EXHIBIT 99(a)(1)
OFFER TO PURCHASE UNITS
OF
AETNA REAL ESTATE ASSOCIATES, L.P.
THIS OFFER WILL EXPIRE AT 12:00 MIDNIGHT, PACIFIC TIME,
ON SEPTEMBER 18, 1998, UNLESS THE OFFER IS EXTENDED.
Oak Investors, LLC, a Delaware limited liability company ("Oak" or the
"Purchaser"), hereby offers to purchase 2,500,000 Units ("Units") in Aetna
Real Estate Associates, L.P., a Delaware Limited Partnership (the
"Partnership"). "Unit" shall have the meaning as the term "Unit" is defined
in the Partnership's Limited Partnership Agreement ("Partnership Agreement")
and included in the definition of "Units" are any and all rights associated
with Seller's Unit, including, without limitation, all of Seller's rights to
claims, damages, recoveries, and causes of action accruing to the benefit of
Seller with respect to Seller's purchase and/or ownership of the Units,
including any and all rights of such Seller in any proceeds from the
settlement after July 31, 1998, of any class action lawsuit by the Recognized
Owners of Units (as defined in the Partnership Agreement) of the Partnership,
which lawsuit relates to the Partnership or its General Partner. The
Partnership disclosed in its Annual Report on Form 10-K filed with the
Securities and Exchange Commission ("SEC") for the year ended December 31,
1997 ("1997 10-K") that "two purported class action lawsuits were filed in
the Chancery Court of Delaware in New Castle County, entitled Xxxxxxx v.
Aetna Real Estate Associates, L.P., et al. and Estes v. Aetna Real Estate
Associates, L.P., et al." SEE SECTION 10 - CERTAIN INFORMATION CONCERNING
THE BUSINESS OF THE PARTNERSHIP AND RELATED MATTERS.
Oak will pay a purchase price of $12.50 per Unit in the Partnership, net
to the seller in cash, without interest, less the amount of any distributions
declared or paid from any source by the Partnership with respect to the Units
after July 31, 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
("Agreement"), 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 19.6 percent of Units
outstanding as of the date of the Offer.
OAK IS NOT AN AFFILIATE OF THE GENERAL PARTNERS OR OF THE PARTNERSHIP
THE OFFER TO PURCHASE IS NOT CONDITIONED UPON THE VALID TENDER OF ANY MINIMUM
NUMBER OF UNITS.
IF MORE THAN 2,500,000 UNITS ARE VALIDLY TENDERED AND NOT WITHDRAWN, THE
PURCHASER WILL ACCEPT FOR PURCHASE UP TO 2,500,000 UNITS, ON A PRO RATA BASIS,
SUBJECT TO THE TERMS AND CONDITIONS HEREIN, SEE "TENDER OFFER - SECTION 13,
CERTAIN CONDITIONS OF THE OFFER."
A RECOGNIZED OWNER MAY TENDER ANY OR ALL UNITS OWNED BY SUCH RECOGNIZED OWNER.
IMPORTANT
Recognized Owner who desires 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1. Terms of the Offer. . . . . . . . . . . . . . . . . . . . 4
Section 2. Acceptance for Payment and Payment for Units. . . . . . . 4
Section 3. Procedures for Tendering Units. . . . . . . . . . . . . . 4
Section 4. Withdrawal Rights . . . . . . . . . . . . . . . . . . . . 5
Section 5. Extension of Tender Period; Termination; Amendment. . . . 6
Section 6. Certain Tax Consequences. . . . . . . . . . . . . . . . . 6
Section 7. Purpose and Effects of the Offer. . . . . . . . . . . . . 6
Section 8. Future Plans. . . . . . . . . . . . . . . . . . . . . . . 7
Section 9. Past Contacts and Negotiations With General Partners. . . 7
Section 10. Certain Information Concerning the Partnership . . . . . 8
Section 11. Certain Information Concerning the Purchaser. . . . . . . 9
Section 12. Source and Amount of Funds . . . . . . . . . . . . . . . 9
Section 13. Certain Conditions of the Offer . . . . . . . . . . . . . 9
Section 14. Certain Legal Matters and Required Regulatory Approvals . 10
Section 15. Fees and Expenses . . . . . . . . . . . . . . . . . . . . 10
Section 16. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 11
SCHEDULE 1
Information with respect to the Managers of Xxxxx Capital, LLC ,
the Manager of Purchaser (Oak) . . . . . . . . . . . . . . . . . S-1
SCHEDULE 2
Properties Owned by the Partnership . . . . . . . . . . . . . . . S-2
INTRODUCTION
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OFFER TO PURCHASE
AETNA REAL ESTATE ASSOCIATES, L.P. UNITS
FOR
$12.50 CASH PER UNIT
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OAK IS NOT AN AFFILIATE OF THE GENERAL PARTNERS OR OF THE PARTNERSHIP.
