0000950134-05-008257.txt : 20160323
0000950134-05-008257.hdr.sgml : 20160323
20050427172709
ACCESSION NUMBER: 0000950134-05-008257
CONFORMED SUBMISSION TYPE: SC TO-T/A
PUBLIC DOCUMENT COUNT: 7
FILED AS OF DATE: 20050427
DATE AS OF CHANGE: 20060123
GROUP MEMBERS: AIMCO-GP INC
GROUP MEMBERS: APARTMENT INVESTMENT AND MANAGEMENT CO
GROUP MEMBERS: FOX CAPITAL MANAGEMENT CORP
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: CENTURY PROPERTIES FUND XV
CENTRAL INDEX KEY: 0000314690
STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500]
IRS NUMBER: 942625577
STATE OF INCORPORATION: CA
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC TO-T/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-44269
FILM NUMBER: 05777475
BUSINESS ADDRESS:
STREET 1: 55 BEATTIE PLACE
STREET 2: P O BOX 1089
CITY: GREENVILLE
STATE: SC
ZIP: 29602
BUSINESS PHONE: 8642391000
MAIL ADDRESS:
STREET 1: POST & HEYMANN
STREET 2: 5665 NORTHSIDE DR NW
CITY: ATLANTA
STATE: GA
ZIP: 30328
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: CENTURY PROPERTIES FUND XV
CENTRAL INDEX KEY: 0000314690
STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500]
IRS NUMBER: 942625577
STATE OF INCORPORATION: CA
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 13E3/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-44269
FILM NUMBER: 05777476
BUSINESS ADDRESS:
STREET 1: 55 BEATTIE PLACE
STREET 2: P O BOX 1089
CITY: GREENVILLE
STATE: SC
ZIP: 29602
BUSINESS PHONE: 8642391000
MAIL ADDRESS:
STREET 1: POST & HEYMANN
STREET 2: 5665 NORTHSIDE DR NW
CITY: ATLANTA
STATE: GA
ZIP: 30328
FILED BY:
COMPANY DATA:
COMPANY CONFORMED NAME: AIMCO PROPERTIES L.P.
CENTRAL INDEX KEY: 0000926660
STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF APARTMENT BUILDINGS [6513]
IRS NUMBER: 841275621
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC TO-T/A
BUSINESS ADDRESS:
STREET 1: 4582 S ULSTER ST PARKWAY
STREET 2: SUITE 1100
CITY: DENVER
STATE: CO
ZIP: 80237
BUSINESS PHONE: 3037578101
MAIL ADDRESS:
STREET 1: 4582 S ULSTER ST PARKWAY
STREET 2: SUITE 1100
CITY: DENVER
STATE: CO
ZIP: 80237
FORMER COMPANY:
FORMER CONFORMED NAME: AIMCO PROPERTIES LP
DATE OF NAME CHANGE: 19980519
SC TO-T/A
1
d18173a3sctovtza.txt
AMENDMENT NO. 3 TO SC TO-TENDER OFFER
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE TO/A
(AMENDMENT NO. 3)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1) OF THE SECURITIES
EXCHANGE ACT OF 1934
Century Properties Fund XV
--------------------------------------------------------------------------------
(Name of Subject Company (Issuer))
AIMCO Properties, L.P.
Apartment Investment and Management Company
AIMCO-GP, Inc.
Fox Capital Management Corporation
--------------------------------------------------------------------------------
(Names of Filing Persons (Offerors))
Limited Partnership Units
--------------------------------------------------------------------------------
(Title of Class of Securities)
None
--------------------------------------------------------------------------------
(CUSIP Number of Class of Securities)
Martha L. Long
Apartment Investment and Management Company
55 Beattie Place
PO Box 1089
Greenville, South Carolina 29602
(864) 239-1000
--------------------------------------------------------------------------------
(Name, address, and telephone numbers
of person authorized to receive notices and
communications on behalf of filing persons)
Copy to:
Joseph A. Coco
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square New York, New York 10036
(212) 735-3000
and
Jonathan L. Friedman
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Los Angeles, California 90071
(213) 687-5000
Calculation of Filing Fee
TRANSACTION VALUATION* AMOUNT OF FILING FEE
---------------------- --------------------
$2,824,733.34 $332.47
* For purposes of calculating the fee only. This amount assumes the purchase
of 28,532.66 units of limited partnership interest of the subject
partnership for $99.00 per unit. The amount of the filing fee, calculated
in accordance with Section 14(g)(1)(B)(3) and Rule 0-11(d) under the
Securities Exchange Act of 1934, as amended, equals $117.70 per million of
the aggregate amount of cash offered by the bidder.
[X] Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: $301.04 Filing Party: AIMCO Properties, L.P.
Form or Registration No.: Schedule To/13E-3 Date Filed: February 16, 2005
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[X] third-party tender offer subject to Rule 14d-1
[ ] issuer tender offer subject to Rule 13e-4
[X] going-private transaction subject to Rule 13e-3
[ ] amendment to Schedule 13D under Rule 13d-2
Check the following box if the filing is a final amendment reporting the results
of the tender offer: [ ]
2
AMENDMENT NO. 3 TO SCHEDULE TO
This Amendment No. 3 amends and supplements the Tender Offer Statement and
Rule 13e-3 Transaction Statement on Schedule TO initially filed on February 16,
2005, as amended by Amendment No. 1 thereto filed on March 15, 2005, and
Amendment No. 2 filed on March 28, 2005 (as amended, the "Schedule TO"). This
Amendment No. 3 relates to the offer by AIMCO Properties, L.P., a Delaware
limited partnership, to purchase units of limited partnership interest ("Units")
of Century Properties Fund XV, a California limited partnership (the
"Partnership"), at a price of $99.00 per unit in cash, subject to the conditions
set forth in the Offer to Purchase dated February 16, 2005 (as amended or
supplemented from time to time, the "Offer to Purchase") and in the related
Letter of Transmittal (as amended or supplemented from time to time, the "Letter
of Transmittal" and, together with the Offer to Purchase, the "Offer"). The item
numbers and responses thereto below are in accordance with the requirements of
Schedule TO. Unless defined herein, capitalized terms used and not otherwise
defined herein have the respective meanings ascribed to such terms in the Offer
to Purchase.
On April 27, 2005, AIMCO Properties, L.P. mailed a letter to the holders
of Units of the Partnership and issued a press release announcing the extension
of the expiration date of the Offer from midnight, New York City time, on
April 27, 2005, to midnight, New York City time, on May 31, 2005 and announcing
that it has increased the offer price for Units from $89.64 to $99.00 per unit
in cash. Copies of the press release and letter have been filed as Exhibits
(a)(12) and (a)(13), respectively, to this Amendment No. 3.
ITEM 1. SUMMARY TERM SHEET.
The information set forth under "SUMMARY TERM SHEET" in the Offer to
Purchase is incorporated herein by reference.
ITEM 2. SUBJECT COMPANY INFORMATION.
(a) The information set forth under "The Offer - Section 8. Certain
Information Concerning Your Partnership" in the Offer to Purchase is
incorporated herein by reference. The Partnership's principal executive offices
are located at 55 Beattie Place, P.O. Box 1089, Greenville, South Carolina
29602, and its phone number is (864) 239-1000.
(b) This Schedule TO relates to the units of limited partnership interest
of Century Properties Fund XV, of which 89,980 units were issued and outstanding
as of December 31, 2004.
(c) Not applicable.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON.
(a)-(c) This Schedule TO is being filed by Apartment Investment and
Management Company, a Maryland corporation ("AIMCO"), AIMCO Properties, L.P., a
Delaware limited partnership ("AIMCO OP"), AIMCO-GP, Inc., a Delaware
corporation ("AIMCO-GP"), and Fox Capital Management Corporation, a Delaware
corporation ("Fox Capital"). AIMCO-GP is the general partner of AIMCO OP and a
wholly owned subsidiary of AIMCO. Fox Capital is the managing general partner of
the Partnership and a wholly owned subsidiary of AIMCO. The principal business
of AIMCO, AIMCO-GP, and AIMCO OP is the ownership, acquisition, development,
expansion and management of multi-family apartment properties. The business
address of AIMCO, AIMCO-GP and AIMCO OP is 4582 Ulster Street Parkway, Suite
1100, Denver, Colorado 80237, and their telephone number is (303) 757-8101. The
principal address of Fox Capital is 55 Beattie Place, P.O. Box 1089, Greenville,
South Carolina 29602, and its phone number is (864) 239-1000.
The information set forth under "The Offer - Section 7. Information
Concerning Us and Certain of Our Affiliates" and Annex I of the Offer to
Purchase is incorporated herein by reference.
During the last five years, none of AIMCO, AIMCO-GP, AIMCO OP or Fox
Capital nor, to the best of their knowledge, any of the persons listed in Annex
I to the Offer to Purchase (i) has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) was a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining further violations of or prohibiting activities subject to
federal or state securities laws or finding any violation with respect to such
laws.
3
ITEM 4. TERMS OF THE TRANSACTION.
(a) The information set forth in the Offer to Purchase and in the related
Letter of Transmittal is incorporated herein by reference.
ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
(a) and (b) The information set forth under "Special Factors - Valuation
of Units - Prior Tender Offers," " - Background and Reasons for the Offer," " -
Conflicts of Interest and Transactions with Affiliates" and "The Offer - Section
6. The Lawsuit and the Settlement," in the Offer to Purchase is incorporated
herein by reference.
ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
(a), (c)(1)-(7) The information set forth under "Special Factors - Effects
of the Offer," " - Background and Reasons for the Offer," " - Future Plans of
the Purchaser" and "The Offer - Section 6. The Lawsuit and the Settlement," in
the Offer to Purchase is incorporated herein by reference.
ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a), (b) and (d) The information set forth under "The Offer - Section 10.
Source of Funds" and " - Section 14. Fees and Expenses" in the Offer to Purchase
is incorporated herein by reference.
ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
The information set forth under "The Offer - Section 8. Certain
Information Concerning Your Partnership - Ownership and Voting" in the Offer to
Purchase is incorporated herein by reference.
ITEM 9. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
Not applicable.
ITEM 10. FINANCIAL STATEMENTS.
Not applicable.
ITEM 11. ADDITIONAL INFORMATION.
(a) The information set forth under "The Offer - Section 13. Certain Legal
Matters" in the Offer to Purchase is incorporated herein by reference.
(b) The information set forth in the Offer to Purchase and in the related
Letter of Transmittal is incorporated herein by reference.
ITEM 12. EXHIBITS.
Item 12 of the Schedule TO is amended and supplemented as follows:
(a)(10) Amended and Restated Offer to Purchase dated April 27, 2005.
(a)(11) Amended and Restated Letter of Transmittal and related
Instructions.
(a)(12) Press Release, dated April 27, 2005.
(a)(13) Letter, dated April 27, 2005, from AIMCO Properties, L.P. to the
limited partners of Century Properties Fund XV.
(c)(1) Appraisal of Lakeside Place (Exhibit (c)(1) to the Schedule TO/A
relating to the Offer, filed with the Securities and Exchange
Commission on December 9, 2003, is incorporated herein by
reference).
(c)(2) Appraisal of Preston Creek (Exhibit (c)(2) to the Schedule TO/A
relating to the Offer, filed with the Securities and Exchange
Commission on December 9, 2003, is incorporated herein by
reference).
4
ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3.
ITEM 2. SUBJECT COMPANY INFORMATION.
(d) The information set forth under "The Offer - Section 8. Certain
Information Concerning Your Partnership - Distributions" in the Offer to
Purchase is incorporated herein by reference.
(e) Not applicable.
(f) The information set forth under "Special Factors - Valuation of
Units - Prior Tender Offers" in the Offer to Purchase is incorporated
herein by reference.
ITEM 4. TERMS OF THE TRANSACTION.
(c) The information set forth under "Special Factors - Background
and Reasons for the Offer" and "The Offer - Section 6. The Lawsuit and the
Settlement" of the Offer to Purchase is incorporated herein by reference.
(d)-(e) The information set forth under "The Offer - Section 11.
Dissenters' Rights" in the Offer to Purchase is incorporated herein by
reference.
(f) Not applicable.
ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
(c) The information set forth under "Special Factors - Background
and Reasons for the Offer" and "The Offer - Section 6. The Lawsuit and the
Settlement" in the Offer to Purchase is incorporated herein by reference.
(e) Not applicable.
ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
(b) See Item 6 of the Schedule TO.
(c)(8) The information set forth under "Special Factors - Effects of
the Offer" of the Offer to Purchase is incorporated herein by reference
ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS.
(a) The information set forth under "Special Factors - Background
and Reasons for the Offer - General" in the Offer to Purchase is
incorporated herein by reference.
(b) The information set forth under "Special Factors - Background
and Reasons for the Offer - Alternatives Considered by Your General
Partner" and " - Alternative Transactions Considered by Us" in the Offer
to Purchase is incorporated herein by reference.
(c) The information set forth under "Special Factors - Background
and Reasons for the Offer" of the Offer to Purchase is incorporated herein
by reference.
(d) The information set forth under "Special Factors - Material
Federal Income Tax Matters" and " - Effects of the Offer" of the Offer to
Purchase is incorporated herein by reference.
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a)-(f) The information set forth under "Special Factors - Position
of the General Partner of Your Partnership with Respect to the Offer" of
the Offer to Purchase is incorporated herein by reference.
5
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS.
(a) The information set forth under "Special Factors - Valuation of
Units - Estimated Liquidation Proceeds Based on Independent Appraisal" and
" - Position of the General Partner of Your Partnership with Respect to
the Offer" of the Offer to Purchase is incorporated herein by reference.
(b) The information set forth under "Special Factors - Valuation of
Units - Estimated Liquidation Proceeds Based on Independent Appraisal" of
the Offer to Purchase is incorporated herein by reference.
(c) The information set forth under "Special Factors - Valuation of
Units - Estimated Liquidation Proceeds Based on Independent Appraisal -
Availability of Appraisal Reports" of the Offer to Purchase is
incorporated herein by reference.
ITEM 10. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(c) See Item 7 of the Schedule TO.
ITEM 12. THE SOLICITATION OR RECOMMENDATION.
(d)-(e) The information set forth under "Special Factors - Position
of the General Partner of Your Partnership with Respect to the Offer" of
the Offer to Purchase is incorporated herein by reference.
ITEM 13. FINANCIAL STATEMENTS.
The information set forth under "The Offer - Section 8. Certain
Information Concerning Your Partnership" of the Offer to Purchase and Item
7 of Part II of the Partnership's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2004 is incorporated herein by reference.
ITEM 14. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
(b) Not applicable.
ITEM 15. ADDITIONAL INFORMATION.
(b) The information set forth in the Offer to Purchase and the
related Letter of Transmittal is incorporated herein by reference.
ITEM 16. EXHIBITS.
(f) Not applicable.
6
SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned hereby certify that the information set forth in this statement is
true, complete and correct.
Date: April 27, 2005
AIMCO PROPERTIES, L.P.
By: AIMCO-GP, INC.
Its General Partner
By: /s/ Martha L. Long
----------------------------
Martha L. Long
Senior Vice President
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
By: /s/ Martha L. Long
----------------------------
Martha L. Long
Senior Vice President
AIMCO-GP, INC.
By: /s/ Martha L. Long
----------------------------
Martha L. Long
Senior Vice President
FOX CAPITAL MANAGEMENT CORPORATION
By: /s/ Martha L. Long
----------------------------
Martha L. Long
Senior Vice President
7
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------------------------------------------------------------
(a)(10) Amended and Restated Offer to Purchase dated April 27, 2005.
(a)(11) Amended and Restated Letter of Transmittal and related
Instructions.
(a)(12) Press Release, dated April 27, 2005.
(a)(13) Letter, dated April 27, 2005, from AIMCO Properties, L.P. to the
limited partners of Century Properties Fund XV.
(c)(1) Appraisal of Lakeside Place (Exhibit (c)(1) to the Schedule TO/A
relating to the Offer, filed with the Securities and Exchange
Commission on December 9, 2003, is incorporated herein by
reference).
(c)(2) Appraisal of Preston Creek (Exhibit (c)(2) to the Schedule TO/A
relating to the Offer, filed with the Securities and Exchange
Commission on December 9, 2003, is incorporated herein by
reference).
8
EX-99.(A)(10)
2
d18173a3exv99wxayx10y.txt
AMENDED AND RESTATED OFFER TO PURCHASE
AMENDED AND RESTATED
OFFER TO PURCHASE
(AIMCO LOGO)
AIMCO PROPERTIES, L.P.
is offering to purchase any and all limited partnership units in
CENTURY PROPERTIES FUND XV
FOR $99.00 PER UNIT IN CASH
Upon the terms and subject to the conditions set forth herein, we will
accept any and all units validly tendered in response to our offer.
You will not pay any partnership transfer fees if you tender your units
pursuant to this offer. You will pay any other fees or costs, including any
transfer taxes.
Our offer price will be reduced for any distributions subsequently made or
declared by your partnership prior to the expiration of our offer.
Our offer and your withdrawal rights will expire at midnight, New York City
time, on May 31, 2005, unless we extend the deadline.
The general partner of your partnership does not make any recommendation
regarding whether you should accept this offer. You are encouraged to carefully
review this Offer to Purchase, and any other information available to you and to
seek advice from your independent lawyer, tax advisor and/or financial advisor
with respect to your particular circumstances before deciding whether or not to
accept this offer.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 OF THIS OFFER TO PURCHASE FOR A
DESCRIPTION OF RISK FACTORS THAT YOU SHOULD CONSIDER IN CONNECTION WITH OUR
OFFER, INCLUDING THE FOLLOWING:
- If you want to tender your units in the offer, you must sign a letter of
transmittal in which you release us from all liability, except as
otherwise provided in Section 3 herein, with respect to any and all claims
through and including the date of execution of the letter of transmittal,
including, but not limited to, those claims that were brought or that
could have been brought in the Nuanes and Heller litigation brought on
behalf of limited partners in your partnership and others, and assign to
us your rights in any future claims. On March 21, 2005, the Court of
Appeals vacated the trial court's order approving the settlement in the
Nuanes and Heller litigation and remanded to the trial court for further
findings on the basis that the "state of the record is insufficient to
permit meaningful appellate review." By executing the enclosed letter of
transmittal, moreover, you will release those claims irrespective of
whether you previously requested exclusion from the settlement and
irrespective of what happens in connection with the remand and any
subsequent appeal.
- Our offer price does not ascribe any value to potential future
improvements in the fair market value or operating performance of your
partnership's properties, including any increase in value that may result
from the redevelopment of Preston Creek Apartments and Lakeside Place
Apartments. Our offer price might be higher if it were based on a more
recent appraisal of your partnership's properties, or if it took into
account any potential improvements in property income.
(Continued on next page)
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THIS TRANSACTION, PASSED UPON THE
MERITS OF THIS TRANSACTION, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE
DISCLOSURE IN THIS OFFER TO PURCHASE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
If you decide to accept our offer, you must complete and sign the enclosed
letter of transmittal in accordance with the instructions thereto and mail or
deliver the signed letter of transmittal and any other required documents to The
Altman Group, Inc., which is acting as Information Agent in connection with our
offer, at one of its addresses set forth on the back cover of this Offer to
Purchase. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THIS
OFFER TO PURCHASE, THE LETTER OF TRANSMITTAL OR FOR A COMPLETE COPY OF AN
APPRAISAL OF ANY OF YOUR PARTNERSHIP'S PROPERTIES MAY ALSO BE DIRECTED TO THE
INFORMATION AGENT AT (800) 467-0821.
April 27, 2005
(Continued from prior page)
- Our offer price was determined without any arms-length negotiations. If
your partnership were to sell its assets and liquidate, the value of the
assets would be determined through negotiations with third parties, who
may be willing to pay more for your partnership's properties than the
value we used to calculate our offer price. Although the actual proceeds
you might receive in a liquidation are uncertain, they could exceed our
offer price. Similarly, other persons might ascribe a value to your
partnership units that is higher than our offer price. As a result, you
might be able to sell your units to a third party at a price that exceeds
our offer price.
- Your general partner and the property manager are affiliates of ours and,
therefore, your general partner has substantial conflicts of interest with
respect to our offer.
- We are making this offer with a view to making a profit and, therefore,
there is a conflict between our desire to purchase your units at a low
price and your desire to sell your units at a high price.
- Continuation of your partnership will result in our affiliates continuing
to receive management fees from your partnership. Such fees would not be
payable if your partnership were liquidated.
- If we do not acquire all of the outstanding units in your partnership, it
is possible that we may conduct a future offer at a higher price, although
we have no obligation or current intention to do so.
- For any units that we acquire from you, you will not receive any future
distributions from operating cash flow of your partnership or upon a sale
or refinancing of property owned by your partnership.
- The general partner makes no recommendation as to whether you should
tender your units because each limited partner's circumstances may differ
from those of other limited partners.
THE GENERAL PARTNER DOES NOT MAKE ANY RECOMMENDATION REGARDING WHETHER YOU
SHOULD ACCEPT THIS OFFER. YOU ARE ENCOURAGED TO CAREFULLY REVIEW THIS OFFER TO
PURCHASE AND ANY OTHER INFORMATION AVAILABLE TO YOU AND TO SEEK THE ADVICE OF
YOUR INDEPENDENT LAWYER, TAX ADVISOR AND/OR FINANCIAL ADVISOR WITH RESPECT TO
YOUR PARTICULAR CIRCUMSTANCES BEFORE DECIDING WHETHER OR NOT TO ACCEPT THIS
OFFER.
THE INFORMATION AGENT FOR THE OFFER IS:
THE ALTMAN GROUP, INC.
By Mail: By Overnight Courier: By Hand:
1275 Valley Brook Avenue 1275 Valley Brook Avenue 1275 Valley Brook Avenue
Lyndhurst, NJ 07071 Lyndhurst, NJ 07071 Lyndhurst, NJ 07071
For information, please call:
TOLL FREE: (800) 467-0821
TABLE OF CONTENTS
PAGE
----
SUMMARY TERM SHEET.......................................... 1
RISK FACTORS................................................ 4
If you tender your units in this offer, you will release
us from all liability and assign to us your rights in
any and all claims through and including the date of
execution of the letter of transmittal, including, but
not limited to, those claims relating to the Nuanes and
Heller litigation, irrespective of whether you
previously requested exclusion from the settlement and
irrespective of what happens in connection with the
remand and any subsequent appeal....................... 4
Our offer price may not represent the price you could
obtain for your units in an open market................ 4
Our offer price does not reflect future prospects......... 4
Our offer price was determined without any arms-length
negotiations, which might result in a higher value for
your partnership units................................. 4
Continuation of the partnership; no time frame regarding
sale of property....................................... 5
Holding your units may result in greater future value..... 5
The general partner faces conflicts of interest with
respect to this offer.................................. 5
Your general partner is not making a recommendation
regarding this offer................................... 6
Your general partner faces conflicts of interest relating
to management fees..................................... 6
If we do not acquire all of the outstanding units in this
offer, we may make a future offer at a higher price.... 6
Your tax liability resulting from a sale of your units
could exceed our offer price........................... 6
You may recognize taxable gain for release and assignment
of claims.............................................. 6
If you tender your units in this offer, you will no longer
be entitled to distributions from your partnership..... 7
You could recognize gain in the event of a future
reduction in your partnership's liabilities............ 7
We could delay acceptance of, and payment for, your
units.................................................. 7
There may be a possible reduction of available information
about your partnership as a result of this offer....... 7
If we demand repayment in full of the loan to your
partnership prior to its scheduled maturity, the
financial status of your partnership could be
jeopardized............................................ 7
SPECIAL FACTORS............................................. 8
Valuation of Units........................................ 8
Background and Reasons for the Offer...................... 18
Material Federal Income Tax Matters....................... 19
Effects of the Offer...................................... 22
Position of the General Partner of Your Partnership With
Respect to the Offer................................... 23
Conflicts of Interest and Transactions with Affiliates.... 26
Future Plans of the Purchaser............................. 28
THE OFFER................................................... 30
1. Terms of the Offer; Expiration Date................... 30
2. Acceptance for Payment and Payment for Units.......... 30
3. Procedure for Tendering Units......................... 31
4. Withdrawal Rights..................................... 34
5. Extension of Tender Period; Termination; Amendment; No
Subsequent Offering Period............................ 35
6. The Lawsuit and the Settlement........................ 36
7. Information Concerning Us and Certain of Our
Affiliates............................................ 41
8. Certain Information Concerning Your Partnership....... 45
9. Voting Power.......................................... 50
10. Source of Funds....................................... 50
11. Dissenters' Rights.................................... 51
12. Conditions to the Offer............................... 51
13. Certain Legal Matters................................. 52
14. Fees and Expenses..................................... 53
ANNEX I -- OFFICERS AND DIRECTORS........................... I-1
SUMMARY TERM SHEET
This summary term sheet highlights the material information regarding our
offer, but it does not describe all of the details thereof. We urge you to read
this entire Offer to Purchase, which contains the full details of our offer. We
have also included in the summary term sheet references to the sections of this
Offer to Purchase where a more complete discussion may be found. Unless
otherwise indicated, references in this Offer to Purchase to "we," "our," "us"
or "AIMCO Properties" refer to AIMCO Properties, L.P., and references to
"general partner" refer to Fox Capital Management Corporation.
- The Offer. Upon the terms and subject to the conditions set forth in
this Offer to Purchase, we are offering to acquire limited partnership
units of Century Properties Fund XV, your partnership, for $99.00 per
unit in cash. See "Special Factors -- Valuation of Units," "Special
Factors -- Effects of the Offer" and "The Offer -- Section 1. Terms of
the Offer; Expiration Date."
- The Litigation Settlement and Release and Assignment of Future
Claims. As part of the settlement of a class and derivative litigation
entitled Nuanes et al. v. Insignia Financial Group, Inc. et al. and
Heller v. Insignia Financial Group, Inc., et al. on behalf of your
partnership and limited partners in your partnership and others (the
"Nuanes and Heller litigation"), we previously offered to acquire any and
all of the limited partnership units of your partnership for $69.52 per
unit in cash. THIS OFFER IS NOT BEING MADE AS PART OF THE SETTLEMENT.
In connection with the settlement, the Court of Appeals on March 21, 2005
vacated the order approving the settlement and remanded the matter back
to the trial court for further findings on the basis that the "state of
the record is insufficient to permit meaningful appellate review." If you
want to tender your units in the offer, you must sign a letter of
transmittal in which you release us from all liability, except as
otherwise provided in Section 3 herein, with respect to any and all
claims through and including the date of execution of the letter of
transmittal, including, but not limited to, those claims that were
brought or that could have been brought in the Nuanes and Heller
litigation, and assign to us your rights in any future claims. By
executing the enclosed letter of transmittal, moreover, you will release
those claims irrespective of whether you previously requested exclusion
from the settlement and irrespective of what happens in connection with
the remand and any subsequent appeal.
IF YOU DID NOT REQUEST EXCLUSION FROM THE SETTLEMENT, YOU WILL BE
ENTITLED TO RECEIVE YOUR PRO RATA SHARE OF THE SETTLEMENT FUND ($4.67 PER
UNIT) WHETHER OR NOT YOU TENDER YOUR UNITS PURSUANT TO THIS OFFER,
PROVIDED THAT APPROVAL OF THE SETTLEMENT AND ANY JUDGMENT ENTERED THERETO
BECOME FINAL. OTHERWISE, YOU WILL NOT BE ENTITLED TO RECEIVE A PRO RATA
SHARE OF THE SETTLEMENT FUND. FOR ADDITIONAL INFORMATION REGARDING THE
SETTLEMENT, SEE "THE OFFER -- SECTION 6. THE LAWSUIT AND SETTLEMENT."
- Factors in Determining the Offer Price. In determining the offer price
per unit, we principally considered:
- the 2003 appraisal of your partnership's properties;
- the location, condition and debt structure of your partnership's
properties, including the prepayment penalty associated with the
mortgages for these properties;
- the current economic conditions in the local markets in which the
properties are located; and
- your partnership's other assets and liabilities.
- Our Offer Price Does Not Reflect Future Prospects. Offer price does not
ascribe any value to potential future improvements in the fair market
value or operating performance of your partnership's properties,
including any increase in value that may result from the redevelopment of
Preston Creek Apartments and Lakeside Place Apartments.
- Fairness of the Offer. Although we, Apartment Investment and Management
Company ("AIMCO") and AIMCO-GP, Inc. (collectively, the "AIMCO Entities")
and your general
1
partner have interests that may conflict with those of the partnership's
unaffiliated limited partners, each of the AIMCO Entities believes that
the offer price and the offer are fair to the unaffiliated limited
partners of your partnership. This determination is based on the
information and the factors set forth under "Special Factors -- Position
of the General Partner of Your Partnership with Respect to the Offer."
- No General Partner Recommendation. The general partner of your
partnership makes no recommendation as to whether you should tender or
refrain from tendering your units. Each limited partner should make his
or her own decision whether or not to tender. You are encouraged to
carefully review this Offer to Purchase and any other information
available to you and to seek advice from your independent lawyer, tax
advisor and/or financial advisor with respect to your particular
circumstances before deciding whether or not to accept this offer. See
"Special Factors -- Position of the General Partner of Your Partnership
with Respect to the Offer."
- Who We Are. We are AIMCO Properties, L.P., the operating partnership of
Apartment Investment and Management Company, a New York Stock
Exchange-listed company. See "The Offer -- Section 7. Information
Concerning Us and Certain of Our Affiliates."
- Conflicts of Interest. NHP Management Company (which is our affiliate)
receives fees for managing your partnership's properties and the general
partner of your partnership (which is our affiliate) is entitled to
receive asset management fees and reimbursement of certain expenses
involving your partnership and its properties. As a result, a conflict of
interest exists between continuing the partnership and receiving these
fees, and the liquidation of the partnership and the termination of these
fees. See "Special Factors -- Conflicts of Interest and Transactions with
Affiliates" and "The Offer -- Section 8. Certain Information Concerning
Your Partnership."
- Tax Consequences. Your sale of units in this offer will be a taxable
transaction for federal income tax purposes. The consequences to each
limited partner may vary and you should consult your tax advisor on the
precise tax consequences to you. See "Special Factors -- Material Federal
Income Tax Matters."
- Expiration Date. Our offer expires on May 31, 2005, unless extended, and
you can tender your units until our offer expires. See "The
Offer -- Section 1. Terms of the Offer; Expiration Date."
- Right to Extend the Expiration Date. We can extend the expiration date
of the offer in our reasonable discretion. We reserve the right to extend
the offer subject to customary conditions. In the event we extend the
offer, we will either issue a press release or other public announcement
no later than 9:00 a.m., New York City time, on the next business day
after the scheduled expiration date of the offer, in accordance with Rule
14e-1(d) of the Securities Exchange Act of 1934. See "The
Offer -- Section 5. Extension of Tender Period; Termination; Amendment;
No Subsequent Offering Period."
- How to Tender. To tender your units, complete the accompanying letter of
transmittal and send it, along with any other documents required by the
letter of transmittal, to the Information Agent, The Altman Group, Inc.,
at one of the addresses set forth on the back of this Offer to Purchase.
See "The Offer -- Section 3. Procedure for Tendering Units."
- Withdrawal Rights. You can withdraw your units at any time prior to the
expiration of the offer, including any extensions. If you properly
withdraw all of the units you previously tendered in the offer, the
corresponding letter of transmittal, including your release and
assignment of future claims contained therein, will be deemed revoked and
of no force or effect. See "The Offer -- Section 4. Withdrawal Rights."
- How to Withdraw. To withdraw your units, you need to send a notice of
withdrawal to the Information Agent, identifying yourself and the units
to be withdrawn. See "The Offer -- Section 4. Withdrawal Rights."
2
- Availability of Funds. We intend to pay the purchase price for any units
tendered from our existing cash balances or borrowings under our line of
credit. See "The Offer -- Section 10. Source of Funds."
- Conditions to the Offer. There are a number of conditions to our offer,
including the absence of competing tender offers, that there be no
material change with respect to our financial condition, and the absence
of certain changes in the financial markets. See "The Offer -- Section
12. Conditions to the Offer."
- Remaining as a Limited Partner. If you do not tender your units, you
will remain a limited partner in your partnership. Consummation of the
offer will not affect the operations, business or financial position of
your partnership. However, if there are fewer than 300 unitholders in
your partnership as a result of the offer, your partnership will no
longer be required to file periodic reports with the SEC, such as annual
reports on Form 10-KSB containing annual audited financial statements,
and quarterly reports on Form 10-QSB containing unaudited financial
statements. See "Special Factors -- Effects of the Offer."
- No Subsequent Offering Period. We do not currently intend to have a
subsequent offering period after the expiration date of the initial
offering period (including any extensions). See "The Offer -- Section 5.
Extension of Tender Offer Period; Termination; Amendment; No Subsequent
Offering Period."
- Additional Information. For assistance in tendering your units, please
contact our Information Agent at one of the addresses or the telephone
number set forth on the back cover page of this Offer to Purchase.
3
RISK FACTORS
Before deciding whether or not to tender any of your units, you should
consider carefully the following risks and disadvantages of the offer:
IF YOU TENDER YOUR UNITS IN THIS OFFER, YOU WILL RELEASE US FROM ALL LIABILITY
AND ASSIGN TO US YOUR RIGHTS IN ANY AND ALL CLAIMS THROUGH AND INCLUDING THE
DATE OF EXECUTION OF THE LETTER OF TRANSMITTAL, INCLUDING, BUT NOT LIMITED TO,
THOSE CLAIMS RELATING TO THE NUANES AND HELLER LITIGATION, IRRESPECTIVE OF
WHETHER YOU PREVIOUSLY REQUESTED EXCLUSION FROM THE SETTLEMENT AND IRRESPECTIVE
OF WHAT HAPPENS IN CONNECTION WITH THE REMAND AND ANY SUBSEQUENT APPEAL.
