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 endedSeptember 30, 2009
  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: 0-8667
  PUBLIC STORAGE PROPERTIES,
LTD.
 (Exact
name of registrant as specified in its charter)
 
 California
              95-3196921(State
      or other jurisdiction of
              (I.R.S.
      Employerincorporation
      or organization)
              Identification
      Number)701
      Western Avenue, Glendale, California
              91201-2349(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.
  [X]  Yes
              [   ]  No
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
 [   ]  Yes
              [   ]  No
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer or a non-accelerated filer.  See definition of
“accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange
Act.
  Large
      Accelerated Filer [  ]
              Accelerated
      Filer [  ]
              Non-accelerated
      Filer [X]
              Smaller
      Reporting Company [  ]
 
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
  [   ]  Yes
              [X]  No
 
 The
Registrant is a limited partnership and issues units representing ownership of
limited partner interests, with a par value of $500.00 per
unit.  Number of units outstanding at November 12,
2009:  20,000.
  
  PUBLIC
      STORAGE PROPERTIES, LTD.INDEXPART
      I
              FINANCIAL INFORMATION (Item 3 not
      applicable)
              PagesItem
      1.
              Financial
      Statements (Unaudited)Condensed
      Balance Sheets at September 30, 2009
                and
      December 31, 2009
              1Condensed
      Statements of Income for the
                Three
      and Nine Months Ended September 30, 2009 and 2008
              2Condensed
      Statements of Partners’ Equity for the
                Nine
      Months Ended September 30, 2009
              3Condensed
      Statements of Cash Flows for the
                Nine
      Months Ended September 30, 2009  and 2008
              4Notes
      to Condensed Financial Statements
              5 -
      10Item
      2.
              Management’s
      Discussion and Analysis of
                Financial
      Condition and Results of Operations
              11
      - 15Item
      4.
              Controls
      and Procedures
              16PART
      II.
              OTHER INFORMATION (Items 2 – 5 not
      applicable)Item
      1.
              Legal
      Proceedings
              17Item
      1A.
              Risk
      Factors
              17Item
      6.
              Exhibits
              17
  
 
  
  
 
 PUBLIC
STORAGE PROPERTIES, LTD.
 CONDENSED
BALANCE SHEETS
  September
      30,
                  2009
              
              
              December
      31,
                  2008(Unaudited)ASSETSCash
      and cash equivalents
              
              $
              864,000
              
              
              $
              802,000Rent
      and other receivables
              
              
              56,000
              
              
              
              60,000Real
      estate facilities, at cost:Buildings,
      land improvements and equipment
              
              
              10,278,000
              
              
              
              10,125,000Land
              
              
              2,476,000
              
              
              
              2,476,00012,754,000
              
              
              
              12,601,000Less
      accumulated depreciation
              
              
              (9,551,000
              )
              
              
              (9,441,000
              )3,203,000
              
              
              
              3,160,000Other
      assets
              
              
              49,000
              
              
              
              67,000Total
      assets
              
              $
              4,172,000
              
              
              $
              4,089,000LIABILITIES AND PARTNERS’
      EQUITYAccounts
      payable
              
              $
              169,000
              
              
              $
              136,000Deferred
      revenue
              
              
              153,000
              
              
              
              190,000Total
      liabilities
              
              
              322,000
              
              
              
              326,000Commitments
      and contingencies (Note 6)Partners’
      equity:Limited
      partners’ equity, $500 per unit, 20,000 units
                authorized,
      issued and outstanding
              
              
              2,859,000
              
              
              
              2,794,000General
      partners’ equity
              
              
              991,000
              
              
              
              969,000Total
      partners’ equity
              
              
              3,850,000
              
              
              
              3,763,000Total
      liabilities and partners’ equity
              
              $
              4,172,000
              
              
              $
              4,089,000
  See
accompanying notes.
 1
  PUBLIC
STORAGE PROPERTIES, LTD.
 CONDENSED
STATEMENTS OF INCOME
 (UNAUDITED)
   Three
      Months Ended
                    September
      30,
                
                
                Nine
      Months Ended
                    September
      30,2009
                
                
                2008
                
                
                2009
                
                
                2008REVENUES:Rental
      income
                
                $
                1,820,000
                
                
                $
                1,928,000
                
                
                $
                5,518,000
                
                
                $
                5,705,000Other
      income
                
                
                73,000
                
                
                
                106,000
                
                
                
                157,000
                
                
                
                195,0001,893,000
                
                
                
                2,034,000
                
                
                
                5,675,000
                
                
                
