Partnership reduced
real estate facilities by the net book value of the destroyed buildings,
resulting in a gain of $1,369,000. In June 1996, the Partnership sold
approximately 61% of the Miami, Florida land for a net price of $376,000
($400,000 less $24,000 of selling cost), resulting in a $13,000 gain on the
sale. The remaining is listed for sale.
As of December 31, 2004, the properties were not encumbered. See Note 7
to the Financial Statements included in Item 15(a).
Other than the Partnership's listing to sell the vacant land in Miami,
Florida as described above, the Partnership does not have any agreements to
buy or sell any real estate nor does it expect to further develop any new or
existing facilities except for capital improvements.
ITEM 3. LEGAL PROCEEDINGS
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Serrao v. Public Storage, Inc. (filed April 2003) (Superior Court -
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Orange County)
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The plaintiff in this case filed a suit against Public Storage, Inc. on
behalf of a putative class of renters who rented self-storage units from
Public Storage, Inc. Plaintiff alleges that Public Storage, Inc.
misrepresented the size of its storage units, has brought claims under
California statutory and common law relating to consumer protection, fraud,
unfair competition, and negligent misrepresentation, and is seeking monetary
damages, restitution, and declaratory and injunctive relief.
9
The claim in this case is substantially similar to those in Henriquez v.
Public Storage, Inc., which was disclosed in prior reports. In January 2003,
the plaintiff caused the Henriquez action to be dismissed.
Based upon the uncertainty inherent in any putative class action, Public
Storage, Inc. cannot presently determine the potential damages, if any, or the
ultimate outcome of this litigation. On November 3, 2003, the court granted
Public Storage, Inc.'s motion to strike the plaintiff's nationwide class
allegations and to limit any putative class to California residents only.
Public Storage, Inc. is vigorously contesting the claims upon which this
lawsuit is based including class certification efforts.
Salaam et al v. Public Storage, Inc. (filed February 2000)
- -------------------------------------------------------------
(Superior Court - Sacramento County); Holzman et al v. Public Storage,
- --------------------------------------------------------------------------
Inc. (filed October 2004) (Superior Court - Sacramento County)
- --------------------------------------------------------------
This action, which was described in the Partnership's prior reports,
was disposed of in February 2005.
Other Items
- -----------
Public Storage and the Partnership are a party to various claims,
complaints, and other legal actions that have arisen in the normal course of
business from time to time, that are not described above. We believe that it
is unlikely that the outcome of these other pending legal proceedings
including employment and tenant claims, in the aggregate, will have a material
adverse effect upon the operations or financial position of the Partnership.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year ended December 31, 2004.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
---------------------------------------------------------------
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
-------------------------------------------------
The Partnership has no common stock.
The Units are not listed on any national securities exchange or quoted on
the NASDAQ System and there is no established public trading market for the
Units. Secondary sales activity for the Units has been limited and sporadic.
The General Partners monitor transfers of the Units (a) because the admission
of the transferee as a substitute limited partner requires the consent of the
General Partners under the Partnership's Amended and Restated Certificate and
Agreement of Limited Partnership, (b) in order to ensure compliance with safe
harbor provisions to avoid treatment as a "publicly traded partnership" for
tax purposes, and (c) because the General Partners (and their affiliates) have
purchased Units. However, the General Partners do not have information
regarding the prices at which all secondary sale transactions in the Units
have been effectuated. Various organizations offer to purchase and sell
limited partnership interests (including securities of the type such as the
Units) in secondary sales transactions. Various publications such as The
Stanger Report summarize and report information (on a monthly, bimonthly or
less frequent basis) regarding secondary sales transactions in limited
partnership interests (including the Units), including the prices at which
such secondary sales transactions are effectuated.
Exclusive of the General Partners' interest in the Partnership, as of
December 31, 2004, there were approximately 1,100 unitholders of record.
Distributions to the general and limited partners of all cash available
for distribution (as defined) are made quarterly. Cash available for
distribution is generally funds from operations of the Partnership, without
deduction for depreciation, but after deducting funds to pay or establish
reserves for all other expenses (other than incentive distributions to the
general partner) and capital improvements, plus net proceeds from any sale or
financing of the Partnership's properties.
Reference is made to Item 6 and 7 hereof for information on the amount
of such distributions.
10
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
For the Year
Ended December 31, 2004 2003 2002 2001 2000
- --------------------------------- ---------------------- ------------------ ---------------- ---------------- ---------------
Revenues $ 10,197,000 $ 9,931,000 $ 9,777,000 $ 9,820,000 $ 8,962,000
Depreciation and
amortization 803,000 940,000 931,000 978,000 954,000
Interest expense - - 4,000 381,000 643,000
Net income 6,348,000 6,084,000 6,166,000 5,831,000 4,790,000
Limited partners' share 4,583,000 4,322,000 5,004,000 5,773,000 4,742,000
General partners' share 1,765,000 1,762,000 1,162,000 58,000 48,000
Limited partners' per unit data (1)
Net income $104.16 $98.23 $113.73 $131.20 $107.77
Cash distributions $116.00 $116.00 $75.00 - -
- ---------------------------------
Cash and cash equivalents $ 1,359,000 $ 1,367,000 $ 1,439,000 $ 449,000 $ 410,000
Total assets $ 38,111,000 $ 32,064,000 $ 26,864,000 $ 27,192,000 $ 22,597,000
Note payable to commercial bank $ - $ - $ - $ 1,550,000 $ 7,600,000
(1) Per unit data is based on the weighted average number of the limited
partnership units (44,000) outstanding during each period.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
------------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
The following discussion should be read in conjunction with the
Partnership's financial statements and notes thereto.
Forward Looking Statements: When used within this document, the words
"expects," "believes," "anticipates," "should," "estimates," and similar
expressions are intended to identify "forward-looking statements" within the
meaning of that term in Section 27A of the Securities Exchange Act of 1933, as
amended, and in Section 21E 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 are described in
Item 1A, "Risk Factors" and include changes in general economic conditions and
in the markets in which the Partnership operates and the impact of competition
from new and existing storage and commercial facilities and other storage
alternatives, which could impact rents and occupancy levels at the
Partnership's facilities; the impact of the regulatory environment as well as
national, state, and local laws and regulations, which could increase the
Partnership's expense and reduce the Partnership's cash available for
distribution; and economic uncertainty due to the impact of war or terrorism
could adversely affect our business plan. We disclaim any obligation to
publicly release the results of any revisions to these forward-looking
statements reflecting new estimates, events or circumstances after the date of
this report.
11
OVERVIEW
The self-storage industry is highly fragmented and is composed
predominantly of numerous local and regional operators. Competition in the
markets in which we operate is significant and has increased over the past
several years due to additional development of self-storage facilities. We
believe that the increase in competition has had a negative impact to the
Partnership's occupancy levels and rental rates in many markets. However, we
believe that the Partnership's affiliation with PSI provides several
distinguishing characteristics that enable the Partnership to compete
effectively with other owners and operators.
PSI is the largest owner and operator of self-storage facilities in the
United States. All of PSI's facilities are operated under the "Public Storage"
brand name, which we believe is the most recognized and established name in
the self-storage industry. Market concentration establishes PSI as one of the
dominant providers of self-storage space in most markets in which PSI operates
and enables PSI to use a variety of promotional activities, such as television
advertising as well as targeted discounting and referrals, which are generally
not economically viable to most of PSI's competitors.
We will continue to focus our growth strategies on improving the
operating performance of our existing self-storage properties primarily
through increases in revenues achieved through the telephone reservation
center and associated marketing efforts. We expect future increases in rental
income to come primarily from increases in realized rent, although there can
be no assurance.
CRITICAL ACCOUNTING POLICIES
- ----------------------------
IMPAIRMENT OF REAL ESTATE
On a quarterly basis, we evaluate our real estate for impairment. The
evaluation of real estate for impairment requires determining whether
indicators of impairment exist, which is a subjective process. When any
indicators of impairment are found, the evaluation then entails projections of
future operating cash flows, which also involves significant judgment. We
identified no such impairments at December 31, 2004. However, future events,
or facts and circumstances that currently exist that we have not yet
identified, could cause us to conclude in the future that our real estate is
impaired. Any resulting impairment loss could have a material, adverse impact
on our financial condition and results of operations.
ESTIMATED USEFUL LIVES OF LONG-LIVED ASSETS
Substantially all of our assets consist of depreciable, long-lived
assets. We record depreciation expense with respect to these assets based upon
their estimated useful lives. Any change in the estimated useful lives of
those assets, caused by functional or economic obsolescence or other factors,
could have a material, adverse impact on our financial condition or results of
operations.
ACCRUALS FOR CONTINGENCIES
We are exposed to business and legal liability risks with respect to events
that have occurred, but in accordance with U.S. generally accepted accounting
principles, we have not accrued for such potential liabilities because the loss
is either not probable or not estimable or because we are not aware of the
event. Future events and the result of pending litigation could result in such
potential losses becoming probable and estimable, which could have a material,
adverse impact on our financial condition or results of operations. Some of
these potential losses, which we are aware of, are described in Notes 5 and 9 to
the Partnership's financial statements.
