0000950134-05-003280.txt : 20120705
0000950134-05-003280.hdr.sgml : 20120704
20050216165926
ACCESSION NUMBER: 0000950134-05-003280
CONFORMED SUBMISSION TYPE: SC TO-T
PUBLIC DOCUMENT COUNT: 4
FILED AS OF DATE: 20050216
DATE AS OF CHANGE: 20050216
GROUP MEMBERS: AIMCO-GP INC
GROUP MEMBERS: APARTMENT INVESTMENT AND MANAGEMENT COMPANY
GROUP MEMBERS: DAVIDSON GROWTH PLUS GP CORPORATION
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: DAVIDSON GROWTH PLUS LP
CENTRAL INDEX KEY: 0000795757
STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500]
IRS NUMBER: 521462866
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC TO-T
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-42782
FILM NUMBER: 05621558
BUSINESS ADDRESS:
STREET 1: 1873 SOUTH BELLAIRE STREET
STREET 2: 17TH FLOOR
CITY: DENVER
STATE: CO
ZIP: 80222
BUSINESS PHONE: 3037578101
MAIL ADDRESS:
STREET 1: 1873 SOUTH BELLAIRE STREET
STREET 2: 17TH FLOOR
CITY: DENVER
STATE: CO
ZIP: 80222
FORMER COMPANY:
FORMER CONFORMED NAME: FREEMAN GROWTH PLUS LP
DATE OF NAME CHANGE: 19910403
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: DAVIDSON GROWTH PLUS LP
CENTRAL INDEX KEY: 0000795757
STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500]
IRS NUMBER: 521462866
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 13E3
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-42782
FILM NUMBER: 05621559
BUSINESS ADDRESS:
STREET 1: 1873 SOUTH BELLAIRE STREET
STREET 2: 17TH FLOOR
CITY: DENVER
STATE: CO
ZIP: 80222
BUSINESS PHONE: 3037578101
MAIL ADDRESS:
STREET 1: 1873 SOUTH BELLAIRE STREET
STREET 2: 17TH FLOOR
CITY: DENVER
STATE: CO
ZIP: 80222
FORMER COMPANY:
FORMER CONFORMED NAME: FREEMAN GROWTH PLUS LP
DATE OF NAME CHANGE: 19910403
FILED BY:
COMPANY DATA:
COMPANY CONFORMED NAME: AIMCO PROPERTIES LP
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
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
SC TO-T
1
d18191asctovt.txt
SCHEDULE TO-T
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE TO
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1) OF THE SECURITIES
EXCHANGE ACT OF 1934
Davidson Growth Plus, L.P.
--------------------------------------------------------------------------------
(Name of Subject Company (Issuer))
AIMCO Properties, L.P.
Apartment Investment and Management Company
AIMCO-GP, Inc.
Davidson Growth Plus G.P. 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
---------------------- --------------------
$ 2,165,283.34 $254.85
* For purposes of calculating the fee only. This amount assumes the
purchase of 11,823.75 units of limited partnership interest of the
subject partnership for $183.13 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.
[ ] 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: Filing Party:
Form or Registration No.: Date Filed:
[ ] 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
SCHEDULE TO
This Tender Offer Statement and Rule 13e-3 Transaction Statement on
Schedule TO (the "Schedule TO") relates to the offer by AIMCO Properties, L.P.,
a Delaware limited partnership, to purchase units of limited partnership
interest ("Units") of Davidson Growth Plus, L.P., a Delaware limited partnership
(the "Partnership"), at a price of $183.13 per unit in cash, subject to the
conditions set forth in the Offer to Purchase dated February 16, 2005 and in the
related Letter of Transmittal (which, together with any supplements or
amendments, collectively constitute the "Offer"). Copies of the Offer to
Purchase and the Letter of Transmittal are filed with the Schedule TO as
Exhibits (a)(1) and (a)(2), respectively. 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.
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 15. 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 Davidson Growth Plus, L.P., of which 28,371.75 units were issued and
outstanding as of September 30, 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 Davidson Growth Plus G.P. Corporation ("Davidson
Growth"). AIMCO-GP is the general partner of AIMCO OP and a wholly owned
subsidiary of AIMCO. Davidson Growth 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 Davidson Growth 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 10. 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
Davidson Growth 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.
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 "The Offer - Section 8.
Valuation of Units - Prior Tender Offers," "- Section 9.
3
The Lawsuit and the Settlement," "- Section 11. Background and Reasons for the
Offer" and "- Section 13. Conflicts of Interest and Transactions with
Affiliates" 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 "The Offer - Section 7.
Effects of the Offer," "- Section 9. The Lawsuit and the Settlement," "- Section
11. Background and Reasons for the Offer" and "- Section 14. Future Plans of the
Purchaser" 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
17. Source of Funds" and "- Section 21. 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 15. 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 20. 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.
(a)(1) Offer to Purchase dated February 16, 2005.
(a)(2) Letter of Transmittal and related Instructions.
(a)(3) Letter from AIMCO OP to the Limited Partners of Davidson
Growth Plus, L.P..
(b) Fourth Amended and Restated Credit Agreement among AIMCO,
AIMCO OP, AIMCO/Bethesda Holdings, Inc., and NHP Management
Company, Bank of America, N.A., Fleet National Bank, First
Union National Bank, and the other financial institutions
party thereto, dated as of March 11, 2002 (Exhibit 10.29 to
AIMCO's Annual Report on Form 10-K for the year ended December
31, 2001, is incorporated herein by reference).
(d) Not applicable.
(g) None.
(h) None.
ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3.
ITEM 2. SUBJECT COMPANY INFORMATION.
(d) The information set forth under "The Offer - Section 15.
Certain Information Concerning Your Partnership - Distributions" in the
Offer to Purchase is incorporated herein by reference.
(e) Not applicable.
4
(f) The information set forth under "The Offer - Section 8.
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 "The Offer - Section 11.
Background and Reasons for the Offer" and "- Section 9. 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
18. 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 "The Offer - Section 11.
Background and Reasons for the Offer" and "- Section 9. 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 "The Offer - Section 7.
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 "The Offer - Section 11.
Background and Reasons for the Offer - General" in the Offer to
Purchase is incorporated herein by reference.
(b) The information set forth under "The Offer - Section 11.
Background and Reasons for the Offer - Alternatives Considered by Your
General Partner" and "- Section 11. Background and Reasons for the
Offer - Alternative Transactions Considered by Us" in the Offer to
Purchase is incorporated herein by reference.
(c) The information set forth under "The Offer - Section 11.
Background and Reasons for the Offer" of the Offer to Purchase is
incorporated herein by reference.
(d) The information set forth under "The Offer - Section 6.
Material Federal Income Tax Matters" and "- Section 7. 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 "The Offer - Section
12. Position of the General Partner of Your Partnership with Respect to
the Offer" of the Offer to Purchase is incorporated herein by
reference.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS.
(a) The information set forth under "The Offer - Section 8.
Valuation of Units - Estimated Liquidation Proceeds Based on
Independent Appraisal" and "- Section 12. 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 "The Offer - Section 8.
Valuation of Units - Estimated Liquidation
5
Proceeds Based on Independent Appraisal" of the Offer to Purchase is
incorporated herein by reference.
(c) The information set forth under "The Offer - Section 8.
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 "The Offer - Section
12. 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 15.
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, 2003 and Item 1 of
Part I of the Partnership's Quarterly Report on Form 10-QSB for the
quarter ended September 30, 2004 are 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: February 16, 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
DAVIDSON GROWTH PLUS G.P. CORPORATION
By: /s/ Martha L. Long
-------------------------------
Martha L. Long
Senior Vice President
7
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
--------------- -------------------------------------------------------
(a)(1) Offer to Purchase dated February 16, 2005
(a)(2) Letter of Transmittal and related Instructions.
(a)(3) Letter from AIMCO OP to the Limited Partners of
Davidson Growth Plus, L.P.
8
EX-99.(A)(1)
2
d18191aexv99wxayx1y.txt
OFFER TO PURCHASE
OFFER TO PURCHASE
(AIMCO LOGO)
AIMCO PROPERTIES, L.P.
is offering to purchase any and all limited partnership units in
DAVIDSON GROWTH PLUS, L.P.
