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OFFER TO PURCHASE FOR CASH
AIMCO PROPERTIES, L.P.
is offering to purchase any and all units of limited partnership interest in
CENTURY PROPERTIES GROWTH FUND XXII
FOR $513 PER UNIT IN CASH
We will accept all units in response to our offer. If units are validly tendered
and not properly withdrawn prior to the expiration date and the purchase of all
such units would result in there being less than 320 unitholders, we will
purchase only 99% of the total number of units so tendered by each limited
partner.
We will pay for accepted units promptly after expiration of the offer.
Our offer price will be reduced for any distributions subsequently declared or
made by your partnership prior to the expiration of our offer.
Our offer and your withdrawal rights will expire at 5:00 p.m., New York City
time, on November 9, 1999, unless we extend the deadline.
YOU WILL NOT PAY ANY PARTNERSHIP TRANSFER FEES OR OTHER COSTS IF YOU TENDER YOUR
UNITS.
Our offer is not subject to any minimum number of units being tendered.
SEE "RISK FACTORS" BEGINNING ON PAGE 1 OF THIS OFFER TO PURCHASE FOR A
DESCRIPTION OF RISK FACTORS THAT YOU SHOULD CONSIDER IN CONNECTION WITH OUR
OFFER, INCLUDING THE FOLLOWING:
o We determined the offer price of $513 per unit without any arms-length
negotiations. Accordingly, our offer price may not reflect the fair
market value of your units.
o Although your partnership's agreement of limited partnership provides
for termination in the year 2010, the prospectus pursuant to which the
units were sold in 1984 indicated that the properties owned by your
partnership might be sold within 5 to 8 years of their acquisition if
conditions permitted.
o Your general partner and the property manager of the residential
properties are subsidiaries of ours and, therefore, the general partner
has substantial conflicts of interest with respect to our offer.
o We are making this offer with a view to making a profit and, therefore,
there is a conflict between our desire to purchase your units at a low
price and your desire to sell your units at a high price.
(continued on next page)
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If you desire accept our offer, you should complete and sign the enclosed
letter of transmittal in accordance with the instructions thereto and mail or
deliver the signed letter of transmittal and any other required documents to
River Oaks Partnership Services, Inc., which is acting as Information Agent in
connection with our offer, at one of its addresses set forth on the back cover
of this offer to purchase. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR
ADDITIONAL COPIES OF THIS OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL MAY
ALSO BE DIRECTED TO THE INFORMATION AGENT AT (888) 349- 2005.
October 12, 1999
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(continued from cover page)
o Continuation of your partnership will result in our affiliates
continuing to receive management fees from your partnership. Such fees
would not be payable if your partnership was liquidated.
o It is possible that we may conduct a subsequent offer at a higher or
lower price.
o For any units that we acquire from you, you will not receive any future
distributions from operating cash flow of your partnership or upon a
sale or refinancing of property owned by your partnership.
o If we acquire a substantial number of units, we will increase our
ability to influence voting decisions with respect to your partnership
and may control such voting decisions, including but not limited to the
removal of the general partner, most amendments to the partnership
agreement and the sale of all or substantially all of your
partnership's assets.
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TABLE OF CONTENTS
INTRODUCTION................................................................................................1
RISK FACTORS................................................................................................1
No Third Party Valuation or Appraisal; No Arms-Length Negotiation......................................1
No Fairness Opinion From a Third Party.................................................................2
Offer Price May Not Represent Fair Market Value........................................................2
Offer Price Does Not Reflect Future Prospects..........................................................2
Offer Price Based on Our Estimate of Liquidation Proceeds..............................................2
Offer Price May Not Represent Liquidation Value........................................................2
Continuation of the Partnership; No Time Frame Regarding Sale of Properties............................2
Holding Units May Result in Greater Future Value.......................................................2
Conflicts of Interest With Respect to the Offer........................................................3
No General Partner Recommendation......................................................................3
Conflicts of Interest Relating to Management Fees......................................................3
Possible Subsequent Offer at a Higher Price............................................................3
Recognition of Taxable Gain on a Sale of Your Units....................................................3
Loss of Future Distributions from Your Partnership.....................................................3
Possible Increase in Control of Your Partnership by Us.................................................4
Recognition of Gain Resulting from Possible Future Reduction in Your Partnership Liabilities...........4
Possible Termination of Your Partnership for Federal Income Tax Purposes...............................4
Potential Delay in Payment.............................................................................4
Balloon Payments.......................................................................................4
THE OFFER...................................................................................................5
Section 1. Terms of the Offer; Expiration Date; Proration............................................5
Section 2. Acceptance for Payment and Payment for Units..............................................5
Section 3. Procedure for Tendering Units.............................................................6
Section 4. Withdrawal Rights.........................................................................9
Section 5. Extension of Tender Period; Termination; Amendment........................................9
Section 6. Certain Federal Income Tax Matters.......................................................10
Section 7. Effects of the Offer.....................................................................13
Section 8. Information Concerning Us and Certain of Our Affiliates..................................14
Section 9. Background and Reasons for the Offer.....................................................15
Section 10. Position of the General Partner of Your Partnership With Respect to the Offer............24
Section 11. Conflicts of Interest and Transactions with Affiliates...................................24
Section 12. Future Plans of the Purchaser............................................................25
Section 13. Certain Information Concerning Your Partnership..........................................26
Section 14. Voting Power.............................................................................32
Section 15. Source of Funds..........................................................................33
Section 16. Dissenters' Rights.......................................................................33
Section 17. Conditions of the Offer..................................................................33
Section 18. Certain Legal Matters....................................................................35
Section 19. Fees and Expenses........................................................................36
ANNEX I - OFFICERS AND DIRECTORS..........................................................................I-1
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INTRODUCTION
We are offering to purchase all of the outstanding units of limited
partnership interest in your partnership, for the purchase price of $513 per
unit, net to the seller in cash, without interest, less the amount of
distributions, if any, made by your partnership in respect of any unit from the
date hereof until the expiration date. Our offer is made upon the terms and
subject to the conditions set forth in this offer to purchase and in the
accompanying letter of transmittal.
If you tender your units in response to our offer, we will pay any transfer
fees imposed for the transfer of units by your partnership. We will also pay any
fees or commissions imposed by your broker in assisting you to tender your
units, or by an custodian or other trustee of any Individual Retirement Account
or benefit plan which is the owner of record of your units. However, you will
have to pay any governmental transfer taxes that apply to you sale (see
Instruction 8 in the letter of transmittal).
We have retained River Oaks Partnership Services, Inc. to act as the
Information Agent in connection with our offer. We will pay all charges and
expenses in connection with the services of the Information Agent. The offer is
not conditioned on any minimum number of units being tendered. However, certain
other conditions do apply. See "The Offer -- Section 17." You may tender all or
any portion of the units that you own. Under no circumstances will we be
required to accept any unit if the transfer of that unit to us would be
prohibited by the agreement of limited partnership of your partnership.
Our offer will expire at 5:00 P.M., New York City time, on November 9,
1999, unless extended. If you desire to accept our offer, you must complete and
sign the letter of transmittal in accordance with the instructions contained
therein and forward or hand deliver it, together with any other required
documents, to the Information Agent. You may withdraw your tender of units
pursuant to the offer at any time prior to the expiration date of our offer and,
if we have not accepted such units for payment, on or after December 10, 1999.
We are AIMCO Properties, L.P., a Delaware limited partnership. Together
with our subsidiaries, we conduct substantially all of the operations of
Apartment Investment and Management Company, or AIMCO. AIMCO is a
self-administered and self-managed real estate investment trust engaged in the
ownership, acquisition, development, expansion and management of multifamily
apartment properties. As of June 30, 1999, AIMCO owned or managed 369,404
apartment units in 2,037 properties located in 49 states, the District of
Columbia and Puerto Rico. AIMCO's Class A Common Stock is listed and traded on
the New York Stock Exchange under the symbol "AIV."
As a result of our October 1, 1998 merger with Insignia Financial
Group, Inc. and our February 26, 1999 merger with Insignia Properties Trust, we
acquired a 100% ownership interest in the general partner of your partnership
and the company that manages the residential properties owned by your
partnership.
RISK FACTORS
Before deciding whether or not to tender any of your units, you should
consider carefully the following risks and disadvantages of the offer:
NO THIRD PARTY VALUATION OR APPRAISAL; NO ARMS-LENGTH NEGOTIATION
We did not base our valuation of the properties owned by your
partnership on any third-party appraisal or valuation. We established the terms
of our offer without any arms-length negotiation. The terms of the offer could
differ if they were subject to independent third party negotiations. It is
uncertain whether our offer price reflects the value which would be realized
upon a sale of your units to a third party.
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NO FAIRNESS OPINION FROM A THIRD PARTY
We did not obtain an opinion from a third party that our offer price is
fair from a financial point of view.
OFFER PRICE MAY NOT REPRESENT FAIR MARKET VALUE
There is no established or regular trading market for your units, nor
is there another reliable standard for determining the fair market value of the
units. Our offer price does not necessarily reflect the price that you would
receive in an open market for your units. Such prices could be higher than our
offer price.
OFFER PRICE DOES NOT REFLECT FUTURE PROSPECTS
Our offer price is based on your partnership's historical property
income. It does not ascribe any value to potential future improvements in the
operating performance of your partnership's properties.
OFFER PRICE BASED ON OUR ESTIMATE OF LIQUIDATION PROCEEDS
The offer price represents only our estimate of the amount you would
receive if we liquidated the partnership. In determining the liquidation value,
we used the direct capitalization method to estimate the value of your
partnership's properties because we think a prospective purchaser of the
properties would value the properties using this method. In doing so, we applied
a capitalization rate to your partnership's property income for the year ended
December 31, 1998. If property income for a different period or a different
capitalization rate was used, a higher valuation could result. Other methods of
valuing your units could also result in a higher valuation.
OFFER PRICE MAY NOT REPRESENT LIQUIDATION VALUE
The actual proceeds obtained from a liquidation are highly uncertain
and could be more than our estimate. Accordingly, our offer price could be less
than the net proceeds that you would realize upon an actual liquidation of your
partnership.
CONTINUATION OF THE PARTNERSHIP; NO TIME FRAME REGARDING SALE OF PROPERTIES
Your general partner (which is our subsidiary) is proposing to continue
to operate your partnership and not to attempt to liquidate it at the present
time. It is not known when the properties owned by your partnership may be sold.
There may be no way to liquidate your investment in a partnership in the future
until the properties are sold and the partnership is liquidated. The general
partner of your partnership continually considers whether a property should be
sold or otherwise disposed of after consideration of relevant factors, including
prevailing economic conditions, availability of favorable financing and tax
considerations, with a view to achieving maximum capital appreciation for your
partnership. At the current time the general partner of your partnership
believes that a property sale of the properties would not be advantageous given
market conditions, the condition of the properties and tax considerations. In
particular, the general partner considered the changes in the local rental
market, the potential for appreciation in the value of a property and the tax
consequences to you and your partners on a sale of property. We cannot predict
when any property will be sold or otherwise disposed of.
HOLDING UNITS MAY RESULT IN GREATER FUTURE VALUE
You might receive more value if you retain your units until your
partnership is liquidated.
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CONFLICTS OF INTEREST WITH RESPECT TO THE OFFER
The general partner of your partnership is our subsidiary and,
therefore, has substantial conflicts of interest with respect to our offer. We
are making this offer with a view to making a profit. There is a conflict
between our desire to purchase your units at a low price and your desire to sell
your units at a high price. We determined our offer price without negotiation
with any other party, including any general or limited partner.
NO GENERAL PARTNER RECOMMENDATION
The general partner of your partnership makes no recommendation as to
whether you should tender or refrain from tendering your units. Although the
general partner believes the offer is fair, you must make your own decision
whether or not to participate in the offer, based upon a number of factors,
including your financial position, your need or desire for liquidity, other
financial opportunities available to you, and your tax position and the tax
consequences to you of selling your units.
CONFLICTS OF INTEREST RELATING TO MANAGEMENT FEES
Since our subsidiaries receive fees for managing your partnership and
its residential properties, a conflict of interest exists between our continuing
the partnership and receiving such fees, and the liquidation of the partnership
and the termination of such fees. Another conflict is the fact that a decision
of the limited partners of your partnership to remove, for any reason, the
general partner of your partnership or the residential property manager of any
property owned by your partnership would result in a decrease or elimination of
the substantial fees paid to them for services provided to your partnership.
POSSIBLE SUBSEQUENT OFFER AT A HIGHER PRICE
It is possible that we may conduct a subsequent offer at a higher or
lower price. Such a decision will depend on, among other things, the performance
of the partnership, prevailing economic conditions, and our interest in
acquiring additional limited partnership interests.
RECOGNITION OF TAXABLE GAIN ON A SALE OF YOUR UNITS
Your sale of units for cash will be a taxable sale, with the result
that you will recognize taxable gain or loss measured by the difference between
the amount realized on the sale and your adjusted tax basis in the units of
limited partnership interest of your partnership you transfer to us. The "amount
realized" with respect to a unit of limited partnership interest of your
partnership you transfer to us will be equal to the sum of the amount of cash
received by you for the unit sold pursuant to the offer plus the amount of
partnership liabilities allocable to the unit. The particular tax consequences
for you of our offer will depend upon a number of factors related to your tax
situation, including your tax basis in your units of limited partnership
interest of your partnership you transfer to us, whether you dispose of all of
your units and whether you have available suspended passive losses, credits or
other tax items to offset any gain recognized as a result of your sale of your
units of limited partnership interest of your partnership. Therefore, depending
on your basis in the units and your tax position, your taxable gain and any tax
liability resulting from a sale of units to us pursuant to the offer could
exceed our offer price. Because the income tax consequences of tendering units
will not be the same for everyone, you should consult your own tax advisor to
determine the tax consequences of the offer to you.
LOSS OF FUTURE DISTRIBUTIONS FROM YOUR PARTNERSHIP
If you tender your units in response to our offer, you will transfer to
us all right, title and interest in and to all of the units we accept, and the
right to receive all distributions in respect of such units on and after the
date on which we accept such units for purchase. Accordingly, for any units that
we acquire from you, you will not
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receive any future distributions from operating cash flow of your partnership or
upon a sale or refinancing of properties owned by your partnership.
POSSIBLE INCREASE IN CONTROL OF YOUR PARTNERSHIP BY US
Decisions with respect to the day-to-day management of your partnership are
the responsibility of the general partner. Because the general partner of your
partnership is our affiliate, we control the management of your partnership.
Under your partnership's agreement of limited partnership, limited partners
holding a majority of the outstanding units must approve certain extraordinary
transactions, including the removal of the general partner, the addition of a
new general partner, most amendments to the partnership agreement and the sale
of all or substantially all of your partnership's assets. If we acquire 15,582.5
additional units, we will own a majority of the outstanding units and will have
the ability to control any vote of the limited partners.
RECOGNITION OF GAIN RESULTING FROM POSSIBLE FUTURE REDUCTION IN YOUR PARTNERSHIP
LIABILITIES
Generally, a decrease in your share of partnership liabilities is treated,
for Federal income tax purposes, as a deemed cash distribution. Although no
general partner of your partnership has any current plan or intention to reduce
the liabilities of your partnership, it is possible that future economic,
market, legal, tax or other considerations may cause a general partner to reduce
the liabilities of your partnership. If you retain all or a portion of your
units of limited partnership interest of your partnership and the liabilities of
your partnership were to be reduced, you will be treated as receiving a
hypothetical distribution of cash resulting from a decrease in your share of the
liabilities of the partnership. Any such hypothetical distribution of cash would
be treated as a nontaxable return of capital to the extent of your adjusted tax
basis in your units and thereafter as gain. Gain recognized by you on the
disposition of retained units with a holding period of 12 months or less may be
classified as short-term capital gain and subject to taxation at ordinary income
tax rates.
POSSIBLE TERMINATION OF YOUR PARTNERSHIP FOR FEDERAL INCOME TAX PURPOSES
If there is a sale or exchange of 50% or more of the total interest in
capital and profits of your partnership within any 12-month period, including
sales or exchanges resulting from our offer, your partnership will terminate for
Federal income tax purposes. Any such termination may, among other things,
subject the assets of your partnership to longer depreciable lives than those
currently applicable to the assets of your partnership. This would generally
decrease the annual average depreciation deductions allocable to you if you do
not tender all of your interests of your partnership (thereby increasing the
taxable income allocable to your interests of your partnership each year), but
would have no effect on the total depreciation deductions available over the
useful lives of the assets of your partnership. Any such termination may also
change (and possibly shorten) your holding period with respect to your interests
of your partnership that you choose to retain. Gain recognized by you on the
disposition of retained units with a holding period of 12 months or less may be
classified as short-term capital gain and subject to taxation at ordinary income
tax rates.