ACCRUALS FOR OPERATING EXPENSES
We accrue for property tax expense and other operating expenses based
upon estimates and historical trends and current and anticipated local and
state government rules and regulations. If these estimates and assumptions are
incorrect, the timing of the recognition our expenses could be incorrect. Cost
of operations, interest expense, general and administrative expense, as well
as television, yellow page, and other advertising expenditures are expensed as
incurred.
12
RESULTS OF OPERATIONS
- ---------------------
YEAR ENDED DECEMBER 31, 2004 COMPARED TO YEAR ENDED DECEMBER 31, 2003:
The Partnership's net income was $6,348,000 in 2004 compared to
$6,084,000 in 2003, representing an increase of $264,000.
During 2004, property net operating income (rental income less cost of
operations, management fees paid to affiliates and depreciation expense) was
$5,381,000 in 2004 compared to $5,125,000 in 2003, representing an increase of
$256,000 or 5%. This increase is attributable to an increase in rental income
partially offset by an increase in cost of operations.
Rental income was $9,121,000 in 2004 compared to $8,857,000 in 2003,
representing an increase of $264,000 or 3%. The increase is attributable to an
increase in realized rent per occupied square foot at the Partnership's
self-storage facilities. The weighted average occupancy level of the
self-storage facilities was stable at 90% in both 2004 and 2003. The annual
realized rent per occupied square foot for the self-storage facilities was
$12.73 in 2004 compared to $12.32 in 2003.
Dividend income from marketable securities of affiliate remained stable
at $1,002,000 for 2004 and 2003. The Partnership distributed its holdings of
Public Storage securities on March 31, 2005 which will end the Partnership's
receipt of dividends from Public Storage securities beginning April 1, 2005.
On March 31, 2005, we distributed substantially all of the Public Storage
common stock and Public Storage Equity Stock, Series A, on a pro-rata basis to
unitholders of record as of January 1, 2005. Accordingly, during the first
quarter ended March 31, 2005, we expect a gain on disposition of approximately
$22.6 million (based upon a value of $56.73 per share for the Public Storage
common stock and $28.01 per depositary share for the Public Storage Equity
Stock, Series A). The actual gain will be based on the closing market price
per share on March 31, 2005.
Cost of operations (including management fees paid to affiliates)
increased $145,000 or 5% to $2,937,000 in 2004 from $2,792,000 in 2003. This
increase is primarily attributable to increases in property taxes, payroll,
utilities, data processing and advertising expenses.
Depreciation expense was $803,000 for the year ended December 31, 2004
compared to $940,000 for the same period in 2003. We expect depreciation
expense with respect to the original cost of buildings to decline
approximately $253,000 in 2005 compared to 2004 primarily related to certain
of the Partnership's buildings becoming fully depreciated.
No interest expense was recorded for the years ended December 31, 2004
and 2003. For the year ended December 31, 2002 the Partnership's loan was paid
in full during the first quarter of 2002 and $4,000 in interest expense was
recorded.
YEAR ENDED DECEMBER 31, 2003 COMPARED TO YEAR ENDED DECEMBER 31, 2002:
The Partnership's net income was $6,084,000 in 2003 compared to
$6,166,000 in 2002, representing a decrease of $82,000.
During 2003, property net operating income (rental income less cost of
operations, management fees paid to affiliates and depreciation expense) was
$5,125,000 in 2003 compared to $5,185,000 in 2002, representing a decrease of
$60,000 or 1%. This decrease is attributable to an increase in cost of
operations and depreciation expense at the Partnership's self-storage
facilities and the San Francisco business park facility, partially offset by
an increase in rental income.
Rental income was $8,857,000 in 2003 compared to $8,697,000 in 2002,
representing an increase of $160,000 or 2%. The increase is attributable to an
increase in average occupancy at the Partnership's self-storage facilities
partially offset by a decline in the realized rent per occupied square foot of
the self-storage facilities. The weighted average occupancy level of the
self-storage facilities was 90% in 2003 compared to 88% in 2002. The annual
realized rent per occupied square foot for the self-storage facilities was
$12.32 in 2003 compared to $12.85 in 2002.
Dividend income from marketable securities of affiliate was $1,002,000
for 2003 and 2002.
13
Cost of operations (including management fees paid to affiliates)
increased $211,000 or 8% to $2,792,000 in 2003 from $2,581,000 in 2002. This
increase is primarily attributable to increases in payroll, property taxes,
advertising and property insurance expenses.
Interest expense was $4,000 in 2002 (none for 2003) as the Partnership
paid the loan in full during the first quarter of 2002.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities ($7,219,000 for the year ended
December 31, 2004) have been sufficient to meet all current obligations of the
Partnership. During 2005, the Partnership anticipates approximately $113,000
of capital improvements compared to $353,000 in 2004 and $314,000 in 2003.
Such enhancements will include new signs, exterior color schemes, and
improvements to the rental offices.
At December 31, 2004, the Partnership held 533,334 shares of common stock
and 17,331 shares of Equity Stock, Series A (marketable securities) with a
fair value totaling $30,221,000 (cost of $8,181,000 at December 31, 2004) in
Public Storage, Inc. The Partnership recognized $1,002,000 in dividend income
during 2004 and 2003. The Partnership distributed its holdings of Public
Storage securities at March 31, 2005 which will end the Partnership's receipt
of dividends from Public Storage securities beginning April 1, 2005.
On April 1, 1999, the partnership borrowed $17,000,000 from a commercial
bank. The proceeds of the loan were used to repay the Partnership's mortgage
debt. The loan was unsecured and bore interest at the London Interbank
Offering Rate ("LIBOR") plus 0.60% to 1.20% depending on the Partnership's
interest coverage ratio. The loan required monthly payments of interest and
was to mature in April 2003. However, during the first quarter of 2002, the
Partnership repaid the loan in full without penalty. The Partnership may
borrow in the future with the intent of using the proceeds to finance
distributions to the limited and general partners.
In June 1996, the Partnership sold approximately 61% of the Miami,
Florida land for a net price of $376,000 ($400,000 less $24,000 of selling
costs), resulting in a $13,000 gain on the sale. The remaining land is listed
for sale. The Partnership does not intend on selling or acquiring any
properties, except for intended sale of the parcel of land in Miami, Florida.
DISTRIBUTIONS
The Partnership Agreement requires that cash available for distribution
(cash from all sources less cash necessary for any obligations or capital
improvement) needs to be distributed at least quarterly.Distributions to the
limited and general partners for the years 1978-1991 aggregated $54,915,000
including $24,356,000 distributed to the partners in 1989 in connection with a
financing of the properties. Quarterly distributions were discontinued in
1991. The Partnership resumed with quarterly distributions beginning in the
second quarter of 2002. During 2003, we paid distributions to the limited and
general partners totaling $5,104,000 ($116.00 per unit) and $1,770,000,
respectively. In 2004, we paid distributions to the limited and general
partners totaling $5,104,000 ($116.00 per unit) and $1,770,000, respectively.
Future distribution rates may be adjusted to levels which are supported by
operating cash flow after capital improvements and other obligations. As
discussed above, on March 31, 2005, we distributed substantially all of our
holdings of Public Storage marketable securities on a pro-rata basis to
unitholders of record as of January 1, 2005 because the Partnership will no
longer receive distributions on its investment in distributed Public Storage
marketable securities. We expect annual cash available for distributions to
decline approximately $1,002,000 after March 31, 2005 because we will no
longer receive distributions on these securities.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
As of December 31, 2004, the Partnership had no outstanding debt.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
The Partnership's financial statements are included elsewhere herein.
Reference is made to the Index to Financial Statements and Financial Statement
Schedule in Item 15(a).
14
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
-----------------------------------------------------------
AND FINANCIAL DISCLOSURE.
-------------------------
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
-----------------------
Public Storage, Inc. maintains disclosure controls and procedures that
are designed to ensure that information required to be disclosed in reports
the Partnership files and submits under the Exchange Act, is recorded,
processed, summarized and reported within the time periods specified in
accordance with SEC guidelines and that such information is communicated to
the Partnership's management, including its Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosure
based on the definition of "disclosure controls and procedures" in Rule
13a-15(e) of the Exchange Act. In designing and evaluating the disclosure
controls and procedures, management recognized that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives.
At the end of the period covered by this report, Public Storage, Inc.
carried out an evaluation, under the supervision and with the participation of
the Partnership's management, including Public Storage, Inc.'s Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the design and
operation of the Partnership's disclosure controls and procedures. Based upon
that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Partnership's disclosure controls and procedures were
effective. During the fourth quarter of 2004, there were no significant
changes in the Partnership's internal controls over financial reporting that
have materially affected, or are reasonably likely to materially affect, the
Partnership's internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
------------------
Not applicable.
15
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
---------------------------------------------------
The Partnership has no directors or executive officers.
