OFFER TO PURCHASE FOR CASH
ALL UNITS
of Limited Partnership Interests in
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ HISTORIC PROPERTIES II, L.P.
by
EVEREST PROPERTIES II, LLC,
▇▇▇▇▇ MILL INVESTOR, LLC, and
MPF PACIFIC GATEWAY, LLC
at a Cash Purchase Price of
$20,000 per Unit
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 5:00 P.M., LOS
ANGELES TIME, ON TUESDAY, DECEMBER 20, 2005, UNLESS THE OFFER IS EXTENDED.
Everest Properties II, LLC, a California limited liability company
("Everest"), ▇▇▇▇▇ Mill Investor, LLC, a New Jersey limited liability company
("▇▇▇▇▇"), and MPF Pacific Gateway, LLC, a California limited liability company
("MPF") (Everest, ▇▇▇▇▇ and MPF are referred to herein as the "Purchasers"), are
offering to purchase ALL Units of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Historic Properties II, L.P.
(the "Partnership") not already held by Purchasers and their affiliates, at a
cash purchase price of $20,000 per Unit, without interest, less the amount of
the Distributions (as defined below) per Unit, if any, made to the Unit Holders
by the Partnership after the date of this Offer. Transfer fees, if any, will be
paid by the Purchasers and will not be deducted from your proceeds. The Offer
(as defined below) is subject to certain terms and conditions set forth in this
Offer to Purchase, as it may be supplemented from time to time (the "Offer to
Purchase") and in the related Agreement of Transfer and Letter of Transmittal,
as it may be supplemented or amended from time to time (the "Letter of
Transmittal," which together with the Offer to Purchase, constitutes the
"Offer"). This Offer is not subject to brokerage commissions and is not
conditioned upon financing. To the knowledge of the Purchasers, a Unit Holder
will not incur any fees, such as selling broker commissions or depositary fees,
to sell Units in response to this Offer; unless such Unit Holder holds Units in
a manner that involves fees particular to such Unit Holder.
The enclosed Letter of Transmittal may be used to tender Units for the
Offer. Please read all Offer materials completely before completing and
returning the Letter of Transmittal (yellow form).
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For More Information or for Further Assistance,
Please Call or Contact Everest at:
Everest Properties II, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (toll free)
November 14, 2005
TABLE OF CONTENTS
Page
INTRODUCTION..................................................................1
SUMMARY OF THE OFFER..........................................................1
DETAILS OF THE OFFER..........................................................2
1. Terms of the Offer; Expiration Date; Proration....................2
2. Acceptance for Payment and Payment of Purchase Price..............3
3. Procedure to Accept the Offer.....................................4
4. Determination of Validity; Rejection of Units; Waiver of Defects;
No Obligation to Give Notice of Defects...........................4
5. Withdrawal Rights.................................................5
6. Extension of Tender Period; Amendment.............................5
7. Conditions of the Offer...........................................6
8. Backup Federal Income Tax Withholding.............................7
9. FIRPTA Withholding................................................7
10.Everest as Agent....................................................7
CERTAIN INFORMATION CONCERNING THE PARTNERSHIP................................8
General................................................................8
Outstanding Units......................................................8
Trading History of the Units...........................................8
Selected Financial and Property Related Data...........................8
DETERMINATION OF OFFER PRICE..................................................9
CERTAIN INFORMATION CONCERNING THE PURCHASERS.................................10
The Purchasers.........................................................10
General................................................................10
Prior Acquisitions of Units and Prior Contacts.........................11
Source of Funds........................................................12
FUTURE PLANS OF THE PURCHASERS................................................13
EFFECTS OF THE OFFER..........................................................13
Future Benefits of Unit Ownership......................................13
Limitations on Resales.................................................13
Influence Over Future Voting Decisions.................................14
FEDERAL INCOME TAX MATTERS....................................................14
CERTAIN LEGAL MATTERS.........................................................16
General................................................................16
State Takeover Statutes................................................16
Fees and Expenses......................................................17
Miscellaneous..........................................................17
SCHEDULE I - Executive Officers of Everest Properties II, LLC
SCHEDULE II - Members and Executive Officers of ▇▇▇▇▇ Mill Investor, LLC
SCHEDULE III - Directors and Executive Officers of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, Inc.
APPENDIX A - Partnership Information
INTRODUCTION
The Purchasers hereby offer to purchase ALL Units of limited partnership
interests in the Partnership not already held by Purchasers and their
affiliates, at a cash purchase price of $20,000 per Unit, without interest, less
the amount of Distributions (defined below) per Unit, if any, made to Unit
Holders by the Partnership after the date of this Offer. No transfer fees will
be deducted - the Purchasers will pay any such fees. To the knowledge of the
Purchasers, a Unit Holder will not incur any other fees, such as selling broker
commissions or depositary fees, to sell Units in response to this Offer; unless
such Unit Holder holds Units in a manner that involves fees particular to such
Unit Holder.
SUMMARY OF THE OFFER
The purpose of the Offer is for the Purchasers to acquire a controlling
equity interest in the Partnership for investment purposes.
In considering the Offer, Unit Holders are urged to consider the following:
o The price offered for the Units is $20,000 in CASH, less any
Distributions made after the date of this Offer. See "Details of the
Offer - Acceptance for Payment and Payment of Purchase Price."
o The Offer is $6,000 (43%) more than the highest prior third-party
offer for Units of which Purchasers are aware, made May 23, 2005 by an
affiliate of Everest, based on the offers that Purchasers or their
affiliates have received as existing limited partners in the
Partnership and a review of public SEC filings.
o The Offer is $9,200 (85%) more than the highest distribution that Unit
Holders would have received from a sale of the Partnership's
properties at the highest price offered for the properties earlier
this year. The General Partner received in 2005 offers to purchase the
Partnership's properties from the same bidders that made identical
offers in June 2003. The General Partner estimated that, depending on
the outcome of due diligence by prospective purchasers, a sale of the
properties pursuant to one of such offers would result in a
distribution of from $9,600 to $10,800 per Unit. See "Certain
Information Concerning the Partnership-Selected Financial and Property
Related Data."
o The Offer is approximately equal to the distribution that Unit Holders
would receive from a sale of the properties for $41,700,000, which is
about $8,700,000 more than the highest previous offer for the
properties. See "Certain Information Concerning the
Partnership-Selected Financial and Property Related Data."
o The Units are illiquid - no trades of Partnership interests have been
reported over the last 12 months, according to Direct Investment
Spectrum, an independent industry publication. The Offer allows Unit
Holders to dispose of their Units without incurring the sales
commissions (typically up to 8% with a minimum of $150-$200)
associated with sales arranged through brokers or other
intermediaries. See "Certain Information Concerning the Partnership -
Trading History of the Units."
o The Operating General Partner has agreed to list the Partnership's
properties for sale, and if an acceptable price is offered, intends to
seek Partnership approval to sell the properties. No list price has
been determined for the properties, there is no assurance that an
acceptable price will be offered, and the Purchasers do not know if or
when a sale of the properties will occur or what price may be
obtained.
