UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the period ended June 30, 1997 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to ------- ------- Commission File Number 0-9208 ------ PUBLIC STORAGE PROPERTIES V, LTD. ----------------------------------------------------- (Exact name of registrant as specified in its charter) California 95-3292068 - --------------------------------------- -------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 701 Western Avenue Glendale, California 91201 - --------------------------------------- -------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (818) 244-8080 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No -- -- INDEX Page ----- PART I. FINANCIAL INFORMATION Condensed balance sheets at June 30, 1997 and December 31, 1996 2 Condensed statements of income for the three and six months ended June 30, 1997 and 1996 3 Condensed statement of partners' equity for the six months ended June 30, 1997 4 Condensed statements of cash flows for the six months ended June 30, 1997 and 1996 5 Notes to condensed financial statements 6 Management's discussion and analysis of financial condition and results of operations 7-8 PART II. OTHER INFORMATION 9 PUBLIC STORAGE PROPERTIES V, LTD. CONDENSED BALANCE SHEETS June 30, December 31, 1997 1996 ------------------ ---------------- (Unaudited) ASSETS ------ Cash and cash equivalents $ 3,086,000 $ 3,177,000 Marketable securities of affiliate (cost of $6,353,000 in 1997 and $5,283,000 in 1996) 14,035,000 13,658,000 Rent and other receivables 130,000 115,000 Real estate facilities, at cost: Buildings and equipment 14,936,000 14,686,000 Land (including land held for sale of $230,000) 4,714,000 4,714,000 ------------------ ---------------- 19,650,000 19,400,000 Less accumulated depreciation (9,457,000) (9,046,000) ------------------ ---------------- 10,193,000 10,354,000 ------------------ ---------------- Other assets 237,000 286,000 ------------------ ---------------- Total assets $ 27,681,000 $ 27,590,000 ================== ================ LIABILITIES AND PARTNERS' EQUITY -------------------------------- Accounts payable $ 91,000 $ 51,000 Deferred revenue 186,000 195,000 Mortgage note payable 22,517,000 22,748,000 Partners' equity: Limited partners' deficit, $500 per unit, 44,000 units authorized, issued and outstanding (2,075,000) (2,806,000) General partners' deficit (720,000) (973,000) Unrealized gain on marketable securities 7,682,000 8,375,000 ------------------ ---------------- Total partners' equity 4,887,000 4,596,000 ------------------ ---------------- Total liabilities and partners' equity $ 27,681,000 $ 27,590,000 ================== ================ See accompanying notes. 2 PUBLIC STORAGE PROPERTIES V, LTD. CONDENSED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, --------------------------------- ------------------------------ 1997 1996 1997 1996 ------------- ------------- ------------- ------------- REVENUES: Rental income $ 1,739,000 $ 1,631,000 $ 3,451,000 $ 3,215,000 Dividends from marketable securities of affiliate 105,000 97,000 202,000 194,000 Other income 46,000 23,000 91,000 40,000 ------------- ------------- ------------- ------------- 1,890,000 1,751,000 3,744,000 3,449,000 ------------- ------------- ------------- ------------- COSTS AND EXPENSES: Cost of operations 413,000 403,000 863,000 800,000 Management fees paid to affiliates 104,000 88,000 206,000 177,000 Depreciation 206,000 189,000 411,000 372,000 Administrative 25,000 21,000 35,000 30,000 Interest expense 627,000 640,000 1,245,000 1,263,000 ------------- ------------- ------------- ------------- 1,375,000 1,341,000 2,760,000 2,642,000 ------------- ------------- ------------- ------------- Net income before gain on sale of land 515,000 410,000 984,000 807,000 Gain on sale of land - 13,000 - 13,000 ------------- ------------- ------------- ------------- NET INCOME $ 515,000 $ 423,000 $ 984,000 $ 820,000 ============= ============= ============= ============= Limited partners' share of net income ($22.14 per unit in 1997 and $18.45 per unit in 1996) $ 974,000 $ 812,000 General partners' share of net income 10,000 8,000 ------------- ------------- $ 984,000 $ 820,000 ============== ============= See accompanying notes. 3 PUBLIC STORAGE PROPERTIES V, LTD. CONDENSED STATEMENT OF PARTNERS' EQUITY (UNAUDITED) Unrealized Gain on Total Limited General Marketable Partners' Partners Partners Securities Equity ----------- --------- ----------- ---------- Balance at December 31, 1996 $(2,806,000) $(973,000) $8,375,000 $4,596,000 Unrealized loss on marketable securities - - (693,000) (693,000) Net income 974,000 10,000 - 984,000 Equity transfer (243,000) 243,000 - - ----------- --------- ----------- ---------- Balance at June 30, 1997 $(2,075,000) $(720,000) $7,682,000 $4,887,000 ============ ========== =========== ========== See accompanying notes. 