-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OXYEYe40bLDPJPU5rmuwqBe5c3F8cAPInRmUipEJvc3YPWr62H+aAOAPlaI4aF37 m6AZQNEBeXujB3B3rkNDrA== 0000891836-99-000152.txt : 19990305 0000891836-99-000152.hdr.sgml : 19990305 ACCESSION NUMBER: 0000891836-99-000152 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19990304 GROUP MEMBERS: GOLDMAN SACHS GROUP LP GROUP MEMBERS: GOLDMAN, SACHS & CO. GROUP MEMBERS: WH ADVISORS, L.L.C. XI GROUP MEMBERS: WHITEHALL STREET REAL ESTATE LTD PARTNERSHIP XI SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: BERKSHIRE REALTY CO INC /DE CENTRAL INDEX KEY: 0000869446 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 043086485 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-51403 FILM NUMBER: 99557304 BUSINESS ADDRESS: STREET 1: 470 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02210 BUSINESS PHONE: 8888670100 MAIL ADDRESS: STREET 1: 470 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02210 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GOLDMAN SACHS GROUP LP CENTRAL INDEX KEY: 0000904571 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133501777 STATE OF INCORPORATION: NY FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 85 BROAD ST CITY: NEW YORK STATE: NY ZIP: 10004 BUSINESS PHONE: 2129021000 MAIL ADDRESS: STREET 1: 85 BROAD STREET CITY: NEW YORK STATE: NY ZIP: 10004 SC 13D 1 SCHEDULE 13D --------------------------- OMB APPROVAL --------------------------- OMB Number: 3235-0145 Expires: August 31, 1999 Estimated average burden hours per form........14.90 --------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ______________)* BERKSHIRE REALTY COMPANY, INC. - -------------------------------------------------------------------------------- (Name of Issuer) Share of Common Stock, par value $0.01 per share - -------------------------------------------------------------------------------- (Title of Class of Securities) 084710 10 2 --------------------------------------------------------- (CUSIP Number) David J. Greenwald, Esq. Goldman, Sachs & Co. 85 Broad Street, New York, New York 10004 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) February 22, 1999 --------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box |_|. NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedules, including all exhibits. See ss.240.13d-7(b) for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D - -------------------------------------------------------------------------------- CUSIP NO. 084710 10 2 PAGE 2 OF 23 PAGES - -------------------------------------------------------------------------------- 1. NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Whitehall Street Real Estate Limited Partnership XI - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (See Instructions) (b) [X] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS (See Instructions) OO - -------------------------------------------------------------------------------- 5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER NUMBER OF -0- SHARES ----------------------------------------------------- BENEFICIALLY 8. SHARED VOTING POWER OWNED BY -0- EACH ----------------------------------------------------- REPORTING 9. SOLE DISPOSITIVE POWER PERSON -0- WITH ----------------------------------------------------- 10. SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON -0- - -------------------------------------------------------------------------------- 12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) [ ] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.0% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON (See Instructions) PN - -------------------------------------------------------------------------------- SCHEDULE 13D - -------------------------------------------------------------------------------- CUSIP NO. 084710 10 2 PAGE 3 OF 23 PAGES - -------------------------------------------------------------------------------- 1. NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) WH Advisors, L.L.C. XI - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (See Instructions) (b) [X] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS (See Instructions) OO - -------------------------------------------------------------------------------- 5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER NUMBER OF -0- SHARES ----------------------------------------------------- BENEFICIALLY 8. SHARED VOTING POWER OWNED BY -0- EACH ----------------------------------------------------- REPORTING 9. SOLE DISPOSITIVE POWER PERSON -0- WITH ----------------------------------------------------- 10. SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON -0- - -------------------------------------------------------------------------------- 12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) [ ] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.0% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON (See Instructions) OO - -------------------------------------------------------------------------------- SCHEDULE 13D - -------------------------------------------------------------------------------- CUSIP NO. 084710 10 2 PAGE 4 OF 23 PAGES - -------------------------------------------------------------------------------- 1. NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) The Goldman Sachs Group, L.P. - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (See Instructions) (b) [X] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS (See Instructions) OO - -------------------------------------------------------------------------------- 5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER NUMBER OF -0- SHARES ----------------------------------------------------- BENEFICIALLY 8. SHARED VOTING POWER OWNED BY 27,208 EACH ----------------------------------------------------- REPORTING 9. SOLE DISPOSITIVE POWER PERSON -0- WITH ----------------------------------------------------- 10. SHARED DISPOSITIVE POWER 27,208 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 27,208 - -------------------------------------------------------------------------------- 12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) [ ] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) less than 1% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON (See Instructions) HC/PN - -------------------------------------------------------------------------------- SCHEDULE 13D - -------------------------------------------------------------------------------- CUSIP NO. 084710 10 2 PAGE 5 OF 23 PAGES - -------------------------------------------------------------------------------- 1. NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Goldman, Sachs & Co. - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (See Instructions) (b) [X] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS (See Instructions) OO - -------------------------------------------------------------------------------- 5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [X] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION New York - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER NUMBER OF -0- SHARES ----------------------------------------------------- BENEFICIALLY 8. SHARED VOTING POWER OWNED BY 27,208 EACH ----------------------------------------------------- REPORTING 9. SOLE DISPOSITIVE POWER PERSON -0- WITH ----------------------------------------------------- 10. SHARED DISPOSITIVE POWER 27,208 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 27,208 - -------------------------------------------------------------------------------- 12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) [ ] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) less than 1% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON (See Instructions) PN/BD/IA - -------------------------------------------------------------------------------- CUSIP No. 084710 10 2 PAGE 6 OF 23 PAGES Item 1. Security and Issuer. The title of the class of equity securities to which this statement relates is the shares of Common Stock, par value $.01 per share (the "Common Stock"), of Berkshire Realty Company, Inc., a Delaware corporation ("Berkshire"). The principal executive offices of Berkshire are located at One Beacon Street, Suite 1550, Boston, Massachusetts 02108. Item 2. Identity and Background. This statement is being filed by Whitehall Street Real Estate Limited Partnership XI ("Whitehall"), WH Advisors, L.L.C. XI ("WH Advisors, L.L.C."), Goldman, Sachs & Co. ("GS&Co.") and The Goldman Sachs Group, L.P. ("GS Group", and, together with Whitehall, WH Advisors, L.L.C. and GS&Co., the "Reporting Persons").* As described in Items 3 and 4 below, on February 22, 1999, Whitehall together with Blackstone Real Estate Acquisitions III L.L.C. ("Blackstone") and The Berkshire Companies Limited Partnership ("BCLP"), formed Aptco, LLC, a Delaware limited liability company ("Aptco"), for the purpose of submitting a merger proposal to the Board of Directors of Berkshire pursuant to which, among other things, Aptco would acquire Berkshire and holders of outstanding shares of Common Stock (other than certain holders described in Item 4 below) would receive cash in exchange for their shares. As a result, the Reporting Persons, together with Blackstone and BCLP and certain affiliates of BCLP as described below (collectively, the "Krupp Affiliates") may be - --------------- * Neither the present filing nor anything contained herein shall be construed as an admission that Whitehall, WH Advisors, L.L.C., GS&Co. or GS Group constitute a "person" for any purpose other than Section 13(d) of the Securities Exchange Act of 1934. CUSIP No. 084710 10 2 PAGE 7 OF 23 PAGES deemed to constitute a "group" within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended.* Pursuant to Rule 13(d)-1(k)(2), the Reporting Persons are filing individually. The business address of each Reporting Person is 85 Broad Street, New York, New York 10004. Whitehall is a Delaware limited partnership that was formed for the purpose of investing in debt and equity interests in real estate assets and businesses. WH Advisors, L.L.C., a Delaware limited liability company, acts as the sole general partner of Whitehall. GS&Co., a New York limited partnership, is an investment banking firm and a member of the New York Stock Exchange, Inc. and other national exchanges. GS Group, one of the general partners of GS&Co., owns a 99% interest in GS&Co. GS&Co. is the investment manager for Whitehall. GS Group is a Delaware limited partnership and holding partnership that (directly or indirectly through subsidiaries or affiliated companies or both) is a leading investment banking organization. The other general partner of GS&Co. is The Goldman, Sachs & Co. L.L.C. ("GS L.L.C."), which is wholly-owned by GS Group and The Goldman Sachs Corporation, a Delaware corporation ("GS Corp."). GS Corp. is the sole general partner of GS Group. The name, residence or business address, present principal occupation or employment, and the name, principal business and address of any corporation or other organization in which such employment is conducted and the citizenship of (i) each director of GS Corp. and GS L.L.C. are set - --------------- * Neither the present filing nor anything contained herein shall be construed as an admission that the Reporting Persons together with Blackstone and the Krupp Affiliates constitute a "person" or "group" for any purpose. Neither the present filing nor anything contained herein shall be construed as an admission that Whitehall together with Blackstone and the Krupp Affiliates constitute a "person" or "group" for any purpose other than what they may be deemed to constitute under Section 13(d) of the Securities Exchange Act of 1934. CUSIP No. 084710 10 2 PAGE 8 OF 23 PAGES forth on Schedule I hereto and are incorporated herein by reference and (ii) each manager and executive officer of WH Advisors, L.L.C. are set forth on Schedule II hereto and are incorporated herein by reference. To the knowledge of the Reporting Persons, the business address of Blackstone is 345 Park Avenue, New York, New York 10154, and the business address of each of the Krupp Affiliates is The Berkshire Group, One Beacon Street, Suite 1500, Boston, Massachusetts 02108. To the knowledge of the Reporting Persons, Blackstone is a Delaware limited liability company that, together with its sole member, Blackstone Real Estate Advisors III, L.P., acts as an advisor to Blackstone Real Estate Partners III, L.P., a real estate investment fund. To the knowledge of the Reporting Persons: BCLP is a Massachusetts limited partnership that, together with its subsidiaries, is principally engaged in mortgage banking and investment sponsorship, asset and other management services, venture capital investing, commercial laundry and linen services and furniture manufacturing and sales. The sole general partners of BCLP are KGP-1, Incorporated ("KGP-1") and KGP-2, Incorporated ("KGP-2"). To the knowledge of the Reporting Persons: KGP-1 and KGP-2 are each Massachusetts corporations whose principal business is serving as general partners of BCLP and certain of its affiliates. Douglas Krupp and George Krupp each own 50% of the outstanding common stock of KGP-1 and KGP-2. The sole directors of KGP-1 and KGP-2 are Douglas Krupp and George Krupp. The sole executive officers of KGP-1 and KGP-2 are Douglas Krupp (President) and David Quade (Executive Vice President). Mr. Quade is a United States citizen whose principal occupation is acting as Executive Vice President and Chief Financial Officer of The Berkshire Group. CUSIP No. 084710 10 2 PAGE 9 OF 23 PAGES To the knowledge of the Reporting Persons: Douglas Krupp is an individual who is a United States citizen and whose principal occupation is acting as the Chairman of BCLP. Douglas Krupp also serves as a director and Chairman of the Board of Berkshire. To the knowledge of the Reporting Persons, George Krupp is an individual who is a United States citizen and whose principal occupation is serving as an instructor of history at the New Jewish High School in Waltham, Massachusetts. None of the Reporting Persons, or to the best knowledge and belief of the Reporting Persons, any of the individuals listed in Schedule I or Schedule II has, during the past five years, been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) or, except as set forth in Schedule III to this Schedule 13D, has been 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 future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. This Item 2 is qualified in its entirety by reference to Schedule I, Schedule II and Schedule III which are attached hereto and incorporated into this Item by reference. Item 3. Source and Amount of Funds or Other Consideration. The Proposed Transactions (as defined in Item 4 below) would be funded through a combination of equity and debt financing. On February 22, 1999, Whitehall, Blackstone and BCLP formed Aptco for the purpose of proposing the Proposed Transactions to Berkshire. Pursuant to a letter, dated February 22, 1999, among Whitehall, Blackstone and Douglas Krupp (on behalf of CUSIP No. 084710 10 2 PAGE 10 OF 23 PAGES himself and the other Krupp Affiliates)(together with the "Summary of Terms" attached thereto, the "Formation Letter") (attached hereto as Exhibit 1), (i) Whitehall and Blackstone have agreed to make an equity contribution to Aptco in the amount of $106 million each , as such amount may be adjusted pursuant to the terms of the Formation Letter and (ii) the Krupp Affiliates have agreed to contribute to Aptco at least 5,416,000 shares of Common Stock and/or OP Units (as defined in Item 4 below) beneficially owned by the Krupp Affiliates. Pursuant to a letter, dated February 22, 1999, between Aptco and Goldman Sachs Mortgage Corporation ("GSMC") (the "Commitment Letter") (attached hereto as Exhibit 2), GSMC has agreed to provide up to $675 million in the form of a bridge loan to fund the remainder of the consideration required for the Proposed Transactions. In connection with the Proposed Transactions, Aptco currently intends to sell certain properties owned by Berkshire and to use the proceeds of such sales to reduce the amount of indebtedness then outstanding under the bridge loan. The transactions contemplated by the Formation Letter and the Commitment Letter are subject to a number of terms and conditions set forth therein, including, among others, the execution of mutually acceptable documentation and the satisfaction of the conditions set forth in the Offer Letter (as defined in Item 4 below). In addition, as of February 22, 1999, GS Group and GS&Co. may be deemed to beneficially own 27,208 shares of Common Stock held in client accounts with respect to which GS&Co. or employees of GS&Co. have voting or investment discretion, or both ("Managed Accounts"). GS&Co. purchased these shares of Common Stock in the ordinary course of its business on behalf of the Managed Accounts. GS&Co. and GS Group each disclaims beneficial ownership CUSIP No. 084710 10 2 PAGE 11 OF 23 PAGES of Common Stock held in Managed Accounts. To the knowledge of the Reporting Persons, each of Blackstone and the Krupp Affiliates disclaim beneficial ownership of Common Stock held in Managed Accounts. None of the Reporting Persons nor any of the persons listed on Schedules I or II has contributed any funds or other consideration towards the purchase of the securities of Berkshire reported in this statement. The information set forth in response to this Item 3 is qualified in its entirety by reference to the Formation Letter and the Commitment letter, which are expressly incorporated herein by reference. Item 4. Purpose of Transaction. Based on information provided by the Krupp Affiliates to the Reporting Persons, the Krupp Affiliates originally acquired the shares of Common Stock which are beneficially owned by them for investment purposes. As of the date of this statement, none of the Reporting Persons, or to the knowledge and belief of the Reporting Persons, any of the individuals listed on Schedule I or Schedule II, has any present plan or intention which relates to or would result in any of the actions set forth in parts (a) through (j) of Item 4 of Schedule 13D, other than the following: As described in a letter, dated February 22, 1999, from Aptco to Berkshire (the "Offer Letter") (attached hereto as Exhibit 3), Aptco has proposed a transaction in which (i) Berkshire would merge (the "Company Merger") with and into Aptco and (ii) a subsidiary of Aptco ("Aptco Sub") CUSIP No. 084710 10 2 PAGE 12 OF 23 PAGES would merge (the "Subsidiary Merger") with and into BRI OP Limited Partnership, a Delaware limited partnership which is the operating partnership of Berkshire ("BRI OP"). Pursuant to the proposed terms of the Company Merger, all outstanding Common Stock not held by Aptco or Aptco Sub (other than dissenting shares) would be converted into $11.05 per share in cash (the "Cash Price"), and all outstanding shares of the Series 1997-A Convertible Preferred Stock, par value $.01 per share (the "Preferred Stock") of Berkshire, (other than dissenting shares) would be converted into an amount in cash equal to the "change of control preference" specified in Berkshire's certificate of designation in respect of the Preferred Stock. Pursuant to the proposed terms of the Subsidiary Merger, the outstanding partnership units in BRI OP ("OP Units") not held by Aptco or Aptco Sub would be converted, at the election of the holders thereof, into either an amount per OP Unit in cash equal to the Cash Price or equity securities of Aptco. The Company Merger and the Subsidiary Merger are collectively referred to herein as the "Proposed Transactions." In connection with the Proposed Transactions, the Common Stock would be delisted from the New York Stock Exchange, and the registration of the Common Stock under the Securities Exchange Act of 1934 would be terminated. In addition, as indicated in the Formation Letter, Aptco currently intends to sell certain properties owned by Berkshire and to use the proceeds of such sales to reduce the amount of indebtedness then outstanding under the bridge loan. The Proposed Transactions are subject to a number of conditions including, among others, (i) execution of definitive merger agreements containing customary "no-shop," "break up fee" and expense reimbursement provisions, (ii) absence of any injunction prohibiting or restricting the CUSIP No. 084710 10 2 PAGE 13 OF 23 PAGES consummation of the Proposed Transactions, any litigation commenced or threatened by a governmental entity and any litigation that could have a material adverse effect with respect to Berkshire or BRI OP, or that could significantly delay the consummation of the Proposed Transactions, (iii) receipt by Berkshire of a satisfactory closing agreement with the Internal Revenue Service, on terms and conditions satisfactory to Aptco, with respect to certain tax matters, and Aptco's satisfaction with respect to certain other tax matters, (iv) execution of an agreement, on or prior to the execution of definitive merger agreements, by the holders of a majority in interest of the Preferred Stock consenting to the Proposed Transactions, (v) receipt by the Board of Directors of Berkshire of an opinion from a nationally recognized investment banking firm as to the fairness of the consideration to be paid under the terms of the Proposed Transactions from a financial point of view to the holders of Common Stock, Preferred Stock and OP Units, (vi) approval of the Proposed Transactions and the definitive merger agreements by the respective Boards of Directors of Berkshire and of the general partner of BRI OP, (vii) approval of the Proposed Transactions by the holders of the Common Stock, Preferred Stock and OP Units, (viii) receipt of any regulatory and other third party consents to the Proposed Transactions, including the financing thereof, (ix) confirmation that investment banking fees, severance costs and legal and accounting expenses of Berkshire relating to the Proposed Transactions will not exceed $12 million, (x) confirmation of the number of fully-diluted shares of Berkshire, (xi) receipt by Aptco of the financing proceeds on the terms and conditions set forth in the Formation Letter and the Commitment Letter and (xii) other customary conditions to closing. CUSIP No. 084710 10 2 PAGE 14 OF 23 PAGES Although Aptco's proposal contained in the Offer Letter expired by its terms at 5:00 p.m. on March 1, 1999, each Reporting