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o The Partnership will not be required to terminate before 2037, unless
a majority of the limited partners approve an earlier dissolution or
an event occurs that would require a dissolution, according to the
Partnership's limited partnership agreement.
o None of the Purchasers is affiliated with the Partnership or its
general partners. Members of ▇▇▇▇▇ and the shareholders of ▇▇▇▇▇
Venture Corp., the operating general partner of the Partnership (the
"Operating General Partner"), are the same. ▇▇▇▇▇ owns Units of the
Partnership but is otherwise not affiliated with the Partnership or
the General Partner. The Partnership's general partner, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Historic Corporation (the "General Partner"), may be expected to
communicate its position on the Offer in the next two weeks.
o The Purchasers are making the Offer with a view to making a profit for
themselves. Accordingly, the desire of the Purchasers to purchase
Units at a low price conflicts with the desire of the Unit Holders to
sell their Units at a high price.
o The Offer is an immediate opportunity for Unit Holders to liquidate
their investment in the Partnership, but Unit Holders who tender their
Units will be giving up the opportunity to participate in any
potential future benefits from ownership of Units, including
distributions resulting from any future sale of the Partnership's
properties. Unit Holders may have a more immediate need to use the
cash now tied up in the Units, and may consider the Offer more certain
to achieve a prompt liquidation of their investment in the Units. See
"Details of the Offer - Acceptance for Payment and Payment of Purchase
Price."
o Unit Holders who sell all of their Units will also eliminate the need
to file Form K-1 information for the Partnership with their federal
tax returns for years after 2005.
Each Unit Holder must make his own decision, based on the Unit Holder's
particular circumstances, whether to tender Units. Unit Holders should consult
with their respective advisors about the financial, tax, legal and other
implications of accepting the Offer.
The above statements are intended only as a brief overview of the principal
terms and considerations regarding the Offer. The entire Offer to Purchase,
which follows, provides substantially greater detail about the Offer, and all of
the statements above are qualified by the entire Offer to Purchase. You should
read it completely and carefully before deciding whether or not to tender your
Units. The Offer is subject to certain terms and conditions set forth in this
Offer to Purchase, and in the related Agreement of Transfer and Letter of
Transmittal, that are not summarized above.
DETAILS OF THE OFFER
1. Terms of the Offer; Expiration Date; Proration. On the terms and subject
to the conditions of the Offer, the Purchasers will accept and purchase, in
accordance with the procedures set forth in this Offer to Purchase, ALL validly
tendered, and not withdrawn, Units not already held by Purchasers and their
affiliates ("Properly Tendered"). For purposes of the Offer, the term
"Expiration Date" means 5:00 p.m., Los Angeles time, on Tuesday, December 20,
2005, unless the Purchasers extend the period of time during which the Offer is
open, in which event the term "Expiration Date" shall mean the latest time and
date to which the Offer is extended by the Purchasers.
If, prior to the Expiration Date, the Purchasers increase the price offered
to the Unit Holders pursuant to the Offer, the increased price will be paid for
all Units accepted for payment pursuant to the Offer, whether or not the Units
were tendered prior to the increase in consideration.
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If transfers of Units are limited by the Partnership Agreement to a number
of Units (the "Transfer Limit"), and the number of Units that are Properly
Tendered exceeds the Transfer Limit, the Purchasers will, upon the terms and
subject to the other conditions of the Offer, accept for payment and pay for
Units equal to the Transfer Limit, pro rata, according to the number of Units
that are Properly Tendered by each Unit Holder, with appropriate adjustments to
avoid purchases of fractional Units. Subject to its obligation to pay for Units
promptly after the Expiration Date, the Purchasers intend to pay for any Units
accepted for payment pursuant to the Offer after determining the final proration
or other adjustments. The Purchasers do not believe it would take any longer
than five business days to determine the effects of any proration required. If
the number of Units that are Properly Tendered is less than or equal to the
Transfer Limit, if any, the Purchasers will purchase all Units that are Properly
Tendered, upon the terms and subject to the other conditions of the Offer. See
"Effects of the Offer - Limitations on Resales."
If prior to the Expiration Date any or all of the conditions of the Offer
have not been satisfied, or waived by the Purchasers, the Purchasers reserve the
right to: (i) decline to purchase any of the Units tendered, terminate the Offer
and return all tendered Units, (ii) waive the unsatisfied conditions and,
subject to complying with applicable rules and regulations of the Securities and
Exchange Commission (the "Commission"), purchase all Units that are Properly
Tendered, (iii) extend the Offer and, subject to the right of Unit Holders to
withdraw Units until the Expiration Date, retain previously tendered Units for
the period or periods for which the Offer is extended, and (iv) amend the Offer.
2. Acceptance for Payment and Payment of Purchase Price. On the terms and
subject to the conditions of the Offer, the Purchasers will purchase and will
pay for ALL Properly Tendered Units, promptly following the Expiration Date. In
all cases, payment for Units purchased pursuant to the Offer will be made only
after timely receipt by the Purchasers of: (i) a properly completed and duly
executed and acknowledged Letter of Transmittal, (ii) any other documents
required in accordance with the Letter of Transmittal, and (iii) written
confirmation from the Partnership of the transfer of the Units to the
Purchasers.
Any Distributions made or declared on or after the date of this Offer
would, by the terms of the Offer and as set forth in the Letter of Transmittal,
be assigned by tendering Unit Holders to the Purchasers and deducted from your
proceeds. No transfer fees will be deducted. UNDER NO CIRCUMSTANCE WILL INTEREST
ON THE PURCHASE PRICE BE PAID, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY
DELAY IN MAKING SUCH PAYMENT.
If any tendered Units are not purchased for any reason (other than
proration adjustments), the Purchasers may destroy the original Letter of
Transmittal with respect to the Units. If for any reason acceptance for payment
of, or payment for, any Units tendered pursuant to the Offer is delayed or the
Purchasers are unable to accept for payment, purchase or pay for Units tendered,
then, without prejudice to the Purchasers' rights under Section 4 herein, the
Purchasers may, nevertheless, retain documents concerning tendered Units, and
those Units may not be withdrawn except to the extent that the tendering Unit
Holders are otherwise entitled to withdrawal rights as described in Section 5
herein, subject, however, to the Purchasers' obligation under Rule 14e-1(c)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to
pay Unit Holders the purchase price in respect of Units tendered or return
documents, if any, representing those Units promptly after termination or
withdrawal of the Offer.
The Purchasers have agreed to purchase the Units tendered in this Offer as
follows, subject to rounding for convenience: Everest will purchase 46% of the
Units purchased; ▇▇▇▇▇ will purchase 46% of the Units purchased; and MPF will
purchase 8% of the Units purchased. The Purchasers shall be jointly and
severally liable to Unit Holders whose Units are accepted for payment.