OAK'S OFFER
Oak is offering to purchase your Units in the Partnership (as the term
"Unit" is defined in the Partnership Agreement of Aetna Real Estate
Associates, L.P. ("Partnership") for $12.50 cash per Unit, which amount
will be reduced by any cash dividends or other distributions declared or
paid from any source, by the Partnership after July 31, 1998, without
regard to the record date or whether such dividends or other distributions
are classified as a return on, or a return of, capital. THE OFFER IS FOR
2,500,000 UNITS, REPRESENTING APPROXIMATELY 19.6 PERCENT OF THE UNITS
OUTSTANDING AS OF THE DATE OF THE OFFER. THE OFFER TO PURCHASE IS NOT
CONDITIONED UPON THE VALID TENDER OF ANY MINIMUM NUMBER OF UNITS. IF MORE
THAN 2,500,000 UNITS ARE VALIDLY TENDERED TO OAK, WE WILL ACCEPT UP TO
2,500,000 UNITS, ON A PRO RATA BASIS, SUBJECT TO THE TERMS AND CONDITIONS
IN THE OFFER.
SPECIAL FACTORS
Before selling your Units to Oak, please consider the following:
- In the Partnership's Annual Report on Form 10-K for the year ended
December 31, 1997 (the"1997 10-K") the Partnership stated:
"The Partnership's principal objectives are to invest in
properties with the goals of obtaining:
(1) cash distributions from rental and interest income
(2) capital appreciation; and
(3) preservation and protection of capital.
In light of the relatively strong national real estate and
capital markets, the General Partners are actively reviewing
the potential sale of Properties. Any change in the length
of a property's ownership period from that currently
anticipated, could affect the real estate and leasing
strategy to be followed at such property, which could alter
the level of capital expenditures to be invested in the
properties. These changes could affect the level of cash
flow received by the Partnership, which might affect the
level of quarterly cash distributions to Recognized Owners.
In 1997, the Partnership made distributions of cash
generated from operations of $.18 per Unit per quarter....
The General Partners currently anticipate that quarterly
cash distributions will continue throughout 1998. The level
and timing of future distributions will be reviewed on a
quarterly basis by the General Partners.
Net Asset Value per Unit increased to $16.71 at December 31,
1997 from $15.59 at December 31, 1996. The increase in Net
Asset Value per Unit is attributable to the increases in the
appraised values of certain of the Partnership's properties,
primarily Summit Village, Town Center Business Park, and 000
xxx 000 Xxxxxxxx Xxxx. The increase in appraised value of
Summit Village and 000 xxx 000 Xxxxxxxx Xxxx is a result of
an increase in projected market rents. The increases in
appraised value of Town Center Business Park is primarily
due to improved occupancy and market rent assumptions.
These value increases were partially offset by a decrease in
the appraised value of Oakland Pointe Shopping Center due to
a decrease in its forecasted occupancy from the expected
departure of three major tenants, and a reduction in the
market rent of some space."
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- No independent person has been retained to evaluate or render any
opinion with respect to the fairness of Oak's offer, and no
representation is made as to such fairness or other measures of value
that may be relevant to the Recognized Owners. We urge you to consult
your own financial advisor in connection with Xxx's offer.
- Although Oak 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
- Oak is making the offer with a view to making a profit. Accordingly,
there is a conflict between the desire of Oak to acquire your Units at
a low price and your desire to sell your Units at a high price. Oak's
intention is to acquire the Units at a Purchase Price which will allow
Oak to make a profit from its ownership of the Units.
