REAL ESTATE

LIMITED PARTNERSHIP SCORECARD

Name of Offering - PUBLIC STORAGE INVESTORS 12, a Cal. L.P. 5-2-88

Size - $5,650,000 (113 units @ $50M each - staged 3-5 yrs.) Min. $1,750,000. Goals: 1. Pres. of capital. 2. Produce rental income to offset expenses., service debt & prov. cash avail for dist. 3. Provide pot. cap. gain thru apprec. of props. Private placement. Hld. pd. - 7-10 yrs. - pg. 6. Suitability - Accred. + 35 non-accred. - Income in curr. yr. - $75M + N/W of $150M or $200M of N/W alone(excl. h,c, & f). Staged - curr. liquidity - $45M/unit - Gross inc. 20% of N/W - $270M. G.P. may request tax returns.

Sponsor - Public Storage Investors, Inc. (PSII) & B. Wayne Hughes, 75% owner of PSI.

Description - L.P. org. to acq. 3 parcels of land to be developed & held for rental income & apprec. as self storage facilities offering storage space for pers. & bus. use (mini-warehouses). There are two props located in Calif. - San Francisco and Montebello (L.A.) The other prop. is located in Baltimore, Md. L.P. has completed dev't. on only one of the props. (Baltimore) and is developing the other 2 parcels.

1. General Partner Experience - Public Storage Investors, Inc. was org. in 1984 (pg. 60). PSI, not the G.P. was org. in 1972 but began syndicating in 1976 (PSP I).

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2. Net Worth Consideration - 12-21-87 - Audit of PSII Corp. G.P. - $1,254,020. Pg. 60. B. Wayne Hughes, indiv. repres. a N/W of $1,000,000. HE IS PERSONAL GUARANTOR OF OTHER PSI L.P.'S TO THE EXTENT OF $50,000,000!

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3. Resale Activity (Track record) - Pg. 59 - PSI - 31 Public L.P.'s & 27 privates along with 19 foreign progs. As of 12-31-87, 726 facilities under mgmt., dev'd 443 projects, 398,000 rental spaces and 82 projects under dev't. Only 1-2 sales shown in notes!

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4. Compensation - Mgmt. fees & R/E comm. unsubordinated. G.P. cash flow partic. is 5%, unsubord. and 5% profits on sale, also unsubord.

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5. Load Factors - Sales Comm. - 10.0%, O & O - 5.0%, Acquisition fees - 5.4% (pg. 38) loan guar. fee & stand-by fee - 5.2% for a total of 25.6%. 6% of acq. cost = $304,080.

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SCORECARD (Page 2)

6. Guarantees - No dealer, salesman or any other person has been auth. to give any info. or to make any rep. not contained in this offering memorandum. No liquidity. Pg. 31 - If required by lender, PSI has agreed to guarantee pymt. of prin. & int. on the first mtg. until NOI reaches a spec. level. Pg. 36 - PSI to prov. perm. fin'g. if none can be obtained. PSI gets a 1%-3% fee. Note - stand-by cash advances are ltd. to $400M max. - pg. 36. G.P. may loan funds but they are not subordinated. pg. 10.

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7. Self-Dealing (Conflicts of Interest) -1. L.P. may buy prop. from PSI & reimb. them for cost + carrying charges. 2. Placement agent - PSI Securities - Affil. No indep. due dilig. 3. PSI rec. 4% contractors profit and 6% of aggreg. acq. & dev't. cost. 4. Competition from PSI to develop near these props. 5. Pg. 41 - 15% of G.P. ints. in L.P. may be reallowed to placement agent - PSI Securities, Christopher Weil or Focus Securities (affils). 6. San Francisco prop. not appraised! If less than acq. & dev't. cost, PSI will return diff. to L.P. (Note - Why not wait till appraised?) 7. Pg. 32 - PSI rec. 1-3% annual stand-by loan guar. fee. 8. Pg. 66 - Sales incentives to B.D.'s and reps. selling deal.