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3. Procedure to Accept the Offer. For the tender of any Units to be valid,
the Purchasers must receive, at the address listed on the back page of this
Offer to Purchase on or prior to the Expiration Date, a properly completed and
duly executed Letter of Transmittal and all documents required by the
Instructions.
The method of delivery of the Letter of Transmittal and all other required
documents is at the option and risk of the tendering Unit Holder, and delivery
will be deemed made only when actually received by the Purchasers. If delivery
is by mail, registered mail with return receipt requested, properly insured, is
recommended. In all cases, sufficient time should be allowed to assure timely
delivery.
By executing and delivering a Letter of Transmittal, a tendering Unit
Holder irrevocably appoints each Purchaser and its officers and any other
designee of each Purchaser, and each of them, the attorneys-in-fact and proxies
of the Unit Holder, in the manner set forth in the Letter of Transmittal, each
with full power of substitution, to the full extent of the Unit Holder's rights
with respect to the Units tendered by the Unit Holder and accepted for payment
by the Purchaser (and with respect to any and all distributions, other Units,
rights or other securities issued or issuable in respect thereof (collectively,
"Distributions")), including without limitation the right to direct any IRA
custodian, trustee or other record owner to execute and deliver the Letter of
Transmittal, the right to accomplish a withdrawal of any previous tender of the
Unit Holder's Units and the right to complete the transfer contemplated thereby.
All such proxies will be considered coupled with an interest in the tendered
Units, are irrevocable and are granted in consideration of, and are effective
upon, the acceptance for payment of the Units by the Purchasers in accordance
with the terms of the Offer. Upon acceptance for payment, all prior powers of
attorney and proxies given by the Unit Holder with respect to the Units and
Distributions will, without further action, be revoked, and no subsequent powers
of attorney or proxies may be given (and, if given, will be without force or
effect). The officers and designees of the Purchasers will, with respect to the
Units for which the appointment is effective, be empowered to exercise all
voting and other rights of the Unit Holder as they in their discretion may deem
proper at any meeting of the Partnership or any adjournment or postponement
thereof.
By executing and delivering a Letter of Transmittal, a tendering Unit
Holder irrevocably assigns to each Purchaser and its assigns all of the right,
title and interest of the Unit Holder in and to any and all Distributions made
by the Partnership, effective upon and after the date of acceptance with respect
to Units accepted for payment and purchased by the Purchasers.
4. Determination of Validity; Rejection of Units; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions about the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Units pursuant to the Offer will be determined by Everest on behalf of the
Purchasers, which determination will be final and binding. Everest, on behalf of
the Purchasers, reserves the right to reject any or all tenders of any
particular Units determined by it not to be in proper form or if the acceptance
of or payment for those Units may, in the opinion of Everest's counsel, be
unlawful. Everest, on behalf of the Purchasers, also reserves the right to waive
or amend any of the conditions of the Offer that it is legally permitted to
waive and to waive any defect in any tender with respect to any particular
Units. ▇▇▇▇▇▇▇'s interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal) will be final and binding. No tender of
Units will be deemed to have been validly made until all defects have been cured
or waived. No Purchaser nor any other person will be under any duty to give
notification of any defects in the tender of any Units or will incur any
liability for failure to give any such notification.
A tender of Units pursuant to the procedure described above and the
acceptance for payment of such Units will constitute a binding agreement between
the tendering Unit Holder and the Purchasers on the terms set forth in the
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Offer. The Purchasers shall be jointly and severally liable for the performance
of agreements with Unit Holders.
For purposes of the Offer, the Purchasers will be deemed to have accepted
for payment pursuant to this Offer, and thereby purchased, Properly Tendered
Units if, as and when any Purchaser gives written notice to the Partnership or
its Transfer Agent of the Purchaser's acceptance of those Units for payment
pursuant to the Offer. Upon the terms and subject to the conditions of the
Offer, payment for Units accepted for payment pursuant to the Offer will be made
and transmitted directly to Unit Holders whose Units have been accepted for
payment.
5. Withdrawal Rights. Tenders of Units made pursuant to the Offer are
irrevocable, except that Units tendered pursuant to the Offer may be withdrawn
at any time on or prior to the Expiration Date and, unless already accepted for
payment by Everest, on behalf of the Purchasers, pursuant to the Offer, may also
be withdrawn at any time after January 13, 2006. If purchase of, or payment for,
Units is delayed for any reason, including extension by the Purchasers of the
Expiration Date, or if the Purchasers are unable to purchase or pay for Units
for any reason (for example, because of proration adjustments) then, without
prejudice to the Purchasers' rights under the Offer, tendered Units may be
retained by the Purchasers and may not be withdrawn, except to the extent that
tendering Unit Holders are otherwise entitled to withdrawal rights as set forth
in this Section 5; subject, however, to the Purchasers' obligation, pursuant to
Rule 14e-1(c) under the Exchange Act, to pay Unit Holders the purchase price in
respect of Units tendered promptly after termination or withdrawal of the Offer.
For withdrawal to be effective, a written notice of withdrawal must be
timely received by Everest at its address listed on the back cover of this Offer
to Purchase. Any notice of withdrawal must specify the name of the person(s) who
tendered the Units to be withdrawn and must be signed by the person(s) who
signed the Letter of Transmittal in the same manner as the Letter of Transmittal
was signed. Any Units properly withdrawn will be deemed not validly tendered for
purposes of the Offer. Withdrawn Units may be re-tendered, however, by following
the procedures described in Section 3 herein at any time prior to the Expiration
Date.
All questions about the validity and form (including time of receipt) of
notices of withdrawal will be determined by Everest on behalf of the Purchasers,
which determination shall be final and binding. No Purchaser nor any other
person will be under any duty to give notice of any defects in any notice of
withdrawal or incur any liability for failure to give any such notice.
6. Extension of Tender Period; Amendment. The Purchasers expressly reserve
the right at any time:
o to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and the payment for, any
Units;
o to delay for a reasonable period the acceptance for payment of, or
payment for, any Units not already accepted for payment or paid for,
if the Purchasers reasonably anticipate the prompt receipt of any
authorization, consent, order of, or filing with, or the expiration of
waiting periods imposed by, any court, government, administrative
agency or other governmental authority, necessary for the consummation
of the transactions contemplated by the Offer;
o to amend the Offer in any respect (including, without limitation, by
increasing or decreasing the price, increasing or decreasing the
number of Units being sought, or both).