4 PUBLIC STORAGE PROPERTIES V, LTD. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended June 30, 1997 1996 -------------------------------------- Cash flows from operating activities: Net income $ 984,000 $ 820,000 Adjustments to reconcile net income to net cash provided by operating activities: Gain on sale of land - (13,000) Depreciation 411,000 372,000 Increase in rent and other receivables (15,000) (11,000) Amortization of prepaid loan fees 41,000 41,000 Decrease (increase) in other assets 8,000 (9,000) Amortization of prepaid management fees - 172,000 Increase in accounts payable 40,000 33,000 (Decrease) increase in deferred revenue (9,000) 12,000 --------------- --------------- Total adjustments 476,000 597,000 --------------- --------------- Net cash provided by operating activities 1,460,000 1,417,000 --------------- --------------- Cash flow from investing activities: Purchase of marketable securities of affiliate (1,070,000) - Proceeds from sale of land - 376,000 Additions to real estate facilities (250,000) (231,000) --------------- --------------- Net cash (used in) provided by investing activities (1,320,000) 145,000 --------------- --------------- Cash flow from financing activities: Principal payments on mortgage note payable (231,000) (227,000) --------------- --------------- Net cash used in financing activities (231,000) (227,000) --------------- --------------- Net (decrease) increase in cash and cash equivalents (91,000) 1,335,000 Cash and cash equivalents at beginning of period 3,177,000 1,156,000 --------------- --------------- Cash and cash equivalents at end of period $ 3,086,000 $ 2,491,000 =============== =============== Supplemental schedule of non-cash investing and financing activities: Decrease (increase) in fair value of marketable securities $ 693,000 $ (716,000) =============== =============== Unrealized (loss) gain on marketable securities $ (693,000) $ 716,000 =============== =============== Decrease in land due to sale $ - $ 363,000 =============== =============== See accompanying notes. 5 PUBLIC STORAGE PROPERTIES V, LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 1. The accompanying unaudited condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures contained herein are adequate to make the information presented not misleading. These unaudited condensed financial statements should be read in conjunction with the financial statements and related notes appearing in the Partnership's Form 10-K for the year ended December 31, 1996. 2. In the opinion of management, the accompanying unaudited condensed financial statements reflect all adjustments, consisting of only normal accruals, necessary to present fairly the Partnership's financial position at June 30, 1997, the results of its operations for the three and six months ended June 30, 1997 and 1996 and its cash flows for the six months then ended. 3. The results of operations for the three and six months ended June 30, 1997 are not necessarily indicative of the results expected for the full year. 4. Marketable securities at June 30, 1997 consist of 479,834 shares of common stock of Public Storage, Inc., a publicly traded real estate investment trust and a general partner of the Partnership. The Partnership has designated its portfolio of marketable securities as available for sale. Accordingly, at June 30, 1997, the Partnership has recorded the marketable securities at fair value, based upon the closing quoted prices of the securities at June 30, 1997. Changes in market value of marketable securities are reflected as unrealized gains or losses directly in Partners' Equity and accordingly have no effect on net income. 6 PUBLIC STORAGE PROPERTIES V, LTD. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - --------------------- THREE AND SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE AND SIX MONTHS ENDED JUNE 30, 1996: The Partnership's net income for the six months ended June 30, 1997 was $984,000 compared to $820,000 for the six months ended June 30, 1996, representing an increase of $164,000 or 20%. The Partnership's net income for the three months ended June 30, 1997 was $515,000 compared to $423,000 for the three months ended June 30, 1996, representing an increase of $92,000 or 22%. These increases are primarily a result of increased operating results at the Partnership's mini-warehouse facilities combined with a decrease in interest expense. Rental income for the six months ended June 30, 1997 was $3,451,000 compared to $3,215,000 for the six months ended June 30, 1996, representing an increase of $236,000 or 7%. Rental income for the three months ended June 30, 1997 was $1,739,000 compared to $1,631,000 for the three months ended June 30, 1996, representing an increase of $108,000 or 7%. The increases for the three and six months ended June 30, 1997 are attributable to increases in rental rates and occupancy levels at the