FOR $183.13 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 March 17, 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. If you
requested exclusion from the settlement but tender your units, by signing
the letter of transmittal, you will release us from any claims that you
would otherwise have preserved by requesting exclusion from the
settlement class. If you did not request exclusion, you will release any
known or unknown claims arising out of the Nuanes and Heller litigation
if the judgment approving the settlement is affirmed on appeal. By
executing the enclosed letter of transmittal, moreover, you will release
those claims even if the judgment is reversed or otherwise vacated on
appeal, as well as any other claims through and including the date of
execution of the letter of transmittal.
- We determined our offer price by estimating a net equity value for your
partnership units based on an aggregate gross property value of
$30,395,464. The aggregate gross property value is the sum of the
property values for each of your partnership's properties, as estimated
by us, before reduction for any prepayment penalties. Our estimate of the
aggregate gross property value is approximately 91% of the aggregate
appraised value of your partnership's properties, as determined by the
independent, court-appointed appraiser in 2003. As a result, our offer
price is less 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 values, which we estimate to be $276.62 per unit.
- Our offer price does not take into account any increase in value since
the 2003 appraisal of your partnership's properties and does not take
into account any increases in property income that may result in the
future. 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 expected improvements in property income.
(Continued on next page)
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.
February 16, 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:
P.O. Box 238 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, whether or not you requested
exclusion from the settlement and whether or not the
judgment is reversed on appeal.......................... 4
Our offer price may not represent fair market value for
your unit............................................... 4
Our offer price is less than the liquidation value implied
by the 2003 appraisal................................... 4
Our offer price does not reflect factors subsequent to
2003 that may have increased the value of your
partnership units....................................... 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.................................... 5
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...... 6
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
THE OFFER................................................... 8
1. Terms of the Offer; Expiration Date................... 8
2. Acceptance for Payment and Payment for Units.......... 8
3. Procedure for Tendering Units......................... 9
4. Withdrawal Rights..................................... 12
5. Extension of Tender Period; Termination; Amendment; No
Subsequent Offering Period............................ 13
6. Material Federal Income Tax Matters................... 14
7. Effects of the Offer.................................. 16
8. Valuation of Units.................................... 18
9. The Lawsuit and the Settlement........................ 29
10. Information Concerning Us and Certain of Our
Affiliates............................................ 35
11. Background and Reasons for the Offer.................. 40
12. Position of the General Partner of Your Partnership
With Respect to the Offer............................. 41
13. Conflicts of Interest and Transactions with
Affiliates............................................ 43
14. Future Plans of the Purchaser......................... 45
15. Certain Information Concerning Your Partnership....... 46
16. Voting Power.......................................... 50
17. Source of Funds....................................... 50
18. Dissenters' Rights.................................... 51
19. Conditions to the Offer............................... 51
20. Certain Legal Matters................................. 53
21. 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 Davidson Growth Plus GP 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 Davidson Growth Plus, L.P., your partnership, for $183.13 per
unit in cash. See "The Offer -- Section 1. Terms of the Offer; Expiration
Date," "-- Section 7. Effects of the Offer" and "-- Section 8. Valuation
of Units."
- The Litigation Settlement Offer. 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 $100.71 per unit in cash. THIS OFFER IS NOT BEING MADE AS PART OF THE
SETTLEMENT.
If you requested exclusion from the settlement but tender your units, by
signing the letter of transmittal, you will release us from claims that
you would otherwise have preserved by requesting exclusion from the
settlement class. If you did not request exclusion, you will release any
known or unknown claims arising out of the Nuanes and Heller litigation
if the judgment approving the settlement is affirmed on appeal. By
executing the enclosed letter of transmittal, moreover, you will release
those claims even if the judgment is reversed or otherwise vacated on
appeal. See "-- Release and Assignment of Future Claims" below.
IF YOU DID NOT REQUEST EXCLUSION FROM THE SETTLEMENT, YOU WILL BE
ENTITLED TO RECEIVE YOUR PRO RATA SHARE OF THE SETTLEMENT FUND ($8.52 PER
UNIT) WHETHER OR NOT YOU TENDER YOUR UNITS PURSUANT TO THIS OFFER,
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. FOR
ADDITIONAL INFORMATION REGARDING THE SETTLEMENT, SEE "THE
OFFER -- SECTION 9. 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.
- Price May Not Reflect Fair Market Value. In deciding whether or not to
accept our offer, you should consider the fact that, based on the
valuation in 2003 of your partnership's properties by American Appraisal
Associates, Inc., we estimate that the net liquidation proceeds per unit
would be approximately $276.62, which is higher than our offer price of
$183.13. Our offer price does not take into account any increase in value
since the 2003 appraisal was completed, and does not take into account
any increases in property income that may result in the future.
- Expiration Date. Our offer expires on March 17, 2005, unless extended,
and you can tender your units until our offer expires. See "The
Offer -- Section 1. Terms of the Offer; Expiration Date."
1
- Right to Extend the Expiration Date. Under the settlement, 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."
- Release and Assignment of Future Claims. 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. If you requested exclusion from the settlement of the Nuanes and
Heller litigation but tender your units, by signing the letter of
transmittal, you will release us from claims that you would otherwise
have preserved by requesting exclusion from the settlement class. If you
did not request exclusion, you will release any known or unknown claims
arising out of the Nuanes and Heller litigation if the judgment approving
the settlement is affirmed on appeal. By executing the enclosed letter of
transmittal, moreover, you will release those claims even if the judgment
is reversed or otherwise vacated on appeal, as well as any other claims
through and including the date of execution of the letter of transmittal.
- Withdrawal Rights. You can withdraw your units at any time prior to the
expiration of the offer, including any extensions. In addition, you can
withdraw your units at any time on or after April 17, 2005 if we have not
already accepted units for purchase and payment. 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."
- 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 "The Offer -- Section 6. Material
Federal Income Tax Matters."
- 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 17. 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
19. 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. We have no plans to
alter 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
2
reports on Form 10-QSB containing unaudited financial statements. See
"The Offer -- Section 7. Effects of 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 10. 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 "The Offer -- Section 13. Conflicts of Interest and
Transactions with Affiliates" and "-- Section 15. Certain Information
Concerning Your Partnership."
- 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
"The Offer -- Section 12. Position of the General Partner of Your
Partnership With Respect to the Offer."
- Fairness of the Offer. Although we, Apartment Investment and Management
Company ("AIMCO") and AIMCO-GP, Inc. (collectively, the "AIMCO Entities")
and your general 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 "The
Offer -- Section 12. Position of Your General Partner of Your Partnership
With Respect to 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, WHETHER OR NOT YOU
REQUESTED EXCLUSION FROM THE SETTLEMENT AND WHETHER OR NOT THE JUDGMENT IS
REVERSED ON APPEAL.
If you want to tender your units in response to our offer, you must sign a
letter of transmittal, in which you release us and our affiliates 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. If you requested exclusion from the settlement of
this litigation but tender your units, by signing the letter of transmittal, you
will release us from claims that you would otherwise have preserved by
requesting exclusion from the settlement class. If you did not request
exclusion, you will release any known or unknown claims arising out of the
Nuanes and Heller litigation if the judgment approving the settlement is
affirmed on appeal. By executing the enclosed letter of transmittal, moreover,
you will release those claims even if the judgment is reversed or otherwise
vacated on appeal, as well as any other claims through and including the date of
execution of the letter of transmittal.
OUR OFFER PRICE MAY NOT REPRESENT FAIR MARKET VALUE FOR YOUR UNITS.
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 IS LESS THAN THE LIQUIDATION VALUE IMPLIED BY THE 2003
APPRAISAL.
We determined our offer price by estimating a net equity value for your
partnership units based on an aggregate gross property value of $30,395,464. The
aggregate gross property value is the sum of the property values for each of
your partnership's properties, as estimated by us, before reduction for any
prepayment penalties. Our estimate of the aggregate gross property value is
approximately 91% of the aggregate appraised value of your partnership's
properties, as determined by the independent, court-appointed appraiser in 2003.
As a result, our offer price is less 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 values, which we estimate to be $276.62
per unit.
OUR OFFER PRICE DOES NOT REFLECT FACTORS SUBSEQUENT TO 2003 THAT MAY HAVE
INCREASED THE VALUE OF YOUR PARTNERSHIP UNITS.
Our offer price does not take into account any increase in value since the
2003 appraisal of your partnership's properties and does not take into account
any increases in property income that may result in the future. 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 expected improvements
in property income.
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
4
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.