                5,900,000COSTS
      AND EXPENSES:Cost
      of operations
                
                
                353,000
                
                
                
                363,000
                
                
                
                1,117,000
                
                
                
                1,162,000Management
      fees paid to affiliate
                
                
                109,000
                
                
                
                116,000
                
                
                
                331,000
                
                
                
                342,000Depreciation
                
                
                41,000
                
                
                
                44,000
                
                
                
                110,000
                
                
                
                113,000Administrative
                
                
                14,000
                
                
                
                12,000
                
                
                
                70,000
                
                
                
                68,000517,000
                
                
                
                535,000
                
                
                
                1,628,000
                
                
                
                1,685,000NET
      INCOME
                
                $
                1,376,000
                
                
                $
                1,499,000
                
                
                $
                4,047,000
                
                
                $
                4,215,000Limited
      partners’ share of net income
                
                $
                1,035,000
                
                
                $
                1,150,000
                
                
                $
                3,026,000
                
                
                $
                3,239,000General
      partners’ share of net income
                
                
                341,000
                
                
                
                349,000
                
                
                
                1,021,000
                
                
                
                976,000$
                1,376,000
                
                
                $
                1,499,000
                
                
                $
                4,047,000
                
                
                $
                4,215,000Limited
      partners’ share of net income per unit (20,000 units
      outstanding)
                
                $
                51.75
                
                
                $
                57.50
                
                
                $
                151.30
                
                
                $
                161.95
 
 
  See
accompanying notes.
 2
  PUBLIC
STORAGE PROPERTIES, LTD.
 CONDENSED
STATEMENT OF PARTNERS’ EQUITY
 (UNAUDITED)
  Limited
                Partners’
              
              
              General
                Partners’
              
              
              Total
      Partners’ EquityBalance
      at December 31, 2008
              
              $
              2,794,000
              
              
              $
              969,000
              
              
              $
              3,763,000Net
      income
              
              
              3,026,000
              
              
              
              1,021,000
              
              
              
              4,047,000Cash
      distributions
              
              
              (2,940,000
              )
              
              
              (1,020,000
              )
              
              
              (3,960,000
              )Equity
      transfer
              
              
              (21,000
              )
              
              
              21,000
              
              
              
              -Balance
      at September 30, 2009
              
              $
              2,859,000
              
              
              $
              991,000
              
              
              $
              3,850,000
  See
accompanying notes.
 3
  PUBLIC
STORAGE PROPERTIES, LTD.
 CONDENSED
STATEMENTS OF CASH FLOWS
 (UNAUDITED)
  Nine
      Months Ended
                  September
      30,2009
              
              
              2008Cash
      flows from operating activities:Net
      income
              
              $
              4,047,000
              
              
              $
              4,215,000Adjustments
      to reconcile net income to net cash
                provided
      by operating activities:Depreciation
              
              
              110,000
              
              
              
              113,000Decrease
      (increase) in rent and other receivables
              
              
              4,000
              
              
              
              (15,000
              )Decrease
      (increase) in other assets
              
              
              18,000
              
              
              
              (5,000
              )Increase  in
      accounts payable
              
              
              33,000
              
              
              
              103,000Decrease
      in deferred revenue
              
              
              (37,000
              )
              
              
              (16,000
              )Total
      adjustments
              
              
              128,000
              
              
              
              180,000Net
      cash provided by operating activities
              
              
              4,175,000
              
              
              
              4,395,000Cash
      flows from investing activities:Additions
      to real estate facilities
              
              
              (153,000
              )
              
              
              (234,000
              )Net
      cash used in investing activities
              
              
              (153,000
              )
              
              
              (234,000
              )Cash
      flows from financing activities:Distributions
      paid to partners
              
              
              (3,960,000
              )
              
              
              (3,771,000
              )Net
      cash used in financing activities
              
              
              (3,960,000
              )
              
              
              (3,771,000
              )Net
      increase in cash and cash equivalents
              
              
              62,000
              
              
              
              390,000Cash
      and cash equivalents at the beginning of the period
              
              
              802,000
              
              
              