5
Notice of any such extension or amendment will promptly be disseminated to Unit
Holders in a manner reasonably designed to inform Unit Holders of such change in
compliance with Rule 14d-4(c) under the Exchange Act. 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, in
accordance with Rule 14e-1(d) under the Exchange Act. If the Purchasers make a
material change in the terms of the Offer or waive a condition that constitutes
a material change in the terms of the Offer, the Purchasers will extend the
Offer and disseminate additional tender offer materials to the extent required
by Rules 14d-4(c) and 14d-6(d) under the Exchange Act. If a Distribution occurs
before the Expiration Date and the Purchasers reduce their Offer price as a
result, the Purchasers will provide notice thereof to Unit Holders and extend
the Expiration Date in accordance with Rule 14e-1(b) under the Exchange Act.
7. Conditions of the Offer. Notwithstanding any other term of the Offer,
the Purchasers will not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to a bidder's obligation to pay for or return
tendered securities promptly after the termination or withdrawal of such
bidder's offer), to pay for any Units tendered, may delay the acceptance for
payment of the Units tendered, or may withdraw the Offer if, at any time on or
after the date of the Offer and before the Expiration Date, any of the following
conditions exists:
(a) a preliminary or permanent injunction or other order of any federal or
state court, government, administrative agency or other governmental authority
shall have been issued and shall remain in effect which: (i) makes illegal,
delays or otherwise directly or indirectly restrains or prohibits the making of
the Offer or the acceptance for payment, purchase of or payment for any Units by
the Purchasers; (ii) imposes or confirms limitations on the ability of the
Purchasers effectively to exercise full rights of both legal and beneficial
ownership of the Units; (iii) requires divestiture by any Purchaser of any
Units; (iv) materially adversely affects the business, properties, assets,
liabilities, financial condition, operations, or results of operations of any
Purchaser, or the Partnership; or (v) seeks to impose any material condition to
the Offer unacceptable to any Purchaser;
(b) there shall be any action taken, or any statute, rule, regulation or
order proposed, enacted, enforced, promulgated, issued or deemed applicable to
the Offer by any federal or state court, government, administrative agency or
other governmental authority which, directly or indirectly, results in any of
the consequences referred to in paragraph (a) above;
(c) there shall be any authorization, consent, order of, or filing with, or
expiration of waiting periods imposed by, any court, government, administrative
agency or other governmental authority, necessary for the consummation of the
transactions contemplated by the Offer and requested by Purchasers, that shall
not have occurred or been filed or obtained, including a resolution to the
satisfaction of any such authority of any comments or inquiries made concerning
the Offer;
(d) any event shall have occurred or been disclosed, or shall have been
threatened, regarding the business, properties, assets, liabilities, financial
condition, operations, or results of operations of the Partnership, which event
is materially adverse, or which threatened event, if fulfilled, would be
materially adverse, to the Partnership or its business or properties, or there
shall be any material lien not disclosed in the Partnership's financial
statements, or the Purchasers shall have become aware of any previously
undisclosed fact that has or with the passage of time would have a material
adverse effect on the value of the Units or the Partnership's properties;
6
(e) the General Partner or the Partnership shall have stated or otherwise
indicated that it intends to refuse to take any action that the Purchasers deem
necessary, in the Purchasers' reasonable judgment, for the Purchasers to be the
registered owner of the Units tendered and accepted for payment hereunder, with
full voting rights, simultaneously with the consummation of the Offer or as soon
thereafter as is permitted under the Partnership Agreement, in accordance with
the Partnership Agreement and applicable law, or the Purchasers are unable to
confirm to their reasonable satisfaction that the General Partner or Partnership
will not refuse to take any such action;
(f) there shall have been threatened, instituted or pending any action or
proceeding before any court or governmental agency or other regulatory or
administrative agency or commission or by any other person, challenging the
acquisition of any Units pursuant to the Offer or otherwise directly or
indirectly relating to the Offer, or otherwise, in the reasonable judgment of
any Purchaser, adversely affecting the Purchaser, the Partnership or its
properties or the value of the Units;
(g) the Partnership shall have (i) issued, or authorized or proposed the
issuance of, any partnership interests of any class, or any securities
convertible into, or rights, warrants or options to acquire, any such interests
or other convertible securities, (ii) issued or authorized or proposed the
issuance of any other securities, in respect of, in lieu of, or in substitution
for, all or any of the presently outstanding Units, (iii) declared or paid any
Distribution, other than in cash, on any of the Units, or (iv) the Partnership
or the General Partner shall have authorized, proposed or announced its
intention to propose any merger, consolidation or business combination
transaction, acquisition of assets, disposition of assets or material change in
its capitalization, or any comparable event not in the ordinary course of
business, other than listing the Partnership's properties for sale; or,
(h) the General Partner shall have modified, or taken any step or steps to
modify, in any way, the procedures or regulations applicable to the registration
of Units or transfers of Units on the books and records of the Partnership or
the admission of transferees of Units as registered owners and as Unit Holders.
The foregoing conditions are for the sole benefit of the Purchasers and may
be (but need not be) asserted by the Purchasers regardless of the circumstances
giving rise to such conditions or may be waived by the Purchasers in whole or in
part at any time prior to the Expiration Date, subject to the requirement to
disseminate to Unit Holders, in a manner reasonably designed to inform them of,
any material change in the information previously provided. Any determination by
either ▇▇▇▇▇▇▇ or ▇▇▇▇▇, in its reasonable judgment, concerning the events
described above will be final and binding upon all parties.
8. Backup Federal Income Tax Withholding. To prevent the possible
application of backup federal income tax withholding with respect to payment of
the purchase price, a tendering Unit Holder must provide the Purchasers with the
Unit Holder's correct taxpayer identification number in the space provided in
the Letter of Transmittal.
9. FIRPTA Withholding. To prevent the withholding of federal income tax in
an amount equal to ten percent of the amount of the purchase price plus
Partnership liabilities allocable to each Unit purchased, the Letter of
Transmittal includes FIRPTA representations certifying the Unit Holder's
taxpayer identification number and address and that the Unit Holder is not a
foreign person.
10. Everest as Agent. For the purpose of performing the obligations,
exercising the rights and making any determinations required of the Purchasers,
Everest shall act on behalf of the Purchasers and no signature or other approval
from the other Purchasers shall be required.
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CERTAIN INFORMATION CONCERNING THE PARTNERSHIP
The Partnership is subject to the information reporting requirements of the
Exchange Act and is required to file reports and other information with the
Commission relating to its business, financial results and other matters.
However, the Partnership has not complied with its periodic reporting
requirements since filing its quarterly report on Form 10-Q for the fiscal
quarter ended November 30, 2004. The last annual report on Form 10-K filed by
the Partnership was for the fiscal year ended February 29, 2004. Such reports
and other documents may be examined and copies may be obtained from the offices
of the Commission at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, or
electronically at ▇▇▇▇://▇▇▇.▇▇▇.▇▇▇. Copies should be available by mail upon
payment of the Commission's customary charges by writing to the Commission's
principal offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇.
General. Attached as Part I of Appendix A to this Offer to Purchase are
excerpts from the last Annual Report on Form 10-K filed by the Partnership with
the Commission (the "Form 10-K"), which excerpts describe the business and
operations of the Partnership.