Person expects to evaluate on an ongoing basis Berkshire's financial condition, business operations and prospects, market price of the Common Stock, conditions in securities markets generally, general economic and industry conditions and other factors. Accordingly, each Reporting Person reserves the right to change its plans and intentions at any time, as it deems appropriate and may or may not submit a revised proposal or extend the expiration date of the proposal contained in the Offer Letter. In particular, each Reporting Person may at any time and from time to time acquire shares of Common Stock or securities convertible or exchangeable for Common Stock; dispose of shares of Common Stock which it has acquired; exchange OP Units which it has acquired for shares of Common Stock; and/or may enter into privately negotiated derivative transactions with institutional counterparts to hedge the market risk of some or all of the positions in the Common Stock which it has acquired. Any such transactions may be effected at any time and from time to time subject to any applicable limitations of the Securities Act. To the knowledge of each Reporting Person, each of the persons listed on Schedule I and Schedule II hereto and each of Blackstone and the Krupp Affiliates may make the same evaluation and reserve the same rights. CUSIP No. 084710 10 2 PAGE 15 OF 23 PAGES Item 5. Interests in Securities of the Issuer. (a) Based on information provided by the Krupp Affiliates to the Reporting Persons, as of February 22, 1999, 5,881,369* shares of Common Stock may be deemed to be beneficially owned by the Krupp Affiliates, representing approximately 14.0% of the outstanding shares of Common Stock.** Each of Whitehall, WH Advisors, L.L.C., GS&Co. and GS Group disclaims beneficial ownership of all of such shares of Common Stock. Based on information provided by Blackstone to the Reporting Persons, as of February 22, 1999, no shares of Common Stock were beneficially owned by Blackstone. As of February 22, 1999, no shares of Common Stock were beneficially owned by Whitehall or WH Advisors, L.L.C. As of February 22, 1999, GS&Co. and GS Group may be deemed to beneficially own 27,208 shares of Common Stock held in Managed Accounts, representing less than 1% of the outstanding shares of Common Stock. Each of GS&Co. and GS Group disclaims beneficial ownership of Common Stock held in Managed Accounts. To the knowledge of the Reporting - --------------- * Based on information provided by the Krupp Affiliates to the Reporting Persons, such number includes 5,344,066 OP Units and excludes 42,110 shares of Common Stock owned by certain persons who are related to Douglas and George Krupp, regarding which the Krupp Affiliates disclaim beneficial ownership. Pursuant to the Amended and Restated Agreement of Limited Partnership of BRI OP, OP Units are convertible into shares of Common Stock on a one-for-one basis or, at the election of Berkshire, into cash. Based on information provided by the Krupp Affiliates to the Reporting Persons, the Krupp Affiliates disclaim beneficial ownership of Common Stock to the extent that OP Units may be exchanged for cash rather than Common Stock at the option of Berkshire. ** All percentages of Common Stock set forth in this Item 5 are based upon the 36,711,488 shares of Common Stock reported to be outstanding as of October 31, 1998 as disclosed in Berkshire's most recent Form 10-Q filed with the Securities and Exchange Commission. CUSIP No. 084710 10 2 PAGE 16 OF 23 PAGES Persons, each of Blackstone and the Krupp Affiliates disclaim beneficial ownership of Common Stock held in Managed Accounts. None of the Reporting Persons, and to the knowledge of the Reporting Persons, none of the persons listed on Schedule I and Schedule II hereto, beneficially own any shares of Common Stock other than as set forth herein. (b) GS&Co. and GS Group share the power to vote or direct the vote and to dispose or direct the disposition of the shares of Common Stock held in the Managed Accounts as indicated on pages 4 and 5 above. (c) None of the Reporting Persons, and based on information provided by Blackstone, the Krupp Affiliates and the persons listed on Schedules I and II hereto to the Reporting Persons, none of the persons listed on Schedule I and Schedule II hereto, the Krupp Affiliates or Blackstone, has been a party to any transaction in the Common Stock during the sixty-day period ending on February 22, 1999. (d) Except for clients who may with respect to shares of Common Stock held in Managed Accounts, no other person has the right to receive or the power to direct the receipt of the dividends from, or the proceeds from the sale of, any shares of Common Stock that may be deemed to be beneficially owned by the Reporting Persons. (e) Not applicable. CUSIP No. 084710 10 2 PAGE 17 OF 23 PAGES Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. Except as disclosed in Items 3, 4 and 5 and the Joint Filing Agreement, dated March 4, 1999, among the Reporting Persons (attached hereto as Exhibit 4), none of the Reporting Persons is a party to any contracts, arrangements, understandings or relationships with respect to any securities of Berkshire, including but not limited to the transfer or voting of any securities, finder's fees, joint ventures, loan or option agreements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. Item 7. Material to be Filed as Exhibits. Exhibit No. Exhibit ----------- ------- 1. Formation Letter, dated February 22,1999, among Whitehall, Blackstone and Douglas Krupp. 2. Commitment Letter, dated February 22, 1999, between Aptco and GSMC. 3. Offer Letter, dated February 22, 1999, from Aptco to Berkshire. 4. Joint Filing Agreement, dated March 4, 1999, among the Reporting Persons. CUSIP No. 084710 10 2 PAGE 18 OF 23 PAGES SIGNATURE After reasonable inquiry and to our best knowledge and belief, we certify that the information set forth in this statement is true, complete and correct. Dated: March 4, 1999 WHITEHALL STREET REAL ESTATE LIMITED PARTNERSHIP XI By: WH Advisors, L.L.C. XI, its general partner By: /s/ Edward M. Siskind --------------------------------- Name: Edward M. Siskind Title: Vice President and Assistant Treasurer WH ADVISORS, L.L.C. XI By: /s/ Edward M. Siskind --------------------------------- Name: Edward M. Siskind Title: Vice President and Assistant Treasurer THE GOLDMAN SACHS GROUP, L.P. By: /s/ Hans L. Reich --------------------------------- Name: Hans L. Reich Title: Attorney-in-Fact GOLDMAN, SACHS & CO. By: /s/ Hans L. Reich --------------------------------- Name: Hans L. Reich Title: Attorney-in-Fact CUSIP No. 084710 10 2 PAGE 19 OF 23 PAGES SCHEDULE I The name of each director of The Goldman Sachs Corporation and The Goldman, Sachs & Co. L.L.C. is set forth below. The business address of each person listed below except John L. Thornton is 85 Broad Street, New York, NY 10004. The business address of John L. Thornton is 133 Fleet Street, London EC4A 2BB, England. Each person is a citizen of the United States of America. The present principal occupation or employment of each of the listed persons is as a managing director of Goldman, Sachs & Co. or another Goldman Sachs operating entity. Jon Z. Corzine Henry M. Paulson, Jr. Robert J. Hurst John A. Thain John L. Thornton CUSIP No. 084710 10 2 PAGE 20 OF 23 PAGES SCHEDULE II The name, position and present principal occupation of each manager and executive officer of WH Advisors, L.L.C. XI, which is the sole general partner of Whitehall Street Real Estate Limited Partnership XI, are set forth below. The business address of all the executive officers and managers listed below except G. Douglas Gunn, Todd A.Williams, Angie D. Madison, Richard E. Georgi III, Paul R. Milosevich, Elizabeth A. O'Brien and Eli Muraidekh is 85 Broad Street, New York, New York 10004. The business address of G. Douglas Gunn, Todd A. Williams, Angie D. Madison and Paul R. Milosevich is 100 Crescent Court, Suite 1000, Dallas, TX 75201. The business address of Richard E. Georgi III and Eli Muraidekh is 133 Fleet Street, London EC4A 2BB, England. The business address of Elizabeth A. O'Brien is 3 Garden Road, Central, Hong Kong. Except for Brahm S. Cramer, who is a Canadian citizen, all executive officers and managers listed below are United States citizens. Name Position Present Principal Occupation - ---- -------- ---------------------------- Rothenberg, Stuart M. Manager/Vice President Managing Director of Goldman, Sachs & Co. Neidich, Daniel M. Manager/President Managing Director of Goldman, Sachs & Co. O'Brien, Elizabeth A. Vice President/Assistant Vice President of Secretary Goldman Sachs (Asia) L.L.C. Georgi III, Richard E. Vice President Managing Director of Goldman Sachs International Weil, David M. Vice President Managing Director of Goldman, Sachs & Co. Rosenberg, Ralph F. Manager/Vice President/ Managing Director of Assistant Secretary Goldman, Sachs & Co. CUSIP No. 084710 10 2 PAGE 21 OF 23 PAGES Name Position Present Principal Occupation - ---- -------- ---------------------------- Williams, Todd A. Vice President/Assistant Managing Director of Secretary/Assistant Goldman, Sachs & Co. Treasurer Naughton, Kevin D. Vice President/Secretary/ Vice President of Treasurer Goldman, Sachs & Co. Siskind, Edward M. Vice President/Assistant Managing Director of Treasurer Goldman, Sachs & Co. Klingher, Michael K. Vice President Managing Director of Goldman, Sachs & Co. Gunn, G. Douglas Vice President/Assistant Vice President of Secretary Goldman, Sachs & Co. Lahey, Brian J. Vice President/Assistant Vice President of Treasurer Goldman, Sachs & Co. Kava, Alan S. Vice President Vice President of Goldman, Sachs & Co. Feldman, Steven M. Vice President Managing Director of Goldman, Sachs & Co. Madison, Angie D. Vice President/Assistant Vice President of Secretary Goldman, Sachs & Co. Weiss, Mitchell S. Assistant Treasurer Vice President of Goldman, Sachs & Co. Cramer, Brahm S. Vice President Vice President of Goldman, Sachs & Co. Karr, Jerome S. Vice President Vice President of Goldman, Sachs & Co. Lauer, Kate Vice President/Assistant Vice President of Secretary Goldman, Sachs & Co. CUSIP No. 084710 10 2 PAGE 22 OF 23 PAGES Name Position Present Principal Occupation - ---- -------- ---------------------------- Milosevich, Paul R. Vice President Vice President of Goldman, Sachs & Co. Mortelliti, Josephine Vice President Vice Presdent of Goldman, Sachs & Co. Muraidekh, Eli Vice President Vice President of Goldman Sachs International Sack, Susan L. Vice President/Assistant Vice President of Secretary Goldman, Sachs & Co. CUSIP No. 084710 10 2 PAGE 23 OF 23 PAGES SCHEDULE III In Securities and Exchange Commission Administrative Proceeding File No. 3-8282 In the Matter of Goldman, Sachs & Co., Goldman, Sachs & Co., (the "Firm"), without admitting or denying any of the SEC's allegations, settled administrative proceedings involving alleged books and records and supervisory violations relating to eleven trades of U.S. Treasury securities in the secondary markets in 1985 and 1986. The SEC alleged that the Firm had failed to maintain certain records required pursuant to Section 17(a) of the Exchange Act and had also failed to supervise activities relating to the aforementioned trades in violation