Partnership's mini-warehouse and business-park facilities. Realized rent at the mini-warehouse facilities for the six months ended June 30, 1997 increased to $.80 per occupied square foot from $.78 per occupied square foot for the six months ended June 30, 1996. Weighted average occupancy levels at the mini-warehouse facility were 94% and 90% for the six months ended June 30, 1997 and 1996, respectively. Rental income at the Partnership's San Francisco business park facility increased by $9,000 for the six months ended June 30, 1997 compared to the same period in 1996 due to increases in both rental rates and occupancy levels. Realized rent for the six months ended June 30, 1997 increased to $1.18 per occupied square foot from $1.15 per occupied square foot for the six months ended June 30, 1996. Weighted average occupancy levels at the business park facility were 96% and 92% for the six months ended June 30, 1997 and 1996, respectively. Other income increased $51,000 for the six months ended June 30, 1997 compared to the same period in 1996 due to an increase in interest income earned on invested cash. Dividend income from marketable securities of affiliate increased $8,000 for the six months ended June 30, 1997 compared to the same period in 1996 due to an increase in the number of shares owned in 1997 compared to the same period in 1996. 7 Cost of operations (including management fees paid to affiliates) for the six months ended June 30, 1997 was $1,069,000 compared to $977,000 for the six months ended June 30, 1996, representing an increase of $92,000 or 9%. Cost of operations (including management fees paid to affiliates) for the three months ended June 30, 1997 was $517,000 compared to $491,000 for the three months ended June 30, 1996, representing an increase of $26,000 or 5%. This increase is mainly attributable to increases in management fees, property tax and payroll expenses. Property taxes increased due to an increase in property tax rates at some of the Partnership's mini-warehouse facilities. In 1995, the Partnership prepaid eight months of 1996 management fees on its mini-warehouse operations discounted at the rate of 14% effective rate to compensate for early payment. As a result, management fee expense for the six months ended June 30, 1996 was $16,000 lower than it would have been under the customary undiscounted fee structure. Interest expense decreased $18,000 for the six months ended June 30, 1997 compared to the same period in 1996 due primarily to a lower outstanding loan balance in 1997 over 1996. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Cash flows from operating activities ($1,460,000 for the six months ended June 30, 1997) have been sufficient to meet all current obligations of the Partnership. At June 30, 1997, the Partnership held 479,834 shares of common stock (marketable securities) with a fair value totaling $14,035,000 (cost basis of $6,353,000 at June 30, 1997) in Public Storage, Inc. In May 1997, the Partnership purchased an additional 39,250 shares of common stock in Public Storage, Inc. at an aggregate cost of $1,070,000. The Partnership recognized $202,000 in dividends for the six months ended June 30, 1997. In the third quarter of 1991, quarterly distributions were discontinued to enable the Partnership to make principal payments that commenced in 1991 and to increase cash reserves in subsequent years through 1999, at which time the remaining principal balance is due. 8 PART II. OTHER INFORMATION Items 1 through 4 are inapplicable. Item 5 In May 1997, B. Wayne Hughes ("Hughes"), a general partner of the Partnership, completed a cash tender offer, which commenced in March 1997, pursuant to which Hughes acquired a total of 5,937 limited partnership units at $459 per Unit. Public Storage, inc. ("PSI"), the other general partner of the Partnership, has an option to purchase such 5,937 Units from Hughes, at Hughes' cost, at any time after May 2, 1998. Item 6 Exhibits and Reports on Form 8-K. -------------------------------- (a) The following exhibit is included herein: (27) Financial Data Schedule (b) Form 8-K The Partnership filed a Current Report on From 8-K dated May 2, 1997 (filed May 9, 1997), pursuant to Item 1, which stated that as a result of B. Wayne Hughes' cash tender offer to purchase limited partnership units in the Partnership ("Units") which was completed on May 2, 1997, as of May 2, 1997 B. Wayne Hughes and Public Storage, Inc., the general partners of the Partnership, beneficially owned an aggregate of 27,288 Units, representing 62.0% of the Units, and are in a position to control all voting decisions with respect to the Partnership. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DATED: August 12, 1997 PUBLIC STORAGE PROPERTIES V, LTD. BY: Public Storage, Inc. General Partner BY: /s/ John Reyes --------------- John Reyes Vice President and Chief Financial Officer