-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Dzk18z4AqYg7pv5WrUiHAc/TK2TWU7vsTh9ge2KCnHjkXMNIMGt6PV0QzR8KYLEJ zyk9iucuvd4qpJZInx9abg== 0000950150-97-000211.txt : 19970223 0000950150-97-000211.hdr.sgml : 19970223 ACCESSION NUMBER: 0000950150-97-000211 CONFORMED SUBMISSION TYPE: SC 14D9 PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19970221 SROS: NONE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: DE ANZA PROPERTIES XII LTD CENTRAL INDEX KEY: 0000351509 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 953601367 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9 SEC ACT: 1934 Act SEC FILE NUMBER: 005-40295 FILM NUMBER: 97540617 BUSINESS ADDRESS: STREET 1: 9171 WILSHIRE BLVD STE 627 CITY: BEVERLY HILLS STATE: CA ZIP: 90210 BUSINESS PHONE: 3105501111 MAIL ADDRESS: STREET 1: 9171 WILSHIRE BLVD STREET 2: SUITE 600 CITY: BEVERLY HILLS STATE: CA ZIP: 90210 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: DE ANZA PROPERTIES XII LTD CENTRAL INDEX KEY: 0000351509 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 953601367 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9 BUSINESS ADDRESS: STREET 1: 9171 WILSHIRE BLVD STE 627 CITY: BEVERLY HILLS STATE: CA ZIP: 90210 BUSINESS PHONE: 3105501111 MAIL ADDRESS: STREET 1: 9171 WILSHIRE BLVD STREET 2: SUITE 600 CITY: BEVERLY HILLS STATE: CA ZIP: 90210 SC 14D9 1 SCHEDULE 14D-9 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 SCHEDULE 14D-9 Solicitation/Recommendation Statement Pursuant to Section 14(d)(4) of the Securities Exchange Act of 1934 (Amendment No. __) De Anza Properties - XII, Ltd., De Anza Properties - XII, Ltd. a California limited partnership De Anza Corporation (Name of Subject Company) (Name of Persons Filing Statement) Units of Limited Partnership Interest (Title of Class of Securities) NONE ((CUSIP) Number of Class of Securities) Herbert M. Gelfand with copies to: De Anza Corporation Michael J. Connell 9171 Wilshire Blvd. Rena L. O'Malley Suite 627 Morrison & Foerster LLP Beverly Hills, California 90210 555 West Fifth Street (310) 550-1111 Los Angeles, CA 90013-1024 (Name, address, and telephone number (213) 892-5200 of person authorized to receive notice and communications on behalf of the person(s) filing statement) 1 2 ITEM 1. SECURITY AND SUBJECT COMPANY. The subject company is DeAnza Properties-XII, Ltd., a California limited partnership (the "Partnership"). The title of the class of equity securities to which this Statement relates is units of limited partnership interest ("Units") of the Partnership. The address of the principal executive offices of the Partnership is 9171 Wilshire Boulevard, Suite 627, Beverly Hills, California 90210. ITEM 2. TENDER OFFER OF THE BIDDERS. This Statement relates to the offer (the "Offer") by MacKenzie Fund 10, L.P., MP Value Fund 4, L.P., Pat Patterson Western Securities, Inc. Profit Sharing Plan, Cal Kan, Inc. and Accelerated High Yield Institutional Investors, L.P., the general partner of each of which is MacKenzie Patterson, Inc., (together the "Bidders"), to purchase for cash up to 5,680 Units at $375 per Unit as disclosed in the Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") dated February 7, 1997 filed by the Bidders with the Securities and Exchange Commission. According to the Schedule 14D-1, the principal place of business of the Bidders is located at 1640 School Street, Suite 100, Moraga, California 94556. ITEM 3. IDENTITY AND BACKGROUND. (a) This Statement is being filed by the Partnership and De Anza Corporation, a California corporation (the "Operating General Partner"). The address of the principal executive offices of the Operating General Partner is 9171 Wilshire Boulevard, Suite 627, Beverly Hills, California 90210. The name and business address of the Partnership are set forth in Item 1 above. (b)(1) The Partnership is a limited partnership and has no executive officers or directors. Except as described below, to the best knowledge of the Partnership, there are no material contracts, agreements, arrangements or understandings or any actual or potential conflicts of interest between the Partnership on the one hand and its general partners including the Operating General Partner or the directors and executive officers of the Operating General Partner or affiliates thereof on the other hand, with respect to the Offer. Terra Vista Management, Inc., a California corporation (the "Manager"), manages and operates Warner Oaks Apartments, the Partnership's sole substantial remaining property ("Warner Oaks"), pursuant to a Management Agreement dated as of August 18, 1994 entered into by the Partnership with the Manager (the "Management Agreement") and also manages two spaces in a mobile home park at San Luis Bay (together with Warner Oaks the "Properties"). The President and sole stockholder of the Manager is Michael D. Gelfand, who is also President and a member of the Board of Directors of the Operating General Partner, and the son of Herbert M. Gelfand (who is Chairman of the Board and sole shareholder, through his family trust, of the Operating General Partner and a general partner of the Partnership). The Management Agreement continues from 2 3 year-to-year. However, either party may, without penalty or obligation to the other party, by providing sixty (60) days' written notice to the other, terminate the Management Agreement with or without cause at any time. The Management Agreement may be immediately canceled in the event of violation of any of the provisions of the Management