of Section 15(b)(4)(E) of the Exchange Act. The Firm was ordered to cease and desist from committing or causing any violation of the aforementioned sections of the Exchange Act, pay a civil money penalty to the SEC in the amount of $250,000 and establish policies and procedures reasonably designed to assure compliance with Section 17(a) of the Exchange Act and Rules 17a-3 and 17a-4 thereunder. EX-99.1 2 SUMMARY OF TERMS COVER LETTER Exhibit 1 February 22, 1999 Douglas S. Krupp The Berkshire Group One Beacon Street, Suite 1550 Boston, MA 02108 Dear Douglas: Aptco, LLC, an entity to be formed by you or your affiliates ("The Berkshire Group") and us or our affiliates, intends to make an acquisition proposal to the Board of Directors of "Bruin" with respect to the possible acquisition of Bruin and its subsidiaries, and that, in connection with such proposal, Aptco will be advising the Bruin Board that the equity portion of the purchase price for the acquisition of Bruin and its subsidiaries will be provided by Whitehall Street Real Estate Limited Partnership XI ("Whitehall"), Blackstone Real Estate Acquisitions III L.L.C. ("Blackstone") and The Berkshire Group, or their respective affiliates. We, severally and not jointly, hereby advise you that, subject to the execution of mutually acceptable documentation and satisfaction of the conditions referred to in any proposal letter to be signed by us, we (directly or through our affiliates) are prepared to proceed as your equity partners in connection with such acquisition on the basis set forth in the attached "Summary of Terms." By countersigning below, you hereby agree that, subject to the execution of mutually acceptable documentation and satisfaction of the conditions referred to in any proposal letter to be signed by you, you (through your affiliates) are prepared to proceed as our equity partner in connection with such acquisition on the basis set forth in the attached "Summary of Terms." The agreements set forth herein will terminate automatically upon the earlier of (i) the date that the Bruin Board definitively rejects Aptco's proposal and (ii) March 31, 1999. Notwithstanding anything that may be expressed or implied in this letter, except as may be set forth in the definitive operating agreement of Aptco, no recourse hereunder or under any documents or instruments delivered in connection herewith shall be had against any current or future officer, agent or employee of Whitehall, Blackstone or The Berkshire Group (any of the foregoing, an "Investor"), against any current or future general or limited partner or member of any Investor or against any affiliate or assignee of any of the foregoing, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable law, it being expressly agreed and acknowledged that no personal liability whatever shall attach to, be imposed on or otherwise be incurred by any such current or future officer, agent or employee or any such current or future general or limited partner, member, affiliate or assignee of any of the foregoing, as such for any obligations of any Investor under this letter or any documents or instruments delivered in connection herewith or for any claim based on, in respect of or by reason of such obligations or their creation. This letter is solely for the benefit of the signatories hereto and no other person shall obtain any rights hereunder or be entitled to rely or claim reliance upon the terms and conditions hereof or in any documents delivered pursuant hereto. This letter may not be assigned by any of the signatories hereto and no Investor may transfer any of its rights hereunder without the prior written consent of the other two Investors. This letter constitutes a general non-binding agreement in principle of the signatories hereto and is not intended to, and does not, create a legally binding commitment, agreement or obligation on the part of any of the signatories hereto. This letter is governed by and shall be construed in accordance with the law of the State of New York applicable to contracts made and performed in that State. [Signatures on next page] This document may be executed in one or more counterparts, each of which shall be considered an original, but all of which taken together shall constitute one and the same document. Very truly yours, WHITEHALL STREET REAL ESTATE LIMITED PARTNERSHIP XI By: WH Advisors, L.L.C. XI By: /s/ Steven Feldman ----------------------------- BLACKSTONE REAL ESTATE ACQUISITIONS III L.L.C. By: /s/ Thomas J. Saylak ----------------------------- Agreed as of the date set forth above: /s/ Douglas S. Krupp - ------------------------------ Douglas S. Krupp, on behalf of himself and his affiliates who will be members of Aptco, LLC 2/22/99 SUMMARY OF TERMS The following sets forth an outline of discussions concerning a possible joint venture involving Blackstone Real Estate Acquisitions III L.L.C. or one of its affiliates ("Blackstone"), The Berkshire Group ("Berkshire Group") and Whitehall Street Real Estate Limited Partnership XI ("Whitehall" and, together with Blackstone and Berkshire Group, the "Investors"). GENERAL Berkshire Group, Blackstone and Whitehall would form a new entity (Aptco) to acquire all the equity securities (including common stock, preferred stock and operating partnership units) of Berkshire Realty Company, Inc. and subsidiaries ("Berkshire"). It is initially envisioned that Aptco would be organized as an LLC. Aptco would focus on the ownership, acquisition, management, renovation and existing development of multifamily properties, primarily value-added/repositioning opportunities. PRICING The price to be offered by Aptco would be unanimously determined by Berkshire Group, Blackstone and Whitehall. STRUCTURE Upon execution of a definitive agreement between Aptco and Berkshire, the Investors would commit to contribute cash, Berkshire common stock and/or operating partnership units to Aptco to fund the acquisition of Berkshire. Berkshire Group would contribute to Aptco as common equity all of its stock and operating partnership units (which shall be not less than 5,416,000 shares and units) valued at the bid price, and Blackstone and Whitehall would each provide 50% of the balance of the required equity (initially to be at least $106 million, increasing at the time the bridge financing is refinanced as provided below, but not in excess of $125.5 million each) as preferred equity. Cash equity required in excess of $251 million shall be contributed as provided below. It is expected that some or all of the third party owners of limited partnership interests in BRI OP -1- Limited Partnership (the "OP") will exchange their interests in the OP for equity interests in Aptco on the terms set forth in the draft merger agreements to be submitted by Aptco with its bid to Berkshire. In the event cash equity in excess of $251 million is required by Aptco, such excess, not to exceed $30 million in the aggregate, would be funded one third each by Blackstone, Whitehall and Berkshire Group. Any such amounts funded by the Investors pursuant to the immediately preceding sentence shall be treated as preferred equity with respect to distribution rights (i.e. shall be pari passu with the other preferred equity held by Blackstone and Whitehall). As an alternative to providing additional equity above $212 million, with the consent of each of the Investors, Aptco may secure subordinated debt upon terms acceptable to each of the Investors. Any Investor not funding its share of any portion of the $30 million of additional required capital calls (described in the first sentence of this paragraph) will be diluted on a 2 for 1 basis (based on book equity). GOVERNANCE Aptco would be governed by a three member Board of Directors (Board). Whitehall, Blackstone and Berkshire Group would each have one seat on the Board. Douglas Krupp (DK) would be Chairman of the Board (as Berkshire Group's designee) and Chief Executive Officer (CEO). Berkshire Group would lose its Board seat in the event that (i) it transfers any portion of its initial ownership interest in Aptco in violation of Aptco's Operating Agreement, (ii) Aptco acquires the interest of Berkshire Group, (iii) DK is removed as CEO for cause (as defined in Annex A), company cause (as defined in Annex A), or if he resigns prior to the fifth anniversary of closing or (iv) upon DK's or Berkshire Group's default of a loan that is secured by a pledge of its interest in Aptco, but only if such loan becomes due, whether as a result of an acceleration or maturity of such loan. Except for those decisions described in this Summary of Terms that require unanimous approval, do not require any Board approval (i.e., can be decided by DK) or can be decided unilaterally by either Blackstone or Whitehall, all decisions (such as all annual budget and business plan approvals, acquisitions of any assets within the parameters set forth on Exhibit 1, etc.) would be approved by a 2 out of 3 vote of the Board. If Aptco is organized as a limited partnership instead of a limited liability company, Whitehall, Blackstone and Berkshire Group would each have the right to have a subsidiary act as a co-general partner of Aptco and the governance provisions would be modified accordingly (e.g., decisions that are described below as requiring a unanimous vote of the Board would instead require unanimous approval of the general partners). A unanimous vote of the Board would be required for (i) amending the Operating Agreement of Aptco, (ii) admitting any new members, (iii) capital calls in excess of the $281 -2- million required above (except that 2 out of 3 Board members may approve capital calls ("Mandatory Capital Calls") for debt service shortfalls, health and safety items, taxes and similar necessary expenditures as long as Berkshire Group's share of such capital calls does not exceed, in the aggregate, $10 million, and any Investor not funding its share of any required capital calls will be diluted on a 2 for 1 basis (based on book equity)), (iv) change in the nature of Aptco's business (e.g., to include mortgage lending), (v) except as set forth in the third paragraph below, any sale of Aptco or sale of all or substantially all of Aptco's assets, in each case prior to 12/31/2002 (i.e., a 2 out of 3 vote will be required to approve a sale of Aptco (and/or its subsidiaries or substantially all of their assets) between 12/31/2002 and the fifth anniversary of closing, (vi) acquisition of any assets outside of the parameters set forth on Exhibit 1 (i.e., a 2 out of 3 vote will be required to approve acquisitions within such parameters), (vii) changes to the bid from the terms submitted to the Board of Berkshire on this date, the execution of the merger documentation, the acceptance of any closing deliveries and/or the grant of consents or approvals or acceptance or waiver of conditions to Aptco's obligation to close pursuant to the merger documentation and (viii) a disposition of all or a portion of the property known as Berkshire Towers (or of the subsidiary that owns such property) prior to the fifth anniversary of closing, other than in a tax deferred transaction. Any equity funded by the Investors pursuant to a Mandatory Capital Call shall be treated as preferred equity