              559,000Cash
      and cash equivalents at the end of the period
              
              $
              864,000
              
              
              $
              949,000
  See
accompanying notes.
 4
 PUBLIC
STORAGE PROPERTIES, LTD.
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
   1.
              Description
      of the Business and Basis of
Presentation
  Public
Storage Properties, Ltd. (the "Partnership") is a publicly held limited
partnership formed under the California Uniform Limited Partnership Act in
November 1976.  The Partnership raised $10,000,000 in gross proceeds
by selling 20,000 units of limited partnership interest ("Units") in an
interstate offering, which commenced in October 1977 and completed in January
1978.  The general partners in the Partnership are Public Storage,
formerly Public Storage, Inc., (“PS”) and B. Wayne Hughes
(“Hughes”).
  The
Partnership was formed to engage in the business of developing and operating
self-storage facilities for personal and business use.  The
Partnership owns nine self-storage facilities located in
California.
  The
accompanying unaudited condensed financial statements have been prepared by us
pursuant to the rules and regulations of the Securities and Exchange Commission
(“SEC”) on the same basis as our audited annual financial statements and, in our
opinion reflect all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the financial information set forth
therein.  Certain information and note disclosures normally included
in financial statements prepared in accordance with U.S. generally accepted
accounting principles (“GAAP”), as defined in the Financial Accounting Standards
Board Accounting Standards Codification (the “Codification”), have been
condensed or omitted pursuant to such rules and regulations, although we believe
that the following disclosures, when read in conjunction with the audited
financial statements and notes thereto as of December 31, 2008, are adequate to
make the information presented not misleading.
  The
Partnership has evaluated subsequent events through November 13, 2009, which
represents the filing date of this Form 10-Q with the SEC.  As of
November 13, 2009, there were no subsequent events which required recognition or
disclosure.
  2.
              Summary
      of Significant Accounting Policies and Partnership
  Matters
  Use of
Estimates:
  The
preparation of the financial statements in conformity with GAAP 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.
  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 income when collected.  Interest income is
recognized as earned.
  We accrue
for property tax expense 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, as well as television, yellow
page, and other advertising expenditures are expensed as
incurred.  Casualty losses or gains are recognized in the period the
casualty occurs, based upon the differential between the book value of assets
destroyed, and estimated insurance proceeds, if any, that we expect to receive
in accordance with our insurance contracts.
   5
 PUBLIC
STORAGE PROPERTIES, LTD.
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
  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
(20,000) outstanding during the period.
  Financial
Instruments:
  The
Partnership has estimated the fair value of its financial instruments using
available market information and appropriate valuation
methodologies.  Considerable judgment is required in interpreting
market data to develop estimates of market value.  Accordingly,
estimated fair values are not necessarily indicative of the amounts that could
be realized in current market exchanges.
  For
purposes of financial statement presentation, the Partnership considers all
highly liquid financial instruments such as short-term treasury securities,
money market funds with daily liquidity and a rating in excess of AAA by
Standard and Poor’s, or investment grade (rated A1 by Standard and Poor’s)
short-term commercial paper with remaining maturities of three months or less at
the date of acquisition to be cash equivalents.
  Due to
the short maturity and the underlying characteristics of our cash and cash
equivalents, other assets, and accrued and other liabilities, the Partnership
believes the carrying values as presented on the condensed balance sheets are
reasonable estimates of fair value.
  Financial
assets that are exposed to credit risk consist primarily of cash and cash
equivalents as well as rent and other receivables.  Our cash and cash
equivalents are invested in investment grade short-term investments and our
receivables consist of small individual amounts.  Accordingly, credit
risk on these assets as a whole is minimal.
  Real Estate Facilities and
Evaluation of Asset Impairment:
  Real
estate facilities are recorded at cost.  Costs associated with the
development, construction, renovation and improvement of properties are
capitalized.  Interest, property taxes, and other costs associated
with the development incurred during the construction period are capitalized as
building cost.  Expenditures for repairs and maintenance are charged
to expense as incurred.  Depreciation is computed using the
straight-line method over the estimated useful lives of the buildings and
improvements, which are generally between 5 and 25 years.  At
September 30, 2009, all of the real estate facilities have been in service
longer than 25 years, and accordingly the original development costs of such
buildings are fully depreciated.
  We
evaluate our real estate for impairment on a quarterly basis.  We
first evaluate these assets for indicators of impairment, and 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
related carrying value, 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 September 30, 2009.
   6
 PUBLIC
STORAGE PROPERTIES, LTD.
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
  