- The tax consequences of the Offer to a particular Recognized Owner of
Units may be different from those of other Recognized Owner of Units,
and we urge you to consult your own tax advisor in connection with the
Offer.
- Recognized Owner of Units who sell their Units to Oak will be giving
up the opportunity to participate in any future potential benefits of
ownership of the Units such as future dividends or other
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, and (v) any proceeds that may be received from any action
lawsuit by the Recognized Owners of the Partnership, which lawsuit relates to
the Partnership or its General Partners.
Purchaser believes that there are a number of qualified purchasers in
today's real estate market that would purchase 100 percent of the Partnership
properties in a single transaction. In the current market, Purchaser
believes that the timing is appropriate for a sale of the properties.
Purchaser intends to actively encourage the General Partners to pursue a
potential sale of the Partnership properties in an auction conducted by a
major investment banking firm or similar type of organization. If the
General Partners does not pursue these options, Purchaser is considering
taking appropriate action which may include attempting to assemble a group of
10 percent of the Recognized Owners in order to call a meeting of the
Recognized Owners to vote to direct the General Partners to sell all of the
Partnership properties.
The Offer is not conditioned upon the valid tender of any minimum number
of the Units. If more than 2,500,000 Units are tendered and not withdrawn,
the Purchaser will accept up to 2,500,000 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.
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According to publicly available information, there were 12,724,547 Units
issued and outstanding on March 1, 1998 which were held by 18,400 Recognized
Owners (including holders of half-Units). Cedar Partners, L.P. ("Cedar"), a
wholly-owned subsidiary of Xxxxx Capital, LLC ("AC") and an affiliate of Oak
Investors, LLC ("Oak"), as Recognized Owner, has transferred and assigned all
of its interest in 104 Units to Oak. Both Cedar and Oak have submitted
properly completed and duly executed transfer documents to the Partnership to
complete the transfer of such 104 Units on the books and records of the
Partnership. AC, Oak and Cedar are the Recognized Owner of 17,805 Units.
Information contained in this Offer to Purchase which relates to, or
represents statements made by, the Partnership or the General Partners, has
been derived from information provided in reports and other information filed
with the SEC by the Partnership and General Partners.
Recognized Owners of Units are urged to read this Offer to Purchase and
the accompanying Agreement of Sale carefully before deciding whether to tender
(sell) their Units.
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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 2,500,000 Units that are validly
tendered on or prior to the Expiration Date. The term "Expiration Date"
shall mean 12:00 midnight, Pacific Time, on September 18, 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 July 31, 1998; and
(b) the Partnership will admit Purchaser as a Recognized
Owner, as that term is defined in the Partnership Agreement,
as to the Units being purchased.
SECTION 2. PRORATION; ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS.
If not more than 2,500,000 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 2,500,000 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 2,500,000
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 Recognized Owners 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 Company that Oak has become a
Recognized Owner of Record on the books and records of the Partnership with
respect to the Units being sold by Seller.
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
Oak 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
Recognized Owner may tender any or all Units owned by such Recognized Owner.
The delivery of the Agreement of Sale will be deemed made only when
actually received by Xxx. Sufficient time should be allowed by Seller to
ensure timely delivery.
BACKUP FEDERAL INCOME TAX WITHHOLDING. A tendering Recognized Owner must
verify such Recognized Owner'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 Recognized Owner of such Units, and the party whose name appears as
Recognized Owner must tender such Units on behalf of any beneficial holder,
as set forth in the "Instructions" to the Agreement of Sale.
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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.
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 Recognized Owner irrevocably appoints the Purchaser as such
Recognized Owner'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
Recognized Owner as they in their sole discretion may deem proper at any
meeting of Recognized Owners. 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
Recognized Owner also irrevocably constitutes and appoints the Purchaser and
its designees as the Recognized Owner'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
Recognized Owner will irrevocably assign to the Purchaser and its assignees
all right, title, and interest that such Recognized Owner has to the Units,
including, without limitation, any and all distributions made by the
Partnership after July 31, 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
Recognized Owner's Units are set forth in the Agreement of Sale.
By executing the Agreement of Sale, a tendering Recognized Owner
represents that either (i) the tendering Recognized Owner 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 Recognized Owner also
agrees that regardless of any provision in the 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 shall be reduced
by any distributions with respect to the Units after July 31, 1998, whether
such distributions are classified as a return on, or a return of, capital.