Agreement, or by the Partnership in the event a petition in bankruptcy is filed by or against the Manager which is not dismissed within ninety (90) days following the date of such filing. The Partnership has retained the Manager and an affiliate of the Operating General Partner to provide accounting, data processing and investor and other services to the Partnership. The Manager and the Operating General Partner's affiliate are reimbursed on an allocated basis for their costs and expenses for providing these services (directly or through unrelated third parties) to the Partnership. The total of such reimbursements paid by the Partnership for the year ended December 31, 1996 was $85,138, representing 3.6% of total Partnership operating revenues, while costs for the same period for salaries, professional fees and services amounted to $353,544, representing 15.1% of total Partnership operating revenues. The Manager is entitled to receive compensation under the Management Agreement for its services of a sum equivalent to five percent (5%) of the aggregate gross receipts from the operation of Warner Oaks, excluding all receipts from utilities or from taxes of any kind or type. However, the Manager's compensation is subordinated to the receipt (on a noncumulative basis) by the limited partners of the Partnership of an annual cash distribution equal to seven percent (7%) of the adjusted aggregate capital contributions of the limited partners. No management fees were paid to the Manager by the Partnership for the year ended December 31, 1996 but the Manager or the Operating General Partner's affiliate have deferred management fees for that year of $114,386. Based upon current estimates of value of the Partnership's Properties, it is unlikely that the deferred management fees for 1996 or for any prior year will be paid. The Management Agreement is an exhibit hereto and is incorporated herein by reference. (b)(2) To the best knowledge of the Partnership, there are no material contracts, agreements, arrangements or understandings or any actual or potential conflicts of interest between the Partnership or its general partners or executive officers or directors of the Operating General Partner or affiliates thereof, on the one hand, and the Bidders or its executive officers, directors or affiliates, on the other hand. ITEM 4. THE SOLICITATION OR RECOMMENDATION. (a) The Operating General Partner has determined that the Offer is inadequate and not in the best interests of the limited partners and recommends that limited partners of the Partnership reject the Offer and not tender their Units pursuant to the Offer. (b) The reasons for the position taken by the Operating General Partner are as follows: 3 4 1. The Offer price does not reflect the value of the Partnership's underlying assets. In the Operating General Partner's view, the Properties of the Partnership are valuable assets despite the decline in California real estate generally. The Operating General Partner believes that if the Properties were sold today (but not in a forced sale) each Unit would be worth approximately $570. The Operating General Partner believes an offer significantly below the $570 estimate is too low to be recommended by the Operating General Partner. In reaching this conclusion, the Operating General Partner did not take into account individual tax consequences, which may vary significantly among limited partners. The $570 estimate was not determined by any independent third party valuation expert. The Offer is also more than 21% lower than the liquidation value of the underlying assets of the Partnership as of February 1, 1997 as estimated by the Bidders to be $478 per Unit. As set forth in the Bidders' materials mailed to each of the limited partners, the Bidders are making the Offer for investment purposes and with the intention of making a profit from the ownership of the Units. In establishing the purchase price of $375 per Unit, the Bidders were motivated to establish the lowest price which might be acceptable to limited partners consistent with the Bidders' objectives. Limited partners who sell any Unit to the Bidders will not receive any distribution to be made by the Partnership with respect to that Unit once the Unit is sold, including all quarterly distributions and any distributions to be made when the Partnership's Properties are sold. In determining the estimated liquidation value of $570 per Unit the Operating General Partner first calculated the estimated current net sales value of Warner Oaks, the Partnership's main remaining property. This was done by dividing Warner Oaks' net operating income ("NOI") of $1,254,943 for 1996 by a capitalization rate. The NOI was determined by taking the Partnership's actual results of operations for the year ended December 31, 1996, which amount was adjusted to account for (i) the portion of NOI for this period attributable to the operation of two spaces at San Luis Bay and the collection of notes receivable related to previous sales of spaces at San Luis Bay, and (ii) certain Partnership expenses which a buyer of Warner Oaks would not take into account. The Operating General Partner divided the NOI by a 7.5% capitalization rate (the "Cap Rate") and reduced this result by (i) $502,500 in estimated closing costs which would be incurred upon the sale of Warner Oaks, including broker's commission, title costs, surveys, legal fees and transfer taxes, and (ii) $4,222,320 of mortgage debt encumbering Warner Oaks as of December 