Offer to Purchase for Cash
Up to 11,000 Class B Units of Limited Partnership Interest
in
MULTI-BENEFIT REALTY FUND '87-1,
a California limited partnership
for
$38 Net Per Class B Unit
by
XXXXXX RIVER PROPERTIES, L.L.C.
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THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK TIME, ON OCTOBER 21,
1998, UNLESS THE OFFER IS EXTENDED.
-------------------------------------------------------------------------------
IMPORTANT
Xxxxxx River Properties, L.L.C., a Delaware limited liability company
(the "Purchaser"), is offering to purchase up to 11,000 of the outstanding
Class B Units of limited partnership interest ("Class B Units") in
Multi-Benefit Realty Fund '87-1, a California limited partnership (the
"Partnership"), at a purchase price of $38 per Class B Unit (the "Purchase
Price"), net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the
related Assignment of Partnership Interest (which, together with any
supplements or amendments, collectively constitute the "Offer"). The Purchase
Price is subject to adjustment under certain circumstances, as described
herein. Holders of Class B Units (each, a "Limited Partner") who tender their
Class B Units in response to the Offer will not be obligated to pay any
commissions or partnership transfer fees. The Purchaser is an affiliate of
ConCap Equities, Inc., which is the general partner of the Partnership (the
"General Partner").
Limited Partners are urged to consider the following factors:
o The Purchaser and the General Partner are both affiliates of
and controlled by Insignia Properties Trust ("IPT"), which is
controlled by Insignia Financial Group, Inc. ("Insignia").
IPT, through its operating partnership Insignia Properties,
L.P. ("IPLP"), currently owns 14,032 Class B Units (including
13,822 Class B Units, which were originally acquired by an
affiliate of the General Partner and IPT at a purchase price
of $25 per Class B Unit, pursuant to a tender offer commenced
in December 1997).
o The net asset value per Class B Unit most recently estimated
by an affiliate of the General Partner was $68 as of June 30,
1998, and the net liquidation value per Class B Unit (the
"Estimated Liquidation Value") estimated by the Purchaser
(which is an affiliate of the General Partner) in connection
with the Offer is $65.84. The Purchaser does not believe,
however, that either the net asset value estimate by the
General Partner's affiliate or the Estimated Liquidation
Value represents a fair estimate of the market value of a
Class B Unit, primarily due to the fact that such estimates
do not take into account timing considerations, market
uncertainties and legal and other expenses that would be
incurred in connection with a liquidation of the Partnership.
See Section 13. Accordingly, the Purchaser does not believe
that such estimates should be viewed as representative of the
amount a Limited Partner can realistically expect to obtain
on a sale of a Class B Unit in the near term.
o The Purchaser will have the right to vote all Class B Units
acquired pursuant to the Offer. Accordingly, if the Purchaser
(which is an affiliate of the General Partner) is successful
in acquiring a significant number of Class B Units, IPT will
be able to significantly influence the outcome of all voting
decisions with respect to the Partnership, including
decisions regarding liquidation, amendments to the Limited
Partnership Agreement, removal and replacement of the General
Partner and mergers, consolidations and other extraordinary
transactions. Because IPT already owns (through IPLP)
approximately 19% of the outstanding Class B Units, however,
it will be able to significantly influence the outcome of all
voting decisions with respect to the Partnership regardless
of the number of Class B Units the Purchaser acquires
pursuant to the Offer.
o The Purchaser (which is an affiliate of the General Partner)
is making the Offer with a view to making a profit.
Accordingly, there is a conflict between the desire of the
Purchaser (which is an affiliate of the General Partner) to
purchase Class B Units at a low price and the desire of the
Limited Partners to sell their Class B Units at a high price.
THE OFFER IS NOT CONDITIONED ON FINANCING OR UPON ANY MINIMUM
AGGREGATE NUMBER OF CLASS B UNITS BEING TENDERED.
----------------------------------------
Any Limited Partner desiring to tender Class B Units should complete
and sign the Assignment of Partnership Interest in accordance with the
Instructions to the Assignment of Partnership Interest and mail or deliver the
signed Assignment of Partnership Interest to the Depositary. A Limited Partner
may tender any or all of the Class B Units owned by that Limited Partner.
Tenders of fractional Class B Units will not be permitted, except by a Limited
Partner who is tendering all of the Class B Units owned by that Limited
Partner.
Questions and requests for assistance or for additional copies of this
Offer to Purchase and the Assignment of Partnership Interest may be directed to
the Information Agent at the address and telephone numbers set forth below and
on the back cover of this Offer to Purchase. No soliciting dealer fees or other
payments to brokers for tenders are being paid by the Purchaser (which is an
affiliate of the General Partner).
----------------------------------------
For More Information or for Further Assistance Please Call:
Beacon Hill Partners, Inc.
at
(000) 000-0000
September 23, 1998
TABLE OF CONTENTS
PAGE
INTRODUCTION.................................................................................................... 1
The Purchaser; Affiliation with the General Partner......................................................... 1
Classes of Units............................................................................................ 1
Some Factors to Be Considered by Limited Partners........................................................... 1
Reasons for and Effects of the Offer........................................................................ 3
Certain Tax Considerations.................................................................................. 4
Originally Anticipated Term of the Partnership; General Policy Regarding Sales
and Refinancings of Partnership Properties; Alternatives........................................... 4
Conditions.................................................................................................. 4
Distributions............................................................................................... 4
Outstanding Class B Units................................................................................... 4
THE OFFER....................................................................................................... 5
Section 1. Terms of the Offer; Expiration Date; Proration.................................................. 5
Section 2. Acceptance for Payment and Payment for Class B Units............................................ 6
Section 3. Procedure for Tendering Class B Units........................................................... 6
Valid Tender............................................................................................ 6
Signature Requirements.................................................................................. 7
Delivery of Assignment of Partnership Interest.......................................................... 7
Appointment as Proxy; Power of Attorney................................................................. 7
Assignment of Interest in Future Distributions.......................................................... 8
Determination of Validity; Rejection of Class B Units; Waiver of Defects; No Obligation
to Give Notice of Defects.......................................................................... 8
Backup Federal Income Tax Withholding................................................................... 8
FIRPTA Withholding...................................................................................... 8
Binding Obligation...................................................................................... 8
Section 4. Withdrawal Rights............................................................................... 8
Section 5. Extension of Tender Period; Termination; Amendment.............................................. 9
Section 6. Certain Federal Income Tax Matters.............................................................. 10
General................................................................................................. 10
Gain or Loss Generally.................................................................................. 10
Unrealized Receivables and Certain Inventory............................................................ 11
Passive Activity Loss Limitation........................................................................ 11
Partnership Termination................................................................................. 11
Backup Withholding and FIRPTA Withholding............................................................... 12
Section 7. Effects of the Offer............................................................................ 12
Limitations on Resales.................................................................................. 12
Effect on Trading Market; Registration Under Section 12(g) of the Exchange Act.......................... 12
Control of Limited Partner Voting Decisions by Purchaser; Effect of Relationship
with General Partner............................................................................... 13
Section 8. Future Plans of Insignia, IPT and the Purchaser................................................. 13
Section 9. Certain Information Concerning the Partnership.................................................. 14
General................................................................................................. 14
Class A Units and Class B Units......................................................................... 14
Originally Anticipated Term of Partnership; Alternatives................................................ 14
General Policy Regarding Sales and Refinancings of Partnership Properties............................... 15
Selected Financial and Property-Related Data............................................................ 15
Cash Distributions History.............................................................................. 17
Operating Budgets of the Partnership.................................................................... 17
Section 10. Conflicts of Interest and Transactions with Affiliates......................................... 17
i
Conflicts of Interest with Respect to the Offer......................................................... 17
Voting by the Purchaser................................................................................. 18
Financing Arrangements.................................................................................. 18
Transactions with Affiliates............................................................................ 18
Section 11. Certain Information Concerning the Purchaser, IPLP, IPT and Insignia........................... 19
The Purchaser........................................................................................... 19
IPT and IPLP............................................................................................ 19
Insignia................................................................................................ 21
Section 12. Source of Funds................................................................................ 22
Section 13. Background of the Offer........................................................................ 23
Affiliation With the General Partner.................................................................... 23
Previous Tender Offer................................................................................... 24
Determination of Purchase Price......................................................................... 24
Litigation.............................................................................................. 29
Section 14. Conditions of the Offer........................................................................ 29
Section 15. Certain Legal Matters.......................................................................... 31
General................................................................................................. 31
Antitrust............................................................................................... 31
Margin Requirements..................................................................................... 31
Section 16. Fees and Expenses.............................................................................. 31
Section 17. Miscellaneous.................................................................................. 31
SCHEDULE I - Information Regarding the Managers of the Purchaser......................................S-1
SCHEDULE II - Information Regarding the Trustees and Executive Officers of IPT.........................S-2
SCHEDULE III - Information Regarding the Directors and Executive Officers of Insignia...................S-4
SCHEDULE IV - IPT Partnerships.........................................................................S-7
ii
TO THE LIMITED PARTNERS HOLDING CLASS B UNITS OF
MULTI-BENEFIT REALTY FUND '87-1
INTRODUCTION
Xxxxxx River Properties, L.L.C. (the "Purchaser"), which is a Delaware
limited liability company and an affiliate of the General Partner (as defined
below), hereby offers to purchase up to 11,000 of the outstanding Class B Units
of limited partnership interest ("Class B Units"), representing approximately
15% of the Class B Units outstanding, in Multi-Benefit Realty Fund '87-1, a
California limited partnership (the "Partnership"), at a purchase price of $38
per Class B Unit (the "Purchase Price"), net to the seller in cash, without
interest, upon the terms and subject to the conditions set forth in this Offer
to Purchase and in the related Assignment of Partnership Interest (which,
together with any supplements or amendments, collectively constitute the
"Offer"). The Offer is not conditioned on any aggregate minimum number of Class
B Units being tendered. A Limited Partner may tender any or all of the Class B
Units owned by that Limited Partner. Tenders of fractional Class B Units will
not be permitted, except by a Limited Partner who is tendering all of the Class
B Units owned by that Limited Partner. The Purchaser (which is an affiliate of
the General Partner) will pay all charges and expenses of Beacon Hill Partners,
Inc., who will serve as the Purchaser's information agent for the Offer (the
"Information Agent"), and Xxxxxx Trust Company of New York, who will act as
depositary for the Offer (the "Depositary").
The Purchaser; Affiliation with the General Partner. ConCap Equities,
Inc., which is the general partner of the Partnership (the "General Partner"),
is a direct, wholly-owned subsidiary of Insignia Properties Trust, a Maryland
real estate investment trust ("IPT"). The Purchaser is a recently formed,
wholly-owned subsidiary of Insignia Properties, L.P., a Delaware limited
partnership ("IPLP"), which is the operating partnership of IPT. IPT is the
sole general partner of IPLP (owning approximately 70% of the total equity
interests in IPLP), and Insignia Financial Group, Inc., a Delaware corporation
("Insignia"), is the sole limited partner of IPLP (owning approximately 30% of
the total equity interests in IPLP). Insignia and its affiliates also own
approximately 57% of the outstanding common shares of IPT. For more than the
past three years, Insignia Residential Group, L.P. ("IRG"), which is an
affiliate of IPT and the Purchaser, has provided property management services
to the Partnership, and Insignia (directly or through affiliates) has performed
asset management, partnership administration and investor relations services
for the Partnership. By reason of these relationships, the General Partner has
conflicts of interest in considering the Offer. The General Partner has
indicated in a Statement on Schedule 14D-9 (the "Schedule 14D-9") filed with
the Securities and Exchange Commission (the "Commission") that it is remaining
neutral and making no recommendation as to whether Limited Partners should
tender their Class B Units in response to the Offer. LIMITED PARTNERS ARE URGED
TO READ THIS OFFER TO PURCHASE AND THE RELATED MATERIALS AND THE SCHEDULE 14D-9
CAREFULLY AND IN THEIR ENTIRETY BEFORE DECIDING WHETHER TO TENDER THEIR CLASS B
UNITS. See Sections 10 and 13.
Classes of Units. Upon the Partnership's formation, the Partnership's
Limited Partnership Agreement (the "Limited Partnership Agreement") established
two classes of units, the Class B Units and Class A units of limited
partnership interest ("Class A Units," and together with the Class B Units, the
"Units"), each of which is entitled to different rights and priorities in
respect of allocations and distributions by the Partnership to Limited
Partners. The Limited Partnership Agreement entitles holders of Class A Units
to an annual, non-compounded cumulative return (currently 10%) on their
invested capital in the Partnership (the "Priority Return"). See Section 9 for
a discussion of the allocations and priorities of cash distributions between
Class A Units and Class B Units.
Some Factors to Be Considered by Limited Partners. In considering the
Offer, Limited Partners may wish to consider the following factors:
Potential Adverse Aspects of the Offer for Limited Partners
o The Purchaser and the General Partner are affiliates of and
controlled by IPT, which is controlled by Insignia. See
Sections 11 and 13. The General Partner has conflicts of
interest in considering the Offer, including (i) as a result
of the fact that a sale or liquidation of the Partnership's
assets would result in a decrease or elimination of the fees
paid to the General Partner and/or its affiliates and (ii)
the fact that as a consequence of the Purchaser's ownership
of Class B Units,
the Purchaser (which is an affiliate of the General Partner)
may have incentives to seek to maximize the value of its
ownership of Class B Units, which in turn may result in a
conflict for the General Partner in attempting to reconcile
the interests of the Purchaser (which is an affiliate of the
General Partner) with the interests of the other Limited
Partners. See Section 10.
o The net asset value per Class B Unit most recently estimated
by an affiliate of the General Partner was $68 as of June 30,
1998, and the net liquidation value per Class B Unit (the
"Estimated Liquidation Value") estimated by the Purchaser
(which is an affiliate of the General Partner) in connection
with the Offer is $65.84. See Section 13 for a discussion of
why the Purchaser (which is an affiliate of the General
Partner) believes that such estimates are not necessarily
indicative of the fair market value of a Class B Unit. THE
PURCHASER (WHICH IS AN AFFILIATE OF THE GENERAL PARTNER)
MAKES NO REPRESENTATION AND EXPRESSES NO OPINION AS TO THE
FAIRNESS OR ADEQUACY OF THE PURCHASE PRICE.
o As with any rational investment decision, the Purchaser
(which is an affiliate of the General Partner) is making the
Offer with a view to making a profit. Accordingly, there is a
conflict between the desire of the Purchaser (which is an
affiliate of the General Partner) to purchase Class B Units
at a low price and the desire of the Limited Partners to sell
their Class B Units at a high price.
o If the Purchaser is successful in acquiring a significant
number of Class B Units pursuant to the Offer, IPT (which is
an affiliate of the General Partner) will have the right to
vote those Class B Units and thereby significantly influence
the outcome of all voting decisions with respect to the
Partnership, including decisions concerning liquidation,
amendments to the Limited Partnership Agreement, removal and
replacement of the General Partner and mergers,
consolidations and other extraordinary transactions. Because
IPT already owns (through IPLP) approximately 19% of the
outstanding Class B Units, however, it will be able to
significantly influence the outcome of all voting decisions
with respect to the Partnership regardless of the number of
Class B Units the Purchaser acquires pursuant to the Offer.
This means that, (i) non-tendering Limited Partners could be
prevented from taking action they desire but that IPT (which
is an affiliate of the General Partner) opposes and (ii) IPT
(which is an affiliate of the General Partner) may be able to
take action desired by IPT but opposed by the non-tendering
Limited Partners.
Potentially Beneficial Aspects of the Offer for Limited Partners
o Although there are some limited resale mechanisms available
to Limited Partners wishing to sell their Class B Units,
there is no formal trading market for Class B Units. At
present, Limited Partners may seek to negotiate private sales
or sales through a trading system such as the American
Partnership Board, which publishes sell offers by Limited
Partners in respect of Class B Units. Accordingly, THE OFFER
AFFORDS LIMITED PARTNERS AN OPPORTUNITY TO DISPOSE OF THEIR
CLASS B UNITS FOR CASH WHICH OTHERWISE MIGHT NOT BE AVAILABLE
TO THEM.
o THE OFFER MAY BE ATTRACTIVE TO LIMITED PARTNERS WHO HAVE AN
IMMEDIATE NEED FOR CASH. Although, the Purchase Price is
approximately 57% less than the highest reported secondary
market sales price of any Class B Unit during the past six
months (based on published information and information
provided by the General Partner), the General Partner has
information that indicates that the highest reported sales
price represented a single, isolated transaction for a
minimal number of Class B Units and such sales price was
materially higher than the range of sales prices for all
other transactions during the six-month period. In addition,
the General Partner has information that indicates that an
affiliate of the purchaser in that isolated transaction
recently commenced a tender offer for up to 4.9% of the
outstanding Class B Units at a lower price than it paid in
that isolated transaction. Excluding that isolated
transaction, the Purchase Price is approximately 5% less than
the next highest sales price for other transactions during
the six-month period. See Section 13. Finally, reported
secondary market sales prices do not take
2
into account commissions and transfer fees typically payable
by a Limited Partner in connection with a secondary market
sale. Therefore, the actual proceeds received by a Limited
Partner who sells Class B Units in the secondary market are
typically significantly less than the reported sales prices.
o LIMITED PARTNERS WHO SELL CLASS B UNITS PURSUANT TO THE OFFER
WILL NOT BE CHARGED ANY SALES COMMISSIONS (WHICH GENERALLY
RANGE FROM 3% TO 10% OF THE SALES PRICE) OR PARTNERSHIP
TRANSFER FEES (WHICH ARE TYPICALLY $100 PER TRANSFER). The
Purchaser will pay all transfer fees imposed by the
Partnership in connection with sales of Class B Units
pursuant to the Offer.
o Real estate markets in the United States generally have
recovered and experienced an upward trend since the end of
the last recession. That recovery and upward trend might
continue. On the other hand, real estate markets also may be
adversely affected by a variety of factors, including
possible fluctuations in interest rates, economic slowdowns
and overbuilding. Accordingly, ownership of Class B Units
continues to be a speculative investment. THE OFFER MAY
PROVIDE LIMITED PARTNERS WITH THE OPPORTUNITY TO LIQUIDATE
THEIR INTERESTS IN THE PARTNERSHIP AND REPLACE THEM WITH
INVESTMENTS THAT ARE LESS SPECULATIVE.
o The Offer may be attractive to Limited Partners who wish to
avoid in the future the expenses, delays and complications in
filing personal income tax returns which may be caused by
ownership of Class B Units. In addition, A LIMITED PARTNER
WHO SELLS 100% OF ITS CLASS B UNITS PURSUANT TO THE OFFER
WILL NO LONGER BE SUBJECT TO THE PASSIVE ACTIVITY LOSS
LIMITATION WITH RESPECT TO "SUSPENDED" LOSSES ATTRIBUTABLE TO
THOSE CLASS B UNITS AND, THEREFORE, WILL BE ABLE TO UTILIZE
FULLY ANY SUCH LOSSES.
o The Offer may be attractive to those Limited Partners who
have become disenchanted with real estate investments
generally, and in particular with the perceived illiquidity
of investments made through limited partnerships, because it
may afford an immediate opportunity for those Limited
Partners to liquidate their investments in the Partnership.
