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EXHIBIT 99.(a)(3)
XXXXXX STREET CAPITAL ACQUISITION CO., L.L.C.
000 XXXXX XXXXXXXX XXXXXX, 00XX XXXXX
XXXXXXX, XX 00000
November 16, 1995
To Limited Partners In Balcor Equity Properties - XII:
Xxxxxx Street Capital Acquisition Co., L.L.C., a Delaware limited
liability company (the "Purchaser") is offering to purchase up to 45% of the
outstanding Limited Partnership Interests (the "Interests") in Balcor Equity
Properties - XII (the "Partnership") for a cash purchase price of $164.00 per
Interest (the "Purchase Price"), net to the seller, upon the terms and subject
to the conditions set forth in the attached Offer to Purchase dated November
16, 1995 and Letter of Acceptance (the "Letter of Acceptance"; which together
with any supplements or amendments, collectively constitute the "Offer").
Unless extended by the Purchaser, the Offer is effective until midnight,
Eastern Standard Time on December 15, 1995. The Offer is not conditioned upon
any minimum number of Interests being tendered, although fractional Interests
will not be accepted.
The purpose of the Offer is to enable the Purchaser to acquire a
significant interest in the Partnership as an investment, based on its
expectation that there may be underlying value in the properties. Our future
plans with respect to the Partnership will depend in part on the Limited
Partners' response to the Offer. If more than the maximum number of Interests
being sought are tendered and not withdrawn prior to the Expiration of the
Offer, we will accept Interests for purchase on a pro rata basis, subject to
certain conditions described in the Offer.
The Offer presents Limited Partners with an opportunity to sell their
Interests prior to the scheduled liquidation of the Partnership and without
incurring the normal Partnership transfer fees or the costs associated with
market sales.
The materials included in this package include important information
concerning the Purchaser, the terms and conditions to the Offer, tax
implications and instructions for tendering your Interests. It is important
that Limited Partners take some time to carefully read the attached Offer, the
Letter of Acceptance and other accompanying materials in order to evaluate the
Offer being made by the Purchaser.
In considering our Offer, Limited Partners should consider the
following factors:
* PURCHASE PRICE DOES NOT REPRESENT LIQUIDATION VALUE. Although
the Purchaser cannot predict the future value of the
Partnership's assets on a per Interest basis, the Purchase
Price could be substantially less than the net proceeds that
would be realized on a per Interest basis from a current sale
of the properties or that may be realized upon a future
liquidation of the Partnership. However, the ability to
receive cash quickly may be attractive to certain Limited
Partners.
* NO RELIANCE ON INDEPENDENT VALUATION OF INTERESTS. The
Purchase Price is below the Purchaser's estimate of the net
asset value of the Partnership's assets on a per Interest
basis assuming such assets were to be sold today. The
Purchaser has made its own independent analysis in
establishing the Purchase Price. No independent person has
been retained to evaluate or render any opinion with respect
to the fairness of the Purchase Price, and no appraisals have
been obtained by the Purchaser of any of the properties owned
by the Partnership (the "Properties"). When the assets of the
Partnership are ultimately sold, the return to Limited
Partners could be higher or lower than the Purchase Price.
Limited Partners are urged to consider carefully all of the
information contained herein before accepting the Offer.
* CONFLICT OF INTEREST. The Purchaser is making the Offer with
a view to making a profit. If the Purchaser's current
estimated net asset value per Interest proves to be correct,
then the Purchaser will benefit upon the liquidation of the
Partnership from the spread between the Purchase Price for the
tendered Interests and the amount it would receive in the
liquidation. Accordingly, Limited Partners might receive more
money if they held their Interests, rather than tender, and
received proceeds from the liquidation of the Partnership.
Limited Partners, however, may prefer to receive the Purchase
Price now rather than wait for uncertain future net
liquidation proceeds.
* PARTNERSHIP TERM. In accordance with the terms of the
Partnership Agreement, the Partnership must sell its assets
and liquidate by December 31, 2032. Although the General
Partner has sold some of the Properties, it is not
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required to do so until the year 2032. The Offer provides
Limited Partners with an opportunity to liquidate their entire
investment sooner than otherwise might be possible.