The Partnership's General Partners are PSI and B. Wayne Hughes. PSI,
acting through its directors and executive officers, and Mr. Hughes manage and
make investment decisions for the Partnership. The self-storage facilities are
managed by PSI pursuant to a Management Agreement.
Pursuant to the Partnership's Amended Certificate and Agreement of
Limited Partnership (the "Partnership Agreement"), a copy of which is included
in the Partnership's prospectus included in the Partnership's Registration
Statement, each of the General Partners continues to serve until (i) death,
insanity, insolvency, bankruptcy or dissolution, (ii) withdrawal with the
consent of the other general partner and a majority vote of the limited
partners, or (iii) removal by a majority vote of the limited partners.
The names of all directors and executive officers of PSI, the offices
held by each of them with PSI, and their ages and business experience during
the past five years are as follows:
Name Positions with PSI
- ---------------------- -------------------------------------------------------
B. Wayne Hughes Chairman of the Board
Ronald L. Havner, Jr. Chief Executive Officer and Vice Chairman of the Board
Harvey Lenkin President and Director
John Reyes Senior Vice President and Chief Financial Officer
John S. Baumann Senior Vice President and Chief Legal Officer
John G. Graul Senior Vice President and President, Self-storage
Operations
David F. Doll Senior Vice President and President, Real Estate Group
B. Wayne Hughes, Jr. Director
Robert J. Abernethy Director
Dann V. Angeloff Director
William C. Baker Director
John T. Evans Director
Uri P. Harkham Director
Daniel C. Staton Director
B. Wayne Hughes, age 71, a general partner of the Partnership, has been a
director of PSI since its organization in 1980 and was President and Co-Chief
Executive Officer from 1980 until November 1991 when he became Chairman of the
Board and sole Chief Executive Officer. Mr. Hughes retired as Chief Executive
Officer of PSI in November 2002 and remains Chairman of the Board. Mr. Hughes
is currently engaged in the acquisition and operation of commercial properties
in California and in the acquisition and operation of mini-warehouses in
Canada. He was Chairman of the Board and Chief Executive Officer from 1990
until March 1998 of Public Storage Properties XI, Inc., which was renamed PS
Business Parks, Inc. ("PSB"), an affiliated REIT. Mr. Hughes has been active
in the real estate investment field for over 30 years. He is the father of B.
Wayne Hughes, Jr., also a member of the PSI Board.
Ronald L. Havner, Jr., age 47, has been Vice Chairman, Chief Executive
Officer and a director of PSI since November 2002. Mr. Havner has been
Chairman of PS Business Parks, Inc. (PSB) since March 1998, Chief Executive
Officer of PSB from March 1998 until August 2003 and President of PSB from
March 1998 to September 2002. He is a member of the Board of Governors of the
National Association of Real Estate Investment Trusts (NAREIT) and a director
of Business Machine Security, Inc., The Mobile Storage Group, and Union BanCal
and its primary subsidiary, Union Bank of California, N.A.
16
Harvey Lenkin, age 68, became President and a director of PSI in November
1991. Mr. Lenkin has been employed by PSI or its predecessor for 27 years. He
has been a director of PS Business Parks since March 1998 and was President of
PS Business Parks from 1990 until March 1998. He is a director of Paladin
Realty Income Properties I, Inc., a director of Huntington Memorial Hospital
in Pasadena, California, and a former member of the Executive Committee of the
Board of Governors of the National Association of Real Estate Investment
Trusts, Inc. (NAREIT).
John Reyes, age 44, a certified public accountant, joined PSI in 1990 and
was Controller of PSI from 1992 until December 1996 when he became Chief
Financial Officer. He became a Vice President of PSI in November 1995 and a
Senior Vice President of PSI in December 1996. From 1983 to 1990, Mr. Reyes
was employed by Ernst & Young.
John S. Baumann, age 44, became Senior Vice President and Chief Legal
Officer of PSI in June 2003. From 1998 to 2002, Mr. Baumann was Senior Vice
President and General Counsel of Syncor International Corporation, an
international high technology health care services company. From 1995 to 1998,
he was Associate General Counsel of KPMG LLP, an international accounting, tax
and consulting firm.
John E. Graul, age 53, became Senior Vice President and President,
Self-Storage Operations, for PSI in February 2004, with overall responsibility
for PSI's national operations. From 1992 until joining the Company, Mr. Graul
was employed by McDonald's Corporation where he served in various management
positions, most recently as Vice President and General Manager - Pacific
Sierra Region.
David F. Doll, age 46, became Senior Vice President and President, Real
Estate Group, for PSI in February 2005, with responsibility for PSI's real
estate activities, including property acquisitions, developments, and
repackagings. Before joining PSI, Mr. Doll was Senior Executive Vice President
of Development for Westfield Corporation, a major international owner and
operator of shopping malls, where he was employed since 1995.
B. Wayne Hughes, Jr., age 45 became director of PSI in January 1998. He
was employed by PSI from 1989 to 2002 serving as Vice President - Acquisitions
of PSI from 1992 to 2002. Mr. Hughes, Jr. is currently engaged in the
acquisition and operation of commercial property in California and
mini-warehouses in Canada. He is the son of B. Wayne Hughes, Chairman of the
PSI Board.
Robert J. Abernethy, age 65, has been President of American Standard
Development Company and of Self-Storage Management Company and of Self-Storage
Management Company, which develop and operate self-storage facilities, since
1976 and 1977, respectively. Mr. Abernethy has been a director of PSI since
its organization in 1980. He is a member of the board of trustees of Johns
Hopkins University, a director of the Los Angeles Music Center, a member of
the Board of Overseers of the Los Angeles Philharmonic, a trustee of Loyola
Marymount University, a director of the Pacific Council on International
Policy, a director of the Atlantic Council, a member of the Council on Foreign
Relations and a former California Transportation Commissioner. Mr. Abernethy
is a former member of the board of directors of the Los Angeles County
Metropolitan Transportation Authority and of the Metropolitan Water District
of Southern California, a former member of the California State Board of
Education, a former member of the California State Arts Council, a former
Planning Commissioner, a former Telecommunications Commissioner and the former
Vice-Chairman of the Economic Development Commission of the City of Los
Angeles. He received an M.B.A. from the Harvard University Graduate School of
Business.
Dann V. Angeloff, age 69, has been President of the Angeloff Company, a
corporate financial advisory firm, since 1976. Mr. Angeloff is currently the
general partner of a limited partnership that in 1974 purchased a
mini-warehouse operated by PSI. Mr. Angeloff has been a director of PSI since
its organization in 1980. He is a director of Bjurman, Barry Fund, Inc.,
Corporation, Nicholas/Applegate Fund, ReadyPac Foods, Retirement Capital Group
and Soft Brands, Inc.
William C. Baker, age 71, became a director of PSI in November 1991. Mr.
Baker has been the Chairman and Chief Executive Officer of Calloway Golf
Company since August 2004. From August 1998 through April 2000, he was
President and Treasurer of Meditrust Operating Company, a real estate
investment trust. From April 1996 to December 1998, Mr. Baker was Chief
Executive Officer of Santa Anita Companies which then operated the Santa Anita
Racetrack. From April 1993 through May 1995, Mr. Baker was President of Red
Robin International, Inc., an operator and franchiser of casual dining
restaurants in the United States and Canada. From January 1992 through
December 1995 he was Chairman and Chief Executive Officer of Carolina
Restaurant Enterprises, Inc., a franchisee of Red Robin International, Inc.
From 1991 to 1999, he was Chairman of the Board of Coast Newport Properties, a
real estate brokerage company. From 1976 to 1988, he was a principal
shareholder and Chairman and Chief Executive Officer of Del Taco, Inc., an
operator and franchiser of fast food restaurants in California. Mr. Baker is a
director of LaQuinta, Inc., California Pizza Kitchen, and Callaway Golf
Company.
17
John T. Evans, age 66, became a director of PSI in August 2003. Mr. Evans
has been a partner in the law firm of Osler, Hoskin & Harcourt LLP, Toronto,
Canada from April 1993 to the present and in the law firm of Blake, Cassels &
Graydon LLP, Toronto, Canada from April 1966 to April 1993. Mr. Evans
specializes in business law matters, securities, restructurings, mergers and
acquisitions and advising on corporate governance. Mr. Evans is a director of
Cara Operations Inc., Kubota Metal Corporation and Toronto East General
Hospital. Until August 2003, Mr. Evans was a director of Canadian
Mini-Warehouse Properties Ltd., a Canadian corporation owned by B. Wayne
Hughes and members of his family.
Uri P. Harkham, age 56, became a director of PSI in March 1993. Mr.
Harkham has been the President and Chief Executive Officer of the Jonathan
Martin Fashion Group, which specializes in designing, manufacturing and
marketing women's clothing, since its organization in 1976. Since 1978, Mr.
Harkham has been the Chairman of the Board of Harkham Properties, a real
estate firm specializing in buying and managing fashion warehouses in Los
Angeles.
