OFFER TO PURCHASE UNITS
OF
COURTYARD BY MARRIOTT LIMITED PARTNERSHIP
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THIS OFFER WILL EXPIRE AT 12:00 MIDNIGHT, PACIFIC TIME,
ON JUNE 26, 1998, UNLESS THE OFFER IS EXTENDED.
-------------------------------------------------------
Palm Investors, LLC, a Delaware limited liability company ("Palm" or the
"Purchaser"), hereby offers to purchase 115 Units of Limited Partnership
Interest ("Units") in Courtyard by Marriott Limited Partnership, a Delaware
Limited Partnership (the "Partnership").
Palm will pay a purchase price of $85,000 per Unit, net to the seller in
cash, without interest, which includes the amount of any distributions declared
or paid from any source by the Partnership with respect to the Units after May
15, 1998 (without regard to the record date), whether such distributions are
classified as a return on, or a return of, capital ("Purchase Price"), upon the
terms and subject to the conditions set forth in this Offer to Purchase (the
"Offer to Purchase") and in the Agreement of Sale, as each may be supplemented
or amended from time to time (which together constitute the "Offer").
The Units sought to be purchased pursuant to the Offer represent, to the
best knowledge of the Purchaser, approximately 10 percent of Units outstanding
as of the date of the Offer.
PALM IS NOT AN AFFILIATE OF THE GENERAL PARTNER OR THE PARTNERSHIP
THE OFFER TO PURCHASE IS NOT CONDITIONED UPON THE VALID TENDER OF ANY MINIMUM
NUMBER OF UNITS.
IF MORE THAN 115 UNITS ARE VALIDLY TENDERED AND NOT WITHDRAWN, THE PURCHASER
WILL ACCEPT FOR PURCHASE UP TO 115 UNITS, ON A PRO RATA BASIS, SUBJECT TO THE
TERMS AND CONDITIONS HEREIN, SEE "TENDER OFFER - SECTION 13, CERTAIN CONDITIONS
OF THE OFFER."
A LIMITED PARTNER MAY TENDER ANY OR ALL UNITS OWNED BY SUCH LIMITED PARTNER.
IMPORTANT
Any Limited Partner desiring to tender ("Seller") any or all of such Units
should complete and sign the Agreement of Sale in accordance with the
instructions in the Agreement of Sale and mail or deliver the Agreement of Sale
and any other required documents to Xxxxx Capital, LLC at the address set forth
on the back cover of this Offer to Purchase, or request his or her broker,
dealer, commercial bank, credit union, trust company or other nominee to effect
the transaction for him or her.
------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR TO PROVIDE ANY INFORMATION OTHER
THAN AS CONTAINED HEREIN OR IN THE AGREEMENT OF SALE. NO SUCH RECOMMENDATION,
INFORMATION, OR REPRESENTATION MAY BE RELIED UPON AS HAVING BEEN AUTHORIZED.
QUESTIONS OR REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES OF THIS OFFER TO
PURCHASE OR THE AGREEMENT OF SALE MAY BE DIRECTED TO:
XXXXX CAPITAL, LLC
0000 XXXXX XXXXXX XXXXX, XXXXX 000, XXX XXXXX, XX 00000
(000) 000-0000
TABLE OF CONTENTS
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
TENDER OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Section 1. Terms of the Offer. . . . . . . . . . . . . . . . . . . . . . . . . . .3
Section 2. Acceptance for Payment and Payment for Units. . . . . . . . . . . . . .3
Section 3. Procedures for Tendering Units. . . . . . . . . . . . . . . . . . . . .3
Section 4. Withdrawal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Section 5. Extension of Tender Period; Termination; Amendment. . . . . . . . . . .4
Section 6. Certain Tax Consequences. . . . . . . . . . . . . . . . . . . . . . . .5
Section 7. Purpose and Effects of the Offer. . . . . . . . . . . . . . . . . . . .5
Section 8. Future Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Section 9. Past Contacts and Negotiations With General Partner . . . . . . . . . .5
Section 10. Certain Information Concerning the Partnership . . . . . . . . . . . 6
Section 11. Certain Information Concerning the Purchaser. . . . . . . . . . . . . .7
Section 12. Source and Amount of Funds . . . . . . . . . . . . . . . . . . . . . 7
Section 13. Certain Conditions of the Offer . . . . . . . . . . . . . . . . . . . .8
Section 14. Certain Legal Matters and Required Regulatory Approvals.. . . . . . . .8
Section 15. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Section 16. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
SCHEDULE 1
Information with respect to the Managers of Xxxxx Capital, LLC ,
the Manager of Purchaser (Palm) . . . . . . . . . . . . . . . . . . . . . . .S-1
SCHEDULE 2
Properties Owned by the Partnership . . . . . . . . . . . . . . . . . . . . .S-2
INTRODUCTION
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OFFER TO PURCHASE
COURTYARD BY MARRIOTT LIMITED PARTNERSHIP UNITS
FOR
$85,000 CASH PER UNIT
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PALM IS NOT AN AFFILIATE OF THE GENERAL PARTNER OR THE PARTNERSHIP.