with respect to distribution rights (i.e., shall be pari passu with the other preferred equity of the Investors). None of the Investors shall enter into any separate voting agreement with any other Investor in respect of its interests. In addition, any related-party transaction involving an Investor would require a majority vote of the non-interested Investor designee-directors. In the event any Investor or its controlling persons files a bankruptcy or similar proceeding with respect to Aptco without first obtaining the prior written approval of two of the three Board members, the ownership interest and capital account of such Investor shall be reduced to zero. Notwithstanding the general requirement that all financings require the approval of at least two of the three Board members, DK, acting alone, will have the authority to accept a financing from the Federal Home Loan Mortgage Corporation ("Freddie Mac") or another institutional lender provided that (I) the amount of such financing is 75% of the appraised value of the Properties on Exhibit 2 hereto and in any event at least $650 million (the financing amount to be reduced by 75% of the appraised value of any assets on Exhibit 3 sold at or prior to the closing), (II) such financing is not recourse in any respect to any Investor without its approval, (III) the term of such financing is equal to 7 years with a fixed interest rate at 8.0% per annum or less, (IV) in order to benefit from lower interest rate spreads, the entire financing will be subject to yield maintenance penalties on prepayments until the fifth anniversary of the closing of the financing (i.e., will be prepayable during the first five years only with yield maintenance and thereafter without yield maintenance), (V) the properties subject to such financing will not be cross-collateralized and the loans will not be cross-defaulted and (VI) the other terms are no less -3- favorable to Aptco than the terms of the "Conditional Commitment" (dated November 16, 1998) previously provided to the Investors from Freddie Mac. Financing outside of the foregoing parameters may be authorized by 2 out of the 3 Board members provided (x) the Board will use commercially reasonable efforts to obtain financing on terms as close to possible as the parameters set forth above, (y) any such alternative financing shall be fixed rate or be subject to appropriate hedging arrangements and (z) such financing shall not be recourse in any respect to any Investor without its approval. Provided that DK is still acting as chairman and CEO, DK will be authorized without the approval of the Board (i) to carry out business plans approved by the Board, provided that payroll expenses do not exceed 105% of the annual amount of that item on the approved budgets, and all other expenses do not in the aggregate exceed 105% of annual expenses (other than payroll expenses) in the approved budgets, (ii) to sell the 10 Assets in Exhibit 3 for prices that yield Aptco net proceeds (after all transactions costs, taxes and debt prepayment fees and expenses) equal to at least 95% of the amounts set forth in Exhibit 3 (provided that such net proceeds shall not be less than 97.5% of all such amounts in the aggregate) in transactions with third parties (unaffiliated with Berkshire Group) and in which Berkshire Group has no continuing interest and (iii) to sell certain individual assets in any calendar year not in excess of $100 million in gross proceeds provided that the price for each sold assets yields Aptco net proceeds (after all transaction costs, taxes and debt prepayment fees and expenses) equal to at least 103% of allocated acquisition cost. If DK does not sell the 10 Assets as provided in clause (ii) above within the time period contemplated by the initial business plan approved by the Board, Whitehall and Blackstone, acting together, may cause Aptco to sell such Assets during the immediately succeeding 6-month period for the prices described in clause (ii) in transactions with third parties (unaffiliated with either Whitehall or Blackstone) and in which neither Whitehall nor Blackstone have any continuing interest. If DK does not sell $100 million of assets in any calendar year as provided in clause (iii) above, during the six months following such year Whitehall and Blackstone, acting together, may cause Aptco to sell that amount of assets not sold in such year for the asset prices described in clause (iii). Each of the Investors will be authorized unilaterally to cause a sale of Aptco to an unaffiliated third party in a bona fide transaction (in which no Investor has a continuing interest) to the highest bidder after the fifth anniversary; provided that DK may not exercise such right until three months following such fifth anniversary; provided further that if, during such three month period DK's Employment Agreement is terminated without cause and Whitehall and Blackstone have not already exercised their right to cause a sale of Aptco then DK may exercise such right. In addition, at any time after the second anniversary, DK may cause a sale of Aptco subject to a right of first offer in favor of each of Whitehall and Blackstone (which may be exercised by either or both of Whitehall and Blackstone) and if such right of first offer is not -4- exercised, DK may cause such sale at a price equal to or higher than the price offered to Whitehall and Blackstone as long as (i) the net proceeds from such sale results in a 12% per annum annually compounded IRR to each of the Investors if the sale is consummated after the third and before the fifth anniversaries of closing or a 15% per annum annually compounded IRR if the sale is consummated between the second and third anniversaries of closing (with Berkshire Group being permitted to use its own funds to allow such IRR thresholds to be achieved), and (ii) such sale is consummated with a bona fide third party (unaffiliated with Berkshire Group) within 180 days after the right of first offer is declined. If Whitehall and Blackstone each exercise the right of first offer, they shall each acquire 50% of the offered interests. Any sale to either or both of Whitehall or Blackstone may be accomplished by purchasing the ownership interests in Aptco not owned by them, rather than Aptco itself. In addition, at any time after 12/31/2002, Whitehall and Blackstone, acting together, may cause a sale of Aptco, subject to a right of first offer in favor of Berkshire Group, as long as such sale is consummated with a bona fide third party (unaffiliated with either Whitehall or Blackstone). The terms of such right of first offer shall provide that such right will be deemed to have been declined or lapsed (x) if it has not been accepted by Berkshire Group (subject to financing) within 30 days of the offer, (y) if any financing contingency set forth in the definitive sales contract shall not have expired, be waived or satisfied within 150 days of the offer, or (z) if consummation of the sale has not occurred within 180 days of the offer. The budget and business plan for the 1999 calendar year will be approved by each of the Investors prior to execution of the Aptco governing documents. MANAGEMENT As described above, day-to-day management would be the responsibility of the Aptco management team. The acquisition of Berkshire would include Berkshire's multifamily management operations. Prior to the execution of a definitive agreement with Berkshire, the staffing, senior management and operating budget of Aptco would be discussed and agreed. DISPOSITIONS The management of Aptco would develop a sale/hold/capital expenditure analysis for each asset, which would be reviewed by the Board annually. Selection of sale agents would be at the Board's discretion. Prior to closing, certain assets will be identified for sale during the first two years after closing. -5- CONFIDENTIALITY Subject to requirements of law, Blackstone, Whitehall and Berkshire Group would each keep confidential all discussions and materials prepared and exchanged in connection with the proposed transaction. It is anticipated that a joint press release would be issued upon execution of a definitive agreement with Berkshire, and possibly earlier if required by law. This summary is for discussion purposes only and constitutes only a general non-binding expression of interest on the part of Blackstone, Whitehall and Berkshire Group and is not intended to, and does not, create a legally binding commitment, agreement or obligation on the part of Blackstone, Whitehall or Berkshire Group, other than the section entitled "Break-Up Fee; Cost Reimbursement" (set forth in Annex A). EXPIRATION The obligation of the parties hereto shall automatically expire on the earlier of (i) March 31, 1999, if the Aptco bid is not accepted by such date by the Board of Directors of Berkshire, (ii) the date which is 210 days after the date Aptco's bid is accepted by Berkshire's Board and (iii) the date upon which Berkshire's Board definitively rejects Aptco's bid. SUPPLEMENTARY TERMS AND CONDITIONS The supplementary terms and conditions set forth in Annex A hereto are incorporated by reference herein. -6- EX-99.2 3 COMMITMENT LETTER Exhibit 2 February 22, 1999 CONFIDENTIAL Aptco, LLC c/o Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, New York 10019 Attn: Douglas S. Krupp, CEO Re: Commitment Letter Ladies and Gentlemen: You have advised Goldman Sachs Mortgage Company ("GSMC") that affiliates of Douglas S. Krupp ("Krupp"), Blackstone Real Estate Acquisitions III L.L.C. ("Other Equity Investor") and Whitehall Street Real Estate Limited Partnership XI ("Whitehall" and, collectively with Krupp and Other Equity Investor and/or their affiliates, the "Investors") have formed and intend to capitalize Aptco, LLC, a Delaware limited liability company ("LLC"), which will propose a transaction to the Board of Directors of a publicly held Delaware corporation ("Bruin"), pursuant to which (i) Bruin would merge into LLC with LLC as the surviving entity and all the outstanding Bruin capital stock (and rights to acquire Bruin capital stock) being converted in the merger into the right to receive cash equal to a price per share (and total purchase price) not to exceed the amount we have agreed on (the "Bruin Merger") and (ii) immediately prior to such merger, a subsidiary of LLC would be merged into BRI OP Limited Partnership, a Delaware limited partnership ("OP"), in a transaction pursuant to which OP and OP's current general partner ("OP GP") would become wholly owned by LLC (the "OP Merger" and together with the Bruin Merger, the "Transaction"). Currently, 79.16% of the partnership interests of OP are directly or indirectly owned by Bruin. Exhibit I hereto depicts the current organizational structure of Bruin. This letter is referred to herein as the Commitment Letter. Financing of $675 million, but in no event in excess of 75.5% of the transaction value (i.e., cash required to consummate the Transaction, assumed debt of at least $233 million, equity contributed or deemed contributed by Krupp (which shall have a value of not less than $57 million) and all fees and expenses of LLC and its subsidiaries relating to the Transaction) is being sought by you in connection with the Transaction (the "Facility"). A