Outstanding Units. According to the Form 10-K, there were 800 Units issued
and outstanding, held by approximately 660 Unit Holders, as of February 29,
2004.
Trading History of the Units. There is no established trading market for
the Units other than limited and sporadic trading through matching services or
privately negotiated sales. At present, privately negotiated sales and sales
through intermediaries (such as through the American Partnership Board) are the
only means available to a Unit Holder to liquidate an investment in Units (other
than this Offer or other occasional offers by other partnership investors, if
any) because the Units are not listed or traded on any exchange or quoted on any
NASDAQ list or system.
According to Direct Investment Spectrum, an independent third party
publication, there have been no trades of the Partnership's limited partnership
interests for at least a year. Sales may be conducted which are not reported in
the Direct Investment Spectrum and the prices of sales through other channels
may differ from those reported by the Direct Investment Spectrum. The Purchasers
do not know whether the information provided by the Direct Investment Spectrum
is accurate or complete.
Except for the purchases described below in "Certain Information Concerning
the Purchasers - Prior Acquisitions of Units and Prior Contacts" the Purchasers
are not aware of any trades of units that were not reported in the Direct
Investment Spectrum.
Selected Financial and Property Related Data. Attached as Part II of
Appendix A is a summary of certain financial and statistical information with
respect to the Partnership and its properties, all of which has been taken from
the Form 10-K and the Quarterly Report on Form 10-Q for the period ended
November 30, 2004 (the "Form 10-Q"). More comprehensive financial and other
information is included in such reports and other documents filed by the
Partnership with the Commission. Part II of Appendix A is qualified in its
entirety by reference to such publicly filed reports and documents, including,
without limitation, all the financial information and related notes contained
therein. Unit Holders should also refer to any other Quarterly Reports on Form
10-Q or Current Reports on Form 8-K filed with the Commission after the Form
10-K or after the date of this Offer for more recent information relating to the
business and operations of the Partnership.
On July 1, 2003, the General Partner filed a definitive consent
solicitation statement with the Commission (the "General Partner's Consent
Solicitation") asking limited partners to authorize the sale of the
8
Partnership's properties for any amount that would result in a distribution of
cash to the limited partners of at least $9,000 per Unit. The following is a
summary of information in the General Partner's Consent Solicitation. The
Partnership hired a broker to approach privately about 30 potentially interested
parties to solicit offers to purchase the Partnership properties. This resulted
in two non-binding offers, which were subject to due diligence, for $32.9
million and $33 million. Because of the age of the properties' historic shell
and the recent deterioration of the local rental market, the Operating General
Partner believed that it was likely that the offers would be reduced after due
diligence investigations. In addition, because the rental market in Jersey City,
New Jersey had declined since the solicitations were made, the broker had
advised that a contingency should be made to allow for a likely reduction of the
offering prices, and suggested allowing for a reduction of approximately $1
million. The General Partner estimated that a sale of the property for $33
million, after payment of all debt and brokerage fees, and including
distribution of the Partnership's cash on hand, would result in net proceeds to
the Unit holders of approximately $11,300 per Unit. If the offer were to be
reduced following due diligence to $32 million, the General Partner estimated
such distribution would be approximately $9,200 per Unit. The Partnership had
announced that a cash distribution in the amount of approximately $1,325 per
Unit was anticipated to be paid in 2003. The funds for such distribution were
included in the above estimates. Accordingly, if such distribution were paid
prior to a sale of the Partnership's properties, the sales proceeds estimated
above would be reduced by such amount. The General Partner's Consent
Solicitation was unsuccessful in that Unit holders holding only 48% of the
outstanding Units voted in favor of the proposal.
The General Partner recently remarketed the Partnership's properties and
received two offers. The new offers were made by the previous bidders for the
properties, and their bids were identical to their previous offers. According to
the real estate agent, although the net operating income was reduced since the
prior marketing, the offering prices remained at the same level because of a
substantial decline in the mortgage interest rate in the last two years, thereby
offsetting the effect of the decline in net operating income. It is estimated
that the amount that would be available for distribution to the Unit Holders
from a sale at the offering prices, updated to reflect recent balance sheet
information, to be approximately $9,600 to $10,800 per Unit.
The Operating General Partner has agreed to list the Partnership's
properties for sale, and if an acceptable price is offered, intends to seek
Partnership approval to sell the properties. No list price has been determined
for the properties, there is no assurance that an acceptable price will be
offered, and the Purchasers do not know if or when a sale of the properties will
occur or what price may be obtained.
DETERMINATION OF OFFER PRICE
In establishing the Offer price, the Purchasers reviewed certain publicly
available information including among other things: (i) the Partnership's
limited partnership agreement (the "Partnership Agreement"), (ii) the limited
partnership agreements of the operating limited partnerships in which the
Partnership is the limited partner, (iii) Annual Reports on Form 10-K, (iv)
Quarterly Reports on Form 10-Q, and (v) other reports filed with the Commission.
The Purchasers determined the Offer price pursuant to their own analysis. The
Purchasers did not obtain current independent valuations or appraisals of the
assets.
Purchasers are making a speculative offer based on the unique circumstances
of the Partnership. Purchasers set their offer price by reviewing the prior
offers of which Purchasers are aware, and selecting a price that Purchasers
believe is sufficiently higher than such prior offers to motivate Unit Holders
to sell their Units.
9
The Purchasers developed an estimated current liquidation value for the
Partnership's Units based on an estimate of the potential price from the sale of
the property to a condominium converter, made by the real estate broker retained
by the Operating General Partner to market the properties, which estimate was
$96.5 Million, plus the other assets and liabilities of the Partnership and
assumed expenses of selling the properties of $1.3 Million. The Purchasers
reviewed the Partnership Agreement provisions regarding the allocation of
distributions and the Partnership's available financial statements in order to
determine how net liquidation proceeds from a current sale of the Partnership's
properties would be distributed. Based on the information described above, the
Purchasers estimated the net proceeds to Unit Holders from a current liquidation
of the Partnership, if the properties were sold for $96.5 Million, would be
approximately $54,500 per Unit. The Purchasers also considered that a
condominium converter may not offer to purchase the property, that the only
offers received for the Partnerships properties, including those received
earlier in 2005, were no more than $33 Million for the property, and that the
General Partner estimated that a sale of the properties at such price would
result in a maximum liquidating distribution of $10,800 per Unit. No assurances
can be provided that the Purchasers' estimates are correct, and the actual
amount of net proceeds that would be received from a current liquidation of the
Partnership's assets may differ substantially from the estimates described
above.