PARTNERSHIP ROLL-UP
In a letter dated December 29, 1997, Host Marriott Corporation announced
the potential consolidation ("Roll-Up") of six limited partnerships,
including the Courtyard by Marriott Limited Partnership (the
"Partnership"), into a single operating partnership. According to your
General Partner, the primary intent of the Roll-Up is to provide limited
partners with a liquidity alternative to their ownership of limited
partnership units; HOWEVER, ASSUMING APPROVAL OF THE ROLL-UP, THE LIQUIDITY
OPTION WILL MOST LIKELY NOT BE AVAILABLE TO THE LIMITED PARTNERS FOR
APPROXIMATELY 18-24 MONTHS. UNTIL SUCH TIME, THERE WILL BE NO CASH
ALTERNATIVE ASSOCIATED WITH THE ROLL-UP. In a letter dated April 16, 1998
to all limited partners, your General Partner indicated that it is
exploring other strategic alternatives in addition to the proposed Roll-Up
announced on December 29, 1997. Such alternatives include a transaction
involving the Partnership's assets or a merger of the Partnership with an
existing publicly traded company.
SPECIAL FACTORS
Before selling your Units to Palm, please consider the following:
- No independent person has been retained to evaluate or render any
opinion with respect to the fairness of Palm's offer, and no
representation is made as to such fairness or other measures of value
that may be relevant to the Limited Partners. We urge you to consult
your own financial advisor in connection with Xxxx's offer.
- Although Palm cannot predict the future value of the Partnership's
assets on a per Unit basis, the Purchase Price could differ
significantly from the net proceeds that would be realized from a
current sale of the Properties owned by the Partnership or that may be
realized upon future liquidation of the Partnership
- Palm is making the offer with a view to making a profit. Accordingly,
there is a conflict between the desire of Palm to acquire your Units
at a low price and your desire to sell your Units at a high price.
Palm's intention is to acquire the Units at a Purchase Price which
will allow Palm to make a profit from its ownership of the Units.
- The tax consequences of the Offer to a particular Limited Partner may
be different from those of other Limited Partners, and we urge you to
consult your own tax advisor in connection with the Offer.
- Limited Partners who sell their Units to Palm will be giving up the
opportunity to participate in any future potential benefits of
ownership of the Units such as distributions, proceeds from the sale
or refinancing of the Partnership's Properties, or liquidation of the
Partnership.
The purpose of the Offer is to allow the Purchaser to benefit from any one
or a combination of the following: (i) any cash distributions, whether such
distributions are classified as a return on, or a return of, capital, from the
operations in the ordinary course of the Partnership; (ii) any distributions of
net proceeds from the sale of assets by the Partnership; (iii) any distributions
of net proceeds from the liquidation of the Partnership; (iv) any cash from any
redemption of the Units by the Partnership; (v) any proceeds that may be
received from any action lawsuit by the Limited Partners of the Partnership,
which lawsuit relates to the Partnership or its General Partner; and (vi) any
stock or interest in an entity into which the Partnership may be merged. The
Purchaser does not have any present plans or intentions to effect a change in
management or with respect to a liquidation, sale of assets or refinancing of
the Partnership's properties.
1
The Offer is not conditioned upon the valid tender of any minimum number of
the Units. If more than 115 Units are tendered and not withdrawn, the Purchaser
will accept up to 115 of the tendered Units on a pro rata basis, subject to the
terms and conditions herein. See "Tender Offer--Section 13. Certain Conditions
of the Offer." The Purchaser expressly reserves the right, in its sole
discretion and for any reason, to terminate the Offer at any time and to waive
any or all of the conditions of the Offer, although the Purchaser does not
presently intend to do so.
The Partnership is subject to the information and reporting requirements of
the Securities Exchange Act of 1934, as amended ("Exchange Act"), and in
accordance therewith is required to file reports and other information with the
Securities and Exchange Commission ("SEC") relating to its business, financial
condition and other matters. Such reports and other information may be inspected
at the public reference facilities maintained by the SEC at room 0000, Xxxxxxxxx
Xxxxx, 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, and is available for
inspection and copying at the regional offices of the SEC located in
Northwestern Atrium Center, 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx 00000, and at 7 World Trade Center, 13th Floor, New York, New York
10048. Copies of such material can also be obtained from the Public Reference
Room of the SEC in Washington, D.C. at prescribed rates or from the SEC's
Website at xxxx://xxx.xxx.xxx.
The Purchaser has filed with the SEC a Tender Offer Statement on Schedule
14D-1 (including exhibits) pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, which provides certain additional
information with respect to the Offer. Such Statements and any amendments
thereto, including exhibits, may be inspected and copies may be obtained from
the SEC in the manner specified above.
According to publicly available information, there were 1,150 Units issued
and outstanding on December 31, 1997, which were held by 1,196 Limited Partners
(including holders of half-Units). Xxxx owns approximately 57.1667 of the
outstanding Units, which is less than 5 percent of the issued and outstanding
Units.