* TAX CONSIDERATIONS. A sale by a Limited Partner pursuant to
the Offer might enable such Limited Partner to utilize
previously nondeductible passive losses to generate additional
savings for federal income tax purposes. In addition, a sale
pursuant to the Offer might enable a Limited Partner to
realize a taxable loss if the Limited Partner's tax basis in
its Interests (including such Limited Partner's share of debt)
exceeds the Purchase Price; on the other hand, taxable gain
would result if this is not the case. The Offer may also be
attractive to Limited Partners who wish in the future to avoid
the expenses, delays and complications in filing complex
income tax returns which result from an ownership of
Interests.
* LACK OF TRADING MARKET. There is no established or regular
trading market for the Interests, nor is there another
reliable standard for determining the fair market value of an
Interest. Limited Partners who desire liquidity may wish to
consider the Offer. The Offer affords Limited Partners an
opportunity to dispose of their Interests for cash, which
alternative otherwise might not be available to them.
However, the Purchase Price is not intended to represent
either the fair market value of an Interest or the fair market
value of the Partnership's assets on a per Interest basis.
* CERTAIN RESTRICTIONS ON TRANSFER OF INTERESTS. The
Partnership Agreement restricts transfers of Interests if a
transfer would cause a termination of the Partnership for
federal income tax purposes, which occurs if 50% or more of
the total Interests in Partnership capital and profits are
transferred within a twelve-month period. If the Purchaser is
successful in purchasing 45% of the Interests, and taking into
account the sales of Interests on the secondary market and
private transactions during the twelve-month period prior to
and after the Offer, the ability to transfer Interests could
be restricted for a time following the Offer.
* SPECULATIVE NATURE OF INTERESTS. The Purchaser believes that
the Interests represent an attractive investment at the
Purchase Price. There can be no assurance, however, that this
judgment is correct. Per the Partnership's September 30, 1995
Form 10-Q, the Partnership has made distributions of $130.50
per Interest since its inception. In the Partnership's Form
10-K for the year ended December 31, 1994, the General Partner
states "In light of results to date and current market
conditions, the General Partner does not anticipate that
investors will recover all of their original capital."
Ownership of Interests will remain a speculative investment.
The Offer provides Limited Partners with the opportunity to
liquidate their Interests and to reinvest the proceeds in
other investments should they desire to do so.
* VOTING POWER. Limited Partners cannot participate in the
management or control of the Partnership's business, and
cannot control either the timing or amount of cash
distributions, or the timing or terms of a sale of the
Partnership's assets, except insofar as the Limited Partners
are entitled to vote as permitted by the Partnership
Agreement. If the maximum number of Interests sought are
tendered and accepted for payment pursuant to the Offer, the
Purchaser will own approximately 45% of the outstanding
Interests and could be in a position to influence
significantly decisions of the Partnership on which Limited
Partners are entitled to vote. This could effectively (i)
prevent non-tendering Limited Partners from taking actions
they desire but that the Purchaser opposes and (ii) enable the
Purchaser to take action desired by the Purchaser but opposed
by the non-tendering Limited Partners. Matters upon which the
Limited Partners are entitled to vote under the Partnership
Agreement are: (1) amendment of the Partnership Agreement; (2)
dissolution of the Partnership; (3) removal of the general
partner or a successor general partner; (4) election of a new
general partner upon the withdrawal of the general partner or
a successor general partner; and (5) approval or disapproval
of the sale of all or substantially all of the assets of the
Partnership. Although the Purchaser has no current intention
with regard to any of these matters, it will vote the
Interests acquired pursuant to the Offer in its interest,
which may, or may not, be in the best interests of
non-tendering Limited Partners.
Each Limited Partner must make his or her own decision based on his or
her particular circumstances. Limited Partners should consult with their
respective advisors about the financial, tax, legal and other implications to
them of accepting the Offer.
If you desire additional information regarding the Offer or need
assistance in tendering your Interests to the Purchaser, you may call the
Information Agent/Depositary, The Xxxxxx Group, Inc. at (000) 000-0000.
Informed and courteous agents are available to assist you.
XXXXXX STREET CAPITAL ACQUISITION CO., L.L.C.