If you want to tender your units in the offer, you must sign a letter of
transmittal in which you release us from all liability, except as otherwise
provided in Section 3 herein, with respect to any and all claims through and
including the date of execution of the letter of transmittal, including, but not
limited to, those claims that were brought or that could have been brought in
the Nuanes and Heller litigation brought on behalf of limited partners in your
partnership and others, and assign to us your rights in any future claims. On
March 21, 2005, the Court of Appeals vacated the trial court's order approving
the settlement in the Nuanes and Heller litigation and remanded to the trial
court for further findings on the basis that the "state of the record is
insufficient to permit meaningful appellate review." By executing the enclosed
letter of transmittal, moreover, you will release those claims irrespective of
whether you previously requested exclusion from the settlement and irrespective
of what happens in connection with the remand and any subsequent appeal.
OUR OFFER PRICE MAY NOT REPRESENT THE PRICE YOU COULD OBTAIN FOR YOUR UNITS IN
AN OPEN MARKET.
There is no established or regular trading market for your units, nor is
there another reliable standard for determining the fair market value of the
units. Our offer price does not necessarily reflect the price that you would
receive in an open market for your units. Such prices could be higher than our
offer price.
OUR OFFER PRICE DOES NOT REFLECT FUTURE PROSPECTS.
Our offer price does ascribe any value to potential future improvements in
the fair market value or operating performance of your partnership's properties,
including any increase in value that may result from the redevelopment of
Preston Creek Apartments and Lakeside Place Apartments. Our offer price might be
higher if it were based on a more recent appraisal of your partnership's
properties, or if it took into account any potential improvements in property
income.
Furthermore, our offer price does not take into account any prospective
increase in property income that may result from the redevelopment of Preston
Creek Apartments and the redevelopment of Lakeside Place Apartments. Your
general partners believe that the redevelopment, if completed, would eventually
allow an increase in the net operating income at the properties and will permit
them to remain competitive with other rental properties in the local market. If
the operating performance of the properties improves as anticipated, you could
receive more value for your units in the future. For more information regarding
the proposed redevelopment, see "Special Factors -- Conflicts of Interest and
Transactions with Affiliates -- Transactions with Affiliates" and "The
Offer -- Section 8. Certain Information Concerning Your
Partnership -- Investment Objectives and Policies; Sale or Financing of
Investments."
OUR OFFER PRICE WAS DETERMINED WITHOUT ANY ARMS-LENGTH NEGOTIATIONS, WHICH MIGHT
RESULT IN A HIGHER VALUE FOR YOUR PARTNERSHIP UNITS.
Our offer price was determined without any arms-length negotiations. If
your partnership were to sell its assets and liquidate, the value of the assets
would be determined through negotiations with third parties, who may be willing
to pay more for your partnership's properties than the value we used to
calculate our offer price. Although the actual proceeds you might receive in a
liquidation are uncertain, they could exceed our offer price. Similarly, other
persons might ascribe a value to your partnership units that is
4
higher than our offer price. As a result, you might be able to sell your units
to a third party at a price that exceeds our offer price.
CONTINUATION OF THE PARTNERSHIP; NO TIME FRAME REGARDING SALE OF PROPERTY.
Your general partner, which is our affiliate, is proposing to continue to
operate your partnership and not to attempt to liquidate it at the present time.
Your partnership's prospectus, dated May 1, 1980, pursuant to which units in
your partnership were sold, indicates that your partnership was intended to be
self-liquidating and that it was anticipated that the partnership's properties
would be sold within 5 to 12 years of their acquisition, subject to market
conditions. The prospectus also indicated that there could be no assurance that
the partnership would be able to so liquidate and that, unless sooner terminated
as provided in the partnership agreement, the existence of the partnership would
continue until the year 2020. It is not known when the properties owned by your
partnership may be sold. The general partner of your partnership continually
considers whether a property should be sold or otherwise disposed of after
consideration of relevant factors, including prevailing economic conditions,
availability of favorable financing and tax considerations, with a view to
achieving maximum capital appreciation for your partnership. At the current
time, the general partner of your partnership believes that a sale of the
properties would not be advantageous given market conditions, the condition of
the properties and tax considerations. In particular, the general partner
considered changes in the local rental market resulting from local economic
conditions (such as unemployment, availability of alternative rental properties,
vacancy rates, and changes in market rental rates), the potential for
appreciation in the value of a property given current local market conditions
and trends for the sale of multi-family residential properties (such as the
current expected sales price of a property given supply and demand and recent
sales of comparable properties in surrounding neighborhoods, the local
competitive climate for property sales, development plans for new construction,
and trends in local and regional real estate markets), the potential for
appreciation given recent or planned capital expenditures on your partnership's
properties, the partnership's operating cash flow requirements, and the
potential tax liability to limited partners on the sale of a property.
HOLDING YOUR UNITS MAY RESULT IN GREATER FUTURE VALUE.
Although a liquidation of your partnership is not currently contemplated in
the near future, you might receive more value if you retain your units until
your partnership is liquidated. Your general partners believe that the
redevelopment of Preston Creek Apartments and Lakeside Place Apartments, if
completed, would eventually allow an increase in the net operating income at the
properties and will permit them to remain competitive with other rental
properties in the local market. However, our offer price does not ascribe any
value to the redevelopment. In addition, at the current time, the general
partner of your partnership believes that selling the properties would not be
advantageous given market conditions, the condition of the properties and tax
considerations. If your partnership's properties were sold in the future and the
net proceeds realized therefrom were distributed to the limited partners of your
partnership, the amount of such distributions might exceed our current offer
price. For partnerships in which we control the general partner and have made
tender offers, it is not unusual for those partnerships to subsequently sell a
property at a price in excess of the value we used to determine our tender offer
price.
THE GENERAL PARTNER FACES CONFLICTS OF INTEREST WITH RESPECT TO THIS OFFER.
The general partner of your partnership is our affiliate and, therefore,
has substantial conflicts of interest with respect to our offer. We are making
this offer with a view to making a profit. There is a conflict between our
desire to purchase your units at a low price and your desire to sell your units
at a high price. We determined our offer price without negotiation with any
other party, including any general or limited partner. See "Special
Factors -- Conflicts of Interest and Transactions with Affiliates."
5
YOUR GENERAL PARTNER IS NOT MAKING A RECOMMENDATION REGARDING THIS OFFER.
The general partner of your partnership (which is our affiliate) makes no
recommendation as to whether or not you should tender or refrain from tendering
your units because each limited partner's circumstances may differ from those of
other limited partners. Although the general partner believes the offer is fair,
you must make your own decision whether or not to participate in the offer based
upon a number of factors, including several factors that may be personal to you,
such as your financial position, your need or desire for liquidity, other
financial opportunities available to you, and your tax position and the tax
consequences to you of selling your units. You are encouraged to carefully
review this Offer to Purchase and any other information available to you and to
seek advice from your independent lawyer, tax advisor and/or financial advisor
with respect to your particular circumstances before deciding whether or not to
accept this offer.
YOUR GENERAL PARTNER FACES CONFLICTS OF INTEREST RELATING TO MANAGEMENT FEES.
Because we or our subsidiaries receive fees for managing your partnership
and its properties, a conflict of interest exists between continuing the
partnership and receiving such fees, and the liquidation of the partnership and
the termination of such fees.
IF WE DO NOT ACQUIRE ALL OF THE OUTSTANDING UNITS IN THIS OFFER, WE MAY MAKE A
FUTURE OFFER AT A HIGHER PRICE.
It is possible that we may conduct a future offer at a higher price,
although we have no obligation or current intention to do so. Our decision to
conduct a future offer will depend on, among other things, the performance of
the partnership, prevailing economic conditions, and our interest in acquiring
additional units.
YOUR TAX LIABILITY RESULTING FROM A SALE OF YOUR UNITS COULD EXCEED OUR OFFER
PRICE.
Your sale of units for cash will be a taxable sale, with the result that
you will recognize taxable gain or loss measured by the difference between the
amount realized on the sale and your adjusted tax basis in the units of limited
partnership interest of your partnership you transfer to us. The "amount
realized" with respect to a unit of limited partnership interest you transfer to
us will be equal to the sum of the amount of cash received by you for the unit
sold pursuant to the offer plus the amount of partnership liabilities allocable
to your unit. Depending on your basis in the units and your tax position, your
tax liability resulting from a sale of units to us pursuant to the offer could
exceed our offer price. The particular tax consequences for you of our offer
will depend upon a number of factors related to your tax situation, including
your tax basis in the units you transfer to us, whether you dispose of all of
your units, and whether you have available suspended passive losses, credits or
other tax items to offset any gain recognized as a result of your sale of your
units. We may also be required by state or local tax laws to withhold a portion
of our offer price. Because the income tax consequences of tendering units will
not be the same for everyone, you should consult your tax advisor to determine
the tax consequences of the offer to you.
YOU MAY RECOGNIZE TAXABLE GAIN FOR RELEASE AND ASSIGNMENT OF CLAIMS.
If you tender units in this offer, a portion of the price paid to you may
be deemed a payment for your release and assignment of claims. The proper
treatment for federal income tax purposes of your receipt of any deemed payments
for your release and assignment of claims is uncertain. No opinion or assurance
can be given that the Internal Revenue Service (the "IRS") will not challenge
the treatment of any deemed payments for your release and assignment of claims
as additional consideration for the units, and assert that such amount should be
treated as an ordinary income payment in exchange for your release and/or
assignment of current and future claims. You should consult your tax advisor
regarding the tax consequences to you with respect to your right to, and your
receipt of, any deemed payments for your release and assignment of claims.
6
IF YOU TENDER YOUR UNITS IN THIS OFFER, YOU WILL NO LONGER BE ENTITLED TO
DISTRIBUTIONS FROM YOUR PARTNERSHIP.
If you tender your units in response to our offer, you will transfer to us
all right, title and interest in and to all of the units we accept, and the
right to receive all distributions in respect of such units on and after the
date on which we accept such units for purchase. Accordingly, for any units that
we acquire from you, you will not receive any future distributions from
operating cash flow of your partnership or upon a sale or refinancing of the
property owned by your partnership.
YOU COULD RECOGNIZE GAIN IN THE EVENT OF A FUTURE REDUCTION IN YOUR
PARTNERSHIP'S LIABILITIES.
Generally, a decrease in your share of partnership liabilities is treated,
for federal income tax purposes, as a deemed cash distribution. Although the
general partner of your partnership does not have any current plan or intention
to reduce the liabilities of your partnership, it is possible that future
economic, market, legal, tax or other considerations may cause the general
partner to reduce your share of the partnership liabilities. If you retain all
or a portion of your units and your share of the partnership liabilities were to
be reduced, you would be treated as receiving a hypothetical distribution of
cash resulting from a decrease in your share of the liabilities of the
partnership. Any such hypothetical distribution of cash would be treated as a
nontaxable return of capital to the extent of your adjusted tax basis in your
units and thereafter as gain. Gain recognized by you on the disposition of
retained units with a holding period of 12 months or less may be classified as
short-term capital gain and subject to taxation at ordinary income tax rates.
WE COULD DELAY ACCEPTANCE OF, AND PAYMENT FOR, YOUR UNITS.
We reserve the right to extend the period of time during which our offer is
open and thereby delay acceptance for payment of any tendered units. The offer
may be extended in our reasonable discretion and no payment will be made in
respect of tendered units until the expiration of the offer and acceptance of
units for payment. We will pay for or return tendered units promptly after
expiration of the offer.
THERE MAY BE A POSSIBLE REDUCTION OF AVAILABLE INFORMATION ABOUT YOUR
PARTNERSHIP AS A RESULT OF THIS OFFER.
If there are less than 300 unitholders in your partnership upon
consummation of the offer, your partnership would no longer be required to file
periodic reports with the SEC, such as annual reports on Form 10-KSB containing
annual audited financial statements, and quarterly reports on Form 10-QSB
containing unaudited quarterly financial statements. Such reports are publicly
available and can be obtained on the SEC's web site. The lack of such filings
could adversely affect the already limited secondary market which currently
exists for units in your partnership and may discourage offers to purchase your
units. In such a case, you would regularly have access only to the information
your partnership's agreement of limited partnership requires your general
partner (which is our affiliate) to provide each year, which consists primarily
of tax information. See "Special Factors -- Effects of the Offer -- Effect on
Trading Market; Registration Under Section 12(g) of the Exchange Act."
IF WE DEMAND REPAYMENT IN FULL OF THE LOAN TO YOUR PARTNERSHIP PRIOR TO ITS
SCHEDULED MATURITY, THE FINANCIAL STATUS OF YOUR PARTNERSHIP COULD BE
JEOPARDIZED.
Your partnership has received approval by the limited partners to authorize
the general partner to obtain a loan from us to fund the redevelopment of
Preston Creek Apartments. We have the right to demand repayment in full of all
outstanding principal and accrued interest on the loan at any time. Based on the
projected redevelopment budget for the property, the total principal amount of
and any accrued interest on the loan are estimated to amount to approximately
$2.6 million by the fourth quarter of 2005, and are expected to be fully repaid
at the beginning of the second quarter of 2007. If the partnership does not have
sufficient funding sources to repay such amount by that time and is otherwise
unable to refinance
7
the loan, work out alternative payment terms, sell assets or obtain additional
funds, the financial status of the partnership could be jeopardized.
SPECIAL FACTORS
In reviewing this offer and before deciding whether or not to tender any of
your units, you should consider carefully the information discussed in this
Special Factors section of this Offer to Purchase.
VALUATION OF UNITS
Determination of Offer Price. Our offer price is based on our estimate of
the proceeds that would be available for distribution to limited partners in the
event of a liquidation of your partnership's properties. Our starting point in
this process is our estimated value for each of the properties. We considered
many of the same factors and assumptions that American Appraisal Associates,
Inc., the court-appointed, independent appraiser ("AAA"), considered in its
appraisals of your partnership's properties. In its report dated July 14, 2003,
AAA determined a final "as is" market value for Lakeside Place Apartments of
$35,000,000 as of May 13, 2003. In its report dated July 16, 2003, AAA
determined a final "as is" market value for Preston Creek Apartments of
$7,900,000 as of May 7, 2003. For a more detailed description of the independent
appraisal of your partnership's properties, see "Special Factors -- Valuation of
Units -- Estimated Liquidation Proceeds Based on Independent Appraisal."
However, unlike AAA's appraisal, which was performed in 2003, our valuation
of your partnership's properties was based on historical and current market data
and our own estimates and assumptions, such as rental trends, occupancy
projections, rental rate changes, unemployment, and household income. A summary
of our valuation for your partnership's properties is set forth below.
For Lakeside Place Apartments, we assigned it a gross property value of
$35,517,221, which is approximately 101% of its appraised value as of May 13,
2003.
For Preston Creek Apartments, we assigned it a gross property value of
$6,715,000, which is approximately 85% of its appraised value as of May 7, 2003.
We made this determination based on certain factors, including the following:
- the property's loss rate of 15% as of July, 2004 compared to a loss rate
assumption of 11% by the appraiser;
- our assessment of recent housing trends in the local market in which the
property is located;
- our assessment of the general economic outlook for the area in which the
property is located; and
- no value was assigned to any increase in value that may result from the
redevelopment of this property.
Once we estimated the gross property value of each property as described
above, we then deducted from the gross property value the estimated prepayment
penalty associated with the mortgage indebtedness secured by the property, which
would be paid in the event of a sale of the property. Accordingly, we deducted
estimated prepayment penalties of $6,213,579 for Lakeside Place Apartments and
$1,101,077 for Preston Creek Apartments to determine their net property values.
The following table compares the appraised values of your partnership's
properties to the net property values that we used to determine our offer price:
2003 GROSS PREPAYMENT NET
PROPERTY APPRAISED VALUE PROPERTY VALUE PENALTY PROPERTY VALUE
-------- --------------- -------------- ---------- --------------
Lakeside Place Apartments....... $35,000,000 $35,517,221 $6,213,579 $29,303,642
Preston Creek Apartments........ 7,900,000 6,715,000 1,101,077 5,613,923
----------- ----------- ---------- -----------
Total........................... $42,900,000 $42,232,221 $7,314,656 $34,917,566
=========== =========== ========== ===========
8
The aggregate net property value for all your partnership's properties is
$34,917,566. This is determined by aggregating the net property values of all
properties. To determine our offer price we then calculated a net equity value
for your partnership based on such aggregate net property value by adding the
value of the non-real estate assets of your partnership and deducting its
liabilities, including the mortgage debt (but excluding the associated
prepayment penalty already deducted above) and certain other costs as indicated
below.
Finally, we allocated 98% of this net equity value to limited partners,
which is the percentage of net proceeds that would be paid to limited partners
in the event of a liquidation of your partnership. Our offer price represents
the net equity value per unit determined in this manner as indicated below.
Aggregate net property value of partnership properties...... $ 34,917,566
Plus: Cash and cash equivalents............................. 85,151
Plus: Other partnership assets.............................. 336,605
Less: Mortgage debt, including accrued interest............. (26,288,608)
Less: Loans from partners................................... (565,174)
Less: Accounts payable and accrued expenses................. (310,787)
Less: Other liabilities..................................... (1,020,592)
Plus: Deficit restoration obligation........................ 1,054,613
------------
Net equity value of your partnership........................ $ 8,208,773
Percentage of net equity value allocated to holders of
units..................................................... 98%
------------
Net equity value of units................................... $ 8,065,690
Total number of units..................................... 89,980.00
------------
Net equity value per unit................................... $ 89.64
============
Although we determined the net equity value for your units to be $89.64 per
unit, we have increased our offer price to $99.00 per unit to match the price
being offered in a third-party tender offer commenced on February 25, 2005.
Comparison of Offer Price to Alternative Consideration. To assist holders
of units in evaluating the offer, your general partner, which is our affiliate,
has attempted to compare the offer price against: (a) all cash tender offer
prices that the general partner has knowledge of, excluding our current offer,
(b) prices at which the units have been sold on the secondary market that the
general partner has knowledge of, and (c) the estimated liquidation proceeds
payable per unit, assuming a sale of properties at prices equal to appraised
values determined by the independent appraiser in 2003. The general partner of
your partnership believes that analyzing the alternatives in terms of estimated
value, based upon currently available data and, where appropriate, reasonable
assumptions made in good faith, establishes a reasonable framework for comparing
alternatives. Since the value of the consideration for alternatives to the offer
is dependent upon varying market conditions, no assurance can be given that the
estimated values reflect the actual range of possible values. The results of
these comparative analyses are summarized in the chart below.
COMPARISON TABLE PER UNIT
---------------- --------
Cash offer price............................................ $ 99.00
Alternatives
Highest cash tender offer price (2002-March 2005)......... $ 99.00
Highest price on secondary market (2002-February 2005).... $121.60
Estimated liquidation proceeds (based on appraised
value)................................................. $ 96.77
9
PRIOR TENDER OFFERS
Excluding the current offer, we have conducted a total of six prior tender
offers for units in your partnership. We have described below all of the tender
offers for units in your partnership that we are aware of that were commenced or
completed since January 1, 2002.
2005. Mackenzie Patterson Fuller, Inc. and others have made an offer to
purchase up to 4,000 units at $99.00 per unit.
2004. We are not aware of any tender offers for units in your partnership
that were commenced or completed in 2004.
2003. On December 30, 2003, we completed a tender offer commenced on
November 12, 2003. We acquired 2,675.50 units in that offer at a price of $69.52
per unit. In that case, we determined our offer price by estimating the net
equity value of limited partnership units based on our valuation of your
partnership's properties using principally the direct capitalization method.
2002. On June 25, 2002, we completed a tender offer commenced on May 7,
2002. We acquired 1,001 units in that offer at a price of $77.00 per unit. In
that case, we determined our offer price by estimating the net equity value of
limited partnership units based on our valuation of your partnership's
properties using principally the direct capitalization method.
Prices on Secondary Market. Secondary market sales information is not a
reliable measure of value because of the limited number of any known trades.
Except for offers made by us and unaffiliated third parties, privately
negotiated sales and sales through intermediaries are the only means that may be
available to a limited partner to liquidate an investment in units (other than
our offer) because the units are not listed or traded on any securities exchange
or quoted on Nasdaq, on the Electronic Bulletin Board, or in "pink sheets."
Secondary sales activity for the units, including privately negotiated sales,
has been limited and sporadic. Set forth below is secondary sales information as
reported by Direct Investments Spectrum (formerly known as The Partnership
Spectrum) and The American Partnership Board, which are the only two sources
from which we currently have information regarding secondary market sales. Other
sources, such as The Stanger Report, may contain prices for the units that equal
or exceed the sales prices reported by Direct Investments Spectrum and The
American Partnership Board.
Set forth below are the high and low sales prices of units during the years
ended December 31, 2004 December 31, 2003 and December 31, 2002, as reported by
Direct Investments Spectrum, which is an independent, third-party source. 2004
prices are through January 31, 2005 as the last publication included the period
December 1, 2004 through January 31, 2005 with no cut-off between calendar
years. The gross sales prices reported by Direct Investments Spectrum do not
necessarily reflect the net sales proceeds received by sellers of units, which
typically are reduced by commissions and other secondary market transaction
costs to amounts less than the reported price. We do not know whether the
information compiled by Direct Investments Spectrum is accurate or complete.
SALES PRICES OF PARTNERSHIP UNITS, AS REPORTED BY DIRECT INVESTMENTS SPECTRUM
HIGH LOW
------- -------
Year Ended December 31, 2004: $ 95.00 $ 50.00
Year Ended December 31, 2003: $120.00 $ 75.00
Year Ended December 31, 2002: $121.60 $100.00
Set forth in the table below are the high and low sales prices of units
during the year ending December 31, 2005 (through February 28) and the years
ended December 31, 2004, December 31, 2003 and December 31, 2002, as reported by
the American Partnership Board, which is an independent, third-party source. The
gross sales prices reported by American Partnership Board do not necessarily
reflect the net sales proceeds received by sellers of units, which typically are
reduced by commissions and other
10
secondary market transaction costs to amounts less than the reported prices. We
do not know whether the information compiled by the American Partnership Board
is accurate or complete.
SALES PRICES OF PARTNERSHIP UNITS, AS REPORTED BY THE AMERICAN PARTNERSHIP BOARD
HIGH LOW
------- -------
Year Ending December 31, 2005 (through February 28): N/A N/A
Year Ended December 31, 2004: $ 82.00 $ 82.00
Year Ended December 31, 2003: $120.02 $120.02
Year Ended December 31, 2002: N/A N/A
ESTIMATED LIQUIDATION PROCEEDS BASED ON INDEPENDENT APPRAISAL
Selection and Qualifications of Independent Appraiser. In 2003, under the
terms of the settlement of the Nuanes and Heller litigation, your partnership's
properties were appraised by AAA, an independent appraiser appointed by the
court. Under the terms of the settlement, the independent appraiser was required
to provide in writing its professional opinion as to the market value of each of
the partnership's properties describing the methodologies used and other
information which the appraiser deemed appropriate to support or explain its
work. The appraiser was also required to prepare an executive summary of each
appraisal that included all material information. As the appraiser was
court-appointed, no special valuation instructions were given to the appraiser
by the partnership, us or our affiliates. The information set forth below was
provided to us by AAA with respect to its appraisals.
AAA is an experienced independent valuation consulting firm with more than
50 offices on four continents. AAA provides valuation and consulting services
for the real estate industry through its specialized industry focus and operates
through a team of professionals with different economical, financial,
statistical, legal, architectural, urban and engineering knowledge and
expertise.
Factors Considered. AAA performed complete appraisals of all of your
partnership's properties. AAA has represented that its report was prepared in
conformity with the Uniform Standards of Professional Appraisal Practice and the
Code of Professional Ethics and Standards of Professional Practice of the
Appraisal Institute. We furnished the appraiser with all of the necessary
information requested by AAA in connection with the appraisal. The information
furnished to the appraiser was true, correct and complete in all material
respects. No limitations were imposed on AAA by us or any of our affiliates. In
preparing its valuation of your partnership property, AAA:
- inspected and analyzed the exterior of all buildings and site
improvements and a representative sample of units;
- conducted neighborhood and area research, including major employers,
demographics (population trends, number of households, and income
trends), housing trends, surrounding uses, and general economic outlook
of the area;
- conducted market research of rental inventory, historical vacancy rates,
historical average rental rates, occupancy trends, concessions, and
marketing strategies in the submarket, and occupancy rates at competing
properties;
- reviewed leasing policy, concessions and history of recent occupancy;
- reviewed the historical operating statements for your partnership's
property and an operating budget forecast for 2003;
- prepared an estimate of stabilized income and expense (for capitalization
purposes);
11
- conducted market inquiries into recent sales of similar properties to
ascertain sales price per unit, effective gross income multipliers and
capitalization rates; and
- prepared sales comparison and income capitalization approaches to value.
AAA was provided by us with the following management budgets for your
partnership's property:
LAKESIDE PLACE PRESTON CREEK
FISCAL YEAR 2003 FISCAL YEAR 2003
MANAGEMENT BUDGET MANAGEMENT BUDGET
---------------------- ----------------------
DESCRIPTION TOTAL PER UNIT TOTAL PER UNIT
----------- ----------- -------- ----------- --------
Revenues Rental Income..................... $6,819,898 $9,291 $1,763,592 $7,735
Vacancy.................................. 386,520 527 102,000 447
Credit Loss/Concessions.................. 140,400 191 66,000 289
Subtotal.............................. $ 526,920 $ 718 $ 168,000 $ 737
Laundry Income........................... $ 35,724 $ 49 $ 10,296 $ 45
Garage Revenue........................... 0 0 0 0
Other Misc. Revenue...................... 445,344 607 60,000 263
Subtotal Other Income................. $ 481,068 $ 655 $ 70,296 $ 308
Effective Gross Income..................... $6,774,046 $9,229 $1,665,888 $7,307
Operating Expenses
Taxes.................................... $ 731,927 $ 997 $ 199,602 $ 875
Insurance................................ 247,645 337 64,834 284
Utilities................................ 408,000 556 135,750 595
Repair & Maintenance..................... 216,120 294 45,735 201
Cleaning................................. 0 0 98,500 432
Landscaping.............................. 168,000 229 48,000 211
Security................................. 0 0 0 0
Marketing & Leasing...................... 101,340 138 39,690 174
General Administrative................... 594,991 811 187,048 820
Management............................... 342,911 467 85,994 377
Miscellaneous............................ 0 0 0 0
Total Operating Expenses................... $2,810,934 $3,830 $ 905,153 $3,970
Reserves................................. 0 0 0 0
Net Income................................. $3,963,112 $5,399 $ 760,735 $3,337
THE ABOVE MANAGEMENT BUDGETS WERE INTERNALLY PREPARED OPERATING PROJECTIONS
FOR THE PARTNERSHIP'S PROPERTIES. A MANAGEMENT BUDGET DOES NOT REFLECT A
PROPERTY'S ACTUAL PERFORMANCE, OR CHANGES IN THE CONDITION OF A PROPERTY, IN THE
LOCAL AREA SURROUNDING A PROPERTY OR IN THE ECONOMY IN GENERAL.
Summary of Approaches and Methodologies Employed. The following summary
describes the material approaches and analyses employed by AAA in preparing the
appraisals. The partnership imposed no conditions or limitations on the scope of
AAA's investigation or the methods and procedures to be followed in preparing
the appraisal. AAA principally relied on two approaches to valuation: (1) the
sales comparison approach and (2) the income capitalization approach.
The sales comparison approach uses analysis techniques and sales of
comparable improved properties in surrounding or competing areas to derive units
of comparison that are then used to indicate a value for the subject property.
Under this approach, the primary methods of analysis used by the appraiser were:
(1) sales price per unit analysis; (2) net operating income analysis; and (3)
effective gross income analysis.
The purpose of the income capitalization approach is to value an
income-producing property by analyzing likely future income and expenses of the
property over a reasonable holding period. Under the income capitalization
approach, AAA performed: (1) a direct capitalization analysis and (2) a
discounted cash flow analysis to derive property value. The direct
capitalization analysis determines the value of a property by applying a
capitalization rate that takes into account all of the factors influencing the
value of such property to the net operating income of such property for a single
year. The direct capitalization method is normally more appropriate for
properties with relatively stable operating histories and
12
expectations. The discounted cash flow analysis determines the value of a
property by discounting to present value the estimated operating cash flow of
such property and the estimated proceeds of a hypothetical sale of such property
at the end of an assumed holding period. The discounted cash flow method is more
appropriate for the analysis of investment properties with multiple or long-term
leases, particularly leases with cancellation clauses or renewal options. It is
especially useful for multi-tenant properties in volatile markets.
AAA relied principally on the income capitalization approach to valuation
and secondarily on the sales comparison approach. Although the sales comparison
approach is considered a reliable method for valuing property, the income
capitalization approach is the primary approach used for valuing income
producing property, such as your partnership's property.
Summary of Independent Appraisals of Your Partnership's Properties. AAA
performed complete appraisals of all of your partnership's properties. The
summary set forth below describes the material conclusions reached by AAA based
on the values determined under the valuation approaches and subject to the
assumptions and limitations described below. The estimated total "as is" market
value of the fee simple estate of your partnership's properties is $42,900,000,
which was determined by adding the estimated values determined by AAA for each
of your partnership's properties and which is higher than our estimate of the
aggregate net property value of $34,917,566.
LAKESIDE PLACE
Valuation Under Sales Comparison Approach. AAA compared five apartment
complexes with Lakeside Place that were sold between January 2001 and February
2003 and located in the property's real estate market area. Based on its
qualitative analysis, AAA rated the locations of two comparable properties as
comparable and three comparable properties as inferior to the location of
Lakeside Place. AAA rated the quality/appeal of one comparable property as
comparable and four comparable properties as inferior to the quality/appeal of
Lakeside Place. AAA rated the amenities of one comparable property as superior
and four comparable properties as comparable to the amenities of Lakeside Place.
AAA made adjustments to the sales price per unit of each comparable
property to reflect differences from Lakeside Place in location, number of
units, quality/appeal, age/condition, occupancy at sale, amenities and average
unit size. Based on the available data, AAA concluded a value range of $46,690
to $56,504 per unit with a mean or average adjusted price of $50,392 per unit
and a median adjusted price of $48,958 per unit. Thus, the estimated value based
on a $49,000 sales price per unit for the 734 units was approximately
$35,200,000 after adjustment for deferred maintenance and present value of
concessions.
As part of the sales comparison approach, AAA also conducted a net
operating income ("NOI") analysis. NOI effectively takes into account the
various physical, location and operating aspects of the sale. AAA compared
Lakeside Place's NOI to the NOI of the five comparable properties and arrived at
a percentage adjustment. After applying the percentage adjustment to the sales
price per unit of each comparable property, the range of value was between
$42,768 and $62,557 per unit, with an average of $54,837 per unit. The appraiser
concluded a value of $48,000 per unit for the 734 units of the property,
resulting in an estimated "as is" market value of $34,500,000 using the NOI
analysis after adjustment for deferred maintenance and present value of
concessions.
AAA also performed an effective gross income multiplier ("EGIM") analysis.
The EGIM measures the relationship between the sales price of a property and its
effective gross income, which is the total annual income that a property would
produce after an allowance for vacancy and credit loss. AAA estimated the
operating expense ratio ("OER") of Lakeside Place to be 41.84% before reserves,
with the expense ratios of the five comparable properties ranging from 41.79% to
50.37%, resulting in EGIMs ranging from 5.07 to 6.46. Thus, AAA concluded an
EGIM of 5.25 for Lakeside Place, and applied the EGIM to the stabilized
effective gross income for the property (see Income Approach section below),
resulting in a value conclusion of approximately $34,100,000 after adjustment
for deferred maintenance and present value of concessions.
13
AAA estimated the value using the price per unit analysis at $35,200,000,
the value using the NOI analysis at $34,500,000 and the value using the EGIM
analysis at $34,100,000. Based on these three valuation methods, AAA concluded
that the reconciled value for Lakeside Place under the sales comparison approach
was $34,500,000. AAA assumed a marketing and exposure period of 6 to 12 months.
Valuation Under Income Capitalization Approach. Under the income
capitalization approach, AAA performed: (1) a direct capitalization analysis and
(2) a discounted cash flow analysis to derive a value for Lakeside Place.
AAA first utilized a discounted cash flow method to analyze the value of
the property. Under this method, anticipated future cash flow and a reversionary
value are discounted at an appropriate rate of return to arrive at an estimate
of present value. AAA also employed a direct capitalization analysis on the
property by dividing a forecast of net operating income ("NOI") by an
appropriate capitalization rate. AAA performed a market rent analysis for the
property to derive a projected rental income. The analysis included both a
review of the subject's current asking and actual rent rates as well as a
comparison with comparable apartment properties. AAA calculated Lakeside Place's
effective gross income ("EGI") by adding apartment rental collections to other
income and then making an adjustment for vacancy and collection loss. Under this
analysis, AAA arrived at an EGI of $6,663,367. Once the EGI was established,
operating expenses were deducted from the EGI in order to arrive at an NOI for
Lakeside Place of approximately $3,600,853. AAA performed a pro forma analysis
of revenue and expenses for the property to derive the subject's stabilized NOI.
AAA relied on the subject's historical and budgeted income and expenses for this
estimate. AAA derived appropriate investment criteria, including an overall
capitalization rate, terminal capitalization rate and a discount rate based upon
analysis of comparable sales and a survey of real estate investors.
The assumptions employed by AAA to determine the value of Lakeside Place
under the income approach included:
(1) stabilized vacancy and collection loss rate of 9%;
(2) replacement reserve of $350 per unit;
(3) overall capitalization rate of 10.00%;
(4) terminal capitalization rate of 11.00%;
(5) discount rate of 12.50%;
(6) 3.00% cost of sale at reversion; and
(7) holding period of 10 years.