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8. Limited Partners Rights - Removal of G.P. is by simple majority but ONLY FOR CAUSE, INCLUDE. BREACH OF FID. DUTY, INTENT. MISCONDUCT, GROSS NEGLIGENCE OR INSOLVENCY. All other limited partner democratic. rights are by simple majority, but require the G.P. concurr. Pg. 105

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9. Leverage - Cost of acq. & dev't. - $11,138,000. Debt - $9,112,000 for leverage of 81%. However, the L.P. antic. add'l financing in 1993!

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10. Financing - No first mtg. loan commit. made. Antic. 10 yr. $9MM, 11% - 30 yr. amort. Secondary fin'g. - 5 yr. interest only! May obtain variable rate fin'g. with neg. amortiz. Construct. loans mature as follows: 1. S.F. - 11'86 (6 mos. extension poss. for a fee). 2. L.A. (Montebello) - 1'89 (6 mos. extension poss. for a fee). Balloon of $8.2MM due 12-31-98.

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11. Valuation Ratio - Only 2 appraisals obtained for comparison purposes! 1. Baltimore - $3.2MM (assum. 90% occup.) Both appraisals are as of 12-15-87 and done on an "as if completed & operating at stabilized occupancy"! 100 % capital raised - 25.6% load = 74.4% going into the property. Very low!

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12. Assumptions - Pg. 10 - The forecast assumes a rate of expense increase to be 1/2 the rate of revenue increase. Should be the same! Goal is 90% occup. A 9% cap. rate is projected on sale. Using the 8% rent inc. projections ( there is also 4% & 6%), the 1990 proj. NOI is $1,082,455. Based on the L.P. loaded cost on the 3 props. (debt of $9MM + cash raised of $5.650MM, the L.P. consideration is $14,652,000. The cap. rate is only 7.34%. Extremely low!

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SCORECARD (Page 3)

13. Percentage of Supply to Demand - Pg. 12 - Each prop. will face sig. competition from other mini-warehouses within each respective mkt. area. surveys of comps. pre- pared IN HOUSE, NOT INDEPENDENTLY. SAN FRAN. NOT APPRAISED! Mini-warehouses are a new business with much competition and increasing. 1. Baltimore - existing 6 story bldg. + basement. 56,163 sq. ft. of rentable storage area. 674 units rennov. completed 3'88 - 3 COMPETING FACILITIES WITHIN 3 MI. Occup.- 75%-80%. 2. San Fran. - exist. 3 story bldg. with basement curr. being rennov. 45,055 sq. ft. - 674 units completion date - 10-1-88. THERE ARE 12 MINI-WAREHOUSES WITHIN 3 MI. AND 4 WITHIN 1 MI.! Occup. ave. 80-90% with 2 in rent up phase. 3. Montebello (L.A.) One story M/W bldg. One 3 story M/W bldg. 68,630 sq. ft. with 761 units to be comp. 11-1-88. THERE ARE 6 MINI - WAREHOUSES WITHIN 3 MI. ) ONE DEV'D BY PSI). 2 are in rent up and the others ave 85-90% occupancy.

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14. Limited Partnership Consid. vs. Comp. -125.6%

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15. Risk Factors (% of normal risk) 1. Liquidity risk. 2. Inv't. of 2 props. (S.F. & Balt.) not independently surveyed, S.F. not appraised! 3. Dev't. risk. 4. R/E operating risk.. 4. Competition. 5. Diff. to deal with defaults. 6. Delays in sale or refi. 7. Uninsured losses. 8. Energy supply shtgs. & allocs. 9. Leverage risk. - 90% +, ultimately. 10. Balloon pymt. risk. 11. Tax risk.

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Total Score ___28 of 75 = 37%

* (Min. Accept. 55 of 75 = 73%)

FEND - Securities Expert Witness
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