POTENTIAL DELAY IN PAYMENT
We reserve the right to extend the period of time during which our offer is
open and thereby delay acceptance for payment of any tendered units. The offer
may be extended indefinitely and no payment will be made in respect of rendered
units until the expiration of the offer and acceptance of units for payment.
BALLOON PAYMENTS
Your partnership has approximately $66,638,000 of balloon payments due on
its mortgage debt between November 2003 and February 2008. Your partnership will
have to refinance such debt or sell its properties prior to the balloon payment
dates, or it will be in default and could lose the properties to foreclosure.
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THE OFFER
SECTION 1. TERMS OF THE OFFER; EXPIRATION DATE.
Upon the terms and subject to the conditions of the offer, we will
accept (and thereby purchase) all of the units that are validly tendered on or
prior to the expiration date and not withdrawn in accordance with the procedures
set forth in "The Offer -- Section 4." For purposes of the offer, the term
"expiration date" shall mean 5:00 p.m., New York City time, on November 9, 1999,
unless we in our sole discretion shall have extended the period of time for
which the offer is open, in which event the term "expiration date" shall mean
the latest time and date on which the offer, as extended by us, shall expire.
See "The Offer -- Section 5" for a description of our right to extend the period
of time during which the offer is open and to amend or terminate the offer.
The purchase price per unit will automatically be reduced by the
aggregate amount of distributions per unit, if any, made by your partnership to
you on or after the commencement of our offer and prior to the date on which we
acquire your units pursuant to our offer.
If, prior to the expiration date, we increase the consideration offered
to limited partners pursuant to the offer, the increased consideration will be
paid for all units accepted for payment pursuant to the offer, whether or not
the units were tendered prior to the increase in consideration.
If units are validly tendered prior to the expiration date and not
properly withdrawn prior to the expiration date in accordance with the
procedures set forth in Section 4 and the purchase of all such units would
result in there being less than 320 unitholders, we will purchase only 99% of
the total number of units so tendered by each limited partner. In such case, you
would continue to be a limited partner and receive a K-1 for tax reporting
purposes.
The offer is conditioned on satisfaction of certain conditions. THE
OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF UNITS BEING TENDERED. See
"The Offer - Section 17," which sets forth in full the conditions of the offer.
We reserve the right (but in no event shall we be obligated), in our reasonable
discretion, to waive any or all of those conditions. If, on or prior to the
expiration date, any or all of the conditions have not been satisfied or waived,
we reserve the right to (i) decline to purchase any of the units tendered,
terminate the offer and return all tendered units to tendering limited partners,
(ii) waive all the unsatisfied conditions and purchase all units validly
tendered, (iii) extend the offer and, subject to the withdrawal rights of
limited partners, retain the units that have been tendered during the period or
periods for which the offer is extended, or (iv) amend the offer. The transfer
of units will be effective August 1, 1999.
This offer is being mailed to the persons shown by your partnership's
records to have been limited partners or, in the case of units owned of record
by Individual Retirement Accounts and qualified plans, beneficial owners of
units, as of October 12, 1999.
SECTION 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS.
Upon the terms and subject to the conditions of the offer, we will
purchase, by accepting for payment, all of the units validly tendered as
promptly as practicable following the expiration date. A tendering beneficial
owner of units whose units are owned of record by an Individual Retirement
Account or other qualified plan will not receive direct payment of the offer
price; rather, payment will be made to the custodian of such account or plan. In
all cases, payment for units purchased pursuant to the offer will be made only
after timely receipt by the Information Agent of a properly completed and duly
executed letter of transmittal and other documents required by the letter of
transmittal. See "The Offer -- Section 3." UNDER NO CIRCUMSTANCES WILL INTEREST
BE PAID ON THE OFFER PRICE BY REASON OF ANY DELAY IN MAKING SUCH PAYMENT.
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We will, upon the terms and subject to the conditions of the offer,
accept for payment and pay for all units validly tendered, with appropriate
adjustments to avoid purchases that would violate the agreement of limited
partnership of your partnership and any relevant procedures or regulations
promulgated by the general partner. Accordingly, in some circumstances, we may
pay you the full offer price and accept an assignment of your right to receive
distributions and other payments in respect of the units and defer, perhaps
indefinitely, the transfer of ownership of the units on the partnership books.
In other circumstance we may only be able to purchase units which, together with
units previously transferred within the preceding twelve months, do not exceed
50% of the outstanding units.
If more units than can be purchased under the partnership agreement are
validly tendered prior to the expiration date and not properly withdrawn prior
to the expiration date in accordance with the procedures specified herein, we
will, upon the terms and subject to the conditions of the offer, accept for
payment and pay for those units so tendered which do not violate the terms of
the partnership agreement, pro rata according to the number of units validly
tendered by each limited partner and not properly withdrawn on or prior to the
expiration date, with appropriate adjustments to avoid purchases of fractional
units. If the number of units validly tendered and not properly withdrawn on or
prior to the expiration date is less than or equal to the maximum number we can
purchase under the partnership agreement, we will purchase all units so tendered
and not withdrawn, upon the terms and subject to the conditions of the offer.
If proration of tendered units is required, then, subject to our
obligation under Rule 14e-1(c) under the Securities Exchange Act of 1934 to pay
limited partners the purchase price in respect of units tendered or return those
units promptly after termination or withdrawal of the offer, we do not intend to
pay for any units accepted for payment pursuant to the offer until the final
proration results are known. Notwithstanding any such delay in payment, no
interest will be paid on the cash offer price.
For purposes of the offer, we will be deemed to have accepted for
payment pursuant to the offer, and thereby purchased, validly tendered units,
if, as and when we give verbal or written notice to the Information Agent of our
acceptance of those units for payment pursuant to the offer. Payment for units
accepted for payment pursuant to the offer will be made through the Information
Agent, which will act as agent for tendering limited partners for the purpose of
receiving cash payments from us and transmitting cash payments to tendering
limited partners.
If any tendered units are not accepted for payment by us for any
reason, the letter of transmittal with respect to such units not purchased may
be destroyed by us or the Information Agent. If, for any reason, acceptance for
payment of, or payment for, any units tendered pursuant to the offer is delayed
or we are unable to accept for payment, purchase or pay for units tendered
pursuant to the offer, then, without prejudice to our rights under "The Offer --
Section 17," the Information Agent may, nevertheless, on our behalf retain
tendered units, and those units may not be withdrawn except to the extent that
the tendering limited partners are entitled to withdrawal rights as described in
"The Offer -- Section 4"; subject, however, to our obligation under Rule 14e-
1(c) under the Exchange Act, to pay you the offer price in respect of units
tendered or return those units promptly after termination or withdrawal of the
offer.
We reserve the right to transfer or assign, in whole or in part, to one
or more of our affiliates, the right to purchase units tendered pursuant to the
offer, but no such transfer or assignment will relieve us of our obligations
under the offer or prejudice your rights to receive payment for units validly
tendered and accepted for payment pursuant to the offer.
SECTION 3. PROCEDURE FOR TENDERING UNITS.
VALID TENDER. To validly tender units pursuant to the offer, a properly
completed and duly executed letter of transmittal and any other documents
required by such letter of transmittal must be received by the
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Information Agent, at one of its addresses set forth on the back cover of this
offer to purchase, on or prior to the expiration date. You may tender all or any
portion of your units. No alternative, conditional or contingent tenders will be
accepted.
SIGNATURE REQUIREMENTS. If the letter of transmittal is signed by the
registered holder of a unit and payment is to be made directly to that holder,
then no signature guarantee is required on the letter of transmittal. Similarly,
if a unit is tendered for the account of a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc. or a commercial bank, savings bank, credit union, savings and loan
association or trust company having an office, branch or agency in the United
States (each an "Eligible Institution"), no signature guarantee is required on
the letter of transmittal. However, in all other cases, all signatures on the
letter of transmittal must be guaranteed by an Eligible Institution.
In order for you to tender in the offer, your units must be validly
tendered and not withdrawn on or prior to the expiration date.
THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT YOUR OPTION AND RISK AND DELIVERY WILL BE DEEMED MADE
ONLY WHEN ACTUALLY RECEIVED BY THE INFORMATION AGENT. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.
APPOINTMENT AS PROXY; POWER OF ATTORNEY. By executing the letter of
transmittal, you are irrevocably appointing us and our designees as your proxy,
in the manner set forth in the letter of transmittal, each with full power of
substitution, to the fullest extent of the your rights with respect to the units
tendered by you and accepted for payment by us. Each such proxy shall be
considered coupled with an interest in the tendered units. Such appointment will
be effective when, and only to the extent that, we accept the tendered unit for
payment. Upon such acceptance for payment, all prior proxies given by you with
respect to the units will, without further action, be revoked, and no subsequent
proxies may be given (and if given will not be effective). We and our designees
will, as to those units, be empowered to exercise all voting and other rights as
a limited partner as we, in our sole discretion, may deem proper at any meeting
of limited partners, by written consent or otherwise. We reserve the right to
require that, in order for units to be deemed validly tendered, immediately upon
our acceptance for payment for the units, we must be able to exercise full
voting rights with respect to the units, including voting at any meeting of
limited partners then scheduled or acting by written consent without a meeting.
By executing the letter of transmittal, you agree to execute all such documents
and take such other actions as shall be reasonably required to enable the units
tendered to be voted in accordance with out directions. The proxy and power of
attorney granted by you to us upon your execution of the letter of transmittal
will remain effective and be irrevocable for a period of ten years following the
termination of our offer.
By executing the letter of transmittal, you also irrevocably constitute
and appoint us and our managers and designees as your attorneys-in-fact, each
with full power of substitution, to the full extent of your rights with respect
to the units tendered by you and accepted for payment by us. Such appointment
will be effective when, and only to the extent that, we pay for your units. You
agree not to exercise any rights pertaining to the tendered units without our
prior consent. Upon such payment, all prior powers of attorney granted by you
with respect to such units will, without further action, be revoked, and no
subsequent powers of attorney may be granted (and if granted will not be
effective). Pursuant to such appointment as attorneys-in-fact, we and our
managers and designees each will have the power, among other things, (i) to
transfer ownership of such units on the partnership books maintained by your
general partner (and execute and deliver any accompanying evidences of transfer
and authenticity it may deem necessary or appropriate in connection therewith),
(ii) upon receipt by the Information Agent of the offer consideration, to become
a substituted limited partner, to receive any and all distributions made by your
partnership on or after the date on which we acquire such units, and to receive
all benefits and otherwise exercise all rights of beneficial ownership of such
units in accordance with the terms of our offer, (iii) to execute and deliver to
the general partner of your partnership a change of address form instructing the
general partner to
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send any and all future distributions to which we are entitled pursuant to the
terms of the offer in respect of tendered units to the address specified in such
form, and (iv) to endorse any check payable to you or upon your order
representing a distribution to which we are entitled pursuant to the terms of
our offer, in each case, in your name and on your behalf.
If you tender units through the enclosed letter of transmittal you will
irrevocably constitute and appoint us and any of our designees as your true and
lawful agent and attorney-in-fact with respect to such units, with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to withdraw any or all of such units that have been
previously tendered in response to any tender or exchange offer provided that
the price per unit we are offering is equal to or higher than the price per unit
being offered in the previous tender or exchange offer. Such appointment is
effective upon the receipt of such letter of transmittal and shall continue to
be effective unless and until you withdraw such units from this offer prior to
the expiration date.
ASSIGNMENT OF INTEREST IN FUTURE DISTRIBUTIONS. By executing the letter
of transmittal, you will irrevocably assign to us and our assigns all of your
right, title and interest in and to any and all distributions made by your
partnership from any source and of any nature, including, without limitation,
distributions in the ordinary course, distributions from sales of assets,
distributions upon liquidation, winding-up, or dissolution, payments in
settlement of existing or future litigation, and all other distributions and
payments from and after the expiration date of our offer, in respect of the
units tendered by you and accepted for payment and thereby purchased by us. If,
after the unit is accepted for payment and purchased by us, you receive any
distribution from any source and of any nature, including, without limitation,
distributions in the ordinary course, distributions from sales of assets,
distributions upon liquidation, winding-up or dissolution, payments in
settlement of existing or future litigation and all other distributions and
payments, from your partnership in respect of such unit, you will agree to
forward promptly such distribution to us.
DETERMINATION OF VALIDITY; REJECTION OF UNITS; WAIVER OF DEFECTS; NO
OBLIGATION TO GIVE NOTICE OF DEFECTS. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of units pursuant to our offer will be determined by us, in our reasonable
discretion, which determination shall be final and binding on all parties. We
reserve the absolute right to reject any or all tenders of any particular unit
determined by us not to be in proper form or if the acceptance of or payment for
that unit may, in the opinion of our counsel, be unlawful. We also reserve the
absolute right to waive or amend any of the conditions of the offer that we are
legally permitted to waive as to the tender of any particular unit and to waive
any defect or irregularity in any tender with respect to any particular unit of
any particular limited partner. Our interpretation of the terms and conditions
of the offer (including the letter of transmittal) will be final and binding on
all parties. No tender of units will be deemed to have been validly made unless
and until all defects and irregularities have been cured or waived. Neither us,
the Information Agent, nor any other person will be under any duty to give
notification of any defects or irregularities in the tender of any unit or will
incur any liability for failure to give any such notification.
BACKUP FEDERAL INCOME TAX WITHHOLDING. To prevent the possible
application of back-up Federal income tax withholding of 31% with respect to
payment of the offer price, you may have to provide us with your correct
taxpayer identification number. See the instructions to the letter of
transmittal and "The Offer -- Section 6."
FIRPTA WITHHOLDING. To prevent the withholding of Federal income tax in
an amount equal to 10% of the amount realized on the disposition (the amount
realized is generally the offer price plus the partnership liabilities allocable
to each unit purchased), you must certify that the you are not a foreign person
if you tender units. See the instructions to the letter of transmittal and "The
Offer -- Section 6."
TRANSFER TAXES. The amount of any transfer taxes (whether imposed on
the registered holder of units
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or any person) payable on account of the transfer to such person will be
deducted from the purchase price unless satisfactory evidence of the payment of
such taxes or exemption therefrom is submitted.
BINDING AGREEMENT. A tender of a unit pursuant to any of the procedures
described above and the acceptance for payment of such unit will constitute a
binding agreement between the tendering unitholder and us on the terms set forth
in this offer to purchase and the related letter of transmittal.
SECTION 4. WITHDRAWAL RIGHTS.
You may withdraw tendered units at any time prior to the expiration
date or on or after December 10, 1999, if the units have not been previously
accepted for payment.
For a withdrawal to be effective, a written notice of withdrawal must
be timely received by the Information Agent at one of its addresses set forth on
the back cover of the offer to purchase. Any such notice of withdrawal must
specify the name of the person who tendered, the number of units to be withdrawn
and the name of the registered holder of such units, if different from the
person who tendered. In addition, the notice of withdrawal must be signed by the
person who signed the letter of transmittal in the same manner as the letter of
transmittal was signed.
If purchase of, or payment for, a unit is delayed for any reason, or if
we are unable to purchase or pay for a unit for any reason, then, without
prejudice to our rights under the offer, tendered units may be retained by the
Information Agent; subject, however, to our obligation, pursuant to Rule
14e-1(c) under the Exchange Act, to pay the offer price in respect of units
tendered or return those units promptly after termination or withdrawal of our
offer.
Any units properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of our offer. However, withdrawn units may be
re-tendered at any time prior to the expiration date by following the procedures
described in "The Offer -- Section 3."
All questions as to the validity and form (including time of receipt)
of notices of withdrawal will be determined by us in our reasonable discretion,
which determination shall be final and binding on all parties. Neither we, the
Information Agent, nor any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
SECTION 5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT.
We expressly reserve the right, in our reasonable discretion, at any
time and from time to time, (i) to extend the period of time during which our
offer is open and thereby delay acceptance for payment of, and the payment for,
any unit, (ii) to terminate the offer and not accept any units not theretofore
accepted for payment or paid for if any of the conditions to the offer are not
satisfied or if any event occurs that might reasonably be expected to result in
a failure to satisfy such conditions, (iii) upon the occurrence of any of the
conditions specified in "The Offer -- Section 17," to delay the acceptance for
payment of, or payment for, any units not already accepted for payment or paid
for, and (iv) to amend our offer in any respect (including, without limitation,
by increasing the consideration offered, increasing or decreasing the units
being sought, or both). Notice of any such extension, termination or amendment
will promptly be disseminated to you in a manner reasonably designed to inform
you of such change. In the case of an extension of the offer, the extension will
be followed by a press release or public announcement which will be issued no
later than 9:00 a.m., New York City time, on the next business day after the
scheduled expiration date of our offer, in accordance with Rule 14e-1(d) under
the Exchange Act.
If we extend the offer, or if we delay payment for a unit (whether
before or after its acceptance for
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payment) or are unable to pay for a unit pursuant to our offer for any reason,
then, without prejudice to our rights under the offer, the Information Agent may
retain tendered units and those units may not be withdrawn except to the extent
tendering unitholders are entitled to withdrawal rights as described in "The
Offer -- Section 4"; subject, however, to our obligation, pursuant to Rule
14e-l(c) under the Exchange Act, to pay the offer price in respect of units
tendered or return those units promptly after termination or withdrawal of the
offer.