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 August 13, 1986, 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 7 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 2011. It is not known when the properties owned by your
partnership may be sold. The market for units in the partnership is illiquid,
and it may be difficult to sell your investment in the partnership in the
future. 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 the changes in the
local rental markets, the potential for appreciation in the value of a property
and the tax consequences to you on a sale of property. We cannot predict when
your partnership's properties will be sold or otherwise disposed of.
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. 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.
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.
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, your
preferences regarding the timing of when you might wish to sell your units,
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.
5
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 requested exclusion from the settlement or the Court's order
approving the settlement is reversed or vacated by virtue of the appeal, 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.
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.
6
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 "The Offer -- Section 7. Effects of the Offer -- Effect
on Trading Market; Registration Under Section 12(g) of the Exchange Act."
7
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 March 17,
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 19. 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. 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.
Upon expiration of the offer, the books and records of the partnership will
reflect the change in ownership as having occurred as of this date. 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. 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.
This offer is being mailed on or about February 16, 2005 to the persons
shown by your partnership's records to be limited partners or, in the case of
units owned of record by Individual Retirement Accounts and qualified plans,
beneficial owners of 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 promptly following the expiration date. 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." UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE OFFER PRICE BY REASON OF ANY DELAY IN
MAKING SUCH PAYMENT.
8
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). In
addition, if we have not accepted units for payment by April 17, 2005 you may
then withdraw any tendered units. 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 will not be effective). We and our designees
will, as to those units, be empowered to exercise all voting
9
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 full 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
asserted against the Releasees, through and including the date of execution of
the letter of transmittal,
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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 the settlement and judgment
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 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
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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 "The Offer -- Section 6.
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 "The
Offer -- Section 6. 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, or on or after April 17, 2005 if the
units have not been previously accepted for payment. 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."
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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, (iii) upon the occurrence of any of the conditions specified in "The
Offer -- Section 19. Conditions to the Offer" relating to necessary governmental
approvals, to delay the acceptance for payment of, or payment for, any units not
already accepted for payment or paid for, and (iv) 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 (other than those
relating to necessary governmental approvals) 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 may 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.
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6. 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 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
14
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.
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 requested exclusion from the
settlement or the Court's order approving the settlement is reversed or vacated
by virtue of the appeal, 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.
15
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% 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.
7. 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 Cooper River Properties L.L.C. and AIMCO IPLP, L.P.
(which are our affiliates), own 16,548 units, or 58.33%, 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 ($(358,000) for the nine months
ended September 30, 2004) and net book value ($(7,390,000) as of September 30,
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.
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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 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 1,335 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 $36,000 per year. This represents
approximately 14% of the partnership's general and administrative expenses and
0.66% of the partnership's total expenses (based on 2003 expenses of
approximately $257,000 and $5,416,000, respectively). In addition, as a result
of the Sarbanes-Oxley Act of 2002, we estimate our costs will increase by
approximately 10% beginning in 2005. If the partnership were to terminate its
registration under the Exchange Act, the estimated cost savings would be
approximately $36,000.
17
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.
8. VALUATION OF UNITS
Determination of Offer Price. We determined the offer price by estimating
the liquidation proceeds that would be payable to limited partners if
calculating a net equity value of units of limited partnership based on a
valuation of your partnership's properties. Our starting point in this process
was the value of your partnership's properties, as determined by the
court-appointed, independent appraiser in 2003. For a more detailed description
of the independent appraisals of your partnership's properties, see "The
Offer -- Section 8. Valuation of Units; Estimated Liquidation Proceeds Based on
Independent Appraisal."
Brighton Crest Apartments is owned by Sterling Crest Joint Venture that has
two partners. Your partnership owns a 82.5% interest and Davidson Income Real
Estate, L.P., whose general partner is an affiliate of your partnership's
general partners, owns a 17.5% interest. For Brighton Crest Apartments, we
assigned it a gross property value of $13,860,000, which is approximately 90% of
its 2003 appraised value. We made this determination based on certain factors,
including the following:
- the property's loss rate of 28% as of July 2004 compared to a loss rate
assumption of 14% by the appraiser;
- our assessment of recent housing trends in the local market in which the
property is located; and
- our assessment of the general economic outlook for the area in which the
property is located.
For The Fairway Apartments, we assigned it a gross property value of
$10,955,464, which is equal to 93% of its 2003 appraised value. We made this
determination based on certain factors, including the following:
- the property's vacancy rate of 10% as of July 2004 compared to a vacancy
rate assumption of 8% by the appraiser;
- our assessment of recent housing trends in the local market in which the
property is located; and
- our assessment of the general economic outlook for the area in which the
property is located.
For The Village Apartments, we assigned it a gross property value of
$5,580,000, which is approximately 90% of its 2003 appraised value. We made this
determination based on certain factors, including the following:
- the property's loss rate of 11% as of July 2004 compared to a loss rate
assumption of 8% by the appraiser;
- our assessment of recent housing trends in the local market in which the
property is located; and
- our assessment of the general economic outlook for the area in which the
property is located.
We then deducted from the gross property values estimated prepayment
penalties of $2,528,095 for Brighton Crest Apartments, $1,428,617 for The
Fairway Apartments and $882,571 for The Village 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 APPRAISED GROSS PROPERTY PREPAYMENT NET PROPERTY
PROPERTY VALUE VALUE PENALTY VALUE
-------- --------------- -------------- ---------- --------------
Brighton Crest Apartments....... $15,400,000 $13,860,000 $2,528,905 $11,331,095
The Fairway Apartments.......... 11,800,000 10,955,464 1,428,517 9,526,947
The Village Apartments.......... 6,200,000 5,580,000 882,571 4,697,429
----------- ----------- ---------- -----------
Total........................... $33,400,000 $30,395,464 $4,839,992 $25,555,472
=========== =========== ========== ===========
18
The aggregate net property value for all your partnership's properties is
$25,555,472. This is determined by aggregating the net property values of all
properties. After determining the aggregate net property value, 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 and debt
owed by your partnership to the general partner or its affiliates.
Finally, we allocated 97% 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...... $ 25,555,472
Plus: Cash and cash equivalents (net of tenant security
deposits)................................................. 169,813
Plus: Other partnership assets.............................. 396,286
Less: Mortgage debt, including accrued interest............. (19,293,703)
Less: Loans from partners................................... (500,609)
Less: Accounts payable and accrued expenses................. (220,330)
Less: Other liabilities..................................... (475,594)
Less: Distributions to lower tier general partners.......... (274,430)
------------
Net equity value of your partnership........................ $ 5,356,905
Percentage of net equity value allocated to holders of
units..................................................... 97%
------------
Net equity value of units................................... $ 5,195,651
Total number of units..................................... 28,371.75
------------
Net equity value per unit................................... $ 183.13
============
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) prior cash tender offer
prices, (b) prices at which the units have sold on the secondary market 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............................................ $183.13
Alternatives
Highest prior cash tender offer price..................... $157.00(1)
Highest price on secondary market......................... $340.00
Estimated liquidation proceeds (based on 2003 appraised
value)................................................. $276.62(2)
---------------
(1) Highest price offered in our 2002-2004 tender offers to date.
(2) Highest price on the secondary market between 2002 and 2004, based on
available information.
PRIOR TENDER OFFERS
2003. On December 30, 2003, we completed a tender offer commenced on
November 6, 2003. We acquired 244.25 units in that offer at a price of $100.71
per unit. In that case, we determined our offer
19
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 8,
2002. We acquired 213.5 units in that offer at a price of $157.00 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 amount 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 which 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 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 are the high and low sale prices of units during the year
ending December 31, 2004 (through November 30) and the years ended December 31,
2003 and December 31, 2002, as reported by Direct Investments Spectrum (formerly
known as The Partnership Spectrum), which is an independent, third-party source.