Daniel C. Staton, age 52, became a director of PSI in March 1999 in
connection with the merger of Storage Trust Realty, a real estate investment
trust, with PSI. Mr. Staton was Chairman of the Board of Trustees of Storage
Trust Realty from February 1998 until March 1999 and a Trustee of Storage
Trust Realty from November 1994 until March 1999. He is President of Walnut
Capital Partners, an investment and venture capital company and the Co-Chief
Executive Officer of PMGI (formerly Media General, Inc.), a print and
electronic media company. Mr. Staton was the Chief Operating Officer and
Executive Vice President of Duke Realty Investments, Inc. from 1993 to 1997
and a director of Duke Realty Investments, Inc. from 1993 until August 1999.
From 1981 to 1983, Mr. Staton was a principal owner of Duke Associates, the
predecessor of Duke Realty Investments, Inc. Prior to joining Duke Associates
in 1981, he was a partner and general manager of his own moving company,
Gateway Van & Storage, Inc. in St. Louis, Missouri. Form 1986 to 1988, Mr.
Staton served as president of the Greater Cincinnati Chapter of the National
Association of Industrial and Office Parks.
Each director of PSI serves until he resigns or is removed from office by
PSI, and may resign or be removed from office at any time with or without
cause. Each officer of PSI serves until he resigns or is removed by the board
of directors of PSI. Any such officer may resign or be removed from office at
any time with or without cause.
There have been no events under any bankruptcy act, no criminal
proceedings, and no judgments or injunctions material to the evaluation of the
ability of any director or executive officer of PSI during the past five
years.
The members of the PSI Audit Committee of the Board are: Robert J.
Abernethy (Chairman), John T. Evans, and Daniel Staton. The Board of PSI has
determined that Mr. Abernethy satisfies the audit committee financial expert
criteria established by the SEC and the accounting or related financial
management expertise criteria established by the New York Stock Exchange
(NYSE). All members of the Audit Committee are independent as that term is
defined in applicable SEC Rules and NYSE listing standards.
The financial records of the Partnership are maintained and prepared by
employees of PSI. The Board of Directors of PSI has adopted a code of ethics
for its senior financial officers. The Code of Ethics applies to those persons
serving as PSI's principal executive officer, principal financial officer and
principal accounting officer. A copy of the Code of Ethics is available by
written request from the Secretary of PSI at 701 Western Ave., Glendale, CA
91201-2349.
ITEM 11. EXECUTIVE COMPENSATION
----------------------
The Partnership has no subsidiaries, directors or officers. See Item 13
for a description of certain transactions between the Partnership and its
General Partners and their affiliates.
18
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
---------------------------------------------------------------
and Related Stockholder Matters
-------------------------------
(a) At March 25, 2005, the following beneficially owned more than 5% of
the Units:
Title Name and Address Beneficial Percent
of Class of Beneficial Owner Ownership of Class
- ---------------------- ----------------------------------------------- ----------------------- --------------------------
Units of Limited Public Storage, Inc. 14,740 Units (1) 33.5%
Partnership Interest 701 Western Avenue
Glendale, California 91201
Units of Limited B. Wayne Hughes, Tamara Hughes Gustavson, PS 12,398 Units (2) 28.2%
Partnership Interest Orangeco Partnerships, Inc.
701 Western Avenue
Glendale, California 91201
(1) Includes (i) 14,609 Units owned by PSI as to which PSI has sole
voting and dispositive power, and (ii) 131 Units which PSI has an
option to acquire from Tamara Hughes Gustavson, an adult daughter of
Hughes.
(2) Includes (i) 4,852 Units owned by BWH Marina Corporation II, a
corporation wholly-owned by Hughes, as to which Hughes has sole
voting and dispositive power, (ii) 131 Units owned by Tamara Hughes
Gustavson as to which Tamara Hughes Gustavson has sole voting and
dispositive power; PSI has an option to acquire these 131 Units, and
(iii) 7,415 Units owned by PS Orangeco Partnerships, Inc., a
corporation in which Hughes and members of his family own
approximately 48% of the voting stock, PSI owns 46% and members of
PSI's management and related individuals own approximately 6%.
(b) The Partnership has no officers and directors. The General
Partners have contributed $222,222 to the capital of the
Partnership and as a result participate in the distributions to the
limited partners and in the Partnership's profits and losses in the
same proportion that the General Partners' capital contribution
bears to the total capital contribution (approximately $177,778 was
contributed by PSI and $44,444 was contributed by Mr. Hughes). In
1995, Mr. Hughes contributed his ownership and rights to
distributions from the Partnership to BWH Marina Corporation II, a
corporation wholly-owned by Mr. Hughes. As such, Mr. Hughes
continues to act as a general partner but receives no direct
compensation or other consideration from the Partnership.
Information regarding ownership of Units by PSI and Hughes, the
General Partners, is set forth under section (a) above. Dann V.
Angeloff, a director of PSI, beneficially owns 27 Units (0.06% of
the Units). The directors and executive officers of PSI (including
Hughes), as a group (17 persons), beneficially own an aggregate of
12,299 Units, representing 28.0% of the Units (including the 4,852
Units owned by Hughes and the 7,415 Units owned by PS Orangeco
Partnerships, Inc.).
(c) The Partnership knows of no contractual arrangements, the
operation of the terms of which may at a subsequent date result in
a change in control of the Partnership, except for articles 16, 17
and 21.1 of the Partnership's Amended Certificate and Agreement of
Limited Partnership (the "Partnership Agreement"), a copy of which
is included in the Partnership's prospectus included in the
Partnership's Registration Statement File No. 2-63247. Those
articles provide, in substance, that the limited partners shall
have the right, by majority vote, to remove a general partner and
that a general partner may designate a successor with the consent
of the other general partner and a majority of the limited
partners.
19
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
The Partnership Agreement provides that the General Partners will be
entitled to cash incentive distributions in an amount equal to (i) 8% of
distributions of cash flow from operations until the distributions to all
partners from all sources equal their capital contributions; thereafter, 25%
of distributions of cash flow from operations, and (ii) 25% of distributions
from net proceeds from sale and financing of the Partnership's properties
remaining after distribution to all partners of any portion thereof required
to cause distributions to partners from all sources to equal their capital
contributions. The partners received distributions equal to their capital
contributions in 1987. Mr. Hughes has assigned his ownership and distribution
rights in the Partnership to BWH Marina Corporation II ("BWH Marinas"). In
addition to their distribution rights with respect to their general partner's
interests, PSI and BWH Marinas own 14,609 and 4,852 Units, respectively.
During 2004, PSI and BWH Marinas received $1,375,000 and $344,000 in
distributions related to their general partner ownership interests.
The Partnership has a Management Agreement with PSI pursuant to which the
Partnership pays PSI a fee of 6% of the gross revenues of the self-storage
facilities operated for the Partnership. For as long as the Management
Agreement is in effect, PSI has granted the Partnership a non-exclusive
license to use two PSI service marks and related designs, including the
"Public Storage" name, in conjunction with rental and operation of facilities
managed pursuant to the Management Agreement. Upon termination of the
Management Agreement, the Partnership would no longer have the right to use
the service marks and related designs. The General Partners believe that the
loss of the right to use the service marks and related designs could have a
material adverse effect on the Partnership's business. The Management
Agreement with PSI provides that the Management Agreement may be terminated
without cause upon 60 days written notice by the Partnership or six months
notice by PSI. During 2004, 2003 and 2002, the Partnership paid fees of
$530,000, $513,000 and $494,000, respectively, to PSI pursuant to the
Management Agreement.
In January 1997, PSBP became the operator of the Partnership's commercial
property pursuant to the Management Agreement. PSBP is an operating
partnership formed to own and operate business parks in which PSI has a
significant economic interest. The general partner of PSBP is PS Business
Parks, Inc., an AMEX listed real estate investment trust. The Partnership's
commercial property is managed by PS Business Parks, LP ("PSBP") pursuant to a
Management Agreement which provides for the payment of a fee by the
Partnership of 5% of the gross revenues of the commercial property operated
for the Partnership. During 2004, 2003 and 2002, the Partnership paid $14,000,
$18,000 and $20,000, respectively, to PSBP pursuant to the Management
Agreement.
In addition, the Partnership combines its insurance purchasing power with
PSI through captive insurance entities controlled by PSI. (See Note 5 to the
Partnership's financial statements.) The captive entities provide limited
property and liability insurance to the Partnership at commercially
competitive rates. The Partnership and PSI also utilize unaffiliated insurance
carriers to provide property and liability insurance in excess of the captive
entities' limitations. Premiums paid to the captive entities for the years
ended December 31, 2004, 2003 and 2002 were $111,000, $79,000 and
$58,000, respectively.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
--------------------------------------
Fees billed to the Partnership by Ernst & Young LLP for 2003 and 2004
as are follows:
Audit Fees: Audit fees billed (or expected to be billed) to the
Partnership by Ernst & Young LLP for the audit of the Partnership's
annual financial statements and reviews of the quarterly financial
statements included in the Partnership's quarterly reports on Form 10-Q
totaled $9,000 for 2003 and $8,000 in 2004.