No adjustment was made for lease-up costs because the property was near or at a
stabilized condition. An adjustment was made for concessions due to soft market
conditions, and AAA estimated the present value of concessions to be $584,000.
An adjustment of $190,000 was made for deferred maintenance. Based on these
assumptions, AAA's estimate of cash flows for a 10-year period resulted in an
indicated value of $35,900,000 through the discounted cash flow method. The
reversion value contributed approximately 37% of the value.
Under the direct capitalization method, utilizing a capitalization rate of
10.00%, the projected NOI resulted in a value (after rounding) of $35,200,000
after adjustments for deferred maintenance and present value of concessions.
Using the income capitalization approach, AAA determined on an as-is basis
that the direct capitalization method and the discounted cash flow method
indicated the value for Lakeside Place was $35,500,000.
Reconciliation of Values and Conclusions of Appraisal. The final step in
the appraisal process was to reconcile the sales comparison approach and the
income capitalization approach values to arrive at a final value conclusion. The
reconciliation of the two approaches involved weighing the valuation techniques
in
14
relation to their substantiation by market and other sources of data, the
relativity and applicability of the approaches to the property type, and the
purpose of the valuation. AAA concluded that the estimated market value under
the sales comparison approach was $34,500,000 and the estimated market value
under the income capitalization approach was $35,500,000. After reconciling the
various factors, in its appraisal report dated July 14, 2003, AAA determined a
final "as is" market value for Lakeside Place of $35,000,000 as of May 13, 2003.
PRESTON CREEK APARTMENTS
Valuation Under Sales Comparison Approach. AAA compared five apartment
complexes with Preston Creek Apartments that were sold between September 1999
and June 2002 and located in the property's real estate market area. Based on
its qualitative analysis, AAA rated the locations of two comparable properties
as superior and three comparable properties as comparable to the location of
Preston Creek Apartments. AAA rated the quality/appeal of three comparable
properties as superior and two comparable properties as comparable to the
quality/appeal of Preston Creek Apartments. AAA rated the amenities of two
comparable properties as superior, two comparable properties as comparable and
one comparable properties as inferior to the amenities of Preston Creek
Apartments.
AAA made adjustments to the sales price per unit of each comparable
property to reflect differences from Preston Creek Apartments in location,
number of units, quality/appeal, age/condition, occupancy at sale, amenities and
average unit size. Based on the available data, AAA concluded a value range of
$34,893 to $42,087 per unit with a mean or average adjusted price of $38,001 per
unit and a median adjusted price of $38,664 per unit. Thus, the estimated value
based on a $37,000 sales price per unit for the 228 units was approximately
$8,300,000 after adjustment for present value of concessions.
As part of the sales comparison approach, AAA also conducted a net
operating income ("NOI") analysis. NOI effectively takes into account the
various physical, location and operating aspects of the sale. AAA compared
Preston Creek Apartments' NOI to the NOI of the five comparable properties and
arrived at a percentage adjustment. After applying the percentage adjustment to
the sales price per unit of each comparable property, the range of value was
between $27,206 and $36,264 per unit, with an average of $32,625 per unit. The
appraiser concluded a value of $36,000 per unit for the 228 units of the
property, resulting in an estimated "as is" market value of $8,100,000 using the
NOI analysis after adjustment for present value of concessions.
AAA also performed an effective gross income multiplier ("EGIM") analysis.
The EGIM measures the relationship between the sales price of a property and its
effective gross income, which is the total annual income that a property would
produce after an allowance for vacancy and credit loss. AAA estimated the
operating expense ratio ("OER") of Preston Creek Apartments to be 54.88% before
reserves, with the expense ratios of the five comparable properties ranging from
41.99% to 51.46%, resulting in EGIMs ranging from 4.82 to 6.42. Thus, AAA
concluded an EGIM of 5.00 for Preston Creek Apartments, and applied the EGIM to
the stabilized effective gross income for the property (see Income Approach
section below), resulting in a value conclusion of approximately $8,200,000
after adjustment for present value of concessions.
AAA estimated the value using the price per unit analysis at $8,300,000,
the value using the NOI analysis at $8,100,000 and the value using the EGIM
analysis at $8,200,000. Based on these three valuation methods, AAA concluded
that the reconciled value for Preston Creek Apartments under the sales
comparison approach was $8,200,000. AAA assumed a marketing and exposure period
of 6 to 12 months.
Valuation Under Income Capitalization Approach. Under the income
capitalization approach, AAA performed: (1) a direct capitalization analysis and
(2) a discounted cash flow analysis to derive a value for Preston Creek
Apartments.
AAA first utilized a discounted cash flow method to analyze the value of
the property. Under this method, anticipated future cash flow and a reversionary
value are discounted at an appropriate rate of
15
return to arrive at an estimate of present value. AAA also employed a direct
capitalization analysis on the property by dividing a forecast of net operating
income ("NOI") by an appropriate capitalization rate. AAA performed a market
rent analysis for the property to derive a projected rental income. The analysis
included both a review of the subject's current asking and actual rent rates as
well as a comparison with comparable apartment properties. AAA calculated
Preston Creek Apartments' effective gross income ("EGI") by adding apartment
rental collections to other income and then making an adjustment for vacancy and
collection loss. Under this analysis, AAA arrived at an EGI of $1,667,136. Once
the EGI was established, operating expenses were deducted from the EGI in order
to arrive at an NOI for Preston Creek Apartments of approximately $695,291. AAA
performed a pro forma analysis of revenue and expenses for the property to
derive the subject's stabilized NOI. AAA relied on the subject's historical and
budgeted income and expenses for this estimate. AAA derived appropriate
investment criteria, including an overall capitalization rate, terminal
capitalization rate and a discount rate based upon analysis of comparable sales
and a survey of real estate investors.
The assumptions employed by AAA to determine the value of Preston Creek
Apartments under the income approach included:
(1) stabilized vacancy and collection loss rate of 11%;
(2) replacement reserve of $250 per unit;
(3) overall capitalization rate of 9.00%;
(4) terminal capitalization rate of 9.50%;
(5) discount rate of 10.50%;
(6) 3.00% cost of sale at reversion; and
(7) holding period of 10 years.
No adjustment was made for lease-up costs because the property was near or at a
stabilized condition. An adjustment was made for concessions due to soft market
conditions, and AAA estimated the present value of concessions to be $129,000.
Based on these assumptions, AAA's estimate of cash flows for a 10-year period
resulted in an indicated value of $7,900,000 through the discounted cash flow
method. The reversion value contributed approximately 42% of the value.
Under the direct capitalization method, utilizing a capitalization rate of
9.00%, the projected NOI resulted in a value (after rounding) of $7,600,000
after adjustments for present value of concessions.
Using the income capitalization approach, AAA determined on an as-is basis
that the direct capitalization method and the discounted cash flow method
indicated the value for Preston Creek Apartments was $7,800,000.
Reconciliation of Values and Conclusions of Appraisal. The final step in
the appraisal process was to reconcile the sales comparison approach and the
income capitalization approach values to arrive at a final value conclusion. The
reconciliation of the two approaches involved weighing the valuation techniques
in relation to their substantiation by market and other sources of data, the
relativity and applicability of the approaches to the property type, and the
purpose of the valuation. AAA concluded that the estimated market value under
the sales comparison approach was $8,200,000 and the estimated market value
under the income capitalization approach was $7,800,000. After reconciling the
various factors, in its appraisal report dated July 16, 2003, AAA determined a
final "as is" market value for Preston Creek Apartments of $7,900,000 as of May
7, 2003.
Assumptions, Limitations and Qualifications of AAA's Valuation. In
preparing the appraisal, AAA relied, without independent verification, on the
accuracy and completeness of all information supplied or
16
otherwise made available to it by or on behalf of the partnership. In arriving
at the appraisal, AAA assumed:
- good and marketable title to the property;
- validity of owner's claim to the property;
- no encumbrances which could not be cleared through normal processes,
unless otherwise stated;
- accuracy of land areas and descriptions obtained from public records;
- no subsurface mineral and use rights or conditions;
- no substances such as asbestos, urea-formaldehyde foam insulation, other
chemicals, toxic wastes, or other potentially hazardous materials in
existence or present on or in the property;
- full compliance with applicable federal, state and local environmental
regulations and laws, unless otherwise stated, defined and considered;
- possession of all required licenses, consents, or other legislative or
administrative authority from any local, state, or national government or
private entity organization and that the renewal of these items is
possible;
- compliance with all applicable zoning and use regulations and
restrictions, unless a nonconformity has been stated, defined, and
considered;
- utilization of the land and improvements within property boundaries and
no encroachment or trespass of the improvements, unless otherwise stated;
- the structural integrity of the property including its conformity to
specific governmental code requirements, such as fire, building and
safety, earthquake, and occupancy, or any physical defects not readily
apparent during inspection; and
- compliance with the Americans with Disabilities Act of 1992.
Compensation of Appraiser. AAA was appointed by the court to perform all
the real estate appraisals in connection with the settlement relating to the
Nuanes and Heller litigation. AAA was paid a fee of $619,100 for the appraisals.
We paid 50% of the costs of the appraisals, with the other 50% paid from the
settlement fund. AAA has conducted other appraisals of property in connection
with the other offers made pursuant to the settlement agreement. Other than the
appraisals performed in connection with the settlement agreement, during the
prior two years, no material relationship has existed between AAA and your
partnership or any of its affiliates, including the AIMCO Entities.
Availability of Appraisal Reports. You may obtain a full copy of AAA's
appraisals upon request, without charge, by contacting the Information Agent at
one of the addresses or the telephone number on the back cover of this Offer to
Purchase. Copies of the appraisal for the property are also available for
inspection and copying at the principal executive offices of the partnership
during regular business hours by any interested unitholder or his or her
designated representative at his or her cost. In addition, a copy of the
appraisals has been filed with the SEC as an exhibit to the Tender Offer
Statement and Rule 13e-3 Transaction Statement on Schedule TO and is available
on the SEC's site on the World Wide Web at http://www.sec.gov.
In estimating the net liquidation proceeds that would be payable per unit
based on the total appraised value of your partnership's properties, we applied
the same basic methodology as described under "Valuation of Units," except that
we did not deduct any amounts that were already deducted from and reflected in
the total appraised value. We deducted from the total appraised value of your
partnership's properties ($42,900,000) total estimated prepayment penalties of
$7,314,656 to determine the net appraised value of $35,585,344. As indicated
below, based on the total appraised value of the partnership
17
properties, the estimated net liquidation proceeds per unit is $96.77, which is
lower than our offer price of $99.00.
Net appraised of partnership properties..................... $ 35,585,344
Plus: Cash and cash equivalents............................. 85,151
Plus: Other partnership assets.............................. 336,605
Less: Mortgage debt, including accrued interest............. (26,288,608)
Less: Loans from partners................................... (565,174)
Less: Accounts payable and accrued expenses................. (310,787)
Less: Other liabilities..................................... (1,020,592)
Plus: Deficit restoration obligation........................ 1,041,525
------------
Estimated net liquidation proceeds of your partnership...... $ 8,863,463
Percentage of estimated net liquidation proceeds allocated
to holders of units....................................... 98%
------------
Estimated net liquidation proceeds of units................. $ 8,707,025
Total number of units..................................... 89,980.00
------------
Estimated net liquidation proceeds per unit................. $ 96.77
============
BACKGROUND AND REASONS FOR THE OFFER
General. We are in the business of acquiring direct and indirect interests
in apartment properties such as the properties owned by your partnership. Our
offer provides us with an opportunity to increase our ownership interest in your
partnership's properties while providing you and other investors with an
opportunity to liquidate your current investment.
This offer constitutes our seventh tender offer for units in your
partnership. As part of the settlement of the Nuanes and Heller litigation, we
commenced a cash tender offer in November 2003 to acquire limited partnership
units in your partnership for $69.52 per unit and acquired 2,675.50 units. THIS
OFFER IS NOT BEING MADE AS PART OF THE SETTLEMENT. Subsequent to the November
2003 litigation settlement offer, we acquired an additional 250 units at an
offer price of $69.52 per unit in four negotiated transactions.
Alternatives Considered by Your General Partner. From time to time in the
past, we have made offers to acquire units of limited partnership interest in
your partnership. Before making this offer and the previous offers, your general
partner (which is our affiliate) considered a number of alternative
transactions. The following is a brief discussion of the advantages and
disadvantages of the alternatives considered by your general partner.
LIQUIDATION
One alternative would be for the partnership to sell its assets, distribute
the net liquidation proceeds to its partners in accordance with the agreement of
limited partnership, and thereafter dissolve. Partners would be at liberty to
use the net liquidation proceeds after taxes for investment, business, personal
or other purposes, at their option. If your partnership were to sell its assets
and liquidate, you would not need to rely upon capitalization of income or other
valuation methods to estimate the fair market value of partnership assets.
Instead, such assets would be valued through negotiations with prospective
purchasers (in many cases unrelated third parties).
If your partnership was liquidated, and the properties sold at prices equal
to the values determined by the independent appraiser in 2003, we estimate that
your net liquidation proceeds would be $96.77 per unit. See "Special
Factors -- Valuation of Units." However, a liquidating sale of all of your
partnership's properties would be a taxable event for all partners, including
your general partner. Furthermore, all partners, including those who wish to
retain their units, and your general partner would be forced to participate in
the liquidation. Lastly, although the future operating results of your
partnership and future sales prices of the properties owned by your partnership
are uncertain, the operating performance of your
18
partnership's properties may improve in the future, which, in turn, may result
in higher property values, making a sale of your partnership's properties a more
attractive option in the future. Such values are also a function of the interest
rate environment at the time. However, because your general partner and property
manager (which are our affiliates) receive fees for managing your partnership
and its properties, a conflict of interest exists between continuing the
partnership and receiving such fees, on the one hand, and the liquidation of the
partnership and the termination of such fees, on the other. See "The
Offer -- Section 8. Certain Information Concerning Your Partnership --
Investment Objectives and Policies; Sale or Financing of Investments" and
"Special Factors -- Conflicts of Interest and Transactions with Affiliates." The
term of the partnership will continue until December 31, 2020, unless the
partnership is terminated sooner under the provisions of the partnership
agreement.
CONTINUATION OF THE PARTNERSHIP WITHOUT THE OFFER
A second alternative would be for your partnership to continue as a
separate legal entity with its own assets and liabilities and continue to be
governed by its existing agreement of limited partnership, without our offer. A
number of advantages could result from the continued operation of your
partnership. Given improving rental market conditions or improved operating
performance, the level of distributions might increase over time. It is possible
that the private resale market for properties could improve over time, making a
sale of the partnership's properties at some point in the future a more
attractive option than it is currently. The continuation of your partnership
will allow you to continue to participate in the net income and any increases in
revenue of your partnership and any net proceeds from the sale of the properties
owned by your partnership. However, no assurance can be given as to future
operating results or as to the results of any future attempts to sell the
properties owned by your partnership.
The primary disadvantage of continuing the operations of your partnership
without our offer is that you would be limited in your ability to sell your
units. Although you could sell your units to a third party, any such sale might
be at a price less than our offer price.
Alternative Transactions Considered by Us. At the present time, we have
decided to proceed with this offer. From time to time in the past, we have
considered proposing a number of alternative transactions, including the
purchase of your partnership's properties or a merger of your partnership in
which you would receive cash in exchange for your units. We decided not to
pursue these alternative transactions because, in each case, we determined that
a tender offer would be a less expensive means of acquiring additional interests
in your partnership, and would not require the consent or approval of any
limited partners (other than those who elect to tender their units). In the
future, however, we may consider purchasing your partnership's properties or
effecting such a merger. See "Special Factors -- Future Plans of the Purchaser."
We also considered an offer to exchange units in your partnership for limited
partnership interests in AIMCO Properties, L.P. However, because of the expense
and delay associated with making such an exchange offer, we decided to make an
offer for cash only. In addition, our historical experience has been that when
we have offered limited partners an opportunity to receive cash or limited
partnership interests in AIMCO Properties, L.P., the limited partners who tender
usually prefer the cash option.
MATERIAL FEDERAL INCOME TAX MATTERS
The following summary is a discussion of the material United States federal
income tax consequences of the offer that may be relevant to (i) limited
partners who tender some or all of their units for cash pursuant to our offer,
and (ii) limited partners who do not tender any of their units pursuant to our
offer. This discussion is based on the Internal Revenue Code of 1986, as amended
(the "Code"), Treasury Regulations, rulings issued by the IRS, and judicial
decisions, all as of the date of this Offer to Purchase. All of the foregoing is
subject to change or alternative construction, possibly with retroactive effect,
and any such change or alternative construction could affect the continuing
accuracy of this summary. This summary is based on the assumption that your
partnership is operated in accordance with its organizational documents
including its certificate of limited partnership and agreement of limited
partnership. This summary does not purport to discuss all aspects of federal
income taxation which may be
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important to a particular person in light of its investment or tax
circumstances, or to certain types of investors subject to special tax rules
(including financial institutions, broker-dealers, insurance companies, and,
except to the extent discussed below, tax-exempt organizations and foreign
investors, as determined for United States federal income tax purposes), nor
(except as otherwise expressly indicated) does it describe any aspect of state,
local, foreign or other tax laws. This summary assumes that the units are held
by the limited partners for investment purposes (commonly referred to as
"capital assets"), and are not held by partners for sale to customers as dealer
property under the Code. No advance ruling has been or will be sought from the
IRS regarding any matter discussed in this Offer to Purchase. Further, no
opinion of counsel has been obtained with regard to the offer.
THE UNITED STATES FEDERAL INCOME TAX TREATMENT OF A LIMITED PARTNER
PARTICIPATING IN THE OFFER DEPENDS IN SOME INSTANCES ON DETERMINATIONS OF FACT
AND INTERPRETATIONS OF COMPLEX PROVISIONS OF UNITED STATES FEDERAL INCOME TAX
LAW FOR WHICH NO CLEAR PRECEDENT OR AUTHORITY MAY BE AVAILABLE. ACCORDINGLY, YOU
SHOULD CONSULT YOUR TAX ADVISOR REGARDING THE UNITED STATES FEDERAL, STATE,
LOCAL AND FOREIGN TAX CONSEQUENCES OF SELLING THE INTERESTS IN YOUR PARTNERSHIP
REPRESENTED BY YOUR UNITS PURSUANT TO OUR OFFER OR OF A DECISION NOT TO SELL IN
LIGHT OF YOUR SPECIFIC TAX SITUATION.
Tax Consequences to Limited Partners Tendering Units for Cash. The sale of
a unit of limited partnership interest pursuant to this offer will be a taxable
transaction for United States federal income tax purposes. You will recognize
gain or loss on a sale of a unit of limited partnership interest of your
partnership equal to the difference, if any, between (i) your "amount realized"
on the sale and (ii) your adjusted tax basis in the unit sold. The "amount
realized" with respect to a unit will be equal to the sum of the amount of cash
received by you for the unit sold pursuant to the offer plus the amount of
partnership liabilities allocable to your unit (as determined under Section 752
of the Code). Thus, your tax liability resulting from a sale of a unit could
exceed the cash received upon such sale.
Adjusted Tax Basis. If you acquired your units for cash, your initial tax
basis in such units was generally equal to your cash investment in your
partnership increased by your share of partnership liabilities at the time you
acquired such units. Your initial tax basis generally has been increased by (i)
your share of partnership income and gains, and (ii) any increases in your share
of partnership liabilities, and has been decreased (but not below zero) by (i)
your share of partnership cash distributions, (ii) any decreases in your share
of partnership liabilities, (iii) your share of partnership losses, and (iv)
your share of nondeductible partnership expenditures that are not chargeable to
capital. For purposes of determining your adjusted tax basis in your units
immediately prior to a disposition of your units, your adjusted tax basis in
your units will include your allocable share of partnership income, gain or loss
for the taxable year of disposition. If your adjusted tax basis is less than
your share of partnership liabilities (e.g., as a result of the effect of net
loss allocations and/or distributions exceeding the cost of your unit), your
gain recognized with respect to a unit pursuant to the offer will exceed the
cash proceeds realized upon the sale of such unit, and may result in a tax
liability to you that exceeds the cash received upon such sale.
Character of Gain or Loss Recognized Pursuant to the Offer. Except as
described below, the gain or loss recognized by you on a sale of a unit pursuant
to the offer generally will be treated as a long-term capital gain or loss if
you held the unit for more than one year. Long-term capital gains recognized by
individuals and certain other noncorporate taxpayers generally will be subject
to a maximum United States federal income tax rate of 15%. If the amount
realized with respect to a unit of limited partnership interest of your
partnership that is attributable to your share of "unrealized receivables" of
your partnership exceeds the tax basis attributable to those assets, such excess
will be treated as ordinary income. Among other things, "unrealized receivables"
include depreciation recapture for certain types of property. In addition, the
maximum United States federal income tax rate applicable to persons who are
noncorporate taxpayers for net capital gains attributable to the sale of
depreciable real property (which may be determined to include an interest in a
partnership such as your units) held for more than one year is currently 25%
(rather than 15%) with respect to that portion of the gain attributable to
depreciation deductions previously taken on the property. Certain limitations
apply to the use of capital losses.
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If you tender a unit of limited partnership interest of your partnership in
the offer, you will be allocated a share of partnership taxable income or loss
for the year of tender with respect to any units sold. You will not receive any
future distributions on units tendered on or after the date on which such units
are accepted for purchase and, accordingly, you may not receive any
distributions with respect to such accreted income. Such allocation and any
partnership cash distributions to you for that year will affect your adjusted
tax basis in your unit and, therefore, the amount of your taxable gain or loss
upon a sale of a unit pursuant to the offer.
Passive Activity Losses. The passive activity loss rules of the Code limit
the use of losses derived from passive activities, which generally include
investments in limited partnership interests such as your units. An individual,
as well as certain other types of investors, generally cannot use losses from
passive activities to offset nonpassive activity income received during the
taxable year. Passive losses that are disallowed for a particular tax year are
"suspended" and may be carried forward to offset passive activity income earned
by the investor in future taxable years. In addition, such suspended losses may
be claimed as a deduction, subject to other applicable limitations, upon a
taxable disposition of the investor's interest in such activity.
Accordingly, if your investment in your units is treated as a passive
activity, you may be able to reduce gain from the sale of your units pursuant to
the offer with passive losses in the manner described below. If you sell all or
a portion of your units pursuant to the offer and recognize a gain on your sale,
you will generally be entitled to use your current and "suspended" passive
activity losses (if any) from your partnership and other passive sources to
offset that gain. In general, if you sell all or a portion of your units
pursuant to the offer and recognize a loss on such sale, you will be entitled to
deduct that loss currently (subject to other applicable limitations) against the
sum of your passive activity income from your partnership for that year (if any)
plus any passive activity income from other sources for that year. If you sell
all of your units pursuant to the offer, the balance of any "suspended" losses
from your partnership that were not otherwise utilized will no longer be
suspended and will therefore be deductible (subject to any other applicable
limitations) by you against any other income for that year, regardless of the
character of that income. You are urged to consult your tax advisor concerning
whether, and the extent to which, you have available "suspended" passive
activity losses from your partnership or other investments that may be used to
reduce gain from the sale of units pursuant to the offer.
Release and Assignment of Claims. If you tender units in this offer, a
portion of the price paid to you may be deemed a payment for your release and
assignment of claims. The proper treatment for federal income tax purposes of
your receipt of any deemed payments for your release and assignment of claims is
uncertain. No opinion or assurance can be given that the IRS will not challenge
the treatment of any deemed payments for your release and assignment of claims
as additional consideration for the units, and assert that such amount should be
treated as an ordinary income payment in exchange for your release and/or
assignment of current and future claims. You should consult your tax advisor
regarding the tax consequences to you with respect to your right to, and your
receipt of, any deemed payments for your release and assignment of claims.
Information Reporting, Backup Withholding and FIRPTA. If you tender any
units, you must report the transaction by filing a statement with your United
States federal income tax return for the year of the tender which provides
certain required information to the IRS. To prevent the possible application of
back-up United States federal income tax withholding with respect to the payment
of the offer consideration, you are generally required to provide us with your
correct taxpayer identification number. Back-up withholding is not an additional
tax. Any amounts withheld under the back-up withholding rules may be refunded or
credited against your United States federal income tax liability, if any,
provided that the required information is furnished to the Internal Revenue
Service. See the instructions to the letter of transmittal.
Gain realized by a foreign person on the sale of a unit pursuant to the
offer will be subject to federal income tax under the Foreign Investment in Real
Property Tax Act of 1980. Under these provisions of the Code, if we acquire an
interest held by a foreign person, we will be required to deduct and withhold
10%
21
of the amount realized by such foreign person on the disposition. Amounts
withheld would be creditable against a foreign person's United States federal
income tax liability and, if in excess thereof, a refund could be claimed from
the Internal Revenue Service by filing a United States income tax return. See
the instructions to the letter of transmittal.
State and Local Withholding. If you tender any units pursuant to this
offer, we may be required under state or local tax laws to deduct and withhold a
portion of our offer price. You should consult your tax advisor concerning
whether any state or local withholding would be required on a disposition of
your units and whether such amounts may be available to you as a credit on your
state or local tax returns.
Tax Consequences to the General Partner of Your Partnership and its
Affiliates, including AIMCO Properties, L.P. The sale of your units pursuant to
this offer will not be a taxable transaction for the general partner of your
partnership or its affiliates, including AIMCO Properties, L.P. Consequently,
the general partner of your partnership and its affiliates will not recognize
gain or loss in connection with this offer. We, like any other purchaser of
units, will receive a tax basis in the purchased units equal to the
consideration paid by us for the units plus the allocable share of debt with
respect to such units. This tax basis will be allocated over the assets owned by
your partnership, and we will be able to take depreciation and amortization
deductions to the extent basis is allocated to depreciable or amortizable
property owned by your partnership.
EFFECTS OF THE OFFER
Because the general partner of your partnership is our affiliate, we have
control over the management of your partnership. We are affiliated with the
company that currently manages the properties owned by your partnership. In
addition, we, together with your general partner, Madison River Properties,
L.L.C., Riverside Drive, L.L.C. and AIMCO IPLP, L.P. (which are our affiliates),
own 61,447.34 units, or 68.29%, of the outstanding units of your partnership.
Because we and our affiliates own a majority of the outstanding units and
control your partnership's general partner, we control the outcome of most
voting decisions with respect to your partnership. In general, we will vote the
units owned by us in whatever manner we deem to be in our best interests, which
may not be in the interest of other limited partners. This could (1) prevent
non-tendering limited partners from taking action that they desire but that we
oppose and (2) enable us to take action desired by us but opposed by
non-tendering limited partners. We are also affiliated with the company that
currently manages, and has managed for some time, the properties owned by your
partnership. In the event that we acquire a substantial number of units pursuant
to this offer, removal of the property manager may become more difficult or
impossible.
If we acquire all of the units that we are seeking in the offer, our
interest in your partnership's net earnings ($(907,000) for the year ended
December 31, 2004) and net book value ($(10,714,000) as of December 31, 2004)
will increase to 100%. AIMCO-GP owns a 1% interest in AIMCO Properties, L.P. and
AIMCO, through its subsidiaries, owns an 89% interest in AIMCO Properties.
Distributions to Us. If we acquire units in the offer, we will participate
in any subsequent distributions to limited partners to the extent of the units
purchased.
Partnership Status. The rules regarding whether a partnership is treated
as a "publicly traded partnership" taxable as a corporation are not certain. We
believe that our purchase of units in accordance with the terms of our offer
should not adversely affect the issue of whether your partnership is classified
as a partnership for federal income tax purposes, because, taking into account
all of the facts and circumstances, the general partner of your partnership
believes that the partnership interests in your partnership should not be
treated as readily tradable on a secondary market or the substantial equivalent
thereof.
Business. Our offer will not affect the operation of the property owned by
your partnership. We will continue to control the general partner of your
partnership and the property manager, both of which will remain the same.
Consummation of the offer will not affect your agreement of limited partnership,
the operations of your partnership, the business and properties owned by your
partnership or any other matter
22
relating to your partnership, except it would result in us increasing our
ownership of units. We have no current intention of changing the fee structure
for your general partner or the manager of your partnership's property.
Effect on Trading Market; Registration Under Section 12(g) of the Exchange
Act. If a substantial number of units are purchased pursuant to the offer, the
result will be a reduction in the number of limited partners in your
partnership. In the case of certain kinds of equity securities, a reduction in
the number of securityholders might be expected to result in a reduction in the
liquidity and volume of activity in the trading market for the security. In the
case of your partnership, however, there is no established public trading market
for the units and, therefore, we do not believe a reduction in the number of
limited partners will materially further restrict your ability to find
purchasers for your units through secondary market transactions.
The units are registered under Section 12(g) of the Exchange Act, which
means, among other things, that your partnership is required to file periodic
reports with the SEC and to comply with the SEC's proxy rules. We do not expect
or intend that consummation of the offer will cause the units to cease to be
registered under Section 12(g) of the Exchange Act. If the units were to be held
by fewer than 300 persons, your partnership could apply to de-register the units
under the Exchange Act. Your partnership currently has 2,973 unitholders. The
lack of filing periodic reports could affect the already limited secondary
market which currently exists for units in your partnership and may result in
others not tendering for such units. In such a case, you would regularly have
access only to the limited information your partnership's agreement of limited
partnership requires your general partner (which is our affiliate) to provide
each year, which information consists primarily of tax information. In
particular, you will continue to receive a Schedule K-1 each year as well as
audited financial statements with respect to your partnership. A Schedule K-1 is
an information statement that contains tax information for the fiscal year of
your partnership, such as your allocation of income, deductions, credits, gains
and losses of your partnership for federal income tax purposes. In comparison,
the periodic reports filed by your partnership under the Exchange Act contain
your partnership's annual and quarterly financial statements prepared in
accordance with generally accepted accounting principles. These periodic reports
filed under the Exchange Act also include information regarding your
partnership's business and property and a discussion regarding your
partnership's financial condition and results of operations. Additionally, your
partnership will not be required to provide current reports on Form 8-K,
describing certain material events. See "The Offer -- Section 1. Terms of the
Offer; Expiration Date."
Costs Associated with Being a Public Company. There are various costs
associated with being a public company, including costs associated with
preparing, auditing and filing our periodic reports with the SEC. We estimate
these expenses to be approximately $39,000 per year. This represents
approximately 13% of the partnership's general and administrative expenses and
0.47% of the partnership's total expenses (based on 2004 expenses of
approximately $309,000 and $8,227,000, respectively). In addition, as a result
of the Sarbanes-Oxley Act of 2002, we estimate our costs will increase by
approximately 10% beginning in 2006. If the partnership were to terminate its
registration under the Exchange Act, the estimated cost savings would be
approximately $39,000.
Accounting Treatment. Upon consummation of the offer, we will account for
our investment in any acquired units under the purchase method of accounting.
There will be no effect on the accounting treatment of your partnership as a
result of the offer.
POSITION OF THE GENERAL PARTNER OF YOUR PARTNERSHIP WITH RESPECT TO THE OFFER
The partnership and the general partner of your partnership (which is our
affiliate) have provided the following information for inclusion in this Offer
to Purchase:
Factors in Favor of Fairness Determination. The general partner of your
partnership believes the offer price and the structure of the transaction are
fair to the unaffiliated limited partners, whether or not they tender units in
the offer. In support of such determination, the general partner considered the
factors
23
and information set forth below, but did not quantify or otherwise attach
particular weight to any such factors or information:
The general partner considered the following factors in support of the
fairness of the offer to unaffiliated limited partners who do NOT tender units
in the offer:
- the fact that the offer does not require approval of a majority of
unaffiliated limited partners and, as a result, each limited partner has
an opportunity to make an individual decision on whether to tender his or
her units (and how many to tender) or to continue to hold them; and
- the fact that unaffiliated limited partners may continue to participate
in the future performance of the partnership or its property following an
alternative transaction such as a property sale or a liquidation of the
partnership.
The general partner considered the following factors in support of the
fairness of the offer to unaffiliated limited partners who do tender units in
the offer:
- the fact that the offer does not require approval of a majority of
unaffiliated limited partners and, as a result, each limited partner has
an opportunity to make an individual decision on whether to tender his or
her units (and how many to tender) or to continue to hold them;
- there is no established trading market for the limited partnership units,
and the offer would provide immediate liquidity for tendering limited
partners;
- the uncertainty of the resulting proceeds from the possible alternative
transactions, particularly a property sale or a liquidation of the
partnership;
- the offer price exceeds the book value per unit of $(102.68) at December
31, 2004;
- our offer price is equal to the highest offer price in prior tender
offers from 2002 through March 2005;
- our offer price is equal to the $99.00 per unit presently being offered
by MacKenzie Patterson Fuller, Inc., et al. pursuant to their
"mini-tender offer" commenced on February 25, 2005;
- our offer price is higher than our estimate of the liquidation proceeds
that would be payable to you if your partnership's properties were sold
at prices equal to their 2003 appraised value, which we estimate to be
$96.77 per unit;
- the fact that our offer price does not reflect any discount for minority
interests; and
- the absence of any other firm offers by third parties for all or
substantially all of the partnership's assets, a merger or other
extraordinary transaction during the past two years with which to compare
the offer.
Factors Not in Favor of Fairness Determination. In addition to the
foregoing factors, the general partner considered the following countervailing
factors:
- our offer price does not ascribe any value to potential future
improvements in the fair market value or operating performance of your
partnership's properties, including any improvements that may result from
the redevelopment of Preston Creek Apartments and Lakeside Place
Apartments. Our offer price might be higher if it were based on a more
recent appraisal of your partnership's properties, or if it took into
account any potential improvements in property income;
- prices at which the units have sold in the secondary market from 2002
through February 28, 2005 (the most recent date for which information was
available) were higher than our current offer price;
- the fact that an unaffiliated representative was not retained to act
solely on behalf of unaffiliated limited partners for purposes of
negotiating the terms of the offer; and
24
- the fact that the general partner's board of directors is comprised
solely of an employee of AIMCO Properties, L.P., and, as a result, the
terms of the offer were not approved by a majority of independent
directors.