If we make a material change in the terms of our offer, or if we waive
a material condition to our offer, we will extend the offer and disseminate
additional tender offer materials to the extent required by Rule 14e-1 under the
Exchange Act. The minimum period during which the offer must remain open
following any material change in the terms of the offer, other than a change in
price or a change in percentage of securities sought or a change in any dealer's
soliciting fee, if any, will depend upon the facts and circumstances, including
the materiality of the change. With respect to a change in price or, subject to
certain limitations, a change in the percentage of securities sought or a change
in any dealer's soliciting fee, if any, a minimum of ten business days from the
date of such change is generally required to allow for adequate dissemination to
unitholders. Accordingly, if prior to the expiration date, we increase (other
than increases of not more than two percent of the outstanding units) or
decrease the number of units being sought, or increase or decrease the offer
price, and if the offer is scheduled to expire at any time earlier than the
tenth business day after the date that notice of such increase or decrease is
first published, sent or given to unitholders, the offer will be extended at
least until the expiration of such ten business days. As used in the offer to
purchase, "business day" means any day other than a Saturday, Sunday or a
Federal holiday, and consists of the time period from 12:01 a.m. through 12:00
midnight, New York City time.
SECTION 6. CERTAIN FEDERAL INCOME TAX MATTERS.
The following summary is a general discussion of certain of the United
States federal income tax consequences of the offer that may be relevant to (i)
unitholders who tender some or all of their units for cash pursuant to our
offer, and (ii) unitholders who do not tender any of their units pursuant to our
offer. This discussion is based on the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code"), Treasury Regulations, rulings issued by the
Internal Revenue Service (the "IRS"), and judicial decisions, all as of the date
of this offer to purchase. All of the foregoing are subject to change or
alternative construction, possibly with retroactive effect, and any such change
or alternative construction could affect the continuing accuracy of this
summary. This summary is based on the assumption that your partnership is
operated in accordance with its organizational documents including its
certificate of limited partnership and agreement of limited partnership. This
summary is for general information only and does not purport to discuss all
aspects of federal income taxation which may be important to a particular person
in light of its investment or tax circumstances, or to certain types of
investors subject to special tax rules (including financial institutions,
broker-dealers, insurance companies, and, except to the extent discussed below,
tax-exempt organizations and foreign investors, as determined for United States
federal income tax purposes), nor (except as otherwise expressly indicated) does
it describe any aspect of state, local, foreign or other tax laws. This summary
assumes that the units constitute capital assets in the hands of the unitholders
(generally, property held for investment). No advance ruling has been or will be
sought from the IRS regarding any matter discussed in this offer to purchase.
Further, no opinion of counsel has been obtained with regard to the offer.
THE UNITED STATES FEDERAL INCOME TAX TREATMENT OF A UNITHOLDER
PARTICIPATING IN THE OFFER DEPENDS IN SOME INSTANCES ON DETERMINATIONS OF FACT
AND INTERPRETATIONS OF COMPLEX PROVISIONS OF UNITED STATES FEDERAL INCOME TAX
LAW FOR WHICH NO CLEAR PRECEDENT OR AUTHORITY MAY BE AVAILABLE. ACCORDINGLY, YOU
SHOULD CONSULT YOUR TAX ADVISOR REGARDING THE UNITED STATES FEDERAL, STATE,
LOCAL AND FOREIGN TAX CONSEQUENCES OF SELLING THE LIMITED PARTNERSHIP INTERESTS
IN YOUR PARTNERSHIP REPRESENTED BY UNITS PURSUANT TO OUR OFFER OR OF A DECISION
NOT TO SELL IN LIGHT OF YOUR SPECIFIC TAX SITUATION.
TAX CONSEQUENCES TO LIMITED PARTNERS TENDERING UNITS FOR CASH. You will
recognize gain or loss on a sale of a unit of limited partnership of your
partnership equal to the difference between (i) your "amount
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realized" on the sale and (ii) your adjusted tax basis in the unit sold. The
"amount realized" with respect to a unit of limited partnership of your
partnership will be equal to the sum of the amount of cash received by you for
the unit sold pursuant to the offer plus the amount of partnership liabilities
allocable to the unit (as determined under Section 752 of the Internal Revenue
Code). Thus, your taxable gain and tax liability resulting from a sale of a unit
of limited partnership of your partnership could exceed the cash received upon
such sale.
ADJUSTED TAX BASIS. If you acquired your units of limited partnership
of your partnership for cash, your initial tax basis in such units was generally
equal to your cash investment in your partnership increased by your share of
partnership liabilities at the time you acquired such units. Your initial tax
basis generally has been increased by (i) your share of partnership income and
gains, and (ii) any increases in your share of partnership liabilities, and has
been decreased (but not below zero) by (i) your share of partnership cash
distributions, (ii) any decreases in your share of partnership liabilities,
(iii) your share of partnership losses, and (iv) your share of nondeductible
partnership expenditures that are not chargeable to capital. For purposes of
determining your adjusted tax basis in units of limited partnership of your
partnership immediately prior to a disposition of your units, your adjusted tax
basis in your units will include your allocable share of partnership income,
gain or loss for the taxable year of disposition. If your adjusted tax basis is
less than your share of partnership liabilities (e.g., as a result of the effect
of net loss allocations and/or distributions exceeding the cost of your unit),
your gain recognized with respect to a unit of limited partnership of your
partnership pursuant to the offer will exceed the cash proceeds realized upon
the sale of such unit.
CHARACTER OF GAIN OR LOSS RECOGNIZED PURSUANT TO THE OFFER. Except as
described below, the gain or loss recognized by you on a sale of a unit of
limited partnership of your partnership pursuant to the offer generally will be
treated as a long-term capital gain or loss if you held the unit for more than
one year. Long-term capital gains recognized by individuals and certain other
noncorporate taxpayers generally will be subject to a maximum United States
federal income tax rate of 20%. If the amount realized with respect to a unit of
limited partnership of your partnership that is attributable to your share of
"unrealized receivables" of your partnership exceeds the tax basis attributable
to those assets, such excess will be treated as ordinary income. Among other
things, "unrealized receivables" include depreciation recapture for certain
types of property. In addition, the maximum United States federal income tax
rate applicable to persons who are noncorporate taxpayers for net capital gains
attributable to the sale of depreciable real property (which may be determined
to include an interest in a partnership such as your units) held for more than
one year is currently 25% (rather than 20%) with respect to that portion of the
gain attributable to depreciation deductions previously taken on the property
If you tender a unit of limited partnership interest of your
partnership in the offer, you will be allocated a share of partnership taxable
income or loss for the year of tender with respect to any units sold. You will
not receive any future distributions on units of limited partnership interest of
your partnership tendered on or after the date on which such units are accepted
for purchase and, accordingly, you may not receive any distributions with
respect to such accreted income. Such allocation and any partnership cash
distributions to you for that year will affect your adjusted tax basis in your
unit of limited partnership interest of your partnership and, therefore, the
amount of your taxable gain or loss upon a sale of a unit pursuant to the offer.
PASSIVE ACTIVITY LOSSES. The passive activity loss rules of the
Internal Revenue Code limit the use of losses derived from passive activities,
which generally include investments in limited partnership interests such as the
units of limited partnership interest of your partnership. An individual, as
well as certain other types of investors, generally cannot use losses from
passive activities to offset nonpassive activity income received during the
taxable year. Passive losses that are disallowed for a particular tax year are
"suspended" and may be carried forward to offset passive activity income earned
by the investor in future taxable years. In addition, such suspended losses may
be claimed as a deduction, subject to other applicable limitations, upon a
taxable disposition of the investor's interest in such activity.
Accordingly, if your investment in your units is treated as a passive
activity, you may be able to reduce gain from the sale of your units of limited
partnership interest of your partnership pursuant to the offer with passive
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losses in the manner described below. If you sell all or a portion of your units
of limited partnership interest of your partnership pursuant to the offer and
recognize a gain on your sale, you will generally be entitled to use your
current and "suspended" passive activity losses (if any) from your partnership
and other passive sources to offset that gain. In general, if you sell all or a
portion of your units of limited partnership interest of your partnership
pursuant to the offer and recognize a loss on such sale, you will be entitled to
deduct that loss currently (subject to other applicable limitations) against the
sum of your passive activity income from your partnership for that year (if any)
plus any passive activity income from other sources for that year. If you sell
all of your units pursuant to the offer, the balance of any "suspended" losses
from your partnership that were not otherwise utilized against passive activity
income as described in the two preceding sentences will generally no longer be
suspended and will generally therefore be deductible (subject to any other
applicable limitations) by you against any other income for that year,
regardless of the character of that income. You are urged to consult your tax
advisor concerning whether, and the extent to which, you have available
"suspended" passive activity losses from your partnership or other investments
that may be used to reduce gain from the sale of units pursuant to the offer.
INFORMATION REPORTING, BACKUP WITHHOLDING AND FIRPTA. If you tender any
units, you must report the transaction by filing a statement with your United
States federal income tax return for the year of the tender which provides
certain required information to the IRS. To prevent the possible application of
back-up United States federal income tax withholding of 31% with respect to the
payment of the offer consideration, you are generally required to provide us
with your correct taxpayer identification number. See the instructions to the
letter of transmittal.
▇▇▇▇ realized by a foreign person on the sale of a unit pursuant to the
offer will be subject to federal income tax under the Foreign Investment in Real
Property Tax Act of 1980. Under these provisions of the Internal Revenue Code,
the transferee of an interest held by a foreign person in a partnership which
owns United States real property generally is required to deduct and withhold
10% of the amount realized on the disposition. Amounts withheld would be
creditable against a foreign person's United States federal income tax liability
and, if in excess thereof, a refund could be claimed from the Internal Revenue
Service by filing a United States income tax return.
See the instructions to the letter of transmittal.
TAX CONSEQUENCES TO NON-TENDERING AND PARTIALLY-TENDERING LIMITED
PARTNERS. Section 708 of the Internal Revenue Code provides that if there is a
sale or exchange of 50% or more of the total interest in capital and profits of
a partnership within any 12-month period, such partnership terminates for United
States federal income tax purposes. It is possible that our acquisition of units
pursuant to the offer alone or in combination with other transfers of interests
in your partnership could result in such a termination of your partnership. If
your partnership is deemed to terminate for tax purposes, the following Federal
income tax events will be deemed to occur: the terminated partnership will be
deemed to have contributed all of its assets (subject to its liabilities) to a
new partnership in exchange for an interest in the new partnership and,
immediately thereafter, the old partnership will be deemed to have distributed
interests in the new partnership to the remaining limited partners in proportion
to their respective interests in the old partnership in liquidation of the old
partnership.
A remaining limited partner will generally not recognize any gain or
loss upon the deemed distribution or upon the deemed contribution and the
capital accounts of the remaining limited partners in the old partnership will
carry over intact into the new partnership. A termination may change (and
possibly shorten) a remaining partner's holding period with respect to its
retained units in your partnership for United States federal income tax
purposes.
The new partnership's adjusted tax basis in its assets will be the same
as the old partnership's basis in such assets immediately before the
termination. A termination may also subject the assets of the new partnership to
depreciable lives in excess of those currently applicable to the old
partnership. This would generally decrease the annual average depreciation
deductions allocable to the remaining limited partners for a number of years
following consummation of the offer (thereby increasing the taxable income
allocable to their units in each such year), but would have no effect on the
total depreciation deductions available over the useful lives of the assets of
your partnership.
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Elections as to certain tax matters previously made by the old
partnership prior to termination will not be applicable to the new partnership
unless the new partnership chooses to make the same elections.
Additionally, upon a termination for tax purposes, the old
partnership's taxable year will close for all limited partners. In the case of a
remaining limited partner or a partially tendering limited partner reporting on
a tax year other than a calendar year, the closing of the partnership's taxable
year may result in more than 12 months' taxable income or loss of the old
partnership being includible in such limited partner's taxable income for the
year of termination.
SECTION 7. EFFECTS OF THE OFFER.
FUTURE CONTROL BY AIMCO. Because the general partner of your
partnership is our subsidiary, we have control over the management of your
partnership. If we are successful in acquiring more than 15,582.5 units pursuant
to the offer, we will own more than 50% of the outstanding units and, as a
result, will be able to control the outcome of all voting decisions with respect
to your partnership. Even if we acquire a lesser number of units pursuant to the
offer, however, because we currently own approximately 31.2% of the outstanding
units, we will be able to significantly influence the outcome of all voting
decisions with respect to your partnership. In general, we will vote the units
owned by us in whatever manner we deem to be in our best interests, which may
not be in the interest of other limited partners. This could (1) prevent
non-tendering limited partners from taking action they desire but that we oppose
and (2) enable us to take action desired by us but opposed by non-tendering
limited partners. We also own the company that manages the residential
properties owned by your partnership. In the event that we acquire a substantial
number of units pursuant to the offer, removal of a property manager may become
more difficult or impossible.
DISTRIBUTIONS TO US. If we acquire units in the offer, we will
participate in any subsequent distributions to limited partners to the extent of
the units purchased.
PARTNERSHIP STATUS. We believe our purchase of units should not
adversely affect the issue of whether your partnership is classified as a
partnership for Federal income tax purposes.
BUSINESS. Our offer will not affect the operation of the properties
owned by your partnership. We will continue to control the general partner of
your partnership and the residential property manager, both of which will remain
the same. Consummation of the offer will not affect your agreement of limited
partnership, the operations of any partnership, the business and properties
owned by your partnership, the management compensation payable to your general
partner or any other matter relating to your partnership, except it would result
in us increasing our ownership of units. We have no current intention of
changing the fee structure for your general partner or the manager of your
partnership's residential properties.
EFFECT ON TRADING MARKET; REGISTRATION UNDER 12(g) OF THE EXCHANGE ACT.
If a substantial number of units are purchased pursuant to the offer, the result
will be a reduction in the number of limited partners in your partnership. In
the case of certain kinds of equity securities, a reduction in the number of
securityholders might be expected to result in a reduction in the liquidity and
volume of activity in the trading market for the security. In this case,
however, there is no established public trading market for the units and,
therefore, we do not believe a reduction in the number of limited partners will
materially further restrict your ability to find purchasers for your units
through secondary market transactions.
The units are registered under Section 12(g) of the Exchange Act, which
means, among other things, that your partnership is required to file periodic
reports with the SEC and to comply with the SEC's proxy rules. We do not expect
or intend that consummation of the offer will cause the units to cease to be
registered under Section 12(g) of the Exchange Act. If the units were to be held
by fewer than 300 persons, your partnership could apply
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to de-register the units under the Exchange Act. Because the units are
widely-held, however, we believe that, even if we purchase the maximum number of
units in the offer, the units will be held of record by more than 300 persons.
SECTION 8. INFORMATION CONCERNING US AND CERTAIN OF OUR AFFILIATES.
We are AIMCO Properties, L.P., a Delaware limited partnership. Together
with our subsidiaries, we conduct substantially all of the operations of
Apartment Investment and Management Company, a Maryland corporation ("AIMCO").
AIMCO is a real estate investment trust that owns and manages multifamily
apartment properties throughout the United States. Based on apartment unit data
compiled by the National Multi-Housing Council, we believe that, as of June 30,
1999, AIMCO was one of the largest owners and managers of multifamily apartment
properties in the United States, with a total portfolio of 369,404 apartment
units in 2,037 properties located in 49 states, the District of Columbia and
Puerto Rico. AIMCO's Class A Common Stock is listed and traded on the New York
Stock Exchange under the symbol "AIV." As of June 30, 1999, AIMCO:
o owned or controlled 64,640 units in 240 apartment properties;
o held an equity interest in 168,817 units in 887 apartment
properties; and
o managed 136,523 units in 940 apartment properties for third
party owners and affiliates.
Our general partner is AIMCO-GP, Inc., which is a wholly-owned
subsidiary of AIMCO. Our principal executive offices are located at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and our telephone number is (303)
757-8101.
The names, positions and business addresses of the directors and
executive officers of AIMCO and your general partner (which is our subsidiary)
as well as a biographical summary of the experience of such persons for the past
five years or more, are set forth on Annex I attached hereto and are
incorporated herein by reference.
We and AIMCO are both subject to the information and reporting
requirements of the Exchange Act and, in accordance therewith, file reports and
other information with the Securities and Exchange Commission relating to our
business, financial condition and other matters. Such reports and other
information may be inspected at the public reference facilities maintained by
the SEC at Judiciary Plaza, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇;
Citicorp Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and 7 World
Trade Center, 13th Floor, New York, New York 10048. Copies of such material can
also be obtained from the Public Reference Room of the SEC in Washington, D.C.
at prescribed rates. The SEC also maintains a site on the World Wide Web at
▇▇▇▇://▇▇▇.▇▇▇.▇▇▇ that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
In addition, information filed by AIMCO with the New York Stock Exchange may be
inspected at the offices of the New York Stock Exchange at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
For more information regarding AIMCO Properties, L.P., please refer to
the Annual Report on Form 10-K for the year ended December 31, 1998 and the
Quarterly Report for the quarterly periods ended March 31, 1999 and June 30,
1999 (particularly the management's discussion and analysis of financial
condition and results of operations) and other reports and documents filed by it
with the SEC.