Tax Fees: Tax fees billed (or expected to be billed) to the Partnership
by Ernst & Young LLP for tax services (primarily federal and state
income tax preparation) totaled $7,000 in 2003 and $8,000 in 2004.
Audit-Related Fees and Other Fees: During 2003 and 2004 Ernst & Young
LLP did not bill the Partnership for audit-related services or any
other services, except audit services and tax services denoted above.
The Audit Committee of PSI pre-approves all services performed by Ernst
& Young LLP, including those listed above. At this time, the Audit Committee has
not delegated pre-approval authority to any member or members of the Audit
Committee.
20
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
------------------------------------------
(a) List of Documents filed as part of the Report.
1. Financial Statements. See Index to Financial Statements and
Financial Statement Schedule.
2. Financial Statement Schedules. See Index to Financial Statements and
Financial Statement Schedule.
3. Exhibits: See Exhibit Index contained below.
(b) Exhibits: See Exhibit Index contained below.
(c) Not applicable.
21
PUBLIC STORAGE PROPERTIES V, LTD.
EXHIBIT INDEX
(Item 15 (b))
3.1 Amended Certificate and Agreement of Limited Partnership. Previously
filed with the Securities and Exchange Commission as Exhibit A to
the Registrant's Prospectus included in Registration Statement No.
2-63247 and incorporated herein by reference.
10.1 Second Amended and Restated Management Agreement dated November 16,
1995 between the Partnership and Public Storage, Inc. Previously filed
with the Securities and Exchange Commission as an exhibit to PS
Partners, Ltd.'s Annual Report on Form 10-K for the year ended December
31, 1996 and incorporated herein by reference.
10.2 Amended Management Agreement dated February 21, 1995 between Storage
Equities, Inc. and Public Storage Commercial Properties Group, Inc.
Previously filed with the Securities and Exchange Commission as an
exhibit to Storage Equities, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1994 and incorporated herein by reference.
10.3 Credit Agreement dated April 1, 1999 by and between Public Storage
Properties V, Ltd. and Wells Fargo Bank, National Association.
Previously filed with the Securities and Exchange Commission as an
exhibit to the Registrant's Quarterly report filed on form 10-Q for the
quarter ended March 31, 1999 and incorporated herein by reference.
14 Code of Ethics for the Senior Financial Officers of Public Storage,
Inc. Filed with the Partnership's Annual Report on Form 10-K for the
year ended December 31, 2003 and incorporated herein by reference.
31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 signed and dated by Ronald L. Havner Jr. Filed herewith.
31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 signed and dated by John Reyes. Filed herewith.
32 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. Furnished herewith.
22
23
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Partnership has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
PUBLIC STORAGE PROPERTIES V, LTD.
a California Limited Partnership
Dated: March 31, 2005 By: Public Storage, Inc., General Partner
By: /s/ Ronald L. Havner, Jr.
---------------------------
Ronald L Havner, Jr., Vice Chairman of the
Board and Chief Executive Officer of
Public Storage, Inc. Corporate General
Partner
By: /s/ B. Wayne Hughes
----------------------
B. Wayne Hughes, General Partner
and Chairman of the Board of
Public Storage, Inc.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Partnership in the capacities and on the dates indicated.
Signature Capacity Date
- --------------------------------------------- ----------------------------------------------------------- -----------------------
/s/ Ronald L. Havner, Jr. Vice Chairman of the Board and Chief Executive March 31, 2005
- ---------------------------------------
Ronald L. Havner, Jr. Officer of Public Storage, Inc., Corporate General
Partner
/s/ B. Wayne Hughes General Partner and Chairman of the Board of March 31, 2005
- --------------------------------------- Public Storage, Inc.
B. Wayne Hughes
/s/ Harvey Lenkin President and Director of Public Storage, Inc. March 31, 2005
- ---------------------------------------
Harvey Lenkin
/s/ John Reyes Senior Vice President and Chief Financial Officer March 31, 2005
- --------------------------------------- of Public Storage, Inc. (principal financial
John Reyes officer and principal accounting officer)
/s/ B. Wayne Hughes, Jr. Director of Public Storage, Inc. March 31, 2005
- ---------------------------------------
B. Wayne Hughes, Jr.
/s/ Robert J. Abernethy Director of Public Storage, Inc. March 31, 2005
- ---------------------------------------
Robert J. Abernethy
/s/ Dann V. Angeloff Director of Public Storage, Inc. March 31, 2005
- ---------------------------------------
Dann V. Angeloff
Director of Public Storage, Inc.
- ---------------------------------------
William C. Baker
/s/ John T. Evans Director of Public Storage, Inc. March 31, 2005
- ---------------------------------------
John T. Evans
/s/ Uri P. Harkham Director of Public Storage, Inc. March 31, 2005
- ---------------------------------------
Uri P. Harkham
/s/ Daniel C. Staton Director of Public Storage, Inc. March 31, 2005
- ---------------------------------------
Daniel C. Staton
23
PUBLIC STORAGE PROPERTIES V, LTD.
INDEX TO FINANCIAL STATEMENTS
AND
FINANCIAL STATEMENT SCHEDULE
(Item 15 (a))
Page
References
Report of Independent Registered Public Accounting Firm F-1
Financial Statements and Schedule:
Balance Sheets as of December 31, 2004 and 2003 F-2
For the years ended December 31, 2004, 2003 and 2002:
Statements of Income and Comprehensive Income F-3
Statements of Partners' Equity F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6 - F-12
Schedule:
III - Real Estate and Accumulated Depreciation F-13 - F-14
All other schedules have been omitted since the required information
is not present or not present in amounts sufficient to require submission of
the schedule, or because the information required is included in the financial
statements or the notes thereto.
Report of Independent Registered Accounting Firm
The Partners
Public Storage Properties V, Ltd.
We have audited the accompanying balance sheets of Public Storage Properties V,
Ltd. (the "Partnership") as of December 31, 2004 and 2003, and the related
statements of income, comprehenisve income, partners' equity and cash flows for
each of the three years in the period ended December 31, 2004. Our audits also
included the schedule listed in the index at item 15(a). These financial
statements and schedule are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. We were not engaged to perform an
audit of the Partnership's internal control over financial reporting. Our audit
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Partnership's internal control over financial reporting. Accordingly we express
no such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Public Storage Properties V,
Ltd. at December 31, 2004 and 2003, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2004, in
conformity with U.S. generally accepted accounting principles. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
ERNST & YOUNG LLP
March 25, 2005
Los Angeles, California
F-1
PUBLIC STORAGE PROPERTIES V, LTD.
BALANCE SHEETS
December 31, 2004 and 2003
2004 2003
------------------------ ----------------------
ASSETS
Cash and cash equivalents $ 1,359,000 $ 1,367,000
Marketable securities of affiliate (cost of $8,181,000 as of December
31, 2004 and 2003) 30,221,000 23,660,000
Rent and other receivables 103,000 191,000
Real estate facilities, at cost:
Buildings and equipment 17,917,000 17,564,000
Land 4,714,000 4,714,000
------------------------ ----------------------
22,631,000 22,278,000
Less accumulated depreciation (16,313,000) (15,510,000)
------------------------ ----------------------
6,318,000 6,768,000
Other assets 110,000 78,000
------------------------ ----------------------
Total assets $ 38,111,000 $ 32,064,000
======================== ======================
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 175,000 $ 170,000
Deferred revenue 246,000 239,000
Commitments and contingencies (Note 9) - -
Partners' equity
Limited partners' equity, $500 per
unit, 44,000 units authorized, issued and outstanding 11,620,000 12,011,000
General partners' equity 4,030,000 4,165,000
Other comprehensive income 22,040,000 15,479,000
------------------------ ----------------------
Total partners' equity 37,690,000 31,655,000
------------------------ ----------------------
Total liabilities and partners' equity $ 38,111,000 $ 32,064,000
======================== ======================
See accompanying notes.
F-2
PUBLIC STORAGE PROPERTIES V, LTD.
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the years ended December 31, 2004, 2003 and 2002
2004 2003 2002
----------------------- -------------------- ----------------------
REVENUES:
Rental income $ 9,121,000 $ 8,857,000 $ 8,697,000
Dividends from marketable securities of affiliate 1,002,000 1,002,000 1,002,000
Other income 74,000 72,000 78,000
----------------------- -------------------- ----------------------
10,197,000 9,931,000 9,777,000
----------------------- -------------------- ----------------------
COSTS AND EXPENSES:
Cost of operations 2,393,000 2,261,000 2,067,000
Management fees paid to affiliates 544,000 531,000 514,000
Depreciation and amortization 803,000 940,000 931,000
Administrative 109,000 115,000 95,000
Interest expense - - 4,000
----------------------- -------------------- ----------------------
3,849,000 3,847,000 3,611,000
----------------------- -------------------- ----------------------
NET INCOME $ 6,348,000 $ 6,084,000 $ 6,166,000
======================= ==================== ======================
Limited partners' share of net income ($104.16 per unit in 2004,
$98.23 per unit in 2003 and $113.73 per unit
in 2002) $ 4,583,000 $ 4,322,000 $ 5,004,000
General partners' share of net income 1,765,000 1,762,000 1,162,000
----------------------- -------------------- ----------------------
$ 6,348,000 $ 6,084,000 $ 6,166,000
======================= ==================== ======================
COMPREHENSIVE INCOME:
Net income $ 6,348,000 $ 6,084,000 $ 6,166,000
Other comprehensive income (change in unrealized
gain (loss) of marketable equity securities) 6,561,000 5,965,000 (590,000)
----------------------- -------------------- ----------------------
$ 12,909,000 $ 12,049,000 $ 5,576,000
======================= ==================== ======================
See accompanying notes.