  Any real
estate facility, which we expect to sell or dispose of prior to its previously
estimated useful life, is stated at the lower of its estimated net realizable
value, less cost to sell, or its carrying value.
  Deferred
Revenue:
  Deferred
revenue totaling $153,000 at September 30, 2009 ($190,000 at December 31, 2008),
consists of prepaid rents, which are recognized as rental income when
earned.
  Environmental
Cost:
  The
Partnership’s policy is to accrue environmental assessments and/or remediation
costs when it is probable that such efforts will be required and the related
costs can be reasonably estimated.  Although there can be no
assurance, we are not aware of any environmental contamination at any of our
facilities, which, individually or in the aggregate, would be material to our
overall business, financial condition or results of operations.
  Income
Taxes:
  Public
Storage Properties, Ltd. is treated as a partnership for federal and state
income tax purposes with the taxable income of the entity allocated to each
partner in accordance with the partnership agreement.  Accordingly, no
federal income tax expense is recorded by the Partnership.
  Recent Accounting
Pronouncements and Guidance:
  As of
November 13, 2009, there have been no recent accounting pronouncements and
guidance, which were not effective for implementation prior to September 30,
2009, 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.
  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
improvements) be distributed at least quarterly.  During the three
months September 30, 2009, we paid distributions to the limited and general
partners totaling $980,000 ($49.00 per unit) and $340,000, respectively and
$1,000,000 ($50.00 per unit) and $347,000, respectively for the same period in
2008.  During the nine months ended September 30, 2009, we paid
distributions to the limited and general partners totaling $2,940,000 ($147.00
per unit) and $1,020,000, respectively, and $2,800,000 ($140.00 per unit) and
$971,000, respectively, for the same period in 2008.  Future
distribution rates may be adjusted to levels which are supported by operating
cash flow after provisions for capital improvements and any other
obligations.
  4.
              Partners'
      Equity
  PS 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.  In
2002, BWH Marina Corporation II sold its interests to H-G Family
Corporation.  As such, Mr. Hughes continues to act as a general
partner but receives no direct compensation or other consideration from the
Partnership.
   7
 PUBLIC
STORAGE PROPERTIES, LTD.
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
  
 The
general partners have a 1% interest in the Partnership.  In addition,
the general partners have an 8% interest in cash distributions attributable to
operations (exclusive of distributions attributable to sale and financing
proceeds until the limited partners recover all of their initial
investment).  Thereafter, the general partners have a 25% interest in
all cash distributions (including sale and financing proceeds).  In
1985, the limited partners recovered all of their initial
investment.  All subsequent cash 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 the results of
operations or distributions to partners.
  5.
              Related
      Party Transactions
  Management Agreement and
Shared Expenses with PS:
  The
Partnership has a management agreement (the “Management Agreement”) with PS
pursuant to which PS operates the self-storage facilities for a fee equal to 6%
of the facilities' gross revenue (as defined).  For the three and nine
months ended September 30, 2009, the Partnership paid PS $109,000 and $331,000,
respectively, and $116,000 and $342,000 for the same periods in 2008,
respectively, under this Management Agreement.
  The
Management Agreement between the Partnership and PS provides that the Management
Agreement may be terminated without cause upon 60 days written notice by the
Partnership or six months notice by PS.
  The
Partnership’s facilities, along with facilities owned by PS and its affiliates,
are managed and marketed jointly by PS in order to take advantage of scale and
other efficiencies.  Joint costs are allocated on a methodology meant
to fairly allocate such costs based upon the related activities.  As a
result, significant components of cost of operations, such as payroll costs,
advertising and promotion, data processing and insurance expenses are shared and
allocated among the properties using methodologies meant to fairly allocate such
costs based upon the related activities.  The total of such expenses,
substantially all of which are included in cost of operations in our
accompanying condensed statements of income, amounted to $166,000 and $159,000
for the three months ended September 30, 2009 and 2008,
respectively.  For the nine months ended September 30, 2009 and 2008,
the total of such expenses were $568,000 and $572,000,
respectively.
  Ownership Interest by the
General Partners
  PS owns
6,274 Limited Partnership Units (“Units”), as to which PS has sole voting and
dispositive power.
  At
December 31, 2008, Hughes and members of his family (the “Hughes Family”) owned
6,105 Units.  Hughes owned 6,025 Units, as to which Hughes had sole
voting and dispositive power, through a wholly-owned corporation and Tamara
Hughes Gustavson, an adult daughter of Hughes, owned 80 Units as to which Tamara
Hughes Gustavson had sole voting and dispositive power.  On January 1,
2009, PS exercised its option to acquire 25 of the Units held by Hughes and the
80 Units held by Tamara Hughes Gustavson for a cost of approximately
$20,000.  At September 30, 2009, Hughes owns 6,000 Units.
  In
addition, there are 196 Units owned by PS Orangeco Partnerships, Inc., a
corporation in which the Hughes Family owns approximately 48% of the voting
stock, PS owns 46% and members of PS management and related individuals own
approximately 6%.
   8
 PUBLIC
STORAGE PROPERTIES, LTD.
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
  