Except as described below in "The Offer - Section 9" and "The Offer -
Section 11", neither we nor, to the best of our knowledge, any of the persons
listed on Annex I attached hereto, (i) beneficially own or have a right to
acquire any units, (ii) has effected any transaction in the units in the past 60
days, or (iii) have any contract, arrangement, understanding or relationship
with any other person with respect to any securities of your partnership,
including, but not limited to, contracts, arrangements, understandings or
relationships concerning transfer or voting thereof, joint ventures, loan or
option arrangements, puts or calls, guarantees of loans, guarantees against loss
or
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the giving or withholding of proxies (except for previous tender offers we may
have conducted for units).
SECTION 9. BACKGROUND AND REASONS FOR THE OFFER.
GENERAL. We are in the business of acquiring direct and indirect
interests in apartment properties such as the properties owned by your
partnership. Our offer provides us with an opportunity to increase our ownership
interest in your partnership's properties while providing you and other
investors with an opportunity to liquidate your current investment.
On October 1, 1998, AIMCO merged (the "Insignia Merger") with Insignia
Financial Group, Inc. ("Insignia"). As a result of the Insignia Merger, AIMCO
acquired approximately 51% of the outstanding common shares of beneficial
interest of Insignia Properties Trust ("IPT"). The general partner of your
partnership is a wholly owned subsidiary of IPT. Through the Insignia Merger,
AIMCO also acquired a majority ownership interest in the entity that manages the
residential properties owned by your partnership. On October 31, 1998, IPT and
AIMCO entered into an agreement and plan of merger, dated as of October 1, 1998,
pursuant to which IPT merged with AIMCO on February 26, 1999 (the "IPT Merger").
Together with its subsidiaries, AIMCO currently owns, in the aggregate,
approximately 31.2% of your partnership's outstanding limited partnership units.
One of the reasons we chose to acquire Insignia is that we would be
able to make the tender offers to acquire limited partnership interests of some
of the limited partnerships formerly controlled or managed by Insignia (the
"Insignia Partnerships"). Such offers would provide liquidity for the limited
partners of the Insignia Partnerships, and would provide AIMCO Properties, L.P.
with a larger asset and capital base and increased diversification. As of the
date of this offering, AIMCO Properties, L.P. proposes to make offers to
approximately 90 of the Insignia Partnerships, including your partnership.
During our negotiations with Insignia in early 1998, we decided that if
the merger with Insignia were consummated, we could also benefit from making
offers for limited partnership interests in the Insignia Partnerships. While
some of the Insignia Partnerships are public partnerships and information is
publicly available on such partnerships for weighing the benefits of making a
tender offer, many of the partnerships are private partnerships and information
about such partnerships comes principally from the general partner. Our control
of the general partner makes it possible to obtain access to such information.
Further, such control also means that we control the operations of the
partnerships and their properties. Insignia did not propose that we conduct such
tender offers, rather we initiated the offers on our own. We determined in June
of 1998 that if the merger with Insignia were consummated, we would offer to
limited partners of certain of the Insignia Partnerships limited partnership
units of AIMCO Properties, L.P. and/or cash.
PRIOR TENDER OFFERS. Prior to the Insignia Merger, a number of tender
offers had been made to acquire units of your partnership. In August of 1997,
IPLP Acquisition I, L.L.C., then an affiliate of Insignia and now our affiliate,
commenced a tender offer for $275 per unit.
On May 13, 1999, we commenced a tender offer for $359 per unit. A total
of 2,997 units, representing 3.6% of the outstanding units, were validly
tendered pursuant to the offer. On October 6, 1999, ERP Operating Limited
Partnership commenced an offer to purchase all of the outstanding units in your
partnership at a purchase price of $500 per unit.
We are aware that tender offers may have been made by unaffiliated
third parties to acquire units in your partnership in exchange for cash. We are
unaware of the amounts offered, terms, tendering parties or number of units
involved in these tender offers. In connection with tender offers made by
Insignia affiliates with respect to partnerships for which we are making offers,
some limited partners filed lawsuits. We are not aware of any merger,
consolidation or other combination involving any of the Insignia Partnerships,
or any acquisitions of any of such partnerships or a material amount of the
assets of such partnerships.
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CERTAIN LITIGATION. On March 24, 1998, certain persons claiming to own
limited partner interests in certain of the limited partnerships for which our
subsidiaries act as general partner (including your partnership) filed a
purported class and derivative action in California Superior Court in the County
of San Mateo against AIMCO, Insignia, the general partners of the partnerships,
certain persons and entities who purportedly formerly controlled the general
partners, and additional entities affiliated with and individuals who are
officers, directors and/or principals of several of the defendants. The
complaint contains allegations that, among other things, (i) the defendants
breached fiduciary duties owed to the plaintiffs, or aided and abetted in those
purported breaches, by selling or agreeing to sell their "fiduciary positions"
as stockholders, officers and directors of the general partners for a profit and
retaining said profit rather than distributing it to the plaintiffs; (ii) the
defendants breached fiduciary duties, or aided and ▇▇▇▇▇▇▇ in those purported
breaches, by mismanaging the partnerships and misappropriating assets of the
partnerships by (a) manipulating the operations of the partnerships to depress
the trading price of limited partnership units of the partnerships; (b) coercing
and fraudulently inducing unitholders to sell units to certain of the defendants
at depressed prices; and (c) using the voting control obtained by purchasing
units at depressed prices to entrench certain of the defendants' positions of
control over the partnerships; and (iii) the defendants breached their fiduciary
duties to the plaintiffs by (a) selling assets of the partnerships such as
mailing lists of unitholders and (b) causing the general partners to enter into
exclusive arrangements with their affiliates to sell goods and services to the
general partners, the unitholders and tenants of properties owned by the
partnerships. The complaint also alleges that the foregoing allegations
constitute violations of various California securities, corporate and
partnership statutes, as well as conversion and common law fraud. The complaint
seeks unspecified compensatory and punitive damages, an injunction blocking the
sale of control of the general partners and a court order directing the
defendants to discharge their fiduciary duties to the plaintiffs. On June 25,
1998, the defendants filed motions seeking dismissal of the action. In lieu of
responding to the motion, plaintiffs have filed an amended complaint. On October
14, 1998, the AIMCO and ▇▇▇▇▇▇▇▇ defendants filed demurrers to the amended
complaint. The demurrers (which are requests to dismiss the action as a matter
of law) were heard on February 8, 1999, but no decision has been reached by the
Court. While no assurances can be given, we believe that the ultimate outcome of
this litigation will not have a material adverse effect on us.
ALTERNATIVES CONSIDERED BY YOUR GENERAL PARTNER. Before we commenced
this offer, your general partner (which is our subsidiary) considered a number
of alternative transactions. The following is a brief discussion of the
advantages and disadvantages of the alternatives considered by your general
partner.
LIQUIDATION
One alternative would be for the partnership to sell its assets,
distribute the net liquidation proceeds to its partners in accordance with the
agreement of limited partnership, and thereafter dissolve. Partners would be at
liberty to use the net liquidation proceeds after taxes for investment,
business, personal or other purposes, at their option. If your partnership were
to sell its assets and liquidate, you and your partners would not need to rely
upon capitalization of income or other valuation methods to estimate the fair
market value of partnership assets. Instead, such assets would be valued through
negotiations with prospective purchasers (in many cases unrelated third
parties).
However, in the opinion of your general partner (which is our
subsidiary), the present time may not be the most desirable time to sell the
real estate assets of your partnership in a private transaction, and the
proceeds realized from any such sale would be uncertain. Liquidation of the
partnership assets may trigger a substantial prepayment penalty under the
mortgages for the properties. Your general partner believes it currently is in
the best interest of your partnership to continue holding its real estate
assets. Although there might be a prepayment penalty of approximately 1 to 2% of
the outstanding balance of the mortgages depending on when and under what
circumstances they are prepaid, such prepayment penalties are not a significant
factor in determining when a property may be sold. See "The Offer - Section 13.
Certain Information Concerning Your Partnership Investment Objectives and
Policies; Sale or Financing of Investments."
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CONTINUATION OF THE PARTNERSHIP WITHOUT THE OFFER
A second alternative would be for your partnership to continue as a
separate legal entity, with its own assets and liabilities and continue to be
governed by its existing agreement of limited partnership, without our offer. A
number of advantages could result from the continued operation of your
partnership. Given improving rental market conditions, the level of
distributions might increase over time. It is possible that the private resale
market for properties could improve over time, making a sale of the
partnership's properties in a private transaction at some point in the future a
more attractive option than it is currently. The continuation of your
partnership will allow you to continue to participate in the net income and any
increases in revenue of your partnership and any net proceeds from the sale of
any property owned by your partnership. However, no assurance can be given as to
future operating results or as to the results of any attempts to sell any
property owned by your partnership.
There are several risks and disadvantages that result from continuing
the operations of your partnership without our offer. If your partnership were
continue operating as presently structured, your partnership could be forced to
borrow on terms that could result in net losses from operations. In addition,
continuation of your partnership without our offer would deny you and your
partners the benefits of our offer. For example, you would have no opportunity
for liquidity unless you were to sell your units in a private transaction. Any
such sale would likely be at a discount from your pro rata share of the fair
market value of the properties owned by your partnership.
SALE OF ASSETS
Your partnership could sell the properties it owns and not liquidate.
Your general partner (which is our subsidiary) considers the sale of partnership
properties from time to time. However, any such sale would likely be a taxable
transaction, and, without a liquidating distribution, would not provide limited
partners with any cash to pay any tax liabilities arising as a result thereof.
ALTERNATIVE TRANSACTIONS CONSIDERED BY US. Before we decided to make
our offer, we considered a number of alternative transactions, including
purchasing some or all of your partnership's properties or merging your
partnership with us. However, both of these alternatives would require a vote of
all the limited partners. If the transaction was approved, all limited partners,
including those who wish to continue to participate in the ownership of your
partnership's properties, would be forced to participate in the transaction. If
the transaction was not approved, all limited partners, including those who
would like to dispose of their investment in your partnership's properties,
would be forced to retain their investment.
DETERMINATION OF OFFER PRICE. In establishing the offer price, we
reviewed certain publicly available information and certain information made
available to us by the general partner (which is our subsidiary) and our other
affiliates, including among other things: (i) the agreement of limited
partnership, as amended to date; (ii) the partnership's Annual Report on Form
10-KSB for the year ended December 31, 1998; (iii) unaudited results of
operations of the partnership's properties for the period since the beginning of
the partnership's current fiscal year and to date in 1999; (iv) the operating
budgets prepared by the residential property manager with respect to the
partnership's properties for the year ending December 31, 1999; and (v) tender
offer statements, solicita tion/recommendation statements and beneficial
ownership reports on Schedules 14D-1, 14D-9, and 13-D. Our determination of the
offer price was based on our review and analysis of the foregoing information,
the other financial information, and the analyses concerning the partnership
summarized below.
VALUATION OF UNITS. We determined our offer price by estimating the
value of each property owned by your partnership using the direct capitalization
method. This method involves applying a capitalization rate to your
partnership's annual property income. A capitalization rate is a percentage
(rate of return), commonly applied by purchasers of residential real estate to
property income to determine the present value of income property. The lower the
capitalization rate utilized the higher the value produced, and the higher the
capitalization rate utilized the lower the value produced. We used your
partnership's property income for the month ended June 30, 1999
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(annualized). Our method for selecting a capitalization rate begins with each
property being assigned a location and condition rating (e.g., "A" for
excellent, "B" for good, "C" for fair, and "D" for poor). We then adjust the
capitalization rate based on whether the mortgage debt that the property is
subject to bears interest at a rate above or below 7.5% per annum. Generally,
for every 0.5% in excess of 7.5%, the capitalization rate would be increased by
0.25% The evaluation of a property's location and condition, and the
determination of an appropriate capitalization rate for a property, is
subjective in nature, and others evaluating the same property might use a
different capitalization rate and derive a different property value.
Property income is the difference between the revenues from the
property and related costs and expenses, excluding income derived from sources
other than its regular activities and before income deductions. Income
deductions include interest, income taxes, prior-year adjustments, charges to
reserves, write-off of intangibles, adjustments arising from major changes in
accounting methods and other material and nonrecurring items. In this respect,
property income differs from net income disclosed in the partnership's financial
statements, which does not exclude these income sources and deductions. The
following is a reconciliation of your partnership's property income for the
unaudited month ended June 30, 1999 (annualized), to your partnership's net
operating income for the same period.
Net Income (Loss)......................... $ 2,820,000
Other Non-Operating Expense............... (323,000)
Depreciation.............................. 4,166,000
Interest.................................. 5,904,000
-----------
Property Income........................... $12,567,000
Although the direct capitalization method is a widely accepted way of
valuing real estate, there are a number of other methods available to value real
estate, each of which may result in different valuations of a property. Further,
in applying the direct capitalization method, others may make different
assumptions and obtain different results. The proceeds that you would receive if
you sold your units to someone else or if your partnership were actually
liquidated might be higher than our offer price. We determined our offer price
as follows:
o First, we estimated the value of the property owned by your partnership
using the direct capitalization method. We selected capitalization
rates based on our experience in valuing similar properties. The lower
the capitalization rate applied to a property's income, the higher its
value. We considered local market sales information for comparable
properties, estimated actual capitalization rates (property income less
capital reserves divided by sales price) and then evaluated each
property in light of its relative competitive position, taking into
account property location, occupancy rate, overall property condition
and other relevant factors. We believe that arms-length purchasers
would base their purchase offers on capitalization rates comparable to
those used by us, however there is no single correct capitalization
rate and others might use different rates. We divided the unaudited
June 30, 1999 (annualized) property income by the property's
capitalization rate to derive an estimated gross property value as
described in the following table.
ESTIMATED 1999 ESTIMATED
PROPERTY CAPITALIZATION GROSS PROPERTY
PROPERTY INCOME (1) RATE VALUE
-------- -------------- -------------- --------------
Autumn Run $1,834,000 10.56% $ 17,360,000
▇▇▇▇▇▇'▇ Pointe 737,000 10.89% 6,772,000
Copper Mill 840,000 10.89% 7,717,000
Four Winds 1,551,000 10.89% 14,241,000
Hampton Greens 1,176,000 10.89% 10,796,000
Plantation Creek 2,524,000 10.89% 23,172,000
Promontory Point 968,000 11.60% 8,347,000
Stoney Creek 1,225,000 10.89% 11,255,000
Woodcreek 1,712,000 10.89% 15,718,000
------------
Estimated Total Gross Property Value $115,378,000
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(1) Actual results for the six months ended June 30, 1999, multiplied by two.
o Second, we calculated the value of the equity of your partnership by
adding to the aggregate gross property value of all properties owned by
your partnership, the value of the non-real estate assets of your
partnership, and deducting the liabilities of your partnership,
including mortgage debt and debt owed by your partnership to its
general partner (which is our subsidiary) or its affiliates after
consideration of any applicable subordination provisions affecting
payment of such debt. We deducted from this value certain other costs
including required capital expenditures, deferred maintenance, and
closing costs to derive a net equity value for your partnership of
$42,475,342. Closing costs, which are estimated to be 4% of the gross
property value, include legal and accounting fees, real property,
transfer taxes, title and escrow costs and broker's fees.
o Third, using this net equity value, we determined the proceeds that
would be paid to holders of units in the event of a liquidation of your
partnership, based on the terms of your partnership's agreement of
limited partnership. Accordingly, 100% of the estimated liquidation
proceeds are assumed to be distributed to holders of units. Our offer
price represents the per unit liquidation proceeds determined in this
manner.
Gross valuation of partnership properties $ 115,378,000
Plus: Cash and cash equivalents 6,967,383
Plus: Other partnership assets, net of security deposits 2,676,393
Less: Mortgage debt, including accrued interest (73,615,726)
Less: Accounts payable and accrued expenses (204,639)
Less: Other liabilities (1,730,962)
-------------
Partnership valuation before taxes and certain costs $ 49,470,449
Less: Disposition fees 0
Less: Extraordinary capital expenditures for deferred maintenance (2,379,987)
Less: Closing costs (4,615,120)
-------------
Estimated net valuation of your partnership $ 42,475,342
Percentage of estimated net valuation allocated to holders of units 100%
-------------
Estimated net valuation of units $ 42,475,342
Total number of units 82,848
-------------
Estimated valuation per unit $ 513
=============
COMPARISON OF CONSIDERATION TO ALTERNATIVE CONSIDERATION. To assist
holders of units in evaluating the offer, your general partner (which is our
subsidiary) has attempted to compare the offer price against: (a) prices at
which the units have sold in the secondary market; (b) estimates of the value of
the units on a liquidation basis; (c) an affiliate's estimate of net liquidation
value; and (d) the recent appraisals of your partnership's properties. The
general partner of your partnership believes that analyzing the alternatives in
terms of estimated value, based upon currently available data and, where
appropriate, reasonable assumptions made in good faith, establishes a reasonable
framework for comparing alternatives. Since the value of the consideration for
alternatives to the offer is dependent upon varying market conditions, no
assurance can be given that the estimated values reflect the range of possible
values.