CERTAIN INFORMATION CONCERNING THE PURCHASERS
The Purchasers. Everest is a California limited liability company that was
formed in 1996. The principal office of Everest is ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. ▇▇▇▇▇▇▇'s manager is Everest Properties, LLC, a
California limited liability company, which has no employees of its own. Both
Everest and its manager have the same executive officers. For certain
information concerning the executive officers of Everest and its manager, see
Schedule I to this Offer to Purchase. Everest and its affiliates invest in
limited partnerships such as the Partnership, and in other forms of real estate
oriented investments, and conduct activities incident thereto.
▇▇▇▇▇ is a New Jersey limited liability company that was formed on February
5, 2004. The principal office of ▇▇▇▇▇ is ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ and its telephone number is (▇▇▇) ▇▇▇-▇▇▇▇. For certain
information concerning the members and executive officers of ▇▇▇▇▇, see Schedule
II to this Offer to Purchase. ▇▇▇▇▇ and its affiliates invest in and manage real
estate and conduct activities incident thereto.
MPF is a California limited liability company that was formed in 2004. The
principal office of MPF is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. MPF
has no employees or officers of its own. MPF's manager is ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, Inc., a California corporation. For certain information concerning the
executive officers of MPF's manager, see Schedule III to this Offer to Purchase.
MPF and its affiliates invest in limited partnerships such as the Partnership,
and in other forms of real estate oriented investments, and conduct activities
incident thereto.
General. Except as set forth elsewhere in this Offer to Purchase: (i) the
Purchasers do not beneficially own or have a right to acquire, and, to the best
knowledge of the Purchasers, no associate or majority-owned subsidiary of
Purchasers or the persons listed in Schedules I, II and III hereto, beneficially
owns or has a right to acquire any Units or any other equity securities of the
10
Partnership; (ii) the Purchasers have not, and to the best knowledge of the
Purchasers, none of the persons and entities referred to in clause (i) above or
any of their executive officers, directors or subsidiaries has, effected any
transaction in the Units or any other equity securities of the Partnership
during the past 60 days other than as stated in this Offer to Purchase; (iii)
the Purchasers do not have and, to the best knowledge of the Purchasers, none of
the persons listed in Schedules I, II and III hereto has, any contract,
arrangement, understanding or relationship with any other person with respect to
any securities of the Partnership, including, but not limited to, the transfer
or voting thereof, joint ventures, loan arrangements, puts or calls, guarantees
of loans, guarantees against loss or the giving or withholding of proxies,
consents or authorizations, other than as stated in this Offer to Purchase; (iv)
since February 28, 2003, there have been no transactions which would require
reporting under the rules and regulations of the Commission between the
Partnership or any of its affiliates and the Purchasers or any of their
subsidiaries or, to the best knowledge of the Purchasers, any of their executive
officers, directors or affiliates; and (v) since February 28, 2003, except as
otherwise stated in this Offer to Purchase, there have been no contacts,
negotiations or transactions between the Purchasers, or any of their
subsidiaries or, to the best knowledge of the Purchasers, any of the persons
listed in Schedules I, II and III hereto, on the one hand, and the Partnership
or its affiliates, on the other hand, concerning a merger, consolidation or
acquisition, tender offer or other acquisition of securities, an election of
directors, or a sale or other transfer of a material amount of assets of the
Partnership.
Prior Acquisitions of Units and Prior Contacts. Everest owns no Units of
the Partnership. Everest Investors 14, LLC, an affiliate of Everest, owns 97
Units (12%). Millenium Management, LLC, an affiliate of Everest, owns 86 Units
(11%). Everest Management, LLC, an affiliate of Everest, owns 32 Units (4%).
▇▇▇▇▇ owns 147 Units (18%) of the Partnership. MPF owns no Units of the
Partnership. MPF Flagship Fund 9, LLC, an affiliate of MPF, owns 8 Units (1%).
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Special Fund 6-A, LLC, an affiliate of MPF, owns 5 Units
(0.6%). ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Special Fund 6, LLC, an affiliate of MPF, owns 16.5
Units (2%). Of the foregoing, 6.2 Units were acquired by Millenium Management,
LLC within the last 60 days, for $14,000 per Unit.
In the aggregate, the foregoing entities currently own 391.5 Units (49%) of
the Partnership.
On June 3, 2003, Millenium Management, LLC ("Millenium"), an affiliate of
Everest, commenced a tender offer for up to 80 Units at a price of $9,200 per
Unit (equivalent to $7,875 per Unit, taking into account the August 2003
distribution of approximately $1,325 per Unit).
In January 2004, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc., the manager of MPF,
commenced a tender offer for up to 32 Units, or approximately 4% of the
outstanding Units, at a price of $11,500 per Unit.
On January 22, 2004, Everest Investors 14, LLC, an affiliate of Everest,
commenced a tender offer for 317 Units, or approximately 40% of the outstanding
Units, at a price of $13,000 per Unit. Everest Investors 14, LLC subsequently
increased its offer to $13,300 per Unit. The General Partner made no
recommendation as to whether Unit holders should tender their Units in response
to the offer.
On February 26, 2004, ▇▇▇▇▇ commenced a tender offer for up to 334
Units, or approximately 42% of the outstanding Units, at a price of $13,500 per
Unit. The General Partner made no recommendation as to whether Unit holders
should tender their Units in response to the offer.
In August 2004, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc., the manager of MPF,
commenced another tender offer for up to 19.5 Units, or approximately 2.4% of
the outstanding Units, at a price of $12,500 per Unit.
On December 1, 2004, ▇▇▇▇▇ commenced a tender offer for up to 150 Units, or
approximately 19% of the outstanding Units, at a price of $13,000 per Unit. The
General Partner made no recommendation as to whether Unit holders should tender
their Units in response to the offer.
11
On May 23, 2005, Millenium Management, LLC, an affiliate of Everest,
commenced a tender offer for 16 Units, or 2% of the outstanding Units, at a
price of $14,000 per Unit. The General Partner made no recommendation as to
whether Unit holders should tender their Units in response to the offer.
The General Partner and the Operating General Partner have had multiple
informal discussions in which the Operating General Partner, an affiliate of
▇▇▇▇▇, during the course of performing its duties as the operating general
partner, expressed an interest in purchasing the Units if the General Partner's
Consent Solicitation were unsuccessful. The Operating General Partner also
indicated to the General Partner that it might exercise its right to purchase
the Partnership's interests in the operating partnerships if the General
Partner's Consent Solicitation were successful. Since the General Partner's
Consent Solicitation terminated unsuccessfully, the Operating General Partner
has repeatedly expressed its interest in purchasing the Units; however, no
negotiations have occurred and no agreement has been made in that regard.
The Operating General Partner has also advised the General Partner that the
Partnership's properties are being listed for sale, and if an acceptable price
is offered, that the Operating General Partner intends to seek Partnership
approval to sell the properties.
Except as otherwise set forth in this Offer document, none of the
Purchasers nor any of their affiliates are party to any past, present or
proposed material contracts, arrangements, understandings, relationships, or
negotiations with the Partnership or with the General Partner concerning the
Partnership.