Information contained in this Offer to Purchase which relates to, or
represents statements made by, the Partnership or the General Partner, has been
derived from information provided in reports and other information filed with
the SEC by the Partnership and General Partner.
Limited Partners are urged to read this Offer to Purchase and the
accompanying Agreement of Sale carefully before deciding whether to tender
(sell) their Units.
2
SECTION 1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for up to 115 Units that are validly tendered on
or prior to the Expiration Date. The term "Expiration Date" shall mean 12:00
midnight, Pacific Time, on June 26, 1998 unless and until the Purchaser shall
have extended the period of time for which the Offer is open, in which event the
term "Expiration Date" shall mean the latest date on which the Offer, as so
extended by the Purchaser, shall expire.
The Offer is conditioned on satisfaction of certain conditions. See
"Tender Offer--Section 13. Certain Conditions of the Offer," which sets forth in
full the conditions of the Offer. Purchaser in its sole discretion, for any
reason, may terminate the offer on or before the Expiration Date, by providing
notice of termination as set forth in Section 5. The Purchaser will not be
required to accept for payment or to pay for any Units tendered, and may amend
or terminate the Offer if the following conditions are not satisfied or waived
by Purchaser on or before the Expiration Date:
(i) Purchaser shall have received from the Seller, a properly
completed and duly executed Agreement of Sale; and
(ii) Purchaser shall have received from the Partnership,
confirmation, to the reasonable satisfaction of Purchaser,
that upon purchase of the Units: (a) the Purchaser will be
entitled to receive all distributions, from any source,
declared or paid by the Partnership after May 15, 1998; and
(b) the Partnership will admit Purchaser as a Substitute
Limited Partner, as that term is defined in the current
Agreement of Limited Partnership, as to the Units being
purchased.
SECTION 2. PRORATION; ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS.
If not more than 115 Units are validly tendered and not properly withdrawn
prior to the Expiration Date, the Purchaser, upon the terms and subject to the
conditions of the Offer, will accept for payment all such Units so tendered.
If more than 115 Units are validly tendered and not properly withdrawn on
or prior to the Expiration Date, the Purchaser, upon the terms and subject to
the conditions of the Offer, will accept for payment 115 Units so tendered, on a
pro rata basis.
In the event that proration is required, the Purchaser will determine the
precise number of Units to be accepted and will announce the final results of
proration as soon as practicable, but in no event later than five business days
following the Expiration Date. Purchaser will not pay for any Units tendered
until after the final proration factor has been determined.
If, prior to the Expiration Date, the Purchaser shall increase the
consideration offered to Limited Partners pursuant to the Offer, such increased
consideration shall be paid for all Units accepted for payment pursuant to the
Offer, whether or not such Units were tendered prior to such increase.
Purchaser will pay for the Units within 5 business days after Purchaser has
received written confirmation from the Partnership that the Partnership has
admitted Palm as a Substitute Limited Partner, as that term is defined in the
current Agreement of Limited Partnership, as to the Units being purchased.
SECTION 3. PROCEDURES FOR TENDERING UNITS.
VALID TENDER. For Units to be validly tendered pursuant to the Offer, a
properly completed and duly executed Agreement of Sale must be received by Palm
at its address set forth on the back cover of this Offer to Purchase on or prior
to the Expiration Date and not withdrawn by the Expiration Date. A Limited
Partner may tender any or all Units owned by such Limited Partner.
The delivery of the Agreement of Sale will be deemed made only when
actually received by Xxxx. Sufficient time should be allowed by Seller to
ensure timely delivery.
BACKUP FEDERAL INCOME TAX WITHHOLDING. A tendering Limited Partner must
verify such Limited Partner's correct taxpayer identification number or social
security number, as applicable, and make certain warranties and representations
that it is not subject to backup federal income tax withholding as set forth in
the Agreement of Sale.
TENDERS BY BENEFICIAL HOLDERS. A tender of Units can only be made by the
Registered Owner of such Units, and the party whose name appears as Registered
Owner must tender such Units on behalf of any beneficial holder, as set forth in
the "Instructions" to the Agreement of Sale.
SIGNATURE GUARANTEES. The signature(s) on the Agreement of Sale must be
guaranteed by a commercial bank, savings bank, credit union, savings and loan
association, or trust company having an office, branch, or agency in the United
States, or a brokerage firm that is a member firm of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc., as set forth in the Agreement of Sale.
3
DETERMINATION OF VALIDITY; REJECTION OF UNITS; WAIVER OF DEFECTS; NO
OBLIGATION TO GIVE NOTICE OF DEFECTS. All questions as to the form of documents
and validity, eligibility (including time of receipt), and acceptance for
payment of any tender of Units will be determined by the Purchaser, in its sole
discretion, which determination will be final and binding on all parties.