On the other hand, Limited Partners who tender their Class B
Units will be giving up the opportunity to participate in any
potential future benefits represented by the ownership of
those Class B Units, including, for example, the right to
participate in any future distributions of cash or property,
whether from operations, the proceeds of a sale or
refinancing of one or more of the Partnership's properties or
in connection with any future liquidation of the Partnership.
Instead, any such distributions of cash or property with
respect to Class B Units tendered in the Offer and purchased
by the Purchaser will be paid to the Purchaser.
The Purchaser (which is an affiliate of the General Partner) makes no
recommendation to any Limited Partner as to whether to tender or refrain from
tendering Class B Units and has been advised by the General Partner that the
General Partner also expects to make no recommendation. Each Limited Partner
must make its own decision, based on the Limited Partner's particular
circumstances, as to whether to tender Class B Units and, if so, how many Class
B Units to tender. Limited Partners should consult with their respective
advisors regarding the financial, tax, legal and other implications of
accepting the Offer. LIMITED PARTNERS ARE URGED TO READ THIS OFFER TO PURCHASE
AND THE RELATED MATERIALS CAREFULLY AND IN THEIR ENTIRETY BEFORE DECIDING
WHETHER TO TENDER THEIR CLASS B UNITS.
Reasons for and Effects of the Offer. The Purchaser's purpose in
making the Offer is to increase IPT's equity interest in the Partnership,
primarily for investment purposes and with a view to making a profit. Although
the number of Class B Units sought in the Offer will not give the Purchaser
(which is an affiliate of the General Partner) absolute control over the
Partnership, if the Purchaser (which is an affiliate of the General Partner) is
successful in acquiring all or a substantial number of the Class B Units it is
tendering for, it will be in a position to exercise significant influence over
the outcome of any vote by Limited Partners. Because IPT already owns (through
IPLP) approximately 19% of the outstanding Class B Units, however, it will be
able to significantly
3
influence the outcome of all voting decisions with respect to the Partnership
regardless of the number of Class B Units the Purchaser acquires pursuant to
the Offer. See Sections 8, 10 and 13.
Certain Tax Considerations. A sale by a Limited Partner pursuant to
the Offer will result in taxable gain (or loss) equal to the excess (deficit)
of the amount realized by the Limited Partner for the Class B Units sold over
(under) such Limited Partner's adjusted tax basis in those Class B Units, which
may be taxable as ordinary income or loss, capital gain or loss or gain from
real estate depreciation recapture. If a Limited Partner has suspended "passive
losses" from the Partnership or other passive activity investments, such
Limited Partner generally may deduct these losses up to the amount of any gain
from the sale. A sale pursuant to the Offer of all of a Limited Partner's Class
B Units will terminate his or her investment in the Partnership and, commencing
with the year following the year of sale, the Limited Partner will no longer
receive Partnership tax information or have to report the complicated tax
information currently required of Limited Partners. See Section 6.
Originally Anticipated Term of the Partnership; General Policy
Regarding Sales and Refinancings of Partnership Properties; Alternatives.
According to the Partnership's Prospectus dated December 10, 1986, the then
general partner (predecessor to the current General Partner) anticipated that
the Partnership would sell and/or refinance its properties five to eight years
after their acquisition, depending on the then current real estate and money
markets, economic climate and income tax consequences to the Limited Partners.
In general, the General Partner regularly evaluates the Partnership's
properties by considering various factors, such as the Partnership's financial
position and real estate and capital markets conditions. The General Partner
monitors each property's specific locale and sub-market conditions evaluating
current trends, competition, new construction and economic changes. The General
Partner oversees each asset's operating performance and continuously evaluates
the physical improvement requirements. In addition, the financing structure for
each property, tax implications and the investment climate are all considered.
Any of these factors, and possibly others, could potentially contribute to any
decision by the General Partner to sell, refinance, upgrade with capital
improvements or hold a particular Partnership property. Based on the foregoing
considerations, however, the General Partner has determined that it is not in
the best interest of Limited Partners to sell or refinance any of the
Partnership's properties at the present time. Under the Limited Partnership
Agreement the term of the Partnership will continue until December 31, 2036,
unless sooner terminated as provided in the Limited Partnership Agreement or by
law. Limited Partners could, as an alternative to tendering their Class B
Units, take a variety of possible actions, including voting to liquidate the
Partnership or causing the Partnership to merge with another entity or engage
in a "roll-up" or similar transaction.
Conditions. The Offer is not conditioned on any aggregate minimum
number of Class B Units being tendered. Certain other conditions do apply,
however. See Section 14.
Distributions. In total, original investors in the Partnership who
purchased Class B Units have not received any cash distributions in respect of
their original $100 investment made in 1983. See Section 9. However, the
Partnership is currently generating positive cash flow from operations, and the
Purchaser (which is an affiliate of the General Partner) believes that the
Partnership will continue to generate positive cash flow from operations. The
potential for future distributions was considered by the Purchaser (which is an
affiliate of the General Partner) when establishing the Purchase Price. Limited
Partners who tender their Class B Units in response to the Offer will retain
any distributions made through September 23, 1998, and will be entitled to
receive and retain any subsequent distributions made by the Partnership prior
to the date on which the Purchaser pays for tendered Class B Units pursuant to
the Offer, although any such subsequent distribution will result in a reduction
of the Purchase Price. See Section 1. However, tendering Limited Partners will
not be entitled to receive or retain any distributions in respect of tendered
Class B Units which are made on or after the date on which the Purchaser pays
for such Class B Units pursuant to the Offer, regardless of the fact that the
record date (as opposed to the payment date) for any such distribution may be a
date prior to the date of purchase. See Section 3.
Outstanding Class B Units. According to information supplied by the
Partnership, as of September 1, 1998 there were 75,152 Class B Units issued and
outstanding, which were held of record by 819 Limited Partners. IPLP currently
owns 14,032 (representing approximately 19%) of the outstanding Class B Units.
4
THE OFFER
SECTION 1. TERMS OF THE OFFER; EXPIRATION DATE; PRORATION. Upon the
terms and subject to the conditions of the Offer, the Purchaser (which is an
affiliate of the General Partner) will accept for payment (and thereby
purchase) up to 11,000 Class B Units that are validly tendered on or prior to
the Expiration Date and not withdrawn in accordance with the procedures set
forth in Section 4. For purposes of the Offer, the term "Expiration Date" shall
mean 12:00 midnight, New York City time, on October 21, 1998, unless the
Purchaser (which is an affiliate of the General Partner) in its sole discretion
shall have extended the period of time for which the Offer is open, in which
event the term "Expiration Date" shall mean the latest time and date on which
the Offer, as extended by the Purchaser, shall expire. See Section 5 for a
description of the Purchaser's right to extend the period of time during which
the Offer is open and to amend or terminate the Offer.
THE PURCHASE PRICE WILL AUTOMATICALLY BE REDUCED BY THE AGGREGATE
AMOUNT OF DISTRIBUTIONS PER CLASS B UNIT, IF ANY, MADE BY THE PARTNERSHIP TO
LIMITED PARTNERS ON OR AFTER OCTOBER 21, 1998 AND PRIOR TO THE DATE ON WHICH
THE PURCHASER PAYS FOR CLASS B UNITS PURCHASED PURSUANT TO THE OFFER.
If, prior to the Expiration Date, the Purchaser (which is an affiliate
of the General Partner) increases the consideration offered to Limited Partners
pursuant to the Offer, the increased consideration will be paid for all Class B
Units accepted for payment pursuant to the Offer, regardless of whether the
Class B Units were tendered prior to the increase in the consideration offered.
If more than 11,000 Class B Units are validly tendered prior to the
Expiration Date and not properly withdrawn prior to the Expiration Date in
accordance with the procedures specified in Section 4, the Purchaser (which is
an affiliate of the General Partner) will, upon the terms and subject to the
conditions of the Offer, accept for payment and pay for an aggregate of 11,000
of the Class B Units so tendered, pro rata according to the number of Class B
Units validly tendered by each Limited Partner and not properly withdrawn on or
prior to the Expiration Date, with appropriate adjustments to avoid purchases
of fractional Class B Units. If the number of Class B Units validly tendered
and not properly withdrawn on or prior to the Expiration Date is less than or
equal to 11,000 Class B Units, the Purchaser (which is an affiliate of the
General Partner) will purchase all Class B Units so tendered and not withdrawn,
upon the terms and subject to the conditions of the Offer.
If proration of tendered Class B Units is required, then, subject to
the Purchaser's obligation under Rule 14e-1(c) under the Securities Exchange
Act of 1934 (the "Exchange Act") to pay Limited Partners the Purchase Price in
respect of Class B Units tendered or return those Class B Units promptly after
the termination or withdrawal of the Offer, the Purchaser (which is an
affiliate of the General Partner) does not intend to pay for any Class B Units
accepted for payment pursuant to the Offer until the final proration results
are known. NOTWITHSTANDING ANY SUCH DELAY IN PAYMENT, NO INTEREST WILL BE PAID
ON THE PURCHASE PRICE.
The Offer is conditioned on satisfaction of certain conditions. See
Section 14, which sets forth in full the conditions of the Offer. The Purchaser
(which is an affiliate of the General Partner) reserves the right (but in no
event shall be obligated), in its sole discretion, to waive any or all of those
conditions. If, on or prior to the Expiration Date, any or all of the
conditions have not been satisfied or waived, the Purchaser reserves the right
to (i) decline to purchase any of the Class B Units tendered and terminate the
Offer, (ii) waive all of the unsatisfied conditions and, subject to complying
with applicable rules and regulations of the Commission, purchase all Class B
Units validly tendered, (iii) extend the Offer and, subject to the right of
Limited Partners to withdraw Class B Units until the Expiration Date, retain
the Class B Units that have been tendered during the period or periods for
which the Offer is extended, and/or (iv) amend the Offer.
This Offer to Purchase and the related Assignment of Partnership
Interest are being mailed by the Purchaser (which is an affiliate of the
General Partner) to the persons shown by the Partnership's records to have been
Limited Partners or (in the case of Class B Units owned of record by Individual
Retirement Accounts ("IRAs") and qualified plans) beneficial owners of Class B
Units as of September 1, 1998.
5
SECTION 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR CLASS B UNITS. Upon
the terms and subject to the conditions of the Offer, the Purchaser (which is
an affiliate of the General Partner) will accept for payment (and thereby
purchase) and will pay for all Class B Units validly tendered and not withdrawn
in accordance with the procedures specified in Section 4, as promptly as
practicable following the Expiration Date. A tendering beneficial owner of
Class B Units whose Class B Units are owned of record by an IRA or other
qualified plan will not receive direct payment of the Purchase Price; rather,
payment will be made to the custodian of such account or plan. In all cases,
payment for Class B Units purchased pursuant to the Offer will be made only
after timely receipt by the Depositary of a properly completed and duly
executed Assignment of Partnership Interest and any other documents required by
the Assignment of Partnership Interest. See Section 3. UNDER NO CIRCUMSTANCES
WILL INTEREST BE PAID ON THE PURCHASE PRICE BY REASON OF ANY DELAY IN MAKING
SUCH PAYMENT.
For purposes of the Offer, the Purchaser (which is an affiliate of the
General Partner) will be deemed to have accepted for payment pursuant to the
Offer, and thereby purchased, validly tendered Class B Units if, as and when
the Purchaser (which is an affiliate of the General Partner) gives verbal or
written notice to the Depositary of the Purchaser's acceptance of those Class B
Units for payment pursuant to the Offer. Upon the terms and subject to the
conditions of the Offer, payment for Class B Units accepted for payment
pursuant to the Offer will be made by deposit of the Purchase Price with the
Depositary, which will act as agent for tendering Limited Partners for the
purpose of receiving payments from the Purchaser and transmitting those
payments to Limited Partners whose Class B Units have been accepted for
payment.
If any tendered Class B Units are not purchased for any reason, the
Assignment of Partnership Interest with respect to such Class B Units will be
destroyed by the Purchaser (which is an affiliate of the General Partner). If
for any reason acceptance for payment of, or payment for, any Class B Units
tendered pursuant to the Offer is delayed or the Purchaser is unable to accept
for payment, purchase or pay for Class B Units tendered pursuant to the Offer,
then, without prejudice to the Purchaser's rights under Section 14, the
Depositary may, nevertheless, on behalf of the Purchaser (which is an affiliate
of the General Partner) retain tendered Class B Units, and those Class B Units
may not be withdrawn except to the extent that the tendering Limited Partners
are entitled to withdrawal rights as described in Section 4; subject, however,
to the Purchaser's obligation under Rule 14e-1(c) under the Exchange Act to pay
Limited Partners the Purchase Price in respect of Class B Units tendered or
return those Class B Units promptly after termination or withdrawal of the
Offer.
The Purchaser (which is an affiliate of the General Partner) reserves
the right to transfer or assign, in whole or from time to time in part, to one
or more of the Purchaser's affiliates, the right to purchase Class B Units
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve the Purchaser of its obligations under the Offer or prejudice the
rights of tendering Limited Partners to receive payment for Class B Units
validly tendered and accepted for payment pursuant to the Offer.
SECTION 3. PROCEDURE FOR TENDERING CLASS B UNITS.
Valid Tender. In order for a tendering Limited Partner to participate
in the Offer, its Class B Units must be validly tendered and not withdrawn on
or prior to the Expiration Date. To validly tender Class B Units, a properly
completed and duly executed Assignment of Partnership Interest and any other
documents required by the Assignment of Partnership Interest must be received
by the Depositary, at its address set forth on the back cover of this Offer to
Purchase, on or prior to the Expiration Date. A Limited Partner may tender any
or all of the Class B Units owned by that Limited Partner. Tenders of
fractional Class B Units will not be permitted, except by a Limited Partner who
is tendering all of the Class B Units owned by that Limited Partner. No
alternative, conditional or contingent tenders will be accepted.
6
Signature Requirements. If the Assignment of Partnership Interest is
signed by the registered holder of the Class B Units and payment is to be made
directly to that holder, then no signature guarantee is required on the
Assignment of Partnership Interest. Similarly, if the Class B Units are
tendered for the account of a member firm of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc. or a
commercial bank, savings bank, credit union, savings and loan association or
trust company having an office, branch or agency in the United States (each an
"Eligible Institution"), no signature guarantee is required on the Assignment
of Partnership Interest. HOWEVER, IN ALL OTHER CASES, ALL SIGNATURES ON THE
ASSIGNMENT OF PARTNERSHIP INTEREST MUST BE GUARANTEED BY AN ELIGIBLE
INSTITUTION. Please contact the Information Agent for assistance in obtaining a
signature guarantee.
Delivery of Assignment of Partnership Interest. The method of delivery
of the Assignment of Partnership Interest and all other required documents is
at the option and risk of the tendering Limited Partner, and delivery will be
deemed made only when actually received by the Depositary. In all cases,
sufficient time should be allowed to assure timely delivery.
Appointment as Proxy; Power of Attorney. By executing an Assignment of
Partnership Interest, a tendering Limited Partner irrevocably appoints the
Purchaser (which is an affiliate of the General Partner), and its managers and
designees as the Limited Partner's proxies, in the manner set forth in the
Assignment of Partnership Interest, each with full power of substitution, to
the full extent of the Limited Partner's rights with respect to the Class B
Units tendered by the Limited Partner and accepted for payment by the Purchaser
(which is an affiliate of the General Partner). Each such proxy shall be
considered coupled with an interest in the tendered Class B Units. Such
appointment will be effective when, and only to the extent that, the Purchaser
(which is an affiliate of the General Partner) accepts the tendered Class B
Units for payment. Upon such acceptance for payment, all prior proxies given by
the Limited Partner with respect to the Class B Units will, without further
action, be revoked, and no subsequent proxies may be given (and if given will
not be effective). The Purchaser (which is an affiliate of the General Partner)
and its managers and designees will, as to those Class B Units, be empowered to
exercise all voting and other rights of the Limited Partner as they in their
sole discretion may deem proper at any meeting of Limited Partners, by written
consent or otherwise. The Purchaser (which is an affiliate of the General
Partner) reserves the right to require that, in order for Class B Units to be
deemed validly tendered, immediately upon the Purchaser's acceptance for
payment of the Class B Units, the Purchaser must be able to exercise full
voting rights with respect to the Class B Units, including voting at any
meeting of Limited Partners then scheduled or acting by written consent without
a meeting.
By executing an Assignment of Partnership Interest, a tendering
Limited Partner also irrevocably constitutes and appoints the Purchaser and its
managers and designees as the Limited Partner's attorneys-in-fact, each with
full power of substitution, to the full extent of the Limited Partner's rights
with respect to the Class B Units tendered by the Limited Partner and accepted
for payment by the Purchaser. Such appointment will be effective when, and only
to the extent that, the Purchaser accepts the tendered Class B Units for
payment. The tendering Limited Partner agrees not to exercise any rights
pertaining to the tendered Class B Units without the prior consent of the
Purchaser. Upon such acceptance for payment, all prior powers of attorney
granted by the Limited Partner with respect to such Class B Units will, without
further action, be revoked, and no subsequent powers of attorney may be granted
(and if granted will not be effective). Pursuant to such appointment as
attorneys-in-fact, the Purchaser and its managers and designees each will have
the power, among other things, (i) to transfer ownership of such Class B Units
on the Partnership books maintained by the General Partner (and execute and
deliver any accompanying evidences of transfer and authenticity any of them may
deem necessary or appropriate in connection therewith), (ii) upon receipt by
the Depositary (as the tendering Limited Partner's agent) of the Purchase
Price, to become a substituted Limited Partner, to receive any and all
distributions made by the Partnership on or after the date on which the
Purchaser purchases such Class B Units, and to receive all benefits and
otherwise exercise all rights of beneficial ownership of such Class B Units in
accordance with the terms of the Offer, (iii) to execute and deliver to the
General Partner a change of address form instructing the General Partner to
send any and all future distributions to which the Purchaser is entitled
pursuant to the terms of the Offer in respect of tendered Class B Units to the
address specified in such form, and (iv) to endorse any check payable to or
upon the order of such Limited Partner representing a distribution to which the
Purchaser is entitled pursuant to the terms of the Offer, in each case in the
name and on behalf of the tendering Limited Partner.