Recognized Owners 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 60 days from the date
of the Offer, the Units tendered may be withdrawn at any time prior to the
extended expiration date.
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.
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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
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 Oak 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.
RECOGNIZED OWNERS SHOULD CONSULT THEIR RESPECTIVE TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES TO EACH SUCH RECOGNIZED OWNER OF SELLING UNITS
PURSUANT TO THE OFFER.
SECTION 7. PURPOSE AND EFFECTS OF THE OFFER.
PURPOSE OF THE OFFER. The Purchaser established the Purchase Price of $12.50
per Unit based on a number of factors, including: (i) the prices of recent
secondary market resales of the Units (ii) the illiquid nature of the
investment; and (iii) the costs to the Purchaser associated with acquiring
the Units ("Factors").
The Purchase Price represents the price at which the Purchasers are
willing to purchase Units. No independent person has been retained by Xxx to
evaluate or render any opinion with respect to the fairness of the Purchase
Price to the Seller's and no representation is made as to such fairness. Oak
urges those Unitholders that are considering tendering their Units pursuant
to the Offer to first consult with their own advisors (e.g. tax, financial)
in evaluating the terms of the Offer before deciding whether or not to tender
Units.
A reported by THE PARTNERSHIP SPECTRUM, an independent national
reporting service that tracks the sale of limited partnership units and real
estate investment trust ("REIT") shares in the secondary market, the high,
low and weighted average sales price of Shares during the period of April 1,
1997 through March 31, 1998, was $12.78, $9.75, and $12.05, respectively.
The Purchaser is offering to purchase Units which are a relatively
illiquid investment and are not offering to purchase the Partnership's
underlying assets. Consequently, the Purchaser does not believe that the
underlying asset value of the Partnership is determinative in arriving at the
Offer Price. Nevertheless, using publicly available information concerning
the Partnership contained in the 1997 10-K, the Purchaser used an estimated
asset value to derive an estimated market value for the Units solely for
purposes of formulating their Offer.
In determining their estimated value of the Units, the Purchaser first
calculated the estimated current net operating income in accordance with the
Partnership's financial statements. Then, in consideration of the Factors
discussed above, the Purchaser determined the appropriate capitalization rate
for the Partnership's net operating income. The resulting net asset value of
the Partnership's properties was added to the Partnership's net current
assets and the Partnership's total estimated asset value was then reduced by
the Purchaser's estimate of the hypothetical costs to liquidate the portfolio
plus the Purchaser's estimated acquisition and transfer costs.
The Purchaser is making the Offer as an investment with a view towards
making a profit. Oak's intention is to acquire the Units at a Purchase Price
which will allow Oak to make a profit from its ownership of the Units.
CERTAIN RESTRICTIONS ON TRANSFER OF UNITS. The Limited Partnership
Agreement and the Depositary Agreement restrict transfers of the Units if,
among others things, such transfer, when added to the total of all other
transfers of Units during the twelve months preceding the proposed transfer,
would result in the transfer of 50 percent or more of the then-outstanding
Units.
6
The General Partners have the right to reduce such percentage of transfers of
Units during any period when the volume of transfer of Units makes it prudent
to do so. Consequently, sales of Units in the secondary market and in private
transactions during the twelve-month period following completion of the Offer
may be restricted, and requests for transfers of Units during such
twelve-month period may not be recognized. The Purchaser does not intend to
purchase Units to the extent such purchase would violate the transfer
restrictions set forth in the Limited Partnership Agreement.
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 Recognized Owners. 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 Recognized
Owners will not materially further restrict the Recognized Owners' ability to
find purchasers for their Units.
The successful purchase of more than 10 percent of the outstanding Units
may put the Purchaser in a position to exert a strong influence upon the General
Partners and the operation of the Partnership.
SECTION 8. FUTURE PLANS.