The general partner did not consider going concern value separately from
liquidation value because it does not believe that there is a distinction
between going concern value and liquidation value for income-producing
properties such as your partnership's properties, where the likely sale price in
the event of liquidation is expected to be equal to the going concern value of
the property. In some markets, where there is a great demand for apartments to
be converted into condominiums, it is possible that sale prices for apartment
properties may be higher than their operating income would justify. In these
situations, the liquidation value may exceed the going concern value. The
general partner has determined that none of your partnership's properties are in
markets where the demand for condominium conversions has resulted in this
effect. Accordingly, the general partner did not consider the two values
separately.
Although there is no established trading market for your limited
partnership units, the general partner took into consideration the prices at
which limited partnership units have sold in the secondary market from 2002
through February 2005 (the most recent date for which information was
available), to the extent such information is available.
The general partner believes the offer price is fair despite the fact that
units may have sold in the secondary market at prices higher than our offer
price. The general partner made this fairness determination based on its belief
that secondary market sales information is not a reliable measure of value
because of the limited number of any known trades. Secondary sales activity for
the units, including privately negotiated sales, has been limited and sporadic.
Except for offers made by us and unaffiliated third parties, privately
negotiated sales and sales through intermediaries are the only means that may be
available to a limited partner to liquidate an investment in units (other than
our offer) because the units are not listed or traded on any securities exchange
or quoted on Nasdaq, on the Electronic Bulletin Board, or in "pink sheets."
The general partner believes that consideration of the offer was
procedurally fair because, among other things, (1) each limited partner has an
opportunity to make an individual decision on whether to tender his or her units
(and how many to tender) or to continue to hold them, and (2) limited partners
can evaluate our offer price by comparing it to the net liquidation proceeds per
unit derived from the independent appraiser's property valuation. In making this
determination, the general partner took into account the absence of the
following procedural safeguards: (1) the requirement of approval of the offer by
a majority of the unaffiliated limited partners, (2) an unaffiliated
representative to act solely on behalf of unaffiliated limited partners for
purposes of negotiating the terms of the offer, and (3) the approval of the
offer by a majority of non-employee directors of your general partner's board of
directors.
Your general partner is our affiliate. We and your general partner are
subsidiaries of AIMCO. As a result, your general partner has a conflict of
interest and makes no recommendation as to whether or not you should tender or
refrain from tendering your units in this offer. While the general partner
believes that the terms of our offer are fair, the general partner also believes
that you must make your own decision whether or not to participate in any offer.
The general partner is unable to make a recommendation because each limited
partner's circumstances may differ from those of other limited partners. These
circumstances, which would impact the desirability of tendering units in the
offer, include your financial position, your need or desire for liquidity, other
financial opportunities available to you, and your tax position and the tax
consequences to you of selling your units. YOU ARE ENCOURAGED TO CAREFULLY
REVIEW THIS OFFER TO PURCHASE AND ANY OTHER INFORMATION AVAILABLE TO YOU AND TO
SEEK ADVICE FROM YOUR INDEPENDENT LAWYER, TAX ADVISOR AND/OR FINANCIAL ADVISOR
WITH RESPECT TO YOUR PARTICULAR CIRCUMSTANCES BEFORE DECIDING WHETHER OR NOT TO
ACCEPT THIS OFFER.
Neither the general partner of your partnership nor its affiliates have any
plans or arrangements to tender any units. Except as otherwise provided in
"Special Factors -- Future Plans of the Purchaser," the general partner does not
have any present plans or proposals which relate to or would result in an
extraordinary transaction, such as a merger, reorganization or liquidation,
involving your partnership; a
25
purchase or sale or transfer of a material amount of your partnership's assets;
or any changes in your partnership's present capitalization, indebtedness or
distribution policies. The sale of your units pursuant to this offer will not be
a taxable transaction for the general partner of your partnership or its
affiliates. Consequently, the general partner of your partnership and its
affiliates will not recognize gain or loss in connection with this offer. For
information relating to certain relationships between your partnership and its
general partner, on one hand, and AIMCO and its affiliates, on the other, and
conflicts of interests with respect to the tender offer, see "Special
Factors -- Background and Reasons for the Offer" and "-- Conflicts of Interest
and Transactions with Affiliates." See also "Special Factors -- Valuation of
Units -- Comparison of Offer Price to Alternative Consideration" for certain
information regarding transactions with respect to units of your partnership.
Your partnership did not receive any report, opinion or appraisal with
respect to the fairness of this offer or the offer price being offered to
limited partners. However, the partnership did receive the 2003 appraisals
prepared by AAA, as described above.
Although the AIMCO Entities have interests that may be in conflict with
those of the partnership's unaffiliated limited partners, each of the AIMCO
Entities believes that the offer price and the structure of the transaction are
fair to the unaffiliated limited partners based on the information and factors
considered by the general partner of your partnership. Each of AIMCO Entities
expressly adopts the analysis, and the factors underlying such analysis, of the
general partner of your partnership.
CONFLICTS OF INTEREST AND TRANSACTIONS WITH AFFILIATES
Conflicts of Interest with Respect to the Offer. The general partner of
your partnership is a subsidiary of AIMCO. As a result, the general partner has
substantial conflicts of interest with respect to the offer. We desire to
purchase units at a low price and you desire to sell units at a high price. Such
conflicts of interest in connection with the offer differ from those conflicts
of interest that exist in connection with the general partner's management of
your partnership. Your general partner has filed a Solicitation/ Recommendation
Statement on Schedule 14d-9 with the SEC, which indicates that it is remaining
neutral and making no recommendation as to whether limited partners should
tender their units in the offer. YOU 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 YOUR UNITS.
Conflicts of Interest That Currently Exist for Your Partnership. Conflicts
of interest exist between the general partner of your partnership and its
affiliates (including us), on the one hand, and you and the other limited
partners of the partnership, on the other. The directors and officers of your
general partner have fiduciary duties to manage the general partner in a manner
beneficial to its stockholder, which is a subsidiary of AIMCO. At the same time,
the general partner of your partnership has fiduciary duties to manage your
partnership in a manner beneficial to all of the limited partners. Such
conflicts of interest might arise in the following situations, among others:
- The partnership pays fees and reimburses expenses to the general
partner and its affiliates for costs incurred in managing and
operating the partnership and its properties. We and the general
partner of your partnership received total fees and reimbursements
(excluding property management fees) of approximately $371,000 in
2002, $304,000 in 2003 and $314,000 in 2004. The property manager is
entitled to receive five percent of gross receipts from the
partnership's properties for providing property management services.
It received management fees of approximately $404,000 in 2002,
$387,000 in 2003 and $360,000 in 2004. We have no current intention
of changing the fee structure for your general partner or the
manager of your partnership's properties.
- In determining to sell a property owned by your partnership, the
general partner takes into consideration, among other factors: (i)
AIMCO's objectives, including its liquidity needs and its relative
desire to retain or dispose of properties within its entire
portfolio, including the properties owned by your partnership, and
(ii) the investment objectives of your partnership.
26
See "The Offer -- Section 8. Certain Information Concerning Your
Partnership -- Investment Objectives and Policies; Sale or Financing of
Investments".
- Decisions of the general partner with respect to the amount and
timing of cash expenditures, borrowings, issuances of additional
interests and reserves in any quarter will affect whether or the
extent to which there is available cash to make distributions in a
given quarter.
Competition Among Properties. Because AIMCO and your partnership both
invest in apartment properties, these properties may compete with one another
for tenants. Furthermore, you should bear in mind that AIMCO may acquire
properties in general market areas where your partnership's properties are
located. We believe that this concentration of properties in a general market
area will facilitate overall operations through collective advertising efforts
and other operational efficiencies. In managing AIMCO's properties, we will
attempt to reduce conflicts between competing properties by referring
prospective customers to the property considered to be most conveniently located
for the customer's needs.
Future Offers. We are not obligated to make another tender offer for units
in your partnership. We have no current plans to conduct future tender offers
for the units in your partnership, but our plans may change based on future
circumstances, including tender offers made by third parties. Any such future
offers that we make could be at prices that are more or less than the current
offer price.
Transactions with Affiliates. Your partnership has no employees and is
dependent on the general partner and us for the management and administration of
all partnership activities. The partnership agreement provides for certain
payments to us for services and reimbursement of certain expenses incurred by us
on behalf of the partnership.
We and the general partner of your partnership are entitled to receive 5%
of gross receipts from all of the partnership's properties for providing
property management services, and received management fees of approximately
$404,000 in 2002, $387,000 in 2003 and $360,000 in 2004.
We were eligible to receive reimbursement of accountable administrative
expenses amounting to approximately $172,000 in 2002, $189,000 in 2003 and
$186,000 in 2004.
Pursuant to the partnership agreement, for managing the affairs of the
partnership, the general partner is entitled to receive a partnership management
fee equal to 10% of the partnership's adjusted cash flow from operations.
Approximately $65,000 was paid during the year ended December 31, 2002. No
partnership management fees were paid during the years ended December 31, 2003
and 2004, as there were no operating distributions during the respective
periods.
We have made available to the partnership a credit line of up to $150,000
per property owned by the partnership. Interest is charged on any such
borrowings at the prime rate plus 2% (7.25% at December 31, 2004). During the
years ended December 31, 2002, 2003 and 2004, the general partner agreed to
advance funds in excess of the credit line. These funds were needed to fund
property tax bills at Preston Creek Apartments in 2003, and to fund property tax
bills at Lakeside Place Apartments and property operations at Preston Creek
Apartments in 2004. During the years ended December 31, 2003 and 2004, the
partnership borrowed approximately $170,000 and $520,000, respectively. Payments
of approximately $174,000, including accrued interest, were made during the year
ended December 31, 2003. During the year ended December 31, 2004, the
partnership received approval by the limited partners to authorize the general
partner to obtain a redevelopment loan of approximately $2.1 million from us
with a fixed interest rate of 10% per annum. During the year ended December 31,
2004, we advanced the partnership approximately $29,000 under the redevelopment
loan. At December 31, 2004, the combined balance of advances from affiliates,
including accrued interest, was approximately $568,000. Interest expense for the
years ended December 31, 2003 and 2004 was approximately $4,000 and $19,000,
respectively. There were no payments made during the year ended December 31,
2004. Subsequent to December 31, 2004, we advanced additional funds of
approximately $220,000 under the redevelopment loan. In addition, an affiliate
of the general partner advanced additional funds of approximately $2,400,000 to
cover real estate tax bills at both properties, capital improvements at Lakeside
Place Apartments and partnership expenses.
27
The partnership insures its properties up to certain limits through
coverage provided by AIMCO, which is generally self-insured for a portion of
losses and liabilities related to workers' compensation, property casualty and
vehicle liability. The partnership insures its properties above the AIMCO limits
through insurance policies obtained by AIMCO from insurers unaffiliated with
your general partner. The partnership was charged by AIMCO and its affiliates
approximately $134,000, $111,000 and $109,000 during the years ended December
31, 2002, 2003 and 2004, respectively, for insurance coverage and fees
associated with policy claims administration.
In connection with the redevelopment of Preston Creek Apartments, on
September 17, 2004, the partnership sought the vote of the limited partners to:
1) authorize the general partner to obtain a redevelopment loan of approximately
$2.1 million from us with interest charged in excess of the rate stated in the
partnership agreement, 2) authorize payment of a redevelopment planning fee of
$25,000 to an affiliate of the general partner, and 3) authorize payment of a
redevelopment supervision fee equal to 4% of the actual redevelopment cost to an
affiliate of the general partner. The redevelopment loan would help to fund an
estimated $2.5 million redevelopment project at Preston Creek Apartments that
the general partner believes is in the best interest of the partnership. On
November 15, 2004, the consent solicitation expired pursuant to its terms. The
consent of the requisite number of limited partners was received. Accordingly,
the partnership commenced the redevelopment project at Preston Creek Apartments
in December 2004. The redevelopment loan will bear interest at a fixed interest
rate of 10.0% per annum, and the redevelopment planning and supervision fees
will be paid.
If during any month of the redevelopment the costs exceed the total amount
of funding described above, we will make a loan to the partnership in an amount
equal to the shortfall. This loan will accrue interest at an annual rate of 10%,
compounded monthly. The principal and accrued interest on this loan will be
payable in full at any time upon demand. If at any time the partnership
accumulates excess funds, we will be entitled to be repaid the outstanding
balance of the loan plus accrued interest before any distributions to the
limited partners of your partnership. Based on the projected redevelopment
budget, the total principal amount of and any accrued interest on the loan are
estimated to amount to approximately $2.6 million by the beginning of the fourth
quarter of 2005, and are expected to be fully repaid at the beginning of the
second quarter of 2007. Many factors could cause these estimates to vary,
including a change in projected redevelopment costs or period, a change in
projected cash flow, or the availability of alternative funding sources. For
more information regarding the redevelopment of Preston Creek Apartments and the
related loan and fees, see the Definitive Proxy Statement on Schedule 14A filed
with the SEC on September 17, 2004 and the partnership's Annual Report on Form
10-KSB for the year ended December 31, 2004.
FUTURE PLANS OF THE PURCHASER
As described above under "Special Factors -- Background and Reasons for the
Offer," your general partner is our affiliate and, therefore, we have the
ability to control the management of your partnership. In addition, we are
affiliated with the manager of your partnership's property. We currently intend
that, upon consummation of the offer, we will hold the units acquired and your
partnership will continue its business and operations substantially as they are
currently being conducted. The offer is not expected to have any effect on
partnership operations.
Although we are not obligated to do so, we may make future tender offers.
However, we have no current plans to conduct future tender offers for units in
your partnership. We may acquire additional units or sell units after completion
or termination of the offer. Any acquisition may be made through private
purchases, through one or more future tender or exchange offers, by merger,
consolidation or by any other means deemed advisable. Any acquisition may be at
a price higher or lower than the price to be paid for the units purchased
pursuant to this offer, and may be for cash, limited partnership interests in
AIMCO Properties, L.P. or other consideration. We may consider selling some or
all of the units we acquire pursuant to this offer to persons not yet
determined, which may include our affiliates. We may also buy your partnership's
properties, although we have no present intention to do so. There can be no
assurance,
28
however, that we will initiate or complete, or will cause your partnership to
initiate or complete, any subsequent transaction during any specific time period
following the expiration of the offer or at all.
Except as set forth herein, we do not have any present plans or proposals
which relate to or would result in an extraordinary transaction, such as a
merger, reorganization or liquidation, involving your partnership; a purchase or
sale or transfer of a material amount of your partnership's assets; any changes
in composition of your partnership's senior management or personnel or their
compensation; any changes in your partnership's present capitalization,
indebtedness or distribution policy; or any other material changes in your
partnership's structure or business. We or our affiliates may loan funds to your
partnership which may be secured by your partnership's properties. If any such
loans are made, upon default of such loans, we or our affiliates could seek to
foreclose on the loan and related mortgage or security interest. However, we
expect that, consistent with your general partner's fiduciary obligations, the
general partner will seek and review opportunities, including opportunities
identified by us, to engage in transactions which could benefit your
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.
Except as set forth herein, we have been advised that the general partner
is not currently considering undertaking, on behalf of your partnership, any of
the following transactions in the foreseeable future: (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 partnerships in which your 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 AIMCO), in any of which limited partners might receive cash, common stock or
other securities or consideration. As discussed under "The Offer -- Section 8.
Certain Information Concerning Your Partnership -- Investment Objectives and
Policies; Sale or Financing of Investments," the general partner regularly
evaluates the real estate and capital markets. The general partner may consider
refinancing the partnership's existing indebtedness to the extent that the
general partner is able to obtain a lower interest rate or if such indebtedness
is approaching maturity. Furthermore, in the event that the general partner
receives an attractive offer for any of your partnership's properties, the
general partner would give due consideration to such an offer.
If any of the transactions referred to above occur, and financial benefits
accrue to the limited partners, we will participate in those benefits to the
extent of our ownership of units. The agreement of limited partnership prohibits
limited partners from voting on actions taken by the partnership, unless
otherwise specifically permitted therein. Limited partners may vote on a
liquidation, and we will be able to significantly influence or control the
outcome of any such vote. Our primary objective in seeking to acquire the units
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 units.
29
THE OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE
Upon the terms and subject to the conditions of the offer, we will accept
(and thereby purchase) any and all units that are validly tendered on or prior
to the expiration date and not withdrawn in accordance with the procedures set
forth in "The Offer -- Section 4. Withdrawal Rights." For purposes of the offer,
the term "expiration date" shall mean midnight, New York City time, on May 31,
2005, unless we in our reasonable discretion shall have extended the period of
time for which the offer is open. See "The Offer -- Section 5. Extension of
Tender Period; Termination; Amendment; No Subsequent Offering Period," for a
description of our right to extend the period of time during which the offer is
open and to amend or terminate the offer.
The purchase price per unit will automatically be reduced by the aggregate
amount of distributions per unit, if any, made or declared by your partnership
on or after the commencement of our offer and prior to the date on which we
acquire your units pursuant to our offer. If the offer price is reduced in this
manner, we will notify you and, if necessary, we will extend the offer period so
that you will have at least ten business days from the date of our notice to
withdraw your units.
If, prior to the expiration date, we increase the consideration offered
pursuant to the offer, the increased consideration will be paid for all units
accepted for payment pursuant to the offer, whether or not the units were
tendered prior to the increase in consideration.
The offer is conditioned on satisfaction of certain conditions. THE OFFER
IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF UNITS BEING TENDERED. See "The
Offer -- Section 12. Conditions to the Offer," which sets forth in full the
conditions of the offer. We reserve the right (but in no event shall we be
obligated), in our reasonable 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, we reserve the right to (i) decline to
purchase any of the units tendered, terminate the offer and return all tendered
units to tendering limited partners, (ii) waive all the unsatisfied conditions
and purchase, subject to the terms of the offer, any and all units validly
tendered, (iii) extend the offer and, subject to your withdrawal rights, retain
the units that have been tendered during the period or periods for which the
offer is extended, or (iv) amend the offer. Although we intend to pay for
tendered units that have been accepted for payment as promptly as practicable,
which we expect will be within three business days after expiration of the
offer, by executing the letter of transmittal, you will agree that the transfer
of units will be deemed to take effect as of the first day of the calendar
quarter in which the offer expires. Although the payment date will occur after
expiration of the offer, in the books and records of the partnership the change
in ownership of tendered units will be made retroactive to the first day of the
calendar quarter in which the offer expires. For tax, accounting and financial
reporting purposes, the transfer of tendered units will be deemed to take effect
on the first day of the calendar quarter in which the offer expires.
Accordingly, all profits and losses relating to any tendered units will be
allocated to us from and after this date. If we waive any material conditions to
our offer, we will notify you and, if necessary, we will extend the offer period
so that you will have at least five business days from the date of our notice to
withdraw your units.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS
Upon the terms and subject to the conditions of the offer, we will
purchase, by accepting for payment, and will pay for, any and all units validly
tendered as promptly as practicable, which we expect will be within three
business days after expiration of the offer. A tendering beneficial owner of
units whose units are owned of record by an Individual Retirement Account or
other qualified plan will not receive direct payment of the offer price; rather,
payment will be made to the custodian of such account or plan. In all cases,
payment for units purchased pursuant to the offer will be made only after timely
receipt by the Information Agent of a properly completed and duly executed
letter of transmittal and other documents required by the letter of transmittal.
See "The Offer -- Section 3. Procedure for Tendering Units."
30
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE OFFER PRICE BY REASON OF ANY
DELAY IN MAKING SUCH PAYMENT.
For purposes of the offer, we will be deemed to have accepted for payment
pursuant to the offer, and thereby purchased, validly tendered units, if, as and
when we give verbal or written notice to the Information Agent of our acceptance
of those units for payment pursuant to the offer. Payment for units accepted for
payment pursuant to the offer will be made through the Information Agent, which
will act as agent for tendering limited partners for the purpose of receiving
cash payments from us and transmitting cash payments to tendering limited
partners.
If any tendered units are not accepted for payment by us for any reason,
the letter of transmittal with respect to such units not purchased may be
destroyed by the Information Agent or us or returned to you. You may withdraw
tendered units until the expiration date (including any extensions). After the
expiration date, the Information Agent may, on our behalf, retain tendered
units, and those units may not be otherwise withdrawn, if, for any reason,
acceptance for payment of, or payment for, any units tendered pursuant to the
offer is delayed or we are unable to accept for payment, purchase or pay for
units tendered pursuant to the offer. Any such action is subject, however, to
our obligation under Rule 14e-1(c) under the Exchange Act, to pay you the offer
price in respect of units tendered or return those units promptly after
termination or withdrawal of the offer.
We reserve the right to transfer or assign, in whole or in part, to one or
more of our affiliates, the right to purchase units tendered pursuant to the
offer, but no such transfer or assignment will relieve us of our obligations
under the offer or prejudice your rights to receive payment for units validly
tendered and accepted for payment pursuant to the offer.
3. PROCEDURE FOR TENDERING UNITS
Valid Tender. To validly tender units pursuant to the offer, a properly
completed and duly executed letter of transmittal, and any other required
documents must be received by the Information Agent, at one of its addresses set
forth on the back cover of this Offer to Purchase, on or prior to the expiration
date. You may tender all or any portion of your units. No alternative,
conditional or contingent tenders will be accepted.
Signature Requirements. If the letter of transmittal is signed by the
registered holder of a unit and payment is to be made directly to that holder,
then no signature guarantee is required on the letter of transmittal. Similarly,
if a unit is 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 letter of transmittal. However, in all other cases, all signatures on the
letter of transmittal must be guaranteed by an Eligible Institution.
In order for you to tender in the offer, your units must be validly
tendered and not withdrawn on or prior to the expiration date.
THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED
DOCUMENTS IS AT YOUR OPTION AND RISK, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE INFORMATION AGENT. IF DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.
Appointment as Proxy; Power of Attorney. By executing the letter of
transmittal, you are irrevocably appointing us and our designees as your proxy,
in the manner set forth in the letter of transmittal and each with full power of
substitution, to the fullest extent of your rights with respect to the units
tendered by you and accepted for payment by us. Each such proxy shall be
considered coupled with an interest in the tendered units. Such appointment will
be effective when, and only to the extent that, we accept the tendered units for
payment. Upon such acceptance for payment, all prior proxies given by you with
respect to the units will, without further action, be revoked, and no subsequent
proxies may be given (and if given
31
will not be effective). We and our designees will, as to those units, be
empowered to exercise all voting and other rights as a limited partner as we, in
our sole discretion, may deem proper at any meeting of limited partners, by
written consent or otherwise. By executing the letter of transmittal, you agree
to execute all such documents and take such other actions as shall be reasonably
required to enable the units tendered to be voted in accordance with our
directions. The proxy granted by you to us will remain effective and be
irrevocable for a period of ten years following the termination of our offer.
By executing the letter of transmittal, you also irrevocably constitute and
appoint us and our designees as your attorneys-in-fact, each with full power of
substitution, to the fullest extent of your rights with respect to the units
tendered by you and accepted for payment by us. Such appointment will be
effective when, and only to the extent that, we pay for your units and will
remain effective and be irrevocable for a period of ten years following the
termination of our offer. You will agree not to exercise any rights pertaining
to the tendered units without our prior consent. Upon such payment, all prior
powers of attorney granted by you with respect to such 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, we and our designees each will have the power, among other
things, (i) to transfer ownership of such units on the partnership books
maintained by your general partner (and execute and deliver any accompanying
evidences of transfer and authenticity it may deem necessary or appropriate in
connection therewith), (ii) upon receipt by the Information Agent of the offer
consideration, to become a substituted limited partner, to receive any and all
distributions made by your partnership on or after the date on which we acquire
such units, and to receive all benefits and otherwise exercise all rights of
beneficial ownership of such units in accordance with the terms of our offer,
(iii) to execute and deliver to the general partner of your partnership a change
of address form instructing the general partner to send any and all future
distributions to which we are entitled pursuant to the terms of the offer in
respect of tendered units to the address specified in such form, and (iv) to
endorse any check payable to you or upon your order representing a distribution
to which we are entitled pursuant to the terms of our offer, in each case, in
your name and on your behalf.
Assignment of Interest in Future Distributions. By executing the letter of
transmittal, you will irrevocably assign to us and our assigns all of your
right, title and interest in and to any and all distributions made by your
partnership from any source and of any nature, including, without limitation,
distributions in the ordinary course, distributions from sales of assets,
distributions upon liquidation, winding-up, or dissolution, payments in
settlement of existing or future litigation, and all other distributions and
payments from and after the expiration date of our offer, in respect of the
units tendered by you and accepted for payment and thereby purchased by us. If,
after the unit is accepted for payment and purchased by us, you receive any
distribution from any source and of any nature, including, without limitation,
distributions in the ordinary course, distributions from sales of assets,
distributions upon liquidation, winding-up or dissolution, payments in
settlement of existing or future litigation and all other distributions and
payments, from your partnership in respect of such unit, you will agree to
forward promptly such distribution to us.
Release of Claims. By executing the letter of transmittal, effective upon
acceptance for payment of the units tendered by you, you will, on behalf of
yourself, your heirs, estate, executor, administrator, successors and assigns,
and your partnership, fully, finally and forever release, relinquish and
discharge us and our predecessors, successors and assigns and our present and
former parents, subsidiaries, affiliates, investors, insurers, reinsurers,
officers, directors, employees, agents, administrators, auditors, attorneys,
accountants, information and solicitation agents, investment bankers, and other
representatives, including but not limited to AIMCO Properties, L.P.
(collectively, the "Releasees"), from any and all claims and causes of action,
whether brought individually, on behalf of a class, or derivatively, demands,
rights, or liabilities, including, but not limited to, claims for negligence,
gross negligence, professional negligence, breach of duty of care or loyalty, or
breach of duty of candor, fraud, breach of fiduciary duty, mismanagement,
corporate waste, malpractice, misrepresentation, whether intentional or
negligent, misstatements and omissions to disclose, breach of contract,
violations of any state or federal statutes, rules or regulations, whether known
claims or unknown claims that have been asserted or that could have been
32
asserted against the Releasees, through and including the date of execution of
the letter of transmittal, including, but not limited to, those claims that
arise out of or relate to (a) those matters and claims set forth in the Nuanes
and Heller litigation, (b) the ownership of one or more units in your
partnership, including but not limited to, any and all claims related to the
management of your partnership or the properties owned by your partnership
(whether currently or previously), the payment of management fees or other
monies to the general partner of your partnership and its affiliates, prior
acquisitions or tender offers and the prior settlement, (c) the purchase,
acquisition, holding, sale, tender or voting of one or more units in your
partnership, or (d) any of the facts, circumstances, allegations, claims, causes
of action, representations, statements, reports, disclosures, transactions,
events, occurrences, acts, omissions or failures to act, of whatever kind or
character whatsoever, irrespective of the state of mind of the actor performing
or omitting to perform the same, that have been or could have been alleged in
any pleadings, amended pleading, argument, complaint, amended complaint, brief,
motion, report or filing in the Nuanes and Heller litigation (collectively, the
"Released Claims"); provided, however, that the Released Claims are not intended
to include (i) any unrelated claims that are unique to a limited partner or
settlement class member (e.g., a settlement class member slips and falls on
property owned by one of the defendants in the Nuanes and Heller litigation,
loses or did not receive a distribution check distributed to other limited
partners in such partnership, or is an employee of one of the defendants and has
an employee related claim), (ii) any claim based upon violations of federal or
state securities laws in connection with this offer, and (iii) any right to your
pro rata share of the settlement fund in the Nuanes and Heller settlement,
assuming that you are otherwise eligible, and approval of the settlement and any
judgment entered thereto become final.
In addition, you will expressly waive and relinquish, to the fullest extent
permitted by law and consistent with the releases described herein, the
provisions, rights and benefits of Section 1542 of the Civil Code of California
("Section 1542"), which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN ITS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.
You will have also waived any and all provisions, rights and benefits
conferred by any law of any state or territory of the United States, or
principle of common law, that is similar, comparable or equivalent to Section
1542. You may hereafter discover facts in addition to or different from those
which you now know or believe to be true with respect to the subject matter of
the Released Claims, but you will be deemed to have fully, finally and forever
settled and released any and all Released Claims, known or unknown, suspected or
unsuspected, contingent or non-contingent, that now exist or heretofore have
existed upon any theory of law or equity now existing, including, but not
limited to, conduct that is negligent, intentional, with or without malice, or a
breach of any duty, law or rule, without regard to the subsequent discovery of
the existence of such different or additional facts.
You will acknowledge and agree that the releases contained in the letter of
transmittal are intended to include the Released Claims, which you may have and
which you do not know or suspect to exist in your favor against the Releasees
and that the releases contained in the letter of transmittal extinguish those
claims. You will represent and warrant to the Releasees that you have been
advised by your attorney of the effect and import of the provisions of Section
1542, and that you have not assigned or otherwise transferred or subrogated any
interest in the Released Claims.
Determination of Validity; Rejection of 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 units pursuant to our offer will be determined by us, in our reasonable
discretion, which determination shall be final and binding on all parties. We
reserve the absolute right to reject any or all tenders of any particular unit
determined by us not to be in proper form or if the acceptance of or payment for
that unit may, in the opinion of our counsel, be unlawful. We also reserve the
absolute right to waive or amend any of the conditions of the offer that we are
legally permitted to waive as to the tender
33
of any particular unit and to waive any defect or irregularity in any tender
with respect to any particular unit of any particular limited partner. If we
waive any of the conditions to the offer with respect to the tender of a
particular unit or with respect to a particular limited partner, we will waive
such condition with respect to all other tenders of units or all other limited
partners in this offer as well. Our interpretation of the terms and conditions
of the offer (including the letter of transmittal) will be final and binding on
all parties. No tender of units will be deemed to have been validly made unless
and until all defects and irregularities have been cured or waived. Neither we,
the Information Agent, nor any other person will be under any duty to give
notification of any defects or irregularities in the tender of any unit or will
incur any liability for failure to give any such notification.
Backup Federal Income Tax Withholding. To prevent the possible application
of back-up federal income tax withholding with respect to payment of the offer
price, you must provide us with your correct taxpayer identification number. See
the instructions to the letter of transmittal and "Special Factors -- Material
Federal Income Tax Matters."
State and Local Withholding. If you tender any units pursuant to this
offer, we may be required under state or local tax laws to deduct and withhold a
portion of our offer price. You should consult your tax advisor concerning
whether any state or local withholding would be required on a disposition of
your units and whether such amounts may be available to you as a credit on your
state or local tax returns.
FIRPTA Withholding. To prevent the withholding of federal income tax in an
amount equal to 10% of the amount realized on the disposition (the amount
realized is generally the offer price plus the partnership liabilities allocable
to each unit purchased), you must certify that you are not a foreign person if
you tender units. See the instructions to the letter of transmittal and "Special
Factors -- Material Federal Income Tax Matters."
Transfer Taxes. The amount of any transfer taxes (whether imposed on the
registered holder of units or any person) payable on account of the transfer of
units will be deducted from the purchase price unless satisfactory evidence of
the payment of such taxes or exemption therefrom is submitted.
Binding Agreement. A tender of a unit pursuant to any of the procedures
described above and the acceptance for payment of such unit will constitute a
binding agreement between the tendering limited partner and us on the terms set
forth in this Offer to Purchase and the letter of transmittal.
4. WITHDRAWAL RIGHTS
You may withdraw your tendered units at any time prior to the expiration
date, including any extensions thereof. If you properly withdraw all of the
units you previously tendered in the offer, the corresponding letter of
transmittal, including your release and assignment of future claims contained
therein, will be deemed revoked and of no force or effect.
For a withdrawal to be effective, a written notice of withdrawal must be
timely received by the Information Agent at one of its addresses 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 number of units to be withdrawn
and the name of the registered holder of such units, if different from the
person who tendered. In addition, the notice of withdrawal must be signed by the
person who signed the letter of transmittal in the same manner as the letter of
transmittal was signed.
If purchase of, or payment for, a unit is delayed for any reason, or if we
are unable to purchase or pay for a unit for any reason, then, without prejudice
to our rights under the offer, tendered units may be retained by the Information
Agent; subject, however, to our obligation, pursuant to Rule 14e-1(c) under the
Exchange Act, to pay the offer price in respect of units tendered or return
those units promptly after termination or withdrawal of our offer.
Any units properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of our offer. However, withdrawn units may be
re-tendered at any time prior to the expiration date by following the procedures
described in "The Offer -- Section 3. Procedure for Tendering Units."
34
All questions as to the validity and form (including time of receipt) of
notices of withdrawal will be determined by us in our reasonable discretion,
which determination will be final and binding on all parties. Neither the
Information Agent, any other person, nor we 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.
5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT; NO SUBSEQUENT OFFERING
PERIOD
We expressly reserve the right, in our reasonable discretion, at any time
and from time to time, (i) to extend the period of time during which our offer
is open and thereby delay acceptance for payment of, and the payment for, any
unit, (ii) to terminate the offer and not accept any units not theretofore
accepted for payment or paid for if any of the conditions to the offer are not
satisfied, and (iii) to amend our offer in any respect (including, without
limitation, by increasing or decreasing the consideration offered, increasing or
decreasing the units being sought, or both). We will not assert any of the
conditions to the offer subsequent to the expiration of the offer. Notice of any
such extension, termination or amendment will promptly be disseminated to you in
a manner reasonably designed to inform you of such change. 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 scheduled expiration date of our offer,
in accordance with Rule 14e-1(d) under the Exchange Act.