portion of the proceeds of the Facility would be made available to LLC to finance a portion of the consideration to be paid to Bruin stockholders and option/warrantholders in the Bruin Merger and the cash option in the OP Merger. Additional information regarding the Transaction is set forth in the Summary of Terms among The Berkshire Group, Other Equity Investor and Whitehall and the draft agreements for the Bruin Merger and the OP Merger which you have furnished to us (the "Summary of Terms"). Based on our understanding of the Transaction as set forth above and in other documents referred to above, and the other information which you have provided to us, GSMC commits to provide the Facility on the terms and subject to the conditions set forth herein. LENDER: GSMC, together with its permitted participants and co- lenders. TRANSFERABILITY: Prior to closing, Borrower and Lender will agree upon the terms pursuant to which Lender may transfer its interest in the loan (it being understood and agreed that Lender may sell participation interests in the loan, provided that GSMC retains the agent role). BORROWER: OP and/or, at GSMC's election, certain other property- owning OP subsidiaries. GUARANTORS: LLC and those OP subsidiaries owning the 58 properties identified on Schedule I hereto which are not borrowers. In addition, Guarantors shall include all other subsidiaries of OP for which no third party consent for such guarantee is required or as to which all required third party consents have been obtained (as to special purpose entities, OP shall arrange for charter amendments, as necessary to permit granting of guarantees). Borrower and Guarantors to use all commercially reasonable efforts to obtain such consents. The Investors (or special purpose entities holding the Investors' interest in LLC) shall be guarantors of the Loan with recourse to be limited to a first priority assignment or pledge of their interests in LLC (See "Security" below). AMOUNT: $675,000,000 in the aggregate, but in no event in excess of 75.5% of the transaction value (i.e., cash required to consummate the Transaction assumed debt of at least $233,000,000, equity contributed or deemed contributed by Krupp and all fees and expenses of LLC and its subsidiaries relating thereto). The amount borrowed under the Facility is referred to as the Loan. Borrower may borrow less than the entire Loan at closing. In such event, the collateral to secure the Loan will be reduced in accordance with loan 2 allocation amounts among the properties (such allocated loan amounts shall be agreed upon by the Lender and Borrower before the merger agreement is signed). TERM: Twelve (12) months from the closing of the Transaction. USE OF PROCEEDS: Proceeds will be used to finance a portion of the aggregate consideration to be paid by LLC in the Bruin Merger, as needed to fund the cash option in the OP Merger, to refinance specified existing indebtedness of OP and its subsidiaries, to repay intercompany indebtedness owed to Bruin to enable Bruin to finance the redemption of its outstanding Series A Preferred Stock, and to fund certain fees and expenses associated with the Transaction. INTEREST: Rate: Absent a default, the Loan will bear interest at the rate of 3.75% above the reserve adjusted London Interbank Offered Rate ("LIBOR Rate") for one month interest periods; provided, however, that notwithstanding the foregoing, the minimum interest rate shall at all times be 8.65%. Payment Dates: Interest will be payable monthly. Other Terms: All interest will be calculated based on a 360-day year and actual days elapsed. The financing documentation will contain (a) customary LIBOR breakage provisions and LIBOR borrowing mechanics, (b) LIBOR Rate definitions and (c) customary provisions for determination of interest in the event that LIBOR is not available for any period. Default Rate: From and after the occurrence of a default, the interest rates applicable to the Loan will be increased by 2% per annum over the interest rate otherwise applicable and such interest and fees will be payable on demand. COMMITMENT FEE: 1.0% of the maximum amount of the Facility, payable at closing of the Transaction, whether or not the Facility is drawn upon. In the event the Transaction does not close, the commitment fee shall be reduced to 75% of the fee provided for in the preceding sentence, but will be payable 3 only out of the break-up fee or reimbursement of such commitment fee expense actually received from Bruin. Borrower shall use good faith efforts to collect the break-up fee and receive reimbursements for the commitment fee if they are owing to the LLC under the terms of the merger documentation. In the event the LLC receives a 100% reimbursement from Bruin of such commitment fee as an expense, the LLC will pay all of such reimbursement over to GSMC. STRUCTURING FEE: 0.25% of the maximum amount of the Facility, payable at the same time as the commitment fee. In the event the Transaction does not close, the structuring fee shall be reduced to 75% of the fee provided for in the preceding sentence, but will be payable only out of the break-up fee or reimbursement of such structuring fee expense actually received from Bruin. Borrower shall use good faith efforts to collect the break-up fee and receive reimbursements for the structuring fee if they are owing to the LLC under the terms of the merger documentation. In the event the LLC receives a 100% reimbursement from Bruin of such structuring fee as an expense, the LLC will pay all of such reimbursement over to GSMC. TAKEDOWN FEE: 0.50% of the amount borrowed, payable upon borrowing. REPAYMENT FEE: A repayment fee of 0.50% of the then outstanding amount of the Facility, if any, shall be due on June 15, 2000. PREPAYMENTS: Borrowers may voluntarily prepay all or any portion of the Loan in minimum amounts of $1 million at any time, upon at least 5 days' prior written notice. All voluntary prepayments will be accompanied by LIBOR breakage costs, if any. SECURITY: First mortgage liens (recorded) and title insurance on 58 properties identified on Schedule I hereto. Pledge by LLC of entire equity of OP GP. In addition, the Investors (or special purpose entities holding the Investors' interest in LLC) will guarantee the Loan with recourse to be limited to a first priority assignment or pledge of their interest in LLC as security for such guaranty. At GSMC's election, a first priority perfected lien on and security interest in all assets 4 of LLC, OP and the subsidiaries of OP not covered by the preceding sentences to the extent available without the requirement to obtain any third party consent or as to which all required third party consents are obtained. Borrower and Guarantors to use all commercially reasonable efforts to obtain such consents. Lender will have dominion over all cash if requested by GSMC, which arrangement shall permit the release of cash to Borrower and Guarantors absent a default; provided, however, that to the extent that the holders of debt in respect of the 24 properties identified on Schedule II hereto shall have the right to and shall prohibit such an arrangement, Lender shall not be entitled to same. The Loan will be cross-collateralized and cross-defaulted in a manner satisfactory to Lender. The Parties will use reasonable good faith efforts to minimize or avoid mortgage recording taxes and minimize title insurance premiums on the 58 properties on Schedule I; it being understood that there will be no mortgages or title insurance obtained with respect to the 24 properties on Schedule II. PARTIAL RELEASES Permitted in connection with third party sales and FROM MORTGAGE OR certain partial refinancings provided that Lender NEGATIVE COVENANT: receives at least minimum release prices based on allocated loan amounts to be agreed upon by the parties. Minimum release price is to be equal to greater of the property's allocated loan amount or 100% of sale or refinancing proceeds capped at 110% of the property's allocated loan amount. Borrower and GSMC to agree on allocated loan amounts prior to the execution of the merger agreement. DOCUMENTATION: The documentation for the Financing will contain representations and warranties, conditions precedent described below, closing document deliveries and similar customary conditions precedent, affirmative and negative covenants (but no financial ratios, maintenance or other similar financial condition tests), indemnities, events of default and remedies, in each case customarily found in documentation for similar transactions. The OP and/or LLC will provide customary environmental indemnity to the Lender. This Commitment Letter does not contain all the terms that will be included in the documentation for the Financing. 5 CONDITIONS: The commitment of GSMC for the Facility is conditioned upon satisfaction of all the following (all to Lender's satisfaction): o Relevant documents, such as all transaction documents and disclosure schedules for the Bruin Merger and the OP Merger and other material agreements to which Borrower is a party, must be acceptable to GSMC in all material respects. o The Bruin Merger and the OP Merger each shall have been consummated in compliance with all applicable law and regulations. o The material terms of the Bruin Merger and the OP Merger, including, without limitation, the consideration offered and the conditions precedent, shall not have been modified, amended or supplemented in any material respect and no material provision contained therein shall have been waived, without GSMC's prior written consent. o Any conditions contained in the merger agreement relating to environmental matters shall have been satisfied or waived with GSMC's prior written consent. o A Closing Agreement with the Internal Revenue Service on terms and conditions satisfactory to Aptco with respect to the tax matters specified in the draft merger agreements. o All necessary governmental and material third party waivers and consents shall have been received. o Receipt of opinions of counsel from Borrower's counsel (including local counsel as requested) reasonably acceptable to GSMC. o Receipt of customary mortgage title insurance policies, existing land surveys, (and the Borrower will use best efforts to obtain surveys for properties as to which surveys have not previously been 6 prepared) evidence of insurance and addition of GSMC as loss payees, and the like. o As of the closing of the Transaction, there shall be no material liabilities of Borrower, other than (i) the $233 million of existing indebtedness encumbering the properties on Schedule II hereto, (ii) customary trade payables not to exceed $5 million, (iii) liabilities shown on Schedule III hereto (iv) liabilities, which shall be subject to the approval of GSMC, disclosed in SEC filings filed after December 31, 1997 and prior to the execution of the merger agreement, and (v) liabilities shown on the Disclosure Letter delivered pursuant to the merger agreement, subject to the approval of GSMC. o There shall be no material adverse change (a "MAC"), in the business, financial condition or prospects of Bruin and its subsidiaries taken as a whole or in the collateral for the Loan taken as a whole (including in the environmental condition thereof) not contemplated by the Transaction. o No material indebtedness of Bruin or OP or any of their subsidiaries (which is not being repaid at closing) shall be in default as the result of the Transaction or the Financing and there shall be no Event of Default on any material indebtedness which is not being repaid at closing beyond applicable cure periods. o There shall be no litigation commenced that, individually or in the aggregate, is reasonably likely to have a material adverse effect on Bruin and its subsidiaries, taken as a whole, or their business or Borrower's ability to repay the Loan or that would prevent or significantly delay the consummation of the Transaction, or any litigation pending or threatened in writing by a governmental entity which challenges the Bruin Merger, the OP Merger or the Financing. 