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. Direct Investments Spectrum
represents only one source of secondary sales information, and other services
may contain prices for the units that equal or exceed the sales prices reported
by Direct Investments Spectrum. 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 Ending December 31, 2004 (through November 30): $175.00 $130.00
Year Ended December 31, 2003: $190.00 $161.03
Year Ended December 31, 2002: $330.00 $157.00
Set forth in the table below are the high and low sales prices of units
during the year ending December 31, 2004 (through November 30) and the years
ended 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 secondary market transaction costs to amounts less than
the reported prices. The American Partnership Board represents one source of
secondary sales information, and other services may contain prices for units
that equal or exceed the sales prices reported by the American Partnership
Board. 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 30, 2004 (through November 30): N/A N/A
Year Ended December 31, 2003: N/A N/A
Year Ended December 31, 2002: $340.00 $157.00
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 American Appraisal Associates, Inc. ("AAA"), an
independent appraiser appointed by the court. Under the terms of the
20
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);
- 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:
THE VILLAGE AT
BRIGHTON CREST THE FAIRWAY BUCKHORN CREEK
FISCAL YEAR 2003 FISCAL YEAR 2003 FISCAL YEAR 2003
MANAGEMENT BUDGET MANAGEMENT BUDGET MANAGEMENT BUDGET
---------------------- ---------------------- ----------------------
DESCRIPTION TOTAL PER UNIT TOTAL PER UNIT TOTAL PER UNIT
----------- ----------- -------- ----------- -------- ----------- --------
Revenues
Rental Income............... $2,776,000 $8,675 $2,167,812 $8,468 $1,080,000 $9,643
Vacancy..................... 219,000 684 80,500 314 42,200 377
Credit Loss/Concessions..... 171,200 535 36,600 143 43,960 393
Subtotal................. $ 390,200 $1,219 $ 117,100 $ 457 $ 86,160 $ 769
Laundry Income.............. $ 0 $ 0 $ 26,568 $ 104 $ 0 $ 0
Garage Revenue.............. 0 0 0 0 0 0
21
THE VILLAGE AT
BRIGHTON CREST THE FAIRWAY BUCKHORN CREEK
FISCAL YEAR 2003 FISCAL YEAR 2003 FISCAL YEAR 2003
MANAGEMENT BUDGET MANAGEMENT BUDGET MANAGEMENT BUDGET
---------------------- ---------------------- ----------------------
DESCRIPTION TOTAL PER UNIT TOTAL PER UNIT TOTAL PER UNIT
----------- ----------- -------- ----------- -------- ----------- --------
Other Misc. Revenue......... $ 157,254 491 60,000 234 119,000 1,063
Subtotal Other Income.... $ 157,254 $ 491 $ 86,568 $ 338 $ 119,000 $1,063
Effective Gross Income........ $2,543,054 $7,947 $2,137,280 $8,349 $1,112,840 $9,936
Operating Expenses
Taxes....................... $ 198,003 $ 619 $ 275,983 $1,078 $ 122,432 $1,093
Insurance................... 71,353 223 63,387 248 34,735 310
Utilities................... 180,000 563 156,200 610 74,400 664
Repair & Maintenance........ 24,000 75 25,950 101 11,700 104
Cleaning.................... 62,500 195 63,600 248 18,000 161
Landscaping................. 68,394 214 75,680 296 39,600 354
Security.................... 0 0 0 0 0 0
Marketing & Leasing......... 63,000 197 34,260 134 14,400 129
General Administrative...... 167,027 522 150,044 586 92,292 824
Management.................. 128,533 402 109,719 429 56,620 506
Miscellaneous............... 0 0 0 0 0 0
Total Operating Expenses...... $ 962,810 $3,009 $ 954,823 $3,730 $ 464,179 $4,144
Reserves.................... 0 0 0 0 0 0
Net Income.................... $1,580,244 $4,938 $1,182,457 $4,619 $ 648,661 $5,792
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 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.
22
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 Property. 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 $33,400,000,
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 $25,555,472.
BRIGHTON CREST APARTMENTS
Valuation Under Sales Comparison Approach. AAA compared five apartment
complexes with Brighton Crest Apartments that were sold between March 2000 and
July 2002 and located in the property's real estate market area. Based on its
qualitative analysis, AAA rated the locations of one comparable property as
superior, two comparable properties as comparable and two comparable properties
as inferior to the location of Brighton Crest Apartments. AAA rated the
quality/appeal of one comparable property as superior, two comparable properties
as comparable and two comparable properties as inferior to the quality/appeal of
Brighton Crest Apartments. AAA rated the amenities of four comparable properties
as superior and one comparable property as comparable to the amenities of
Brighton Crest Apartments.
AAA made adjustments to the sales price per unit of each comparable
property to reflect differences from Brighton Crest 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
$42,809 to $55,843 per unit with a mean or average adjusted price of $48,953 per
unit and a median adjusted price of $48,421 per unit. Thus, the estimated value
based on a $48,500 sales price per unit for the 320 units was approximately
$15,500,000.
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
Brighton Crest 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 $37,147 and $ 52,215 per unit, with an average of $45,117 per unit. The
appraiser concluded a value of $45,000 per unit for the 320 units of the
property, resulting in an estimated "as is" market value of $14,400,000 using
the NOI analysis.
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 Brighton Crest Apartments to be 41.65% before
reserves, with the expense ratios of the five comparable properties ranging from
31.10% to 46.58%, resulting in EGIMs ranging from 4.60 to 7.40. Thus, AAA
concluded an EGIM of 6.25 for Brighton Crest 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 $15,600,000.
AAA estimated the value using the price per unit analysis at $15,500,000,
the value using the NOI analysis at $14,400,000 and the value using the EGIM
analysis at $15,600,000. Based on these three valuation methods, AAA concluded
that the reconciled value for Brighton Crest Apartments under the sales
comparison approach was $15,200,000. AAA assumed a marketing and exposure period
of 6 to 12 months.
23
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 Brighton Crest
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 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 Brighton Crest
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 $2,501,179. Once
the EGI was established, operating expenses were deducted from the EGI in order
to arrive at an NOI for Brighton Crest Apartments of approximately $1,379,320.
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 Brighton Crest
Apartments under the income approach included:
(1) stabilized vacancy and collection loss rate of 14%;
(2) replacement reserve of $250 per unit;
(3) overall capitalization rate of 9.00%;
(4) terminal capitalization rate of 9.75%;
(5) discount rate of 11.25%;
(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. No adjustment was made for concessions. Based on these
assumptions, AAA's estimate of cash flows for a 10-year period resulted in an
indicated value of $15,700,000 through the discounted cash flow method. The
reversion value contributed approximately 40% 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 $15,300,000.
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 Brighton Crest Apartments was $15,400,000.
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 $15,200,000 and the estimated market value
under the income capitalization approach was $15,400,000. After reconciling the
various factors, AAA determined a final "as is" market value for Brighton Crest
Apartments of $15,400,000 as of May 13, 2003.
24
THE VILLAGE OF BUCKHORN CREEK
Valuation Under Sales Comparison Approach. AAA compared four apartment
complexes with The Village of Buckhorn Creek that were sold between May 2000 and
June 2002 and located in the property's real estate market area. Based on its
qualitative analysis, AAA rated the locations of three comparable properties as
comparable and one comparable property as inferior to the location of The
Village of Buckhorn Creek. AAA rated the quality/appeal of one comparable
property as comparable and three comparable properties as inferior to the
quality/appeal of The Village of Buckhorn Creek. AAA rated the amenities of two
comparable properties as comparable and two comparable properties as inferior to
the amenities of The Village of Buckhorn Creek.
AAA made adjustments to the sales price per unit of each comparable
property to reflect differences from The Village of Buckhorn Creek 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
$53,206 to $56,375 per unit with a mean or average adjusted price of $55,136 per
unit and a median adjusted price of $55,482 per unit. Thus, the estimated value
based on a $55,000 sales price per unit for the 112 units was approximately
$6,200,000.
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 The
Village of Buckhorn Creek's NOI to the NOI of the four 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 $44,022 and $59,086 per unit, with an average of $54,037 per unit. The
appraiser concluded a value of $55,000 per unit for the 112 units of the
property, resulting in an estimated "as is" market value of $6,200,000 using the
NOI analysis.
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 The Village of Buckhorn Creek to be 42.53%
before reserves, with the expense ratios of the four comparable properties
ranging from 43.81% to 55.21%, resulting in EGIMs ranging from 4.57 to 6.22.
Thus, AAA concluded an EGIM of 6.00 for The Village of Buckhorn Creek, 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
$6,500,000.
AAA estimated the value using the price per unit analysis at $6,200,000,
the value using the NOI analysis at $6,200,000 and the value using the EGIM
analysis at $6,500,000. Based on these three valuation methods, AAA concluded
that the reconciled value for The Village of Buckhorn Creek under the sales
comparison approach was $6,200,000. 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 The Village of
Buckhorn Creek.
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 The Village of
Buckhorn Creek'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 $1,089,200. Once
the EGI was established, operating expenses were deducted from the EGI in order
to arrive at an NOI for The Village of Buckhorn Creek of approximately $597,940.