OTHER REQUIREMENTS. By executing and delivering the Agreement of Sale, a
tendering Limited Partner irrevocably appoints the Purchaser as such Limited
Partner's proxy, with full power of substitution. All such proxies are
irrevocable and coupled with an interest in the tendered Units and empower the
Purchaser to exercise all voting and other rights of such Limited Partner as
they in their sole discretion may deem proper at any meeting of Limited
Partners. The complete terms and conditions of the proxy are set forth in the
Agreement of Sale.
By executing and delivering the Agreement of Sale, a tendering Limited
Partner also irrevocably constitutes and appoints the Purchaser and its
designees as the Limited Partner's attorneys-in-fact. Such appointment will be
effective upon Purchaser's payment for the Units. The complete terms and
conditions of the Power of Attorney are set forth in the Agreement of Sale.
By executing and delivering the Agreement of Sale, a tendering Limited
Partner will irrevocably assign to the Purchaser and its assignees all right,
title, and interest that such Limited Partner has to the Units, including,
without limitation, any and all distributions made by the Partnership after May
15, 1998, regardless of the fact that the record date for any such distribution
may be a date prior to the Expiration Date and whether such distributions are
classified as a return on, or a return of, capital. The complete terms and
conditions of the assignment of the Limited Partner's Units are set forth in
the Agreement of Sale.
By executing the Agreement of Sale, a tendering Limited Partner represents
that either (i) the tendering Limited Partner is not a plan subject to Title 1
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), or
an entity deemed to hold "plan assets" within the meaning of 29 C.F.R Section
0000-0-000 of any such plan; or (ii) the tender and acceptance of Units pursuant
to the applicable Offer will not result in a nonexempt prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code.
By executing the Agreement of Sale, a tendering Limited Partner also agrees
that regardless of any provision in the Partnership's Limited Partnership
Agreement which provides that a transfer is not effective until a date
subsequent to the date of any transfer of Units under the Offer, the Purchase
Price includes any distributions with respect to the Units after May 15, 1998,
whether such distributions are classified as a return on, or a return of,
capital.
Limited Partners will not have any appraisal or dissenter's rights with
respect to or in connection with the Offer.
SECTION 4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Units made
pursuant to the Offer are irrevocable. Units tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date. In the event the Offer
is extended beyond the Expiration Date and beyond July 25, 1998, the Units
tendered may be withdrawn at any time.
In order for a withdrawal to be effective, a written or facsimile
transmission notice of withdrawal, with signature(s) guaranteed in the same
manner as in Section 3 above, must be timely received by the Purchaser at its
address set forth on the last page of this Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the Units to be
withdrawn, and the number of Units to be withdrawn. Any Units properly
withdrawn will be deemed not validly tendered for purposes of the Offer, but may
be re-tendered at any subsequent time prior to the Expiration Date by following
any of the procedures described in Section 3.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding.
SECTION 5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT.
The Purchaser expressly reserves the right, in its sole discretion, at any
time (i) to extend the period of time during which the Offer is open; (ii) to
terminate the Offer; (iii) upon the failure of the Seller to satisfy any of the
conditions specified in Section 13, to delay the acceptance for payment of, or
payment for, any Units; and (iv) to amend the Offer in any respect (including,
without limitation, by increasing or decreasing the consideration offered). Any
extension, termination, or amendment will be followed as promptly as practicable
by public announcement; the announcement in the case of an extension to be
issued no later than 9:00 a.m., Pacific Time, on the next business day after the
previously scheduled Expiration Date, in accordance with the public announcement
requirement of Rule 14e-1(d) under the Exchange Act.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will extend the Offer to the extent required by Rules 14d-4(c) and
14d-6(d) under the Exchange Act. The minimum period during which an offer must
remain open following a material change in the terms of the
4
offer or of information concerning the offer, other than a change in price or a
change in percentage of securities sought, will depend upon the facts and
circumstances, including the relative materiality of the change in the terms or
information. With respect to a change in price or a change in percentage of
securities sought, however, a minimum ten-business-day period is generally
required by Palm to allow for adequate dissemination to security holders and for
investor response. As used in this Offer, "business day" means any day other
than a Saturday, Sunday, or a federal holiday and consists of the time period
from 12:01 a.m. through 12:00 midnight, Pacific Time.
SECTION 6. CERTAIN TAX CONSEQUENCES.
LIMITED PARTNERS SHOULD CONSULT THEIR RESPECTIVE TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES TO EACH SUCH LIMITED PARTNER OF SELLING UNITS
PURSUANT TO THE OFFER.
SECTION 7. PURPOSE AND EFFECTS OF THE OFFER.
PURPOSE OF THE OFFER. The Purchaser is making the Offer for investment
purposes with a view towards making a profit. Palm's intention is to acquire
the Units at a Purchase Price which will allow Palm to make a profit from its
ownership of the Units.