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The results of these comparative analyses are summarized in the
following chart. You should bear in mind that the estimated values assigned to
the alternate forms of consideration are based on a variety of assumptions that
have been made by us. These assumptions relate to, among other things, the
operating results, if any since June 30, 1999 as to income and expenses of the
properties, other projected amounts and the capitalization rates that may be
used by prospective buyers if your partnership assets were to be liquidated.
In addition, these estimates are based upon certain information
available to your general partner (which is our subsidiary) at the time the
estimates were computed, and no assurance can be given that the same conditions
analyzed by it in arriving at the estimates of value would exist at the time of
the offer. The assumptions used have been determined by the general partner of
your partnership in good faith, and, where appropriate, are based upon current
and historical information regarding your partnership and current real estate
markets, and have been highlighted below to the extent critical to the
conclusions of the general partner of your partnership. Actual results may vary
from those set forth below based on numerous factors, including interest rate
fluctuations, tax law changes, supply and demand for similar apartment
properties, the manner in which your partnership's properties are sold and
changes in availability of capital to finance acquisitions of apartment
properties.
Under your partnership's agreement of limited partnership, the term of
the partnership will continue until December 31, 2010, unless sooner terminated
as provided in the agreement or by law. Limited partners could, as an
alternative to tendering their units, take a variety of possible actions,
including voting to liquidate the partnership or amending the agreement of
limited partnership to authorize limited partners to cause the partnership to
merge with another entity or engage in a "roll-up" or similar transaction.
COMPARISON TABLE
PER UNIT
--------
Cash offer price .................................. $513
Alternatives:
Prior cash offer price .......................... $359 (1)
Offer by ERP Operating Limited Partnership ...... $500
Prices on secondary market ...................... $60 to $400
Estimated liquidation proceeds .................. $513
General partner's estimate of net asset value ... $488
Affiliate's estimate of net liquidation value ... $412.22
----------
(1) In our May 13, 1999 tender offer, the offer price of $359 was determined
based upon our calculation of the liquidation value of your partnership. Such
offer price for the prior tender offer was based on (i) your partnership's
property income for the year ended December 31, 1998, (ii) our estimate of an
appropriate capitalization rate (ranging from 10.00% to 11.25%) for each of your
partnership's properties, (iii) plus the current assets of your partnership,
(iv) less estimated costs and fees (including applicable state sales taxes) for
a sale on the property, and winding up of your partnership, (v) less estimated
cost of deferred maintenance, (vi) less the mortgages for the properties, (vii)
less your partnership's other liabilities, and (viii) the percentage ownership
interests of the limited partners in your partnership. See also "The Offer -
Section 9 - Background and Reasons for the Offer - Prior Tender Offers."
PRICES ON SECONDARY MARKET
Secondary market sales information is not a reliable measure of value
because of the limited amount of any known trades. At present, privately
negotiated sales and sales through intermediaries are the only means which may
be available to a limited partner to liquidate an investment in units (other
than our offer) because the units are not listed or traded on any exchange or
quoted on NASDAQ, on the Electronic Bulletin
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Board, or in "pink sheets." Secondary sales activity for the units, including
privately negotiated sales, has been limited and sporadic.
Prior to our acquisition of the general partner, the general
partner received from time to time information on the prices at which units were
sold; however, it did not regularly receive or maintain information regarding
the bid or asked quotations of secondary market makers, if any. The prices in
the table below are based solely on information provided to the general partner
by sellers and buyers of units transferred in sale transactions (i.e., excluding
transactions believed to result from the death of a limited partner, rollover to
an IRA account, establishment of a trust, trustee to trustee transfers,
termination of a benefit plan, distributions from a qualified or nonqualified
plan, uniform gifts to minors, abandonment of units or similar non-sale
transactions). The transfer paperwork submitted to the general partner often did
not include the requested price information or contained conflicting information
as to the actual sales price. Sale prices not reported or disclosed could exceed
the reported prices. According to information obtained from your general partner
(which is our subsidiary) from January 1, 1996 to September 30, 1998, an
aggregate of 919 units (representing approximately 1.2% of the total outstanding
units) were transferred (including any tender offers) in sale transactions. Set
forth in the table below are the high and low sales prices of units for the
quarterly periods from January 1, 1996 to September 30, 1998, as reported by
your general partner:
SALES PRICES OF PARTNERSHIP UNITS, AS REPORTED BY THE GENERAL PARTNER
HIGH
----
Fiscal Year Ended December 31, 1998:
Third Quarter ................................ $400.00
Second Quarter ............................... 275.00
First Quarter ................................ 267.57
Fiscal Year Ended December 31, 1997:
Fourth Quarter ............................... 200.00
Third Quarter ................................ 244.00
Second Quarter ............................... 257.00
First Quarter ................................ 153.30
Fiscal Year Ended December 31, 1996:
Fourth Quarter ............................... 115.00
Third Quarter ................................ --
Second Quarter ............................... --
First Quarter ................................ --
Set forth below are the high and low sale prices of units for the years
ended December 31, 1996, 1997 and 1998 and for the first and second quarters of
1999, as reported by The Partnership Spectrum, which is an independent,
third-party source. The gross sales prices reported by The Partnership Spectrum
do not necessarily reflect the net sales proceeds received by sellers of units,
which typically are reduced by commissions and other secondary market
transaction costs to amounts less than the reported price. The Partnership
Spectrum represents only one source of secondary sales information, and other
services may contain prices for the units that equal or exceed sales prices
reported in The Partnership Spectrum. We do not know whether the information
compiled by The Partnership Spectrum is accurate or complete.
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SALES PRICES OF PARTNERSHIP UNITS,
AS REPORTED BY THE PARTNERSHIP SPECTRUM
LOW SALES HIGH SALES
PRICE PRICE
PER UNIT PER UNIT
---------- ----------
Fiscal Year Ended December 31, 1999:
Second Quarter ............................. $ 345.00 $ 345.00
First Quarter .............................. 290.00 322.00
Fiscal Year Ended December 31, 1998:
Fourth Quarter ............................. 249.72 290.00
Third Quarter .............................. 260.00 311.00
Second Quarter ............................. 225.00 330.00
First Quarter .............................. 175.00 303.33
Fiscal Year Ended December 31, 1997:
Fourth Quarter ............................. 187.00 187.00
Third Quarter .............................. 170.00 340.00
Second Quarter ............................. 145.00 261.00
First Quarter .............................. 105.00 210.00
Fiscal Year Ended December 31, 1996:
Fourth Quarter ............................. 76.67 187.00
Third Quarter .............................. 67.00 137.80
Second Quarter ............................. 60.00 97.00
First Quarter .............................. 65.00 86.00
Set forth in the table below are the high and low sales prices of units
for the year ended December 31, 1998, the first, second, and third quarters of
1999, as reported by the American Partnership Board, which is an independent,
third-party source. The gross sales prices reported by American Partnership
Board do not necessarily reflect the net sales proceeds received by sellers of
units, which typically are reduced by commissions and other secondary market
transaction costs to amounts less than the reported prices. The American
Partnership Board represents one source of secondary sales information, and the
other services may contain prices for units that equal or exceed sales prices
reported by the American Partnership Board. We do not know whether the
information compiled by the American Partnership Board is accurate or complete.
SALES PRICES OF PARTNERSHIP UNITS, AS REPORTED BY THE AMERICAN PARTNERSHIP BOARD
HIGH LOW
------ ------
Fiscal Year Ended December 31, 1999
Third Quarter ....................... -- --
Second Quarter ...................... 345.00 345.00
First Quarter ....................... 321.89 321.89
Fiscal Year Ended December 31, 1998: ..... 318.88 275.00
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ESTIMATED LIQUIDATION PROCEEDS
Liquidation value is a measure of the price at which the assets of your
partnership would sell if disposed of in an arms-length transaction between a
willing buyer and your partnership, each having access to relevant information
regarding the historical revenues and expenses of the business. Your general
partner (which is our subsidiary) estimated the liquidation value of units using
the same direct capitalization method and assumptions as we did in valuing the
units for the offer price. The liquidation analysis also assumed that your
partnership's properties were sold to an independent third-party buyer at the
current property value and that other balance sheet assets (excluding amortizing
assets) and liabilities of your partnership were sold at their book value, and
that the net proceeds of sale were allocated to your partners in accordance with
your partnership's agreement of limited partnership.
The liquidation analysis assumes that the assets of your partnership
are sold in a single transaction. Should the assets be liquidated over time,
even at prices equal to those projected, distributions to limited partners from
cash flow from operations might be reduced because your partnership's relatively
fixed costs, such as general and administrative expenses, are not
proportionately reduced with the liquidation of assets. However, for
simplification purposes, the sales of the assets are assumed to occur
concurrently. The liquidation analysis assumes that the assets would be disposed
of in an orderly manner and not sold in forced or distressed sales where sellers
might be expected to dispose of their interests at substantial discounts to
their actual fair market value.
AFFILIATE'S ESTIMATE OF NET LIQUIDATION VALUE
An affiliate of your general partner which is now an affiliate of ours,
prepared an estimate of your partnership's net liquidation value per unit in
connection with a tender offer to purchase units for $275 each which closed in
September 1997. That estimate of your partnership's net liquidation value per
unit as of June 30, 1997 was $412.22. This estimated net liquidation value is
based on an income capitalization approached similar to the one we used,
adjusted for your partnership's other assets and liabilities (excluding prepaid
and deferred expenses and security deposits). Four percent was then deducted
from the resulting amount to cover the estimated costs of selling the
properties. This final amount was then divided by the number of units
outstanding to obtain the $412.22
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per unit. While this value is higher than our offer price per unit, because
different income and capitalization rates were used and we believe that the
income capitalization amounts used overstate the value of the properties.
ALLOCATION OF CONSIDERATION. We have allocated to the limited partners
the amount of the estimated net valuation of your partnership based on your
partnership's agreement of limited partnership as if your partnership was being
liquidated at the current time.
SECTION 10. POSITION OF THE GENERAL PARTNER OF YOUR PARTNERSHIP WITH RESPECT TO
THE OFFER.
The general partner of your partnership believes the offer price and
the structure of the transaction are fair to the limited partners. In making
such determination, the general partner considered all of the factors and
information set forth below, but did not quantify or otherwise attach particular
weight to any such factors or information:
o The offer gives you an opportunity to make an individual
decision on whether to tender your units or to continue to
hold them.
o Our offer price, and the method we used to determine our offer
price.
o The fact that the price offered for your units is based on an
estimated value of your partnership's properties that has been
determined using a method believed to reflect the valuation of
such assets by buyers in the market for similar assets.
o Prices at which the units have recently sold, to the extent
such information is available.
o The absence of an established trading market for your units.
o An analysis of possible alternative transactions, including a
property sale or refinancing, or a liquidation of the
partnership.
o An evaluation of the financial condition and results of
operations of your partnership including the increase in
property income of your partnership from $10,813,000 for the
year ended December 31, 1998 to $12,567,000 for the unaudited
month ended June 30, 1999 (annualized).
The general partner of your partnership makes no recommendation as to
whether you should tender or refrain from tendering your units. Although the
general partner believes the offer is fair, you must make your own decision
whether or not to participate in the offer, based upon a number of factors,
including your financial position, your need or desire for liquidity, other
financial opportunities available to you, and your tax position and the tax
consequences to you of selling your units.
SECTION 11. CONFLICTS OF INTEREST AND TRANSACTIONS WITH AFFILIATES.
CONFLICTS OF INTEREST WITH RESPECT TO THE OFFER. The general partner of
your partnership is a subsidiary of AIMCO. Accordingly, the general partner of
your partnership has substantial conflicts of interest with respect to the
offer. The general partner of your partnership has a fiduciary obligation to
obtain a fair offer price for you, even as a subsidiary of AIMCO. As a
consequence of our ownership of units, we may have incentives to seek to
maximize the value of our ownership of units, which in turn may result in a
conflict for your general partner in attempting to reconcile our interests with
the interests of the other limited partners. Additionally, we desire to purchase
units at a low price and you desire to sell units at a high price. The general
partner of your partnership makes no recommendation as to whether you should
tender or refrain from tendering your units. Such conflicts of interest in
connection with the offer and the operation of AIMCO differ from those conflicts
of interest that
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currently exist for your partnership. See "Risk Factors -- Conflicts of Interest
With Respect to the Offer." Your general partner has filed a
Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC, which
indicates that it is remaining neutral and making no recommendation as to
whether limited partners should tender their units pursuant to the offer.
LIMITED PARTNERS ARE URGED TO READ THIS OFFER TO PURCHASE AND THE SCHEDULE 14D-9
AND THE RELATED MATERIALS CAREFULLY AND IN THEIR ENTIRETY BEFORE DECIDING
WHETHER TO TENDER THEIR UNITS.
CONFLICTS OF INTEREST THAT CURRENTLY EXIST FOR YOUR PARTNERSHIP. We own
both the general partner of your partnership and the property manager of your
partnership's residential properties. The general partner does not receive an
annual management fee but may receive reimbursements for expenses incurred in
its capacity as general partner. The general partner of your partnership
received total fees and reimbursements of $388,000 in 1996, $239,000 in 1997,
$178,000 in 1998, and $164,000 as of June 30, 1999 (annualized). The
reimbursement amount to your general partner for the 1998 fiscal year included
$24,000 which was paid to an affiliate of your general partner for costs
incurred in connection with construction oversight services. The property
manager for the properties received management fees of $1,010,00 in 1996,
$1,044,000 in 1997, $1,085,000 in 1998, and $1,122,000 for the unaudited month
ending June 30, 1999 (annualized). We have no current intention of changing the
fee structure for your general partner or the manager of your partnership's
residential properties.
COMPETITION AMONG PROPERTIES. Because AIMCO and your partnership both
invest in apartment properties, these properties may compete with one another
for tenants. Furthermore, you should bear in mind that AIMCO may acquire
properties in general market areas where your partnership properties are
located. It is believed that this concentration of properties in a general
market area will facilitate overall operations through collective advertising
efforts and other operational efficiencies. In managing AIMCO's properties, we
will attempt to reduce such conflicts between competing properties by referring
prospective customers to the property considered to be most conveniently located
for the customer's needs.
FUTURE OFFERS. Although we have no current plans to conduct future
tender offers for your units, our plans may change based on future
circumstances. Any such future offers that we might make could be for
consideration that is more or less than the consideration we are currently
offering.
SECTION 12. FUTURE PLANS OF THE PURCHASER.
As described above under "The Offer -- Section 9. Background and
Reasons for the Offer," we own the general partner and thereby control the
management of your partnership. In addition, we own the manager of the
residential properties. We currently intend that, upon consummation of the
offer, your partnership will continue its business and operations substantially
as they are currently being conducted. The offer is not expected to have any
effect on partnership operations.
Although we have no present intention to do so, we may acquire
additional units or sell units after completion or termination of the offer. Any
acquisition may be made through private purchases, through one or more future
tender or exchange offers, by merger, consolidation or by any other means deemed
advisable. Any acquisition may be at a price higher or lower than the price to
be paid for the units purchased pursuant to this offer, and may be for cash,
limited partnership interests in AIMCO Properties, L.P. or other consideration.
We also may consider selling some or all of the units we acquire pursuant to the
offer to persons not yet determined, which may include our affiliates. We may
also buy your partnership's properties, although we have no present intention to
do so. There can be no assurance, however, that we will initiate or complete, or
will cause your partnership to initiate or complete, any subsequent transaction
during any specific time period following the expiration of the offer or at all.
Except as set forth herein, we do not have any present plans or
proposals which relate to or would result in an extraordinary transaction, such
as a merger, reorganization or liquidation, involving your partnership or any of
your partnership's subsidiaries; a sale or transfer of a material amount of your
partnership's assets (or assets of
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the partnership's subsidiaries); any changes in composition of your
partnership's senior management or personnel or their compensation; any changes
in your partnership's present capitalization or distribution policy; or any
other material changes in your partnership's structure or business. We or our
affiliates may loan funds to your partnership which may be secured by your
partnership's properties. If any such loans are made, upon default of such
loans, the lender could seek to foreclose on the loan and related mortgage or
security interest. However, we expect that consistent with your general
partner's fiduciary obligations, the general partner will seek and review
opportunities (including opportunities identified by us) to engage in
transactions which could benefit your partnership, such as sales or refinancings
of assets or a combination of the partnership with one or more other entities,
with the objective of seeking to maximize returns to limited partners.