AAA performed a pro forma analysis of revenue and
25
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 The Village of
Buckhorn Creek under the income approach included:
(1) stabilized vacancy and collection loss rate of 8%;
(2) replacement reserve of $250 per unit;
(3) overall capitalization rate of 9.50%;
(4) terminal capitalization rate of 10.00%;
(5) discount rate of 12.00%;
(6) 2.00% 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. No adjustment was made for concessions. Based on these
assumptions, AAA's estimate of cash flows for a 10-year period resulted in an
indicated value of $6,200,000 through the discounted cash flow method. The
reversion value contributed approximately 38% of the value.
Under the direct capitalization method, utilizing a capitalization rate of
9.50%, the projected NOI resulted in a value (after rounding) of $6,300,000.
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 The Village of Buckhorn Creek was $6,200,000.
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 $6,200,000 and the estimated market value
under the income capitalization approach was $6,200,000. After reconciling the
various factors, AAA determined a final "as is" market value for The Village of
Buckhorn Creek of $6,200,000 as of May 16, 2003.
THE FAIRWAY
Valuation Under Sales Comparison Approach. AAA compared five apartment
complexes with The Fairway were sold between February 2000 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 comparable and
three comparable properties as inferior to the location of The Fairway. AAA
rated the quality/appeal of two comparable properties as comparable and three
comparable properties as inferior to the quality/appeal of The Fairway. AAA
rated the amenities of one comparable property as superior and four comparable
properties as inferior to the amenities of The Fairway.
AAA made adjustments to the sales price per unit of each comparable
property to reflect differences from The Fairway 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 $40,637 to
$47,870 per unit with a mean or average adjusted price of $43,818 per unit and a
median adjusted price of $43,773 per unit. Thus, the estimated value based on a
$44,000 sales price per unit for the 256 units was approximately $11,100,000
after adjustment for present value of concessions.
26
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 The
Fairway'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
$38,337 and $51,102 per unit, with an average of $45,365 per unit. The appraiser
concluded a value of $46,000 per unit for the 256 units of the property,
resulting in an estimated "as is" market value of $11,600,000 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 The Fairway to be 44.34% before reserves,
with the expense ratios of the five comparable properties ranging from 41.39% to
53.50%, resulting in EGIMs ranging from 4.82 to 5.77. Thus, AAA concluded an
EGIM of 5.50 for The Fairway, 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 $11,400,000 after adjustment for present
value of concessions.
AAA estimated the value using the price per unit analysis at $11,100,00,
the value using the NOI analysis at $11,600,000 and the value using the EGIM
analysis at $11,400,000. Based on these three valuation methods, AAA concluded
that the reconciled value for The Fairway under the sales comparison approach
was $11,400,000. 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 The Fairway.
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 The Fairway'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 $2,091,256. Once the EGI was established,
operating expenses were deducted from the EGI in order to arrive at an NOI for
The Fairway of approximately $1,100,086. 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 The Fairway under
the income approach included:
(1) stabilized vacancy and collection loss rate of 8%;
(2) replacement reserve of $250 per unit;
(3) overall capitalization rate of 9.25%;
(4) terminal capitalization rate of 9.75%;
(5) discount rate of 10.75%;
(6) 3.00% cost of sale at reversion; and
27
(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 $136,000.
Based on these assumptions, AAA's estimate of cash flows for a 10-year period
resulted in an indicated value of $12,100,000 through the discounted cash flow
method. The reversion value contributed approximately 41% of the value.
Under the direct capitalization method, utilizing a capitalization rate of
9.25%, the projected NOI resulted in a value (after rounding) of $11,800,000
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 The Fairway was $12,000,000.
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 $11,400,000 and the estimated market value
under the income capitalization approach was $12,000,000. After reconciling the
various factors, AAA determined a final "as is" market value for The Fairway of
$11,800,000 as of April 28, 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 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.
28
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 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, ($33,400,000) total estimated prepayment penalties of
$4,839,992 to determine the net appraised value of $28,560,008. As indicated
below, based on the total appraised value of the partnership properties, the
estimated net liquidation proceeds per unit is $276.62, which is higher than our
offer price of $183.13.
Net appraised value of partnership properties............... $ 28,560,008
Plus: Cash and cash equivalents (net of tenant security
deposits)................................................. 169,813
Plus: Other partnership assets.............................. 396,286
Less: Mortgage debt, including accrued interest............. (19,293,703)
Less: Loans from partners................................... (500,609)
Less: Accounts payable and accrued expenses................. (220,330)
Less: Other liabilities..................................... (475,594)
Less: Distributions to lower tier general partners.......... (544,031)
------------
Estimated net liquidation proceeds of your partnership...... $ 8,091,839
Percentage of estimated net liquidation proceeds allocated
to holders of units based on the partnership agreement.... 97%
------------
Estimated net liquidation proceeds of units................. $ 7,848,259
Total number of units..................................... 28,371.75
------------
Estimated net liquidation proceeds per unit................. $ 276.62
============
9. 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
29
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.
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.
30
- 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 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
31
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. Both appeals have been fully briefed and argued and
the parties are waiting for a decision from the Court of Appeals.
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 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
32
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%
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%
33
(C)
OWNERSHIP ALLOCATED
PERCENTAGE (D) PORTION OF
(A) (B) OF SETTLEMENT ADJUSTED SETTLEMENT
PARTNERSHIP REVENUE(1) CLASS(2) REVENUE(3) FUND(4)
----------- ------------ ------------- ------------- ----------
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 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
34
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.
10. 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 September 30, 2004, we owned or managed 271,859 apartment
units in 1,546 properties located in 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 September 30, 2004, we:
- owned or controlled (consolidated) 172,900 units in 693 apartment
properties;
- held an equity interest in (unconsolidated) 51,474 units in 371 apartment
properties; and
- provided services or managed, for third party owner, 47,485 units in 482
apartment properties, primarily pursuant to long term, non-cancelable
agreements (including 39,294 units in 409 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 Annual Report on Form 10-K for the year ended December 31, 2003 and
our respective Quarterly Reports on Form 10-Q for the quarterly periods ended
March 31, 2004, June 30, 2004 and September 30, 2004
35
(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 "The Offer -- Section 11. Background and Reasons for
the Offer," "-- Section 13. Conflicts of Interest and Transactions with
Affiliates" and "-- Section 15. 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
nine months ended September 30, 2004 and 2003 is based on unaudited financial
statements. The historical financial data set forth below for AIMCO Properties,
L.P. for the years ended December 31, 2003, 2002 and 2001 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 the AIMCO
Operating Partnership" included in AIMCO Properties, L.P.'s Annual Report on
Form 10-K for the year ended December 31, 2003 and its Quarterly Report on Form
10-Q for the quarter ended September 30, 2004.
FOR THE NINE MONTHS ENDED FOR THE YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------------- --------------------------------------
2004 2003(1) 2003(2)(3) 2002(3) 2001(3)
----------- ----------- ----------- ----------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
(UNAUDITED)
OPERATING DATA:
Total revenues............... $ 1,087,794 $ 1,044,191 $ 1,516,283 $ 1,387,831 $1,273,037
Total expenses............... 827,616 715,790 1,059,350 889,372 878,734
Income before minority
interest, discontinued
operations and cumulative
effect of change in
accounting principle...... 28,228 66,122 80,551 201,479 143,953
Income from continuing
operations................ 35,124 62,856 78,490 186,924 107,117
Income from discontinued
operations................ 181,999 73,471 99,378 19,278 13,947
Cumulative effect of change
in accounting principle... (3,957) -- -- -- --
Net income................... 213,166 136,327 177,868 206,202 121,064
PER UNIT DATA:
Earnings (loss) per common
unit -- basic:
(Loss) income from
continuing operations
(net of preferred
distributions).......... $ (0.36) $ (0.18) $ (0.24) $ 0.81 $ 0.08
Net (loss) income
attributable to common
unitholders............. 1.35 0.52 0.71 1.00 0.25
36
FOR THE NINE MONTHS ENDED FOR THE YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------------- --------------------------------------
2004 2003(1) 2003(2)(3) 2002(3) 2001(3)
----------- ----------- ----------- ----------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
(UNAUDITED)
(Loss) earnings per common
unit -- diluted:
(Loss) income from
continuing operations
(net of preferred
distributions).......... $ (0.36) $ (0.18) $ (0.24) $ 0.80 $ 0.08
Net (loss) income
attributable to common
unitholders............. 1.35 0.52 0.71 0.99 0.25
Dividends declared per common
unit...................... 1.80 2.24 2.84 3.28 3.16
BALANCE SHEET INFORMATION:
Real estate, net of
accumulated
depreciation.............. $ 8,651,861 $ 8,887,140 $ 8,155,916 $ 8,615,287 $6,330,521
Total assets................. 10,196,723 10,194,026 10,109,631 10,355,329 8,200,526
Total indebtedness........... 6,003,100 6,334,785 5,739,336 6,021,990 4,420,399
Partners' capital............ 3,247,454 3,233,805 3,174,815 3,576,083 3,080,071
CASH FLOW DATA:
Cash provided by operating
activities................ $ 302,638 $ 404,055 $ 430,258 $ 496,670 $ 491,846
Cash (used in) provided by
investing activities...... 219,410 157,638 313,164 (873,832) (140,638)
Cash (used in) provided by
financing activities...... (513,910) (531,163) (728,543) 398,637 (430,245)
OTHER DATA:
Funds from operations
available to common
unitholders --
diluted(4)................ $ 220,230 $ 273,501 $ 349,108 $ 498,589 $ 528,655
Weighted average number of
common units, common units
equivalents and dilutive
preferred securities
outstanding............... 106,054 108,941 108,151 109,538 102,147
---------------
(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 nine months ended September 30, 2003 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 real estate, net of accumulated
depreciation, total assets and total indebtedness in the 2003 balance sheet
to conform to presentation changes made in AIMCO Properties' Form 10-Q for
the quarter ended September 30, 2004. These reclassifications primarily
represent changes related to certain intercompany eliminations and the
treatment of discontinued operations.