7
Assignment of Interest in Future Distributions. By executing an
Assignment of Partnership Interest, a tendering Limited Partner irrevocably
assigns to the Purchaser (which is an affiliate of the General Partner) and its
assigns all of the right, title and interest of the Limited Partner in and to
any and all distributions made by the Partnership on or after the date on which
the Purchaser purchases such Class B Units, in respect of the Class B Units
tendered by such Limited Partner and accepted for payment by the Purchaser,
regardless of the fact that the record date for any such distribution may be a
date prior to the date of such purchase. The Purchaser will seek to be admitted
to the Partnership as a substituted Limited Partner upon consummation of the
Offer.
Determination of Validity; Rejection of Class B Units; Waiver of
Defects; No Obligation to Give Notice of Defects. All questions as to the
validity, form, eligibility (including time of receipt) and acceptance for
payment of any tender of Class B Units pursuant to the Offer will be determined
by the Purchaser (which is an affiliate of the General Partner), in its sole
discretion, which determination shall be final and binding. The Purchaser
(which is an affiliate of the General Partner) reserves the absolute right to
reject any or all tenders of any particular Class B Units determined by it not
to be in proper form or if the acceptance of or payment for those Class B Units
may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser
(which is an affiliate of the General Partner) also reserves the absolute right
to waive or amend any of the conditions of the Offer that it is legally
permitted to waive as to the tender of any particular Class B Units and to
waive any defect or irregularity in any tender with respect to any particular
Class B Units of any particular Limited Partner. The Purchaser's interpretation
of the terms and conditions of the Offer (including the Assignment of
Partnership Interest and the Instructions thereto) will be final and binding.
No tender of Class B Units will be deemed to have been validly made until all
defects and irregularities have been cured or waived. None of the Purchaser
(which is an affiliate of the General Partner), the Information Agent, the
Depositary or any other person will be under any duty to give notification of
any defects or irregularities in the tender of any Class B Units or will incur
any liability for failure to give any such notification.
Backup Federal Income Tax Withholding. To prevent the possible
application of backup federal income tax withholding of 31% with respect to
payment of the Purchase Price, each tendering Limited Partner must provide the
Purchaser (which is an affiliate of the General Partner) with the Limited
Partner's correct taxpayer identification number by completing the Substitute
Form W-9 included in the Assignment of Partnership Interest. See the
Instructions to the Assignment of Partnership Interest and Section 6.
FIRPTA Withholding. To prevent the withholding of federal income tax
in an amount equal to 10% of the amount of the Purchase Price plus Partnership
liabilities allocable to each Class B Unit purchased, each tendering Limited
Partner must complete the FIRPTA Affidavit included in the Assignment of
Partnership Interest certifying the Limited Partner's taxpayer identification
number and address and that such Limited Partner is not a foreign person. See
the Instructions to the Assignment of Partnership Interest and Section 6.
Binding Obligation. A tender of Class B Units pursuant to and in
accordance with the procedures described in this Section 3 and the acceptance
for payment of such Class B Units will constitute a binding agreement between
the tendering Limited Partner and the Purchaser (which is an affiliate of the
General Partner) on the terms set forth in this Offer to Purchase and in the
Assignment of Partnership Interest.
SECTION 4. WITHDRAWAL RIGHTS. Tenders of Class B Units pursuant to the
Offer are irrevocable, except that Class B Units tendered pursuant to the Offer
may be withdrawn at any time prior to the Expiration Date and, unless already
accepted for payment as provided in this Offer to Purchase, may also be
withdrawn at any time after November 22, 1998. For withdrawal to be effective,
a written or facsimile transmission notice of withdrawal must be timely
received by the Depositary at its address set forth on the back cover of this
Offer to Purchase. Any such notice of withdrawal must specify the name of the
person who tendered the Class B Units to be withdrawn and must be signed by the
person(s) who signed the Assignment of Partnership Interest in the same manner
as the Assignment of Partnership Interest was signed (including signature
guarantees by an Eligible Institution). Class B Units properly withdrawn will
be deemed not to be validly tendered for purposes of the Offer. Withdrawn Class
B Units may be re-tendered, however, by following the procedures described in
Section 3 at any time prior to the Expiration Date.
If payment for Class B Units is delayed for any reason or if the
Purchaser (which is an affiliate of the General Partner) is unable to pay for
Class B Units for any reason, then, without prejudice to the Purchaser's rights
8
under the Offer, tendered Class B Units may be retained by the Depositary and
may not be withdrawn except to the extent that tendering Limited Partners are
entitled to withdrawal rights as set forth in this Section 4; subject, however,
to the Purchaser's obligation, pursuant to Rule 14e-1(c) under the Exchange
Act, to pay Limited Partners the Purchase Price in respect of Class B Units
tendered or return those Class B Units promptly after termination or withdrawal
of the Offer.
All questions as to the validity and form (including time of receipt)
of notices of withdrawal will be determined by the Purchaser (which is an
affiliate of the General Partner), in its sole discretion, which determination
shall be final and binding. None of the Purchaser, the Information Agent, the
Depositary or any other person will be under any duty to give notification of
any defects or irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification.
SECTION 5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT. The
Purchaser (which is an affiliate of the General Partner) expressly reserves the
right, in its sole discretion, at any time and from time to time, (i) to extend
the period of time during which the Offer is open and thereby delay acceptance
for payment of, and the payment for, validly tendered Class B Units, (ii) to
terminate the Offer if any condition referred to in Section 14 has not been
satisfied upon the occurrence of any event specified in Section 14 and (iii) to
amend the Offer in any respect (including, without limitation, by increasing
the consideration offered, increasing or decreasing the number of Class B Units
being sought, or both). Notice of any such extension, termination or amendment
will be disseminated promptly to Limited Partners in a manner reasonably
designed to inform Limited Partners of such change in compliance with Rule
14d-4(c) under the Exchange Act. In the case of an extension of the Offer, the
extension will be followed by a press release or public announcement which will
be issued no later than 9:00 a.m., New York City time, on the next business day
after the then scheduled Expiration Date, in accordance with Rule 14e-1(d)
under the Exchange Act.
If the Purchaser (which is an affiliate of the General Partner)
extends the Offer, or if the Purchaser (whether before or after its acceptance
for payment of Class B Units) is delayed in its payment for Class B Units or is
unable to pay for Class B Units pursuant to the Offer for any reason, then,
without prejudice to the Purchaser's rights under the Offer, the Depositary may
retain tendered Class B Units and those Class B Units may not be withdrawn
except to the extent tendering Limited Partners are entitled to withdrawal
rights as described in Section 4; subject, however, to the Purchaser's
obligation, pursuant to Rule 14e-1(c) under the Exchange Act, to pay Limited
Partners the Purchase Price in respect of Class B Units tendered or return
those Class B Units promptly after termination or withdrawal of the Offer.
If the Purchaser (which is an affiliate of the General Partner) 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 and disseminate additional tender offer materials 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 information concerning the offer will depend upon the
facts and circumstances, including the relative materiality of the change in
the terms or information. In the Commission's view, an offer should remain open
for a minimum of five business days from the date the material change is first
published, sent or given to securityholders, and if material changes are made
with respect to information that approaches the significance of price or the
percentage of securities sought, a minimum of ten business days may be required
to allow for adequate dissemination to securityholders and investor response.
As used in this Offer to Purchase, "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, New York City time.
9
SECTION 6. CERTAIN FEDERAL INCOME TAX MATTERS.
General. The following summary is a general discussion of certain of
the federal income tax consequences of a sale of Class B Units pursuant to the
Offer. This summary is based on the Internal Revenue Code of 1986, as amended
(the "Code"), applicable Treasury regulations thereunder, administrative
rulings, practice and procedures and judicial authority, all as of the date of
the Offer. All of the foregoing are subject to change, and any such change
could affect the continuing accuracy of this summary. This summary does not
discuss all aspects of federal income taxation that may be relevant to a
particular Limited Partner in light of such Limited Partner's specific
circumstances or to certain types of Limited Partners subject to special
treatment under the federal income tax laws (for example, foreign persons,
dealers in securities, banks, insurance companies and tax-exempt
organizations), nor (except as otherwise expressly indicated) does it describe
any aspect of state, local, foreign or other tax laws. Sales of Class B Units
pursuant to the Offer will be taxable transactions for federal income tax
purposes, and also may be taxable transactions under applicable state, local,
foreign and other tax laws. EACH LIMITED PARTNER SHOULD CONSULT ITS OWN TAX
ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO SUCH LIMITED PARTNER OF
SELLING CLASS B UNITS PURSUANT TO THE OFFER.
Gain or Loss Generally. In general, a Limited Partner will recognize
gain or loss on a sale of Class B Units pursuant to the Offer equal to the
difference between (i) the Limited Partner's "amount realized" on the sale and
(ii) the Limited Partner's adjusted tax basis in the Class B Units sold.
Generally, a Limited Partner's adjusted tax basis with respect to a Class B
Unit equals its cost, increased by the amount of income and the amount of
Partnership liabilities (as determined under Code Section 752) allocated to the
Class B Unit, and decreased by (i) any distributions made with respect to such
Class B Unit, (ii) the amount of deductions or losses allocated to the Class B
Unit and (iii) any decrease in the amount of Partnership liabilities (as
determined under Code Section 752) allocated to the Class B Unit. Thus, the
amount of a Limited Partner's adjusted tax basis in tendered Class B Units will
vary depending upon the Limited Partner's particular circumstances. The "amount
realized" with respect to a Class B Unit will be a sum equal to the amount of
cash received by the Limited Partner for the Class B Unit pursuant to the
Offer, plus the amount of the Partnership's liabilities allocable to the Class
B Unit (as determined under Code Section 752).
A portion of the gain or loss recognized by a Limited Partner on a
sale of a Class B Unit pursuant to the Offer generally will be treated as a
capital gain or loss, if (as is generally expected to be the case) the Class B
Unit was held by the Limited Partner as a capital asset. Under the IRS
Restructuring and Reform Act of 1998, the capital gains rate for individuals
and other non-corporate taxpayers is 20% for sales of capital assets held for
more than one year. However, any gain from the sale of such assets attributable
to the recapture of depreciation with respect to real property (other than
certain depreciation recapture taxable as ordinary income) is taxed at a
maximum rate of 25%. Corporate taxpayers are taxed at a maximum marginal rate
of 35% for both capital gains and ordinary income. The maximum marginal federal
income tax rate for ordinary income of individuals and other noncorporate
taxpayers is 39.6%. Capital losses are deductible only to the extent of capital
gains, except that, subject to the passive activity loss limitations discussed
below, non-corporate taxpayers may deduct up to $3,000 of capital losses in
excess of the amount of their capital gains against ordinary income. Excess
capital losses generally can be carried forward to succeeding years (a
corporation's carryforward period is five years and a non-corporate taxpayer
can carry forward such losses indefinitely); and a corporation is permitted to
carry back excess capital losses to the three preceding taxable years, provided
the carryback does not increase or produce a net operating loss for any of
those years.
A tendering Limited Partner will be allocated a pro rata share of the
Partnership's taxable income or loss for the year of sale with respect to the
Class B Units sold in accordance with the provisions of the Limited Partnership
Agreement concerning transfers of Class B Units. Such allocation and any cash
distributed by the Partnership to the Limited Partner for that year will affect
the Limited Partner's adjusted tax basis in Class B Units and, therefore, the
amount of such Limited Partner's taxable gain or loss upon a sale of Class B
Units pursuant to the Offer.
10
Unrealized Receivables and Certain Inventory. A portion of the gain or
loss upon the sale of Class B Units may be attributable to unrealized
receivables. If any portion of the amount of gain or loss realized by a Limited
Partner is attributable to "unrealized receivables" (which includes certain
depreciation recapture) or "substantially appreciated inventory" as defined in
Code Section 751, then a portion of the Limited Partner's gain or loss may be
ordinary rather than capital. In addition, a portion of such gain may be taxed
at the 25% rate discussed above. A Limited Partner who tenders Class B Units
which are purchased pursuant to the Offer must file an information statement
with such Limited Partner's federal income tax return for the year of the sale
which provides the information specified in Treasury Regulation ss.
1.751-1(a)(3). A selling Limited Partner also must notify the Partnership of
the date of the transfer and the names, addresses and tax identification
numbers of the transferor(s) and transferee within 30 days of the date of the
transfer (or, if earlier, by January 15 of the following calendar year).
Passive Activity Loss Limitation. Under Code Section 469, a
non-corporate taxpayer or personal service corporation generally can deduct
"passive losses" in any year only to the extent of the person's passive income
for that year. Closely held corporations (other than personal service
corporations) may offset such losses against active income as well as passive
activity income for that year. A portion of any post-1986 losses of Limited
Partners from the Partnership may have been passive losses. Thus, Limited
Partners may have "suspended" passive losses from the Partnership (i.e.,
post-1986 net taxable losses in excess of statutorily permitted "phase-in"
amounts which have not been used to offset income from other passive activities
or from the Partnership). Substantially all gain or loss from a sale of Class B
Units pursuant to the Offer will be passive income or loss.
If a Limited Partner sells less than all of its Units pursuant to the
Offer, suspended passive losses, if any (including a portion of any loss
recognized on the sale of Class B Units), can be currently deducted (subject to
other applicable limitations) to the extent of the Limited Partner's passive
income from the Partnership for that year (including any gain recognized on the
sale of Class B Units) plus any other passive income for that year. The
preceding sentence will apply if a Limited Partner continues to hold Class B
and/or Class A Units. If, on the other hand, a Limited Partner sells 100% of
its Units pursuant to the Offer, any "suspended" losses and any losses
recognized upon the sale of the Class B Units will be offset first against any
other net passive gain to the Limited Partner from the sale of the Class B
Units and any other net passive activity income from other passive activity
investments, and the balance of any "suspended" net losses from the Units will
no longer be subject to the passive activity loss limitation and, therefore,
will be deductible by such Limited Partner from its other income (subject to
any other applicable limitations), including ordinary income. If a tendering
Limited Partner has suspended passive losses from the Partnership, such Limited
Partner must sell all of its Class B Units (and must not hold any Class A
Units) to receive these tax benefits. If more than 11,000 of the outstanding
Class B Units are tendered, some tendering Limited Partners may not be able to
sell 100% of their Class B Units pursuant to the Offer because of proration of
the number of Class B Units to be purchased by the Purchaser. See Section 1.
Partnership Termination. Section 708(b) of the Code provides that a
partnership terminates for income tax purposes if there is a sale or exchange
of 50% or more of the total interest in partnership capital and profits within
a twelve-month period (although successive transfers of the same interest
within a twelve-month period will be treated as a single transfer for this
purpose). In the event of a termination, the Partnership's tax year would close
and the Partnership would be treated for income tax purposes as if it had
contributed all of its assets and liabilities to a "new" partnership in
exchange for an interest in the "new" partnership. The Partnership would then
be treated as making a distribution of the interests in the "new" partnership
to the new partners and the remaining partners, followed by the liquidation of
the Partnership. Because the "new" partnership would be treated as having
acquired its assets on the date of the deemed contribution, a new depreciation
recovery period would begin on such date, the Partnership's annual depreciation
deductions over the next few years would be substantially reduced, and the
Partnership would have greater taxable income (or less tax loss) than if no tax
termination occurred. In addition, depreciation may be required to be allocated
to those Limited Partners that have a higher tax basis. A tax termination of
the Partnership would also terminate any partnership in which the Partnership
holds a majority interest (50% or more).
The Limited Partnership Agreement prohibits transfers of Class B Units
if a transfer, when considered with all other transfers during the same
applicable twelve-month period, would cause a termination of the Partnership
11
for tax purposes. The Purchaser believes that even if the maximum number of
Class B Units is purchased pursuant to the Offer, those transfers will not
cause a tax termination of the Partnership.
Backup Withholding and FIRPTA Withholding. Limited Partners (other
than tax-exempt persons, corporations and certain foreign persons) who tender
Class B Units may be subject to 31% backup withholding unless those Limited
Partners provide a taxpayer identification number ("TIN") and certify that the
TIN is correct or properly certify that they are awaiting a TIN. A Limited
Partner may avoid backup withholding by properly completing and signing the
Substitute Form W-9 included as part of the Assignment of Partnership Interest.
If a Limited Partner who is subject to backup withholding does not properly
complete and sign the Substitute Form W-9, the Purchaser will withhold 31% from
payments to such Limited Partner.
Gain realized by a foreign Limited Partner on the sale of a Class B
Unit pursuant to the Offer will be subject to federal income tax. Under Code
Section 1445, the transferee of an interest held by a foreign person in a
partnership which owns United States real property generally is required to
deduct and withhold a tax equal to 10% of the amount realized on the
disposition. In order to comply with this requirement, the Purchaser will
withhold 10% of the amount realized by a tendering Limited Partner unless the
Limited Partner properly completes and signs the FIRPTA Affidavit included as
part of the Assignment of Partnership Interest certifying the Limited Partner's
TIN and address, and that such Limited Partner is not a foreign person. Amounts
withheld would be creditable against a foreign Limited Partner's federal income
tax liability and, if in excess thereof, a refund could be obtained from the
Internal Revenue Service by filing a U.S. income tax return.
SECTION 7. EFFECTS OF THE OFFER.
Limitations on Resales. The Limited Partnership Agreement prohibits
transfers of Class B 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 income tax purposes. This provision
may limit sales of Class B Units in the secondary market and in private
transactions for the twelve-month period following completion of the Offer. The
General Partner has advised the Purchaser that the Partnership will not process
any requests for recognition of substitution of Limited Partners upon a
transfer of Class B Units during such twelve-month period which the General
Partner believes may cause a tax termination in contravention of the Limited
Partnership Agreement. In determining the number of Class B Units for which the
Offer is made (representing approximately 15% of the outstanding Class B
Units), the Purchaser (which is an affiliate of the General Partner) took this
restriction into account so as to permit normal historical levels of transfers
to occur following the transfers of Class B Units pursuant to the Offer without
violating this restriction.