We have been advised that the possible future transactions the general
partner expects to consider on behalf of your partnership include: (1) payment
of extraordinary distributions; (2) refinancing, reducing or increasing existing
indebtedness of the partnership; (3) sales of assets, individually or as part of
a complete liquidation; and (4) mergers or other consolidation transactions
involving the partnership. Any such merger or consolidation transaction could
involve other limited partnerships in which your general partner or its
affiliates serve as general partners, or a combination of the partnership with
one or more existing, publicly traded entities (including, possibly, affiliates
of AIMCO), in any of which limited partners might receive cash, common stock or
other securities or consideration. There is no assurance, however, as to when or
whether any of the transactions referred to above might occur. If any such
transaction is effected by the partnership and financial benefits accrue to the
limited partners of your partnership, we will participate in those benefits to
the extent of our ownership of units. The agreement of limited partnership
prohibits limited partners from voting on actions taken by the partnership,
unless otherwise specifically permitted therein. Limited partners may vote on a
liquidation, and if we are successful in acquiring a substantial number of units
pursuant to the offer, we will be able to control the outcome of any such vote.
Even if we acquire a lesser number of units pursuant to the offer, however,
because we currently own approximately 31.2% of the outstanding limited
partnership units we will be able to significantly influence the outcome of any
such vote. Our primary objective in seeking to acquire the units pursuant to the
offer is not, however, to influence the vote on any particular transaction, but
rather to generate a profit on the investment represented by those units.
SECTION 13. CERTAIN INFORMATION CONCERNING YOUR PARTNERSHIP.
GENERAL. Century Properties Growth Fund XXII was organized on January
31, 1984, under the laws of the State of California. Its primary business is
real estate ownership and related operations. Your partnership was formed for
the purpose of making investments in various types of real properties which
offer potential capital appreciation and cash distributions to its limited
partners.
Your partnership's investment portfolio currently consists of the
following nine residential apartment complexes: Wood Creek Apartments, a
432-unit complex in Mesa, Arizona; Plantation Creek Apartments, a 484- unit
complex in Atlanta, Georgia; Stoney Creek Apartments, a 364-unit complex in
Dallas, Texas; Four Wind Apartments, a 350-unit complex in Overland, Kansas;
Promontory Point Apartments, a 252-unit complex in Austin, Texas; ▇▇▇▇▇▇'▇
Pointe Apartments, a 192-unit complex in Charleston, South Carolina; Hampton
Greens Apartments, a 309-unit complex in Dallas, Texas; Autumn Run Apartments, a
320-unit complex in Naperville, Illinois; and Copper Mill Apartments, a 192-unit
complex in Richmond, Virginia.
The general partner of your partnership is Fox Partners IV, which is a
wholly owned subsidiary of AIMCO. A wholly owned subsidiary of AIMCO serves as
manager of the residential properties owned by your partnership. As of December
31, 1998, there were 82,848 units issued and outstanding, which were held of
record by 5,471 limited partners. Your partnership's principal executive offices
are located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
and its telephone number at that address is (▇▇▇) ▇▇▇-▇▇▇▇.
For additional information about your partnership, please refer to the
annual report prepared by your
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partnership which was sent to you prior to this offer to purchase, particularly
Item 2 of Form 10-KSB which contains detailed information regarding the
properties owned, including mortgages, rental rates and taxes.
INVESTMENT OBJECTIVES AND POLICIES; SALE OR FINANCING OF INVESTMENTS.
In general, your general partner (which is our subsidiary) regularly evaluates
the partnership's properties by considering various factors, such as the
partnership's financial position and real estate and capital markets conditions.
The general partner monitors the properties' specific locale and sub-market
conditions (including stability of the surrounding neighborhood) evaluating
current trends, competition, new construction and economic changes. The general
partner oversees each asset's operating performance and continuously evaluates
the physical improvement requirements. In addition, the financing structure for
each property (including any prepayment penalties), tax implications,
availability of attractive mortgage financing to a purchaser, and the investment
climate are all considered. Any of these factors, and possibly others, could
potentially contribute to any decision by the general partner to sell,
refinance, upgrade with capital improvements or hold a particular partnership
property. If rental market conditions improve, the level of distributions might
increase over time. It is possible that the private resale market for properties
could improve over time, making a sale of the partnership's properties in a
private transaction at some point in the future a more viable option than it is
currently. After taking into account the foregoing considerations, your general
partner is not currently seeking a sale of your partnership's properties
primarily because it expects the properties' operating performance to improve in
the near term. In particular, the general partner noted that it expects to spend
approximately $3,000,000 for capital improvements at the properties in 1999 to
repair and update the properties' parking lots, landscaping, plumbing, pool,
roof, painting, floor covering, lighting, structure, perimeter fencing and water
heater and air conditioning system. Although there can be no assurance as to
future performance, however, these expenditures are expected to improve the
desirability of the property to tenants. The general partner does not believe
that a sale of the properties at the present time would adequately reflect the
properties' future prospects. Another significant factor considered by your
general partner is the likely tax consequences of a sale of the properties for
cash. Such a transaction would likely result in tax liabilities for many limited
partners. The general partner has not received any recent indication of interest
or offer to purchase the properties.
ORIGINALLY ANTICIPATED TERM OF PARTNERSHIP. Your partnership's
prospectus, dated September 25, 1984, pursuant to which units in your
partnership were sold, indicated that your partnership was intended to be
self-liquidating and that it was anticipated that the partnership's properties
would be sold within 5 to 8 years of their acquisition, provided market
conditions permit. The prospectus also indicated that there could be no
assurance that the partnership would be able to so liquidate and that, unless
sooner terminated as provided in the partnership agreement, the existence of the
partnership would continue until the year 2010. The partnership currently owns 9
apartment properties and no commercial properties. Your general partner (which
is our subsidiary) continually considers whether a property should be sold or
otherwise disposed of after consideration of relevant factors, including
prevailing economic conditions, availability of favorable financing and tax
considerations, with a view to achieving maximum capital appreciation for your
partnership. We cannot predict when any of the properties will be sold or
otherwise disposed of. However, there is no current plan or intention to sell
the properties in the near future.
Under your partnership's agreement of limited partnership, the term of
the partnership will continue until December 31, 2010, unless sooner terminated
as provided in the agreement or by law. Limited partners could, as an
alternative to tendering their units, take a variety of possible actions,
including voting to liquidate the partnership or amending the agreement of
limited partnership to authorize limited partners to cause the partnership to
merge with another entity or engage in a "roll-up" or similar transaction.
Your partnership has an ongoing program of capital improvements,
replacements and renovations, including roof replacements, kitchen and bath
renovations, balcony repairs (where applicable), replacement of various building
systems and other replacements and renovations in the ordinary course of
business. All capital improvement and renovation costs, which are budgeted at
approximately $3,200,000 in 1999, are expected to be
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paid from operating cash flows, cash reserves, or from short-term or long-term
borrowings.
COMPETITION. There are other residential properties within the market
area of your partnership's properties. The number and quality of competitive
properties in such an area could have a material effect on the rental market for
the apartments at your partnership's properties and the rents that may be
charged for such apartments. While we are a significant factor in the United
States in the apartment industry, competition for apartments is local. According
to data published by the National Multi-Housing Council, as of January 1, 1999,
our portfolio of 373,409 owned or managed apartment units represents
approximately 2.2% of the national stock of rental apartments in structures with
at least five apartments.
SELECTED FINANCIAL AND PROPERTY-RELATED DATA. The summary financial
information of Century Properties Growth Fund XXII for the years ended December
1998 and 1997 is based on audited financial statements. The summary financial
information for the six months ended June 30, 1999, is based on unaudited
financial statements. This information should be read in conjunction with such
financial statements, including notes thereto, and "Management's Discussion and
Analysis of Financial Condition and Results of Operations of Your Partnership"
in the Annual Report on Form 10-KSB of your partnership for the year ended
December 31, 1998, and the Quarterly Reports on Form 10-QSB for the quarter
ended June 30, 1999.
CENTURY PROPERTIES GROWTH FUND XXII
(IN THOUSANDS, EXCEPT FOR PER UNIT DATA)
FOR THE YEAR ENDED FOR THE SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------------ ------------------------
1998 1997 1999 1998
-------- -------- -------- --------
OPERATING DATA:
Total Revenues .......................... $ 21,663 $ 20,598 $ 11,192 $ 10,761
Net Income (Loss) ....................... 1,814 391 1,410 932
Net Income per limited partnership
unit .................................. 19.31 4.16 15.02 9.92
Distributions per limited partnership
unit .................................. 27.79 -- 53.23 --
DECEMBER 31, JUNE 30,
------------------------ ------------------------
1998 1997 1999 1998
-------- -------- -------- --------
BALANCE SHEET DATA:
Cash and Cash Equivalents ............. $ 6,684 $ 3,345 $ 4,241 $ 7,137
Real Estate, Net of Accumulated
Depreciation ........................ 76,040 78,890 74,986 77,487
Total Assets .......................... 143,139 138,899 141,114 142,783
Notes Payable ......................... 73,135 72,603 72,794 73,462
General Partners' Capital (Deficit) ... (7,345) (7,361) (7,769) (7,251)
Limited Partners' Capital (Deficit) ... 18,682 19,384 15,516 20,206
Partners' Capital (Deficit) ........... 11,337 12,023 7,747 12,955
Total Distributions ................... (2,500) -- (5,000) --
Net increase (decrease) in cash
and cash equivalents ................ 3,339 2,234 (2,443) 3,292
Net cash provided by operating
activities .......................... 6,120 4,483 4,026 3,014
DESCRIPTION OF PROPERTIES. The following shows the location, the date
of purchase, the nature of
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your partnership's ownership interest in and the use of each of your
partnership's properties.
Property Date of Purchase Type of Ownership Use
-------- ---------------- ----------------- ---
Wood Creek Apartments 5/84 Fee ownership subject Apartment - 432 units
Mesa, Arizona to first mortgage (1)
Plantation Creek Apartments 6/84 Fee ownership subject Apartment - 484 units
Atlanta, Georgia to first mortgage (1)
Stoney Creek Apartments 6/85 Fee ownership subject Apartment - 364 units
Dallas, Texas to first mortgage (1)
Four Winds Apartments 9/85 Fee ownership subject Apartment - 350 units
Overland, Kansas to first mortgage (1)
Promontory Point Apartments 10/85 Fee ownership subject Apartment - 252 units
Austin, Texas to first mortgage (1)
▇▇▇▇▇▇'▇ Pointe Apartments 11/85 Fee ownership subject Apartment - 192 units
Charleston, South Carolina to first mortgage (1)
Hampton Greens Apartments 12/85 Fee ownership subject Apartment - 309 units
Dallas, Texas to first mortgage (1)
Autumn Run Apartments 6/86 Fee ownership subject Apartment - 320 units
Naperville, Illinois to first mortgage (1)
Copper Mill Apartments 9/86 Fee ownership subject Apartment - 192 units
Richmond, Virginia to first mortgage (1)
(1) Property is held by a limited partnership in which the Partnership owns
a 100% interest
ACCUMULATED DEPRECIATION SCHEDULE. The following shows the gross
carrying value, accumulated depreciation and federal tax basis of each of your
partnership's properties as of December 31, 1998.
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
-------- -------- ------------ --------- ------ ---------
(in thousands) (in thousands)
Wood Creek $ 16,310 $ 7,254 5-30 yrs. SL $ 4,047
Plantation Creek 25,892 11,637 5-30 yrs. SL 6,802
Stoney Creek 14,253 6,301 5-30 yrs. SL 4,851
Four Winds 16,751 6,554 5-30 yrs. SL 5,764
Promontory Point 11,874 4,997 5-30 yrs. SL 4,427
▇▇▇▇▇▇'▇ Pointe 7,520 3,429 5-30 yrs. SL 2,170
Hampton Greens 12,318 5,037 5-30 yrs. SL 4,759
Autumn Run 17,778 7,193 5-30 yrs. SL 6,351
Copper Mill 9,492 3,746 5-30 yrs. SL 5,193
-------- ------- -------
Total $132,188 $56,148 $44,364
======== ======= =======
SCHEDULE OF MORTGAGES. The following shows certain information
regarding the outstanding mortgages encumbering each of your partnership's
properties as of December 31, 1998.
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Principal
Principal Stated Balance
Balance At Interest Period Maturity Due At
Property December 31, 1998 Rate Amortized Date Maturity
-------- ----------------- -------- --------- -------- ---------
(in thousands) (in thousands)
Wood Creek $12,566 7.93% 30 yrs. 2/2006 $11,319
Plantation Creek 15,489 7.93% 30 yrs. 2/2006 13,952
Stoney Creek 6,860 7.88% 30 yrs. 1/2006 6,180
Four Winds 9,425 7.93% 30 yrs. 2/2006 8,489
Promontory Point 3,980 7.04% 30 yrs. 5/2008 3,442
▇▇▇▇▇▇'▇ Pointe 4,135 7.88% 30 yrs. 1/2006 3,725
Hampton Greens 5,644 7.88% 30 yrs. 1/2006 5,084
Autumn Run 9,100 7.33% (1) 11/2003 9,100
Copper Mill 5,936 7.88% 30 yrs. 1/2006 5,347
------- -------
TOTAL $73,135 $66,638
======= =======
(1) Interest only payments.
AVERAGE ANNUAL RENTAL RATES AND OCCUPANCY. The following shows the
average annual rental rates and occupancy percentages for each of your
partnership's properties during the past two years.
Property Average Annual Rental Rates Average Annual Occupancy
-------- ------------------------------ ------------------------
1998 1997 1998 1997
----------- ----------- ------ ------
Wood Creek $7,393/unit $7,149/unit 94% 93%
Plantation Creek 8,889/unit 8,731/unit 95% 93%
Stoney Creek 6,378/unit 6,069/unit 94% 93%
Four Winds 7,699/unit 7,251/unit 97% 95%
Promontory Point(1) 7,383/unit 7,174/unit 94% 90%
▇▇▇▇▇▇'▇ Pointe 6,963/unit 6,540/unit 97% 97%
Hampton Greens 6,137/unit 5,862/unit 93% 91%
Autumn Run 9,244/unit 8,998/unit 95% 94%
Copper Mill(2) 8,675/unit 8,624/unit 89% 94%
(1) Occupancy increased due to increased marketing efforts.
(2) Occupancy decreased due to the decrease in corporate unit rental and the
market's being overbuilt.
SCHEDULE OF REAL ESTATE TAXES AND RATES. The following shows the real
estate taxes and rates for 1998 for each of your partnership's properties.
Property 1998 Billing 1998 Rate
-------- ------------ ---------
(in thousands)
Wood Creek $185 1.17%
Plantation Creek 213 3.95%
Stoney Creek 245 2.54%
Four Winds 162 1.07%
Promontory Point 198 2.62%
▇▇▇▇▇▇'▇ Pointe 93 1.60%
Hampton Greens 197 2.54%
Autumn Run 323 6.63%
Copper Mill 90 0.94%
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PROPERTY MANAGEMENT. Your partnership's residential properties are
managed by an entity which is a wholly owned subsidiary of AIMCO. Pursuant to
the management agreement between the property manager and your partnership, the
property manager operates your partnership's residential properties, establishes
rental policies and rates and directs marketing activities. The property manager
also is responsible for maintenance, the purchase of equipment and supplies, and
the selection and engagement of all vendors, suppliers and independent
contractors.
DISTRIBUTIONS. The following table shows, for each of the years
indicated, the distributions paid per unit for such years.
YEAR ENDED DECEMBER 31 AMOUNT
---------------------- ------
1995..................... $ 0.00
1996..................... 30.76
1997..................... 0.00
1998..................... 27.79
------
Total.......... $58.55
OPERATING BUDGETS OF THE PARTNERSHIP. A summary of the operating
budgets of your partnership's properties for the year ending on December 31,
1999 is as follows:
FISCAL 1999 OPERATING BUDGETS
▇▇▇▇▇▇ ▇▇▇▇▇▇ FOUR
RUN IL ▇▇▇▇▇▇'▇ POINT MILL WINDS
----------- -------------- ---------- -----------
Total Revenues $ 3,062,715 $1,416,799 $1,591,740 $ 2,777,446
Operating Expenses (1,054,045) (581,208) (646,830) (1,024,695)
Replacement Reserves - Net 72,000 52,800 48,000 90,996
Debt Service (667,032) (369,964) (531,005) (836,242)
Capital Expenditures (254,300) (194,435) (132,461) (301,500)
----------- ---------- ---------- -----------
Net Cash Flow $ 1,159,338 $ 320,992 $ 329,444 $ 706,005
HAMPTON PLANTATION PROMONTORY ▇▇▇▇▇▇
▇▇▇▇▇ CREEK POINT CREEK WOODCREEK
---------- ----------- ---------- ----------- -----------
Total Revenues $1,862,724 $ 4,251,440 $1,814,978 $ 2,271,578 $ 3,153,498
Operating Expenses (869,909) (1,454,022) (837,841) (1,037,709) (1,031,584)
Replacement Reserves - Net 77,256 120,996 -- 90,996 --
Debt Service (504,889) (1,390,724) (320,639) (613,701) (1,128,323)
Capital Expenditures (188,800) (978,000) (440,300) (267,200) (111,050)
---------- ----------- ---------- ----------- -----------
Net Cash Flow $ 376,382 $ 549,690 $ 216,198 $ 443,964 $ 882,541
The above budgets at the time they were made were forward-looking
information developed by your general partner (which is our subsidiary).