7 o There shall not have occurred and be continuing (i) any general suspension of, or limitation on prices for, trading in securities on the New York Stock Exchange, (ii) a declaration of any general banking moratorium by federal or New York authorities or any suspension of payments in respect of money center banks or any limitation (whether or not mandatory) imposed by federal or state authorities on the extension of credit by money center banks in the United States, (iii) any limitation (whether or not mandatory) by any United States governmental entity on, or any other event which could materially affect, the extension of credit by banks or other United States financial institutions, (iv) from the date hereof through the closing date a decline of at least 15 % in either the Dow Jones Average of Industrial Stocks or the Standard & Poor's 500 Index, (v) any material disruption or material adverse change in the financial or capital markets generally or (vi) a commencement of a war, armed hostilities or any other international or national calamity directly or indirectly involving the United States or, in the case of a situation existing as of the date hereof, a material escalation of such situation. o Absence of a default under the Financing. o GSMC shall have verified that the annualized net operating income for the collateral for the Loan shall be at least $114.6 MM (representing a 7.5% decrease from Bruin's budgeted 1999 net operating income of $123.9 MM). For purposes of the foregoing, GSMC shall define the analysis period as beginning January 1, 1999 and ending on the last day of the month immediately prior to closing. Lender shall compare the actual income and expense performance of the properties with the 1999 budget previously furnished to GSMC. GSMC shall determine that the actual net operating income during the analysis period shall not be less than 92.5% of the 1999 budgeted net operating income for the same analysis period. Foregoing NOI test to be adjusted to reflect sales of properties 8 between the date hereof and closing (assuming entire cash proceeds thereof are retained by Bruin or used to repay existing debt that otherwise would be repaid at closing). o LLC shall have received the equity from Other Equity Investor, Whitehall and Krupp contemplated by the Summary of Terms (i.e., a minimum of $106 million from each of Whitehall and Other Equity Investor and a contribution having a value of at least $57 million from Krupp), and all the Bruin stock and OP Units currently owned by Krupp and his affiliates. o The Transaction shall have closed no later than 210 days (the "Commitment Termination Date") following the signing of a definitive agreement for the Bruin Merger and the Loan shall not, in any event, be drawn down after December 31, 1999. o Definitive agreements for the Bruin Merger and the OP Merger shall have been executed by March 31, 1999, provided, however, that if definitive agreements are not executed by March 31, 1999 and Lender does not extend this Commitment Letter, this Commitment Letter will terminate and neither Borrower nor Lender will be liable hereunder. OTHER TERMS: The documentation for the Facility will require, among other things, compliance with covenants pertaining to the following (all in form and substance satisfactory to GSMC): o Financial reporting on a monthly basis. All financial statements shall be prepared on a consolidated and consolidating basis. o Compliance with all applicable law, decrees and material agreements, or obtaining of applicable consents and waivers. o Limitations on commercial transactions, management agreements, service agreements and 9 borrowing transactions with officers, directors, employees and affiliates. o Prohibition on new indebtedness, other than the Facility, and other than refinancings of existing indebtedness (i) in respect of the 24 properties listed on Schedule II, provided the same are on terms not materially more onerous to the Borrower than the existing indebtedness being refinanced and (ii) in respect of the 58 properties identified on Schedule I, provided that payment of the appropriate release price is made. o Prohibitions on liens, mortgages and security interests except those in existence and identified, those incurred in connection with permitted refinancings, and liens on indebtedness permitted to be incurred for the financing of permitted purchases of properties which liens are limited to the properties purchased, and which obligations are solely those of the property owning subsidiary. o Limitations on, or prohibitions of, cash dividends, other distributions to equity holders, payments in respect of subordinated debt and redemption of common or preferred stock. Such limitations and/or prohibitions shall not preclude, in the absence of a default under the Loan, distributions to certain OP Unit Holders who convert their interests to Class A (Preferred) Interests or tax distributions, as contemplated by the LLC agreement. o Limitations on mergers, acquisitions, or sale of a material portion of assets (other than sales accompanied by payment of specified release prices). o Prohibitions of a direct or indirect change in control of Borrower or LLC (other than changes which increase the control of Whitehall and the Other Equity Investor. The foregoing shall not prohibit any change in ownership (but not control) within Whitehall, Krupp or the Other Equity Investor). 10 Whitehall and Blackstone will each have equivalent control and substantially equivalent economic interests in LLC. o Customary provisions regarding responsibility for misappropriation of funds. o Limitations on capital expenditures. o Agent's and Lender's rights of inspection and access to facilities, management and auditors. o Payment of Lender's costs and expenses in documenting, closing and servicing the Loan (including reasonable attorneys' fees and costs, title insurance premiums and mortgage recording taxes). o Escrow for real estate taxes. o Governing law: New York. The commitment of GSMC hereunder is subject to the execution and delivery of final legal documentation acceptable to GSMC and its counsel incorporating, without limitation, the terms set forth in this Commitment Letter. By signing this Commitment Letter, you acknowledge that this Commitment Letter supersedes any and all discussions and understandings, written or oral, between or among GSMC and any other person as to the Facility, including any prior commitment letters for debt financing for the Transaction. No amendments, waivers or modifications of this Commitment Letter or any of its contents shall be effective unless expressly set forth in writing and executed by you and GSMC. This Commitment Letter is being provided to you on the condition that, except as required by law or SEC Regs (as defined below), neither it nor its contents will be disclosed publicly or privately except to those individuals who are your advisors who have a need to know of them as a result of their being specifically involved in the Bruin Merger and the OP Merger and the Facility and then only on the condition that such matters may not, except as required by law or regulations of the Securities and Exchange Commission ("SEC Regs"), be further disclosed and except that, following your acceptance hereof, you may disclose this Commitment Letter to Bruin and its advisors. No person, other than the parties signatory hereto, is entitled to rely upon this Commitment Letter or any of its contents. No person shall, except as required by law or SEC Regs, use the name of, or refer to GSMC or any of its affiliates, in any correspondence, discussions, press release, advertisement or disclosure made in connection with the Transaction without the prior written consent of GSMC. 11 In the event the Transaction closes, you agree to indemnify and hold harmless each of GSMC, its affiliates, and the directors, officers, employees, agents, attorneys and representatives of any of them (each, an "Indemnified Person"), from and against all suits, actions, proceedings, claims, damages, losses, liabilities and expenses (including, but not limited to, reasonable attorneys' fees and disbursements and other costs of investigation or defense, including those incurred upon any appeal), which may be instituted or asserted against or incurred by any such Indemnified Person in connection with, or arising out of, this Commitment Letter, the Financing, the documentation related thereto, any actions or failures to act in connection therewith, and any and all environmental liabilities and legal costs and expenses arising out of or incurred in connection with any disputes between or among any parties to any of the foregoing, and any investigation, litigation, or proceeding related to any such matters. Your obligation for such reimbursement may be assumed by Borrower at closing. Notwithstanding the foregoing, no indemnitor shall be liable for any indemnification to any Indemnified Person to the extent that any such suit, action, proceeding, claim, damage, loss, liability or expense results solely from that Indemnified Person's gross negligence or willful misconduct, as finally determined by a court of competent jurisdiction. Under no circumstances shall GSMC, or any of its affiliates be liable to you or any other person for any punitive, exemplary, consequential or indirect damages in connection with this Commitment Letter, the Facility or the documentation related thereto, regardless of whether the commitment herein is terminated or the Transaction or the Facility closes. For purposes of this paragraph, the term "affiliate" shall not include any affiliated entity which is an Investor. You and GSMC expressly waive any right to trial by jury of any claim, demand, action or cause of action arising in connection with this Commitment Letter, any transaction relating hereto, or any other instrument, document or agreement executed or delivered in connection herewith, whether sounding in contact, tort or otherwise. You and GSMC consent and agree that the state or federal courts located in New York County, City of New York, New York, shall have exclusive jurisdiction to hear and determine any claims or disputes between or among any of the parties hereto pertaining to this Commitment Letter or the Facility under consideration and any investigation, litigation, or proceeding related to or arising out of any such matters, provided, however, that you and GSMC acknowledge that any appeals from those courts may have to be heard by a court located outside of such jurisdiction. You and GSMC expressly submit and consent in advance to such jurisdiction in any action or suit commenced in any such court, and hereby waive any objection which either of them may have based upon lack of personal jurisdiction, improper venue or inconvenient forum. The definitive documentation for the Facility shall contain Borrower's and Guarantors' agreement to the foregoing. This Commitment Letter is governed by and shall be construed in accordance with the law of the State of New York applicable to contracts made and performed in that State. GSMC shall have access to all relevant facilities, personnel and accountants, and copies of all documents which GSMC may reasonably request, including business plans, financial statements (historical and pro forma), books, records, and other documents. GSMC agrees to treat any confidential information so received as it would its own confidential information. 