 Captive Insurance Activities
with PS
  The
Partnership has a 0.9% 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 PS.  The Partnership accounts
for its investment in STOR-Re, which is included in other assets on our
accompanying condensed balance sheets, on the cost method, and has received no
distributions during the nine months ended September 30, 2009 or
2008.
  STOR-Re
provides limited property and liability insurance coverage to the Partnership,
PS, 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 PS (collectively, this entity and STOR-Re
are referred to as the “Captive Entities”).  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
reviewed quarterly.
  Other Activities with
PS
  PS
Insurance Company - Hawaii, Ltd. (“PSICH”), a corporation that reinsures
policies against losses to goods stored by tenants in the Partnership’s and PS’
storage facilities.  PSICH receives the premiums and bears the risks
associated with the re-insurance.  The Partnership receives a fee (an
“Access Fee”) from PSICH in return for providing tenant
listings.  This Access Fee is based on the number of spaces the
Partnership has to rent.  Included in other income on our accompanying
condensed statements of income for these Access Fees are $71,000 and $100,000
for the three months ended September 30, 2009 and 2008, respectively, and
$150,000 and $160,000 for the nine months ended September 30, 2009 and 2008,
respectively.
  A
subsidiary of PS sells locks and boxes to the general public and tenants
associated with securing their spaces and storing and moving their
goods.  The subsidiary of PS receives the revenues and bears the cost
of the activities.
  6.
              Commitments
      and Contingencies
  Legal
Proceedings:
  Brinkley v. Public Storage,
Inc. (filed April 2005) (Superior Court of California – Los Angeles
County)
  The
plaintiff sued PS on behalf of a purported class of California non-exempt
employees based on various California wage and hour laws and seeking monetary
damages and injunctive relief.  In May 2006, a motion for class
certification was filed seeking to certify five subclasses.  Plaintiff
sought certification for alleged meal period violations, rest period violations,
failure to pay for travel time, failure to pay for mileage reimbursement, and
for wage statement violations.  In October 2006, the Court declined to
certify three out of the five subclasses.  The Court did, however,
certify subclasses based on alleged meal period and wage statement
violations.  Subsequently, PS filed a motion for summary judgment
seeking to dismiss the matter in its entirety.  On June 22, 2007, the
Court granted PS’ summary judgment motion as to the causes of action relating to
the subclasses certified and dismissed those claims.  The only
surviving claims are those relating to the named plaintiff.  The
plaintiff has filed an appeal to the Court’s June 22, 2007 summary judgment
ruling.  On October 28, 2008, the Court of Appeals sustained the trial
court’s ruling.  The plaintiff filed a petition for review with the
California Supreme Court, which was granted but further action in this matter
was deferred pending consideration and disposition of a related issue in Brinker Restaurant Corp. v. Superior
Court which is currently pending before the California Supreme
Court.
   9
 PUBLIC
STORAGE PROPERTIES, LTD.
 NOTES
TO CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
  
  Other
Items
  PS 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.
   10
  Item
2.    Management’s Discussion and
Analysis of Financial Condition and Results of Operations
  The
following should be read in conjunction with the Partnership’s condensed
financial statements and notes thereto.
  Forward Looking
Statements:  This document contains forward-looking statements
within the meaning of the federal securities laws.  All statements in
this document, other than statements of historical fact, are forward-looking
statements which may be identified by the use of the words
"expects,"   "believes,"  
"anticipates,"  "plans," "would," "should," "may," "estimates"
and similar expressions.  These forward-looking statements involve
known and unknown risks and uncertainties, which may cause Public Storage
Properties, Ltd.’s (the “Partnership”) actual results and performance to be
materially different from those expressed or implied in the forward-looking
statements.  As a result, you should not rely on any forward-looking
statements in this report, or which management may make orally or in writing
from time to time, as predictions of future events nor guarantees of future
performance.  We caution you not to place undue reliance on
forward-looking statements, which speak only as the date of this report or as of
the dates indicated in the statements.  All of our forward-looking
statements, including those in this report, are qualified in their entirely by
this statement. We expressly disclaim any obligation to update publicly or
otherwise revise any forward-looking statements, whether as a result of new
information, new estimates, or other factors, events or circumstances after the
date of this document, except where expressly required by
law.  Accordingly, you should use caution in relying on past
forward-looking statements to anticipate future results.
  Factors
and risks that may impact our future results and performance include, but are
not limited to, those described in Item 1A, "Risk Factors" in the Public Storage
Properties, Ltd. Annual Report on Form 10-K for the year ended December 31, 2008
and in our other filings with the Securities and Exchange Commission
(“SEC”).  These risks include, among others, the
following:
  ·
              general
      risks associated with the ownership and operation of real estate including
      changes in demand, potential liability for environmental contamination,
      adverse changes in tax laws, including property tax rates and assessments,
      real estate and zoning laws and regulations, and the impact of natural
      disasters;
  ·
              risks
      associated with downturns in the local economies in the markets in which
      we operate, including risks related to current economic
      conditions;
  ·
              the
      impact of competition from new and existing self-storage and commercial
      facilities and other storage
alternatives;
  ·
              the
      impact of the regulatory environment as well as national, state, and local
      laws and regulations including, without limitation, those governing
      environmental, tax and tenant insurance matters, and risks related to the
      impact of existing and potential new laws and
  regulations;
  ·
              disruptions
      or shutdowns of our automated processes and systems or breaches of our
      data security; and
  ·
              economic
      uncertainty due to the impact of war or
  terrorism.
  The risks
included here are not exhaustive as it is not possible for management to predict
all possible risk factors that may exist or emerge from time to time. Investors
should refer to our future reports and other information filed from time to time
with the SEC for additional information.
   11
  