Therefore, the budgets were dependent upon future events with respect to the
ability of your partnership to meet such budget. The budgets incorporated
various assumptions including, but not limited to, lease revenue (including
occupancy rates), various operating expenses, general and administrative
expenses, depreciation expenses, capital expenditures, and working capital
levels. While we deemed such budgets to be reasonable and valid at the date
made, there is no assurance that the assumed facts will be validated or that the
circumstances will actually occur. Any estimate of the future performance of a
business, such as your partnership's business, is forward-looking and based on
assumptions some of which inevitably will prove to be incorrect.
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The budget amounts provided above are figures that were not computed in
accordance with GAAP. In particular, items that are categorized as capital
expenditures for purposes of preparing the operating budget are often
re-categorized as expenses when the financial statements are audited and
presented in accordance with GAAP. Therefore, the summary operating budget
presented for fiscal 1999 should not necessarily be considered as indicative of
what the audited operating results for fiscal 1999 will be. For the month ended
June 30, 1999 (annualized), the partnership reported revenues of $22,298,248,
operating expenses of $8,862,340 and replacement reserves and capital
expenditures of $870,000.
BENEFICIAL OWNERSHIP OF INTERESTS IN YOUR PARTNERSHIP. Together with
our subsidiaries, we currently own, in the aggregate, approximately 31.2% of
your partnership's limited partnership units. Except as set forth above, neither
we, nor, to the best of our knowledge, any of our affiliates, (i) beneficially
own or have a right to acquire any units, (ii) has effected any transactions in
the units in the past 60 days, or (iii) have any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of your partnership, including, but not limited to, contracts,
arrangements, understandings or relationships concerning transfer or voting
thereof, joint ventures, loan or option arrangements, puts or calls, guarantees
of loans, guarantees against loss or the giving or withholding of proxies.
COMPENSATION PAID TO THE GENERAL PARTNER AND ITS AFFILIATES. The
following table shows, for each of the years indicated, compensation paid to
your general partner and its affiliates on a historical basis.
PARTNERSHIP PROPERTY
FEES AND MANAGEMENT
YEAR EXPENSES FEES
---- ---------- ----------
1995 ........... $ 333,000 $1,011,000
1996 ........... 388,000 1,010,000
1997 ........... 239,000 1,044,000
1998 ........... 178,000 1,085,000
Unaudited June 1999 ...... 164,000 1,122,000
(Annualized)
LEGAL PROCEEDINGS. Your partnership may be a party to a variety of
legal proceedings related to its ownership of the partnership's properties and
management and leasing business, respectively, arising in the ordinary course of
the business, which are not expected to have a material adverse effect on your
partnership.
ADDITIONAL INFORMATION CONCERNING YOUR PARTNERSHIP. Your partnership
files annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document your partnership
files at the SEC's public reference rooms in Washington, D.C., New York, New
York, and Chicago, Illinois. Please call the SEC at ▇-▇▇▇-▇▇▇-▇▇▇▇ for further
information on the public reference rooms. Your partnership's SEC filings are
also available to the public at the SEC's web site at ▇▇▇▇://▇▇▇.▇▇▇.▇▇▇.
SECTION 14. VOTING POWER.
Decisions with respect to the day-to-day management of your partnership
are the responsibility of the general partner. Because the general partner of
your partnership is our affiliate, we control the management of your
partnership. Under your partnership's agreement of limited partnership, limited
partners holding a majority of the outstanding units must approve certain
extraordinary transactions, including the removal of the general partner, the
addition of a new general partner, most amendments to the partnership agreement
and the sale of all or substantially all of your partnership's assets. If we
acquire 15,582.5 additional units that we are offering to purchase, we will own
a majority of the outstanding units and will have the ability to control any
vote of the limited partners.
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SECTION 15. SOURCE OF FUNDS.
We expect that approximately $29,243,822 will be required to purchase
57,005.5 of the limited partnership units that we are seeking in this offer
(exclusive of fees and expenses estimated to be $10,000). For more information
regarding fees and expenses, see "The Offer -- Section 19. Fees and Expenses"
below.
Under our secured $300 million revolving credit facility with Bank of
America, BankBoston, N.A and First Union National Bank, AIMCO Properties, L.P.
is the borrower and all obligations thereunder are guaranteed by AIMCO and
certain of its subsidiaries. The credit facility includes a swing line of up to
$30 million. The obligations under the credit facility are secured by AIMCO
Properties, L.P.'s pledge of its stock ownership in certain subsidiaries of
AIMCO as well as a pledge of its interests in notes issued by it to certain
subsidiaries of AIMCO. The annual interest rate under the credit facility is
based on either LIBOR or a base rate which is the higher of Bank of America's
reference rate or 0.5% over the federal funds rate, plus, in either case, an
applicable margin. The margin ranges between 2.05% and 2.55% in the case of
LIBOR-based loans and between 0.55% and 1.05% in the case of base rate loans,
based upon a fixed charge coverage ratio. The credit facility expires on July
31, 2001 unless extended at the discretion of AIMCO Properties, L.P., at which
time the revolving facility would be converted into a term loan for up to two
successive one-year periods. The financial covenants contained in the credit
facility require us to maintain a ratio of debt to gross asset value of no more
than 0.55 to 1.0, and an interest coverage ratio of 2.25 to 1.0, and a fixed
charge coverage ratio of at least 1.7 to 1.0 through September 31, 1999 and 1.75
to 1.0 thereafter. In addition, the credit facility limits us from distributing
more than 80% of our Funds From Operations (as defined) (or such amounts as may
be necessary for us to maintain our status as a REIT), imposes minimum net worth
requirements and provides other financial covenants related to certain of our
assets and obligations.
SECTION 16. DISSENTERS' RIGHTS.
Neither the agreement of limited partnership of your partnership nor
applicable law provides any right for you to have your units appraised or
redeemed in connection with, or as a result of, our offer. You have the
opportunity to make an individual decision on whether or not to tender your
units in the offer.
SECTION 17. CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of our offer, we will not be
required to accept for payment and pay for any units tendered pursuant to our
offer, may postpone the purchase of, and payment for, units tendered, and may
terminate or amend our offer if at any time on or after the date of this offer
to purchase and at or before the expiration of our offer (including any
extension thereof), any of the following shall occur or may reasonably be
expected to occur:
(a) any change (or any condition, event or development involving a
prospective change) shall have occurred or been threatened in the business,
properties, assets, liabilities, indebtedness, capitalization, condition
(financial or otherwise), operations, licenses or franchises, management
contract, or results of operations or prospects of your partnership or local
markets in which your partnership owns property, including any fire, flood,
natural disaster, casualty loss, or act of God that, in our reasonable judgment,
are or may be materially adverse to your partnership or the value of the units
to us, or we shall have become aware of any facts relating to your partnership,
its indebtedness or its operations which, in our reasonable judgment, has or may
have material significance with respect to the value of your partnership or the
value of the units to us; or
(b) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange or
the over-the-counter market in the United States, (ii) a decline in the closing
price of a share of AIMCO's Class A Common Stock of more than 7.5% from the date
hereof, (iii) any extraordinary or material adverse change in the financial,
real estate or money markets or major equity security indices in the United
States such that there shall have occurred at least a 25 basis point increase in
LIBOR, the price of the 10-year Treasury Bond or the 30-year Treasury Bond, or
at least a 7.5% decrease in
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37
the S&P 500 Index, the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ Index, in each case from the date
hereof, (iii) any material adverse change in the commercial mortgage financing
markets, (iv) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States (not existing on the date
hereof), (vi) a commencement of a war, conflict, armed hostilities or other
national or international calamity directly or indirectly involving the United
States (not existing on the date hereof), (vii) any limitation (whether or not
mandatory) by any governmental authority on, or any other event which, in our
reasonable judgment, might affect the extension of credit by banks or other
lending institutions, or (viii) in the case of any of the foregoing existing at
the time of the commencement of the offer, in our reasonable judgment, a
material acceleration or worsening thereof; or
(c) there shall have been threatened, instituted or pending any action,
proceeding, application or counterclaim by any Federal, state, local or foreign
government, governmental authority or governmental agency, or by any other
person, before any governmental authority, court or regulatory or administrative
agency, authority or tribunal, which (i) challenges or seeks to challenge our
purchase of the units, restrains, prohibits or delays the making or consummation
of our offer, prohibits the performance of any of the contracts or other
arrangements entered into by us (or any affiliates of ours), seeks to obtain any
material amount of damages as a result of the transactions contemplated by our
offer, (ii) seeks to make the purchase of, or payment for, some or all of the
units pursuant to our offer illegal or results in a delay in our ability to
accept for payment or pay for some or all of the units, (iii) seeks to prohibit
or limit the ownership or operation by us or any of our affiliates of the entity
serving as general partner of the partnership or to remove such entity as
general partner of your partnership, or seeks to impose any material limitation
on our ability or the ability of any affiliate of ours to conduct your
partnership's business or own such assets, (iv) seeks to impose material
limitations on our ability to acquire or hold or to exercise full rights of
ownership of the units including, but not limited to, the right to vote the
units purchased by us on all matters properly presented to the limited partners,
or (v) might result, in our reasonable judgment, in a diminution in the value of
your partnership or a limitation of the benefits expected to be derived by us as
a result of the transactions contemplated by our offer or the value of the units
to us; or
(d) there shall be any action taken, or any statute, rule, regulation,
order or injunction shall be sought, proposed, enacted, promulgated, entered,
enforced or deemed applicable to our offer, your partnership, any general
partner of your partnership, us or any affiliate of ours or your partnership, or
any other action shall have been taken, proposed or threatened, by any
government, governmental authority or court, that, in our reasonable judgment,
might, directly or indirectly, result in any of the consequences referred to in
clauses (i) through (vi) of paragraph (c) above; or
(e) your partnership shall have (i) changed, or authorized a change of,
the units or your partnership's capitalization, (ii) issued, distributed, sold
or pledged, or authorized, proposed or announced the issuance, distribution,
sale or pledge of (A) any equity interests (including, without limitation,
units), or securities convertible into any such equity interests or any rights,
warrants or options to acquire any such equity interests or convertible
securities, or (B) any other securities in respect of, in lieu of, or in
substitution for units outstanding on the date hereof, (iii) purchased or
otherwise acquired, or proposed or offered to purchase or otherwise acquire, any
outstanding units or other securities, (iv) declared or paid any dividend or
distribution on any units or issued, authorized, recommended or proposed the
issuance of any other distribu tion in respect of the units, whether payable in
cash, securities or other property, (v) authorized, recommended, proposed or
announced an agreement, or intention to enter into an agreement, with respect to
any merger, consolidation, liquidation or business combination, any acquisition
or disposition of a material amount of assets or securities, or any release or
relinquishment of any material contract rights, or any comparable event, not in
the ordinary course of business, (vi) taken any action to implement such a
transaction previously authorized, recommended, proposed or publicly announced,
(vii) issued, or announced its intention to issue, any debt securities, or
securities convertible into, or rights, warrants or options to acquire, any debt
securities, or incurred, or announced its intention to incur, any debt other
than in the ordinary course of business and consistent with past practice,
(viii) authorized, recommended or proposed, or entered into, any transaction
which, in our reasonable judgment, has or could have an adverse affect on the
value of your partnership or the units, (ix) proposed, adopted or authorized any
amendment of its organizational documents, (x) agreed in
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writing or otherwise to take any of the foregoing actions or (xi) been notified
that any debt of your partnership or any of its subsidiaries secured by any of
its or their assets is in default or has been accelerated; or
(f) a tender or exchange offer for any units shall have been commenced
or publicly proposed to be made by another person or "group" (as defined in
Section 13(d)(3) of the Exchange Act), or it shall have been publicly disclosed
or we shall have otherwise learned that (i) any person or group shall have
acquired or proposed or be attempting to acquire beneficial ownership of more
than five percent of the units, or shall have been granted any option, warrant
or right, conditional or otherwise, to acquire beneficial ownership of more than
five percent of the units, other than acquisitions for bona fide arbitrage
purposes, or (ii) any person or group shall have entered into a definitive
agreement or an agreement in principle or made a proposal with respect to a
merger, consolidation or other business combination with or involving your
partnership; or
(g) we shall not have adequate cash or financing commitments available
to pay the for the units validly tendered; or
(h) the offer to purchase may have an adverse effect on AIMCO's status
as a REIT.
The foregoing conditions are for our sole benefit and may be asserted
by us regardless of the circumstances giving rise to such conditions or may be
waived by us in whole or in part at any time and from time to time in our
reasonable discretion. The failure by us at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to any particular facts or circumstances shall not
be deemed a waiver with respect to any other facts or circumstances and each
right shall be deemed a continuing right which may be asserted at any time and
from time to time.
SECTION 18. CERTAIN LEGAL MATTERS.
GENERAL. Except as set forth in this Section 18, we are not, based on
information provided by your general partner (which is our subsidiary), aware of
any licenses or regulatory permits that would be material to the business of
your partnership, taken as a whole, and that might be adversely affected by our
acquisition of units as contemplated herein, or any filings, approvals or other
actions by or with any domestic or foreign governmental authority or
administrative or regulatory agency that would be required prior to the
acquisition of units by us pursuant to the offer, other than the filing of a
Tender Offer Statement on Schedule 14D-1 with the SEC (which has already been
filed) and any required amendments thereto. While there is no present intent to
delay the purchase of units tendered pursuant to the offer pending receipt of
any such additional approval or the taking of any such action, there can be no
assurance that any such additional approval or action, if needed, would be
obtained without substantial conditions or that adverse consequences might not
result to your partnership or its business, or that certain parts of its
business might not have to be disposed of or other substantial conditions
complied with in order to obtain such approval or action, any of which could
cause us to elect to terminate the offer without purchasing units thereunder.
Our obligation to purchase and pay for units is subject to certain conditions,
including conditions related to the legal matters discussed in this Section 18.
ANTITRUST. We do not believe that the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, is applicable to the acquisition of units
contemplated by our offer.
MARGIN REQUIREMENTS. The units are not "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System and,
accordingly, those regulations generally are not applicable to our offer.
STATE LAWS. We are not aware of any jurisdiction in which the making of
our offer is not in compliance with applicable law. If we become aware of any
jurisdiction in which the making of the offer would not be in compliance with
applicable law, we will make a good faith effort to comply with any such law.
If, after such good faith effort, we cannot comply with any such law, the offer
will not be made to (nor will tenders be accepted from or on behalf of)
unitholders residing in such jurisdiction. In those jurisdictions with
securities or blue sky laws that require the offer to be made by a licensed
broker or dealer, the offer shall
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be made on behalf of us, if at all, only by one or more registered brokers or
dealers licensed under the laws of that jurisdiction.
SECTION 19. FEES AND EXPENSES.
Except as set forth in this Section 19, we will not pay any fees or
commissions to any broker, dealer or other person for soliciting tenders of
units pursuant to the offer. We have retained River Oaks Partnership Services,
Inc. to act as Information Agent in connection with our offer. The Information
Agent may contact holders of units by mail, telephone, telex, telegraph and
personal interview and may request brokers, dealers and other nominee limited
partners to forward materials relating to the offer to beneficial owners of the
units. We will pay the Information Agent reasonable and customary compensation
for its services in connection with the offer, plus reimbursement for
out-of-pocket expenses, and will indemnify it against certain liabilities and
expenses in connection therewith, including liabilities under the Federal
securities laws. We will also pay all costs and expenses of printing and mailing
the offer and its legal fees and expenses.
------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF US NOT CONTAINED HEREIN OR IN THE LETTER OF
TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED.
We have filed with the Commission a Tender Offer Statement on Schedule
14D-1, pursuant to Section 14(d)(1) and Rule 14d-3 under the Exchange Act,
furnishing certain additional information with respect to our offer, and may
file amendments thereto. The Schedule 14D-1 and any amendments thereto,
including exhibits, may be inspected and copies may be obtained at the same
place and in the same manner as described in "The Offer -- Section 13" under
"Additional Information Concerning Your Partnership."
AIMCO PROPERTIES, L.P.