No independent person has been retained by Xxxx to evaluate or render any
opinion with respect to the fairness of the Purchase Price and no representation
is made as to such fairness. The Purchaser established the Purchase Price based
on its own independent analysis of the Partnership, which included a valuation
of the properties and other assets owned by the Partnership and by a subjective
determination of the financial condition of the Partnership. The Purchaser made
its subjective determination of the Purchase Price per Unit from its analysis of
financial information which was available from information in the Form Annual
Report on Form 10-K filed with the SEC ("10-K") and the Form Quarterly Report on
Form 10-Q ("10-Q").
CERTAIN RESTRICTIONS ON TRANSFER OF UNITS. The Partnership Agreement
restricts the transfer of Units if a transfer, when considered with all other
transfers during the same applicable twelve-month period, would cause a
termination of the Partnership, for federal or state income tax purposes.
EFFECT OF SALES THROUGH "MATCHING SERVICE" AND PRICE RANGE OF THE UNITS. If
a substantial number of Units are purchased pursuant to the Offer, the result
will be a reduction in the number of Limited Partners. In the case of certain
kinds of equity securities, a reduction in the number of security holders might
be expected to result in a reduction in the liquidity and volume of activity in
the trading market for the security. In this case, however, there is no active
trading market for the Units, but only several services that "match" buyers and
sellers of Units, typically by means of an auction, and the Purchaser believes a
reduction in the number of Limited Partners will not materially further restrict
the Limited Partners' ability to find purchasers for their Units.
The successful purchase of more than 5.02 percent of the outstanding Units
by the Purchaser will cause the Purchaser to own more than 10 percent of the
outstanding Units. The Purchaser may then be in a position to exert a strong
influence upon the General Partner and the operation of the Partnership.
SECTION 8. FUTURE PLANS.
The Purchaser is acquiring the Units pursuant to the Offer for investment
purposes. However, the Purchaser and its affiliates may acquire additional
Units through private purchases, one or more future tender offers, or by any
other means deemed advisable. Such future purchases may be at prices higher or
lower than the Purchase Price.
SECTION 9. PAST CONTACTS AND NEGOTIATIONS WITH THE GENERAL PARTNER.
In late spring or early summer of 1997, Palm became a Limited Partner of
the Partnership; thereafter, Xxxx requested the list of Limited Partners for the
Partnership which Xxxx received from the General Partner in a timely manner.
Purchaser, pursuant to three limited tender offers, acquired a total of
55.667 Units, which is approximately 4.75 percent of the issued and outstanding
Units of the Partnership. Pursuant to the first tender offer which commenced on
November 13, 1997, and terminated on December, 12, 1997, Purchaser acquired
34.667 Units at $70,000 per Unit. Pursuant to the second tender offer which
commenced on January 23, 1998, and terminated on February 3, 1998, Purchaser
acquired 1.5 Units at $70,000 per Unit. Purchaser terminated its second tender
because of a competing higher tender offer. Pursuant to the third tender offer
which commenced on February 5, 1998, and terminated on March 6, 1998, Purchaser
acquired 19.5 Units at $85,000 per Unit. Upon review of the second and third
offers, Purchaser determined that it would pay $85,000 per Unit for all Units
acquired pursuant to the second and third offers and has made such payment to
those selling Unit holders.
Since Purchaser has acquired Units in the Partnership, Purchaser has had
contacts with the Partnership's transfer agent and the General Partner with
respect to matters pertaining to the transfer of Limited Partnership interests
purchased by Palm.
5
Members of the Purchaser met with executives of the Partnership and Host
Marriott Corporation ("Host Marriott") on January 22, 1998 and February 26,
1998, to discuss the proposed consolidation of six limited partnerships,
including the Partnership, into a Real Estate Investment Trust (REIT) sponsored
by Host Marriott.
Commencing in January, 1998 and continuing until the date of this Offer,
members of the Purchaser have had three or four telephone conversations with
executives of Host Xxxxxxxx to discuss the proposed consolidation.
On or about May 8, 1998, the Purchaser had a telephone conversation with
the Partnership and reviewed (i) certain administrative matters concerning
Purchaser's past and possible future tender offers; and (ii) costs of the
present class action lawsuit and how to minimize the costs of such lawsuit and
(iii) whether the Partnership had any additional information regarding the
matter of the consolidation of the Partnership into a REIT or a similar
transaction involving combining the Partnership assets, other than that
information that the Partnership had reported in its letter to all Limited
Partners dated April 6, 1998; the Partnership indicated that it had nothing
definitive to report regarding the consolidation other than the information
reported in the April 6, 1998 letter.
SECTION 10. CERTAIN INFORMATION CONCERNING THE BUSINESS OF THE PARTNERSHIP AND
RELATED MATTERS.
The Partnership was organized on July 15, 1986 under the laws of Delaware.
The Partnership is engaged solely in the business of owning and operating
hotels. The Partnership's principal offices are located at 00000 Xxxxxxxx Xxxx,
Xxxxxxxx, Xxxxxxxx 00000.
The General Partner disclosed is its 1997 Form 10-K that it has undertaken
on behalf of the Partnership to pursue a consolidation of the Partnership with
five other limited partnerships. If the Partners of the Partnership approve the
transaction, and if other conditions are satisfied, the Partners of the
Partnership would receive units in the merger entity in exchange for their
interests in the Partnership.