If we extend the offer, or if we delay payment for a unit (whether before
or after its acceptance for payment) or are unable to pay for a unit pursuant to
our offer for any reason, then, without prejudice to our rights under the offer,
the Information Agent may retain tendered units and those units may not be
withdrawn except to the extent tendering limited partners are entitled to
withdrawal rights as described in "The Offer -- Section 4. Withdrawal Rights;"
subject, however, to our obligation, pursuant to Rule 14e-1(c) under the
Exchange Act, to pay the offer price in respect of units tendered or return
those units promptly after termination or withdrawal of the offer.
If we make a material change in the terms of our offer, or if we waive a
material condition to our offer, we will extend the offer and disseminate
additional tender offer materials to the extent required by Rules 14d-4 and
14e-1 under the Exchange Act. The minimum period during which the offer must
remain open following any material change in the terms of the offer, other than
a change in price or a change in percentage of securities sought or a change in
any dealer's soliciting fee, if any, will depend upon the facts and
circumstances, including the materiality of the change, but generally will be
five business days. With respect to a change in price or, subject to certain
limitations, a change in the percentage of securities sought or a change in any
dealer's soliciting fee, if any, a minimum of ten business days from the date of
such change is generally required to allow for adequate dissemination to limited
partners. Accordingly, if, prior to the expiration date, we increase (other than
increases of not more than two percent of the outstanding units) or decrease the
number of units being sought, or increase or decrease the offer price, and if
the offer is scheduled to expire at any time earlier than the tenth business day
after the date that notice of such increase or decrease is first published, sent
or given to limited partners, the offer will be extended at least until the
expiration of such ten business days. 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.
Pursuant to Rule 14d-11 under the Exchange Act, subsequent offering periods
may be provided in tender offers for "any and all" outstanding units of a
partnership. A subsequent offering period is an additional period of from three
to twenty business days following the expiration date of the offer, including
any extensions, in which limited partners may continue to tender units not
tendered in the offer for the offer price. We do not currently intend to offer a
subsequent offering period.
35
6. THE LAWSUIT AND THE SETTLEMENT
BACKGROUND
In March 1998, holders of limited partnership units in the partnerships
managed by affiliates of Insignia Financial Group (collectively, "Insignia")
commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group,
Inc., et al. (the "Nuanes action") in the Superior Court of the State of
California for the County of San Mateo (the "Court"). The plaintiffs named as
defendants, among others, your partnership, its general partner and several of
their affiliated partnerships and corporate entities, as well as AIMCO, who had
announced a merger with Insignia. The action originally asserted claims on
behalf of a putative class of limited partners in over 50 limited partnerships,
including your partnership (collectively, the "Partnerships") and derivatively
on behalf of those same Partnerships (which are named as nominal defendants)
challenging, among other things, the acquisition of interests in certain general
partner entities by Insignia; past tender offers by Insignia to acquire limited
partnership units; Insignia's management of the Partnerships; and the series of
transactions which closed on October 1, 1998 and February 26, 1999 whereby
Insignia and Insignia Properties Trust, respectively, were merged into AIMCO
(hereinafter, the "Insignia Merger").
PROCEDURAL HISTORY
On June 25, 1998, your general partner filed a motion seeking dismissal of
the action. In lieu of responding to the motion, the plaintiffs filed an amended
complaint. The general partner filed demurrers to the amended complaint which
were heard in February 1999. Pending the ruling on such demurrers, settlement
negotiations commenced. On November 2, 1999, the parties executed and filed a
Stipulation of Settlement, settling claims, subject to court approval, on behalf
of your partnership and all limited partners who owned units as of November 3,
1999. Preliminary approval of the settlement was obtained on November 3, 1999
from the Court, at which time the Court set a final approval hearing for
December 10, 1999. Prior to the December 10, 1999 hearing, the Court received
various objections to the settlement, including a challenge to the Court's
preliminary approval based upon the alleged lack of authority of prior lead
counsel to enter the settlement.
On December 14, 1999, the general partner and its affiliates terminated the
proposed settlement. In February 2000, counsel for some of the named plaintiffs
filed a motion to disqualify plaintiffs' lead and liaison counsel who negotiated
the proposed settlement on behalf of plaintiffs. On June 27, 2000, the Court
entered an order disqualifying them from the case. An appeal was taken from part
of the June 27, 2000 order on October 5, 2000. Subsequently, certain plaintiffs,
specifically, BEJ Equity Partners and J-B Investment Partners, withdrew as
plaintiffs.
On December 4, 2000, the Court appointed the law firm of Lieff Cabraser
Heimann & Bernstein LLP as new lead counsel for plaintiffs and the putative
class. Plaintiffs filed a third amended complaint on January 19, 2001 and the
general partner and its affiliates filed a demurrer to the third amended
complaint. On July 10, 2001, the Court issued an order granting in part and
denying in part defendants' demurrer. Among other things, the Court sustained
defendants' demurrer without leave to amend as to those derivative claims
involving partnerships in which the named plaintiffs did not own an interest.
The Court subsequently denied plaintiffs' motion for reconsideration.
The fourth amended complaint was filed on September 7, 2001. It was brought
by plaintiffs who owned interests in four of the Partnerships. Plaintiffs
Jeffrey Homburger, Sean O'Reilly and Norman and Doris Rosenberg formally
withdrew from the case on August 20, 2001. The general partner and affiliated
defendants filed a demurrer to the fourth amended complaint, which the Court
granted in part on January 28, 2002. The Court dismissed without leave to amend
plaintiffs' state securities fraud claim under California's Corporate Code
Section 25400(b), plaintiffs' contract claim arising out of the partnership
agreements, plaintiffs' derivative claim for statutory unfair competition as to
those partnerships in which plaintiffs lack representation, plaintiffs'
conversion claim and plaintiffs' claim under California's Corporation Code
Section 15636.
36
Only some of the remaining claims in the fourth amended complaint relate to
the partnership. Plaintiffs alleged that affiliates of the general partner have
issued false and misleading tender offers beginning in 1998 and continuing
through to the present for units in the partnership. Plaintiffs allege
violations of state securities fraud statutes and common law fraud against both
AIMCO and Insignia. Specifically, plaintiffs allege that the tender offers have
been misleading because they failed to disclose:
- that third parties would not use a property's historical income, but
would instead use a property's projected income, in calculating a
property's value based on the capitalization method.
- that the property income figures used in the capitalization method were
artificially lower because AIMCO charges management fees allegedly in
excess of the market.
- that AIMCO allegedly deducted all capital expenditures from property
income despite an alleged AIMCO policy of deducting only $250 to $300 per
apartment unit.
- the rating for the condition of each property, any adjustment made to the
capitalization rate as a result, the interest rate on mortgage debt for
each property and any corresponding adjustments in the capitalization
rates.
- that AIMCO allegedly negotiated lower capitalization rates for valuing
properties it owns in connection with a revolving credit facility.
- that AIMCO failed to disclose that the valuation methods and/or policies
it used for its own business purposes allegedly differ from those used in
the tender offers.
- internal valuations of the properties it used in connection with the
Insignia merger or the capitalization rates used in connection with those
valuations.
Plaintiffs alleged that the general partner breached its fiduciary duty by
assisting Insignia and AIMCO in making the tender offers by providing financial
information, failing to correct supposedly misleading information given to
unitholders, recommending that the prices offered were fair and preventing third
parties from making tender offers. Plaintiffs have also included a statutory
unfair competition claim against all the defendants, a claim for tortious
interference with contract, unjust enrichment and judicial dissolution.
THE HELLER COMPLAINT
During the third quarter of 2001, a complaint was filed against the same
defendants that are named in the Nuanes action, captioned Heller v. Insignia
Financial Group, Inc., et al. (the "Heller action"). The Heller complaint was
filed in order to preserve derivative claims that were dismissed without leave
to amend in the Nuanes action by the Court's July 10, 2001 order. The first
amended complaint in the Heller action was brought as a purported derivative
action, and asserted claims for, among other things, breach of fiduciary duty;
unfair competition; conversion, unjust enrichment; and judicial dissolution. On
January 28, 2002, however, the Court, on motion by the general partner and its
affiliates, struck the Heller complaint as a violation of its July 10, 2001
order in the Nuanes action. On March 27, 2002, plaintiffs in the Heller action
filed a notice of appeal of the Court's January 28, 2002 order striking the
complaint.
THE SETTLEMENT OF THE NUANES AND HELLER COMPLAINTS
On December 20, 2002, the parties to the above-entitled litigation executed
a Stipulation of Settlement of the two actions. That settlement was the result
of over one year of negotiations and the involvement of two separate settlement
judges. Class counsel and defendants' counsel first met with the Honorable
William J. Cahill, Retired California Superior Court Judge, on two separate
occasions. Counsel also met on four separate occasions with the Honorable
Margaret J. Kemp, California Superior Court Judge, before reaching a settlement
in principle. The parties initially met with Judge Cahill on two occasions in
the fall of 2000, but were ultimately unsuccessful in reaching a definitive
settlement agreement. At the Court's direction, they renewed formal settlement
discussions before Judge Kemp. The parties first attended a settlement
conference before Judge Kemp in September or October 2002 and then
37
subsequently met with her on October 28, 2002, November 26, 2002 and December 2,
2002. The parties reached final agreement on the material terms of the
settlement at the last settlement conference with Judge Kemp on December 2, 2002
and put the terms of that agreement on the record in open court.
In each of the conferences described above, counsel from Lieff Cabraser
Heimann & Bernstein LLP, Farella Braun & Martel LLP & Berman Devalerio Pease &
Tobacco attended on behalf of the named plaintiffs and the putative settlement
class; counsel from Skadden Arps Slate Meagher & Flom LLP attended on behalf of
AIMCO and its affiliated entities, including your general partner, and Orrick
Herrington & Sutcliffe attended on behalf of the remaining defendants. Former
AIMCO Executive Vice President Patrick Foye also attended each of these
meetings. Mr. Vincent Gresham of the Law Offices of Vincent Gresham also
participated on behalf of plaintiffs and the putative settlement class in those
settlement discussions before the Hon. Cahill, Retired. At these meetings,
discussions included possible transactions that could provide liquidity to
investors and form the basis of a settlement, the use of a settlement fund and
the amount of such fund, the timing and distribution of any settlement fund,
selection and use of an appraiser and disclosures that would accompany any
contemplated transaction(s). The participants considered but ultimately rejected
a merger or roll-up of the various partnerships as possible alternatives to cash
tender offers. The parties ultimately concluded, however, that a merger or
roll-up could be potentially complicated and time consuming and that a cash
tender offer would be a less coercive form of providing liquidity to those
investors who desired it.
The Settlement Agreement requires each tender offer to attach executive
summaries of partnership property appraisals commissioned specifically for the
settlement tender offers and to provide an explanation of how the appraised
values of the properties compare to the per Unit price(s) being offered. It also
requires the payment of an allocable portion of the settlement fund for each
unit tendered pursuant to the settlement fund, details the scope of the release
and covenants not to sue which will bind class members, requires that tender
offers be made no more than one year after final approval of the settlement and
imposes certain restrictions on the length of time in which the tender offers
can remain open, as well as with regard to other disclosures made therein. On
April 4, 2003, the Court preliminarily approved the settlement and, on June 13,
2003, entered an order finally approving the settlement and dismissing both the
Heller and Nuanes litigation with prejudice.
On August 12, 2003, an objector filed an appeal of the court's order
approving the settlement and is seeking to reverse or vacate the Court's order
and the judgment entered thereto. On November 24, 2003, the objector appealing
the settlement and judgment entered thereto filed an application requesting the
Court order AIMCO to withdraw the settlement tender offers, refrain from making
further offers pending the appeal and auction any units tendered to third
parties. The objector contended that our prior offers did not conform with the
terms of the Settlement. Alternatively, counsel for the objector has requested
the Court on behalf of a settlement class member to order AIMCO to pay all
non-tendering settlement class members their pro rata share of the Settlement
Fund whether or not the settlement and judgment entered thereto is vacated on
appeal and to notify settlement class members that the releases and covenant not
to sue are not binding unless the settlement and judgment entered thereto is
affirmed on appeal. On December 18, 2003, the Court heard oral argument on the
applications brought on behalf of the objector and denied them in their
entirety. On February 23, 2004, an appeal was also taken from certain portions
of the Court's December 2003 orders denying injunctive relief in connection with
the settlement offers and assessing fees against objector's counsel for the
Court's use of a referee. On March 21, 2005, the Court of Appeals issued
opinions in both pending appeals. With regard to the settlement and judgment
entered thereto, the Court of Appeals vacated the trial court's order and
remanded the trial court for further findings on the basis that the "state of
the record is insufficient to permit meaningful appellate review." With regard
to the second appeal, the Court of Appeals reversed the order assessing fees
against objector's counsel for the Court's use of a referee.
TERMS OF THE SETTLEMENT
Under the terms of the settlement, we made cash tender offers for all
outstanding limited partnership interests in your partnership and 40 other
partnerships (the "Tender Offer Partnerships") and
38
accompanied each of those offers with executive summaries of appraisals of
partnership properties prepared by an independent appraiser appointed by the
Court. Our affiliate has paid 50% of the costs of the appraisals, with the other
50% paid from the settlement fund. The appraiser was paid $619,100 for the
appraisals. We had the option of making a second round of tender offers (in our
sole and absolute discretion) to purchase all remaining outstanding limited
partnership interests, at the same price, or at a higher or lower price, within
18 months of the order finally approving the settlement. In November and
December 2004, we commenced a second round of cash tender offers for all
outstanding limited partnership units in 14 Tender Offer Partnerships. That
18-month period has expired, and this offer does not constitute one of the
second round of tender offers.
In addition, as part of the settlement, we agreed to create a settlement
fund for the benefit of settlement class members in the principal amount of $9.9
million. The settlement class members consist of all limited partners in the
Tender Offer Partnerships, including your partnership, who owned units as of
December 20, 2002, and who did not validly request exclusion from the
settlement. After deducting attorneys' fees and other settlement costs,
including a portion of the costs of appraisal and certain costs of
administration of the settlement fund, we allocated the remaining amount in the
settlement fund among the Tender Offer Partnerships, pursuant to the terms of
the settlement, pro rata based on partnership revenue for the year ended
December 31, 2002 allocable to units held by members of the settlement class, as
set forth below:
(C)
OWNERSHIP ALLOCATED
PERCENTAGE (D) PORTION OF
(A) (B) OF SETTLEMENT ADJUSTED SETTLEMENT
PARTNERSHIP REVENUE(1) CLASS(2) REVENUE(3) FUND(4)
----------- ------------ ------------- -------------- ----------
Angeles Income Properties, Ltd.
II............................. $ 6,721,398 38.11% $ 2,561,680.99 2.12%
Angeles Income Properties, Ltd.
III............................ 757,234 47.99% 363,400.46 0.30%
Angeles Income Properties, Ltd.
6.............................. 3,314,969 57.18% 1,895,539.00 1.57%
Angeles Opportunity Properties,
Ltd. .......................... 2,487,492 50.42% 1,254,256.40 1.04%
Angeles Partners VII............. 1,382,326 32.28% 446,158.51 0.37%
Angeles Partners IX.............. 3,053,411 32.79% 1,001,090.64 0.83%
Angeles Partners X............... 2,363,419 40.94% 967,701.17 0.80%
Angeles Partners XI.............. 8,102,088 37.05% 3,002,068.40 2.49%
Angeles Partners XII............. 17,579,608 30.85% 5,423,897.42 4.50%
Century Properties Fund XIV...... 5,754,231 33.27% 1,914,451.55 1.59%
Century Properties Fund XV....... 7,891,876 35.11% 2,770,502.79 2.30%
Century Properties Fund XVI...... 3,129,310 38.59% 1,207,704.29 1.00%
Century Properties Fund XVII..... 13,989,178 39.81% 5,568,998.68 4.62%
Century Properties Fund XVIII.... 4,652,589 44.57% 2,073,721.09 1.72%
Century Properties Fund XIX...... 15,838,890 41.77% 6,615,207.49 5.48%
Century Properties Growth Fund
XXII........................... 18,750,167 44.10% 8,268,717.87 6.86%
Consolidated Capital Growth
Fund........................... 11,095,122 35.45% 3,933,281.02 3.26%
Consolidated Capital
Institutional Properties....... 17,492,318 34.85% 6,095,971.72 5.05%
Consolidated Capital
Institutional Properties/2..... 4,531,076 50.40% 2,283,507.96 1.89%
Consolidated Capital
Institutional Properties/3..... 11,898,507 46.92% 5,583,341.99 4.63%
Consolidated Capital Properties
III............................ 3,319,845 48.56% 1,612,222.94 1.34%
Consolidated Capital Properties
IV............................. 26,375,116 43.55% 11,486,890.81 9.52%
Consolidated Capital Properties
VI............................. 1,790,898 49.39% 884,610.64 0.73%
39
(C)
OWNERSHIP ALLOCATED
PERCENTAGE (D) PORTION OF
(A) (B) OF SETTLEMENT ADJUSTED SETTLEMENT
PARTNERSHIP REVENUE(1) CLASS(2) REVENUE(3) FUND(4)
----------- ------------ ------------- -------------- ----------
Davidson Diversified Real Estate
I, L.P. ....................... 926,289 57.35% 531,230.56 0.44%
Davidson Diversified Real Estate
II, L.P. ...................... 6,679,248 50.21% 3,353,945.59 2.78%
Davidson Diversified Real Estate
III, L.P. ..................... 4,914,862 59.79% 2,938,470.22 2.44%
Davidson Growth Plus, L.P. ...... 5,497,496 42.55% 2,339,052.86 1.94%
Davidson Income Real Estate,
L.P. .......................... 4,824,647 55.50% 2,677,466.62 2.22%
Fox Strategic Housing Income
Partners....................... 2,905,478 59.32% 1,723,635.91 1.43%
Johnstown/Consolidated Income
Partners....................... 1,109,711 45.50% 504,939.49 0.42%
Multi-Benefit Realty Fund 87-1... 3,584,756
Class A Investors.............. 1,993,125 35.01% 697,750.93 0.58%
Class B Investors.............. 1,591,632 47.59% 757,524.59 0.63%
National Property Investors
III............................ 8,886,583 25.79% 2,291,879.79 1.90%
National Property Investors 4.... 7,248,900 24.52% 1,777,282.20 1.47%
National Property Investors 5.... 4,610,576 36.17% 1,667,480.41 1.38%
National Property Investors 6.... 10,168,298 34.73% 3,531,813.61 2.93%
National Property Investors 7.... 7,235,037 31.17% 2,255,187.60 1.87%
National Property Investors 8.... 4,334,235 38.98% 1,689,580.96 1.40%
Shelter Properties I Limited
Partnership.................... 4,908,445 20.51% 1,006,722.11 0.83%
Shelter Properties II Limited
Partnership.................... 5,148,389 29.25% 1,505,669.73 1.25%
Shelter Properties III Limited
Partnership.................... 5,155,756 35.20% 1,814,826.22 1.50%
Shelter Properties IV Limited
Partnership.................... 9,682,744 31.49% 3,048,820.05 2.53%
Shelter Properties V Limited
Partnership.................... 13,237,273 28.68% 3,796,475.63 3.15%
Shelter Properties VI Limited
Partnership.................... 8,475,852 34.45% 2,920,007.57 2.42%
Shelter Properties VII Limited
Partnership.................... 1,497,429 37.87% 567,007.84 0.47%
------------ -------------- -------
Total....................... $313,303,073 $ 120,611,694 100.00%
============ ============== =======
---------------
(1) For the year ended December 31, 2002.
(2) Excludes units owned by AIMCO and its affiliates and other limited partners
who have requested exclusion from the settlement class.
(3) Determined, for each partnership, by multiplying the amount of revenue
(column (B)) by the percentage of outstanding units held by members of the
settlement class (column (C)).
(4) Determined, for each partnership, by dividing the amount of adjusted revenue
(column (D)) by the total amount of adjusted revenue for all partnerships.
The amount allocated to a Tender Offer Partnership was then divided by the
total number of outstanding units owned by settlement class members in such
Tender Offer Partnership (excluding units
40
held by us and our affiliates), and the resulting amount was included in the
offer price for units in that Tender Offer Partnership. For each unit validly
tendered in the offers and accepted by us, an amount equal to the portion of the
settlement fund included in the per unit offer price was deducted from the
settlement fund and paid to us (other than units tendered by limited partners
who have requested exclusion from the settlement class). All limited partners
who tendered their units in response to the offers received the same price per
unit, including those persons who may have requested exclusion from the
settlement class.
Any balance remaining will be paid to settlement class members who have
retained any units based on the allocation method used in the litigation
settlement offers, provided that the Court's order approving the settlement and
entering judgment thereto is affirmed on appeal and is final. If the Court's
order is reversed or vacated by virtue of the appeal, however, you will not be
entitled to receive a pro rata share of the settlement fund.
The general partners of the Tender Offer Partnerships have also agreed, as
part of the settlement, to waive their right to seek reimbursement and/or
indemnification for the full amount of fees and costs incurred in the defense of
the class and derivative litigation; provided, however, that they may charge
fees and costs to your partnership and the other partnerships involved in the
litigation in an amount not to exceed $1,500,000 (which is approximately 50% of
the outstanding fees and costs).
In consideration for the terms described above, plaintiffs and settlement
class members agreed, among other things, to dismiss the Nuanes action and the
Heller action with prejudice, release the defendants from all liability with
respect to all claims and causes of action, whether brought individually, on
behalf of a class, or derivatively, whether known or unknown, that have been
asserted or that could have been asserted that arise out of or relate to (i)
those matters and claims set forth in the complaints in the Heller and Nuanes
actions, (ii) ownership of one or more units in any of the Tender Offer
Partnerships, (iii) the purchase, acquisition, holding, sale, tender or voting
of one or more units in any of the Tender Offer Partnerships, and (iv) any of
the facts, circumstances, allegations, claims, causes of action,
representations, statements, reports, disclosures, transactions, events,
occurrences, acts, omissions or failures to act, of whatever kind or character
whatsoever, irrespective of the state of mind of the actor performing or
omitting to perform the same, that have been or could have been alleged in any
pleadings, amended pleading, argument, complaint, amended complaint, brief,
motion, report or filing in either the Nuanes action or the Heller action,
provided, however, that the released claims are not intended to include any
unrelated claims that are unique to a particular settlement class member (e.g.,
a settlement class member slips and falls on property owned by one of our
affiliates, loses or did not receive a distribution check distributed to other
limited partners in your partnership, or is an employee and has an employee
related claim). Settlement class members also covenanted and agreed not to bring
any action, claim, suit, or proceeding against any of the defendants in the
class and derivative litigation that concerns any of the matters which are the
subject of the settlement and that the stipulation of settlement will act as a
bar to any such claim, action, suit or proceeding. The plaintiffs and settlement
class members also agreed that they would not oppose a request that the Court
withdraw the finding regarding Robert A. Stanger & Co. made in the June 27, 2000
order disqualifying lead and liaison counsel.
Under the terms of the settlement, neither we nor our affiliates admit to
any wrongdoing, and we deny liability under all claims brought in the
litigation. The final settlement of the lawsuit is the product of good faith,
arm's length negotiations between settlement class counsel and counsel for the
defendants. These negotiations resulted in the settlement set forth in the
Stipulation.
7. INFORMATION CONCERNING US AND CERTAIN OF OUR AFFILIATES
General. We are AIMCO Properties, L.P., a Delaware limited partnership.
Together with our subsidiaries, we conduct substantially all of the operations
of Apartment Investment and Management Company, a Maryland corporation
("AIMCO"). AIMCO is a real estate investment trust that owns and manages
multifamily apartment properties throughout the United States. AIMCO's Class A
Common Stock is listed and traded on the New York Stock Exchange under the
symbol "AIV." As of December 31, 2004, we owned or managed 263,734 apartment
units in 1,499 properties located in
41
47 states, the District of Columbia and Puerto Rico. Based on apartment unit
data compiled by the National Multi Housing Council, we believe that we are one
of the largest owners and managers of multi-family apartment properties in the
United States. As of December 31, 2004, we:
- owned or controlled (consolidated) 169,932 units in 676 apartment
properties;
- held an equity interest in (unconsolidated) 44,728 units in 330 apartment
properties; and
- provided services or managed, for third party owners, 49,074 units in 493
apartment properties, primarily pursuant to long term, non-cancelable
agreements (including 41,233 units in 421 properties that are asset
managed only, and not property managed).
Our general partner is AIMCO-GP, Inc., a Delaware corporation, which is a
wholly owned subsidiary of AIMCO. Our principal executive office is located at
4582 South Ulster Street Parkway, Suite 1100, Denver, Colorado 80237, and our
telephone number is (303) 757-8101.
The names, positions and business addresses of the directors and executive
officers of AIMCO and your general partner (which is our affiliate), as well as
a biographical summary of the experience of such persons for the past five years
or more, are set forth on Annex I attached hereto and are incorporated herein by
reference.
We and AIMCO are both subject to the information and reporting requirements
of the Exchange Act and, in accordance therewith, file reports and other
information with the Securities and Exchange Commission relating to our
business, financial condition and other matters, including the complete
financial statements summarized below. Such reports and other information may be
inspected at the public reference facilities maintained by the SEC at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such material
can also be obtained from the Public Reference Room of the SEC in Washington,
D.C. at prescribed rates. The SEC also maintains a site on the World Wide Web at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
In addition, information filed by AIMCO with the New York Stock Exchange may be
inspected at the offices of the New York Stock Exchange at 20 Broad Street, New
York, New York 10005.
For more information regarding AIMCO and AIMCO Properties, L.P., please
refer to our respective Annual Report on Form 10-K for the year ended December
31, 2004 (particularly the management's discussion and analysis of financial
condition and results of operations) and other reports and documents we have
filed with the SEC.
Except as described in "Special Factors -- Background and Reasons for the
Offer," "-- Conflicts of Interest and Transactions with Affiliates" and "The
Offer -- Section 8. Certain Information Concerning Your Partnership -- Ownership
and Voting," neither we nor, to the best of our knowledge, any of the persons
listed on Annex I attached hereto, (i) beneficially own or have a right to
acquire any units, (ii) has effected any transaction in the units in the past 60
days, or (iii) have any contract, arrangement, understanding or relationship
with any other person with respect to any securities of your partnership,
including, but not limited to, contracts, arrangements, understandings or
relationships concerning 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. Neither we nor our affiliates intend to
tender any units beneficially owned in this offer.
Summary Selected Financial Information for AIMCO Properties, L.P. The
historical financial data set forth below for AIMCO Properties, L.P. for the
years ended December 31, 2004, 2003 and 2002 is based on audited financial
statements. This information should be read in conjunction with such financial
statements, including the notes thereto, and "Management's Discussion and
Analysis of Financial
42
Condition and Results of Operations of the AIMCO Operating Partnership" included
in AIMCO Properties, L.P.'s Annual Report on Form 10-K for the year ended
December 31, 2004.
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------
2004 2003(1)(2) 2002(1)(2)
------------- ------------- -------------
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
OPERATING DATA:
Total revenues...................................... $ 1,468,915 $ 1,394,705 $ 1,266,919
Total expenses...................................... 1,140,157 975,686 801,593
Income before minority interest, discontinued
operations and cumulative effect of change in
accounting principle............................. 42,728 71,265 187,657
Income from continuing operations................... 60,013 71,085 173,944
Income from discontinued operations................. 237,065 106,783 32,258
Cumulative effect of change in accounting
principle........................................ (3,957) -- --
Net income.......................................... 293,121 177,868 206,202
PER SHARE DATA:
Earnings per common unit -- basic:
(Loss) income from continuing operations (net of
preferred distributions)....................... $ (0.35) $ (0.31) $ 0.68
Net income attributable to common unitholders.... 1.88 0.71 1.00
Earnings per common unit -- diluted:
(Loss) income from continuing operations (net of
preferred distributions)....................... (0.35) (0.31) 0.67
Net income attributable to common unitholders.... 1.88 0.71 0.99
Dividends declared per common unit.................. 2.40 2.84 3.28
BALANCE SHEET INFORMATION:
Real estate, net of accumulated depreciation........ $ 8,785,551 $ 8,145,948 $ 7,969,538
Total assets........................................ 10,084,154 10,098,649 10,347,829
Total indebtedness.................................. 5,988,372 5,731,701 5,560,096
Partners' capital................................... 3,291,087 3,174,815 3,576,083
CASH FLOW DATA:
Cash provided by operating activities............... $ 365,523 $ 463,879 $ 505,412
Cash provided by (used in) investing activities..... 407,683 279,543 (884,496)
Cash (used in) provided by financing activities..... (782,295) (728,543) 398,637
OTHER DATA:
Funds from operations available to common
unitholders -- diluted(3)........................ $ 295,645 $ 349,108 $ 498,589
Weighted average number of common units, common
units equivalents and dilutive preferred
securities outstanding........................... 105,694 108,151 109,538
---------------
(1) Beginning with the first quarter of 2004, AIMCO Properties modified the
presentation of its consolidated statements of income. The presentation of
the statements of income for the years ended December 31, 2003 and 2002 has
also been modified to conform with this new format. These presentation
changes do not affect the accounting treatment of amounts reported, only
their classification within the statement of income.
(2) Certain reclassifications have been made to the 2003 and 2002 amounts to
conform to the 2004 presentation. These reclassifications primarily
represent presentation changes related to discontinued operations resulting
from the 2002 adoption of Statement of Financial Accounting Standard No.
144, Accounting for the Impairment of Long-Lived Asset to be Disposed Of.
43
(3) Funds From Operations, or FFO, is a financial measure not calculated in
accordance with generally accepted accounting principles, or GAAP, that we
believe, when considered with the financial data determined in accordance
with GAAP, is helpful to investors in understanding our performance because
it captures features particular to real estate performance by recognizing
that real estate generally appreciates over time or maintains residual value
to a much greater extent than do other depreciable assets such as machinery,
computers or other personal property. The Board of Governors of the National
Association of Real Estate Investment Trusts, or NAREIT, defines FFO as net
income (loss), computed in accordance with GAAP, excluding gains and losses
from extraordinary items, cumulative effect of change in accounting
principle, gains on dispositions of depreciable real estate related to
unconsolidated entities and other, gains on dispositions of real estate from
discontinued operations, net of related income taxes, plus real estate
related depreciation and amortization (excluding amortization of financing
costs), including depreciation for unconsolidated real estate partnerships,
joint ventures and discontinued operations. We calculate FFO based on the
NAREIT definition, as further adjusted for amortization of management
contracts and deficit distributions to minority partners. We calculate FFO
(diluted) by subtracting redemption related preferred OP Unit issuance costs
and distributions on preferred OP Units, adding back distributions on
dilutive preferred securities and adding back the interest expense on
dilutive mandatorily redeemable convertible preferred securities. FFO should
not be considered an alternative to net income or net cash flows from
operating activities, as calculated in accordance with GAAP, as an
indication of our performance or as a measure of liquidity. FFO is not
necessarily indicative of cash available to fund future cash needs. In
addition, although FFO is a measure used for comparability in assessing the
performance of real estate investment trusts, there can be no assurance that
our basis for computing FFO is comparable with that of other real estate
investment trusts.
The following is a reconciliation of net income to Funds From Operations:
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------
2004 2003 2002
--------- --------- ---------
(AMOUNTS IN THOUSANDS)
NET INCOME ATTRIBUTABLE TO COMMON UNITHOLDERS(A).......... $ 196,199 $ 74,242 $ 98,556
Adjustments:
Depreciation and amortization(B)........................ 368,844 331,609 268,085
Depreciation and amortization related to non-real estate
assets............................................... (18,349) (20,370) (19,070)
Depreciation of rental property related to minority
partners' interest(C)................................ (43,387) (28,714) (22,542)
Depreciation of rental property related to
unconsolidated properties............................ 22,360 25,817 33,549
(Gain) Loss on dispositions of real estate related to
unconsolidated entities and other.................... (68,634) (3,178) 22,362
Gain on dispositions of non-depreciable assets.......... 38,977 -- --
Deficit distributions to minority partners, net(D)...... 18,007 22,629 27,535
Cumulative effect of change in accounting principle..... 3,957 -- --
Discontinued operations:
Depreciation of rental property, net of minority
partners' interest(C).............................. 12,404 37,349 48,070
(Gain) loss on dispositions of real estate, net of
minority partners' interest(C)..................... (249,944) (101,849) (4,374)
(Recovery of deficit distributions) deficit
distributions to minority partners(D).............. (3,863) (10,686) 845
Income tax arising from disposals.................... 16,015 12,134 2,507
Preferred OP Unit distributions......................... 93,433 95,981 107,646
Redemption related preferred OP Unit issuance costs..... 3,489 7,645 --
--------- --------- ---------
44
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------
2004 2003 2002
--------- --------- ---------
(AMOUNTS IN THOUSANDS)
FUNDS FROM OPERATIONS..................................... $ 389,508 $ 442,609 $ 563,169
Preferred OP Unit distributions........................... (93,433) (95,981) (107,646)
Redemption related preferred OP Unit issuance costs....... (3,489) (7,645) --
Distributions on dilutive preferred securities............ 3,059 9,138 41,905
Interest expense on mandatorily redeemable convertible
preferred securities.................................... -- 987 1,161
--------- --------- ---------
Funds from Operations attributable to common unitholders--
diluted................................................. $ 295,645 $ 349,108 $ 498,589
========= ========= =========
WEIGHTED AVERAGE NUMBER OF COMMON UNITS, COMMON UNIT
EQUIVALENTS AND DILUTIVE PREFERRED SECURITIES
OUTSTANDING:
Common unit and equivalents(E).......................... 104,386 104,861 99,168
Dilutive preferred securities........................... 1,308 3,290 10,370
--------- --------- ---------
Total................................................ 105,694 108,151 109,538
========= ========= =========
---------------
(A) Represents numerator for earnings per common unit calculated in accordance
with GAAP.