Effect on Trading Market; Registration Under Section 12(g) of the
Exchange Act. If a substantial number of Class B 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 established public trading market for the Class B Units
and, therefore, the Purchaser (which is an affiliate of the General Partner)
does not believe a reduction in the number of Limited Partners will materially
further restrict the Limited Partners' ability to find purchasers for their
Class B Units through secondary market transactions. See Section 13 for certain
limited information regarding recent secondary market sales of the Class B
Units.
The Class B Units are registered under Section 12(g) of the Exchange
Act, which means, among other things, that the Partnership is required to file
periodic reports with the Commission and to comply with the Commission's proxy
rules. The Purchaser (which is an affiliate of the General Partner) does not
expect or intend that consummation of the Offer will cause the Class B Units to
cease to be registered under Section 12(g) of the Exchange Act. If the Class B
Units were to be held by fewer than 300 persons, the Partnership could apply to
de-register the Class B Units under the Exchange Act. Because the Class B Units
are widely held, however, the Purchaser (which is an affiliate of the General
Partner) believes that, even if it purchases the maximum number of Class B
Units in the Offer, after that purchase the Class B Units will be held of
record by more than 300 persons.
12
Control of Limited Partner Voting Decisions by Purchaser; Effect of
Relationship with General Partner. The Limited Partnership Agreement provides
that the General Partner has absolute discretion as to whether to admit an
assignee of Class B Units to the Partnership as a substituted Limited Partner.
The Purchaser (which is an affiliate of the General Partner) will seek to be
admitted to the Partnership as a substituted Limited Partner upon consummation
of the Offer and, if admitted, will have the right to vote each Class B Unit
purchased pursuant to the Offer. Even if the Purchaser (which is an affiliate
of the General Partner) is not admitted to the Partnership as a substituted
Limited Partner, however, the Purchaser nonetheless will have the right to vote
each Class B Unit purchased in the Offer pursuant to the irrevocable
appointment by tendering Limited Partners of the Purchaser and its managers and
designees as proxies with respect to the Class B Units tendered by such Limited
Partners and accepted for payment by the Purchaser. See Section 3. As a result,
the Purchaser (which is an affiliate of the General Partner) could be in a
position to significantly influence the outcome of all voting decisions with
respect to the Partnership. Because IPT already owns (through IPLP)
approximately 19% of the outstanding Class B Units, however, it will be able to
significantly influence the outcome of all voting decisions with respect to the
Partnership regardless of the number of Class B Units the Purchaser acquires
pursuant to the Offer. In general, IPLP and the Purchaser (which are affiliates
of the General Partner) will vote the Class B Units owned by them in whatever
manner they deem to be in the best interests of IPT, which, because of their
relationship with the General Partner, also may be in the interest of the
General Partner, but may not be in the interest of other Limited Partners. This
could (i) prevent non-tendering Limited Partners from taking action they desire
but that IPT opposes and (ii) enable IPT to take action desired by IPT but
opposed by non-tendering Limited Partners. Under the Limited Partnership
Agreement, Limited Partners holding a majority of the Class B Units are
entitled to take action with respect to a variety of matters, including:
removal of the General Partner and in certain circumstances election of a new
or successor general partner; dissolution of the Partnership; the sale of all
or substantially all of the assets of the Partnership; and most types of
amendments to the Limited Partnership Agreement.
The Offer will not result in any change in the compensation payable to
the General Partner or its affiliates. However, as a result of the Offer, the
Purchaser (which is an affiliate of the General Partner) will participate, in
its capacity as a Limited Partner, in any subsequent distributions to Limited
Partners to the extent of the Class B Units purchased pursuant to the Offer.
SECTION 8. FUTURE PLANS OF INSIGNIA, IPT AND THE PURCHASER. IPT,
through the Purchaser (which is an affiliate of the General Partner), is
seeking to acquire Class B Units pursuant to the Offer in order to increase its
equity interest in the Partnership, primarily for investment purposes and with
a view to making a profit. Following the completion of the Offer, IPT and/or
persons related to or affiliated with it may acquire additional Class B Units.
Any such acquisition may be made through private purchases, through one or more
future tender or exchange offers or by any other means deemed advisable. Any
such acquisition may be at a price higher or lower than the price to be paid
for the Class B Units purchased pursuant to the Offer, and may be for cash or
other consideration. Insignia and IPT (which are affiliates of the General
Partner) also may consider disposing of some or all of the Class B Units the
Purchaser acquires pursuant to the Offer, either directly or by a sale or other
disposition of one or more interests in IPT or IPLP, depending among other
things on the requirements from time to time of Insignia, IPT and their
affiliates in light of liquidity, strategic, tax and other considerations.
Neither IPT nor the Purchaser (which are affiliates of the General
Partner) has any present plans or intentions with respect to an extraordinary
transaction, such as a merger, reorganization or liquidation, involving the
Partnership or a sale or refinancing of any of the Partnership's properties.
However, IPT and the Purchaser expect that consistent with the General
Partner's fiduciary obligations, the General Partner will seek and review
opportunities (including opportunities identified by IPT and the Purchaser) to
engage in transactions which could benefit the Partnership, such as sales or
refinancings of assets or a combination of the Partnership with one or more
other entities, with the objective of seeking to maximize returns to Limited
Partners.
IPT and the Purchaser (which are affiliates of the General Partner)
have been advised that the possible future transactions the General Partner
expects to consider on behalf of the Partnership include (i) payment of
extraordinary distributions; (ii) refinancing, reducing or increasing existing
indebtedness of the Partnership; (iii) sales of assets, individually or as part
of a complete liquidation; and (iv) mergers or other consolidation transactions
involving the Partnership. Any such merger or consolidation transaction could
involve other limited
13
partnerships in which the General Partner or its affiliates serve as general
partners, or a combination of the Partnership with one or more existing,
publicly traded entities (including, possibly, affiliates of IPT (which is an
affiliate of the General Partner) or IPT itself), in any of which Limited
Partners might receive cash, common stock or other securities or consideration.
There is no assurance, however, as to when or whether any of the transactions
referred to above might occur. If any such transaction is effected by the
Partnership and financial benefits accrue to the Limited Partners of the
Partnership, the Purchaser (and thus IPT) will participate in those benefits to
the extent of its ownership of Class B Units. A merger or other consolidation
transaction and certain kinds of other extraordinary transactions would require
a vote of the Limited Partners, and if the Purchaser is successful in acquiring
a significant number of Class B Units pursuant to the Offer (or otherwise), IPT
will have the right to vote those Units and thereby significantly influence the
outcome of any such vote. Because IPT already owns (through IPLP) approximately
19% of the outstanding Class B Units, however, it will be able to significantly
influence the outcome of all voting decisions with respect to the Partnership
regardless of the number of Class B Units the Purchaser acquires pursuant to
the Offer. See Section 13. IPT's primary objective in seeking to acquire the
Class B Units through the Purchaser pursuant to the Offer is not, however, to
influence the vote on any particular transaction, but rather to generate a
profit on the investment represented by those Class B Units.
SECTION 9. CERTAIN INFORMATION CONCERNING THE PARTNERSHIP. Except as
otherwise indicated, information contained in this Section 9 is based upon
documents and reports publicly filed by the Partnership with the Commission.
General. The Partnership was organized on September 8, 1986 under the
laws of the State of California. Its principal executive offices are located at
Xxx Xxxxxxxx Xxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, and its
telephone number at that address is (000) 000-0000.
The Partnership's primary business is real estate ownership and
related operations. The Partnership was formed to invest in low or moderately
leveraged commercial and residential properties in order to generate current
income and capital appreciation.
The Partnership's investment portfolio currently consists of three
residential apartment complexes: a 278- unit complex in Columbus, Ohio; a
200-unit complex in Indianapolis, Indiana; and a 300-unit complex in West
Valley City, Utah.
Class A Units and Class B Units. Upon its formation, the Partnership
issued two classes of units of limited partnership interest, the Class A Units
and Class B Units. The Class A Units and the Class B Units are entitled to
different rights and priorities as to cash distributions and partnership
allocations, as follows. Both distributable cash from operations and cash from
surplus funds (i.e., net sale and refinancing proceeds) are allocated 1% to the
General Partner and 99% to the Limited Partners. Until such time as the holders
of Class A Units have received their Priority Return, all cash distributions to
Limited Partners are made to the holders of Class A Units; thereafter, the
allocation of cash distributions ("Non-Priority Return Distributions") to
Limited Partners depends on whether a distribution is comprised of
distributable cash from operations or cash from surplus funds. A Non-Priority
Return Distribution of distributable cash from operations is allocated equally
among the holders of Class A Units and Class B Units. A Non-Priority Return
Distribution of cash from surplus funds, on the other hand, is allocated pro
rata (based on relative initial capital contributions) among the holders of
Class A Units and Class B Units until such time as each has received a return
of 100% of their initial invested capital, and thereafter (based on current
circumstances) 90% to the holders of Class B Units, a 9% fee to the General
Partner and 1% to the holders of Class A Units.
Originally Anticipated Term of Partnership; Alternatives. According to
the Partnership's Prospectus dated December 10, 1986, the then general partner
(predecessor to the current General Partner) anticipated that the Partnership
would sell and/or refinance its properties five to eight years after their
acquisition, depending on the then current real estate and money markets,
economic climate and income tax consequences to the Limited Partners. Under the
Limited Partnership Agreement the term of the Partnership will continue until
December 31, 2036, unless sooner terminated as provided in the Limited
Partnership Agreement or by law. Limited Partners could, as an
14
alternative to tendering their Class B Units, take a variety of possible
actions, including voting to liquidate the Partnership or causing the
Partnership to merge with another entity or engage in a "roll-up" or similar
transaction.
General Policy Regarding Sales and Refinancings of Partnership
Properties. In general, the General Partner regularly evaluates the
Partnership's properties by considering various factors, such as the
Partnership's financial position and real estate and capital markets
conditions. The General Partner monitors each property's specific locale and
sub-market conditions evaluating current trends, competition, new construction
and economic changes. The General Partner oversees each asset's operating
performance and continuously evaluates the physical improvement requirements.
In addition, the financing structure for each property, tax implications and
the investment climate are all considered. Any of these factors, and possibly
others, could potentially contribute to any decision by the General Partner to
sell, refinance, upgrade with capital improvements or hold a particular
Partnership property. Based on the foregoing considerations, however, the
General Partner has determined that it is not in the best interest of Limited
Partners to sell or refinance any of the Partnership's properties at the
present time.
Selected Financial and Property-Related Data. Set forth below is a
summary of certain financial and statistical information with respect to the
Partnership and its properties, all of which has been excerpted or derived from
the Partnership's Annual Reports on Form 10-KSB for the years ended December
31, 1997, 1996 and 1995 and on Form 10-K for the years ended December 31, 1994
and 1993 and the Partnership's Quarterly Reports on Form 10-QSB for the periods
ended June 30, 1998 and 1997. More comprehensive financial and other
information is included in such reports and other documents filed by the
Partnership with the Commission, 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.
MULTI-BENEFIT REALTY FUND '87-1
SELECTED FINANCIAL DATA
(in thousands, except Class B Unit data)
SIX MONTHS ENDED FISCAL YEAR ENDED
JUNE 30, DECEMBER 31,
----------------------- -------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---------- ------------ ----------- ----------- ----------- ---------- -----------
(UNAUDITED)
Statements of Operations Data:
Rental Income................. $ 2,444 $ 2,337 $ 4,729 $ 4,595 $ 4,312 $ 4,216 $ 4,185
Other Income.................. $ 156 $ 155 $ 315 $ 266 $ 960 $ 132 $ 177
Total Revenues............. $ 2,600 $ 2,492 $ 5,044 $ 4,861 $ 5,272 $ 4,348 $ 4,362
Income (Loss) from Operations
(before extraordinary item) $ 199 $ 105 $ 15 $ 46 $ 383 $ (1,452) $ (350)
Net Income (Loss)(1).......... $ 199 $ 105 $ 15 $ 46 $ 383 $ (1,396) $ (350)
Net Income (Loss) per Class B $0.27
Unit(1).................... $ 1.15 $ 0.60 $ 0.09 $ 2.21 $ (8.06) $ (2.01)
AS OF AS OF
JUNE 30, DECEMBER 31,
----------------------- -------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---------- ------------ ----------- ----------- ----------- ---------- -----------
(UNAUDITED)
Balance Sheets Data:
Total Assets.................. $ 14,946 $ 15,909 $ 15,116 $ 16,612 $ 16,334 $ 16,688 $ 18,688
Total Liabilities............. $ 12,977 $ 13,017 $ 13,002 $ 13,136 $ 12,445 $ 12,264 $ 12,363
Limited Partners' Equity (Deficit$(23,925 $ 3,878 $ 3,839 $ 3,832 $ 3,812 $ 3,646 $ 4,252
Class B Units Outstanding..... 75,152 75,152 75,152 75,152 75,152 75,152 75,152
Book Value per Class B Unit... $ 52.23 $ 51.60 $ 51.08 $ 50.99 $ 50.72 $ 48.52 $ 56.58
-------------------------
(1) Net income or loss is allocated equally among holders of Class A Units
and Class B Units.
(2) Limited Partners' Equity (Deficit) is calculated only with respect to
Class B Units.
15
Description of Properties. Set forth below is a table showing the
location, the date of purchase, the nature of the Partnership's ownership
interest in and the use of each of the Partnership's properties.
DATE OF
PROPERTY PURCHASE TYPE OF OWNERSHIP USE
---------------------------- -------- --------------------------- ----------------------
Carlin Manor Apartments 11/87 Fee ownership Residential Apartments
Columbus, Ohio (subject to first mortgage) (278 units)
Xxxx Club Apartments 05/87 Fee ownership Residential Apartments
Indianapolis, Indiana (subject to first mortgage) (200 units)
Shadow Brook Apartments 05/87 Fee ownership Residential Apartments
West Valley City, Utah (subject to first mortgage) (300 units)
Accumulated Depreciation Schedule. Set forth below is a table showing
the gross carrying value, accumulated depreciation and federal tax basis of
each of the Partnership's properties as of December 31, 1997 ($ amounts in
thousands).
GROSS
CARRYING ACCUMULATED FEDERAL
PROPERTY VALUE DEPRECIATION RATE METHOD TAX BASIS
----------------------------------- -------------- ------------- ---------- ----------- -----------
Carlin Manor Apartments $ 6,679 $ 3,512 5-30 yrs. S/L $ 5,410
Xxxx Club Apartments 6,912 3,502 5-30 yrs. S/L 4,224
Shadow Brook Apartments 10,352 3,899 5-30 yrs. S/L 6,487
-------- ---------- ----------
TOTALS $ 23,943 $ 10,913 $ 16,121
======== ========== ==========
Schedule of Mortgages. Set forth below is a table showing certain
information regarding the outstanding mortgages encumbering each of the
Partnership's properties as of December 31, 1997 ($ amounts in thousands).
PRINCIPAL PRINCIPAL
BALANCE AT STATED BALANCE
DECEMBER 31, INTEREST PERIOD MATURITY DUE AT
PROPERTY 1997 RATE AMORTIZED DATE MATURITY
---------------------------------- --------------- ---------- ------------ ------------ -----------
Carlin Manor Apartments $ 2,500 7.33% (a) 11/2003 $ 2,500
Xxxx Club Apartments 3,785 8.30% 7 yrs. 10/2000 3,575
Shadow Brook Apartments 6,000 7.33% (a) 11/2003 6,000
-------- ------------
TOTALS $ 12,285 $ 12,075
======== ============
(a) Interest only payments.
Average Annual Rental Rate and Occupancy. Set forth below is a table
showing the average annual rental rates and occupancy percentages for each of
the Partnership's properties during the past two years.
PROPERTY AVERAGE ANNUAL RENTAL RATE AVERAGE ANNUAL OCCUPANCY
----------------------- --------------------------------- ------------------------
1997 1996 1997 1996
----------- ----------- ------------------------
Carlin Manor Apartments $5,685/unit $5,497/unit 89% 90%
Xxxx Club Apartments $7,267/unit $7,074/unit 93% 94%
Shadow Brook Apartments $6,933/unit $6,511/unit 96% 97%
16
Schedule of Real Estate Taxes and Rates. Set forth below is a table
showing the real estate taxes and rates for 1997 for each of the Partnership's
properties.
1997 1997
PROPERTY BILLING RATE
---------------------------------------- --------- --------
Carlin Manor Apartments $ 107,000 5.4%
Xxxx Club Apartments $ 156,000 9.6%
Shadow Brook Apartments $ 80,000 1.3%
Other Information. The Partnership is subject to the information
reporting requirements of the Exchange Act and accordingly is required to file
reports and other information with the Commission relating to its business,
financial results and other matters. Such reports and other documents may be
inspected at the Commission's Public Reference Section, Room 1024, 000 Xxxxx
Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, where copies may be obtained at
prescribed rates, and at the regional offices of the Commission located in the
Citicorp Center, 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000,
and 7 World Trade Center, New York, New York 10048. Copies should be available
by mail upon payment of the Commission's customary charges by writing to the
Commission's principal offices at 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X.
00000. The Commission also maintains a web site that contains reports, proxy
and other information filed electronically with the Commission, the address of
which is xxxx://xxx.xxx.xxx.
Cash Distributions History. In total, original investors in the
Partnership who purchased Class B Units have not received any cash
distributions in respect of their original $100 investment made in 1983.
Operating Budgets of the Partnership. A summary of the fiscal 1997 and
1998 operating budgets and the audited results of operations for fiscal 1997 of
the Partnership are set forth in the table below. The budgeted amounts provided
below are figures that were not computed in accordance with generally accepted
accounting principles ("GAAP"). Historically, budgeted operating results of
operations for a particular fiscal year have differed significantly in certain
respects from the audited operating results for that year. In particular, items
that are categorized as capital expenditures for purposes of preparing the
operating budgets are often re-categorized as expenses when the financial
statements are audited and presented in accordance with GAAP. Therefore, the
summary operating budget presented for fiscal 1998 should not necessarily be
considered as indicative of what the audited operating results for fiscal 1998
will be. Furthermore, any estimate of the future performance of a business,
such as the Partnership's business, is forward-looking and based on numerous
assumptions, some of which inevitably will prove to be incorrect. For this
reason, it is probable that the Partnership's future operating results will
differ from those projected in the operating budget, and those differences may
be material. Therefore, such information should not be relied on by Limited
Partners.