DISTRIBUTIONS. The Partnership disclosed in its Annual Report on Form 10-K
filed with the SEC for the year ended December 31, 1997, that it made
distributions as follows:
Year Ending Distributions Per
December 31 Unit
----------- ----
1995 $-0-
1996 $2,000
1997 $35,000
The foregoing summary is qualified in its entirety by reference to such
reports and other documents and all of the financial information and related
notes contained therein.
Set forth below is a summary of certain financial information with respect
to the Partnership, which has been excerpted or derived from the Partnership's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997. More
comprehensive financial and other information is included in such reports and
other documents filed by the Partnership with the SEC, and the following summary
is qualified in its entirety by reference to such reports and other documents
and all the financial information and related notes contained therein. Such
reports and other documents may be examined and copies may be obtained from the
offices of the SEC at the addresses set forth in the "Introduction." The
Purchaser disclaims any responsibility for the information included in such
reports and documents, and extracted in this Offer to Purchase.
6
Courtyard by Marriott Limited Partnership
Selected Financial Data
Income Statement Data (in Fiscal Year Fiscal Year Fiscal Year
thousands): Ended 12/31/97 Ended 12/31/96 Ended 12/31/95
-------------- -------------- --------------
Net Revenue $95,304 $90,300 $83,043
Net Income $27,813 $13,454 $4,988
Net Income per Unit $22,976 $11,114 $4,120
Balance Sheet Data As of As of As of
(in thousands): 12/31/97 12/31/96 12/31/95
-------- -------- --------
Total Assets $331,406 $330,509 $338,740
Total Liabilities $362,991 $349,839 $369,224
---------------------------------------------------------
Units Outstanding 1,150 1,150 1,150
For information concerning the properties owned by the Partnership, please refer
to Schedule 2 attached hereto, which is incorporated herein by reference.
SECTION 11. CERTAIN INFORMATION CONCERNING THE PURCHASER.
The Purchaser is a Delaware Limited Liability Company which was organized
for the purpose of acquiring the Units in several limited partnerships that were
sponsored by Host Marriott Corporation and its affiliates. The Manager of the
Purchaser is Xxxxx Capital, LLC, a California limited liability company ("AC"),
which is controlled by its two members, Xxx Xxxxxxxxx and Xxxx X. Xxxxx. AC is
engaged in financial and business consulting, and making tender offers and
opportunistic investments. The Purchaser's and AC's offices are located at 0000
Xxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000. For certain
information concerning the members of AC, see Schedule 1 to this Offer to
Purchase.
Except as otherwise set forth herein, (i) neither the Purchaser nor, to the
best knowledge of the Purchaser, any of the persons listed on Schedule 1, or any
affiliate of the Purchaser beneficially owns or has a right to acquire any
Units; (ii) neither the Purchaser nor, to the best knowledge of the Purchaser,
any of the persons listed on Schedule 1, or any affiliate of the Purchaser or
any member, director, executive officer, or subsidiary of any of the foregoing
has effected any transaction in the Units; (iii) neither the Purchaser nor, to
the best knowledge of the Purchaser, any of the persons listed on Schedule 1 or
any affiliate of the Purchaser has any contract, arrangement, understanding, or
relationship with any other person with respect to any securities of the
Partnership, including but not limited to, contracts, arrangements,
understandings, or relationships concerning the transfer or voting thereof,
joint ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss, or the giving or withholding of proxies, consents, or
authorizations; (iv) there have been no transactions or business relationships
which would be required to be disclosed under the rules and regulations of the
SEC between any of the Purchasers, or, to the best knowledge of the Purchaser,
any of the persons listed on Schedule 1 or any affiliate of the Purchaser, on
the one hand, and the Partnership or affiliates, on the other hand; and (v)
there have been no contracts, negotiations, or transactions between the
Purchaser or to the best knowledge of the Purchaser, any of the persons listed
on Schedule 1 or any affiliate of the Purchaser, on the one hand, and the
Partnership or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer (other than as described in Section 8
of this Offer) or other acquisition of securities, an election or removal of the
General Partner, or a sale or other transfer of a material amount of assets.
SECTION 12. SOURCE AND AMOUNT OF FUNDS.
The Purchaser expects that approximately $9,775,000 (exclusive of fees and
expenses) will be required to purchase 115 Units (approximately 10 percent of
the outstanding Units), if tendered. The Purchaser has a binding commitment
from its
7
members to provide those funds as capital contributions to Purchaser.
Purchaser's members have an aggregate net worth substantially in excess of the
amount required to purchase the 115 Units.
SECTION 13. CERTAIN CONDITIONS OF THE OFFER.