The Purchaser is acquiring the Units pursuant to the Offer for
investment purposes. Purchaser believes that there are a number of qualified
purchasers in today's real estate market that would purchase 100 percent of
the Partnership properties in a single transaction. In the current market,
Purchaser believes that the timing is appropriate for a sale of the
properties. Purchaser intends to actively encourage the General Partners to
pursue the sale of the Partnership's properties. If the General Partners do
not pursue these options, Purchaser is considering taking appropriate action
which may include attempting to assemble a group of 10 percent or more of the
Recognized Owners in order to call a meeting of the Recognized Owners to vote
to direct the General Partners to sell all of the Partnership's properties.
Although the Purchaser and its affiliates have no present plans to do
so, the Purchaser and its affiliates reserve the right, at any time following
the Expiration Date, to 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. By tendering Units pursuant to the Offer, Seller is giving up the
opportunity to participate in any potential future offers for the
Partnership's Units made by the Purchaser.
SECTION 9. PAST CONTACTS AND NEGOTIATIONS WITH THE GENERAL PARTNERS.
Prior to April 7, 1998, Manager of Purchaser telephoned one of the
General Partners of the Partnership and advised the General Partner that, as
a Recognized Owner, it had the right to the list of Recognized Owners
("List") and requested such List. Manager further requested that it be
permitted to review the appraisals of the properties owned by the
Partnership, based upon the right conferred upon all Recognized Owners by
provisions set forth in the Partnership Agreement. On April 7, 1998,
Xxxxxxxxx delivered a letter requesting a copy of the most current List of
the Recognized Owners and the right to inspect, examine, and review the most
current appraisals of each of the properties in the offices of the
Partnership on Tuesday, April 21, and Wednesday, April 22, 1998 during normal
business hours. This request was made to the General Partners pursuant to
Article 12, Paragraph 12.1 of the Partnership Agreement. Within a week of
sending the April 7, 1998 letter, one of the General Partners contacted
Xxxxxxxxx and indicated that Xxxxxxxxx's request would be discussed between
the two General Partners and that Purchaser would be informed of the action
they intended to take. On May 11, 1998, Xxxxxxxxx received a memorandum from
the Partnership which included a proposed standstill agreement pursuant to
which (if executed by the Purchaser) the Partnership would provide Purchaser
with the List of Recognized Owners. The standstill agreement proposed by the
General Partners was unacceptable to Purchaser and totally ignored the rights
of Purchaser as set forth in the Partnership Agreement. On May 18, 1998,
Xxxxxxxxx sent a letter to General Partners informing the General Partners
that the proposed terms set forth in the standstill agreement were completely
unacceptable and furthermore did not address Purchaser's request to review
the appraisals of the Partnership's properties. From May 18, 1997 through
July 1, 1998 there were approximately six written communications and several
telephone calls between the Purchaser and one of the General Partners, in an
endeavor to reach a satisfactory standstill agreement that would provide
Purchaser with the List. On or about July 1, 1998, such negotiations reached
an impasse and were terminated.
Concurrently with the filing of this Offer with the SEC, the Purchaser
intends to file an action in Chancery Court in the State of Delaware against
the Partnership and its General Partners to obtain the List.
7
SECTION 10. CERTAIN INFORMATION CONCERNING THE BUSINESS OF THE PARTNERSHIP AND
RELATED MATTERS.
The Partnership was organized on September 11, 1986 under the laws of
Delaware. The Partnership is engaged in the business of acquiring and
operating certain types of residential and commercial real estate, either
directly or through joint venture arrangements, and making participating
investments, construction loans, and conventional mortgage loans. The
Partnership's principal offices are located at 000 Xxxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxxxx 00000.
DISTRIBUTIONS. The Partnership disclosed in its 1997 10-K, that it made
distributions as follows:
Cash
Year Ending Distributions
December 31 Per Unit
----------- -------------
1995 $.72
1996 $.72
1997 $.72
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 1997
10-K. 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.
AETNA REAL ESTATE ASSOCIATES, L.P.
SELECTED FINANCIAL DATA
Income Statement Data Fiscal Year Fiscal Year Fiscal Year
(in thousands): Ended 12/31/97 Ended 12/31/96 Ended 12/31/95
-------------- -------------- --------------
Operating Income $6,793 $5,711 $594(a)
Net Income $6,793 $5,711 $571
Net Income per Unit $.53 $.44 $.04
Balance Sheet Data As of As of
(in thousands): 12/31/97 12/31/96
-------- --------
Total Assets (Historical Cost) $203,416 $205,750
Total Liabilities $3,707 $3,580
------------ ------------
Weighted Average of Units Outstanding 12,724,547 12,724,547
(a) Includes $5,002 operating income less $4,408 impairment of
investment in real estate
8
For information concerning the properties owned by the Partnership, please
refer to Schedule 2 attached hereto, which is incorporated herein by
reference.