(B) Includes amortization of management contracts where we are the general
partner. Such management contracts were established in certain instances
where we acquired a general partner in either a consolidated or an
unconsolidated partnership. Because the recoverability of these management
contracts depends primarily on the operations of the real estate owned by
the limited partnerships, we believe it is consistent with the White Paper
to add back such amortization, as the White Paper directs the add-back of
amortization of assets uniquely significant to the real estate industry.
(C) "Minority partners' interest," as referenced in this line item and others
in this presentation means minority interest in AIMCO Properties'
consolidated real estate partnerships.
(D) In accordance with GAAP, deficit distributions to minority partners are
charges recognized in our income statement when cash is distributed to a
non-controlling partner in a consolidated real estate partnership in excess
of the positive balance in such partner's capital account, which is
classified as minority interest on our balance sheet. We record these
charges for GAAP purposes even though there is no economic effect or cost.
Deficit distributions to minority partners occur when the fair value of the
underlying real estate exceeds its depreciated net book value because the
underlying real estate has appreciated or maintained its value. As a
result, the recognition of expense for deficit distributions to minority
partners represents, in substance, either (a) our recognition of
depreciation previously allocated to the non-controlling partner or (b) a
cost related to the non-controlling partner's share of real estate
appreciation. Based on White Paper guidance that requires real estate
depreciation and gains to be excluded from FFO, we add back deficit
distributions and subtract related recoveries in our reconciliation of net
income to FFO.
(E) Represents denominator for earnings per common unit -- diluted, calculated
in accordance with GAAP plus additional common unit equivalents that are
dilutive for FFO.
8. CERTAIN INFORMATION CONCERNING YOUR PARTNERSHIP
General. Your partnership was organized on December 12, 1979 under the
laws of the State of California. Its primary business is real estate ownership
and related operations. Your partnership was formed for the purpose of making
investments in income-producing commercial and residential real estate. Your
partnership's investment portfolio currently consists of two residential
apartment complexes. Your partnership currently has approximately 2,973 limited
partners.
45
General Partner. The general partner of your partnership is Fox Capital
Management Corporation, which is a subsidiary of AIMCO. Our affiliate serves as
manager of the properties owned by your partnership. We and the general partner
of your partnership received total fees and reimbursements (excluding property
management fees) of approximately $371,000 in 2002, $304,000 in 2003 and
$314,000 in 2004. The property manager is entitled to receive five percent of
gross receipts from the partnership's properties for providing property
management services. It received management fees of approximately $404,000 in
2002, $387,000 in 2003 and $360,000 in 2004.
Ownership and Voting. We, together with your general partner, Madison
River Properties, L.L.C., Riverside Drive, L.L.C. and AIMCO IPLP, L.P. (which
are our affiliates), own 61,447.34 units, or 68.29%, of the outstanding units of
your partnership. Because we and our affiliates own a majority of the
outstanding units and control your partnership's general partner, we control the
outcome of most voting decisions with respect to your partnership. In general,
we will vote the units owned by us in whatever manner we deem to be in our best
interests, which may not be in the interest of other limited partners. See
"Special Factors -- Effects of the Offer" and "The Offer -- Section 9. Voting
Power."
Investment Objectives and Policies; Sale or Financing of Investments. In
general, your general partner (which is our affiliate) 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 a property's specific locale and sub-market
conditions (including stability of the surrounding neighborhood), evaluating
current trends, competition, new construction and economic changes. It oversees
the operating performance of the properties and continuously evaluates the
physical improvement requirements. In addition, the financing structure for the
properties (including any prepayment penalties), tax implications, availability
of attractive mortgage financing to a purchaser, 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 the partnership properties. After taking into
account the foregoing considerations, your general partner has no present
intention of seeking a sale of your partnership's properties. Although the
future operating results of your partnership and future sales prices of the
properties owned by your partnership are uncertain, the operating performance of
your partnership's properties may improve in the future or the private resale
market for properties could improve, which, in turn, may result in higher
property values, making a sale of your partnership's properties a more
attractive option in the future. Such values, however, are also a function of
the interest rate environment at the time. In addition, the partnership
commenced with a $2.5 million redevelopment project at Preston Creek Apartments
and a $1.5 million redevelopment project at Lakeside Place Apartments. The
redevelopment of Preston Creek Apartments will be financed with loans from us
which will accrue interest at 10%, and the redevelopment of Lakeside Place
Apartments is to be financed with loans from us which will accrue interest at
prime plus 2%. The redevelopment of Lakeside Place Apartments and Preston Creek
Apartments could increase the value of the properties. After completion of the
redevelopment, the general partner plans to continue to hold and operate the
properties and increase rents to reflect the improvements resulting from the
redevelopment. To the extent that there is any cash flow available for
distribution to limited partners, such distributions are not expected to resume
until the redevelopment of Preston Creek Apartments is completely funded and our
loan to your partnership is fully repaid. The general partner estimates that
such distributions to limited partners will not resume until at least the
beginning of the second quarter of 2007. Many factors could cause this estimate
to vary, including a change in projected redevelopment costs or period, a change
in projected cash flow, or the availability of alternative funding sources.
Another significant factor considered by your general partner is the likely tax
consequences of a sale of the properties for cash. Such a transaction would
likely result in tax liabilities for many limited partners.
Term of Your Partnership. Under your partnership's agreement of limited
partnership, the term of the partnership will continue until December 31, 2020
unless sooner terminated as provided in the agreement or by law.
Capital Replacements. Your partnership has an ongoing program of capital
improvements, replacements and renovations, including interior and exterior
building improvements, cabinet, floor covering
46
and appliance replacements and other replacements and renovations in the
ordinary course of business. The general partner spent approximately $1,045,000
for capital improvements at your partnership's properties in 2004 to repair and
update the properties. In addition, the partnership has commenced with a $1.5
million redevelopment project at Lakeside Place Apartments and a $2.5 million
redevelopment project at Preston Creek Apartments. Additional routine capital
expenditures at the properties are anticipated during 2005. Such capital
expenditures will depend on the physical condition of the properties as well as
anticipated cash flow generated by the properties. All capital improvements are
expected to be paid from operating cash flows or cash reserves, or from
short-term or long-term borrowings.
Competition. There are other residential properties within the market area
of each of your partnership's properties. The number and quality of competitive
properties in such an area could have a material effect on the rental market for
the apartments at your partnership's properties and the rents that may be
charged for such apartments. While AIMCO is a significant factor in the United
States in the apartment industry, competition for apartments is local. According
to data published by the National Multi-Housing Council, we believe AIMCO is the
largest owner and manager of multifamily apartment properties in the United
States.
47
Financial Data. The selected financial information of your partnership set
forth below for the years ended December 31, 2004, 2003 and 2002 is based on
audited financial statements. This information should be read in conjunction
with such financial statements, including the notes thereto, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations of Your
Partnership" in the Annual Report on Form 10-KSB of your partnership for the
year ended December 31, 2004. These reports and other information may be
inspected at the public reference facilities maintained by the SEC at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such material
can also be obtained from the Public Reference Room of the SEC in Washington,
D.C. at prescribed rates. The SEC also maintains a site on the World Wide Web at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
FOR THE YEAR ENDED
DECEMBER 31,
----------------------------
2004 2003 2002
-------- ------- -------
(IN THOUSANDS,
EXCEPT PER UNIT DATA)
OPERATING DATA:
Total revenues....................................... $ 7,320 $ 7,813 $ 8,111
(Loss) income from continuing operations............. (907) (215) 158
Net (loss) income.................................... (907) (215) 158
(Loss) income from continuing operations per limited
partnership unit.................................. (9.88) (2.34) 1.72
Net (loss) income per limited partnership unit....... (9.88) (2.34) 1.72
Distributions per limited partnership unit........... -- -- 5.92
Ratios of earnings to fixed charges.................. 58.34% 90.32% 106.94%
BALANCE SHEET INFORMATION:
Cash and cash equivalents............................ $ 129 $ 615 $ 630
Real estate, net of accumulated depreciation......... 16,718 17,382 18,248
Total assets......................................... 17,601 18,599 19,486
Notes payable........................................ 26,113 26,925 27,675
General partners' deficit............................ (1,475) (1,455) (1,447)
Limited partners' deficit............................ (9,239) (8,350) (8,139)
Partners' deficit.................................... (10,714) (9,805) (9,586)
Total distributions.................................. (2) (4) (549)
Book value per limited partnership unit.............. (102.68) (92.80) (90.45)
CASH FLOW DATA:
Net (decrease) increase in cash and cash
equivalents....................................... (486) (15) 425
Net cash provided by operating activities............ 742 1,546 2,375
Description of Property. The following shows the location, the date of
purchase, the nature of your partnership's ownership interest in and the use of
your partnership's properties.
DATE OF
PROPERTY PURCHASE TYPE OF OWNERSHIP USE
-------- -------- ----------------- ---
Lakeside Place Apartments
Houston, Texas....................... 12/80 Fee ownership subject to Apartment
first mortgage(1) 734 units
Preston Creek Apartments
Dallas, Texas........................ 08/81 Fee ownership subject to Apartment
first mortgage 228 units
---------------
(1) Property is held by a limited partnership in which the partnership owns a
99% interest.
48
Accumulated Depreciation Schedule. The following shows the gross carrying
value and accumulated depreciation of your partnership's properties as of
December 31, 2004.
GROSS ACCUMULATED DEPRECIABLE FEDERAL
PROPERTY CARRYING VALUE DEPRECIATION LIFE METHOD TAX BASIS
-------- -------------- ------------ ----------- ------ --------------
(IN THOUSANDS) (IN THOUSANDS)
Lakeside Place............. $35,058 $23,081 5-30 yrs SL $12,286
Preston Creek.............. 10,858 6,117 5-30 yrs SL 3,059
------- ------- -------
Total...................... $45,916 $29,198 $15,345
======= ======= =======
Schedule of Mortgages. The following shows certain information regarding
the outstanding first mortgage encumbering your partnership's properties as of
December 31, 2004.
PRINCIPAL
BALANCE AT
DECEMBER 31, INTEREST PERIOD MATURITY PRINCIPAL BALANCE
PROPERTY 2004 RATE AMORTIZED DATE DUE AT MATURITY(1)
-------- -------------- -------- --------- -------- ------------------
(IN THOUSANDS) (IN THOUSANDS)
Lakeside Place........... $21,014 8.34% 20 years 03/01/20 $ --
Preston Creek............ 5,099 6.65% 20 years 01/01/22 --
------- -----
Total.................. $26,113 $ --
======= =====
---------------
(1) See notes to financial statements in the partnership's Annual Report on Form
10-KSB for the year ended December 31, 2004 for information with respect to
the partnership's ability to prepay these loans and other specific details
about these loans.
Average Rental Rates and Occupancy. The following shows the average rental
rates and occupancy percentages for your partnership's properties during the
periods indicated.
AVERAGE ANNUAL AVERAGE ANNUAL
RENTAL RATES OCCUPANCY
--------------- ----------------
PROPERTY 2004 2003 2004 2003
-------- ------ ------ ------- ------
(PER UNIT)
Lakeside Place...................................... $8,363 $8,801 87% 89%
Preston Creek....................................... $7,316 $7,456 89% 95%
Property Management. Your partnership's properties are managed by one of
our affiliates. Pursuant to the management agreement between the property
manager and your partnership, the property manager operates your partnership's
properties, establishes rental policies and rates and directs marketing
activities. The property manager also is responsible for maintenance, the
purchase of equipment and supplies, and the selection and engagement of all
vendors, suppliers and independent contractors.
Distributions. The following table shows, for each of the years indicated,
the distributions paid per unit for such years.
YEAR ENDED DECEMBER 31 AMOUNT
---------------------- -------
2002........................................................ $ 5.92
2003........................................................ $ 0.00
2004........................................................ $ 0.00
Compensation Paid to the General Partner and its Affiliates. The following
table shows, for each of the years indicated, approximate amounts paid to your
general partner and its affiliates on a historical basis. The general partner is
reimbursed for actual direct costs and expenses incurred in connection with the
operation of the partnership. The property manager is entitled to receive fees
for transactions involving your partnership and its properties and is entitled
to receive five percent of the gross receipts from the
49
partnership's properties for providing property management services. See
"Special Factors -- Conflicts of Interest and Transactions with Affiliates."
PARTNERSHIP PROPERTY
FEES AND MANAGEMENT
YEAR EXPENSES FEES
---- ----------- ----------
2002........................................................ $371,000 $404,000
2003........................................................ $304,000 $387,000
2004........................................................ $314,000 $360,000
Legal Proceedings. From time to time, your partnership may be a party to a
variety of legal proceedings related to its ownership of properties which arise
in the ordinary course of business. See "The Offer -- Section 6. The Lawsuit and
the Settlement."
9. VOTING POWER
Decisions with respect to the day-to-day management of your partnership are
the responsibility of the general partner. Because the general partner of your
partnership is our affiliate, we control the management of your partnership.
Under your partnership's agreement of limited partnership, limited partners
holding a majority of the outstanding units must approve certain extraordinary
transactions, including the removal of the general partner, most amendments to
the partnership agreement and the sale of all or substantially all of your
partnership's assets. We, together with your general partner, Madison River
Properties, L.L.C., Riverside Drive, L.L.C. and AIMCO IPLP, L.P. (which are our
affiliates), own 61,447.34 units, or 68.29%, of the outstanding units of your
partnership. Because we and our affiliates own a majority of the outstanding
units and control your partnership's general partner, we control the outcome of
most voting decisions with respect to your partnership. In general, we will vote
the units owned by us in whatever manner we deem to be in our best interests,
which may not be in the interest of other limited partners. See "Special
Factors -- Effects of the Offer."
10. SOURCE OF FUNDS
We expect that approximately $2,824,700 will be required to purchase all of
the limited partnership units that we are seeking in this offer exclusive of
fees and expenses. For more information regarding fees and expenses, see "The
Offer -- Section 14. Fees and Expenses."
In addition to this offer, we intend to make concurrent offers to acquire
interests in approximately 8 other limited partnerships. We also intend to
acquire interests in 7 other partnerships by merger. If all such transactions
were fully subscribed for cash, we would be required to pay approximately $57.2
million for all such units. If for some reason we did not have such funds
available, we might extend these offers for a period of time sufficient for us
to obtain additional funds, or we could terminate the offers. However, we do not
expect all such offers to be fully subscribed. Additionally, we believe that we
will have sufficient cash on hand and available sources of financing to acquire
all units tendered pursuant to such offers. As of December 31, 2004, we had $105
million of cash on hand and $358.23 million available for borrowing under
existing lines of credit. We intend to repay any amounts borrowed to finance the
offer out of future working capital.
We have a $445 million revolving credit facility with Bank of America,
Fleet National Bank and First Union National Bank with a syndicate comprised of
a total of ten lender participants. We are the borrower and all obligations
thereunder are guaranteed by certain of AIMCO's subsidiaries. The obligations
under the credit facility are secured, among other things, by our pledge of our
stock ownership in certain subsidiaries of AIMCO, and a first priority pledge of
certain of our non-real estate assets. The annual interest rate under the credit
facility is based on either LIBOR or a base rate which is the higher of Bank of
America's reference rate or 0.5% over the federal funds rate, plus, in either
case, an applicable margin. The margin ranges between 2.15% and 2.85% in the
case of LIBOR-based loans and between 0.65% and 1.35% in the case of base rate
loans, based upon a fixed charge coverage ratio. The credit facility expires on
July 31, 2005 and can be extended at AIMCO's option for a one-year term on a
one-time basis.
50
11. DISSENTERS' RIGHTS
Neither the agreement of limited partnership of your partnership nor
applicable law provides any right for you to have your units appraised or
redeemed in connection with, or as a result of, our offer. You have the
opportunity to make an individual decision on whether or not to tender your
units in the offer.
No provisions have been made with regard to the offer to allow you or other
limited partners to inspect the books and records of the partnership or to
obtain counsel or appraisal services at our expense or at the expense of your
partnership. However, you have the right under your partnership's agreement of
limited partnership to obtain a list of the limited partners in your
partnership.
12. CONDITIONS TO THE OFFER
We will not be required to accept for payment and pay for any units
tendered pursuant to our offer, may postpone the purchase of, and payment for,
units tendered, and may terminate or amend our offer if at any time on or after
the date of this Offer to Purchase and at or before the expiration of our offer
(including any extension thereof), any of the following shall occur:
- any change shall have occurred or been threatened in the business,
properties, assets, liabilities, indebtedness, capitalization, condition
(financial or otherwise), operations, licenses or franchises, management
contract, or results of operations or prospects of your partnership or
local markets in which your partnership owns or operates its properties,
including any fire, flood, natural disaster, casualty loss, or act of God
that is adverse to your partnership or the value of your units to us,
which change would, individually or in the aggregate, result in an
adverse effect on net operating income of your partnership of more than
$10,000 per year, or a decrease in value of an asset of your partnership,
or the incurrence of a liability with respect to your partnership, in an
amount in excess of $100,000 (a "Material Adverse Effect"); or
- there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on any national securities exchange
or the over-the-counter market in the United States, (ii) a decline in
the closing share price of AIMCO's Class A Common Stock of more than
5.0%, measured from the close of business on the last trading day
preceding the date of this offer and the close of business on the last
trading day preceding the expiration of this offer, (iii) any
extraordinary or material adverse change in the financial, real estate or
money markets or major equity security indices in the United States such
that there shall have occurred at least a 25 basis point increase in
LIBOR, or at least a 5.0% decrease in the S&P 500 Index, the Morgan
Stanley REIT Index, or the price of the 10-year Treasury Bond or the
price of the 30-year Treasury Bond, in each case, measured from the close
of business on the last trading day preceding the date of this offer and
the close of business on the last trading day preceding the expiration of
this offer, (iv) a declaration of a banking moratorium or any suspension
of payments in respect of banks in the United States, (v) any limitation
(whether or not mandatory) by any governmental authority on, or any other
material event which, in either case, could reasonably be expected to
affect the extension of credit by banks or other lending institutions, 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
- there shall have been threatened in writing, instituted or pending any
action, proceeding, application or counterclaim by any Federal, state,
local or foreign government, governmental authority or governmental
agency, or by any other person, before any governmental authority, court
or regulatory or administrative agency, authority or tribunal, which (i)
challenges or seeks to challenge the acquisition by us of the units,
restrains, prohibits or delays the making or consummation of the offer,
prohibits the performance of any of the contracts or other arrangements
entered into by us (or any of our affiliates) seeks to obtain any
material amount of damages as a result of the transactions contemplated
by the offer, (ii) seeks to make the purchase of, or payment for, some or
all of the units pursuant to the offer illegal or results in a delay in
our ability to accept for payment or pay for some or all of the units,
(iii) seeks to prohibit or limit the ownership or operation by us or any
of our affiliates of the entity serving as your general partner (which is
our affiliate) or to
51
remove such entity as the general partner of your partnership, or seeks
to impose any material limitation on our ability or any of our affiliates
to conduct your partnership's business or own such assets, (iv) seeks to
impose material limitations on our ability or any of our affiliates to
acquire or hold or to exercise full rights of ownership of the units
including, but not limited to, the right to vote the units purchased by
us on all matters properly presented to unitholders or (v) 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
- there shall be any action taken, or any statute, rule, regulation, order
or injunction shall be sought, proposed, enacted, promulgated, entered,
enforced or deemed applicable to the offer, your partnership, any general
partner of your partnership, us or any affiliate of our or your
partnership, or any other action shall have been taken, proposed or
threatened, by any government, governmental authority or court, that,
directly or indirectly, results in any of the consequences referred to in
clauses (i) through (v) of the immediately preceding paragraph; or
- a tender or exchange offer for any units shall have been commenced or
publicly proposed to be made by another person or "group" (as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934), or it shall
have been publicly disclosed or we shall have otherwise learned that (i)
any person or group shall have acquired or proposed or be attempting to
acquire beneficial ownership of more than four percent of the units, or
shall have been granted any option, warrant or right, conditional or
otherwise, to acquire beneficial ownership of more than four percent of
the units, or (ii) any person or group shall have entered into a
definitive agreement or an agreement in principle or made a proposal with
respect to a merger, consolidation, purchase or lease of assets, debt
refinancing or other business combination with or involving your
partnership; or
- there shall have occurred any event, circumstance, change, effect or
development that, individually or in the aggregate with any other events,
circumstances, changes, effects or developments, has had an adverse
effect on our financial condition in an amount in excess of $10,000,000,
which does not result from actions or inactions by us or our affiliates.
The foregoing conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to such conditions or may be waived
by us at any time in our reasonable discretion prior to the expiration of this
offer. The failure by us at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right, and the waiver of any such right
with respect to any particular facts or circumstances shall not be deemed a
waiver with respect to any other facts or circumstances. If we waive any of the
conditions to the offer with respect to the tender of a particular unit, we will
waive such condition with respect to all other tenders of units in this offer as
well. All conditions to our offer will be satisfied or waived on or before the
expiration of our offer. We will not waive a material condition to the offer on
the expiration date. If we waive any material conditions to our offer, we will
notify you and, if necessary, we will extend the offer period so that you will
have at least five business days from the date of our notice to withdraw your
units.
13. CERTAIN LEGAL MATTERS
General. Except as set forth in this Section 13, we are not aware of any
licenses or regulatory permits that would be material to the business of your
partnership, taken as a whole, and that might be adversely affected by our
acquisition of units as contemplated herein, or any filings, approvals or other
actions by or with any domestic or foreign governmental authority or
administrative or regulatory agency that would be required prior to the
acquisition of units by us pursuant to the offer, other than the filing of a
Tender Offer Statement and Rule 13e-3 Transaction Statement on Schedule TO with
the SEC (which has already been filed) and any required amendments thereto.
While there is no present intent to delay the purchase of 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 your partnership or its
business, or that certain parts of its business might not have to be disposed of
or other
52
substantial conditions complied with in order to obtain such approval or action,
any of which could cause us to elect to terminate the offer without purchasing
units thereunder. Our obligation to purchase and pay for units is subject to
certain conditions, including conditions related to the legal matters discussed
in this Section 13.
Antitrust. We do not believe that the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, is applicable to the acquisition of units
contemplated by our offer.
Margin Requirements. The 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 our offer.
State Laws. We are not aware of any jurisdiction in which the making of
our offer is not in compliance with applicable law. If we become aware of any
jurisdiction in which the making of the offer would not be in compliance with
applicable law, we will make a good faith effort to comply with any such law.
If, after such good faith effort, we 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 with securities
or blue sky laws that require the offer to be made by a licensed broker or
dealer, the offer shall be made on behalf of us, if at all, only by one or more
registered brokers or dealers licensed under the laws of that jurisdiction.
14. FEES AND EXPENSES
You will not pay any partnership transfer fees if you tender your units.
Except as set forth herein, we will not pay any fees or commissions to any
broker, dealer or other person for soliciting tenders of units pursuant to the
offer. We have retained The Altman Group, Inc. to act as Information Agent in
connection with our offer. The Information Agent may contact holders of units by
mail, telephone, telex, telegraph and personal interview and may request
brokers, dealers and other nominee limited partners to forward materials
relating to the offer to beneficial owners of the units. We will pay the
Information Agent reasonable and customary compensation for its services in
connection with the offer, plus reimbursement for out-of-pocket expenses, and
will indemnify it against certain liabilities and expenses in connection
therewith, including liabilities under the Federal securities laws. We will also
pay all costs and expenses of printing and mailing the offer and any related
legal fees and expenses. The partnership will not be responsible for paying any
of the fees or expenses incurred by us in connection with this offer.
The following is an itemized statement of the aggregate estimated expenses
incurred and to be incurred in this offer by us:
Information Agent Fees...................................... $ 7,500
Legal Fees.................................................. 30,000
Printing Fees............................................... 26,600
Tax and Accounting Fees..................................... 1,500
Postage..................................................... 34,000
Depositary.................................................. 500
--------
Total.................................................. $100,100
========
---------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF US NOT CONTAINED HEREIN, OR IN THE LETTER OF
TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED.
THE GENERAL PARTNER DOES NOT MAKE ANY RECOMMENDATION REGARDING WHETHER YOU
SHOULD ACCEPT THIS OFFER. YOU ARE INSTEAD ENCOURAGED TO CAREFULLY REVIEW THIS
OFFER TO PURCHASE AND ANY OTHER INFORMATION
53
AVAILABLE TO YOU AND TO SEEK ADVICE FROM YOUR INDEPENDENT LAWYER, TAX ADVISOR
AND/OR FINANCIAL ADVISOR WITH RESPECT TO YOUR PARTICULAR CIRCUMSTANCES BEFORE
DECIDING WHETHER OR NOT TO ACCEPT THIS OFFER.
We have filed with the SEC a Tender Offer Statement and Rule 13e-3
Transaction Statement on Schedule TO, pursuant to Sections 13(e)(4), 14(d)(1)
and Rule 14d-3 under the Exchange Act, furnishing certain additional information
with respect to our offer, and may file amendments thereto. Your partnership has
filed with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9
pursuant to Section 14(d)(4) and Rule 14d-9 under the Exchange Act, furnishing
certain additional information about your partnership's and the general
partner's position concerning our offer, and your partnership may file
amendments thereto. The Schedules TO and 14D-9 and any amendments to either
Schedule, including exhibits, may be inspected and copies may be obtained at the
same place and in the same manner as described in "The Offer -- Section 8.
Certain Information Concerning Your Partnership."
The letter of transmittal 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 Information Agent at one of its
addresses set forth below.
THE INFORMATION AGENT FOR THE OFFER IS:
THE ALTMAN GROUP, INC.
By Mail: By Overnight Courier: By Hand:
1275 Valley Brook Avenue 1275 Valley Brook Avenue 1275 Valley Brook Avenue
Lyndhurst, NJ 07071 Lyndhurst, NJ 07071 Lyndhurst, NJ 07071
For information, please call:
TOLL FREE: (800) 467-0821
54
ANNEX I
OFFICERS AND DIRECTORS
The names and positions of the executive officers of Apartment Investment
and Management Company ("AIMCO"); AIMCO-GP, Inc. ("AIMCO-GP") and Fox Capital
Management Corporation, the managing general partner of your partnership (the
"Managing General Partner") are set forth below. All of the executive officers
of AIMCO also serve as executive officers of AIMCO-GP. The directors of AIMCO
are also set forth below. The two directors of AIMCO-GP are Terry Considine and
Paul J. McAuliffe. The directors of the Managing General Partner of your
partnership are Martha L. Long and Harry G. Alcock. Unless otherwise indicated,
the business address of each executive officer and director is 4582 South Ulster
Parkway, Suite 1100, Denver, Colorado 80237. Each executive officer and director
is a citizen of the United States of America.
NAME POSITION
---- --------
Terry Considine........................... Chairman of the Board, Chief Executive Officer
and President of AIMCO and AIMCO-GP
Jeffrey W. Adler.......................... Executive Vice President -- Conventional
Property Operations of AIMCO and Executive Vice
President of the Managing General Partner and
AIMCO-GP
Harry G. Alcock........................... Executive Vice President and Chief Investment
Officer of AIMCO, Executive Vice President and
Director of the Managing General Partner and
Executive Vice President of AIMCO-GP
Miles Cortez.............................. Executive Vice President, General Counsel and
Secretary of AIMCO, the Managing General Partner
and AIMCO-GP
Joseph DeTuno............................. Executive Vice President -- Redevelopment of
AIMCO and Executive Vice President of the
Managing General Partner and AIMCO-GP
Randall J. Fein........................... Executive Vice President -- University Housing
of AIMCO and Executive Vice President of the
Managing General Partner and AIMCO-GP
Patti K. Fielding......................... Executive Vice President -- Securities and Debt
of AIMCO and Executive Vice President of the
Managing General Partner and AIMCO-GP
Lance J. Graber........................... Executive Vice President of AIMCO, the Managing
General Partner and AIMCO-GP
Paul J. McAuliffe......................... Executive Vice President and Chief Financial
Officer of AIMCO, AIMCO-GP and the Managing
General Partner and Director of AIMCO-GP
Ronald D. Monson.......................... Senior Vice President of AIMCO and Executive
Vice President of the Managing General Partner
and AIMCO-GP
James G. Purvis........................... Executive Vice President -- Human Resources of
AIMCO and Executive Vice President of the
Managing General Partner and AIMCO-GP
David Robertson........................... Executive Vice President of AIMCO, AIMCO-GP the
Managing General Partner
Thomas M. Herzog.......................... Executive Vice President and Chief Accounting
Officer of AIMCO and Senior Vice President and
Chief Accounting Officer of the Managing General
Partner and AIMCO-GP
Martha L. Long............................ Senior Vice President and Director of the
Managing General Partner and Senior Vice
President of AIMCO and AIMCO-GP
James N. Bailey........................... Director of AIMCO
I-1
NAME POSITION
---- --------
Richard S. Ellwood........................ Director of AIMCO
J. Landis Martin.......................... Director of AIMCO
Thomas L. Rhodes.......................... Director of AIMCO
Michael A. Stein.......................... Director of AIMCO
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
Terry Considine........................... Mr. Considine has been Chairman of the Board and
Chief Executive Officer of AIMCO since July 1994
and has been President since October 2004. Mr.
Considine serves as Chairman of the Board of
Directors of American Land Lease, Inc. (formerly
Asset Investors Corporation and Commercial Asset
Investors, Inc.), another public real estate
investment trust. Mr. Considine devotes his time
to his responsibilities at AIMCO and AIMCO-GP on
a full-time basis, and the balance to American
Land Lease, Inc.
Jeffrey W. Adler.......................... Mr. Adler was appointed Executive Vice
President, Conventional Property Operations in
February 2004. Previously he served as Senior
Vice President of Risk Management of AIMCO from
January 2002 until November 2002, when he added
the responsibility of Senior Vice President,
Marketing. Prior to joining AIMCO, from 2000 to
2002, Mr. Adler was Vice President,
Property/Casualty for Channelpoint, a software
company. From 1990 to 2000 Mr. Adler held
several positions at Progressive Insurance
including Colorado General Manager from 1996 to
2000, Product Manager for Progressive Insurance
Mountain Division from 1992 to 1996, and
Director of Corporate Marketing from 1990 to
1992.
Harry G. Alcock........................... Mr. Alcock served as a Vice President of AIMCO
from July 1996 to October 1997, when he was
promoted to Senior Vice President --
Acquisitions. Mr. Alcock served as Senior Vice
President -- Acquisitions until October 1999,
when he was promoted to Executive Vice President
and Chief Investment Officer. Mr. Alcock has
held responsibility for AIMCO's acquisition and
financing activities since July 1994. From June
1992 until July 1994, Mr. Alcock served as
Senior Financial Analyst for PDI and HFC. From
1988 to 1992, Mr. Alcock worked for Larwin
Development Corp., a Los Angeles-based real
estate developer, with responsibility for
raising debt and joint venture equity to fund
land acquisition and development. From 1987 to
1988, Mr. Alcock worked for Ford Aerospace Corp.
He received his B.S. from San Jose State
University.
I-2
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
Miles Cortez.............................. Mr. Cortez was appointed Executive Vice
President, General Counsel and Secretary of
AIMCO in August 2001. Prior to joining AIMCO,
Mr. Cortez was the senior partner of Cortez
Macaulay Bernhardt & Schuetze LLC, a Denver law
firm, from December 1997 through September 2001.
From August 1993 through November 1997, Mr.
Cortez was a partner in the law firm of McKenna
& Cuneo, LLP in Denver. Mr. Cortez was the
President of the Colorado Bar Association from
1996 to 1997 and President of the Denver Bar
Association from 1982 to 1983.
Joseph DeTuno............................. Mr. DeTuno was appointed Executive Vice
President -- Redevelopment of AIMCO in February
2001 and previously served as Senior Vice
President -- Property Redevelopment of AIMCO
from August 1997 to February 2001. Prior to
joining AIMCO, Mr. DeTuno was President and
founder of JD Associates, his own full service
real estate consulting, advisory and project
management company that he founded in 1990.
Randall J. Fein........................... Mr. Fein was appointed Executive Vice
President -- University Housing of AIMCO in
October 2003. He is responsible For the
operation of AIMCO's student housing related
Portfolio, including its joint venture
activities. From 1989 through 2003, Mr. Fein
served as general partner of Income Apartment
Investors L.P., and Texas First Properties L.P.,
which operated student and non-student housing.
Prior to entering the apartment industry, Mr.
Fein was engaged in the securities industry as a
Director of Jefferies and as a Vice President of
Salomon Brothers Inc. Mr. Fein is a member of
the State Bar of Texas.
Patti K. Fielding......................... Ms. Fielding was appointed Executive Vice
President -- Securities and Debt of the Managing
General Partner in February 2004 and of AIMCO in
February 2003. She is responsible for securities
and debt financing and the treasury department.
From January 2000 to February 2003, Ms. Fielding
served as Senior Vice President -- Securities
and Debt. Ms. Fielding joined AIMCO in February
1997 and served as Vice President -- Tenders,
Securities and Debt until January 2002. Prior to
joining AIMCO, Ms. Fielding was a Vice President
with Hanover Capital Partners from 1996 to 1997,
Vice Chairman, Senior Vice President and
Principal of CapSource Funding Corp from 1993 to
1995, and Group Vice President with Duff &
Phelps Rating Co. from 1987 to 1993.
I-3
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
Lance J. Graber........................... Mr. Graber was appointed Executive Vice
President -- Acquisitions in October 1999. His
principal business function is overseeing
dispositions, refinancings, redevelopments and
other transactions within AIMCO Capital's
portfolio of affordable properties. Prior to
joining AIMCO, Mr. Graber was an Associate from
1991 through 1992 and then a Vice President from
1992 through 1994 at Credit Suisse First Boston
engaged in real estate financial advisory
services and principal investing. He was a
Director there from 1994 to May 1999, during
which time he supervised a staff of seven in the
making of principal investments in hotel,
multi-family and assisted living properties. Mr.