FISCAL 1997 FISCAL 1997 FISCAL 1998
BUDGETED AUDITED BUDGETED
------------ ----------- ------------
Total Revenues from Property Operations................. $ 5,020,000 $ 5,044,000 $ 5,124,000
Total Operating Expenses................................ $ 2,569,000 $ 2,936,000 $ 2,701,000
Net Operating Income.................................... $ 2,451,000 $ 2,108,000 $ 2,423,000
Capital Expenditures.................................... $ 606,000 $ 569,000 $ 483,000
SECTION 10. CONFLICTS OF INTEREST AND TRANSACTIONS WITH AFFILIATES.
The General Partner and its affiliates have conflicts of interest with respect
to the Offer as set forth below.
Conflicts of Interest with Respect to the Offer. The General Partner
has conflicts of interest with respect to the Offer, including conflicts
resulting from its affiliation with IPT and the Purchaser. The General Partner
also would have a conflict of interest (i) as a result of the fact that a sale
or liquidation of the Partnership's assets would result in a decrease or
elimination of the fees paid to the General Partner and/or its affiliates and
(ii) as a consequence of the Purchaser's ownership of Class B Units, because
the Purchaser (which is an affiliate of the General Partner) may have
incentives to seek to maximize the value of its ownership of Class B Units,
which in turn may result in a conflict for the General Partner in attempting to
reconcile the interests of the Purchaser (which is an affiliate of the General
Partner) with the interests of the other Limited Partners. In addition, the
Purchaser
17
(which is an affiliate of the General Partner) is making the Offer with a view
to making a profit. Accordingly, there is a conflict between the desire of the
Purchaser (which is an affiliate of the General Partner) to purchase Class B
Units at a low price and the desire of the Limited Partners to sell their Class
B Units at a high price. The General Partner has indicated in the Schedule
14D-9 that it is remaining neutral and making no recommendation as to whether
Limited Partners should tender their Class B Units pursuant to the Offer.
LIMITED PARTNERS ARE URGED TO READ THIS OFFER TO PURCHASE AND THE SCHEDULE
14D-9 AND THE RELATED MATERIALS CAREFULLY AND IN THEIR ENTIRETY BEFORE DECIDING
WHETHER TO TENDER THEIR CLASS B UNITS.
Voting by the Purchaser. The Limited Partnership Agreement provides
that the General Partner has absolute discretion as to whether to admit an
assignee of Class B Units to the Partnership as a substituted Limited Partner.
The Purchaser (which is an affiliate of the General Partner) will seek to be
admitted to the Partnership as a substituted Limited Partner upon consummation
of the Offer and, if admitted, will have the right to vote each Class B Unit
purchased pursuant to the Offer. Even if the Purchaser (which is an affiliate
of the General Partner) is not admitted to the Partnership as a substituted
Limited Partner, however, the Purchaser nonetheless will have the right to vote
each Class B Unit purchased in the Offer pursuant to the irrevocable
appointment by tendering Limited Partners of the Purchaser (which is an
affiliate of the General Partner) and its managers and designees as proxies
with respect to the Class B Units tendered by such Limited Partners and
accepted for payment by the Purchaser. See Section 3. As a result, if the
Purchaser (which is an affiliate of the General Partner) is successful in
acquiring a significant number of Class B Units pursuant to the Offer (or
otherwise), IPT (which controls the General Partner, IPLP and the Purchaser)
will be able to significantly influence the outcome of all voting decisions
with respect to the Partnership. Because IPT already owns (through IPLP)
approximately 19% of the outstanding Class B Units, however, it will be able to
significantly influence the outcome of all voting decisions with respect to the
Partnership regardless of the number of Class B Units the Purchaser acquires
pursuant to the Offer. In general, IPLP and the Purchaser (which are affiliates
of the General Partner) will vote the Class B Units owned by them in whatever
manner they deem to be in IPT's best interests, which, because of their
relationship with the General Partner, also may be in the interest of the
General Partner, but may not be in the interest of other Limited Partners. This
could (i) prevent non-tendering Limited Partners from taking action they desire
but that IPT opposes and (ii) enable IPT to take action desired by IPT but
opposed by non-tendering Limited Partners. Under the Limited Partnership
Agreement, Limited Partners holding a majority of the Class B Units are
entitled to take action with respect to a variety of matters, including:
removal of the General Partner and in certain circumstances election of a new
or successor general partner; dissolution of the Partnership; the sale of all
or substantially all of the assets of the Partnership; and most types of
amendments to the Limited Partnership Agreement. See Section 7.
Financing Arrangements. The Purchaser (which is an affiliate of the
General Partner) expects to pay for the Class B Units it purchases pursuant to
the Offer with funds provided by IPLP as capital contributions. IPLP in turn
intends to use its cash on hand and, if necessary, funds available to it under
its credit facility (as described in Section 12) to make such contributions.
See Section 12. It is possible, however, that in connection with its future
financing activities, IPT or IPLP may cause or request the Purchaser (which is
an affiliate of the General Partner) to pledge the Class B Units as collateral
for loans, or otherwise agree to terms which provide IPT, IPLP and the
Purchaser with incentives to generate substantial near-term cash flow from the
Purchaser's investment in the Class B Units. This could be the case, for
example, if a loan has a "balloon" maturity after a relatively short time or
bears a high or increasing interest rate. In such a situation, the General
Partner may experience a conflict of interest in seeking to reconcile the best
interests of the Partnership with the need of its affiliates for cash flow from
the Partnership's activities.
Transactions with Affiliates. Under the Limited Partnership Agreement,
the General Partner holds an interest in the Partnership and is entitled to
participate in certain cash distributions made by the Partnership to its
partners. The General Partner received from the Partnership in respect of its
interest in the Partnership cash distributions of $3,000 to date in 1998,
$14,000 in 1997, $5,000 in 1996 and $9,000 in 1995. The Partnership paid IRG
fees for property management services in the amounts of approximately $248,000,
$240,000 and $223,000 for the years ended December 31, 1997, 1996 and 1995,
respectively, and has paid IRG property management fees equal to $128,000
during the first six months of 1998. The Partnership reimbursed the General
Partner and its affiliates (including Insignia) for expenses incurred in
connection with asset management and partnership administration services
performed by them for the Partnership for the years ended December 31, 1997,
1996 and
18
1995 in the amounts of $124,000, $178,000 and $120,000, respectively, and has
reimbursed them for such services in the amount of $56,000 through June 30,
1998 (including reimbursements paid to an affiliate of the General Partner in
the amounts of $11,000 and $54,000 for the years ended December 31, 1997 and
1996, respectively, for costs incurred in connection with construction
oversight services). The Partnership paid approximately $1,000 for the six
months ended June 30, 1998 to an affiliate of the General Partner for costs
incurred in connection with construction oversight services. Pursuant to the
Limited Partnership Agreement, the General Partner is entitled to receive a fee
for executive and administrative management services equal to 9% of the
Partnership's adjusted cash from operations, as and when cash from operations
is distributed to the Limited Partners. The fees paid to the General Partner
pursuant to this provision were approximately $123,000, $41,000 and $82,000 for
the years ended December 31, 1997, 1996 and 1995, respectively, and
approximately $31,000 for the six months ended June 30, 1998. For the period
January 1, 1996 through December 31, 1996, the Partnership insured its
properties under a master policy through an agency and insurer unaffiliated
with the General Partner, and through an agency affiliated with the General
Partner for the period January 1, 1997 through August 31, 1997. An affiliate of
the General Partner acquired, in the acquisition of a business, certain
financial obligations from an insurance agency which was later acquired by the
agent who placed the current year's master policy. That agent assumed the
financial obligations to the affiliate of the General Partner who received
payments on these obligations from the agent. Insignia and the General Partner
believe that the aggregate financial benefit derived by Insignia and its
affiliates from such arrangement was immaterial.
SECTION 11. CERTAIN INFORMATION CONCERNING THE PURCHASER, IPLP, IPT
AND INSIGNIA.
The Purchaser. The Purchaser (which is an affiliate of the General
Partner) is a recently formed entity controlled by IPT and organized for the
purpose of making tender offers (including the Offer). The Purchaser is a
wholly-owned subsidiary of IPLP. The Purchaser (which is an affiliate of the
General Partner) has not engaged in any business activity other than in
connection with the Offer and certain other tender offers for units of limited
partnership interests in other IPT Partnerships (as defined below).
The principal executive offices of the Purchaser (which is an
affiliate of the General Partner) are located at One Insignia Financial Plaza,
P.O. Box 19059, Greenville, South Carolina 29602, and its telephone number is
(000) 000-0000. For certain information concerning the managers of the
Purchaser (which is an affiliate of the General Partner), see Schedule I to
this Offer to Purchase.
IPT and IPLP. IPT was formed by Insignia in May 1996 for the purpose
of acquiring and owning interests in multi-family residential properties,
principally through ownership of limited and general partner interests in real
estate limited partnerships (including the Partnership). IPT has been organized
and operates in a manner that will qualify it to be taxed as a real estate
investment trust ("REIT") under the Code. Substantially all of IPT's
investments are held through IPLP, which is the operating partnership of IPT.
IPT is presently the sole general partner and Insignia is presently the sole
limited partner of IPLP. IPT has engaged Insignia to provide certain investment
banking and related services to IPT and IPLP, including in connection with the
Offer.
Substantially all of IPT's assets consist of (i) interests in entities
which comprise or control the managing general partners of real estate limited
partnerships, including the Partnership (the "IPT Partnerships"), which
interests are held by IPT directly, and (ii) limited partner interests in the
IPT Partnerships, which interests are held through IPLP. The IPT Partnerships
own, in the aggregate, 349 properties containing approximately 73,000
residential apartment units and approximately 5.8 million square feet of
commercial space. See Schedule IV for a list of the IPT Partnerships in which
IPT has a material investment.
On September 17, 1998, Angeles Mortgage Investment Trust, an
unincorporated California business trust whose Class A shares have been trading
on the American Stock Exchange under the symbol ANM ("AMIT"), was merged with
and into IPT, with IPT being the surviving entity (the "AMIT Merger"). As a
result of the AMIT Merger, IPT's common shares are now listed and traded on the
American Stock Exchange under the symbol FFO.
IPT is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is required to file periodic reports,
proxy statements and other information with the Commission relating
19
to its business, financial condition and other matters. Certain information, as
of particular dates, concerning IPT's business, principal properties, capital
structure, material pending legal proceedings, operating results, financial
condition, directors and officers (including their remuneration and stock
options granted to them), the principal holders of IPT's securities, any
material interests of such persons in transactions with IPT and certain other
matters is required to be disclosed in proxy statements and annual reports
distributed to IPT's shareholders and filed with the Commission. Such reports,
proxy statements and other information may be inspected and copied at the
Commission's public reference facilities and should also be available for
inspection in the same manner as set forth with respect to the Partnership in
Section 9.
The principal executive offices of IPT and IPLP are located at One
Insignia Financial Plaza, P.O. Box 19059, Greenville, South Carolina 29602, and
the telephone number of each is (000) 000-0000. For certain information
concerning the trustees and executive officers of IPT, see Schedule II to this
Offer to Purchase. IPLP does not have any officers or employees.
Set forth below is certain consolidated financial information with
respect to IPT, IPLP and its consolidated subsidiaries for its fiscal years
ended December 31, 1997 and 1996 and the six-month periods ended June 30, 1998
and 1997. More comprehensive financial and other information is included in
IPT's Registration Statement on Form S-4, as most recently amended on August
10, 1998 (including management's discussion and analysis of financial condition
and results of operations), and in other reports and documents filed by IPT
with the Commission. The financial information set forth below is qualified in
its entirety by reference to such reports and documents filed with the
Commission and the financial statements and related notes contained therein.
These reports and other documents may be examined and copies thereof may be
obtained in the manner set forth above.
INSIGNIA PROPERTIES TRUST SELECTED
CONSOLIDATED FINANCIAL INFORMATION (in
thousands, except share and unit data)
SIX MONTHS ENDED SIX MONTHS ENDED YEAR ENDED YEAR ENDED
JUNE 30, 1998 JUNE 30, 1997 DECEMBER 31, 1997 DECEMBER 31, 1996
------------------ ------------------ ------------------- -------------------
(unaudited) (unaudited) (audited) (audited)
Statements of Operations Data:
Revenues.......................... $ 12,977 $ 6,715 $ 16,826 $ 9,705
Income Before Extraordinary Item.. $ 9,164 $ 1,248 $ 6,074 $ 3,557
Net Income........................ $ 8,907 $ 1,248 $ 6,004 $ 2,425
Supplemental Data:
Funds From Operations(1).......... $ 16,825 $ 8,718 $ 20,939 $ 12,563
IPT Common Shares Outstanding..... 19,427,760 15,501,487 18,573,151 11,168,036
IPLP Units Outstanding............ 9,934,476 8,399,499 9,415,947 8,399,499
----------- ----------- ---------- ----------
IPT Common Shares and IPLP
Units Outstanding(2).......... 29,362,236 23,900,986 27,989,098 19,567,535
========== ========== ========== ==========
Balance Sheets Data:
Cash.............................. $ 14,639 $ 35,520 $ 37,432 $ 4,928
Investments in IPT Partnerships(3) $ 192,832 $ 124,951 $ 159,469 $ 118,741
Long-Term Debt.................... $ 21,951 $ 19,950 $ 19,300 $ 19,730
Shareholders' Equity(4)........... $ 212,697 $ 163,466 $ 200,659 $ 121,068
(1) Funds from Operations represent income or loss from real estate operations,
which is net income or loss in accordance with GAAP, excluding gains or
losses from debt restructuring or sales of property, plus depreciation and
provision for impairment.
(2) Assumes all outstanding IPLP units are exchanged for IPT Common Shares.
(3) As of June 30, 1998, represented IPT's investment in 41 of the 124 IPT
Partnerships which IPT accounts for using the equity method. Of the
remaining 83 IPT Partnerships, IPT accounts for 81 using the cost method
and two using the consolidation method.
(4) Includes Insignia's minority interest in IPLP.
20
Insignia. Insignia is a fully integrated real estate services
organization. Insignia is the largest manager of multi-family residential
properties in the United States and is among the largest managers of commercial
properties. Insignia's real estate services include property management,
providing all of the day-to-day services necessary to operate a property,
whether residential or commercial; asset management, including long-term
financial planning, monitoring and implementing capital improvement plans, and
development and execution of refinancings and dispositions; real estate leasing
and brokerage; maintenance and construction services; marketing and
advertising; investor reporting and accounting; and investment banking,
including assistance in workouts and restructurings, mergers and acquisitions,
and debt and equity securitizations.
Insignia provides property and/or asset management services for
approximately 3,800 properties, which include approximately 272,000 residential
units (including cooperative and condominium units), and in excess of 208
million square feet of retail, commercial and industrial space, located in over
500 cities in 48 states, Italy, the United Kingdom and Germany. Insignia
currently provides partnership administration services to approximately 900
limited partnerships having approximately 350,000 limited partners. Insignia is
a public company whose stock is traded on the New York Stock Exchange under the
symbol IFS.
On March 17, 1998, Insignia and Apartment Investment and Management
Company, a Maryland corporation ("AIMCO"), entered into a definitive merger
agreement (as amended and restated, the "AIMCO Merger Agreement"), pursuant to
which substantially all of Insignia's residential real estate operations and
ownership interests, including its interests in IPT and IPLP, are to be merged
with and into AIMCO, with AIMCO as the surviving corporation (the "AIMCO
Merger"). AIMCO is a public REIT whose Class A shares trade on the New York
Stock Exchange under the symbol AIV. The AIMCO Merger is expected to close on
October 1, 1998.
Assuming the AIMCO Merger is consummated, AIMCO will succeed to
Insignia's ownership of IPT and IPLP, and thus IPT (and the Partnership) will
thereafter be controlled by AIMCO. In addition, AIMCO is required pursuant to
the AIMCO Merger Agreement to acquire all of the outstanding shares of IPT not
owned by Insignia by causing IPT to merge with and into AIMCO (or a subsidiary
of AIMCO) as soon as practicable after the consummation of the AIMCO Merger, in
which event IPT would cease to exist as a separate entity and AIMCO would
effectively own all of the Class B Units acquired by the Purchaser pursuant to
the Offer.
Insignia is subject to the information and reporting requirements of
the Exchange Act and in accordance therewith is required to file periodic
reports, proxy statements and other information with the Commission relating to
its business, financial condition and other matters. Certain information, as of
particular dates, concerning Insignia's business, principal properties, capital
structure, material pending legal proceedings, operating results, financial
condition, directors and officers (including their remuneration and stock
options granted to them), the principal holders of Insignia's securities, any
material interests of such persons in transactions with Insignia and certain
other matters is required to be disclosed in proxy statements and annual
reports distributed to Insignia's shareholders and filed with the Commission.
Such reports, proxy statements and other information may be inspected and
copied at the Commission's public reference facilities and should also be
available for inspection in the same manner as set forth with respect to the
Partnership in Section 9.
Insignia's principal executive offices are located at Xxx Xxxxxxxx
Xxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, and its telephone number is
(000) 000-0000. For certain information concerning the directors and executive
officers of Insignia, see Schedule III to this Offer to Purchase.
Set forth below is certain consolidated financial information with
respect to Insignia and its consolidated subsidiaries for its fiscal years
ended December 31, 1997, 1996 and 1995 and the six-month periods ended June 30,
1998 and 1997. More comprehensive financial and other information is included
in Insignia's Annual Report on Form 10-K for the year ended December 31, 1997
(including management's discussion and analysis of financial condition and
results of operations) and in other reports and documents filed by Insignia
with the Commission. The financial information set forth below is qualified in
its entirety by reference to such reports and documents filed with the
Commission and the financial statements and related notes contained therein.
These reports and other documents may be examined and copies thereof may be
obtained in the manner set forth above.