Source of Funds. Based on the Offer price of $20,000 per Unit, and the fact
that the Purchasers and their affiliates already own 391.5 of the 800
outstanding Units, the Purchasers estimate that the total amount of funds
necessary to purchase all Units sought by this Offer and to pay related fees and
expenses, will be approximately $8,250,000.
Everest expects to obtain these funds from current cash and cash
equivalents and existing, available lines of credit.
▇▇▇▇▇ expects to obtain these funds by means of equity capital
contributions from its members at the time the Units tendered pursuant to the
Offer are accepted for payment. Such members will fund their capital
contributions through existing cash and other financial assets which in the
aggregate are sufficient to provide the funds required in connection with the
Offer without any borrowings. Such members have irrevocably agreed and are
obligated to make such capital contributions available to ▇▇▇▇▇ on demand.
MPF expects to obtain these funds by means of equity capital contributions
from its members at the time the Units tendered pursuant to the Offer are
accepted for payment. Such members will fund their capital contributions through
existing cash and other financial assets which in the aggregate are sufficient
to provide the funds required in connection with the Offer without any
borrowings. Such members have irrevocably agreed and are obligated to make such
capital contributions available to MPF on demand.
The Purchasers have agreed to purchase the Units tendered in this Offer as
follows, subject to rounding for convenience: Everest will purchase 46% of the
Units purchased; ▇▇▇▇▇ will purchase 46% of the Units purchased; and MPF will
purchase 8% of the Units purchased. The Purchasers shall be jointly and
severally liable to Unit Holders whose Units are accepted for payment. Each
Purchaser has adequate funds, as described above, to purchase all the Units for
which the Offer is made.
12
FUTURE PLANS OF THE PURCHASERS
The Purchasers are seeking to acquire Units pursuant to the Offer to
increase their equity interest in the Partnership, for investment purposes.
Following the completion of the Offer, the Purchasers and persons related to or
affiliated with the Purchasers may acquire additional Units, although there is
no current intention to do so. Any such acquisition may be made through private
purchases, through one or more future tender or exchange offers or by any other
means deemed advisable by the Purchasers. Any such acquisition may be at a price
higher or lower than the price to be paid for the Units purchased pursuant to
the Offer, and may be for cash or other consideration. The Purchasers also may
consider selling some or all of the Units it acquires pursuant to the Offer,
either directly or by a sale of one or more interests in a Purchaser itself,
depending upon liquidity, strategic, tax and other considerations.
The Operating General Partner has agreed to list the Partnership's
properties for sale, and if an acceptable price is offered, intends to seek
Partnership approval to sell the properties. No list price has been determined
for the properties, there is no assurance that an acceptable price will be
offered, and the Purchasers do not know if or when a sale of the properties will
occur or what price may be obtained. Under the partnership agreement of the
Partnership, a sale of its property would require the consent of at least 51% of
the Unit holders. The Purchasers would be in favor of a sale of the properties
and, if required to vote, would vote in favor, as long as the Purchasers
believed the sale price was satisfactory. The Purchasers do not have any
agreement on a price that they believe would be satisfactory, or any agreement
on voting. The Purchasers and their affiliates currently hold an aggregate of
391.5 (49%) of the outstanding Units, and may hold 51% or more of the Units
after the Offer.
The terms of the operating partnership agreements provide that, if the Unit
Holders vote to sell the properties, the Operating General Partner has the right
to purchase all Units of the Partnership from the Unit holders for the amount
that would have been distributable to the Unit Holders as a result of such sale.
The Operating General Partner has stated to the Purchasers that it intends to
waive such right to purchase the Units if an agreement to sell the properties is
made and submitted to a vote of the Unit Holders.
Other than as set forth above, the Purchasers do not currently intend to
change current management, indebtedness, capitalization, corporate structure or
business operations of the Partnership and do not have current plans for any
extraordinary transaction such as a merger, reorganization, liquidation or sale
or transfer of assets involving the Partnership. However, these plans could
change at any time in the future. If any transaction is effected by the
Partnership and financial benefits accrue to the Unit Holders, the Purchasers
and their affiliates that own Units will participate in those benefits to the
extent of their ownership of the Units.
EFFECTS OF THE OFFER
Future Benefits of Unit Ownership. Tendering Unit Holders shall receive
cash in exchange for their Units purchased by the Purchasers and will forego all
future distributions and income and loss allocations from the Partnership with
respect to such Units.
Limitations on Resales. The Partnership Agreement prohibits a transfer of
Units if the transfer would result in 50% or more of the Units being transferred
in a 12 month period (a "Tax Termination"). This provision may limit sales of
Units on the secondary market and in private transactions following completion
of the Offer. Accordingly, the Partnership may not recognize any requests for
recognition of a transferee Unit Holder upon a transfer of Units if the transfer
would result in a Tax Termination, or the Partnership may attempt to impose a
limit on the number of Units it will accept for transfer as a result of the
13
Offer (a "Transfer Limit" - see "Details of the Offer - Terms of the Offer;
Expiration Date; Proration"). In either such event, the Purchasers will purchase
the maximum number of Units they may purchase without causing a Tax Termination
or surpassing a Transfer Limit validly imposed under the Partnership Agreement,
as informed by the General Partner.
It is not possible for Purchasers to determine how many Units may be
purchased because only the General Partner will know the number of Units that
have been transferred in all other transactions prior to the expiration of the
Offer. However, the Purchasers know that 75 Units were transferred to the
Purchasers or their affiliates within the last 12 months. If only 75 Units have
been transferred within the last 12 months, then up to 324 Units could be
transferred pursuant to this Offer before causing a Tax Termination. Given the
small number of outstanding Units of the Partnership and the absence of any
trading activity reported in the Direct Investment Spectrum, the Purchasers
believe it is unlikely that materially more than 75 Units have been transferred
within the last 12 months. Also, the General Partner may elect to accept
transfers notwithstanding a technical Tax Termination if the General Partner
determines that the actual effect of such a Tax Termination is not material to
the Partnership. See "Details of the Offer - Terms of the Offer; Expiration
Date; Proration."
Influence Over Future Voting Decisions. Under the Partnership Agreement,
Unit Holders holding 51% or more of the Units are entitled to take action with
respect to a variety of matters, including removal of the General Partner,
selling all or substantially all the Partnership's assets and dissolving the
Partnership, and approval of most types of amendments to the Partnership
Agreement. If the Purchasers acquire 16.5 Units, the Purchasers and their
affiliates would hold 51% of the Units and therefore would control any vote of
the Unit Holders if the Purchasers agreed to vote together. The Purchasers have
not made any agreement regarding any voting matters, although each Purchaser is
likely to vote in favor of a sale of the properties if such Purchaser believes,
in its sole discretion, that the proposed price is satisfactory.