The Partnership disclosed in its 1997 10-K that "two purported class action
lawsuits were filed in the Chancery Court of Delaware in New Castle County,
entitled Xxxxxxx v. Aetna Real Estate Associates, L.P., et al. and Estes v.
Aetna Real Estate Associates, L.P., et al."
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 pursuant to the Offer. 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 Partners, or a sale or other transfer of a material amount of assets.
SECTION 12. SOURCE AND AMOUNT OF FUNDS.
The Purchaser expects that approximately $31,250,000 (exclusive of fees
and expenses) will be required to purchase 2,500,000 Units (approximately
19.6 percent of the outstanding Units), if tendered. Purchaser has received
a commitment from one of its members to provide Oak with all the capital
necessary to purchase up to 2,500,000 Units in the Partnership. The member
making such commitment has an aggregate net worth substantially in excess of
the amount necessary to purchase the 2,500,000 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 July 31, 1998; and
(b) the Partnership will admit Purchaser as a Recognized
Owner, as that term is defined in the current Limited
Partnership Agreement, as to the Units being purchased.
Furthermore, the Purchaser will not be required to accept for payment or
pay for any Units tendered if, on or after the
9
date of the Offer and before the Expiration Date, Purchaser a preliminary or
permanent injunction or other order of any federal or state court, government
or governmental authority or agency shall have been issued and shall remain
in effect which (i) makes illegal, delays or otherwise directly or indirectly
restrains or prohibits the making of the Offer or the acceptance for payment
of any Units by the Purchasers, (ii) requires divestiture by the Purchasers
of any Units, (iv) causes any material diminution of the benefits to be
derived by the Purchasers as a result of the transactions contemplated by the
Offer, or (v) might materially adversely affect the business, properties,
assets, liabilities, financial condition, operations, results of operations
or prospects of the Purchasers or the Partnership.
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.
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.
10
SECTION 16. MISCELLANEOUS.
THE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON
BEHALF OF) RECOGNIZED OWNERS 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.
OAK INVESTORS, LLC
0000 XXXXX XXXXXX XXXXX, XXXXX 000, XXX XXXXX, XX 00000
(000) 000-0000
11
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 have a background in the capital markets, real estate
securities, and real estate markets. Commencing in 1996, AC and its
affiliates have been in the business of making opportunistic investments,
which include a number of tender offers on public and private real estate
limited partnerships.
S-1
SCHEDULE 2
PROPERTIES OWNED BY THE PARTNERSHIP
The following Schedule of Properties owned by the Partnership was extracted from
the 1997 10-K:
Name Location Type Ownership
---- -------- ---- ---------
Cross Pointe Center Centerville, Ohio Retail / Shopping Center 100%
Village Square Hazelwood, Missouri Retail / Shopping Center 100%
Gateway Square Hinsdale, Illinois Special Retail Center 100%
Oakland Pointe Shopping Center Pontiac, Michigan Retail / Shopping Center 000%
Xxxxxx Xxxxxx Xxxxx Xxxxxxxxxx, Xxxxxxxxxx Retail / Shopping Center 100%
Three Riverside Drive Andover, Massachusetts Office/R&D 100%
115 and 000 Xxxxxxxx Xxxx Xxxxxxxxxxx, Mass Office/R&D/Warehouse 100%
Westgate Distribution Center Corona, California Warehouse/Distribution 100%
Marina Bay Industrial Park Richmond, California Industrial park (1)
Town Center Business Park Santa Fe Springs, CA Business park (2)
Lincoln Square Apartments Arlington Heights, ILL Apartment complex 100%
Summit Village Rosslyn, Virginia Apartment complex 100%
Windmont Apartments DeKalb County, Georgia Apartment complex 100%
(1) the Partnership owns a controlling general partnership interest in a
limited partnership that owns the property.
(2) the Partnership owns a controlling interest in a general partnership which
owns and operates the property
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-2