21
INSIGNIA FINANCIAL GROUP, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except per share data)
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
------------------------- --------------------------------------
1998 1997 1997 1996 1995
----------- ------------ ------------ ------------ -----------
(unaudited)
Statements of Operations Data:
Total Revenues.................................. $ 281,254 $ 154,527 $ 400,843 $ 227,074 $ 123,032
Income Before Taxes and Extraordinary Item...... $ 12,134 $ 7,630 $ 17,055 $ 14,946 $ 10,093
Net Income...................................... $ 6,674 $ 4,578 $ 10,233 $ 8,564 $ 5,806
Earnings Per Share.............................. $ 0.19 $ 0.14 $ 0.32 $ 0.26 $ 0.20
AS OF AS OF
JUNE 30, DECEMBER 31,
------------------------- --------------------------------------
1998 1997 1997 1996 1995
----------- ------------ ------------ ------------ -----------
(unaudited)
Balance Sheets Data:
Cash and Cash Equivalents....................... $ 57,807 $ 88,847 $ 88,847 $ 54,614 $ 49,846
Receivables..................................... $ 147,569 $ 122,180 $ 122,180 $ 46,040 $ 26,445
Total Assets................................ $ 954,189 $ 800,223 $ 800,223 $ 492,402 $ 245,409
Accounts Payable................................ $ 16,205 $ 13,705 $ 13,705 $ 1,711 $ 1,497
Commissions Payable............................. $ 54,467 $ 51,285 $ 51,285 $ 18,736 $ 602
Accrued and Sundry Liabilities.................. $ 105,658 $ 102,009 $ 102,009 $ 40,741 $ 25,619
Long-Term Debt.................................. $ 289,335 $ 189,704 $ 189,704 $ 69,140 $ 42,996
Total Liabilities........................... $ 465,665 $ 356,703 $ 356,703 $ 130,328 $ 70,714
Redeemable Convertible Preferred Stock.......... -- -- -- -- $ 15,000
Redeemable Convertible Preferred Securities
of Subsidiary Trust........................... $ 144,210 $ 144,065 $ 144,065 $ 144,169 --
Minority Interest in Consolidated Subsidiaries.. $ 66,484 $ 61,546 $ 61,546 -- $ 2,682
Shareholders' Equity........................ $ 277,830 $ 237,909 $ 237,909 $ 217,905 $ 157,013
Except as otherwise set forth herein, none of the Purchaser (which is
an affiliate of the General Partner), IPLP, IPT, Insignia or, to the best of
the Purchaser's knowledge, any of the persons listed on Schedules I, II or III
hereto, or any affiliate of the foregoing, (i) beneficially owns or has a right
to acquire any Class B Units, (ii) has effected any transaction in the Class B
Units in the last 60 days, or (iii) 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.
Xxxxxx X. Xxxxxx, who is the Chairman of the Board, Chief Executive Officer and
President of Insignia and a trustee of IPT, beneficially owns approximately 18%
of Insignia's outstanding common stock and, as a result, may be deemed to
beneficially own the Class B Units owned by IPLP.
SECTION 12. SOURCE OF FUNDS. The Purchaser (which is an affiliate of
the General Partner) expects that approximately $500,000 will be required to
purchase 11,000 Class B Units, if tendered, and to pay related fees and
expenses. The Purchaser (which is an affiliate of the General Partner) expects
to obtain all of those funds from IPLP, which in turn intends to use its cash
on hand and borrowings from its credit facility with a commercial bank and
financial institution. The Purchaser has not conditioned the Offer on obtaining
financing.
The following is a summary description of the existing credit facility
(the "Facility") provided for the benefit of IPLP pursuant to the Credit
Agreement, dated as of December 30, 1997 (the "Credit Agreement"), among IPLP,
as borrower, Xxxxxx Commercial Paper, Inc., as syndication agent, First Union
National Bank, as administrative agent and the lenders from time to time
parties thereto (the "Lenders"). This summary description does not purport to
be complete and is qualified in its entirety by reference to the Credit
Agreement, a copy of
22
which has been filed as an exhibit to the Purchaser's Tender Offer Statement on
Schedule 14D-1 filed with the Commission.
Pursuant to the Credit Agreement, the Lenders have made available to
IPLP a revolving credit facility of up to $50 million at any one time
outstanding. Loans under the Facility (the "Loans") may be utilized to finance
certain permitted investments and refinance certain investments made prior to
the date of the Credit Agreement.
The Facility matures in a single installment on December 30, 2000.
Loans bear interest, at IPLP's election, (i) at a rate equal to the
higher of (a) the rate announced from time to time by First Union National Bank
as its base lending rate or (b) the daily effective federal funds rate as
quoted by First Union National Bank; or (ii) at rates based on the London
interbank offered rate, as adjusted for certain reserve and other requirements
applicable to lenders, for one-, two-, three- or six-month periods plus an
interest margin of 2.50%. As of the date hereof, IPT has $30 million of
outstanding indebtedness under the Facility.
IPT is obligated to pay a commitment fee at a rate of 0.25% per annum
on the undrawn portion of the Facility. Such commitment fee is payable
quarterly in arrears and calculated based on the actual number of days elapsed
over a 365-day year.
The Loans are subject to mandatory prepayment only to the extent that
the aggregate outstanding principal amount of the Loans on any day exceeds the
amount of the Facility then in effect. Voluntary prepayments of the Loans and
voluntary reductions of the Facility are permitted, in whole or in part, at the
option of IPLP in minimum principal amounts, without premium or penalty,
subject to reimbursement of certain of the Lenders' costs under certain
conditions.
IPLP's obligations under the Facility have been guaranteed by IPT and
such guaranty is secured by a first priority pledge of and security interest in
the capital stock or other equity interests held by IPT in each of the
subsidiaries of IPT which directly or indirectly owns or controls the general
partner interest (including an interest in the Managing General Partner) in any
Real Estate Entity (as defined below) in which IPLP directly or indirectly owns
a limited partner interest (including the Partnership). In addition, the
Facility is secured by a first priority pledge of and security interest in all
limited partnership interests from time to time owned by IPLP and the equity
interests from time to time held by IPLP in any subsidiary of IPLP which itself
owns limited partnership interests. The Credit Agreement defines a "Real Estate
Entity" as any limited partnership, limited liability company, corporation or
other entity which has as its principal business the ownership of real property
or debt secured by real property. Thus, the IPT Partnerships (including the
Partnership) constitute Real Estate Entities for purposes of the Credit
Agreement.
The Facility contains representations and warranties, conditions
precedent, covenants, events of default and other provisions customarily found
in similar transactions.
SECTION 13. BACKGROUND OF THE OFFER.
Affiliation With the General Partner. Upon the Partnership's formation
in 1986, Consolidated Capital Equities Corporation ("CCEC"), a Colorado
corporation, was the sole general partner and Multi-Benefit '87-1 Depositary
Corporation, a wholly-owned subsidiary of CCEC, was the sole limited partner.
As a result of a succession of agreements, CCEC became the managing general
partner. In 1988, through a series of transactions, Southmark Corporation
acquired control of CCEC. In December 1988, CCEC filed for reorganization under
Chapter 11 of the United States Bankruptcy Code. In 1990, as part of CCEC's
reorganization plan, the General Partner acquired CCEC's interest as managing
general partner of the Partnership and its general partner interests in the
Partnership and in 15 other affiliated public limited partnerships (the
"Affiliated Partnerships") and the General Partner replaced CCEC as the general
partner of the Partnership (and as the general partner of each of the
Affiliated Partnerships). The selection of the General Partner as the general
partner of the Partnership (and of each of the Affiliated Partnerships) was
approved by a majority of the Limited Partners in the Partnership (and by a
majority of the limited partners in each of the Affiliated Partnerships)
pursuant to solicitations commenced in August
23
1990. Insignia acquired the stock of the General Partner through two
transactions in December 1994 and October 1995, and contributed that stock to
IPT in December 1996 in connection with IPT's formation.
Previous Tender Offer. Madison River Properties, L.L.C. ("Madison
River") acquired 13,822 (or approximately 18.4%) of the outstanding Class B
Units, at a purchase price of $25 per Class B Unit, pursuant to a tender offer
commenced in December 1997. Madison River is an affiliate of IPLP, IPT,
Insignia and the General Partner.
Determination of Purchase Price. In establishing the Purchase Price,
the Purchaser (which is an affiliate of the General Partner) reviewed certain
publicly available information and certain information made available to it by
the General Partner and its other affiliates, including among other things: (i)
the Limited Partnership Agreement, as amended to date; (ii) the Partnership's
Annual Report on Form 10-KSB for the year ended December 31, 1997 and the
Partnership's Quarterly Report on Form 10-QSB for the period ended June 30,
1998; (iii) unaudited results of operations of the Partnership's properties for
the period since the beginning of the Partnership's current fiscal year; (iv)
the operating budgets prepared by IRG with respect to the Partnership's
properties for the year ending December 31, 1998; (v) independent appraisals of
two of the Partnership's properties; and (vi) other information obtained by
IRG, Insignia and other affiliates in their capacities as providers of property
management, asset management and partnership administration services to the
Partnership. The Purchaser's determination of the Purchase Price was based on
its review and analysis of the foregoing information, the other financial
information and analyses concerning the Partnership summarized below. In
determining the Purchase Price, the Purchaser did not rely upon any material,
non-public information concerning the Partnership not summarized below or
elsewhere in this Offer to Purchase.
Trading History of Class B Units. Secondary market sales activity for
the Class B Units, including privately negotiated sales, has been limited and
sporadic. According to information obtained from the General Partner, from July
1, 1996 to June 30, 1998 an aggregate of 1,296 Class B Units (representing less
than 1.8% of the total outstanding Class B Units) was transferred (excluding
the Class B Units transferred to IPLP in December 1996 in connection with the
formation of IPT and the Units acquired by an affiliate of IPT and Insignia
pursuant to a tender offer commenced in December 1997) in sale transactions.
Set forth in the table below are the high and low sales prices of Class B Units
for the quarterly periods from July 1, 1996 to June 30, 1998, as reported by
the General Partner and by The Partnership Spectrum, which is an independent,
third-party source. The gross sales prices compiled by The Partnership Spectrum
do not necessarily reflect the net sales proceeds received by sellers of Class
B Units, which typically are reduced by commissions and other secondary market
transaction costs to amounts less than the reported prices; thus the Purchaser
does not know whether the information reported by The Partnership Spectrum is
accurate or complete. The transfer paperwork submitted to the General Partner
often does not include the requested price information or contains conflicting
information as to the actual sales price; accordingly, Limited Partners should
not rely upon this information as being completely accurate.
24
MULTI-BENEFIT REALTY FUND '87-1
REPORTED SALES PRICES OF PARTNERSHIP CLASS B UNITS
AS REPORTED BY AS REPORTED BY
THE GENERAL PARTNER(A) THE PARTNERSHIP SPECTRUM(B)
---------------------------------- ----------------------------------
LOW SALES HIGH SALES LOW SALES HIGH SALES
PRICE PRICE PRICE PRICE
PER CLASS B UNIT PER CLASS B UNIT PER CLASS B UNIT PER CLASS B UNIT
---------------- ---------------- ---------------- ----------------
Fiscal Year Ended December 31, 1998:
Second Quarter.......................... $26 $26 (e) (e)
First Quarter........................... 40 88(d) (e) (e)
Fiscal Year Ended December 31, 1997:
Fourth Quarter.......................... 4 15 (e) (e)
Third Quarter........................... 20 20 (e) (e)
Second Quarter.......................... 20 20 (e) (e)
First Quarter .......................... (c) (c) (e) (e)
Fiscal Year Ended December 31, 1996:
Fourth Quarter ......................... 1 10 (e) (e)
Third Quarter........................... 8 10 (e) (e)
(a) Although the General Partner requests and records information on the
prices at which Class B Units are sold, it ny. The regularly receive or
maintain information regarding the bid or asked quotations of secondary
market makers, if ahe prices in the General Partner processes transfers of
Class B Units only 12 times per year - on the first day of each month.
Tnsferred in sale table are based solely on information provided to the
General Partner by sellers and buyers of Class B Units xxxx XXX account,
transactions (i.e., excluding transactions believed to result from the
death of a Limited Partner, rollover to aified or non-qualified
establishment of a trust, trustee to trustee transfers, termination of a
benefit plan, distributions from a qual plan, uniform gifts, abandonment
of Class B Units or similar non-sale transactions). ceived by sellers
(b) The gross sales prices reported by The Partnership Spectrum do not
necessarily reflect the net sales proceeds reunts less than of Class B
Units, which typically are reduced by commissions and other secondary
market transaction costs to amoormation the reported prices. The Purchaser
(which is an affiliate of the General Partner) does not know whether the
inf compiled by The Partnership Spectrum is accurate or complete.
(c) No Class B Units were reported by the General Partner as having been sold
during the quarter.
(d) The General Partner has information that indicates that this reported
sales price represented a single, isolatedl other minimal number of Class
B Units and such sales price was materially higher than the range of sales
prices for alate of the purchaser transactions during the quarter. In
addition, the General Partner has information that indicates that an
affilit a lower price in that isolated transaction recently commenced a
tender offer for up to 4.9% of the outstanding Class B Units ately 5% less
than than it paid in that isolated transaction. Excluding that isolated
transaction, the Purchase Price is approxima the next highest sales price
for other transactions during the six-month period prior to June 30, 1998.
(e) No Class B Units were reported by The Partnership Spectrum as having been
sold during the quarter.
The Purchaser (which is an affiliate of the General Partner) believes
that, although secondary market sales information probably is not a reliable
measure of value because of the limited and inefficient nature of the market
for Class B Units, this information may be relevant to a Limited Partner's
decision as to whether to tender its Class B Units pursuant to the Offer. At
present, privately negotiated sales and sales through intermediaries (e.g.,
through the trading system operated by American Partnership Board, Inc., which
publishes sell offers by holders of Class B Units) are the only means available
to a Limited Partner to liquidate an investment in Class B Units (other than
the Offer) because the Class B Units are not listed or traded on any exchange
or quoted on NASDAQ.
Appraisals. Two of the Partnership's properties were appraised in 1996
by an independent, third party appraiser, Xxxxxxx Tener Real Estate Services,
Inc. ("KTR"), in connection with an initial financing of one property and a
refinancing of the other property. According to the appraisal reports, the
scope of the appraisals included an inspection of each property and an analysis
of the respective surrounding markets. In each case, KTR relied principally on
the income capitalization approach to valuation and secondarily on the sales
comparison approach, and represented that its report was prepared in accordance
with the Code of Professional Ethics and Standards of Professional Appraisal
Practice of the Appraisal Institute and the Uniform Standards of Professional
Appraisal Practice, and in compliance with the Appraisal Standards set forth in
the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (known
as "FIRREA"). The estimated market value of the fee simple estate of each of
the Partnership's properties specified in those appraisal reports for the two
properties which were appraised in 1996 are set forth in the table below, and
copies of the summaries of those appraisals have been filed as exhibits
25
to the Purchaser's Tender Offer Statement on Schedule 14D-1 filed with the
Commission. Independent appraisals have not been conducted for the
Partnership's properties at any other time during the past three years.
APPRAISED DATE OF
PROPERTY NAME VALUE APPRAISAL
------------- --------------- ---------
Carlin Manor Apartments $ 4,750,000 04/12/96
Shadow Brook Apartments $ 11,750,000 04/25/96
General Partner's Estimate of Net Asset Value. An affiliate of the
General Partner prepared an estimate of the Partnership's net asset value per
Class B Unit in connection with an offer to purchase up to 4.9% of the
outstanding Class B Units commenced by a party unaffiliated with the Purchaser,
IPLP, IPT or Insignia in September 1998. That estimate of the Partnership's net
asset value per Class B Unit as of June 30, 1998 was $68. The General Partner's
affiliate estimates net asset value based on a hypothetical sale of the
Partnership's properties and the distribution to the Limited Partners and the
General Partner of the gross proceeds of such sales, net of related
indebtedness, together with the Partnership's cash, proceeds from temporary
investments, and all other assets that are believed to have liquidation value,
after provision in full for all of the Partnership's other known liabilities.
The net asset value estimate prepared by the General Partner's affiliate does
not take into account (i) timing considerations or (ii) costs associated with
winding up the Partnership. Therefore, the Purchaser believes that the General
Partner's estimate of net asset value per Class B Unit do not necessarily
represent either the fair market value of a Class B Unit or the amount a
Limited Partner reasonably could expect to receive if the Partnership's
properties were sold and the Partnership was liquidated. For this reason, the
Purchaser considered the net asset value estimate prepared by the General
Partner's affiliate to be less meaningful in determining the Purchase Price
than the pro forma liquidation analysis described below.
Purchaser's Estimate of Gross Real Estate Value. In estimating the
gross real estate value of the Partnership's properties, the Purchaser utilized
the capitalization of income approach. The estimate of the gross real estate
value of the Partnership's properties prepared by the Purchaser does not
purport to be an estimate of the aggregate fair market value of the Class B
Units themselves, nor should it be viewed as such by Limited Partners. Neither
the Purchaser nor any of its affiliates prepared any estimates of the values of
the Partnership's properties based upon any other valuation method.
The following is a description of the methodology employed by the
Purchaser in preparing such estimates of the values of the properties owned by
the Partnership (as used below, "net operating income" is calculated before
depreciation, amortization, debt service payments and certain capital
expenditure items):
CARLIN MANOR APARTMENTS. In estimating the value of this property, the
Purchaser reviewed the income ($782,767) generated by the property for the six
months ended June 30, 1998 (comprised of $736,104 of gross rental income and
$46,663 of other income), and then deducted from this amount the total
operating expenses of the property for the six months ($381,747), resulting in
the Purchaser's estimate of net operating income for the six months ($401,020).
The Purchaser then annualized this amount, resulting in estimated annual net
operating income of $802,040, and then reduced that annualized net operating
income amount by $400 per apartment unit, representing the Purchaser's estimate
of the adjustment that would be imputed by a third party purchaser in
underwriting the operating expenses, including normal replacement reserves, of
the property for valuation purposes. Finally, the Purchaser capitalized its
estimated adjusted net operating income amount ($690,840) at an 11.5%
capitalization rate, resulting in an estimated gross property value of
$6,007,304.
XXXX CLUB APARTMENTS. In estimating the value of this property, the
Purchaser reviewed the income ($725,975) generated by the property for the six
months ended June 30, 1998 (comprised of $692,274 of gross rental income and
$33,701 of other income), and then deducted from this amount the total
operating expenses of the property for the six months ($446,483), resulting in
the Purchaser's estimate of net operating income for the six months ($279,492).