F-3
PUBLIC STORAGE PROPERTIES V, LTD.
STATEMENTS OF PARTNERS' EQUITY
For the years ended December 31, 2004, 2003 and 2002
Other
Comprehensive Total Partners'
Limited Partners General Partners Income Equity
------------------------ -------------------- --------------------- ----------------------
Balance at December 31, 2001 11,319,000 3,925,000 10,104,000 25,348,000
Change in unrealized gain on
marketable equity securities - - (590,000) (590,000)
Net income 5,004,000 1,162,000 - 6,166,000
Distributions paid to partners (3,300,000) (1,144,000) - (4,444,000)
Equity transfer (426,000) 426,000 - -
------------------------ -------------------- --------------------- ----------------------
Balance at December 31, 2002 12,597,000 4,369,000 9,514,000 26,480,000
Change in unrealized gain on
marketable equity securities - - 5,965,000 5,965,000
Net income 4,322,000 1,762,000 - 6,084,000
Distributions paid to partners (5,104,000) (1,770,000) - (6,874,000)
Equity transfer 196,000 (196,000) - -
------------------------ -------------------- --------------------- ----------------------
Balance at December 31, 2003 12,011,000 4,165,000 15,479,000 31,655,000
Change in unrealized gain on
marketable equity securities - - 6,561,000 6,561,000
Net income 4,583,000 1,765,000 - 6,348,000
Distributions paid to partners (5,104,000) (1,770,000) - (6,874,000)
Equity transfer 130,000 (130,000) - -
------------------------ -------------------- --------------------- ----------------------
Balance at December 31, 2004 $ 11,620,000 $ 4,030,000 $ 22,040,000 $ 37,690,000
======================== ==================== ===================== ======================
See accompanying notes.
F-4
PUBLIC STORAGE PROPERTIES V, LTD.
STATEMENTS OF CASH FLOWS
For the years ended December 31, 2004, 2003 and 2002
2004 2003 2002
-------------------- --------------------- ---------------------
Cash flows from operating activities:
Net income $ 6,348,000 $ 6,084,000 $ 6,166,000
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation 803,000 940,000 931,000
Decrease in rent and other receivables 88,000 36,000 188,000
(Increase) decrease in other assets (32,000) 31,000 (27,000)
Increase (decrease) in accounts payable 5,000 (13,000) 77,000
Increase in deferred revenue 7,000 38,000 13,000
-------------------- --------------------- ---------------------
Total adjustments 871,000 1,032,000 1,182,000
-------------------- --------------------- ---------------------
Net cash provided by operating activities 7,219,000 7,116,000 7,348,000
-------------------- --------------------- ---------------------
Cash flow from investing activities:
Additions to real estate facilities (353,000) (314,000) (364,000)
-------------------- --------------------- ---------------------
Net cash used in investing activities (353,000) (314,000) (364,000)
-------------------- --------------------- ---------------------
Cash flows from financing activities:
Distributions paid to partners (6,874,000) (6,874,000) (4,444,000)
Principal payments on note to commercial bank - - (1,550,000)
-------------------- --------------------- ---------------------
Net cash used in financing activities (6,874,000) (6,874,000) (5,994,000)
-------------------- --------------------- ---------------------
Net (decrease) increase in cash and cash equivalents (8,000) (72,000) 990,000
Cash and cash equivalents at the beginning of the year 1,367,000 1,439,000 449,000
-------------------- --------------------- ---------------------
Cash and cash equivalents at the end of the year $ 1,359,000 $ 1,367,000 $ 1,439,000
==================== ===================== =====================
Supplemental schedule of non-cash investing and financing
activities:
Increase (decrease) in fair value of marketable securities:
Marketable securities $ 6,561,000 $ 5,965,000 $ (590,000)
==================== ===================== =====================
Other comprehensive income $ 6,561,000 $ 5,965,000 $ (590,000)
==================== ===================== =====================
See accompanying notes.
F-5
PUBLIC STORAGE PROPERTIES V, LTD.
NOTES TO FINANCIAL STATEMENTS
December 31, 2004
1. DESCRIPTION OF PARTNERSHIP
Public Storage Properties V, Ltd. (the "Partnership") was
formed with the proceeds of a public offering. The general partners
in the Partnership are Public Storage, Inc. ("PSI") and B. Wayne
Hughes ("Hughes"). The Partnership owns fourteen operating facilities
located in three states and a parcel of land in Florida.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PARTNERSHIP MATTERS
Real Estate Facilities:
-----------------------
Cost of land includes appraisal fees and legal fees related to
acquisition and closing costs. Buildings and equipment reflect costs
incurred through December 31, 2004 and 2003 to develop self-storage
facilities and to a lesser extent, a business park property. The
self-storage facilities provide self-service storage spaces for
lease, usually on a month-to-month basis, to the general public. The
buildings and equipment are generally depreciated on a straight-line
basis over estimated useful lives of 25 and 5 years, respectively.
In August 1992, the building at a self-storage facility located
in Miami, Florida was completely destroyed by Hurricane Andrew. In
1993, the General Partners decided that it would be more beneficial
to the Partnership, given the condition of the market area of the
self-storage facility, to cease operations at this location and
therefore, decided not to reconstruct the buildings. In June 1996,
the Partnership sold approximately 61% of the Miami, Florida land.
The remaining land is listed for sale.
Revenue and Expense Recognition:
--------------------------------
Rental income, which is generally earned pursuant to
month-to-month leases for storage space, is recognized as earned.
Promotional discounts are recognized as a reduction to rental income
over the promotional period, which is generally during the first
month of occupancy. Late charges and administrative fees are
recognized as rental income when collected. Interest income is
recognized as earned.
We accrue for property tax expenses based upon estimates and
historical trends. If these estimates are incorrect, the timing of
expense recognition could be affected.
Cost of operations, general and administrative expense,
interest expense, as well as television, yellow page and other
advertising expenditures are expensed as incurred. Television, yellow
page, and other advertising expenditures totaled $340,000, $327,000
and $294,000 for the years ended December 31, 2004, 2003 and 2002,
respectively.
Allocation of Net Income:
-------------------------
The general partners' share of net income consists of amounts
attributable to their 1% capital contribution and an additional
percentage of cash flow (as defined) which relates to the general
partners' share of cash distributions as set forth in the Partnership
Agreement (Note 4). All remaining net income is allocated to the
limited partners.
Per unit data is based on the weighted average number of the
limited partnership units (44,000) outstanding during the period.
Cash and Cash Equivalents:
--------------------------
For financial statement purposes, the Partnership considers all
highly liquid investments with an original maturity of three months
or less to be cash equivalents.
F-6
PUBLIC STORAGE PROPERTIES V, LTD.
NOTES TO FINANCIAL STATEMENTS
December 31, 2004
Use of Estimates:
-----------------
The preparation of the financial statements in conformity with
U.S. generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.
Marketable Securities:
----------------------
Marketable securities at December 31, 2004 consist of 533,334
shares of common stock and 17,331 shares of Equity Stock, Series A of
Public Storage, Inc. The Partnership has designated its portfolio of
marketable securities as being available for sale. Accordingly, at
December 31, 2004, the Partnership has recorded the marketable
securities at fair value, based upon the closing quoted price of the
securities at December 31, 2004, and has recorded a corresponding
unrealized gain (loss) totaling $6,561,000, $5,965,000 and $(590,000)
for the years ended December 31, 2004, 2003 and 2002, respectively,
as a increase (decrease) to Partnership equity. The Partnership
recognized dividends of $1,002,000 for the years ended December 31,
2004, 2003 and 2002, respectively.
Comprehensive Income:
---------------------
As of January 1, 1998, the Partnership adopted Statement 130,
Reporting Comprehensive Income. Statement 130 establishes new rules
for the reporting and display of comprehensive income and its
components; however, the adoption of this Statement had no impact on
the Partnership's net income or shareholders' equity. Statement 130
requires unrealized gains or losses on the Partnership's
available-for-sale securities, which prior to adoption were reported
separately in shareholders' equity, to be included in other
comprehensive income. The primary impact of this statement for the
Partnership is to recharacterize unrealized gains or losses in
shareholders' equity as "other comprehensive income."