31, 1996. The resulting estimated net sales value of Warner Oaks is approximately $12,025,180. The Operating General Partner believes that the Cap Rate used by it is within the range of capitalization rates currently employed in the marketplace and is the Cap Rate at which Warner Oaks would most likely sell today. Warner Oaks is a premium, gated apartment community catering to professionals and white-collar workers who work in the upscale, planned Warner Center development in suburban Los Angeles. Because of these qualities, the Operating General Partner believes Warner Oaks would appeal to real estate investment trusts ("REITs"), among other potential buyers, and that current dividend 4 5 yields of public apartment REITs of 4.6% to 7.7% allows these REITs to buy properties at Cap Rates lower than 7.5% and maintain their yield to investors. Irvine Apartment Communities is a REIT whose properties are similarly upscale and also located in Southern California, and its recent yield was 5.3%. To determine the estimated liquidation value of the Partnership's assets, the Operating General Partner added to the estimated net sales value of Warner Oaks, (i) $120,000 as an estimated condominium value of the two remaining spaces at San Luis Bay, (ii) $301,958 of notes receivable related to previous sales of condominium spaces at San Luis Bay, and (iii) $497,629 of other net current assets (before accrued management and condominium conversion fees) as of December 31, 1996. The resulting net estimated liquidation value of the Partnership's assets as of December 31, 1996 is approximately $12,944,767 or $570 per Unit. Based on these estimates, the general partners would not receive any distributions from sale and liquidation proceeds nor would any deferred management or condominium conversion fees be paid. 2. The Operating General Partner believes the Bidders intend to influence a sale of the Partnership's Properties. If, as a result of consummation of the Offer, the Bidders are in a position to significantly influence all Partnership decisions, the Bidders intend to vote the Units acquired in the Offer in accordance with its own investment objectives. That vote may be different from or in conflict with the interests of other limited partners who do not tender their Units. The Bidders appear to be purchasing Units with a view toward urging an earlier rather than a later sale date. The Operating General Partner, however, has determined to list Warner Oaks for sale with a nationally recognized real estate broker and has entered into discussions for this purpose. The Operating General Partner anticipates that a sale of Warner Oaks could occur as early as this year. 3. Risks. The Operating General Partner believes each limited partner should consider the risks of a continuing investment in the Partnership. In particular, limited partners should consider: - The Offer provides limited partners with the opportunity to tender their Units and realize their investment now at a definite price without having to wait for the Partnership to be terminated or liquidated in the future. - There is no assurance that the return to limited partners after a sale of Warner Oaks will be greater than the price being offered now by the Bidders. - The Offer provides an opportunity to limited partners to liquidate their investment without the usual transaction costs associated with market sales and without the difficulty of selling Units in an illiquid and limited trading market. The Operating General Partner urges all limited partners to carefully consider all the information contained herein and consult with their own advisors, tax, financial or otherwise, in evaluating the terms of the Offer before deciding whether to tender Units. 5 6 In particular, the Operating General Partner has not taken into account the tax consequences to individual limited partners as a result of accepting or rejecting the Offer and those tax consequences could vary significantly for each limited partner based on such limited partner's unique tax situation or other circumstances. No independent person has been retained to evaluate or render any opinion with respect to the fairness of the Offer price. ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. Neither the Partnership nor any person acting on its behalf intends to employ, retain or compensate any other person to make solicitations or recommendations to the limited partners of the Partnership in connection with the Offer. ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES. (a) To the best knowledge of the Partnership, no transactions in the Units have been effected during the past 60 days by the Partnership, by general partners of the Partnership, including by the Operating General Partner or any executive officer or director of the Operating General Partner, or any affiliates or subsidiaries of such persons. (b) To the best knowledge of the Partnership, the Operating General Partner, the officers and directors of the Operating General Partner and any other affiliate of the Operating General Partner do not presently intend to tender to the Bidders any Units currently held of record or beneficially owned by such Persons. ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY. (a) Except as described below, the Partnership is not engaged in any negotiation in response to the Offer which relates to or would result in: (1) An extraordinary transaction such as a merger or reorganization, involving the Partnership or any subsidiary of the Partnership; (2) A purchase, sale or transfer of a material amount of assets by the Partnership or any subsidiary of the Partnership; (3) A tender offer for or other acquisition of securities by or of the Partnership; or (4) Any material change in the present capitalization or dividend policy of the Partnership. (b) Except as described below, there are no transactions, board or partnership resolutions, agreements in principle, or signed contracts in response to the Offer, which relate to or would result in one or more of the matters referred to in this Item 7. The Operating General Partner intends to sell Warner Oaks upon receipt of a satisfactory offer and anticipates that such sale could occur as early as this year. Warner Oaks suffered moderate damage from the January 17, 1994 earthquake, the epicenter of which was approximately ten miles from the property. The Partnership completely repaired the earthquake damage to Warner Oaks and has experienced substantially increased occupancy rates. The Operating General Partner believes that the real estate market in Southern California improved steadily in 1996 and that this has improved 6 7 values in the earthquake affected area surrounding Warner Oaks. The Operating General Partner, therefore, presently intends to sell Warner Oaks upon receipt of a satisfactory offer. In discussions with Bidders on June 10,1996, representatives of the Operating General Partner discussed the possibility of selling as well as the possibility of refinancing Warner Oaks. At that time, the Operating General Partner was uncertain as to the timing of any sale, but estimated that a sale would occur in a 3-5 year time period. Since the June 10, 1996 meeting, the Operating General Partner has determined that it would not be in the best interests of the Partnership to pursue a refinancing and, because of improvement in general market conditions, the Operating General Partner has determined to list Warner Oaks with a nationally recognized real estate broker and has entered into discussions for this purpose. There will be no assurance, however, that changes in the market or the condition or the occupancy of Warner Oaks would not result in a revision in the estimated timing for a planned sale or that a marketing effort, if conducted as planned, will result in a sale of Warner Oaks. ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED. The general partners of the Partnership, including the Operating General Partner and certain officers and directors of the Operating General Partner and other affiliates of the Operating General Partner, beneficially own limited partnership Units and general partner interests in the Partnership. The total amount of Units owned by all general partners and the directors and key executive officers of the Operating General Partner is less than 1% of the outstanding Units. Pursuant to the terms of the Partnership's Partnership Agreement, in the event a general partner (including the Operating General Partner) is removed as a general partner by a vote of a majority in interest of the limited partners, such general partner shall automatically become a limited partner and if the vote of a majority in interest of the limited partners so requires, sell his interest to the limited partners who shall purchase such interest on behalf of the Partnership. If a removed general partner is required by the limited partners to sell his interest in the Partnership, the amount to be paid for such interest shall be computed as of the date of the consummation of the purchase and in accordance with Section 15 of the Partnership's Partnership Agreement. The affirmative vote of a majority in interest of the limited partners of the Partnership is required under the Partnership's Partnership Agreement to remove or replace any general partner (including the Operating General Partner) or to dissolve the Partnership. ITEM 9. MATERIAL TO BE FILED AS EXHIBITS. (a) Letter to Limited Partners dated February 21, 1997. (b) None. 7 8 (c) Management Agreement dated as of August 18, 1994 by and between Terra Vista Management, Inc., a California corporation, and De Anza Properties-XII, Ltd., a California limited partnership.* __________________________________________ * Not included in copies mailed to limited partners. 8 9 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete, and correct. February 21, 1997 - ----------------- (Date) DE ANZA PROPERTIES-XII, LTD., A CALIFORNIA LIMITED PARTNERSHIP By: DE ANZA CORPORATION Operating General Partner By: /s/Herbert M. Gelfand --------------------------------- Herbert M. Gelfand Chairman of the Board DE ANZA CORPORATION By: /s/Herbert M. Gelfand --------------------------------- Herbert M. Gelfand Chairman of the Board 9 10 EXHIBIT INDEX 99.1 Letter to Limited Partners dated February 21, 1997. 99.2 Management Agreement dated as of August 18, 1994 by and between Terra Vista Management, Inc., a California corporation, and De Anza Properties-XII, Ltd., a California limited partnership. Incorporated herein by reference to Exhibit No. 99.2 to Schedule 14D-9 Solicitation/Recommendation Statement Pursuant to Section 14(d)(4) of the Securities Exchange Act of 1934 previously filed by De Anza Properties XII, Ltd. with the Securities and Exchange Commission on May 2, 1996. 