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ANNEX I
OFFICERS AND DIRECTORS
The names and positions of the executive officers of Apartment
Investment and Management Company ("AIMCO"), AIMCO-GP, Inc. ("AIMCO-GP") and the
directors of AIMCO are set forth below. The two directors of AIMCO-GP are ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇. The two directors of the general partner of your
partnership are ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇. The two executive
officers of the general partner of your partnership are ▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Executive Vice President, and ▇▇▇▇▇ ▇▇▇▇▇▇, Senior Vice President - Real Estate
Accounting. Unless otherwise indicated, the business address of each executive
officer and director is 1873 South Bellaire Street, 17th Floor, Denver, Colorado
80222. Each executive officer and director is a citizen of the United States of
America.
NAME POSITION
---- --------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.................................. Chairman of the Board of Directors and Chief Executive
Officer
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇............................... Vice Chairman, President and Director
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇................................. Executive Vice President -- Finance and Administration
▇▇▇▇ ▇. ▇▇▇▇▇▇................................... Executive Vice President, General Counsel and Secretary
▇▇▇▇▇▇▇ ▇. ▇▇▇▇.................................. Executive Vice President
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇................................ Executive Vice President--Capital Markets
▇▇▇▇▇▇ ▇. ▇▇▇.................................... Executive Vice President and Co-Founder
▇▇▇▇▇ ▇. ▇▇▇▇▇▇.................................. Senior Vice President -- Acquisitions
▇▇▇▇ ▇. ▇▇▇▇▇.................................... Senior Vice President and Chief Financial Officer
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇............................... Director
▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇................................. Director
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇................................. Director
▇▇▇▇ ▇. ▇▇▇▇▇.................................... Director
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇................ Chief Executive Officer of AIMCO and AIMCO-GP
since July 1994. He is the sole owner of
▇▇▇▇▇▇▇▇▇ Investment Co. and prior to July 1994
was owner of approximately 75% of Property Asset
Management, L.L.C., Limited Liability Company, a
Colorado limited liability company, and its
related entities (collectively, "▇▇▇"), one of
AIMCO's predecessors. On October 1, 1996, ▇▇.
▇▇▇▇▇▇▇▇▇ was appointed Co-Chairman and director
of Asset Investors Corp. and Commercial Asset
Investors, Inc., two other public real estate
investment trusts, and appointed as a director
of Financial Assets Management, LLC, a real
estate investment trust manager. ▇▇. ▇▇▇▇▇▇▇▇▇
has been involved as a principal in a variety of
real estate activities, including the
acquisition, renova tion, development and
disposition of properties. ▇▇. ▇▇▇▇▇▇▇▇▇ has
also controlled entities engaged in other
businesses such as television broadcasting,
gasoline distribution and environmental
laboratories. ▇▇. ▇▇▇▇▇▇▇▇▇ received a B.A. from
Harvard College, a ▇.▇. from Harvard Law School
and was formerly admitted as a member of the
Massachusetts Bar (inactive).
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NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇............. ▇▇. ▇▇▇▇▇▇▇▇▇ has been Vice Chairman and a
director of AIMCO since July 1994 and was
appointed President of AIMCO in July 1997. ▇▇.
▇▇▇▇▇▇▇▇▇ has served as Vice President of
AIMCO-GP from July 1994 through July 1998 and
was appointed President in July 1998. ▇▇.
▇▇▇▇▇▇▇▇▇ has been a director of AIMCO-GP since
July 1994. Since September 1993, ▇▇. ▇▇▇▇▇▇▇▇▇
has owned 75% of PDI Realty Enterprises, Inc., a
Delaware corporation ("PDI"), one of AIMCO's
predecessors, and serves as its President and
Chief Executive Officer. From 1986 to 1993, he
served as President and Chief Executive Officer
of Heron Financial Corpora tion ("HFC"), a
United States holding company for Heron Interna
tional, N.V.'s real estate and related assets.
While at HFC, ▇▇. ▇▇▇▇▇▇▇▇▇ administered the
acquisition, development and disposition of
approximately 8,150 apartment units (including
6,217 units that have been acquired by the
AIMCO) and 3.1 million square feet of commercial
real estate. Prior to joining HFC, ▇▇. ▇▇▇▇▇▇▇▇▇
was a senior partner with the law firm of Loeb
and Loeb where he had extensive real estate and
REIT experience. ▇▇. ▇▇▇▇▇▇▇▇▇ received a B.A.
from Yale College and a ▇.▇. from the University
of California (Boalt Hall).
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇............... ▇▇. ▇▇▇▇▇▇ has served as Senior Vice President -
Finance and Administration of AIMCO since
January 1996 and was promoted to Executive
Vice-President - Finance and Administration in
March 1997. ▇▇. ▇▇▇▇▇▇ has been Executive Vice
President-Finance and Administration of AIMCO-GP
similar capacity with Lincoln Property Company
("LPC") as well as Vice President/Senior
Controller and Director of Administrative
Services of Lincoln Property Services where he
was responsible for LPC's computer systems,
accounting, tax, treasury services and benefits
administra tion. From 1984 to 1990, he was an
audit manager with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. where
he served real estate and banking clients. From
1981 to 1983, ▇▇. ▇▇▇▇▇▇ was on the audit staff
of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & Company. ▇▇. ▇▇▇▇▇▇
received a B.S. in Business Administration/
Finance from Oregon State University and is a
Certified Public Accountant.
▇▇▇▇ ▇. ▇▇▇▇▇▇................. ▇▇. ▇▇▇▇▇▇ has served as Executive Vice
President and General Counsel of AIMCO since
December 8, 1997. ▇▇. ▇▇▇▇▇▇ has been Executive
Vice President and General Counsel of AIMCO-GP
since July 1998. Prior to joining AIMCO, ▇▇.
▇▇▇▇▇▇ served as Senior Vice President and
General Counsel of NHP Incorporated from April
1994 until December 1997. ▇▇. ▇▇▇▇▇▇ served as
Vice President and Deputy General Counsel of NHP
Incorporated from June 1991 to March 1994 and as
Associate General Counsel of NHP from 1986 to
1991. From 1983 to 1985, ▇▇. ▇▇▇▇▇▇ was with the
Washington, D.C. law firm of Lane & ▇▇▇▇▇, P.C.
From 1979 to 1983, ▇▇. ▇▇▇▇▇▇ practiced with the
Chicago law firm of ▇▇▇▇ and ▇▇▇▇▇▇▇. ▇▇. ▇▇▇▇▇▇
received an A.B. from the University of
Rochester and a ▇.▇. from Washington University
School of Law.
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NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇................ ▇▇. ▇▇▇▇ has served as Executive Vice President
of AIMCO and AIMCO-GP since May 1998. Prior to
joining AIMCO, ▇▇. ▇▇▇▇ was a partner in the law
firm of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
from 1989 to 1998 and was Managing Partner of
the firm's Brussels, Budapest and Moscow offices
from 1992 through 1994. ▇▇. ▇▇▇▇ is also Deputy
Chairman of the Long Island Power Authority and
serves as a member of the New York State
Privatiza tion Council. He received a B.A. from
Fordham College and a ▇.▇. from ▇▇▇▇▇▇▇
University Law School.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.............. ▇▇. ▇▇▇▇▇▇▇▇▇ was appointed Executive Vice
President - Capital Markets in February 1999.
Prior to joining AIMCO, ▇▇. ▇▇▇▇▇▇▇▇▇ was Senior
Managing Director of Secured Capital Corporation
and prior to that time had been a Managing
Director of ▇▇▇▇▇ ▇▇▇▇▇▇, Inc. from 1993 to
1996, where he was a key member of the
underwriting team that led AIMCO's initial
public offering in 1994. ▇▇. ▇▇▇▇▇▇▇▇▇ was also
a Managing Director and head of the real estate
group at CS First Boston from 1990 to 1993 and
he was a Principal in the real estate group at
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc. from 1983 to 1990.
▇▇. ▇▇▇▇▇▇▇▇▇ received a B.A. from Columbia
College and an MBA from University of Virginia,
▇▇▇▇▇▇ School.
▇▇▇▇▇▇ ▇. ▇▇▇.................. Mr. ▇▇▇ is a Co-Founder of AIMCO and has served
as Executive Vice President of AIMCO since July
1994. Mr. ▇▇▇ has been Executive Vice President
of AIMCO-GP since July 1998. From 1987 until
July 1994, he served as President of ▇▇▇. Prior
to merging his firm with ▇▇▇ in 1987, Mr. ▇▇▇
acquired extensive experience in property
management. Between 1977 and 1981 he supervised
the property management of over 3,000 apartment
and mobile home units in Colorado, Michigan,
Pennsylvania and Florida, and in 1981 he joined
with others to form the property management firm
of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ and Ira. Mr. ▇▇▇ served for
several years on the National Apartment Manager
Accreditation Board and is a former president of
both the National Apartment Association and the
Colorado Apartment Association. Mr. ▇▇▇ is the
sixth individual elected to the Hall of Fame of
the National Apartment Association in its
54-year history. He holds a Certified Apartment
Property Supervisor (CAPS) and a Certified
Apartment Manager designation from the National
Apartment Association, a Certified Property
Manager (CPM) designation from the National
Institute of Real Estate Management (IREM) and
he is a member of the Board of Directors of the
National Multi-Housing Council, the National
Apartment Association and the Apartment
Association of Metro Denver. Mr. ▇▇▇ received a
B.S. from Metropolitan State College in 1975.
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NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇................ ▇▇. ▇▇▇▇▇▇ has served as Vice President of AIMCO
and AIMCO-GP since July 1996, and was promoted
to Senior Vice President Acquisitions in October
1997, with responsibility for acquisition and
financing activities since July 1994. From June
1992 until July 1994, ▇▇. ▇▇▇▇▇▇ served as
Senior Financial Analyst for PDI and HFC. From
1988 to 1992, ▇▇. ▇▇▇▇▇▇ worked for Larwin
Develop ment Corp., a Los Angeles based real
estate developer, with responsibility for
raising debt and joint venture equity to fund
land acquisitions and development. From 1987 to
1988, ▇▇. ▇▇▇▇▇▇ worked for Ford Aerospace Corp.
He received his B.S. from San ▇▇▇▇ State
University.
▇▇▇▇ ▇. ▇▇▇▇▇.................. ▇▇. ▇▇▇▇▇ has served as Senior Vice President
and Chief Financial Officer of AIMCO since
November 1997. ▇▇. ▇▇▇▇▇ has been Senior Vice
President and Chief Financial Officer of
AIMCO-GP since July 1998. Prior to joining
AIMCO, ▇▇. ▇▇▇▇▇ served as a Senior Manager in
the audit practice of the Real Estate Services
Group for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP in Dallas, Texas.
▇▇. ▇▇▇▇▇ was employed by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
for ten years and his clients were primarily
publicly-held real estate companies, including
office and multi-family real estate investment
trusts. ▇▇. ▇▇▇▇▇ holds a Bachelor of Business
Administration degree in Accounting from ▇▇▇▇▇▇
State University and is a Certified Public
Accountant.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇............. ▇▇. ▇▇▇▇▇▇▇ was appointed a Director of AIMCO in
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ July 1994 and is currently Chairman of the Audit
Rumson, NJ 07660 Committee. ▇▇. ▇▇▇▇▇▇▇ is the founder and
President of ▇.▇. ▇▇▇▇▇▇▇ & Co., Incorporated, a
real estate investment banking firm. Prior to
forming ▇.▇. ▇▇▇▇▇▇▇ & Co., Incorporated in
1987, ▇▇. ▇▇▇▇▇▇▇ had 31 years experience on
Wall Street as an investment banker, serving as:
Managing Director and senior banker at ▇▇▇▇▇▇▇
▇▇▇▇▇ Capital Markets from 1984 to 1987;
Managing Director at Warburg ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ from
1978 to 1984; general partner and then Senior
Vice President and a director at White, Weld &
Co. from 1968 to 1978; and in various capacities
at ▇.▇. ▇▇▇▇▇▇ & Co. from 1955 to 1968. ▇▇.
▇▇▇▇▇▇▇ currently serves as a director of FelCor
Suite Hotels, Inc. and Florida East Coast
Industries, Inc.
▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇............... ▇▇. ▇▇▇▇▇▇ was appointed a Director of AIMCO in
199 Broadway July 1994 and became Chairman of the
Suite 4300 Compensation Committee in March 1998. ▇▇. ▇▇▇▇▇▇
▇▇▇▇▇▇, CO 80202 has served as President and Chief Executive
Officer and a Director of NL Industries, Inc., a
manufacturer of titanium dioxide, since 1987.
▇▇. ▇▇▇▇▇▇ has served as Chairman of Tremont
Corporation, a holding company operating through
its affiliates Titanium Metals Corporation
("TIMET") and NL Industries, Inc., since 1990
and as Chief Executive Officer and a director of
Tremont since 1998. ▇▇. ▇▇▇▇▇▇ has served as
Chairman of Timet, an integrated producer of
titanium, since 1987 and Chief Executive Officer
since January 1995. From 1990 until its
acquisition by Dresser Industries, Inc.
("Dresser") in 1994, ▇▇. ▇▇▇▇▇▇ served as
Chairman of the Board and Chief Executive
Officer of Baroid Corporation, an oilfield
services company. In addition to Tremont, NL and
TIMET, ▇▇. ▇▇▇▇▇▇ is a director of Dresser,
which is engaged in the petroleum services,
hydrocarbon and engineering industries.
I-4
44
NAME PRINCIPAL OCCUPATIONS FOR THE LAST FIVE YEARS
---- ---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇................ ▇▇. ▇▇▇▇▇▇ joined AIMCO in July 1997 as Vice
President of Finance and Administration and
became Senior Vice President - Real Estate
Accounting in November 1998. Prior to joining
AIMCO, ▇▇. ▇▇▇▇▇▇ was with National Housing
Partners since 1989. While at National Housing
Partners, ▇▇. ▇▇▇▇▇▇ served as a real estate
controller from 1989 to 1992, as Vice President
of Accounting from 1992 to 1995 and as Interim
Chief Information Officer from 1995 to July
1997. Prior to joining National Housing
Partners, ▇▇. ▇▇▇▇▇▇ was a Senior Auditor with
Deloitte & Touche from 1984 to 1989. ▇▇. ▇▇▇▇▇▇
received a B.A. in accounting from Virginia
Tech.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇............... ▇▇. ▇▇▇▇▇▇ was appointed a Director of AIMCO in
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ July 1994. ▇▇. ▇▇▇▇▇▇ has served as the
4th Floor President and a Director of National Review
New York, NY 10016 magazine since November 30, 1992, where he has
also served as a Director since 1998. From 1976
to 1992, he held various positions at ▇▇▇▇▇▇▇,
Sachs & Co. and was elected a General Partner in
1986 and served as a General Partner from 1987
until November 27, 1992. He is currently
Co-Chairman of the Board, Co-Chief Executive
Officer and a Director of Commercial Assets Inc.
and Asset Investors Corporation. He also serves
as a Director of Delphi Financial Group, Inc.
and its subsidiaries, Delphi International Ltd.,
Oracle Reinsurance Company, and the ▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇▇▇ Foundation. ▇▇. ▇▇▇▇▇▇ is Chairman
of the Empire Foundation for Policy Research, a
Founder and Trustee of Change NY, a Trustee of
The Heritage Foundation, and a Trustee of the
Manhattan Institute
▇▇▇▇ ▇. ▇▇▇▇▇.................. ▇▇. ▇▇▇▇▇ was appointed a Director of AIMCO in
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ November 1994. ▇▇. ▇▇▇▇▇ is Principal and
Suite 8311994 President of ▇▇▇▇ ▇. ▇▇▇▇▇ Develop ments. Mr.
Atlanta, GA 30326 ▇▇▇▇▇ has been a shopping center developer,
owner and consultant for over 8.6 million square
feet of shopping center projects including Lenox
Square in Atlanta, Georgia. ▇▇. ▇▇▇▇▇ is a
Trustee and former President of the
International Council of Shopping Centers and
was selected to be a member of the American
Society of Real Estate Counselors. ▇▇. ▇▇▇▇▇
served as a Director for Pan-American
Properties, Inc. (National Coal Board of Great
Britain) formerly known as Continental Illinois
Properties. He also serves as a director of
American Fidelity Assurance Companies and is
retained as an advisor by Shop System Study
Society, Tokyo, Japan.
I-5
45
The letter of transmittal and any other required documents should be
sent or delivered by each unitholder or such unitholder's broker, dealer, bank,
trust company or other nominee to the Information Agent at one of its addresses
set forth below.
THE INFORMATION AGENT FOR THE OFFER IS:
RIVER OAKS PARTNERSHIP SERVICES, INC.
By Mail: By Overnight Courier: By Hand:
P.O. Box 2065 ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇, ▇.▇. 07606-2065 Carlstadt, N.J. 07072 Carlstadt, N.J. 07072
Attn.: Reorganization Dept. Attn.: Reorganization Dept.
For information, please call:
TOLL FREE: (▇▇▇) ▇▇▇-▇▇▇▇