12 This Commitment Letter shall be of no force and effect unless and until this Commitment Letter is each executed and delivered to GSMC on or before 5:00 p.m. New York City time on February 23, 1999 at, 85 Broad Street, New York, New York 10004. Once effective, the commitment of GSMC to provide financing in accordance with the terms of this Commitment Letter shall terminate if the Bruin Board of Directors rejects LLC's proposal relating to the Transaction (in which case, none of the LLC, the Investors or their respective affiliates shall have any liability hereunder whether on account of fees, reimbursement obligations or otherwise) or if the Loan does not close by the Commitment Termination Date. 13 We look forward to continuing to work with you toward completing this transaction. Sincerely, GOLDMAN SACHS MORTGAGE COMPANY By: /s/ Mark J. Kogan ------------------------------- Its Duly Authorized Signatory AGREED AND ACCEPTED THIS 22nd DAY OF FEBRUARY, 1999. APTCO, LLC By: /s/ Douglas Krupp ------------------------------ 14 EX-99.3 4 BID LETTER Exhibit 3 February 22, 1999 Lazard Freres & Co., LLC 30 Rockefeller Plaza New York, New York 10020 Attention: Matthew J. Lustig Gary Ickowicz Gentlemen: Aptco, LLC ("Aptco"), a company formed by affiliates of Douglas Krupp, Whitehall Street Real Estate Limited Partnership XI ("Whitehall") and Blackstone Real Estate Acquisitions III L.L.C. ("Blackstone") hereby makes the following proposal, pursuant to which holders of common stock of Berkshire Realty Company, Inc. ("BRI") would receive, and holders of limited partnership interests ("OP Units") in BRI OP Limited Partnership ("OP") would have the opportunity to receive, $11.05 per share/OP Unit in cash (the "Cash Price") for their respective interests in the Company. Our proposal contemplates that the acquisition of BRI would take the form of a merger (the "BRI Merger") pursuant to which BRI would be merged with and into Aptco, with Aptco as the surviving entity of the BRI Merger. Pursuant to the BRI Merger, holders of BRI common stock would receive, in exchange for their stock, an amount of cash per share equal to the Cash Price. Contemporaneously with the BRI Merger, a newly formed subsidiary of Aptco would merge with and into OP (the "OP Merger"), with OP as the surviving entity of the OP Merger. Pursuant to the OP Merger, OP Unitholders would be given the choice to elect to receive, in exchange for each of their OP Units, one of the following: (a) cash equal to the Cash Price; (b) a senior preferred equity interest in Aptco with a liquidation preference equal to the Cash Price, which would entitle the holder to receive cumulative preferred distributions of available cash on a senior basis equal to 6% per annum, and would be callable by Aptco after six years or earlier upon a sale of Aptco (whether by merger, initial public offering, sale of all or substantially all of its assets, or otherwise) at a price equal to the liquidation preference; or (c) an equity interest in Aptco that (i) would be subordinate to the senior preferred equity interest described above and to senior subordinated equity interests to be held by Whitehall and Blackstone or their respective affiliates, but would be generally pari passu with the equity interests to be held by Douglas Krupp and his affiliates and (ii) would be callable by Aptco after six years or earlier upon a sale of Aptco (whether by merger, initial public offering, sale of all or substantially all of its assets, or otherwise) at a price equal to the then fair market value of such interest. The aggregate purchase price for the acquisition of BRI and OP would be funded with a combination of debt and equity financing. The debt financing would 2 consist of a bridge loan to be provided by Goldman Sachs Mortgage Company (an affiliate of Whitehall) pursuant to the attached commitment letter. With respect to the equity financing, affiliates of Douglas Krupp, Whitehall and Blackstone (together with the debt providers, the "Financing Sources") have agreed in principle, subject to the execution of mutually acceptable documentation with respect to Aptco and the conditions set forth below, to provide Aptco with sufficient funds to finance the remaining purchase price and related expenses for the acquisition. Upon your acceptance of our proposal as set forth in this letter, we are prepared to work towards immediately finalizing definitive acquisition agreements with BRI and OP, which we would expect to be executed within two weeks time. Such agreements would contain customary representations, warranties, covenants and indemnities (including indemnification of Aptco and its Financing Sources by BRI against claims arising in connection with this transaction). In addition, consummation of the proposed transaction by Aptco would be subject to the conditions set forth in the definitive acquisition agreements, including the following: (i) there being no injunction prohibiting or restricting the consummation of any of the transactions described herein, no litigation commenced or threatened by a governmental entity, nor any litigation that could have a material adverse effect with respect to BRI or OP or that could significantly delay the consummation of the BRI or the OP Mergers; (ii) execution of an agreement delivered, on or prior to the execution of definitive acquisition agreements, by the holders of a majority in interest of BRI's Series 1997-A Convertible Preferred Stock ("Series A Preferred") consenting to the transactions, including the BRI Merger and the conversion of their shares pursuant to the BRI Merger into an amount of cash equal to 115% of the liquidation preference of such shares; (iii) receipt by BRI's Board of Directors of an opinion from a nationally recognized investment banking firm that the consideration to be paid to the holders of BRI stock, Series A Preferred and OP Units is fair, from a financial point of view; (iv) approval of the proposed transactions by the respective Boards of Directors of BRI and the general partner of OP, and by the requisite vote of the stockholders of BRI and the OP Unitholders; (v) receipt of any regulatory and other third party consents to the transactions, including the financing thereof; 3 (vi) receipt by BRI of a closing agreement with the Internal Revenue Service, on terms and conditions satisfactory to Aptco, with respect to certain tax matters, and Aptco's satisfaction with respect to certain other tax matters; (vii) confirmation that the number of shares of common stock of BRI will not be more than 48,015,000, assuming the exercise of all stock options and the conversion of all OP Units (but without taking into account the conversion of shares of Series A Preferred into shares of BRI common stock); (viii) confirmation that investment banking fees, severance costs and legal/accounting expenses of BRI relating to the transaction will not exceed $12 million; (ix) inclusion in the BRI Merger agreement of satisfactory "no-shop," "break up fee" and expense reimbursement provisions customary for transactions of this type; and (x) other customary conditions to closing. The closing of the BRI Merger and OP Merger would not be subject to a due diligence or financing contingency (other than the receipt by Aptco of financing proceeds on the terms and conditions of the commitments from the Financing Sources). Accompanying this letter is a draft merger agreement relating to the BRI Merger, and a draft merger agreement relating to the OP Merger. Aptco, together with its financial advisors and legal counsel are prepared to meet with you and your advisors immediately to work on finalizing the enclosed agreements. Of course, at this stage of the process, our proposal is merely an expression of interest and is not intended to be legally binding, and Aptco does not intend to be legally bound to any transaction with BRI or OP until definitive agreements are fully executed. We believe Aptco is uniquely positioned to proceed with a transaction in the best interests of BRI stockholders and OP Unitholders on an expeditious basis. This letter is intended to be confidential and neither it nor our involvement in pursuing a possible acquisition proposal should be publicly disclosed by BRI or you unless required by law. In the event BRI determines that public disclosure is so required, we request that any public announcement of this proposal be reviewed by Aptco and its advisors prior to its release. Pursuant to the confidentiality agreement with you, we hereby advise you that we intend to make the public disclosures required under Section 13(d) of the Securities Exchange Act of 1934, as amended, as soon as practicable. 4 This offer is open until 5:00 p.m. on March 1, 1999, and will expire at that time if not accepted. We look forward to working with you on this proposed transaction. Very truly yours, APTCO, LLC, By its members: THE BERKSHIRE COMPANIES LIMITED PARTNERSHIP By: KGP-1, Inc. By: /s/ Douglas Krupp -------------------------- Douglas Krupp President WHITEHALL STREET REAL ESTATE LIMITED PARTNERSHIP XI By: WH Advisors, L.L.C. XI By: /s/ Steven Feldman -------------------------- BLACKSTONE REAL ESTATE ACQUISITIONS III L.L.C. By: /s/ Thomas J. Saylak -------------------------- cc: Prudential Securities Incorporated Real Estate Investment Banking One New York Plaza New York, New York 10292 Attention: Scott Schaevitz EX-99.4 5 JOINT FILING AGREEMENT Exhibit 4 JOINT FILING AGREEMENT Each of the Reporting Persons hereby agrees to make this joint filing pursuant to Rule 13d-1(k) of the Exchange Act of 1934. Dated: March 4, 1999 WHITEHALL STREET REAL ESTATE LIMITED PARTNERSHIP XI By: WH Advisors, L.L.C. XI, its general partner By: /s/ Edward M. Siskind --------------------------------- Name: Edward M. Siskind Title: Vice President and Assistant Treasurer WH ADVISORS, L.L.C. XI By: /s/ Edward M. Siskind --------------------------------- Name: Edward M. Siskind Title: Vice President and Assistant Treasurer THE GOLDMAN SACHS GROUP, L.P. By: /s/ Hans L. Reich --------------------------------- Name: Hans L. Reich Title: Attorney-in-Fact GOLDMAN, SACHS & CO. By: /s/ Hans L. Reich --------------------------------- Name: Hans L. Reich Title: Attorney-in-Fact -----END PRIVACY-ENHANCED MESSAGE-----