 
  Critical Accounting
Policies
  Management’s
Discussion and Analysis of Financial Condition and Results of Operations
discusses our financial statements, which have been prepared in accordance with
United States (“U.S.”) generally accepted accounting principles
(“GAAP”).  The preparation of our financial statements and related
disclosures in conformity with GAAP and our discussion and analysis of our
financial condition and results of operations requires management to make
judgments, assumptions and estimates that affect the amounts reported in our
condensed financial statements and accompanying notes.  The notes to
the Partnership’s September 30, 2009 condensed financial statements, primarily
Note 2, summarize the significant accounting policies and methods used in the
preparation of our condensed financial statements and related
disclosures.
  Management
believes the following are the critical accounting policies that have a material
impact on the Partnership’s financial presentation.  That is, they are
both important to the portrayal of our financial condition and results, and they
require management to make judgments and estimates about matters that are
inherently uncertain.
  Impairment of Real Estate:
Substantially all of our assets consist of real estate.  On a
quarterly basis, we evaluate our real estate for impairment.  The
evaluation of our real estate for impairment includes 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 September 30,
2009.  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 the Partnership’s 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 GAAP, 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 6 to the
Partnership’s September 30, 2009 condensed 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, our expenses could be misstated.
  Overview of Management’s
Discussion and Analysis of Operations
  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 Public Storage (“PS”) provides
several distinguishing characteristics that enable the Partnership to compete
effectively with other owners and operators.
   12
  
 PS is the
largest owner and operator of self-storage facilities in the U.S.  All
of the PS facilities in the U.S. 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 PS as one of
the dominant providers of self-storage space in most markets in which PS
operates and enables PS 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 competitors of PS, as well as more
substantial, well-placed yellow page advertisements than can many of its
competitors.
  The
self-storage industry is not immune to the recessionary pressures in the general
economic environment. Demand for self-storage space in the U.S. has softened
and, as a result, the Partnership is experiencing downward pressure on occupancy
levels, rental rates and revenue growth.
  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 any potential future increases in rental income to
come primarily from increases in realized rent rather than increases in
occupancy, although there can be no assurance that we will experience such
increases.
  Results of
Operations
  Three
months ended September 30, 2009 as compared to three months ended September 30,
2008:
  The
Partnership's net income for the three months ended September 30, 2009 was
$1,376,000, as compared to $1,499,000 for the same period in 2008, representing
a decrease of $123,000 or 8.2%.  Property net operating income (rental
income less cost of operations, management fees paid to an affiliate and
depreciation expense) decreased $88,000 or 6.3% from $1,405,000 for the three
months ended September 30, 2008 to $1,317,000 for the three months ended
September 30, 2009.
  Rental
income for the three months ended September 30, 2009 was $1,820,000, as compared
to $1,928,000 for the three months ended September 30, 2008, representing a
decrease of $108,000 or 5.6%.  The decrease in rental income was
primarily a result of a 3.3% decrease in realized rent per square foot and a
2.4% decrease in occupancy.  Annualized realized rent for the three
months ended September 30, 2009 decreased to $15.68 per occupied square foot, as
compared to $16.21 per occupied square foot for the three months ended September
30, 2008.  Weighted average occupancy levels at the self-storage
facilities were 89.8% and 92.0% for the three months ended September 30, 2009
and 2008, respectively.
  We
believe that demand for self-storage space has been negatively impacted by
general economic conditions, the slowdown in housing sales and moving activity,
as well as increased competition.  Based upon certain comparative
September 30, 2009 key operating metrics for the Partnership’s self-storage
facilities including a 2.5% decline in square foot occupancy from 91.7% at
September 30, 2008 to 89.4% at September 30, 2009, and 4.9% lower in place
annual rent per occupied square foot from $17.79 at September 30, 2008 to $16.92
at September 30, 2009, we expect that the revenue will decline for the
Partnership’s facilities for the three months ending December 31, 2009, as
compared to the same period in 2008.  The Partnership’s operating
strategy will be to continue to focus on maintaining occupancy levels by
adjusting rental rates, promotional discounts and marketing
activities.  It is unclear to us how much the above mentioned factors
will impact our revenues beyond the fourth quarter of 2009.
   13
  