Purchaser in its sole discretion, for any reason, may terminate the offer
on or before the Expiration Date, by providing notice of termination as set
forth in Section 5. The Purchaser will not be required to accept for payment or
to pay for any Units tendered, and may amend or terminate the Offer if the
following conditions are not satisfied or waived by Purchaser on or before the
Expiration Date:
(i) Purchaser shall have received from the Seller, a properly
completed and duly executed Agreement of Sale; and
(ii) Purchaser shall have received from the Partnership,
confirmation, to the reasonable satisfaction of Purchaser,
that upon purchase of the Units: (a) the Purchaser will be
entitled to receive all distributions, from any source,
declared or paid by the Partnership after May 15, 1998; and
(b) the Partnership will admit Purchaser as a Substitute
Limited Partner, as that term is defined in the current
Agreement of Limited Partnership, as to the Units being
purchased.
The foregoing conditions are for the sole benefit of the Purchaser and its
affiliates and may be asserted by the Purchaser regardless of the circumstances
(including, without limitation, any action or inaction by the Purchaser or any
of its affiliates) giving rise to such condition, or may be waived by the
Purchaser, in whole or in part, from time to time in its sole discretion. The
failure by the Purchaser at any time to exercise the foregoing rights will not
be deemed a waiver of such rights, which rights will be deemed to be ongoing and
may be asserted at any time and from time to time. Any determination by the
Purchaser concerning the events described in this Section 13 will be final and
binding upon all parties.
SECTION 14. CERTAIN LEGAL MATTERS AND REQUIRED REGULATORY APPROVALS.
GENERAL. Except as set forth in this Offer to Purchase, based on its
review of publicly available filings by the Partnership with the SEC and
other publicly available information regarding the Partnership, the Purchaser
is not aware of any licenses or regulatory permits that would be material to
the business of the Partnership, taken as a whole, and that might be
adversely affected by the Purchaser's acquisition of Units as contemplated
herein, or any filings, approvals, or other actions by or with any domestic,
foreign, or governmental authority or administrative or regulatory agency
that would be required prior to the acquisition of Units by the Purchaser
pursuant to the Offer as contemplated herein. Should any such approval or
other action be required, there can be no assurance that any such additional
approval or action, if needed, would be obtained without substantial
conditions or that adverse consequences might not result to the Partnership's
business, or that certain parts of the Partnership's or the Purchaser's
business might not have to be disposed of or held separate or other
substantial conditions complied with in order to obtain such approval. The
Purchaser's obligation to purchase and pay for Units is subject to certain
conditions. See "Tender Offer-- Section 13. Certain Conditions of the Offer."
ANTITRUST. Under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), and the rules and regulations that have been
promulgated thereunder by the Federal Trade Commission (the "FTC"), certain
acquisition transactions may not be consummated until certain information and
documentary material has been furnished for review by the Antitrust Division of
the Department of Justice (the "Antitrust Division") and the FTC and certain
waiting period requirements have been satisfied. The Purchaser does not
currently believe any filing is required under the HSR Act with respect to its
acquisition of Units contemplated by the Offer.
Based upon an examination of publicly available information relating to
the business in which the Partnership is engaged, the Purchaser believes that
the acquisition of Units pursuant to the Offer would not violate the
antitrust laws. Nevertheless, there can be no assurance that a challenge to
the Offer on antitrust grounds will not be made, or, if such challenge is
made, what the result will be.
STATE TAKEOVER LAWS. The Purchaser has not attempted to comply with any
state takeover statutes in connection with the Offer. The Purchaser reserves the
right to challenge the validity or applicability of any state law allegedly
applicable to the Offer, and nothing in the Offer, nor any action taken in
connection herewith, is intended as a waiver of that right. In the event that
any state takeover statute is found applicable to the Offer, the Purchaser might
be unable to accept for payment or purchase Units tendered pursuant to the Offer
or be delayed in continuing or consummating the Offer. In such case, the
Purchaser may not be obligated to accept for purchase, or pay for, any Units
tendered.
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SECTION 15. FEES AND EXPENSES.
Xxxxx Capital has been retained by the Purchaser to act as the Information
Agent in connection with the Offer. The Information Agent will receive
reasonable and customary compensation for its services in connection with the
Offer and will be indemnified against certain liabilities and expenses in
connection therewith.
Except as set forth in this Section 15, the Purchaser will not pay any
fees or commissions to any broker, dealer or other person for soliciting
tenders of Units pursuant to the Offer. Brokers, dealers, commercial banks,
trust companies, and other nominees, if any, will, upon request, be
reimbursed by the Purchaser for customary clerical and mailing expenses
incurred by them in forwarding materials to their customers.
SECTION 16. MISCELLANEOUS.
THE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON
BEHALF OF) LIMITED PARTNERS IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER
OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH
JURISDICTION. THE PURCHASER IS NOT AWARE OF ANY JURISDICTION WITHIN THE UNITED
STATES IN WHICH THE MAKING OF THE OFFER OF THE ACCEPTANCE THEREOF WOULD BE
ILLEGAL.