(3) Certain reclassifications have been made to the 2002 and 2001 amounts to
conform to the 2003 presentation. These reclassifications primarily
represent presentation changes related to discontinued operations resulting
from the 2002 adoption of Statement of Financial Accounting Standard No.
144. The amounts reported for 2003 (except for Real estate, net of
accumulated depreciation, Total assets and Total indebtedness), 2002 and
2001 are from the audited financial statements in AIMCO
37
Properties' Form 10-K for the year December 31, 2003 and have not been
reclassified for discontinued operations throughout 2004.
(4) 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.
38
The following is a reconciliation of net income to Funds From Operations:
FOR THE NINE MONTHS FOR THE YEAR ENDED
ENDED SEPTEMBER 30, DECEMBER 31,
------------------- ---------------------------------
2004 2003 2003 2002 2001
---- ---- ---- ---- ----
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
NET INCOME ATTRIBUTABLE TO COMMON
UNITHOLDERS(A)......................... $140,691 $ 54,219 $ 74,242 $ 98,556 $ 20,930
Adjustments:
Depreciation and amortization (net of
minority partners' interest for
years ended December 31, 2003, 2002
and 2001)........................... 265,981 245,305 304,957 245,351 313,842
Depreciation and amortization related
to non-real estate assets........... (13,481) (15,639) (D) (D) (D)
Depreciation of rental property related
to minority partners' interest(B)... (32,132) (21,206) (D) (D) (D)
Depreciation of rental property related
to unconsolidated properties........ 17,116 19,331 25,817 33,549 57,506
(Gain) Loss on dispositions of real
estate related to unconsolidated
entities and land................... (5,763) (2,209) (3,178) 22,362 (15,005)
Deficit distributions to minority
partners............................ 14,907 20,928 22,672 26,979 46,359
Income tax arising from disposals...... -- -- -- -- 3,202
Cumulative effect of change in
accounting principle................ 3,957 -- -- -- --
Discontinued operations:
Depreciation of rental property, net
of minority partners'
interest(B)....................... 12,075 29,702 14,906 29,192 34,522
Gain on dispositions of real estate,
net of minority partners'
interest(B)....................... (196,066) (67,459) (101,849) (4,374) --
(Recovery of deficit distributions)
deficit distributions to minority
partners.......................... (3,308) (4,076) (10,718) 1,401 1,342
Income tax arising from disposals... 13,235 5,112 12,134 2,507 --
Preferred OP Unit distributions........ 70,289 74,463 95,981 107,646 100,134
Redemption related preferred OP Unit
issuance costs...................... 2,186 7,645 7,645 -- --
-------- -------- --------- --------- ---------
FUNDS FROM OPERATIONS.................... $289,687 $346,116 $ 442,609 $ 563,169 $ 562,832
Preferred OP Unit distributions.......... (70,289) (74,463) (95,981) (107,646) (100,134)
Redemption related preferred OP Unit
issuance costs......................... (2,186) (7,645) (7,645) -- --
Distributions on dilutive preferred
securities............................. 3,018 8,752 9,138 41,905 64,389
Interest expense on mandatorily
redeemable convertible preferred
securities............................. -- 741 987 1,161 1,568
-------- -------- --------- --------- ---------
Funds From Operations attributable to
common unitholders -- diluted.......... $220,230 $273,501 $ 349,108 $ 498,589 $ 528,655
======== ======== ========= ========= =========
WEIGHTED AVERAGE NUMBER OF COMMON UNITS,
COMMON UNIT EQUIVALENTS AND DILUTIVE
PREFERRED SECURITIES OUTSTANDING:
Common unit and equivalents(C)......... 104,335 104,844 104,861 99,168 84,960
Dilutive preferred securities.......... 1,719 4,097 3,290 10,370 17,187
-------- -------- --------- --------- ---------
Total............................... 106,054 108,941 108,151 109,538 102,147
======== ======== ========= ========= =========
---------------
(A) Represents numerator for earnings per common unit calculated in accordance
with GAAP.
(B) "Minority partners' interest," as referenced in this line item and others
in this presentation means minority interest in AIMCO Properties'
consolidated real estate partnerships.
(C) Represents denominator for earnings per common unit -- diluted, calculated
in accordance with GAAP.
(D) Not shown as separate amounts in presentation included in the December 31,
2003 Form 10-K.
39
11. 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.
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 $100.71 per unit and acquired 244.25 units. THIS OFFER IS
NOT BEING MADE AS PART OF THE SETTLEMENT.
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 recently determined by the independent appraiser (in 2003), we
estimate that your net liquidation proceeds would be $276.62 per unit. See "The
Offer -- Section 8. 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 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
capitalization rates in the market and the interest rate environment at the
time. However, because your general partner and properties 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 15. Certain
Information Concerning Your Partnership -- Investment Objectives and Policies;
Sale or Financing of Investments" and "-- Section 13. Conflicts of Interest and
Transactions with Affiliates." The term of the partnership will continue until
December 31, 2011, 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
40
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 "The Offer -- Section 14. 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.
12. 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:
The general partner of your partnership believes the offer price and the
structure of the transaction are fair to the limited partners. In making such
determination, the general partner considered all of the factors and information
set forth below, but did not quantify or otherwise attach particular weight to
any such factors or information:
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 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 properties 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;
41
- 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 $(223.85) at September
30, 2004;
- 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:
- we determined our offer price by estimating a net equity value for your
partnership units based on an aggregate gross property value of
$30,395,464. The gross property value is the value of your partnership's
properties, as estimated by us, before reduction for any prepayment
penalties. Our estimate of the aggregate gross property value is
approximately 91% of the market value of your partnership's properties,
as determined by the independent, court-appointed appraiser in 2003. As a
result, our offer price is less 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 values, which we
estimate to be $276.62 per unit;
- our offer price does not take into account any increase in value since
the 2003 appraisal was completed, and does not take into account any
increases in property income that we may realize in the near future;
- 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;
- 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; and
- prices at which the units have recently sold were higher than our current
offer price.
The general partner does not believe that going concern value of your
partnership is relevant to the fairness of the offer because the partnership is
not an operating business in the typical sense. Its only assets are its
properties; the partnership has no other operations. Going concern value
typically reflects independent value for the goodwill of a business as a going
concern, over and above its asset value, however, those facts are not present
here. Accordingly, the general partner did not consider a separate going concern
value of the partnership in determining the fairness of the offer. In this case,
the liquidation value was determined based on appraised values of the
partnership's properties. These appraised values reflect the value of the
properties as a going concern.
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.
The general partner 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
42
circumstances may differ from those of other limited partners. These
circumstances, which would impact the desirability of tendering units in the
offer, include a limited partner's financial position, his need or desire for
liquidity, other financial opportunities available to him, and his tax position
and the tax consequences to him of selling his 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 or its affiliates have any
plans or arrangements to tender any units. Except as otherwise provided in "The
Offer -- Section 14. 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 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
"The Offer -- Section 11. Background and Reasons for the Offer" and "-- Section
13. Conflicts of Interest and Transactions with Affiliates." See also "The
Offer -- Section 8. Valuation of Units -- Comparison 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 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.
