Public Storage 1996 Annual Report Download - page 22

Notes to Consolidated Financial Statements (continued)
P UBLIC S TORAGE , I NC . 1996 A NNUAL R EPORT
20
8. N OTES P AYABLE
Notes payable at December 31, 1996 and 1995 consist of the following:
1996 1995
Carrying Carrying
(In thousands) amount Fair value amount Fair value
7.08% unsecured senior notes, due November 2003 $ 59,750 $ 59,750 $ 65,500 $ 65,500
Mortgage notes payable:
10.55% mortgage notes secured by real estate facilities,
principal and interest payable monthly, due August 2004 32,115 34,964 33,699 36,959
7.07% to 11.10% mortgage notes secured by real estate facilities,
principal and interest payable monthly, due at varying dates
between December 1997 and September 2028 16,578 16,578 22,875 22,875
Variable rate mortgage notes secured by real estate facilities – – 35,978 35,978
$108,443 $111,292 $158,052 $161,312
During 1995, in connection with the PSMI Merger, the Company assumed the 7.08% unsecured senior notes payable. The senior notes require
interest and principal payments to be paid semi-annually and have various restrictive covenants, all of which have been met at December 31, 1996.
The 10.55% mortgage notes consist of five notes which are cross-collateralized by 19 properties and are due to a life insurance company.
Although there is a negative spread between the carrying value and the estimated fair value of the notes, the notes provide for the prepayment
of principal subject to the payment of penalties which exceed this negative spread. Accordingly, prepayment of the notes at this time would not be
economically practicable.
Mortgage notes payable are secured by 30 of the Company’s real estate facilities having an aggregate net book value of $68.1 million at
December 31, 1996.
At December 31, 1996, approximate principal maturities of notes payable are as follows:
Fixed Rate
Mortgage Debt
7.08% Unsecured (weighted average
(in thousands) Senior Notes rate of 10.28%) Total
1997 $ 6,500 $ 4,744 $ 11,244
1998 7,250 7,908 15,158
1999 8,000 6,484 14,484
2000 8,750 2,721 11,471
2001 9,500 2,238 11,738
Thereafter 19,750 24,598 44,348
$59,750 $48,693 $108,443
Interest paid (including interest related to the borrowings on the Credit Facility) during 1996, 1995 and 1994 was $10,312,000, $8,595,000 and
$5,940,000, respectively. In addition, in 1996 and 1995, the Company capitalized interest totaling $1,861,000 and $307,000, respectively, related
to construction of real estate facilities.
9. M INORITY I NTEREST
In consolidation, the Company classifies ownership interests other than its own in the net assets of each of the Consolidated Partnerships as minority
interest on the consolidated financial statements. Minority interest in income consists of the minority interests’ share of the operating results of
the Company relating to the consolidated operations of the Consolidated Partnerships.
During 1996, the Company acquired limited partnership interests in the Consolidated Partnerships in several transactions for an aggregate cost
of $15,419,000. These transactions had the effect of reducing minority interest by approximately $8,193,000 (the historical book value of such
interests in the underlying net assets of the partnerships). The excess of the underlying book value over cost ($7,226,000) has been allocated to
real estate facilities in consolidation. In 1995 and 1994, the Company acquired interests in the Consolidated Partnerships at an aggregate cost of
$32,683,000 and $51,711,000, respectively, reducing minority interest by approximately $32,906,000 and $46,891,000, respectively. The excess
of cost over underlying book values was allocated to real estate facilities in consolidation.
During 1996 and 1995, in connection with certain business combinations (Note 3) minority interest was increased by $20,139,000 and
$17,034,000, respectively, representing the remaining partners’ equity interests in the aggregate net assets of the consolidated partnerships.