Graber received a B.S. and an M.B.A. from the
Wharton School of the University of
Pennsylvania.
Paul J. McAuliffe......................... Mr. McAuliffe has been Executive Vice President
and Chief Financial Officer of the Managing
General Partner since April 2002. Mr. McAuliffe
has been Executive Vice President of AIMCO since
February 1999 and was appointed Chief Financial
Officer in October 1999. Prior to joining AIMCO,
Mr. McAuliffe was Senior Managing Director of
Secured Capital Corporation and prior to that
time had been a Managing Director of Smith
Barney, Inc. from 1993 to 1996, where he was a
key member of the underwriting team that led
AIMCO's initial public offering in 1994. Mr.
McAuliffe was also a Managing Director and head
of the real estate group at CS First Boston from
1990 to 1993 and he was a Principal in the real
estate group at Morgan Stanley & Co., Inc. from
1983 to 1990. Mr. McAuliffe received a B.A. from
Columbia College and an MBA from University of
Virginia, Darden School.
Ronald D. Monson.......................... Mr. Monson was appointed Senior Vice President
of AIMCO in December 2004. Beginning February
2004, Mr. Monson assumed oversight of four of
AIMCO's regional operating centers. From
February 2001 to February 2004, Mr. Monson
served as the head of AIMCO's conventional
property operations. Mr. Monson has been with
AIMCO since 1997 and was promoted to Divisional
Vice President in 1998. Prior to joining AIMCO,
Mr. Monson worked for 13 years in operations
management positions in the lawn care and
landscaping industries, principally with True
Green/Chemlawn. Mr. Monson received a Bachelor
of Science from the University of Minnesota and
a Masters in Business Administration from
Georgia State University.
I-4
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
James G. Purvis........................... Mr. Purvis was appointed Executive Vice
President in February 2003. He is responsible
for AIMCO's Human Resources and People
Initiatives. Mr. Purvis has over 20 years of
executive strategic human resources experience.
Prior to joining AIMCO he was Vice President, HR
at SomaLogic, a privately funded biotechnology
company. He was a principal in O(3)C Global
Organization Solutions, and has held executive
human resources and operations management
positions in ALCOA (Aluminum Company of
America), Texas Air/Eastern Airlines,
Starwood/WestinHotels and Resorts, and
Tele-Communications (TCI) Technology, Inc. Mr.
Purvis holds a BA in communications and modern
languages from the University of Notre Dame.
David Robertson........................... Mr. Robertson was appointed Executive Vice
President -- Affordable Properties in February
2002. He is responsible for affordable property
operations, refinancing and other value creation
within AIMCO's affordable portfolio. Prior to
joining AIMCO, Mr. Robertson was a member of the
investment-banking group at Smith Barney from
1991 to 1996, where he was responsible for real
estate investment banking transactions in the
western United States, and was part of the Smith
Barney team that managed AIMCO's initial public
offering in 1994. Since February 1996, Mr.
Robertson has been Chairman and Chief Executive
Officer of Robeks Corporation, a privately held
chain of specialty food stores.
Thomas M. Herzog.......................... Mr. Herzog was appointed Executive Vice
President of AIMCO in December 2004 and Chief
Accounting Officer of AIMCO in January 2004. He
was also appointed Senior Vice President and
Chief Accounting Officer of the Managing General
Partner in January 2004. Prior to joining AIMCO,
Mr. Herzog was at GE Real Estate, serving as
Chief Accounting Officer & Global Controller
from April 2002 to January 2004 and as Chief
Technical Advisor from March 2000 to April 2002.
Prior to joining GE Real Estate, Mr. Herzog was
at Deloitte & Touche LLP from 1990 until 2000,
including a two-year assignment in the real
estate national office.
Martha L. Long............................ Martha L. Long has been with AIMCO since October
1998 and served in various capacities. From 1998
to 2001, she served as Senior Vice President and
Controller. During 2002 and 2003, she served as
Senior Vice President of Continuous Improvement.
Ms. Long has been a Director and Senior Vice
President of the Managing General Partner since
February 2004.
I-5
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
James N. Bailey........................... Mr. Bailey was appointed a Director of AIMCO in
Cambridge Associates, Inc. June 2000. In 1973, Mr. Bailey co-founded
1 Winthrop Square, Cambridge Associates, Inc., which is an
Suite 500 investment consulting firm for non-profit
Boston, MA 02110 institutions and wealthy family groups. He is
also Co-Founder, Treasurer and Director of The
Plymouth Rock Company, Direct Response
Corporation and Homeowners' Direct Corporation,
each of which is a United States personal lines
insurance company. He received his M.B.A. and
J.D. degrees in 1973 from Harvard Business
School and Harvard Law School.
Richard S. Ellwood........................ Mr. Ellwood was appointed a Director of AIMCO in
12 Auldwood Lane July 1994 and is currently Chairman of the Audit
Rumson, NJ 07660 Committee and a member of the Compensation
Committee. Mr. Ellwood is the founder and
President of R.S. Ellwood & Co., Incorporated, a
real estate investment banking firm. Prior to
forming R.S. Ellwood & Co., Incorporated in
1987, Mr. Ellwood had 31 years experience on
Wall Street as an investment banker, serving as:
Managing Director and senior banker at Merrill
Lynch Capital Markets from 1984 to 1987;
Managing Director at Warburg Paribas Becker from
1978 to 1984; general partner and then Senior
Vice President and a director at White, Weld &
Co. from 1968 to 1978; and in various capacities
at J.P. Morgan & Co. from 1955 to 1968. Mr.
Ellwood currently serves as a director of Felcor
Lodging Trust, Incorporated and Florida East
Coast Industries, Inc.
J. Landis Martin.......................... Mr. Martin was appointed a director of AIMCO in
199 Broadway July 1994 and became Chairman of the
Suite 4300 Compensation Committee on March 19, 1998. Mr.
Denver, CO 80202 Martin is a member of the Audit Committee. Mr.
Martin has served as President and Chief
Executive Officer of NL Industries, Inc., a
manufacturer of titanium dioxide, since 1987.
Mr. Martin has served as Chairman of Tremont
Corporation ("Tremont"), a holding company
operating though its affiliates Titanium Metals
Corporation ("TIMET") and NL Industries, Inc.
("NL"), since 1990 and as Chief Executive
Officer and a director of Tremont since 1988.
Mr. Martin has served as Chairman of TIMET, an
integrated producer of titanium, since 1987 and
Chief Executive Officer since January 1995. From
1990 until its acquisition by a predecessor of
Halliburton Company ("Halliburton") in 1994, Mr.
Martin served as Chairman of the Board and Chief
Executive Officer of Baroid Corporation, an
oilfield services company. In addition to
Tremont, NL and TIMET, Mr. Martin is a director
of Halliburton, which is engaged in the
petroleum services, hydrocarbon and engineering
industries, and Crown Castle International
Corporation, a communications company.
I-6
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
Thomas L. Rhodes.......................... Mr. Rhodes was appointed a Director of AIMCO in
215 Lexington Avenue July 1994 and is a member of the Audit and
4th Floor Compensation Committees. Mr. Rhodes has served
New York, NY 10016 as the President and a Director of National
Review magazine since November 1992, where he
has also served as a Director since 1998. From
1976 to 1992, he held various positions at
Goldman, Sachs & Co. and was elected a General
Partner in 1986 and served as a General Partner
from 1987 until November 1992. He is currently
Co-Chairman of the Board, Co-Chief Executive
Officer and a Director of American Land Lease,
Inc. He also serves as a Director of Delphi
Financial Group and its subsidiaries, Delphi
International Ltd., Oracle Reinsurance Company
and the Lynde and Harry Bradley Foundation.
Michael A. Stein.......................... Mr. Stein was elected a Director of AIMCO
22021 20th Avenue SE effective October 15, 2004 and is a member of
Bothell, WA 98021 the Audit, Compensation and Human Resources, and
Nominating and Corporate Governance Committees.
Mr. Stein is currently the Vice President and
Chief Financial Officer of ICOS Corporation. Mr.
Stein was previously Executive Vice President
and Chief Financial Officer of Nordstrom Inc.,
and held a similar position at Marriott
International Inc. Prior to joining Marriott in
1989, he spent 18 years at Arthur Andersen LLP,
where he was a partner and served as head of the
Commercial Group within the Washington D.C.
Financial Consulting and Audit Division. Mr.
Stein is a certified public accountant.
I-7
Questions and requests for assistance or for additional copies of this
Offer to Purchase and the letter of transmittal 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 offer is:
THE ALTMAN GROUP, INC.
By Mail:
1275 Valley Brook Avenue
Lyndhurst, NJ 07071
By Overnight Courier:
1275 Valley Brook Avenue
Lyndhurst, NJ 07071
By Hand:
1275 Valley Brook Avenue
Lyndhurst, NJ 07071
For information, please call:
By Telephone:
TOLL FREE: (800) 467-0821
By Fax:
(201) 460-0050
EX-99.(A)(11)
3
d18173a3exv99wxayx11y.txt
AMENDED AND RESTATED LETTER OF TRANSMITTAL
(AIMCO)
AMENDED AND RESTATED
LETTER OF TRANSMITTAL
TO TENDER UNITS OF LIMITED PARTNERSHIP INTEREST IN
CENTURY PROPERTIES FUND XV (THE "PARTNERSHIP")
PURSUANT TO AN OFFER TO PURCHASE
DATED APRIL 27, 2005
BY
AIMCO PROPERTIES, L.P.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, NEW YORK CITY TIME, ON
MAY 31, 2005, UNLESS EXTENDED (THE "EXPIRATION DATE") THE OFFER PRICE IS $99.00
PER UNIT
--------------------------------------------------------------------------------
IF YOU HAVE THE CERTIFICATE ORIGINALLY ISSUED TO REPRESENT YOUR INTEREST IN THE
PARTNERSHIP PLEASE SEND IT TO THE INFORMATION AGENT WITH THIS LETTER OF
TRANSMITTAL
The Information Agent for the offer is:
THE ALTMAN GROUP, INC.
By Mail: By Overnight Courier: By Hand:
P.O. Box 238 1275 Valley Brook Avenue 1275 Valley Brook Avenue
Lyndhurst, NJ 07071 Lyndhurst, NJ 07071 Lyndhurst, NJ 07071
By Telephone:
TOLL FREE (800) 467-0821
By Fax:
(201) 460-0050
To participate in the offer, you must send a duly executed copy of this
Letter of Transmittal and any other documents required by this Letter of
Transmittal so that such documents are received by The Altman Group, Inc., the
Information Agent, on or prior to the Expiration Date. THE METHOD OF DELIVERY OF
THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT YOUR OPTION
AND RISK, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
INFORMATION AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ASSURE TIMELY DELIVERY. DELIVERY OF THIS LETTER OF TRANSMITTAL OR ANY OTHER
REQUIRED DOCUMENTS TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE VALID DELIVERY.
FOR INFORMATION OR ASSISTANCE IN CONNECTION WITH THE OFFER OR THE COMPLETION
OF THIS LETTER OF TRANSMITTAL, PLEASE CONTACT THE INFORMATION AGENT AT (800)
467-0821 (TOLL FREE).
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
WHEN TENDERING, YOU MUST SEND ALL PAGES OF THIS LETTER OF TRANSMITTAL,
INCLUDING EXECUTED TAX CERTIFICATIONS (BOXES A AND B).
-------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF UNITS TENDERED
-------------------------------------------------------------------------------------------------------------------
NAME(S), ADDRESS(ES), NUMBER OF UNITS OWNED AND TAX IDENTIFICATION NUMBER OF
REGISTERED HOLDER(S). (PLEASE INDICATE CHANGES OR CORRECTIONS TO THE NAME, ADDRESS, TOTAL NUMBER OF UNITS TENDERED
NUMBER OF UNITS OWNED AND TAX IDENTIFICATION NUMBER PRINTED BELOW.) (#)
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SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 2, 4 AND 8)
To be completed ONLY if the consideration for the purchase price of Units
accepted for payment is to be issued in the name of someone other than the
undersigned.
[ ] Issue consideration to:
Name:
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(Please Type or Print)
Address:
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(Include Zip Code)
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(Tax Identification or Social Security No.)
(See Substitute Form W-9)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 2, 4 AND 8)
To be completed ONLY if the consideration for the purchase price of Units
accepted for payment is to be sent to someone other than the undersigned or to
the undersigned at an address other than that shown above.
[ ] Mail Consideration to:
Name:
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(Please Type or Print)
Address:
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(Include Zip Code)
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
2
Ladies and Gentlemen:
The undersigned hereto hereby acknowledges that he or she has received (i)
the Purchaser's Offer to Purchase dated February 16, 2005 (the "Offer Date") and
the Amended and Restated Offer to Purchase dated the date set forth above,
relating to the offer by AIMCO Properties, L.P. (the "Purchaser") to purchase
Limited Partnership Interests (the "Units") in the Partnership and (ii) this
Letter of Transmittal and the Instructions hereto, as each may be supplemented
or amended from time to time (collectively, the "Offer").
THE GENERAL PARTNER OF YOUR PARTNERSHIP DOES NOT MAKE ANY RECOMMENDATION
REGARDING WHETHER YOU SHOULD ACCEPT THE OFFER. YOU ARE ENCOURAGED TO CAREFULLY
REVIEW THE OFFER TO PURCHASE AND ANY OTHER INFORMATION AVAILABLE TO YOU AND TO
SEEK ADVICE FROM YOUR INDEPENDENT LAWYER, TAX ADVISOR AND/OR FINANCIAL ADVISOR
WITH RESPECT TO YOUR PARTICULAR CIRCUMSTANCES BEFORE DECIDING WHETHER OR NOT TO
ACCEPT THE OFFER.
Upon the terms and subject to the conditions set forth in the Offer to
Purchase, and this Letter of Transmittal, the undersigned hereto hereby tenders
to the Purchaser the Units set forth in the box above entitled "Description of
Units Tendered," including all interests in any limited partnership represented
by such units (collectively, the "Units"), at the price indicated on the Offer
and any supplement thereto, less the amount of distributions, if any, made by
the Partnership from the Offer Date until the Expiration Date (the "Offer
Price"), net to the undersigned in cash, without interest.
By executing this Letter of Transmittal, the undersigned hereby
acknowledges that the general partner does not make any recommendation regarding
whether the undersigned should accept the Offer, and the undersigned hereto
represents and warrants to the Purchaser that the undersigned has received the
Offer.
Subject to and effective upon acceptance for payment of any of the Units
tendered hereby in accordance with the terms of the Offer, the undersigned
hereto hereby irrevocably sells, assigns, transfers, conveys and delivers to, or
upon the order of, the Purchaser all right, title and interest in and to such
Units tendered hereby that are accepted for payment pursuant to the Offer,
including, without limitation, (i) all of the undersigned's interest in the
capital of the Partnership, and the undersigned's interest in all profits,
losses and distributions of any kind to which the undersigned shall at any time
be entitled in respect of the Units, including, without limitation,
distributions in the ordinary course, distributions from sales of assets,
distributions upon liquidation, winding-up, or dissolution, payments in
settlement of existing or future litigation, and all other distributions and
payments from and after the Expiration Date of the Offer, in respect of the
Units tendered by the undersigned and accepted for payment and thereby purchased
by the Purchaser; (ii) all other payments, if any, due or to become due to the
undersigned in respect of the Units, under or arising out of the agreement and
certificate of limited partnership of the Partnership (the "Partnership
Agreement"), or any agreement pursuant to which the Units were sold (the
"Purchase Agreement"), whether as contractual obligations, damages, insurance
proceeds, condemnation awards or otherwise; (iii) all of the undersigned's
claims, rights, powers, privileges, authority, options, security interests,
liens and remedies, if any, under or arising out of the Partnership Agreement or
Purchase Agreement or the undersigned's ownership of the Units, including,
without limitation, all voting rights, rights of first offer, first refusal or
similar rights, and rights to be substituted as a limited partner of the
Partnership; and (iv) all present and future claims, if any, of the undersigned
whether on behalf of the Partnership, individually or on behalf of a putative
class (including without limitation any claims against limited partners of the
Partnership, the general partner(s) and/or any affiliates thereof) under,
arising out of or related to the Partnership Agreement, the Purchase Agreement,
the undersigned's status as a limited partner, the terms or conditions of the
Offer, the management of the Partnership, monies loaned or advanced, services
rendered to the Partnership or its partners, or any other claims arising out of
or related to the undersigned's ownership of Units in the Partnership.
The undersigned hereto, on behalf of himself or herself, his or her heirs,
estate, executor, administrator, successors and assigns, and the Partnership,
fully, finally and forever releases, relinquishes and discharges the Purchaser
and its predecessors, successors and assigns and its present and former parents,
subsidiaries, affiliates, investors, insurers, reinsurers, officers, directors,
employees, agents,
3
administrators, auditors, attorneys, accountants, information and solicitation
agents, investment bankers, and other representatives, including but not limited
to Apartment Investment and Management Company and the general partner of the
Partnership (collectively, the "Releasees"), from any and all claims and causes
of action, whether brought individually, on behalf of a class, or derivatively,
demands, rights, or liabilities, including, but not limited to, claims for
negligence, gross negligence, professional negligence, breach of duty of care or
loyalty, or breach of duty of candor, fraud, breach of fiduciary duty,
mismanagement, corporate waste, malpractice, misrepresentation, whether
intentional or negligent, misstatements and omissions to disclose, breach of
contract, violations of any state or federal statutes, rules or regulations,
whether known claims or unknown claims that have been asserted or that could
have been asserted against the Releasees, through and including the date of
execution of the letter of transmittal, including, but not limited to, those
claims that arise out of or relate to (a) those matters and claims set forth in
the Nuanes and Heller class and derivative litigation described in the Offer to
Purchase, (b) the ownership of one or more Units in the Partnership, including
but not limited to, any and all claims related to the management of the
Partnership or the properties owned by the Partnership (whether currently or
previously), the payment of management fees or other monies to the general
partner of the Partnership and its affiliates, prior acquisitions or tender
offers and the prior settlement, (c) the purchase, acquisition, holding, sale,
tender or voting of one or more Units in the Partnership, or (d) any of the
facts, circumstances, allegations, claims, causes of action, representations,
statements, reports, disclosures, transactions, events, occurrences, acts,
omissions or failures to act, of whatever kind or character whatsoever,
irrespective of the state of mind of the actor performing or omitting to perform
the same, that have been or could have been alleged in any pleadings, amended
pleading, argument, complaint, amended complaint, brief, motion, report or
filing in the Nuanes and Heller class and derivative litigation (collectively,
the "Released Claims"); provided, however, that the Released Claims are not
intended to include (i) any unrelated claims that are unique to a unitholder or
settlement class member (e.g., a settlement class member slips and falls on
property owned by one of the defendants in the Nuanes and Heller class and
derivative litigation, loses or did not receive a distribution check distributed
to other limited partners in such partnership, or is an employee of one of the
defendants and has an employee-related claim), (ii) any claim based on
violations of federal or state securities laws in connection with the Offer, and
(iii) any right to your pro rata share of the settlement fund in the Nuanes and
Heller settlement, assuming that you are otherwise eligible, and approval of the
settlement and any judgment entered thereto become final.
The undersigned hereto expressly waives and relinquishes, to the fullest
extent permitted by law and consistent with the releases contained herein, the
provisions, rights and benefits of Section 1542 of the Civil Code of California
("Section 1542"), which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN ITS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.
The undersigned hereto waives any and all provisions, rights and benefits
conferred by any law of any state or territory of the United States, or
principle of common law, that is similar, comparable or equivalent to Section
1542. The undersigned acknowledges and agrees that it may hereafter discover
facts in addition to or different from those which it now knows or believes to
be true with respect to the subject matter of the Released Claims, but the
undersigned shall be deemed to have fully, finally and forever settled and
released any and all Released Claims, known or unknown, suspected or
unsuspected, contingent or non-contingent, that now exist or heretofore have
existed upon any theory of law or equity now existing, including, but not
limited to, conduct that is negligent, intentional, with or without malice, or a
breach of any duty, law or rule, without regard to the subsequent discovery of
the existence of such different or additional facts.
The undersigned hereto agrees that the releases contained herein are
intended to include the Released Claims, which the undersigned may have and
which the undersigned does not know or suspect to exist in its favor against the
Releasees and that the releases contained herein extinguish those claims. The
undersigned hereto represents and warrants to the Releasees that the undersigned
has been advised by its
4
attorney of the effect and import of the provisions of Section 1542, and that
the undersigned has not assigned or otherwise transferred or subrogated any
interest in the Released Claims.
The undersigned hereto irrevocably appoints the Purchaser and its designees
as his or her proxy, each with full power of substitution, to the fullest extent
of the undersigned's rights with respect to the Units tendered by him or her and
accepted for payment by the Purchaser. Such proxy shall be considered coupled
with an interest in the tendered Units. Such appointment will be effective when,
and only to the extent that, we accept the tendered units for payment. Upon such
acceptance for payment, all prior proxies and consents given by the undersigned
hereto with respect to the Units will, without further action, be revoked, and
no subsequent proxies or consents may be given (and if given will not be
effective). The Purchaser and its designees are, as to those Units, empowered to
exercise all voting and other rights as a limited partner as the Purchaser, in
its discretion, may deem proper at any meeting of limited partners, by written
consent or otherwise. By executing this Letter of Transmittal, the undersigned
agrees to execute all such documents and take such other actions as shall be
reasonably required to enable the Units tendered to be voted in accordance with
the Purchaser's directions. The proxy granted by the undersigned hereto to the
Purchaser will remain effective and be irrevocable for a period of ten years
following the Expiration Date of the Offer.
The undersigned hereto hereby irrevocably constitutes and appoints the
Purchaser and any designees of the Purchaser as the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Units, with full power
of substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to do all such acts and things necessary or expedient
to deliver such Units and transfer ownership of such Units on the partnership
books maintained by the general partner of the Partnership, together with all
accompanying evidence of transfer and authenticity to, or upon the order of, the
Purchaser, to sign any and all documents necessary to authorize the transfer of
the Units to the Purchaser including, without limitation, the "Transferor's
(Seller's) Application for Transfer" created by the National Association of
Securities Dealers, Inc., if required, and upon receipt by the Information Agent
(as the undersigned's agent) of the Offer Price, to become a substitute limited
partner, to receive any and all distributions made or declared by the
Partnership from and after the Expiration Date of the Offer (regardless of the
record date for any such distribution), and to receive all benefits and
otherwise exercise all rights of beneficial ownership of such Units, all in
accordance with the terms of the Offer. This appointment is effective upon
purchase of the Units by the Purchaser and will remain effective and be
irrevocable for a period of ten years following the Expiration Date of the
Offer. Upon purchase of the Units pursuant to the Offer, all prior powers of
attorney given by the undersigned hereto with respect to such Units will be
revoked and no subsequent powers of attorney may be given (and if given will not
be deemed effective).
In addition to and without limiting the generality of the foregoing, the
undersigned hereto hereby irrevocably (i) requests and authorizes (subject to
and effective upon acceptance for payment of any Unit tendered hereby) the
Partnership and its general partner to take any and all actions as may be
required to effect the transfer of the undersigned's Units to the Purchaser (or
its designee) and to admit the Purchaser as a substitute limited partner in the
Partnership under the terms of the Partnership Agreement; (ii) empowers the
Purchaser and its agent 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 the address specified in the form, and to endorse any check
payable to or upon the order of such unitholder 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 unitholder; (iii) agrees not to
exercise any rights pertaining to the Units without the prior consent of the
Purchaser; and (iv) requests and consents to the transfer of the Units, to be
effective on the books and records of the Partnership as of the effective date
set forth in the Offer.
NOTWITHSTANDING ANY PROVISION IN THE PARTNERSHIP AGREEMENT OR ANY PURCHASE
AGREEMENT TO THE CONTRARY, THE UNDERSIGNED HERETO HEREBY DIRECTS THE GENERAL
PARTNER OF THE PARTNERSHIP TO MAKE ALL DISTRIBUTIONS AFTER THE PURCHASER ACCEPTS
THE TENDERED UNITS FOR PAYMENT TO THE PURCHASER OR ITS DESIGNEE. Subject to and
effective upon acceptance for payment of any Unit tendered hereby, the
undersigned hereby requests that the Purchaser be admitted to the Partnership as
a substitute limited partner under the terms
5
of the Partnership Agreement. Upon request, the undersigned will execute and
deliver additional documents deemed by the Information Agent or the Purchaser to
be necessary or desirable to complete the assignment, transfer and purchase of
Units tendered hereby and will hold any distributions received from the
Partnership after the Expiration Date in trust for the benefit of the Purchaser
and, if necessary, will promptly forward to the Purchaser any such distributions
immediately upon receipt. The Purchaser reserves the right to transfer or
assign, in whole or in part, from time to time, to one or more of its
affiliates, the right to purchase 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 unitholders to receive
payment for Units validly tendered and accepted for payment pursuant to the
Offer.
By executing this Letter of Transmittal, the undersigned hereto represents
that either (i) the undersigned is not a plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code"), or an entity deemed
to hold "plan assets" within the meaning of 29 C.F.R. Section 2510.3-101 of any
such plan, or (ii) the tender and acceptance of Units pursuant to the Offer will
not result in a nonexempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code.
The undersigned hereto understands that a tender of Units to the Purchaser
will constitute a binding agreement between the undersigned and the Purchaser
upon the terms and subject to the conditions of the Offer. The undersigned
recognizes that under certain circumstances set forth in the Offer, the
Purchaser may not be required to accept for payment any or all of the Units
tendered hereby. In such event, the undersigned understands that any Letter of
Transmittal for Units not accepted for payment may be returned to the
undersigned or destroyed by the Purchaser (or its agent). THIS TENDER IS
IRREVOCABLE, EXCEPT THAT UNITS TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN
AT ANY TIME PRIOR TO THE EXPIRATION DATE, OR UNLESS ALREADY ACCEPTED FOR
PAYMENT, ANY TIME AFTER 60 DAYS FROM THE OFFER DATE.
THE UNDERSIGNED HAS BEEN ADVISED THAT THE PURCHASER IS AN AFFILIATE OF THE
GENERAL PARTNER OF THE PARTNERSHIP. THE UNDERSIGNED HERETO HAS MADE HIS OR HER
OWN DECISION TO TENDER UNITS.
The undersigned hereto hereby represents and warrants for the benefit of
the Partnership and the Purchaser that the undersigned owns the Units tendered
hereby and has full power and authority and has taken all necessary action to
validly tender, sell, assign, transfer, convey and deliver the Units tendered
hereby and that when the same are accepted for payment by the Purchaser, the
Purchaser will acquire good, marketable and unencumbered title thereto, free and
clear of all liens, restrictions, charges, encumbrances, conditional sales
agreements or other obligations relating to the sale or transfer thereof, and
such Units will not be subject to any adverse claims and that the transfer and
assignment contemplated herein are in compliance with all applicable laws and
regulations.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned hereto, and any obligations of the
undersigned shall be binding upon the heirs, personal representatives, trustees
in bankruptcy, legal representatives, and successors and assigns of the
undersigned.
The undersigned hereto further represents and warrants that, to the extent
a certificate evidencing the Units tendered hereby (the "original certificate")
is not delivered by the undersigned together with this Letter of Transmittal,
(i) the undersigned has not sold, transferred, conveyed, assigned, pledged,
deposited or otherwise disposed of any portion of the Units, (ii) the
undersigned has caused a diligent search of its records to be taken and has been
unable to locate the original certificate, (iii) if the undersigned shall find
or recover the original certificate evidencing the Units, the undersigned will
immediately and without consideration surrender it to the Purchaser; and (iv)
the undersigned shall at all times indemnify, defend, and save harmless the
Purchaser and the Partnership, its successors, and its assigns from and against
any and all claims, actions, and suits whether groundless or otherwise, and from
and against any and all liabilities, losses, damages, judgments, costs, charges,
counsel fees, and other expenses of every nature and character by reason of
honoring or refusing to honor the original certificate when presented by or on
behalf of a holder in due course of a holder appearing to or believed by the
partnership to be such, or by issuance or delivery of a replacement certificate,
or the making of any payment, delivery, or credit in respect of the original
certificate without surrender thereof, or in respect of the replacement
certificate.
6
IMPORTANT: WHEN TENDERING, YOU MUST SEND ALL PAGES OF THIS LETTER OF
TRANSMITTAL, INCLUDING EXECUTED TAX CERTIFICATIONS ON NEXT PAGE.
SIGNATURE BOX
(SEE INSTRUCTION 2)
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Please sign exactly as your name is printed on the front of this Letter of
Transmittal. For joint owners, each joint owner must sign. (See Instruction 2).
The undersigned hereto hereby represents, warrants and agrees as set forth in
this Letter of Transmittal and tenders the Units indicated in this Letter of
Transmittal to the Purchaser pursuant to the terms of the Offer.
X
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(Signature of Owner)
X
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(Signature of Joint Owner)
Name and Capacity (if other than individuals):
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Title:
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Address:
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(City) (State) (Zip)
Area Code and Telephone No. (Day):
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(Evening):
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SIGNATURE GUARANTEE (IF REQUIRED)
(SEE INSTRUCTION 2)
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YOU DO NOT NEED TO HAVE YOUR SIGNATURE GUARANTEED UNLESS YOU ARE A TRUSTEE,
EXECUTOR, ADMINISTRATOR, GUARDIAN, ATTORNEY-IN-FACT, OFFICER OF A CORPORATION OR
OTHER PERSON ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY.
Name and Address of Eligible Institution:
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Authorized Signature: X
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Name:
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Title: --------------- Date: --------------------
7
TAX CERTIFICATIONS
(SEE INSTRUCTION 5)
Please refer to the attached Instructions for completing Boxes A and B
below.
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BOX A
SUBSTITUTE W-9
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SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN ---------------------------------------
FORM W-9 THE BOX AT THE RIGHT OR, IF YOU DO SOCIAL SECURITY NUMBER
NOT HAVE A TIN, WRITE "APPLIED FOR"
DEPARTMENT OF THE TREASURY AND SIGN THE CERTIFICATION BELOW. OR
INTERNAL REVENUE SERVICE ---------------------------------------
(IRS) TAXPAYER IDENTIFICATION NUMBER
[ ] EXEMPT
PAYER'S REQUEST FOR
TAXPAYER
IDENTIFICATION NUMBER
(TIN)
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PART 2 -- CERTIFICATION -- Under penalties of perjury, I certify that:
PLEASE FILL IN YOUR NAME
AND (1) The number shown on this form is my correct Taxpayer Identification
ADDRESS BELOW. Number (or I am waiting for a number to be issued to me),
--------------------------
Name (2) I am not subject to backup withholding either because (a) I am exempt
-------------------------- from backup withholding, (b) I have not been notified by the IRS that I
Business Name am subject to backup withholding as a result of failure to report all
-------------------------- interest or dividends, or (c) the IRS has notified me that I am no longer
Address (number and subject to backup withholding, and
street) (3) I am a U.S. person (as defined for U.S. federal income tax purposes).
--------------------------
City, State and Zip Code
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CERTIFICATION INSTRUCTIONS -- You must cross out item (2) in Part 2 above if
you have been notified by the IRS that you are subject to backup withholding
because of under reporting interest or dividends on your tax return. However,
if after being notified by the IRS that you were subject to backup
withholding, you received another notification from the IRS that you are no
longer subject to backup withholding, do not cross out item (2). If you are
exempt from backup withholding, check the box in Part 1 and see the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9".
Signature: --------------------------------------------- Date: ----------
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BOX B
FIRPTA AFFIDAVIT
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Under Section 1445(e)(5) of the Internal Revenue Code and Treas. Reg. 1.1445
11T(d), a transferee must withhold tax equal to 10% of the amount realized with
respect to certain transfers of an interest in a partnership if 50% or more of
the value of its gross assets consists of U.S. real property interests and 90%
or more of the value of its gross assets consists of U.S. real property
interests plus cash equivalents, and the holder of the Units is a foreign
person. To inform AIMCO Properties, L.P. that no withholding is required with
respect to the unitholder's Units in the Partnership, the undersigned hereby
certifies the following under penalties of perjury:
(i) Unless this box [ ] is checked, the unitholder, if an individual, is
a U.S. citizen or a resident alien for purposes of U.S. income taxation, and
if other than an individual, is not a foreign corporation, foreign
partnership, foreign estate or foreign trust (as those terms are defined in
the Internal Revenue Code and Income Tax Regulations);
(ii) The unitholder is not a disregarded entity as defined in Treas.
Reg. Section 1.1445-2(b)(2)(iii);
(iii) The unitholder's U.S. social security number (for individuals) or
employer identification number (for non individuals) is correct as furnished
in the blank provided for that purpose in Box A;
(iv) The unitholder's home address (for individuals), or office address
(for non individuals), is correctly printed (or corrected) is correct as
furnished in the blank provided for that purpose in Box A.
The undersigned understands that this certification may be disclosed to the
IRS by AIMCO Properties, L.P. and that any false statements contained herein
could be punished by fine, imprisonment, or both.
Under penalties of perjury I declare that I have examined this certification
and to the best of my knowledge and belief it is true, correct, and complete.
Signature: ---------------------------------------- Date: ------------------
8
INSTRUCTIONS
FOR COMPLETING LETTER OF TRANSMITTAL
1. REQUIREMENTS OF TENDER. To be effective, a duly completed and signed
Letter of Transmittal (or facsimile thereof) and any other required
documents must be received by the Information Agent at one of its
addresses (or its facsimile number) set forth herein on or before the
date and time of the Expiration Date, unless extended. To ensure
receipt of the Letter of Transmittal and any other required documents,
it is suggested that you use overnight courier delivery or, if the
Letter of Transmittal and any other required documents are to be
delivered by United States mail, that you use certified or registered
mail, return receipt requested.