13. CONFLICTS OF INTEREST AND TRANSACTIONS WITH AFFILIATES
Conflicts of Interest with Respect to the Offer. The general partner of
your partnership is an affiliate 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. We own
the general partner of your partnership and are affiliated with the property
manager of your partnership's properties. The general partner of your
partnership received total fees and reimbursements (excluding property
management fees) of $435,000 in 2001, $287,000 in 2002 and $266,000 in 2003.
Total fees and reimbursements (excluding property management fees) for the nine
months ended September 30, 2004 were approximately $196,000. 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 $308,000 in 2001, $296,000 in 2002 and $266,000
in 2003. Management fees for the nine months ended September 30,
43
2004 were approximately $185,000. We have no current intention of changing the
fee structure for your general partner or the manager of your partnership's
property.
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 property is 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
$308,000 in 2001, $296,000 in 2002, $266,000 in 2003 and $185,000 for the nine
months ended September 30, 2004.
We were eligible to receive reimbursement of accountable administrative
expenses amounting to approximately $350,000 in 2001, $160,000 in 2002, $175,000
in 2003 and $114,000 for the nine months ended September 30, 2004. Included in
these amounts are fees related to construction management services provided by
NHP Management Company (which is our affiliate) of approximately $194,000 in
2001, $9,000 in 2002, $7,000 in 2003 and $2,000 for the nine months ended
September 30, 2004. The construction management service fees are calculated
based on a percentage of current additions to investment properties. At
September 30, 2004, the partnership owed us approximately $127,000 of accrued
accountable administrative expenses.
The partnership agreement provides for a fee equal to 2% of adjusted cash
from operations, as defined in the partnership agreement, to be paid to the
general partner for managing the affairs of the partnership. Payment of this
management fee is subordinated and is payable only after the partnership has
distributed to the limited partners adjusted cash from operations in any year
equal to 10% of the limited partners' adjusted invested capital, as defined in
the partnership agreement, or upon the refinance or sale of a property in the
partnership. The general partner earned approximately $29,000 in 2001, $30,000
in 2002 and $17,000 in 2003. No such fees were earned or accrued during the nine
months ended September 30, 2004. Unpaid subordinated partnership management fees
at September 30, 2004 are approximately $44,000.
In addition to reimbursement for services, the partnership paid us
approximately $8,000 for loan costs related to the refinancing of The Village
Apartments during the year ended December 31, 2002.
During the years ended December 31, 2003 and 2002, the general partner
advanced the partnership funds to cover operational expenses totaling
approximately $154,000 and $162,000, which were repaid by the partnership prior
to December 31, 2003 and 2002, respectively. During the nine months ended
September 30, 2004, the general partner advanced approximately $344,000 to the
partnership for real estate taxes owed by Fairway and Brighton Crest Apartments.
At September 30, 2004, the amount of outstanding loans and interest was
approximately $350,000. Interest on the advances is accrued at prime plus 1%
(5.75% at September 30, 2004). Interest expense on the advances was
approximately $1,000 in 2002, $1,000 in 2003 and $6,000 for the nine months
ended September 30, 2004.
44
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 $56,000, $88,000 and $73,000 during the years ended December 31,
2001, 2002 and 2003, respectively, for insurance coverage and fees associated
with policy claims administration, and was charged approximately $76,000 for the
nine months ended September 30 2004.
14. FUTURE PLANS OF THE PURCHASER
As described above under "The Offer -- Section 11. 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, 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.
We have been advised that the general partner does not currently expect to
consider, on behalf of your partnership any of the following transactions: (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 15. 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
45
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.
15. CERTAIN INFORMATION CONCERNING YOUR PARTNERSHIP
General. Your partnership was organized on May 22, 1986 under the laws of
the State of Delaware. 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 three residential apartment
complexes. Your partnership currently has approximately 1,335 limited partners.
General Partner. The general partner of your partnership is Davidson
Growth Plus GP Corporation, which is an affiliate of AIMCO. Our affiliate serves
as manager of the properties owned by your partnership. The general partner of
your partnership received total fees and reimbursements (excluding property
management fees) of approximately $435,000 in 2001, $287,000 in 2002 and
$266,000 in 2003. Total fees and reimbursements (excluding property management
fees) for the nine months ended September 30, 2004 were approximately $196,000.
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 $308,000 in 2001, $296,000 in 2002 and
$266,000 in 2003. Management fees for the nine months ended September 30, 2004
were approximately $185,000.
Ownership and Voting. We, together with Cooper River Properties L.L.C. and
AIMCO IPLP, L.P. (which are our affiliates), own 16,548 units, or 58.33%, of the
outstanding units of your partnership. Because we and our affiliates own a
majority of the outstanding units, we have the ability to control most votes of
the limited partners. See "The Litigation Settlement Offer -- Section 7. Effects
of the Offer" and "-- Section 16. 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. If rental market
conditions improve, 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 in a private transaction at some
point in the future a more viable option than it is currently. After taking into
account the foregoing considerations, your general partner is not currently
seeking a sale of your partnership's properties. Although the future operating
results of your partnership and future sales prices of the property owned by
your partnership are uncertain, the operating performance of your 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, however, are also a function of
capitalization rates in the market and the interest
46
rate environment at the time. 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, 2011
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 and appliance replacements and
other replacements and renovations in the ordinary course of business. During
2005, the capital improvements budget for each property in your partnership will
be determined on a quarterly basis, primarily based on the immediate maintenance
needs of each property to maintain both tenant safety and curb appeal. Your
partnership is currently evaluating the capital improvements needs of each
property for the first fiscal quarter of 2005. Additional improvements may be
considered each quarter and will depend on the physical condition of the
property as well as anticipated cash flow generated by the property. 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.
Financial Data. The selected financial information of your partnership set
forth below for the years ended December 31, 2003, 2002 and 2001 is based on
audited financial statements. The selected financial information set forth below
for the nine months ended September 30, 2004 and 2003 is based on unaudited
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, 2003, and the Quarterly Report on Form 10-QSB for the
quarter ended September 30, 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
47
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, FOR THE YEAR ENDED DECEMBER 31,
------------------------- --------------------------------
2004 2003 2003 2002 2001
----------- ----------- --------- --------- --------
(IN THOUSANDS, EXCEPT PER UNIT DATA)
(UNAUDITED)
OPERATING DATA:
Total revenues............ $ 3,780 $ 4,138 $ 5,372 $ 5,823 $ 6,069
Operating (loss) income... (358) 86 (44) 127 1,085
Distributions to minority
interest partner in
excess of investment... -- (33) (33) (803) --
Minority interest in net
income (loss) of joint
venture................ -- -- -- 21 (108)
Net (loss) income......... (358) 53 (77) (655) 977
Net (loss) income per
limited partnership
unit................... (12.23) 1.80 (2.64) (22.38) 33.41
Distributions per limited
partnership unit....... -- 9.41 9.41 190.54 59.42
Ratio of earnings to fixed
charges................ 67.28% 107.69% 97.04% 108.40% 193.40%
BALANCE SHEET DATA:
Cash and cash
equivalents............ $ 212 $ 383 $ 275 $ 359 $ 431
Real estate, net of
accumulated
depreciation........... 11,758 12,318 12,129 12,776 13,367
Total assets.............. 13,192 13,889 13,497 14,234 14,530
Notes payable............. 19,234 19,880 19,745 20,272 14,164
Minority interest......... -- -- -- -- 34
General partners'
deficit................ (1,039) (1,024) (1,028) (1,018) (831)
Limited partners'
(deficit) capital...... (6,351) (5,878) (6,004) (5,662) 379
Partners' deficit......... (7,390) (6,902) (7,032) (6,680) (452)
Total distributions....... -- (275) (275) (5,573) (1,738)
Book value per limited
partnership unit....... (223.85) (207.18) (211.62) (199.56) 13.36
CASH FLOWS:
Net (decrease) increase in
cash and cash
equivalents............ $ (63) $ 24 $ (84) $ (72) $ (330)
Net cash provided by
operating activities... 408 989 1,123 1,663 2,356
48
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
-------- -------- ----------------- ----------
Brighton Crest Apartments............. Phase I The partnership holds an Apartment
Marietta, Georgia 09/25/87 82.5% interest in the 320 units
Phase II joint venture which has
12/15/87 fee ownership subject to
a first mortgage
The Fairway Apartments(1)............. 05/18/88 Fee ownership subject to Apartment
Plano, Texas a first mortgage 256 units
The Village Apartments................ 05/31/88 Fee ownership subject to Apartment
Brandon, Florida a first mortgage 112 units
---------------
(1) Property is held by a limited partnership in which the partnership owns a
99% interest.