The Purchaser then annualized this amount, resulting in estimated annual net
operating income of $558,984, and then increased that annualized net operating
income amount by $300 per apartment unit, representing the Purchaser's estimate
of the adjustment that would be imputed by a third party purchaser in
26
underwriting the operating expenses, including normal replacement reserves, of
the property for valuation purposes. Finally, the Purchaser capitalized its
estimated adjusted net operating income amount ($618,984) at a 10%
capitalization rate, resulting in an estimated gross property value of
$6,189,840.
SHADOW BROOK APARTMENTS. In estimating the value of this property, the
Purchaser reviewed the income ($1,055,617) generated by the property for the
six months ended June 30, 1998 (comprised of $1,006,150 of gross rental income
and $49,467 of other income), and then deducted from this amount the total
operating expenses of the property for the six months ($398,632), resulting in
the Purchaser's estimate of net operating income for the six months ($656,985).
The Purchaser then annualized this amount, resulting in estimated annual net
operating income of $1,313,970, and then reduced that annualized net operating
income amount by $300 per apartment unit, representing the Purchaser's estimate
of the adjustment that would be imputed by a third party purchaser in
underwriting the operating expenses, including normal replacement reserves, of
the property for valuation purposes. Finally, the Purchaser capitalized its
estimated adjusted net operating income amount ($1,223,970) at a 9.25%
capitalization rate, resulting in an estimated gross property value of
$13,232,108.
Based on the individual estimates of the gross values of the
Partnership's properties described above, the Purchaser estimated that the
current aggregate gross real estate value of the Partnership's properties is
$25,429,252 (the "Gross Real Estate Value Estimate"). The property-specific
capitalization rates used by the Purchaser in the valuation estimates described
above were based upon the Purchaser's, IPT's and Insignia's general knowledge
of the revenues and expenses associated with operating multi-family properties
in the markets in which the Partnership's properties are located, their general
knowledge of property values in those markets and their experience in the real
estate market in general.
Although there are several other methods of estimating the value of
real estate of this type, the Purchaser believes that this approach represents
a reasonable method of estimating the aggregate gross value of the
Partnership's properties (without taking into account the costs of disposing of
the properties), subject to the substantial uncertainties inherent in any
estimate of value. The use of other assumptions, however, particularly as to
the applicable capitalization rate, could produce substantially different
results. None of the Purchaser, IPT or Insignia solicited any offers or
inquiries from prospective buyers of the Partnership's properties in connection
with preparing the Purchaser's estimates of the fair market values of those
properties, and the actual amounts for which the Partnership's properties might
be sold could be significantly higher or significantly lower than the
Purchaser's estimates.
The Gross Real Estate Value Estimate does not take into account (i)
the debt encumbering the Partnership's properties or the other liabilities of
the Partnership, (ii) cash and other assets held by the Partnership, (iii) real
estate transaction costs that would be incurred on a sale of the Partnership's
properties, such as brokerage commissions and other selling and closing
expenses, (iv) timing considerations or (v) costs associated with winding up
the Partnership. For this reason, the Purchaser considers the Gross Real Estate
Value Estimate to be less meaningful in evaluating the Purchase Price offered
by the Purchaser than its pro forma estimate of the net liquidation value per
Class B Unit described below.
Purchaser's Pro Forma Estimate of Net Liquidation Value per Class B
Unit. The Purchaser is offering to purchase Class B Units, which are a
relatively illiquid investment, and is not offering to purchase the
Partnership's underlying assets or assume any of its liabilities. Consequently,
the Purchaser does not believe that the per-Class B Unit amount which might be
distributed to Limited Partners following a future sale of all the
Partnership's properties necessarily reflects the present fair value of a Class
B Unit. Conversely, the realizable value of the Partnership's assets clearly is
a relevant factor in determining the price a prudent purchaser would offer for
Class B Units. In considering this factor, the Purchaser made a pro forma
calculation of the amount each Limited Partner might receive in a theoretical
orderly liquidation of the Partnership (which may not be realistically
possible, particularly in the near term, due to real estate market conditions,
the general difficulty of disposing of real estate in a short period of time,
and other general economic factors), based on the Gross Real Estate Value
Estimate described above and the other considerations described below. The
Purchaser based its pro forma liquidation analysis on the Gross Real Estate
Value Estimate (and thus on the Purchaser's estimates of the values of the
Partnership's properties described above), as opposed to the appraised values
of the Partnership's properties
27
or the values estimated by the General Partner (each, as described above),
because the Purchaser believes that the Gross Real Estate Value Estimate
represents the best estimate, based on currently available information, of the
values of the Partnership's properties.
In estimating the pro forma net liquidation value per Class B Unit,
the Purchaser adjusted its Gross Real Estate Value Estimate of $25,429,252 to
reflect the Partnership's other assets and liabilities (excluding prepaid and
deferred expenses and security deposits). Specifically, the Purchaser added the
amounts of cash, accounts receivable and escrow deposits shown on the
Partnership's unaudited balance sheet at June 30, 1998 ($2,010,000), and
subtracted the mortgage debt encumbering the Partnership's properties
($12,251,000) and all other liabilities shown on that balance sheet ($726,000).
The Purchaser then deducted $1,017,170, representing a reserve equal to 4% of
the Gross Real Estate Value Estimate (which represents the Purchaser's estimate
of the probable costs of brokerage commissions, real estate transfer taxes and
other disposition expenses). The result, $13,445,082, represents the
Purchaser's pro forma estimate of the aggregate net liquidation proceeds
(before provision for the costs described in the following sentence) which
could be realized on an orderly liquidation of the Partnership, based on the
assumptions implicit in the calculations described above. The Purchaser did
not, however, deduct any amounts in respect of the legal and other costs which
the Purchaser expects would be incurred in a liquidation, including costs of
negotiating purchase and sale contracts, possibly conducting a consent
solicitation in order to obtain the Limited Partners' approvals for the sales
as may be required by the Limited Partnership Agreement, and winding up the
Partnership, because of the difficulty of estimating those amounts.
To complete its pro forma estimate of the amount of the theoretical
liquidation proceeds that would be distributable per Class B Unit, the
Purchaser then deducted 1%, which is the percentage allocable to the General
Partner in respect of its non-subordinated interest in the Partnership. Of the
remaining $13,310,631, Limited Partners holding the Class A Units are entitled
to $2,064,239 ($21.44 per Class A Unit), which represents the amount of the
unpaid Priority Return as of June 30, 1998. The remaining $11,246,302 is then
allocated pro rata among the holders of Class B Units and Class A Units based
on their relative initial capital contributions (approximately 44% for the
Class B Units and 56% for the Class A Units). Limited Partners holding Class B
Units are entitled to receive $4,948,373, representing the aggregate net
liquidation proceeds payable to holders of Class B Units, which the Purchaser
then divided by the 75,152 Class B Units reported as outstanding by the General
Partner as of September 1, 1998. The resulting estimated pro forma liquidation
value was $65.84 per Class B Unit (the "Estimated Liquidation Value"), before
provision for the legal and other costs of liquidating the Partnership
described in the last sentence of the preceding paragraph.
The Purchaser's pro forma liquidation analysis described above is
merely theoretical and does not itself reflect the value of the Class B Units
because (i) there is no assurance that any such liquidation in fact will occur
in the foreseeable future and (ii) any liquidation in which the estimated fair
market values described above might be realized would take an extended period
of time (at least a year, and quite possibly significantly longer), during
which time the Partnership and its partners would continue to be exposed to the
risk of fluctuations in asset values because of changing market conditions and
other factors. For any property sales in which the Partnership is required to
indemnify the buyer for matters arising after the closing, a portion of the
sales proceeds could be held by the Partnership until all possible claims are
satisfied, further extending the delay in the receipt by the Limited Partners
of liquidation proceeds. In light of these factors, the Purchaser (which is an
affiliate of the General Partner) believes the actual current value of the
Class B Units is substantially less than its estimate of the Estimated
Liquidation Value. Conversely, there is a substantial possibility that the
per-Class B Unit value realized in an orderly liquidation could be greater than
the Estimated Liquidation Value. A reduction in either operating expenses or
capital expenditures from the levels reflected in the property operating
statements for the six months ended June 30, 1998 would result in a higher
liquidation value under the method described above. Similarly, a higher
liquidation value would result if a buyer applied lower capitalization rates
(reflecting a willingness to accept a lower rate of return on its investment)
to the applicable net operating income generated by the Partnership's
properties than the capitalization rates applied by the Purchaser. For example,
a 5% increase or decrease in the value of the Partnership's properties would
produce a corresponding increase or decrease in the Estimated Liquidation Value
of approximately $7 per Class B Unit. Furthermore, the analysis described above
is based on a series of assumptions, some of which may not be correct.
Accordingly, this analysis should be viewed merely as indicative
28
of the Purchaser's approach to valuing Class B Units and not as predictive of
the likely result of any future transactions.
Litigation. On March 24, 1998, certain persons claiming to own limited
partner interests in certain limited partnerships (including the Partnership)
whose general partners (the "General Partners") are affiliates of Insignia (the
"Partnerships") filed a purported class and derivative action in California
Superior Court in the County of San Mateo (the "San Mateo Complaint") against
Insignia, the General Partners (including the General Partner), certain persons
and entities who purportedly formerly controlled the General Partners, and
additional entities affiliated with and individuals who are officers, directors
and/or principals of several of the defendants. The San Mateo Complaint
contains allegations that, among other things, (i) the defendants breached
their fiduciary duties to the plaintiffs by selling or agreeing to sell their
"fiduciary positions" as stockholders, officers and directors of the General
Partners for a profit and retaining said profit rather than distributing it to
the plaintiffs; (ii) the defendants breached their fiduciary duties by
mismanaging the Partnerships and misappropriating the assets of the
Partnerships by (a) manipulating the operations of the Partnerships to depress
the trading price of limited partnership units (the "Units") of the
Partnerships; (b) coercing and fraudulently inducing unitholders to sell Units
to certain of the defendants at depressed prices; and (c) using the voting
control obtained by purchasing Units at depressed prices to entrench certain of
the defendants' positions of control over the Partnerships; and (iii) the
defendants breached their fiduciary duties to the plaintiffs by (a) selling
assets of the Partnerships such as mailing lists of unitholders; and (b)
causing the General Partners to enter into exclusive arrangements with their
affiliates to sell goods and services to the General Partners, the unitholders
and tenants of Partnership properties. The San Mateo Complaint also alleges
that the foregoing allegations constitute violations of various California
securities, corporate and partnership statutes, as well as conversion and
common law fraud. The San Mateo Complaint seeks unspecified compensatory and
punitive damages, an injunction blocking the sale of control of the General
Partners to AIMCO and a court order directing the defendants to discharge their
fiduciary duties to the plaintiffs. On June 24, 1998, the Managing General
Partner filed a motion seeking dismissal of the action. IPT and Insignia
believe that the allegations contained in the San Mateo Complaint are without
merit and intend to vigorously contest the plaintiffs' action.
On July 30, 1998, certain entities claiming to own limited partnership
interests in certain limited partnerships (including the Partnership) whose
general partners are affiliates of Insignia, IPT and the Purchaser (the
"Affiliated General Partners") filed a complaint in the Superior Court of the
State of California, County of Los Angeles (the "Los Angeles Complaint")
against Insignia, the Subject Partnerships (defined below), the Affiliated
General Partners (including the General Partner) and additional entities
affiliated with several of the defendants. The action involves 44 real estate
limited partnerships (each named as a defendant) in which the plaintiffs
allegedly own interests and which Insignia affiliates allegedly manage or
control (the "Subject Partnerships"). Plaintiffs allege that they have
requested from, but have been denied by each of the Subject Partnerships, lists
of their respective limited partners for the purpose of making tender offers to
purchase up to 4.9% of the units of limited partnership interest in each of the
Subject Partnerships. The Los Angeles Complaint also alleges that certain of
the defendants made tender offers to purchase units of limited partnership
interest in many of the Subject Partnerships, with the alleged result that
plaintiffs have been deprived of the benefits they would have realized from
ownership of the additional units. The plaintiffs assert eleven causes of
action, including breach of contract, unfair business practices, and violations
of the partnership statutes of the states in which the Subject Partnerships are
organized. Plaintiffs seek compensatory, punitive and treble damages. Insignia
was only recently served with the Los Angeles Complaint and has not yet
responded to it. Xxxxxxxx believes the claims to be without merit and intends
to defend the action vigorously.
SECTION 14. CONDITIONS OF THE OFFER. Notwithstanding any other term of
the Offer, the Purchaser (which is an affiliate of the General Partner) will
not be required to accept for payment or to pay for any Class B Units tendered
if all authorizations, consents, orders or approvals of, or declarations or
filings with, or expirations of waiting periods imposed by, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, necessary for the consummation of the
transactions contemplated by the Offer shall not have been filed, occurred or
been obtained prior to the Expiration Date. Furthermore, notwithstanding any
other term of the Offer and in addition to the Purchaser's right to withdraw
the Offer at any time before the Expiration Date, the Purchaser (which is an
affiliate of the General Partner) will not be required to accept for
29
payment or pay for any Class B Units not theretofore accepted for payment or
paid for and may terminate or amend the Offer as to such Class B Units if, at
any time on or after the date of the Offer and before the Expiration Date, any
of the following conditions exists:
(a) 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, purchase of or payment for any Class B Units by
the Purchaser (which is an affiliate of the General Partner), (ii) imposes or
confirms limitations on the ability of the Purchaser effectively to exercise
full rights of ownership of any Class B Units, including without limitation the
right to vote any Class B Units acquired by the Purchaser pursuant to the Offer
or otherwise on all matters properly presented to the Partnership's Limited
Partners, (iii) requires divestiture by the Purchaser of any Class B Units,
(iv) causes any material diminution of the benefits to be derived by the
Purchaser 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 Purchaser or the Partnership;
(b) there shall be any action taken, or any statute, rule, regulation
or order proposed, enacted, enforced, promulgated, issued or deemed applicable
to the Offer by any federal or state court, government or governmental
authority or agency, which might, directly or indirectly, result in any of the
consequences referred to in clauses (i) through (v) of paragraph (a) above;
(c) any change or development shall have occurred or been threatened
since the date of the Offer to Purchase, in the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects of the Partnership, which is or may be materially adverse to the
Partnership, or the Purchaser (which is an affiliate of the General Partner)
shall have become aware of any fact that does or may have a material adverse
effect on the value of the Class B Units;
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities exchange
or in the over-the-counter market in the United States, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any limitation by any governmental authority on, or other
event which might affect, the extension of credit by lending institutions or
result in any imposition of currency controls in the United States, (iv) a
commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States, (v) a material
change in United States or other currency exchange rates or a suspension of, or
imposition of a limitation on, the markets thereof, or (vi) in the case of any
of the foregoing existing at the time of the commencement of the Offer, a
material acceleration or worsening thereof; or
(e) it shall have been publicly disclosed or the Purchaser (which is
an affiliate of the General Partner) shall have otherwise learned that (i) more
than ten percent of the outstanding Class B Units have been or are proposed to
be acquired by another person (including a "group" within the meaning of
Section 13(d)(3) of the Exchange Act), or (ii) any person or group that prior
to such date had filed a Statement with the Commission pursuant to Section
13(d) or (g) of the Exchange Act has increased or proposes to increase the
number of Class B Units beneficially owned by such person or group as disclosed
in such Statement by two percent or more of the outstanding Class B Units.
The foregoing conditions are for the sole benefit of the Purchaser
(which is an affiliate of the General Partner) and may be asserted by the
Purchaser regardless of the circumstances giving rise to such conditions or may
be waived by the Purchaser in whole or in part at any time and from time to
time in its sole discretion. Any determination by the Purchaser (which is an
affiliate of the General Partner) concerning the events described above will be
final and binding upon all parties.
30
SECTION 15. CERTAIN LEGAL MATTERS.
General. The Purchaser (which is an affiliate of the General Partner)
is not aware of any filings, approvals or other actions by any domestic or
foreign governmental or administrative agency that would be required prior to
the acquisition of Class B Units by the Purchaser (which is an affiliate of the
General Partner) pursuant to the Offer, other than the filing of a Tender Offer
Statement on Schedule 14D-1 with the Commission (which has already been filed)
and any required amendments thereto. Should any such approval or other action
be required, it is the Purchaser's present intention that such additional
approval or action would be sought. Although there is no present intent to
delay the purchase of Class B Units tendered pursuant to the Offer pending
receipt of any such additional approval or the taking of any such action, 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 business might not have to be disposed of or other substantial
conditions complied with in order to obtain such approval or action, any of
which could cause the Purchaser (which is an affiliate of the General Partner)
to elect to terminate the Offer without purchasing Class B Units thereunder.
Antitrust. The Purchaser (which is an affiliate of the General
Partner) does not believe that the Xxxx-ScottRodino Antitrust Improvements Act
of 1976, as amended, is applicable to the acquisition of Class B Units
contemplated by the Offer.
Margin Requirements. The Class B Units are not "margin securities"
under the regulations of the Board of Governors of the Federal Reserve System
and, accordingly, those regulations generally are not applicable to the Offer.
SECTION 16. FEES AND EXPENSES. Except as set forth in this Section 16,
the Purchaser (which is an affiliate of the General Partner) will not pay any
fees or commissions to any broker, dealer or other person for soliciting
tenders of Class B Units pursuant to the Offer. The Purchaser (which is an
affiliate of the General Partner) has retained Beacon Hill Partners, Inc. to
act as Information Agent and Xxxxxx Trust Company of New York to act as
Depositary in connection with the Offer. The Purchaser (which is an affiliate
of the General Partner) will pay the Information Agent and the Depositary
reasonable and customary compensation for their respective services in
connection with the Offer, plus reimbursement for out-of-pocket expenses, and
has agreed to indemnify the Information Agent and the Depositary against
certain liabilities and expenses in connection therewith, including liabilities
under the federal securities laws. The Purchaser (which is an affiliate of the
General Partner) will also pay all costs and expenses of printing and mailing
the Offer and its legal fees and expenses.