Impairment of Real Estate:
--------------------------
We evaluate our real estate for impairment on a quarterly
basis. We first evaluate these assets for indicators of impairment
such as a) a significant decrease in the market price of real estate,
b) a significant adverse change in the extent or manner in which real
estate is being used or in its physical condition, c) a significant
adverse change in legal factors or the business climate that could
affect the value of the real estate, d) an accumulation of costs
significantly in excess of the amount originally projected for the
acquisition of construction of the real estate, or e) a
current-period operating or cash flow loss combined with a history of
operating or cash flow losses or a projection or forecast that
demonstrates continuing losses associated with the use of the real
estate. When any such indicators of impairment are noted, we compare
the carrying value of the real estate to the future estimated
undiscounted cash flows attributable to the real estate. If the real
estate's recoverable amount is less than the carrying value of the
asset, then an impairment charge is booked for the excess of carrying
value over the real estate's fair value. Our evaluations have
identified no such impairments at December 31, 2004. Certain real
estate facilities have been in service longer than 25 years, and
accordingly these buildings are fully depreciated as of December 31,
2004.
Any long-lived assets which we expect to sell or dispose of
prior to their previously estimated useful life are stated at the
lower of their estimated net realizable value (less cost to sell) or
their carrying value.
F-7
PUBLIC STORAGE PROPERTIES V, LTD.
NOTES TO FINANCIAL STATEMENTS
December 31, 2004
Environmental Cost:
-------------------
Substantially all of the Partnership's facilities were acquired
prior to the time that it was customary to conduct environmental
investigations in connection with property acquisitions. Although
there can be no assurance, the Partnership is not aware of any
environmental contamination of any of its property sites which
individually or in the aggregate would be material to the
Partnership's overall business, financial condition, or results of
operations.
Recent Accounting Pronouncements and Guidance:
---------------------------------------------
As of March 25, 2005, there have been no recent accounting
pronouncements and guidance, which were not effective for
implementation prior to December 31, 2004, that would have a material
impact upon reporting the operations or financial position of the
Partnership.
Segment Reporting:
------------------
The Partnership only has one reportable segment as defined
within Statement of Financial Accounting Standards No. 131.
3. CASH DISTRIBUTIONS
The Partnership Agreement requires that cash available for
distribution (cash flow from all sources less cash necessary for any
obligations or capital improvement) needs to be distributed at least
quarterly. In June 1989, the Partnership financed its properties and
distributed approximately $24,356,000 to its partners. Quarterly
distributions were suspended in 1991. The Partnership resumed with
quarterly distributions beginning in the second quarter of 2002. We
paid distributions during 2003 to the limited and general partners
totaling $5,104,000 ($116.00 per unit) and $1,770,000, respectively.
During 2004, we paid distributions to the limited and general
partners totaling $5,104,000 ($116 per unit) and $1,770,000,
respectively. Future distribution rates may be adjusted to levels
which are supported by operating cash flow after capital improvements
and other obligations.
4. PARTNERS' EQUITY
PSI and Hughes are general partners of the Partnership. In
1995, Hughes contributed his ownership and rights to distributions
from the Partnership to BWH Marina Corporation II, a corporation
wholly-owned by Hughes. As such, Hughes continues to act as a general
partner of the Partnership but does not directly receive any
compensation, distributions or other consideration from the
Partnership.
The general partners have a 1% interest in the Partnership. In
addition, the general partners had an 8% interest in cash
distributions attributable to operations (exclusive of distributions
attributable to sale and financing proceeds) until the limited
partners recovered all of their investment. Thereafter, the general
partners have a 25% interest in all cash distributions (including
sale and financing proceeds). During 1987, the limited partners
recovered all of their initial investment. All subsequent
distributions are being made 25.75% (including the 1% interest) to
the general partners and 74.25% to the limited partners. Transfers of
equity are made periodically to reconcile the partners' equity
accounts to the provisions of the Partnership Agreement. These
transfers have no effect on results of operations or distributions to
partners.
5. RELATED PARTY TRANSACTIONS
Management Agreements and Shared Expenses with Affiliates
---------------------------------------------------------
The Partnership has a management agreement with PSI pursuant
to which PSI operates the Partnership's self-storage facilities for a
fee equal to 6% of the facilities' gross revenue (as defined). The
F-8
PUBLIC STORAGE PROPERTIES V, LTD.
NOTES TO FINANCIAL STATEMENTS
December 31, 2004
Partnership's business parks are managed by PS Business Parks,
L.P. ("PSBP") pursuant to a management contract. PSBP, an affiliate
of PSI operates the Partnership's business parks for a fee equal to
5% of the facilities gross income. For 2004, 2003 and 2002, the
Partnership paid $544,000, $531,000 and $514,000, respectively,
pursuant to these management agreements.
The Management Agreement between the Partnership and PSI
provides that the Management Agreement may be terminated without
cause upon 60 days written notice by the Partnership or six months
notice by PSI. The Management Agreement between the Partnership and
PSBP provides that the Management Agreement may be terminated (i)
without cause upon 60 days written notice by the Partnership and upon
seven years notice by PSBP and (ii) at any time by either party for
cause.
The Partnership's facilities, along with facilities owned by
PSI and its affiliates, are managed jointly by PSI in order to take
advantage of scale and other efficiencies. Joint costs are allocated
on a methodology meant to fairly allocate such costs. Such joint
costs include supervisory, relief, and administrative personnel
costs, television advertising expenses, yellow page advertising, data
processing, and insurance (including amounts paid to PSI's captive
insurance entities). The total of such expenses, which are included
in Cost of Operations, amounted to $969,000, $890,000, and $761,000
for the years ended December 31, 2004, 2003, and 2002, respectively.
Ownership Interest by the General Partners
In addition, B. Wayne Hughes, General Partner of the
"Partnership", and Chairman of PSI and members of his family own 28.2%
of the Limited Partnership units. PSI and its affiliates own 33.5% of
the Limited Partnership units.
Captive Insurance Activities with PSI
-------------------------------------
The Partnership has a 1.4% ownership interest in STOR-Re Mutual
Insurance Corporation ("STOR-Re"), which was formed in 1994 as an
association captive insurance company, and is controlled by PSI. The
Partnership accounts for its investment in STOR-Re, which is included
in other assets, on the cost method, and has received no
distributions during the three years ended December 31, 2004.
STOR-Re provides limited property and liability insurance
coverage to the Partnership, PSI, and affiliates for losses occurring
before April 1, 2004. STOR-Re was succeeded with respect to these
activities for losses occurring after March 31, 2004 by a wholly
owned subsidiary of PSI. Liabilities for losses and loss adjustment
expenses include an amount determined from loss reports and
individual cases and an amount, based on recommendations from an
outside actuary that is a member of the American Academy of
Actuaries, using a frequency and severity method, for losses incurred
but not reported. Determining the liability for unpaid losses and
loss adjustment expense is based upon estimates and while we believe
that the amount is adequate, the ultimate loss may be in excess of or
less than the amounts provided. The methods for making such estimates
and for establishing the resulting liability are continually
reviewed.
F-9
PUBLIC STORAGE PROPERTIES V, LTD.
NOTES TO FINANCIAL STATEMENTS
December 31, 2004
The following table sets forth certain condensed consolidated
financial information with respect to STOR-Re (representing 100% of
this entity's operations and not the Partnership's pro-rata share):
2004 (a) 2003
---------------------- ---------------------
(Amounts in thousands)
For the year ended December 31,
Premiums earned................................. $ 3,994 $ 14,766
Net investment income........................... 677 721
Loss and loss adjustment expense................ (2,948) (14,731)
Other expenses.................................. (200) (298)
---------------------- ---------------------
Net income (loss)............................ $ 1,523 $ 458
====================== =====================
At December 31,
Total assets (primarily cash and other
investments)................................. $ 33,071 $ 41,778
Liabilities for losses and loss adjustment
expenses..................................... 20,222 29,634
Other liabilities............................... - 4,053
Member's surplus................................ 12,849 8,091
(a) Effective April 1, 2004, STOR-Re ceased providing insurance
for losses occurring after April 1, 2004, and was succeeded with
respect to these activities by PSIC-H, a wholly owned subsidiary of
PSI. Accordingly, premiums and associated loss expense for periods
after March 31, 2004 are not included in this table.
Premiums paid to the captive entities for the years ended
December 31, 2004, 2003 and 2002 were $111,000, $79,000
and $58,000, respectively.
Other Activities with PSI
-------------------------
A corporation that reinsures policies against losses to goods
stored by tenants in PSI's storage facilities was purchased by PSI from
Mr. Hughes and members of his family (the "Hughes Family") on December
31, 2001. This corporation receives the premiums and bears the
risks associated with the re-insurance.
A subsidiary of PSI sells locks and boxes and rents trucks to
the general public and tenants to be used in securing their spaces
and moving their goods. The subsidiary of PSI receives the revenues
and bears the cost of the activities.
6. TAXES BASED ON INCOME
Taxes based on income are the responsibility of the individual
partners and, accordingly, the Partnership's financial statements do
not reflect a provision for such taxes.
Unaudited taxable net income was $6,522,000, $6,264,000 and
$6,357,000 for the years ended December 31, 2004, 2003 and 2002,
respectively. The difference between taxable net income and net income
is primarily related to depreciation expense resulting from differences
in book and tax depreciation methods.