Accumulated Depreciation Schedule. The following shows the gross carrying
value and accumulated depreciation of your partnership's properties as of
December 31, 2003.
GROSS CARRYING ACCUMULATED FEDERAL TAX
PROPERTY VALUE DEPRECIATION RATE METHOD BASIS
-------- -------------- ------------ --------- ------ --------------
(IN THOUSANDS) (IN THOUSANDS)
Brighton Crest
Apartments............... $14,230 $ 8,317 5-30 yrs S/L $ 8,304
The Fairway Apartments..... 7,525 3,556 5-30 yrs S/L 4,935
The Village Apartments..... 5,221 2,974 5-30 yrs S/L 3,268
------- ------- -------
Total.................... $26,976 $14,847 $16,507
======= ======= =======
Schedule of Mortgages. The following shows certain information regarding
the outstanding first mortgage encumbering your partnership's properties as of
December 31, 2003.
PRINCIPAL
BALANCE AT STATED
DECEMBER 31, INTEREST PERIOD MATURITY PRINCIPAL BALANCE
PROPERTY 2003 RATE AMORTIZED DATE DUE AT MATURITY(1)
-------- ------------ -------- --------- -------- ------------------
(IN THOUSANDS) (IN THOUSANDS)
Brighton Crest............ $10,171 7.16% 20 years 02/01/22 $ --
The Fairway............... 6,100 7.27% 20 years 01/01/21 --
The Village............... 3,474 7.22% 20 years 02/01/22 --
-------
Total................ $19,745
=======
---------------
(1) See notes to financial statements in the partnership's Annual Report on Form
10-KSB for the year ended December 31, 2003.
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 RATE OCCUPANCY
--------------- ---------------
(PER UNIT)
PROPERTY 2003 2002 2003 2002
-------- ------ ------ ----- -----
Brighton Crest Apartments............................ $8,627 $8,655 90% 92%
The Fairway Apartments............................... $8,196 $8,603 86% 94%
The Village Apartments............................... $9,399 $9,286 96% 96%
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
49
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
---------------------- -------
2001........................................................ $ 59.42
2002........................................................ $190.54
2003........................................................ $ 9.41
2004 (through September 30, 2004)........................... $ --
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 property and is entitled to
receive five percent of the gross receipts from the partnership's property for
providing property management services. See "The Offer -- Section 13. Conflicts
of Interest and Transactions with Affiliates."
PARTNERSHIP PROPERTY
FEES AND MANAGEMENT
YEAR EXPENSES FEES
---- ----------- ----------
2001........................................................ $435,000 $308,000
2002........................................................ $287,000 $296,000
2003........................................................ $266,000 $266,000
2004 (through September 30, 2004)........................... $196,000 $185,000
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 9. The Lawsuit and
the Settlement."
16. 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 Cooper River Properties L.L.C. and AIMCO
IPLP, L.P. (which are our affiliates), own 16,548 units, or 58.33%, of the
outstanding units of your partnership. Because we and our affiliates own a
majority of the outstanding units, we control most voting decisions made by
limited partners. See "The Offer -- Section 7. Effects of the Offer."
17. SOURCE OF FUNDS
We expect that approximately $2,165,300 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 21. Fees and Expenses."
In addition to this offer, we intend to make concurrent offers to acquire
interests in approximately 7 other limited partnerships. If all such offers were
fully subscribed for cash, we would be required to pay approximately $33.4
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
50
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 September
30, 2004, we had $122.5 million of cash on hand and $258.4 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.
18. 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.
19. 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
51
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 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
52
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.
20. CERTAIN LEGAL MATTERS
General. Except as set forth in this Section 20, 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 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 20.
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.
21. 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.
53
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.................................................. 20,000
Printing Fees............................................... 6,000
Tax and Accounting Fees..................................... 1,500
Postage..................................................... 7,700
Depositary.................................................. 500
-------
Total..................................................... $43,200
=======
---------------------
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 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 15.
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:
P.O. Box 238 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 Davidson
Growth Plus GP 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 and
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
I-1
NAME POSITION
---- --------
James N. Bailey........................... Director of AIMCO
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 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:
P.O. Box 238
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)(2)
3
d18191aexv99wxayx2y.txt
LETTER OF TRANSMITTAL
(AIMCO)
LETTER OF TRANSMITTAL
TO TENDER UNITS OF LIMITED PARTNERSHIP INTEREST IN
DAVIDSON GROWTH PLUS, L.P. (THE "PARTNERSHIP")
PURSUANT TO AN OFFER TO PURCHASE
DATED FEBRUARY 16, 2005
BY
AIMCO PROPERTIES, L.P.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, NEW YORK CITY TIME, ON
MARCH 17, 2005, UNLESS EXTENDED (THE "EXPIRATION DATE") THE OFFER PRICE IS
$183.13 PER UNIT
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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).
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DESCRIPTION OF UNITS TENDERED
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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 the date set forth above (the "Offer
Date"), 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, administrators, auditors, attorneys, accountants, information
and solicitation agents, investment bankers,
3
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 the settlement and judgment 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.
Subject to and effective upon acceptance for payment of any Unit tendered
hereby in accordance with the terms of the Offer, the signatory agrees not to
bring any action, claim, suit or proceeding against the Purchaser and its
affiliates who were defendants in the Nuanes and Heller class and derivative
litigation concerning any of the matters that are the subject of the Stipulation
of Settlement approved by the Court in connection with the settlement of such
class and derivative litigation, other than for violations of federal or state
securities law.
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 upon
receipt of this Letter of Transmittal. Upon receipt of this Letter of
Transmittal, 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
5
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 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
6
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.
7
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: --------------------
8
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 am
Business Name 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: ------------------
9
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
10
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.
11
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.
12
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.
13
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.
14
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
15
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
16
EX-99.(A)(3)
4
d18191aexv99wxayx3y.txt
LETTER FROM AIMCO OP TO LIMITED PARTNERS OF DAVIDSON GROWTH PLUS, L.P.
AIMCO
AIMCO PROPERTIES, L.P.
C/O THE ALTMAN GROUP, INC.
1275 VALLEY BROOK AVENUE
LYNDHURST, NEW JERSEY 07071
(800) 467-0821
February 16, 2005
Dear Limited Partner:
Enclosed is our tender offer at a price that we think you should consider.
- We are offering to acquire your units of limited partnership interest in
Davidson Growth Plus, L.P. for $183.13 per unit in cash.
- This offer is not subject to any minimum number of units.
- This offer is not being made as part of the settlement of the Nuanes and
Heller class and derivative litigation.
- You will not be required to pay any partnership transfer fees in
connection with any disposition of your units pursuant to this offer.
BY ACCEPTING OUR OFFER
- You will receive your final K-1 for this partnership and forever be free
of tax reporting relative to this investment.
- You will have been able to convert your interest into cash.
- You will release us from all liability 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 relating to the Nuanes and
Heller class and derivative litigation, whether or not you requested
exclusion from the settlement or the judgment is reversed on appeal, and
assign to us your rights in any future claims. Please see the description
of the litigation and settlement within the enclosed document.
- You simply complete and sign the enclosed Letter of Transmittal in
accordance with the instructions and mail or deliver it and any other
required documents to The Altman Group, Inc., which is acting as
Information Agent in connection with this offer.
BY REJECTING OUR OFFER
- You will remain a limited partner in the partnership, and do not need to
fill out any papers.
- You will receive annual K-1's with your tax information.
The partnership's general partner, which is our affiliate, regularly
evaluates the capital needs, competitive position and market conditions for each
of the properties that the partnership owns, and the general partner uses these
factors to determine whether the partnership will want to continue to own them.
The general partner could decide that the best course of action is to sell some
or all of the assets in the partnership in the near future. Eventually, the
partnership will terminate. You may elect to hold your interest until the
termination of the partnership. 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. In any event, this is
our attempt to provide you some liquidity and to relieve you of your tax
reporting burden.
If you have any questions, please contact the Information Agent, toll free,
at (800) 467-0821.
VERY TRULY YOURS,
AIMCO PROPERTIES, L.P.