Our records indicate that you own the number of Units set forth in the
box above entitled "Description of Units Tendered" under the column
entitled "Name(s), Address(es), Number of Units Owned and Tax
Identification Number of Registered Holder(s)." If you would like to
tender only a portion of your Units, please so indicate in the space
provided in the box above entitled "Description of Units Tendered."
WHEN TENDERING, YOU MUST SEND ALL PAGES OF THE LETTER OF TRANSMITTAL,
INCLUDING EXECUTED TAX CERTIFICATIONS (BOXES A AND B).
THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING
UNITHOLDER AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED
BY THE INFORMATION AGENT. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY.
2. SIGNATURE REQUIREMENTS.
INDIVIDUAL AND JOINT OWNERS. After carefully reading and completing
the Letter of Transmittal, to tender Units, unitholders must sign at
the "X" in the Signature Box of the Letter of Transmittal. The
signature(s) must correspond exactly with the names printed (or
corrected) on the front of the Letter of Transmittal. NO SIGNATURE
GUARANTEE ON THE LETTER OF TRANSMITTAL IS REQUIRED IF THE LETTER OF
TRANSMITTAL IS SIGNED BY THE UNITHOLDER (OR BENEFICIAL OWNER IN THE
CASE OF AN IRA). If any tendered Units are registered in the names of
two or more joint owners, all such owners must sign this Letter of
Transmittal.
IRAS/ELIGIBLE INSTITUTIONS. For Units held in an IRA account, the
beneficial owner should sign in the Signature Box and no signature
guarantee is required. Similarly, no signature guarantee is required if
Units are tendered for the account of a member firm of a registered
national security exchange, a member firm 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").
TRUSTEES, CORPORATIONS, PARTNERSHIP AND FIDUCIARIES. Trustees,
executors, administrators, guardians, attorneys-in-fact, officers of a
corporation, authorized partners of a partnership or other persons
acting in a fiduciary or representative capacity must sign at the "X"
in the Signature Box and have their signatures guaranteed by an
Eligible Institution by completing the signature guarantee set forth in
the Signature Box of the Letter of Transmittal. If the Letter of
Transmittal is signed by trustees, administrators, guardians,
attorneys-in-fact, officers of a corporation, authorized partners of a
partnership or others acting in a fiduciary or representative capacity,
such persons should, in addition to having their signatures guaranteed,
indicate their title in the Signature Box and must submit proper
evidence satisfactory to the Purchaser of their authority to so act
(see Instruction 3 below).
3. DOCUMENTATION REQUIREMENTS. In addition to the information required to
be completed on the Letter of Transmittal, additional documentation may
be required by the Purchaser under certain circumstances including, but
not limited to, those listed below. Questions
9
on documentation should be directed to the Information Agent at its
telephone number set forth herein.
DECEASED OWNER (JOINT TENANT) -- Copy of death certificate.
DECEASED OWNER (OTHERS) -- Copy of death certificate (see also
Executor/ Administrator/Guardian below).
EXECUTOR/ADMINISTRATOR/GUARDIAN -- Copy of court appointment documents for
executor or administrator; and
(a) a copy of applicable provisions of
the will (title page, executor(s)'
powers, asset distribution); or
(b) estate distribution documents.
ATTORNEY-IN-FACT -- Current power of attorney.
CORPORATION/PARTNERSHIP -- Corporate resolution(s) or other evidence
of authority to act. Partnership should
furnish a copy of the partnership
agreement.
TRUST/PENSION PLANS -- Unless the trustee(s) are named in the
registration, a copy of the cover page of
the trust or pension plan, along with a
copy of the section(s) setting forth
names and powers of trustee(s) and any
amendments to such sections or
appointment of successor trustee(s).
4. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If consideration is to be
issued in the name of a person other than the person signing the
Signature Box of the Letter of Transmittal or if consideration is to be
sent to someone other than such signer or to an address other than that
set forth on the Letter of Transmittal in the box entitled "Description
of Units Tendered," the appropriate boxes on the Letter of Transmittal
should be completed.
5. TAX CERTIFICATIONS. The unitholder(s) tendering Units to the Purchaser
pursuant to the Offer must furnish the Purchaser with the
unitholder(s)' taxpayer identification number ("TIN") and certify as
true, under penalties of perjury, the representations in Box A and Box
B. See attached Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for guidance in determining the proper
TIN to give the Purchaser.
U.S. PERSONS. A unitholder that is a U.S. citizen or a resident alien
individual, a domestic corporation, a domestic partnership, a domestic
trust or a domestic estate (collectively, "U.S. Persons"), as those
terms are defined in the Code, should follow the instructions below
with respect to certifying Box A and Box B.
BOX A -- SUBSTITUTE FORM W-9.
PART (i), TAXPAYER IDENTIFICATION NUMBER. Tendering unitholders must
certify to the Purchaser that the TIN provided in Box A is correct. If
a correct TIN is not provided, penalties may be imposed by the Internal
Revenue Service (the "IRS"), in addition to the unitholder being
subject to backup withholding.
PART (ii), BACKUP WITHHOLDING. In order to avoid Federal income tax
backup withholding, the tendering unitholder must certify, under
penalty of perjury, that such unitholder is not subject to backup
withholding. Certain unitholders (including, among others, all
corporations and certain exempt non-profit organizations) are not
subject to backup withholding. Backup withholding is not an additional
tax. If withholding results in an overpayment of taxes, a refund may be
obtained from the IRS. DO NOT CHECK THE BOX IN BOX A, PART (ii), UNLESS
YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE SUBJECT TO BACKUP
WITHHOLDING.
10
When determining the TIN to be furnished, please refer to the following
as a guide:
Individual accounts -- should reflect owner's TIN.
Joint accounts -- should reflect the TIN of the owner whose name
appears first.
Trust accounts -- should reflect the TIN assigned to the trust.
IRA custodial accounts -- should reflect the TIN of the custodian (not
necessary to provide).
Custodial accounts for the benefit of minors -- should reflect the TIN
of the minor.
Corporations, partnership or other business entities -- should reflect
the TIN assigned to that entity.
Single member limited liability company -- should reflect the TIN of
the owner of the Units for federal income tax purposes.
NON-U.S. PERSONS. In order for a unitholder that is not a U.S. Person
("Non-U.S. Person") to qualify as exempt, such unitholder must submit a
completed Form W-8BEN "Certificate of Foreign Status," Form W-8ECI
"Certificate of Foreign Person's Claim for Exemption from Withholding
on Income Effectively Connected with the Conduct of a U.S. Trade or
Business," or Form W-8IMY "Certificate of Foreign Intermediary, Foreign
Flow Through Entity or Certain U.S. Branches for United States Tax
Withholding" signed under penalties of perjury attesting to such exempt
status. Such forms may be obtained from the IRS at www.irs.gov.
BOX B -- FIRPTA AFFIDAVIT. Section 1445 of the Code requires that each
unitholder transferring interests in a partnership with real estate
assets meeting certain criteria certify under penalty of perjury the
representations made in Box B, or be subject to withholding of tax
equal to 10% of the amount realized for interests purchased. Tax
withheld under Section 1445 of the Code is not an additional tax. If
withholding results in an overpayment of tax, a refund may be obtained
from the IRS. PART (i) SHOULD BE CHECKED ONLY IF THE TENDERING
UNITHOLDER IS NOT A U.S. PERSON, AS DESCRIBED THEREIN.
6. CONDITIONAL TENDERS. No alternative, conditional or contingent tenders
will be accepted.
7. VALIDITY OF LETTER OF TRANSMITTAL. All questions as to the validity,
form, eligibility (including time of receipt) and acceptance of a
Letter of Transmittal and other required documents will be determined
by the Purchaser and such determination will be final and binding. The
Purchaser's interpretation of the terms and conditions of the Offer
(including these Instructions for this Letter of Transmittal) will be
final and binding. The Purchaser will have the right to waive any
irregularities or conditions as to the manner of tendering. Any
irregularities in connection with tenders, unless waived, must be cured
within such time as the Purchaser shall determine. This Letter of
Transmittal will not be valid until any irregularities have been cured
or waived. Neither the Purchaser nor the Information Agent are under
any duty to give notification of defects in a Letter of Transmittal and
will incur no liability for failure to give such notification.
8. ASSIGNEE STATUS. Assignees must provide documentation to the
Information Agent which demonstrates, to the satisfaction of the
Purchaser, such person's status as an assignee.
9. TRANSFER TAXES. The amount of any transfer taxes (whether imposed on
the registered holder or such person) payable on account of the
transfer to such person will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes or exemption
therefrom is submitted.
11
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
NAME
If you are an individual, you must generally enter the name shown on your
Social Security card. However, if you have changed your last name, for instance,
due to marriage, without informing the Social Security Administration of the
name change, enter your first name, the last name shown on your Social Security
card, and your new last name. If the account is in joint names, list first and
then circle the name of the person or entity whose number you enter in Part I of
the form.
Sole Proprietor -- You must enter your individual name as shown on your
Social Security card. You may enter your business, trade or "doing business as"
name on the Business Name line.
Limited Liability Company (LLC) -- If you are a single-member LLC
(including a foreign LLC with a domestic owner) that is disregarded as an entity
separate from its owner under Treasury regulations sec. 301.7701-3, enter the
owner's name. Enter the LLC's name on the Business Name line. A disregarded
domestic entity that has a foreign owner must use the appropriate Form W-8.
Other Entities -- Enter the business name as shown on required federal
income tax documents. This name should match the name shown on the charter or
other legal document creating the entity. You may enter any business, trade or
"doing business as" name on the Business Name line.
TAXPAYER IDENTIFICATION NUMBER (TIN)
You must enter your taxpayer identification number in the appropriate box.
If you are a resident alien and you do not have and are not eligible to get a
Social Security number, your taxpayer identification number is your IRS
individual taxpayer identification number (ITIN). Enter it in the Social
Security number box. If you do not have an individual taxpayer identification
number, see OBTAINING A NUMBER below. If you are a sole proprietor and you have
an employer identification number, you may enter either your Social Security
number or employer identification number. However, using your employer
identification number may result in unnecessary notices to the requester, and
the IRS prefers that you use your Social Security number. If you are an LLC that
is disregarded as an entity separate from its owner under Treasury regulations
sec. 301.7701-3, and are owned by an individual, enter the owner's Social
Security number. If the owner of a disregarded LLC is a corporation,
partnership, etc., enter the owner's employer identification number. See the
chart below for further clarification of name and TIN combinations.
12
Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
-----------------------------------------------------
GIVE THE TAXPAYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF --
-----------------------------------------------------
1. An individual account The individual
2. Two or more individuals The actual owner of
(joint account) the account or, if
combined funds, the
first individual on
the account(1)
3. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
4. a. The usual revocable The grantor trustee(1)
savings trust
account (grantor is
also trustee)
b. So-called trust The actual owner(1)
account that is not
a legal or valid
trust under state
law
5. Sole proprietorship or The owner(3)
single-owner LLC
6. A valid trust, estate or The legal entity (Do
pension trust not furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title.)(4)
-----------------------------------------------------
-----------------------------------------------------
GIVE THE TAXPAYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF --
-----------------------------------------------------
7. Corporate or LLC The corporation
electing corporate
status on Form 8832
8. Association, club, The organization
religious, charitable,
educational
organization, or other
tax-exempt organization
9. Partnership or multi- The partnership
member LLC
10. A broker or registered The broker or nominee
nominee
11. Account with the The public entity
Department of
Agriculture in the name
of a public entity (such
as a State or local
government, school
district, or prison)
that receives
agricultural program
payments
-----------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your Social Security number or
employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
13
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
For interest and dividends, the following payees are generally exempt from
backup withholding:
- An organization exempt from tax under section 501(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), an individual retirement account (IRA),
or a custodial account under section 403(b)(7) of the Code if the account
satisfies the requirements of section 401(f)(2) of the Code.
- The United States or any of its agencies or instrumentalities.
- A state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities.
- A foreign government or any of its political subdivisions, agencies or
instrumentalities.
- An international organization or any of its agencies or instrumentalities.
- A corporation.
- A foreign bank of central issue.
- A dealer in securities or commodities required to register in the United
States, the District of Columbia or a possession of the United States.
- A real estate investment trust.
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A common trust fund operated by a bank under section 584(a) of the Code.
- A financial institution (as defined for purposes of section 3406 of the Code).
- A middleman known in the investment community as a nominee or who is listed in
the most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List.
- A trust exempt from tax under section 664 of the Code or described in section
4947 of the Code.
For broker transactions, persons listed above, as well the persons listed
below, are exempt from backup withholding.
- A futures commission merchant registered with the Commodity Futures Trading
Commission.
- A person registered under the Investment Advisors Act of 1940 who regularly
acts as a broker.
Exempt payees described above should file substitute Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND
RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE
DIVIDENDS, ALSO SIGN AND DATE THE FORM. IF YOU ARE A NONRESIDENT ALIEN OR A
FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED
INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(A),
6045, and 6050A.
PRIVACY ACT NOTICE -- Section 6109 requires most recipients of dividend,
interest, or other payments to give correct taxpayer identification numbers to
payers who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file a tax return. Payers must generally withhold a
portion of taxable interest, dividend, and certain other payments to a payee who
does not furnish a correct taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER -- If you fail
to furnish your correct taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING -- If you
make a false statement with no reasonable basis that results in no imposition of
backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
14
The Information Agent for the offer is:
THE ALTMAN GROUP, INC.
By Mail: By Overnight Courier: By Hand:
P.O. Box 238 1275 Valley Brook Avenue 1275 Valley Brook Avenue
Lyndhurst, NJ 07071 Lyndhurst, NJ 07071 Lyndhurst, NJ 07071
By Telephone:
TOLL FREE (800) 467-0821
By Fax:
(201) 460-0050
15
EX-99.(A)(12)
4
d18173a3exv99wxayx12y.txt
PRESS RELEASE
EXHIBIT (a)(12)
CONTACT: The Altman Group, Inc.
(800) 467-0821 (toll free)
FOR IMMEDIATE RELEASE
AIMCO PROPERTIES, L.P. ANNOUNCES EXTENSION OF TENDER OFFERS AND INCREASE IN
OFFER PRICE FOR TENDER OFFERS FOR CENTURY PROPERTIES FUND XV AND CENTURY
PROPERTIES FUND XIX
DENVER, COLORADO, April 27, 2005 - As previously announced, AIMCO
Properties, L.P. is offering to purchase units of limited partnership interest
in the partnerships set forth below, subject to the terms of their respective
Offers to Purchase and related Letters of Transmittal (as amended and
supplemented, the "Offers"). AIMCO Properties, L.P. has now extended the
expiration date of each of the Offers to midnight, New York City time, on May
31, 2005. The Offers were previously scheduled to expire at midnight, New York
City time, on April 27, 2005. AIMCO Properties, L.P. has reported, based on
information provided by the Information Agent for the Offers, that as of the
close of business on April 25, 2005, the approximate number of units set forth
below had been tendered pursuant to each of the Offers.
Name of Partnership Number of Units Tendered
------------------- ------------------------
Century Properties Fund XIV 544
Century Properties Fund XV 2,130
Century Properties Fund XIX 3,072
Century Properties Growth Fund XXII 4,506
Davidson Growth Plus, L.P. 770
Davidson Income Real Estate, L.P. 531
Fox Strategic Housing Income Partners 870
National Property Investors III 534
In addition, AIMCO Properties, L.P. announced today that it has
increased its offer price to purchase units of limited partnership interest in
Century Properties Fund XV and Century Properties Fund XIX, subject to the terms
of their respective Offers to Purchase and related Letters of Transmittal (as
amended and supplemented, the "CPF Offers"). The offer price for Century
Properties Fund XV has been increased from $89.64 to $99.00 per unit in cash.
The offer price for Century Properties Fund XIX has been increased from $261.28
to $300.00 per unit in cash. In accordance with the terms of the CPF Offers, the
increased consideration will be paid for all units accepted for payment pursuant
to the CPF Offers, whether or not the units were tendered prior to the increase
in consideration.
For further information, please contact The Altman Group, Inc. at (800)
467-0821 (toll free), which is acting as the Information Agent for the Offers.
EX-99.(A)(13)
5
d18173a3exv99wxayx13y.txt
LETTER TO LIMITED PARTNERS
EXHIBIT (a)(13)
AIMCO
AIMCO PROPERTIES, L.P.
c/o The Altman Group, Inc.
P.O. Box 238
Lyndhurst, NJ 07071
(800) 467-0821
April 27, 2005
Dear Limited Partner:
We recently mailed you tender offer documents offering to purchase your
units of limited partnership interest in Century Properties Fund XV for $89.64
per unit in cash. Our offer was made upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated February 16, 2005, and in
the related Letter of Transmittal (collectively, together with any supplements
or amendments, our "Offer").
WE HAVE EXTENDED OUR OFFER UNTIL MIDNIGHT, NEW YORK CITY TIME, ON MAY
31, 2005, AND HAVE ISSUED A PRESS RELEASE ANNOUNCING THE EXTENSION. Our Offer
was previously scheduled to expire on April 27, 2005.
IN ADDITION, WE HAVE INCREASED OUR OFFER PRICE TO $99.00 PER UNIT IN
CASH AND HAVE ISSUED A PRESS RELEASE ANNOUNCING THE INCREASE IN OUR OFFER PRICE.
The increased price will be paid for all units accepted for payment pursuant to
the Offer, whether or not the units were tendered prior to the increase.
If you retain your units, you will continue to be a limited partner. If
you elect to remain in the partnership until termination, you will continue to
participate in the partnership distributions, if any, and the tax effects of the
partnership's results.
If you have any questions, please contact the Information Agent, toll
free, at (800) 467-0821.
Sincerely,
AIMCO Properties, L.P.
CORRESP
6
filename6.txt
AIMCO PROPERTIES, L.P.
4582 South Ulster Street Parkway, Suite 1100
Denver, Colorado 80237
(303) 757-8101
March 18, 2005
VIA FACSIMILE 202-942-9638 & COURIER
FOR COMMISSION USE ONLY
Abby Adams, Esq.
Office of Mergers and Acquisitions
Division of Corporate Finance
United States Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0303
RE: NATIONAL PROPERTY INVESTORS III
SCHEDULE TO-T/13E-3 FILED FEBRUARY 16, 2005
FILED BY AIMCO PROPERTIES LP, ET AL.
FOX STRATEGIC HOUSING INCOME PARTNERS
SCHEDULE TO-T/13E-3 FILED FEBRUARY 16, 2005
FILED BY AIMCO PROPERTIES LP, ET AL.
CENTURY PROPERTIES FUND XIV, XV, XIX,
AND CENTURY PROPERTIES GROWTH FUND XXII
SCHEDULES TO-T/13E-3 FILED FEBRUARY 16, 2005
FILED BY AIMCO PROPERTIES LP, ET AL.
DAVIDSON INCOME REAL ESTATE, L.P.
SCHEDULE TO-T/13E-3 FILED FEBRUARY 16, 2005
FILED BY AIMCO PROPERTIES LP, ET AL.
DAVIDSON GROWTH PLUS LP
SCHEDULE TO-T/13E-3 FILED FEBRUARY 16, 2005
FILED BY AIMCO PROPERTIES LP, ET AL.
Dear Ms. Adams:
We have received the comment letter, dated March 3, 2005, issued by the
staff of the Securities and Exchange Commission (the "Commission") with respect
to the Schedules TO and Schedules 13E-3 referenced above. AIMCO Properties,
L.P., AIMCO-GP, Inc., Apartment Investment and Management Company, and the other
filing persons of the partnerships as shown in Schedule I hereto (collectively,
the "Filing Persons") acknowledge the following:
o The Filing Persons are responsible for the adequacy and accuracy of the
disclosure in their filings;
o Staff comments or changes to disclosure in response to staff comments
in the filings reviewed by the staff do not foreclose the Commission
from taking any action with respect to the filing; and
o The Filing Persons may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the federal
securities laws of the United States.
Very truly yours,
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
AIMCO-GP, INC.
AIMCO PROPERTIES, L.P.
By: AIMCO-GP, Inc., its General Partner
By: /s/ Miles Cortez
-----------------------------------
Miles Cortez
Executive Vice President, General
Counsel and Secretary
[INTENTIONALLY LEFT BLANK]
2
DAVIDSON DIVERSIFIED PROPERTIES, INC.
DAVIDSON GROWTH PLUS G.P. CORPORATION
FOX CAPITAL MANAGEMENT CORPORATION
NPI EQUITY INVESTMENTS, INC.
By: /s/ Martha L. Long
----------------------------
Martha L. Long
Senior Vice President
FOX PARTNERS II
FOX PARTNERS IV
By: FOX CAPITAL MANAGEMENT CORPORATION,
its General Partner
By: /s/ Martha L. Long
------------------------
Martha L. Long
Senior Vice President
SCHEDULE I
Partnership Other Filing Persons
----------- --------------------
Century Properties Fund IV Fox Capital Management Corporation
Century Properties Fund V Fox Capital Management Corporation
Century Properties Fund XIX Fox Partners II
Fox Capital Management Corporation
Century Properties Growth Fund XXII Fox Partners IV
Fox Capital Management Corporation
Davidson Growth Plus, L.P. Davidson Growth Plus G.P. Corporation
Davidson Income Real Estate, L.P. Davidson Diversified Properties, Inc.
Fox Strategic Housing Income Partners Fox Capital Management Corporation
National Property Investors III NPI Equity Investments, Inc.
CORRESP
7
filename7.txt
April 27, 2005
VIA EDGAR & HAND DELIVERY
Abby Adams, Esq.
Office of Mergers and Acquisitions
Division of Corporate Finance
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0303
Re: NATIONAL PROPERTY INVESTORS III, FOX STRATEGIC HOUSING INCOME
PROPERTIES CENTURY PROPERTIES FUND XIV, XV, XIX, AND XXII,
DAVIDSON INCOME REAL ESTATE LP, AND DAVIDSON GROWTH PLUS LP
DRAFT AMENDED SCHEDULE TO-T/13E-3S
DATED MARCH 18, 2005
SUBMITTED BY AIMCO PROPERTIES LP, ET AL.
Dear Ms. Adams:
On behalf of AIMCO Properties, L.P. ("AIMCO OP"), we are responding to
the Staff's comment letter, dated March 25, 2005, regarding the Tender Offer
Statements and Rule 13e-3 Transaction Statements on Schedule TO ("Schedule TO")
referred to above. For your convenience, we are providing supplementally a copy
of this letter and a copy of the Amended and Restated Offer to Purchase and the
Amended and Restated Letter of Transmittal for National Property Investors III
("NPI III"), which have been marked to show proposed changes in response to the
Staff's comments dated March 25, 2005. An amendment to the Schedule TO has been
filed for each of the partnerships that includes as exhibits an Amended and
Restated Offer to Purchase and an Amended and Restated Letter of Transmittal,
reflecting the changes in response to the Staff's comment letters dated March 3,
2005 and March 25, 2005. As requested, we have set forth below each of the
Staff's comments and AIMCO OP's response to each comment.
GENERAL
1. Please provide the statements requested in the closing of our March 3,
2005 letter. File the statements in EDGAR as CORRESP. For your
convenience, we repeat the information here:
We urge all persons who are responsible for the
accuracy and adequacy of the disclosure in the filings
reviewed by the staff to be certain that they have provided
all information investors require. Since the filing persons
are in possession of all facts relating to the disclosure,
they are responsible for the accuracy and adequacy of the
disclosures they have made.
Securities and Exchange Commission
April 27, 2005
Page 2
In connection with responding to our comments, please
provide, in writing, a statement from the filing persons
acknowledging that
o the filing persons are responsible for the adequacy and
accuracy of the disclosure in the filings;
o staff comments or changes to disclosure in response to
staff comments in the filings reviewed by the staff do not
foreclose the Commission from taking any action with
respect to the filing; and
o the filing persons may not assert staff comments as a
defense in any proceeding initiated by the Commission or
any person under the federal securities laws of the United
States.
In addition, please be advised that the Division of Enforcement has
access to all information you provide to the staff of the Division of
Corporation Finance in our review of your filing or in response to our
comments on your filing.
RESPONSE: We have filed the statements made in a letter from the filing
persons, dated March 18, 2005, on EDGAR as CORRESPONDENCE.
2. Please tell us your plans for extending the offers and disseminating
the revised information.
RESPONSE: AIMCO OP has extended the expiration date for each of the
offers to May 31, 2005 and has filed an amendment to the Schedule TO
for each of the partnerships that includes as exhibits the Amended and
Restated Offer to Purchase and the Amended and Restated Letter of
Transmittal, reflecting the changes in response to the Staff's comment
letters dated March 3, 2005 and March 25, 2005. Upon completion of the
Staff's review, AIMCO OP intends to disseminate revised offering
materials for each of the partnerships.
OFFER TO PURCHASE UNITS OF NATIONAL PROPERTY INVESTORS III
Valuation of Units
3. We note your response to comment 11. We do not agree with your analysis
that the information was not material. Note that revised disclosure in
your current offers does not cure any past deficiency. In addition, we
note that, in the offer for units of National Property Investors, you
estimate the gross property value of the Pinetree Apartments at
$5,376,146; however, the revised disclosure indicates that Pinetree
Apartments is being held out for sale for $5,100,000. Please tell us
why this difference exists.
In addition, the revised disclosure states that the general partner has
committed to sell this property within one year. Please provide us
additional information about this commitment. For example, tell us with
whom has the general partner made this commitment, why, under what
terms, whether the general partner decided not to follow through on
this commitment, and, if so, under what circumstances. Also, it appears
you should revise the offer to disclose
Securities and Exchange Commission
April 27, 2005
Page 3
the estimated distribution that would be made to holders of limited
partnership interests, on a per unit basis, were this property sold at
the price it is listed for sale.
Finally, you state that all current offers have been revised to
disclose any properties currently being held out for sale. Confirm that
you have provided all disclosure regarding your plans, as required by
Item 1006. Also, confirm that you have provided us marked pages of each
such revised disclosure.
RESPONSE: AIMCO OP notes the Staff's disagreement with its materiality
analysis in response to comment 11, and supplementally advises the
Staff that the failure to disclose the pending sales in the prior
tender offers appears to have been an oversight by some former
employees, based upon our discussions with them.
In response to the Staff's comments regarding Pinetree Apartments,
AIMCO OP would like to correct its previous supplemental response that
Pinetree Apartments has been listed for sale for $5,100,000. Although
this property is currently listed for sale, there is no listing or
asking price. We have revised the disclosure for NPI III to disclose
the current status of the potential sale of this property and to refer
to the general partner's "intention" rather than "commitment" to sell
it within one year.
In addition, AIMCO OP supplementally advises the Staff that the general
partners of Century Properties Fund XIX ("CPF XIX") and Century
Properties Growth Fund XXII ("CPGF XXII") have listed for sale (with no
specified price) Misty Woods Apartments and Four Winds Apartments,
respectively. We have revised the disclosure for CPF XIX and CPGF XXII
to disclose the current status of these potential sales. We have also
revised the disclosure for the following partnerships and properties to
disclose the general partner's current intention regarding such
properties: (1) CPF XIX - Sands Point Apartments; (2) CPGF XXII -
Promontory Point and Wood Creek Apartments; and (3) Davidson Income
Real Estate, L.P. ("DIRE") - Lakeside Apartments.
AIMCO OP confirms that it has provided all disclosure regarding its
plans as required by Item 1006(c) of Regulation M-A, and that it has
supplementally provided a blackline copy of the changed pages under
"Special Factors - Future Plans of the Purchaser" and "The Offer -
Section 8. Certain Information Concerning Your Partnership - Investment
Objectives and Policies; Sale or Financing of Investments" of the Offer
to Purchase for each of CPF XIX, CPGF XXII, DIRE, and NPI III, which
has been marked to show such revised disclosure against the version
previously filed. In addition, we have made corresponding revisions to
the disclosure under "Risk Factors" and "Special Factors - Valuation of
Units," which are reflected in the Amended and Restated Offer to
Purchase for each of CPF XIX, CPGF XXII, DIRE, and NPI III.
Background and Reasons for the Offer
4. We note your response to comment 14. What consideration have you given
to disclosing the number of prior tender offers you have conducted for
the units of the same partnership?
Securities and Exchange Commission
April 27, 2005
Page 4
RESPONSE: We note the Staff's comment and have revised the disclosure
to disclose the number of prior tender offers AIMCO OP has conducted
for the units of the same partnership.
5. We note your response to comment 16. It appears you should revise the
response to Item 1002(f) and Item 1014 of Regulation M-A to disclose
and address the purchase price paid to unit holders for the 86 units
you have purchased since your last tender offer.
RESPONSE: We have revised the disclosure in response to this comment.
Position of the General Partner of Your Partnership with Respect to the Offer
6. We note the response to comment 18. You cite the fact that this offer
is higher than your prior tender offers as a positive factor. It
appears that you should revise this factor to briefly discuss the fact
that your most recent prior offer did not take into account the fact
that the general partner was in the process of selling one partnership
property, and, as you disclose, if you had based [y]our offer price on
the actual sale price of Summerwalk Apartments instead of [y]our
estimate of its gross property value, [you] estimate that [y]our offer
price would have been, $245.36, which is 59.4% higher than [y]our prior
offer price of $153.85.
RESPONSE: We have revised the disclosure in response to this comment.
Source of Funds
7. We note the revised disclosure in response to comment 23, that you
intend to acquire additional units in 8 other partnerships by tender
offer and in 7 other partnerships by merger. Identify the partnerships
involved in the merger transactions, the timing for the merger
transactions and whether these transactions are also Rule 13e-3
transactions.
RESPONSE: We supplementally advise the Staff that the seven
partnerships involved in the mergers are Beach-Oxford Associates
Limited Partnership, Lake Ridge-Oxford Associates Limited Partnership,
Nashua-Oxford-Bay Associates Limited Partnership, Newport-Oxford
Associates Limited Partnership, Oxford-Columbia Associates, Minneapolis
Associates Limited Partnership, and Minneapolis Associates II Limited
Partnership. None of these partnerships are subject to the reporting
requirements under the Securities Exchange Act of 1934 and, therefore,
the mergers are not Rule 13e-3 transactions. Information statements
regarding the mergers were mailed to limited partners on or about March
11, 2005. AIMCO OP has completed five of the merger transactions and
expects to complete the remaining two merger transactions by the end of
May 2005, subject to obtaining the requisite consents.
Letter of Transmittal
8. We note your response to comment 24 and will examine the letter of
transmittal when it is provided.
Securities and Exchange Commission
April 27, 2005
Page 5
RESPONSE: We note the Staff's comment 24 and have supplementally
provided a copy of the Amended and Restated Letter of Transmittal for
NPI III, marked to show changes. In addition, an amendment to the
Schedule TO for each of the partnerships has been filed that includes
an Amended and Restated Letter of Transmittal.
Schedule TO-T/13E-3 filed with respect to Century Properties Growth Fund XXII
and XIX
9. We note your response to comment 27. Revise the Schedule TO-T/13E-3 and
the disclosure document to provide the information in your supplemental
response.
RESPONSE: The Schedule TO and Offer to Purchase for each of CPF XIX and
CPGF XXII have been revised and filed with the Commission.
10. It appears you should revise the offer, and particularly the fairness
determination, to address the tender offer that commenced March 24,
2005 for interests in Century Property Growth Fund XIX at $300 per
unit.
RESPONSE: We supplementally advise the Staff that AIMCO OP has
increased its offer price for interests in CPF XIX to $300 per unit. In
addition, AIMCO OP supplementally advises the Staff that it has learned
of a "mini-tender offer" by the same offeror for interests in CPF XV
for $99 per unit in cash commenced on February 25, 2005 and a
"mini-tender offer" by CMG Partners, LLC for interests in Davidson
Growth Plus, L.P. ("DGP") for $190 per unit in cash commenced in April
2005. AIMCO OP has increased its offer price for interests in CPF XV to
$99 per unit. AIMCO OP has issued a press release and mailed a letter
to limited partners of CPF XIX and CPF V announcing the increase in its
offer price, and has also filed an amendment to the Schedule TO for
each of CPF XIX and CPF XV that includes as exhibits the press release
and letter to limited partners. In addition, AIMCO OP has revised the
disclosure for DGP to address the "mini-tender offer" by CMG Partners,
LLC.
In addition, we supplementally advise the Staff that, in connection
with the refinancing of certain properties of CPF XIX and DIRE in 2003, the
lenders obtained appraisals from an independent appraiser with respect to such
properties, copies of which were provided to AIMCO OP. AIMCO OP is in the
process of obtaining the requisite consents to disclosure and filing of the
appraisals. Upon obtaining such consents, AIMCO OP intends to file an amendment
to the applicable Schedule TO to provide disclosure consistent with the
requirements of Item 1015 of Regulation M-A. AIMCO OP has revised the Offer to
Purchase for each of CPF XIX and DIRE, however, to disclose the existence of the
appraisals, the date of the appraisals and the appraised value for the
properties.
Securities and Exchange Commission
April 27, 2005
Page 6
We would appreciate your prompt attention to this letter. Please do not
hesitate to contact the undersigned at (213) 687-5527 or Jonathan Friedman at
(213) 687-5396 if you have any questions or comments regarding this letter or
the revised Schedule TOs.
Very truly yours,
/s/ Jonathan Ko
Jonathan Ko
cc: Daniel L. Jablonsky, Esq. - Securities and Exchange Commission,
Division of Enforcement
Martha Long - Apartment Investment and Management Company
Miles Cortez, Esq. - Apartment Investment and Management Company
Joseph Coco, Esq. - Skadden, Arps, Slate, Meagher & Flom LLP
Jonathan Friedman, Esq. - Skadden, Arps, Slate, Meagher & Flom LLP