 Other
income was $73,000 for the three months ended September 30, 2009, as compared to
$106,000 for the three months ended September 30, 2008, representing a decrease
of $33,000 or 31.1%.  Included in other income are access fees paid by
PS Insurance Company - Hawaii, Ltd. (“PSICH”), a corporation owned by PS
(described more fully in Note 5 to the Partnership’s September 30, 2009
condensed financial statements), totaling $71,000 and $100,000 for the three
months ended September 30, 2009 and 2008, respectively.  The decline
is due to adjustments in timing of the recording of income in 2008 due to
changes in accounting estimates.  Interest income on cash balances for
the three months ended September 30, 2009 declined as compared to the same
period in 2008 due to significant decreases in average interest rates. The
Partnership has $864,000 in cash on hand at September 30, 2009 invested
primarily in money-market funds, which earn nominal rates of interest in the
current interest rate environment.
  Cost of
operations, including management fees paid to an affiliate, (see Note 5 to the
Partnership’s September 30, 2009 condensed financial statements) for the
three months ended September 30, 2009 was $462,000 compared to $479,000 for the
three months ended September 30, 2008, representing a decrease of $17,000 or
3.5%, as decreases in repairs and maintenance and utilities and office expenses,
were partially offset by increases in media advertising expense.
  Depreciation
expense was $41,000 and $44,000 for the three months ended September 30, 2009
and 2008, respectively, representing a decrease of $3,000 or
6.8%.  The decrease in depreciation expense is primarily related to
fully depreciated capital improvements on the buildings for the Partnership’s
self-storage facilities.
  Administrative
expense was $14,000 and $12,000 for the three months ended September 30, 2009
and 2008, respectively.
  Nine
months ended September 30, 2009 as compared to nine months ended September 30,
2008:
  The
Partnership's net income for the nine months ended September 30, 2009 was
$4,047,000, as compared to $4,215,000 for the same period in 2008, representing
a decrease of $168,000 or 4.0%.  Property net operating income (rental
income less cost of operations, management fees paid to an affiliate and
depreciation expense) decreased $128,000 or 3.1% from $4,088,000 for the nine
months ended September 30, 2008 to $3,960,000 for the nine months ended
September 30, 2009.
  Rental
income for the nine months ended September 30, 2009 was $5,518,000, as compared
to $5,705,000 for the nine months ended September 30, 2008, representing a
decrease of $187,000 or 3.3%.  The decrease in rental income was
primarily a result of a 2.3% decrease in realized rent per square
foot.  Annual realized rent for the nine months ended September 30,
2009 decreased to $15.67 per occupied square foot, as compared to $16.04 per
occupied square foot for the nine months ended September 30,
2008.  Weighted average occupancy levels at the self-storage
facilities were 91.1% and 91.9% for the nine months ended September 30, 2009 and
2008, respectively.
  Other
income was $157,000 for the nine months ended September 30, 2009, as compared to
$195,000 for the nine months ended September 30, 2008, representing a decrease
of $38,000 or 19.5%.  Included in other income are access fees paid by
PSICH, totaling $150,000 and $160,000 for the nine months ended September 30,
2009 and 2008, respectively.  Interest income on cash balances for the
nine months ended September 30, 2009 declined as compared to the same
period in 2008 due to significantly lower interest rates.
  Cost of
operations, including management fees paid to an affiliate, (see Note 5 to the
Partnership’s September 30, 2009 condensed financial statements) for the
nine months ended September 30, 2009 was $1,448,000 compared to $1,504,000 for
the nine months ended September 30, 2008, representing a decrease of $56,000 or
3.7%, as decreases in repairs and maintenance, utilities, insurance and payroll
expenses, were partially offset by increases in media advertising and property
tax expenses.
  Depreciation
expense was $110,000 and $113,000 for the nine months ended September 30, 2009
and 2008, respectively.
   14
  