10 EX-99.1 2 LETTER TO LIMITED PARTNERS DATED FEBRUARY 21, 1997 1 EXHIBIT 99.1 LOGO 9171 Wilshire Boulevard PROPERTIES - XII, LTD. Beverly Hills, California 90210 National: (800) 321-9638 February 21, 1997 California: (800) 421-2991 Dear Limited Partner: De Anza Properties - XII, Ltd., a California limited partnership (the "Partnership") has reviewed the unsolicited tender offer made by MacKenzie Patterson, Inc. and its affiliates (collectively, the "Bidders") to purchase units of limited partnership interest of the Partnership ("Units") for $375 per Unit. The Operating General Partner has determined that the offer is inadequate, and not in the best interests of the Partnership or its limited partners. Accordingly, the Operating General Partner recommends that the limited partners reject the offer and urges you not to tender any of your limited partnership Units. None of the Operating General Partner or any of its officers, directors or affiliates intend to tender any Units. Limited Partners who sell any Unit to the Bidders will not receive any distributions to be made by the Partnership with respect to that Unit once the Unit is sold, including all quarterly distributions and any distributions to be made when the Partnership's properties are sold. In arriving at its determination, the Operating General Partner reviewed the offer with its advisors and management, and considered many factors including the business, financial condition and prospects of the Partnership. The Operating General Partner's conclusions and recommendations concerning the offer are based, in part, on the Operating General Partner's belief that the amount being offered by the Bidders does not reflect the value of the Partnership's underlying assets -- the most important of which is the Partnership's sole remaining real property, the Warner Oaks apartment project. The Operating General Partner believes that the market for this property has significantly improved. As a result, the Operating General Partner has determined to list Warner Oaks for sale with a nationally recognized real estate broker and has entered into discussions for this purpose. The Operating General Partner anticipates that Warner Oaks could be sold as early as this year. The Operating General Partner has estimated that a limited partnership Unit has a current liquidating value of $570 as compared to the Bidders' estimate of $478 and the Bidders' offer of only $375. According to the Bidders' materials, the Bidders' liquidating value estimate was based primarily on its assumption that the Partnership's property could be sold at a price based on a 9% capitalization rate. The Operating General Partner's estimate is based on a 7.5% capitalization rate, which it believes more closely approximates the rate prevailing for similar properties in the vicinity of the Partnership's property. The Bidders have encouraged a sale of the Property to avoid administrative costs. Of the administrative costs, reimbursements paid to affiliates of the Operating General Partner in 1996 amounted to $85,138, which represents only 3.6% of total Partnership operating revenues, and affiliates of the Operating General Partner received no management fees. Deferred management fees would be payable to the Operating General Partner only if the limited partners first receive a full return of their capital and their full priority return. Even if the Property is sold and a $570 per Unit value is realized no management fees would be payable to the Operating General Partner or its affiliates. In addition, the costs borne by the Partnership for salaries and professional fees and services paid for the year ended December 31, 1996 increased to $353,544 and the approximate $5,000 increase in these administrative costs for the year ended December 31, 1996, compared with the year 2 ended December 31, 1995, was due to expenses related to the need to respond to the previous tender offers of affiliates of the Bidders. Before deciding to reject the Bidders' offer, limited partners should consider the risks of a continued investment in the Partnership: - The offer from the Bidders provides limited partners with the opportunity to tender their Units and realize their investment now at a definite price without having to wait for the Partnership to be terminated or liquidated in the future. - There is no assurance that the return to limited partners after a sale of the Property will be greater than the price being offered now by the Bidders. - The offer provides an opportunity to limited partners to liquidate their investment without the usual transaction costs associated with market sales and without the difficulty of selling Units in an illiquid and limited trading market. The attached Schedule 14D-9, which has been filed with the Securities and Exchange Commission, expands upon the reasons for the Operating General Partner's determination concerning the Bidders' offer, and contains additional information relating to the Operating General Partner's recommendation and certain other actions taken by the Operating General Partner on behalf of the Partnership. We urge you to read the Schedule 14D-9 carefully. If you have any questions concerning these matters please call Investor Relations at (310) 777-2153. You can be assured that the Operating General Partner will continue to act in the manner in which the Operating General Partner believes to be in the best interest of the Partnership and its limited partners. Very truly yours, DE ANZA PROPERTIES-XII, LTD., A CALIFORNIA LIMITED PARTNERSHIP By: DE ANZA CORPORATION, Operating General Partner By: /s/ HERBERT M. GELFAND ------------------------------ Herbert M. Gelfand Chairman of the Board -----END PRIVACY-ENHANCED MESSAGE-----