In any jurisdiction where the securities, blue sky, or other laws
require the Offer to be made by a licensed broker or dealer, the Purchaser
will withdraw the Offer. The Purchaser has filed with the SEC the Schedule
14D-1, together with exhibits, pursuant to Rule 14d-3 of the General Rules
and Regulations under the Exchange Act, furnishing certain information with
respect to the Offer, and may file amendments thereto. Such Schedule 14D-1
and any amendments thereto, including exhibits, may be examined and copies
may be obtained from the SEC as set forth above in "Introduction."
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser not contained in this Offer to
Purchase or in the Agreement of Sale and, if given or made, any such
information or representation must not be relied upon as having been
authorized. Neither the delivery of the Offer to Purchase nor any purchase
pursuant to the Offer shall, under any circumstances, create any implication
that there has been no change in the affairs of the Purchaser or the
Partnership since the date as of which information is furnished or the date
of this Offer to Purchase.
PALM INVESTORS, LLC
0000 XXXXX XXXXXX XXXXX, XXXXX 000, XXX XXXXX, XX 00000
(000) 000-0000
9
SCHEDULE 1
INFORMATION REGARDING THE MANAGERS
OF XXXXX CAPITAL, LLC
Set forth in the table below are the names of the members of Xxxxx Capital,
LLC and their present principal occupations and five (5) year employment
histories. Each individual is a citizen of the United States and the business
address of each person is 0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx,
Xxxxxxxxxx 00000.
Present Principal Occupation or Employment
Name and Five-Year Employment History
Xxx Xxxxxxxxx Member and Manager of Xxxxx Capital LLC. President of Xxxxx
Capital, Inc., a California corporation, its predecessor
entity since 1989.
Xxxx X. Xxxxx Member and Manager of Xxxxx Capital LLC. Vice President of
Xxxxx Capital, Inc., a California corporation, its
predecessor entity since 1989.
Xxxxx Capital LLC and its predecessor entity, Xxxxx Capital, Inc. ("AC"),
have been providing business and financial consulting services since 1989. AC
principals offer an extensive background in the capital markets, real estate
securities, and real estate markets. AC, has developed relationships with
capital sources who furnish equity and debt for both public and private
transactions. In previous transactions, AC has provided, for its clients,
consulting services for the following types of transactions: debt and equity
placements for leveraged buy-outs; the making of tender offers; debt and equity
capital for real estate development projects; structuring of companies to become
REITs; and creation of joint venture partnerships between real estate developers
and investors. In addition, AC provides financial structuring advice and
analyses for refinancing and financing alternatives for the design and
structuring of joint ventures, limited partnerships (both public and private),
and for Real Estate Investment Trusts.
S-1
SCHEDULE 2
COURTYARD BY MARRIOTT HOTELS OWNED BY THE PARTNERSHIP
The following Schedule of Properties owned by the Partnership was extracted from
the Partnership's Annual Report Form 10-K for the year ending December 31, 1997,
as filed with the SEC.
Location
--------
Alabama
Montgomery (1)
Arizona
Phoenix Airport (1)
California
Buena Park (1)
Fremont (1)
Pleasanton
Sacramento-Rancho Xxxxxxx
San Francisco Airport (2)
Santa Xxx (1)
Connecticut
Windsor (1)
Florida
Melbourne (1)
Miami Airport-West (1)
Tallahassee (1)
Georgia
Atlanta-Xxxx Road (1)
Atlanta-Executive Park (1)
Atlanta-Northlake (2)
Atlanta-Peachtree Corners
Atlanta-Peachtree Dunwoody
Atlanta-Xxxxx Xxxx
Xxxxxxx
Xxxxxxxx
Savannah
Illinois
Naperville (1)
Maryland
Xxxx Valley (1)
Landover
Rockville (1)
Michigan
Dearborn (1)
Southfield
Xxxx
Xxxxxx
North Carolina
Xxxxxxxxx-Xxxxxxxx Road (1)
Raleigh-Wake Forest Road
New York
Tarrytown
Ohio
Cincinnati-Blue Ash (1)
Columbus-Dublin (1)
Columbus-Worthington (1)
Pennsylvania
Valley Forge (1)
Tennessee
Brentwood (1)
Memphis-Park Avenue East (1)
Texas
Arlington
Bedford (1)
Dallas-Addison (1)
Dallas-Las Colinas
Dallas-LBJ Northwest (1)
San Antonio Airport (1)
San Antonio-Medical Center (1)
Virginia
Fair Oaks
Herndon (1)
Hampton (1)
Richmond (1)
Virginia Beach (1)
(1) Land is leased from MII or an affiliate of MII. (2) Land is leased from a
third party.
S-2
More comprehensive financial and other information is included in
such report and other documents filed by the Partnership with the SEC, and the
following is qualified by reference to such report and other documents. Such
report and other documents may be examined and copies may be obtained from the
offices of the SEC at the addresses set forth in the "Introduction" section of
the Offer to Purchase. The Purchaser disclaims any responsibility for the
information included in such report and documents, and extracted in this
Schedule 2, as well as any changes which may have taken place in the information
in the report since the date it was issued.
S-3