  Administrative
expense was $70,000 and $68,000 for the nine months ended September 30, 2009 and
2008, respectively.
  Liquidity and Capital
Resources
  At
September 30, 2009, the Partnership had cash of $864,000 as compared to total
liabilities of $322,000.  Cash generated from operations ($4,175,000
for the nine months ended September 30, 2009) has been sufficient to meet all
current obligations of the Partnership.  Capital improvements totaled
$153,000 and $234,000 in the nine months ended September 30, 2009 and 2008,
respectively.  Capital improvements are budgeted at $176,000 for the
year ending December 31, 2009.
  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, 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.  As the
capital and credit markets are currently constrained and in flux, there can be
no assurance that the Partnership would be able to access any such borrowings in
order to do so, if such a course of action were otherwise deemed
necessary.
  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) be distributed at least quarterly.  During the three months
ended September 30, 2009, we paid distributions to the limited and general
partners totaling $980,000 ($49.00 per unit) and $340,000,
respectively.  During the nine months ended September 30, 2009, we
paid distributions to the limited and general partners totaling $2,940,000
($147.00 per unit) and $1,020,000, respectively.  Future distribution
rates will be adjusted to levels which are supported by operating cash flow
after provisions for capital improvements and any other necessary
obligations.
   15
  
  Item
4.    Controls and
Procedures
  Public
Storage 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 Securities Exchange Act of 1934, as amended, (“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 Public Storage’s Chief
Executive Officer and Chief Financial Officer, to allow timely decisions
regarding required disclosure based on the definition of "disclosure controls
and procedures" in Rules 13a-15(e) and 15d-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 and management necessarily was required
to apply its judgment in evaluating the cost-benefit relationship of possible
controls and procedures in reaching that level of reasonable
assurance.
  As of the
end of the fiscal quarter covered by this report, Public Storage carried out an
evaluation, under the supervision and with the participation of the
Partnership’s management, including Public Storage’s Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of the
Partnership’s disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on that evaluation,
Public Storage’s Chief Executive Officer and Chief Financial Officer concluded
that the Partnership’s disclosure controls and procedures were
effective.
  There
have not been any changes in our internal control over financial reporting (as
such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act)
during the quarter to which this report relates that have materially affected,
or are reasonable likely to materially affect, our internal control over
financial reporting.
   16
  PART
II.  OTHER INFORMATION
  Item
1.    Legal
Proceedings
  The
information set forth under the heading “Legal Proceedings” in Note 6 to the
Partnership’s September 30, 2009 condensed financial statements in this Form
10-Q is incorporated by reference in this Item 1.
  Item
1A.  Risk
Factors
  The risk
factors set forth below update the corresponding risk factor in Part I, “Item
1A. Risk Factors” in the Public Storage Properties, Ltd. Annual Report on Form
10-K for the year ended December 31, 2008.  In addition to the risk
factor below, you should carefully consider the other risk factors discussed in
the Partnership’s Annual Report on Form 10-K for the year ended December 31,
2008, which could materially affect the Partnership’s business, financial
position and results of operations.
  The
Partnership is subject to governmental regulations and actions that affect its
operating results and financial condition.
  The
Partnership’s business is subject to regulation under a wide variety of U.S.
federal, state and local laws, regulations and policies.  There can be
no assurance that, in response to current economic conditions or the current
political environment or otherwise, laws and regulations will not be implemented
or changed in ways that adversely affect the Partnership’s operating results and
financial condition, such as current federal legislative proposals to expand
health care coverage costs or facilitate union activity or otherwise increase
operating costs.
  Item
6.    Exhibits
  Exhibits
required by Item 601 of Regulation S-K are listed in the attached Exhibit Index,
and are filed herewith or incorporated herein by reference.
   17
  
  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:
November 13, 2009
  PUBLIC
STORAGE PROPERTIES, LTD.
  BY:       Public
Storage
 General
Partner
 
 BY:       /s/ John
Reyes
 John
Reyes
 Senior
Vice President and
 Chief
Financial Officer
  18
  Exhibit
No.                      Exhibit Index
  
 
 31.1
                Rule 13a-14(a) Certification.  Filed
  herewith.
  31.2
                Rule 13a-14(a) Certification.  Filed
  herewith.
  32
                Section
      1350 Certifications.  Filed
herewith.
  
   19