SECTION 17. MISCELLANEOUS. The Purchaser (which is an affiliate of the
General Partner) is not aware of any jurisdiction in which the making of the
Offer is not in compliance with applicable law. If the Purchaser (which is an
affiliate of the General Partner) becomes aware of any jurisdiction in which
the making of the Offer would not be in compliance with applicable law, the
Purchaser will make a good faith effort to comply with any such law. If, after
such good faith effort, the Purchaser (which is an affiliate of the General
Partner) cannot comply with any such law, the Offer will not be made to (nor
will tenders be accepted from or on behalf of) Limited Partners residing in
such jurisdiction. In those jurisdictions whose securities or blue sky laws
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed to be made on behalf of the Purchaser (which is an affiliate of the
General Partner) by one or more registered brokers or dealers licensed under
the laws of that jurisdiction.
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser (which is an affiliate of the General
Partner) not contained in this Offer to Purchase or in the Assignment of
Partnership Interest and, if given or made, such information or representation
must not be relied upon as having been authorized.
31
The Purchaser (which is an affiliate of the General Partner), IPLP,
IPT and Insignia have filed with the Commission a Tender Offer Statement on
Schedule 14D-1, pursuant to Rule 14d-3 under the Exchange Act, furnishing
certain additional information with respect to the Offer, and may file
amendments thereto. The Schedule 14D-1 and any amendments thereto, including
exhibits, may be inspected and copies may be obtained at the same places and in
the same manner as set forth in Section 9 (except that they will not be
available at the regional offices of the Commission).
XXXXXX RIVER PROPERTIES, L.L.C.
SEPTEMBER 23, 1998
32
SCHEDULE I
INFORMATION REGARDING THE MANAGERS OF THE PURCHASER
Set forth in the table below are the name and the present principal occupations
or employment and the name, principal business and address of any corporation
or other organization in which such occupation or employment is conducted, and
the five-year employment history of each of the managers of the Purchaser. Each
person identified below is employed by Xxxxxxxx and is a United States citizen.
The principal business address of the Purchaser and, unless otherwise
indicated, the business address of each person identified below, is One
Insignia Financial Plaza, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000.
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
Xxxxxxx X. Xxxxx Xxxxxxx X. Xxxxx has been a Manager of the Purchaser since its inception in
375 Park Avenue July 1998. For additional information regarding Xx. Xxxxx, see Schedule II.
Suite 3401
New York, NY 10152
Xxxx X. Xxxxxxx Xxxx X. Xxxxxxx has been a Manager of the Purchaser since July 1998. For
000 Xxxx Xxxxxx additional information regarding Xx. Xxxxxxx, see Schedule III.
New York, NY 10166
Xxxxxx Xxxxxx Xxxxxx Xxxxxx has been a Manager of the Purchaser since its inception in July
1998. For additional information regarding Xx. Xxxxxx, see Schedules II and
III.
S-1
SCHEDULE II
INFORMATION REGARDING THE
TRUSTEES AND EXECUTIVE OFFICERS OF IPT
Set forth in the table below are the name and the present principal occupations
or employment and the name, principal business and address of any corporation
or other organization in which such occupation or employment is conducted, and
the five-year employment history of each of the trustees and executive officers
of IPT. Each person identified below is employed by Xxxxxxxx and is a United
States citizen. The principal business address of IPT and, unless otherwise
indicated, the business address of each person identified below, is One
Insignia Financial Plaza, Greenville, South Carolina 29602. Trustees are
identified by an asterisk.
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
Xxxxxx X. Xxxxxx* Xxxxxx X. Xxxxxx has served as a Trustee of IPT and as Chairman
000 Xxxx Xxxxxx of the Board of Trustees and Chief Executive Officer of IPT since
Suite 3401 December 1996. For additional information regarding Xx. Xxxxxx,
New York, NY 10152 see Schedule III.
Xxxxx X. Xxxxx* Xxxxx X. Xxxxx has served as a Trustee of IPT since its inception
in May 1996, and has served as President and Director of IPT since
December 1996. For additional information regarding Xx. Xxxxx, see
Schedule III.
Xxxxx X. Xxxxxxxx* Xxxxx X. Xxxxxxxx has served as a Trustee of IPT since December
102 Woodmont Boulevard 1996. Xx. Xxxxxxxx has also served as an Executive Managing
Suite 400 Director of IPT since December 1996. For additional information
Nashville, TN 37205 regarding Xx. Xxxxxxxx, see Schedule III.
Xxxxxxx X. Xxxxx Xxxxxxx X. Xxxxx has served as a Senior Vice President of IPT
000 Xxxx Xxxxxx since August 1997, and has served as Secretary of IPT since
Suite 3401 January 1998. From June until August 1997, Xx. Xxxxx served as
New York, NY 10152 a Vice President of IPT. Since April 1997, Xx. Xxxxx'x principal
occupation has been to serve as a Senior Vice President -Investment
Banking of Insignia. Prior to April 1997, Xx. Xxxxx'x principal
occupation was as an attorney with the law firm of Xxxxxx & Xxxxx,
New York, New York.
Xxxxxxx X. Xxxxx Xxxxxxx X. Xxxxx has served as the Controller of IPT since August
1997. Since April 1995, Mr. Xxxxx' principal occupation has been
to serve as an accountant with Insignia. Prior to April 1995, Mr.
Xxxxx' principal occupation was as a senior auditor with the
accounting firm of Ernst & Young LLP.
Xxxxxxx X. Xxxxxxx, Xx. Xxxxxxx X. Xxxxxxx, Xx. has served as a Senior Vice President of
IPT since August 1997, and served as Vice President and Director
of Operations of IPT from December 1996 until August 1997.
Xx. Xxxxxxx'x principal employment has been with Insignia for
more than the past five years. From January 1994 to September
1997, Xx. Xxxxxxx served as Managing Director-- Partnership
Administration of Insignia.
S-2
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
Xxxxxx Xxxxxx Xxxxxx Xxxxxx has served as Vice President and Treasurer of IPT
since December 1996. Xx. Xxxxxx served as a Vice President of IPT
from December 1996 until August 1997 and as Chief Financial Officer
of IPT from May 1996 until December 1996. For additional information
regarding Xx. Xxxxxx, see Schedule III.
Xxxxxxx X. Xxxxxx Xxxxxxx X. Xxxxxx has served as Chief Operating Officer of IPT since
May 1997. Since August 1994, Xx. Xxxxxx'x principal occupation has been to
serve as President of the various corporate general partners of partnerships
controlled by Metropolitan Asset Enhancement, L.P., which is an affiliate of
Insignia.
S-3
SCHEDULE III
INFORMATION REGARDING THE
DIRECTORS AND EXECUTIVE OFFICERS OF INSIGNIA
Set forth in the table below are the name and the present principal occupations
or employment and the name, principal business and address of any corporation
or other organization in which such occupation or employment is conducted, and
the five-year employment history of each of the directors and executive
officers of Insignia. Unless otherwise indicated, each person identified below
is employed by Insignia and is a United States citizen. The principal business
address of Insignia and, unless otherwise indicated, the business address of
each person identified below, is One Insignia Financial Plaza, Xxxxxxxxxx,
Xxxxx Xxxxxxxx 00000. Directors are identified by an asterisk.
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
Xxxxxx X. Xxxxxx* Xxxxxx X. Xxxxxx has been a Director of Insignia since its inception in
000 Xxxx Xxxxxx July 1990. Xx. Xxxxxx has been Chairman and Chief Executive Officer
Suite 3401 of Insignia since January 1991 and President since May 1995. Mr.
New York, NY 10152 Xxxxxx has also been President of Metropolitan Asset Group, Ltd. ("MAG"),
a real estate investment banking firm, since 1983.
Xxxxxx X. Xxxxxxx* Xxxxxx X. Xxxxxxx has been a Director of Insignia since May 1996. For
0000 Xxxxx Xxxxxx Xxxxx more than the past five years, Xx. Xxxxxxx'x principal occupation has
Santa Fe, NM 87501 been as a General Partner of First Security Company II, L.P., an investment
advisory firm.
Xxxxx X. Xxxxxx* Xxxxx X. Xxxxxx has been a Director of Insignia since August 1993. Mr.
000 Xxxx Xxxxxx Xxxxxx is the retired Chairman of the Board and Chief Executive Officer
New York, NY 10021 of Alexander's Inc., a real estate company. He also serves as a director
of Refac Technology Development Corporation, Noodle Kiddoodle, and
Containerways International Ltd.
Xxxxxx X. Xxxx* Xxxxxx X. Xxxx has been a Director of Insignia since August 1993.
000 Xxxx 00xx Xxxxxx Since February 1996, Xx. Xxxx has been a partner in the law firm of
New York, NY 10019 Akin, Gump, Xxxxxxx, Xxxxx & Xxxx, which represents Insignia and
certain of its affiliates from time to time. From January 1991 to
February 1996, Xx. Xxxx was a partner in the law firm LeBoeuf, Lamb,
Xxxxxx & XxxXxx.
Xxxxxxx X. Xxxxxxxx* Xxxxxxx X. Xxxxxxxx has been a Director of Insignia since August 1993.
000 Xxxx 00xx Xxxxxx For more than the past five years, Xx. Xxxxxxxx'x principal occupation
New York, NY 10022 has been as a self-employed consultant in the real estate business,
including ownership, management and lending.
Xxxxx X. Aston Xxxxx X. Aston's principal employment has been with Insignia for more
than the past five years. Xx. Xxxxx currently serves as Chief Financial
Officer of Insignia (since August 1996), with the Office of the Chairman
(since July 1994) and Executive Managing Director of Investment Banking of
Insignia (since January 1991).
Xxxxxx X. Xxxxx Xxxxxx X. Xxxxx'x principal employment has been with Realty One, Inc.,
0000 Xxxxxxxx Xxxxx Xxxx. a wholly-owned subsidiary of Insignia ("Realty One"), for more than the
Cleveland, OH 44131 past five years. Xx. Xxxxx currently serves as Chairman and Chief
Executive Officer of Realty One (since October 1997).
S-4
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
Xxxxxxx X. Xxxxxxx Xx. Xxxxxxx currently serves as a Director and Chief Operating Officer of
0000 Xxxxxxxx Xxxxx Xxxx. Realty One (since October 1997). From 1994 to 1997, Xx. Xxxxxxx was
Cleveland, OH 44131 the President of Realty One. Prior to 1994, Xx. Xxxxxxx was the Chief
Financial Officer and Executive Vice President of Xxxxxxxx, Inc., a full
service advertising agency.
Xxxx X.X. Xxxxxxxxx Xxxx X.X. Xxxxxxxxx'x principal employment has been with Xxxxxxx
Xxxxxxxx Square House Xxxxx for more than the past five years. Xx. Xxxxxxxxx currently serves
London W1X 6AN as a Managing Director of Insignia for Xxxxxxx Xxxxx (since Insignia's
England acquisition of Xxxxxxx Xxxxx in 1998) and has been a director of Xxxxxxx
Xxxxx since its inception in 1997. Xx. Xxxxxxxxx is a citizen of the United
Kingdom.
Xxxxxx X. Xxxxxx Xxxxxx Xxxxxx has been a Senior Vice President -- Human Resources of
Insignia since August 1997. Prior to August 1997, Xx. Xxxxxx'x
principal employment for more than the prior five years was as Director --
Human Resources of E&Y Xxxxxxx Xxxxxxxxx Real Estate Group, New York, New York.
Xxxx X. Xxxxxxxx Xxxx X. Xxxxxxxx'x principal employment has been with Xxxxxxx Xxxxx for
Berkeley Square House more than the past five years. Xx. Xxxxxxxx currently serves as Chief
London W1X 6AN Executive Officer of Xxxxxxx Xxxxx (since Insignia's acquisition of Xxxxxxx
Xxxxxxx Xxxxx in 1998). Xx. Xxxxxxxx is a citizen of the United Kingdom.
Xxxxx X. Xxxxxxxx Xxxxx X. Xxxxxxxx'x principal employment has been with Insignia for
000 Xxxxxxxx Xxxxxxxxx more than the past five years. Xx. Xxxxxxxx currently serves as an
Suite 400 Executive Managing Director of Insignia (since July 1994) and as
Nashville, TN 37205 President of Insignia Financial Services, a division of Insignia (since July
1994).
Xxxx X. Xxxxxxx Xxxx X. Xxxxxxx has been General Counsel and Secretary of Insignia
000 Xxxx Xxxxxx since March 1998. Prior to that time, Xx. Xxxxxxx'x principal occupation
New York, NY 10166 was as a partner with the law firm of Nixon, Hargrave, Devans & Xxxxx,
LLP, New York, New York.
Xxxxxxx X. Xxxxxxxx Xxxxxxx X. Xxxxxxxx'x principal employment has been with Insignia for
000 Xxxx Xxxxxx more than the past five years. Xx. Xxxxxxxx currently serves as a
New York, NY 10166 Managing Director -- Investment Banking of Insignia (since July 1994).
Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxxx has been with the Office of the Chairman of Insignia
000 Xxxx Xxxxxx and has been Chairman of Insignia/ESG, Inc. since July 1996. Prior to
New York, NY 10166 July 1996, Xx. Xxxxxx'x principal employment for more than the prior
five years was as a founder and Chairman of Xxxxxx X. Xxxxxx Company,
Incorporated ("ESG"), a commercial property management and brokerage firm
located in New York, New York that was acquired by Insignia in June 1996.
Xxxxxx X. Xxxxxxx Xxxxxx X. Xxxxxxx'x principal employment has been with Insignia for
more than the past five years. Xx. Xxxxxxx currently serves as a Senior
Vice President of Insignia (since July 1994) and as Chief Information Officer of
Insignia (since January 1991).
S-5
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
Xxxxxx X.X. Xxxxxxx Xxxxxx Xxxxxxx'x principal employment has been with Xxxxxxx Xxxxx
Berkeley Square House Group Limited, a wholly-owned U.K. subsidiary of Insignia ("Xxxxxxx
Xxxxxx W1X 6AN Xxxxx"), for more than the past five years. Xx. Xxxxxxx currently serves
England as Chairman of Xxxxxxx Xxxxx (since Insignia's acquisition of Xxxxxxx
Xxxxx in 1998). Xx. Xxxxxxx is a citizen of the United Kingdom.
Xxxx Xxxxxxx Xxxx Xxxxxxx has been an Executive Managing Director of Insignia since
909 Third Avenue September 1995 and President of Insignia Residential Group since
New York, NY 10022 September 1997. Xx. Xxxxxxx has also served as President of Insignia Management
Services -- New York, Inc., a subsidiary of Insignia, since September 1995.
Prior to September 1995, Xx. Xxxxxxx'x principal occupation was to serve as
President and Chief Executive Officer of Xxxxxxx Company, Inc., a residential
property management firm located in New York, New York which Insignia acquired
in September 1995.
Xxxxxx Xxxx Xxxxxx Xxxx has been a Senior Vice President -- Finance of Insignia since January
1997 and Controller of Insignia since June 1994. Prior to June 1994, Xx. Xxxx was
Senior Vice President and Controller of The First Savings Bank, FSB located in
Greenville, South Carolina.
Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxxx'x principal employment has been with Insignia for more than the
past five years. Xx. Xxxxxx currently serves as Chief Operating Officer of
Insignia Residential Group (since January 1997).
Xxxxxxx X. Xxxxxx Xxxxxxx X. Xxxxxx has been a Managing Director of Insignia since
000 Xxxx Xxxxxx June 1996, President of Insignia Commercial Group since January 1997
New York, NY 10166 and President of Insignia/ESG, Inc. since June 1996. From February 1992 until
July 1996, Xx. Xxxxxx'x principal employment was as President of ESG. Xx.
Xxxxxx currently serves as a Director of Liberty Property Trust and Tower Realty,
Inc.
Xxxxxx Xxxxxx Xxxxxx Xxxxxx'x principal employment has been with Insignia for more than the
past five years. Xx. Xxxxxx currently serves as Chief Operating Officer (since
August 1996) and Treasurer (since January 1992) of Insignia. Xx. Xxxxxx has also
served as the Chief Financial Officer and Controller of MAG since September 1990.
S-6
SCHEDULE IV
IPT PARTNERSHIPS
Consolidated Capital Growth Fund
Consolidated Capital Institutional Properties
Consolidated Capital Institutional Properties/2
Consolidated Capital Institutional Properties/3
Consolidated Capital Properties III
Consolidated Capital Properties IV
Consolidated Capital Properties V
Consolidated Capital Properties VI
Johnstown/Consolidated Income Partners
Multi-Benefit Realty Fund 87-1
Shelter Properties I Limited Partnership
Shelter Properties II Limited Partnership
Shelter Properties III Limited Partnership
Shelter Properties IV Limited Partnership
Shelter Properties V Limited Partnership
Shelter Properties VI Limited Partnership
Shelter Properties VII Limited Partnership
National Property Investors III
National Property Investors 4
National Property Investors 5
National Property Investors 6
National Property Investors 7
National Property Investors 8
Century Properties Fund XIV
Century Properties Fund XV
Century Properties Fund XVI
Century Properties Fund XVII
Century Properties Fund XVIII
Century Properties Fund XIX
Century Properties Growth Fund XXII
Fox Strategic Housing Income Partners
Davidson Growth Plus, X.X.
Xxxxxxxx Diversified Real Estate II, X.X.
Xxxxxxxx Income Real Estate, L.P.
HCW Pension Real Estate Fund
Angeles Income Properties, Ltd. II
Angeles Income Properties, Ltd. IV
Angeles Income Properties, Ltd. 6
Angeles Opportunity Properties, Ltd.
Angeles Partners IX
Angeles Partners XII
S-7
Manually signed facsimile copies of the Assignment of Partnership
Interest will be accepted. The Assignment of Partnership Interest and any other
required documents should be sent or delivered by each Limited Partner or such
Limited Partner's broker, dealer, bank, trust company or other nominee to the
Depositary as set forth below.
The Depositary for the Offer is:
XXXXXX TRUST COMPANY OF NEW YORK
By Mail: By Facsimile: To Confirm: By Hand/Overnight Delivery:
Wall Street Station (000) 000-0000 (212) 701-0000 Xxxx Xxxxxx Plaza
P.O. Box 0000 00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000 Xxx Xxxx, Xxx Xxxx 00000
Questions and requests for assistance or for additional copies of this
Offer to Purchase and the Assignment of Partnership Interest may be directed to
the Information Agent at its telephone number and address listed below. You may
also contact your broker, dealer, bank, trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the Offer is:
BEACON HILL PARTNERS, INC.
00 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000
(Toll Free)
(000) 000-0000
(Call Collect)