7. NOTES PAYABLE
On April 1, 1999, the partnership borrowed $17,000,000 from a
commercial bank. The proceeds of the loan were used to repay the
Partnership's mortgage debt. The loan was unsecured and bore interest
at the London Interbank Offering Rate ("LIBOR") plus 0.60% to 1.20%
depending on the Partnership's interest coverage ratio. The loan
requires monthly payments of interest and matures April 2003. During
the first quarter of 2002, the Partnership paid the loan in full
without penalty.
No interest was paid during 2004 or 2003, and $4,000 in
interest was paid in 2002.
F-10
PUBLIC STORAGE PROPERTIES V, LTD.
NOTES TO FINANCIAL STATEMENTS
December 31, 2004
8. SUPPLEMENTARY QUARTERLY FINANCIAL DATA (UNAUDITED)
Three Months Ended
-------------------------------------------------------------------------------
March 31, 2004 June 30, 2004 September 30, 2004 December 31, 2004
----------------- ----------------- -------------------- -------------------
Rental Income $ 2,234,000 $ 2,271,000 $ 2,281,000 $ 2,335,000
Cost of Operations (including
management fees and depreciation) $ 930,000 $ 986,000 $ 987,000 $ 837,000
Net Income $ 1,547,000 $ 1,520,000 $ 1,538,000 $ 1,743,000
Net Income Per Limited Partner Unit $ 25.14 $ 24.54 $ 24.93 $ 29.55
Distributions $ 1,719,000 $ 1,718,000 $ 1,719,000 $ 1,718,000
Three Months Ended
-------------------------------------------------------------------------------
March 31, 2003 June 30, 2003 September 30, 2003 December 31, 2003
----------------- ----------------- -------------------- -------------------
Rental Income $ 2,157,000 $ 2,176,000 $ 2,272,000 $ 2,252,000
Cost of Operations (including
management fees and depreciation) $ 900,000 $ 951,000 $ 928,000 $ 953,000
Net Income $ 1,494,000 $ 1,463,000 $ 1,589,000 $ 1,538,000
Net Income Per Limited Partner Unit $ 23.95 $ 23.25 $ 26.10 $ 24.93
Distributions $ 1,719,000 $ 1,719,000 $ 1,719,000 $ 1,717,000
9. COMMITMENTS AND CONTINGENCIES
Serrao v. Public Storage, Inc. (filed April 2003)
--------------------------------------------------
(Superior Court - Orange County)
--------------------------------
The plaintiff in this case filed a suit against Public Storage,
Inc. on behalf of a putative class of renters who rented self-storage
units from Public Storage, Inc.. Plaintiff alleges that Public
Storage, Inc. misrepresented the size of its storage units, has
brought claims under California statutory and common law relating to
consumer protection, fraud, unfair competition, and negligent
misrepresentation, and is seeking monetary damages, restitution, and
declaratory and injunctive relief.
The claim in this case is substantially similar to those in
Henriquez v. Public Storage, Inc., which was disclosed in prior
reports. In January 2003, the plaintiff caused the Henriquez action
to be dismissed.
Based upon the uncertainty inherent in any putative class
action, Public Storage, Inc. cannot presently determine the potential
damages, if any, or the ultimate outcome of this litigation. On
November 3, 2003, the court granted Public Storage, Inc.'s motion to
strike the plaintiff's nationwide class allegations and to limit any
putative class to California residents only. Public Storage, Inc. is
vigorously contesting the claims upon which this lawsuit is based
including class certification efforts.
Salaam et al v. Public Storage, Inc. (filed February 2000)
------------------------------------------------------------
(Superior Court - Sacramento County); Holzman et al v. Public
----------------------------------------------------------------
Storage, Inc. (filed October 2004) (Superior Court - Sacramento County)
----------------------------------------------------------------------
This action, which was described in the Partnership's prior
reports, was disposed of in February 2005.
Other Items
-----------
Public Storage, Inc. and the Partnership are parties to various
claims, complaints, and other legal actions that have arisen in the
normal course of business from time to time, that are not described
above. We believe that it is unlikely that the outcome of these other
pending legal proceedings including employment and tenant claims, in
the aggregate, will have a material adverse effect upon the
operations or financial position of the Partnership.
F-11
PUBLIC STORAGE PROPERTIES V, LTD.
NOTES TO FINANCIAL STATEMENTS
December 31, 2004
10. SUBSEQUENT EVENT (UNAUDITED)
On March 31, 2005, we distributed substantially all of the
Public Storage common stock and Public Storage Equity Stock, Series
A, on a pro-rata basis to all unitholders of record as of January 1,
2005. Accordingly, during the first quarter ended March 31, 2005, we
expect a gain on disposition of approximately $22.6 million (based
upon a value of $56.73 per share for the Public Storage common stock
and $28.01 per depositary share for the Public Storage Equity Stock,
Series A). The actual gain will be based on the closing market price
per share on March 31, 2005.
F-12
Public Storage Properties V, Ltd.
Schedule III - Real Estate and Accumulated Depreciation
For the year ended December 31, 2004
Initial Cost
----------------------------------
Building, Land Costs Subsequent
Imp & to construction
Description Land Equipment (Improvements)
- ---------------------------- --------------- --------------- ----------------
California
Belmont $478,000 $811,000 $298,000
Carson Street 265,000 563,000 261,000
Palmdale 114,000 721,000 389,000
Pasadena Fair Oaks 686,000 1,219,000 448,000
Sacramento Carmichael 305,000 850,000 367,000
Sacramento Florin 326,000 1,063,000 435,000
San Jose Capitol Quimby 209,000 742,000 267,000
San Jose Felipe 270,000 935,000 342,000
So. San Francisco
Spruce (1) 532,000 1,488,000 660,000
Florida
Miami Perrine (2) 230,000 -
Miami 27th Avenue 142,000 878,000 502,000
Miami 29th 270,000 520,000 298,000
Georgia
Atlanta Montreal Road 397,000 888,000 407,000
Atlanta Mountain
Industrial Blvd. 271,000 725,000 486,000
Marietta-Cobb Parkway 219,000 914,000 440,000
--------------- --------------- ----------------
$4,714,000 $12,317,000 $5,600,000
=============== =============== ===============
Gross Carrying Amount
at December 31, 2004
--------------------------
Building, Land
Imp & Accumulated Date
Description Land Equipment Total Depreciation Completed
- ------------------------ -------------- --------------- ---------------- -------------- -------------
California
Belmont $478,000 $1,109,000 $1,587,000 $1,042,000 12/79
Carson Street 265,000 824,000 1,089,000 726,000 01/80
Palmdale 114,000 1,110,000 1,224,000 1,078,000 01/80
Pasadena Fair Oaks 686,000 1,667,000 2,353,000 1,528,000 03/80
Sacramento Carmichael 305,000 1,217,000 1,522,000 1,119,000 07/80
Sacramento Florin 326,000 1,498,000 1,824,000 1,369,000 06/80
San Jose Capitol Quimby 209,000 1,009,000 1,218,000 943,000 07/80
San Jose Felipe 270,000 1,277,000 1,547,000 1,168,000 12/80
So. San Francisco
Spruce (1) 532,000 2,148,000 2,680,000 1,817,000 11/80
Florida
Miami Perrine (2) 230,000 - 230,000 - 01/80
Miami 27th Avenue 142,000 1,380,000 1,522,000 1,254,000 05/80
Miami 29th 270,000 818,000 1,088,000 768,000 10/79
Georgia
Atlanta Montreal Road 397,000 1,295,000 1,692,000 1,163,000 06/80
Atlanta Mountain
Industrial Blvd. 271,000 1,211,000 1,482,000 1,093,000 09/80
Marietta-Cobb Parkway 219,000 1,354,000 1,573,000 1,245,000 10/79
-------------- --------------- ---------------- --------------
$4,714,000 $17,917,000 $22,631,000 $16,313,000
============== =============== ================ ==============
(1) A portion of the property has been developed as a business park.
(2) The property is listed for sale. In 1996, the Partnership sold
approximately 61% of the Miami/Perrine property.
F-13
Public Storage Properties V, Ltd.
Schedule III - Real Estate and Accumulated Depreciation
(continued)
Reconciliation of Real Estate Cost and Accumulated Depreciation
2004 2003
------------------ --------------------
Investment in Real estate
Balance at the beginning of the year $ 22,278,000 $ 21,964,000
Additions through cash expenditures 353,000 314,000
------------------ --------------------
Balance at the end of the year $ 22,631,000 $ 22,278,000
================== ====================
Accumulated Depreciation
Balance at the beginning of the year $ 15,510,000 $ 14,570,000
Additions charged to costs and expenses 803,000 940,000
------------------ --------------------
Balance at the end of the year $ 16,313,000 $ 15,510,000
================== ====================
(a) The aggregate depreciable cost of real estate (excluding land) for Federal
income tax purposes is $17,376,000 (unaudited).
F-14