Other Potential Effects. The Units are registered under the Exchange Act,
which requires, among other things that the Partnership furnish certain
information to its Unit Holders and to the Commission and comply with the
Commission's proxy rules in connection with meetings of, and solicitation of
consents from, Unit holders. Registration and reporting requirements could be
terminated by the Partnership if the number of record holders falls below 300,
or below 500 if the Partnership's total assets are below $10 million for three
consecutive preceding fiscal years. The Partnership reported a total of 660
limited partners as of February 29, 2004 and in excess of $10 Million in total
assets (consolidated with the operating limited partnerships). It is possible
that the purchase of Units pursuant to the Offer could reduce the number of
record Unit holders below 300. Any decision to terminate the registration of the
Partnership would be made solely by the Partnership's General Partner, without
any requirement in the Partnership Agreement to obtain the approval of Unit
Holders. The Purchasers presently do not intend to request the General Partner
to terminate the registration of the Partnership.
FEDERAL INCOME TAX MATTERS
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), applicable Treasury regulations thereunder, administrative rulings, and
judicial authority, all as of the date of the Offer. All of the foregoing is
subject to change, and any such change could affect the continuing accuracy of
this summary. This summary does not discuss all aspects of federal income
taxation that may be relevant to a particular Unit Holder in light of such Unit
▇▇▇▇▇▇'s specific circumstances, nor does it describe any aspect of state,
local, foreign or other tax laws. Sales of Units pursuant to the Offer may be
taxable transactions under applicable state, local, foreign and other tax laws.
14
UNIT HOLDERS SHOULD CONSULT THEIR RESPECTIVE TAX ADVISORS AS TO THE PARTICULAR
TAX CONSEQUENCES TO THE UNIT HOLDER OF SELLING UNITS PURSUANT TO THE OFFER.
In general, a Unit Holder will recognize gain or loss on a sale of Units
pursuant to the Offer equal to the difference between (i) the Unit Holder's
"amount realized" on the sale and (ii) the Unit Holder's adjusted tax basis in
the Units sold. The amount of a Unit Holder's adjusted tax basis in a Unit will
vary depending upon the Unit Holder's particular circumstances, and it will
include the amount of the Partnership's liabilities allocable to the Unit (as
determined under Code Section 752). The "amount realized" with respect to a Unit
will be a sum equal to the amount of cash received by the Unit Holder for the
Unit pursuant to the Offer (that is, the purchase price), plus the amount of the
Partnership's liabilities allocable to the Unit (as determined under Code
Section 752).
The gain or loss recognized by a Unit Holder on a sale of a Unit pursuant
to the Offer generally will be treated as a capital gain or loss if the Unit was
held by the Unit Holder as a capital asset. Gain with respect to Units held for
more than one year will be taxed, for federal income tax purposes, at a maximum
long-term capital gain rate of 15 percent. Gain with respect to Units held one
year or less will be taxed at ordinary income rates. It should also be noted
that the Taxpayer Relief Act of 1997 imposed depreciation recapture of
previously deducted straight-line depreciation with respect to real property at
a rate of 25 percent (assuming eligibility for long-term capital gain
treatment). A portion of the gain realized by a Unit Holder with respect to a
disposition of the Units may be subjected to this 25 percent rate to the extent
that the gain is attributable to depreciation recapture inherent in the
properties of the Partnership.
If any portion of the amount realized by a Unit Holder is attributable to
such Unit Holder's share of "unrealized receivables" or "substantially
appreciated inventory items" as defined in Code Section 751, a corresponding
portion of such Unit Holder's gain or loss will be treated as ordinary gain or
loss. It is possible that the basis allocation rules of Code Section 751 may
result in a Unit ▇▇▇▇▇▇'s recognizing ordinary income with respect to the
portion of the Unit Holder's amount realized on the sale of a Unit that is
attributable to such items while recognizing a capital loss with respect to the
remainder of the Unit.
Capital losses are deductible only to the extent of capital gains, except
that taxpayers who are natural persons may deduct up to $3,000 per year of
capital losses in excess of the amount of their capital gains against ordinary
income. Excess capital losses generally can be carried forward to succeeding
years (a "C" corporation's carry-forward period is five years and an individual
taxpayer can carry forward such losses indefinitely).
Under Code Section 469, individuals, S corporations and certain
closely-held corporations generally are able to deduct "passive activity losses"
in any year only to the extent of the person's passive activity income for that
year. Substantially all post-1986 losses of Unit Holders from the Partnership
are passive activity losses. Unit Holders may have "suspended" passive activity
losses from the Partnership (i.e., post-1986 net taxable losses in excess of
statutorily permitted "phase-in" amounts and which have not been used to offset
income from other passive activities).
If a Unit Holder sells less than all of its interest in the Partnership
pursuant to the Offer, a passive loss recognized by that Unit Holder can be
currently deducted (subject to the other applicable limitations) to the extent
of the Unit Holder's passive income from the Partnership for that year plus any
other net passive activity income for that year, and any gain recognized by a
Unit Holder upon the sale of Units can be offset by the Unit Holder's current or
"suspended" passive activity losses (if any) from the Partnership and other
sources. If, on the other hand, a Unit Holder sells 100 percent of its interest
in the Partnership pursuant to the Offer, any "suspended" passive activity
15
losses from the Partnership and any passive activity losses recognized upon the
sale of the Units will be offset first against any net passive activity income
from the Unit Holder's other passive activity investments, and the balance of
any net passive activity losses attributable to the Partnership will no longer
be subject to the passive activity loss limitation and, therefore, will be
deductible by such Unit Holder from its other "ordinary" income (subject to any
other applicable limitations). Under certain circumstances, some tendering Unit
Holders may not be able to sell 100 percent of their Units pursuant to the Offer
because of proration of the number of Units to be purchased by the Purchasers.
See "Details of the Offer - Terms of the Offer; Expiration Date; Proration."
A tendering Unit Holder will be allocated the Unit Holder's pro rata share
of the annual taxable income and losses from the Partnership with respect to the
Units sold for the period through the date of sale, even though such Unit Holder
will assign to the Purchasers its rights to receive certain cash distributions
with respect to such Units. Such allocations and any Partnership distributions
for such period would affect a Unit Holder's adjusted tax basis in the tendered
Units and, therefore, the amount of gain or loss recognized by the Unit Holder
on the sale of the Units.
Unit Holders (other than tax-exempt persons, corporations and certain
foreign individuals) who tender Units may be subject to 28 percent backup
withholding unless those Unit Holders provide a taxpayer identification number
("TIN") and are certain that the TIN is correct or properly certify that they
are awaiting a TIN. A Unit Holder may avoid backup withholding by properly
completing and signing the Letter of Transmittal. If a Unit Holder who is
subject to backup withholding does not include its TIN, the Purchasers will
withhold 28 percent from payments to such Unit Holder.
Possible Tax Termination. The Code provides that if 50% or more of the
capital and profits interests in a partnership are sold or exchanged within a
single 12-month period, such partnership generally will terminate for federal
income tax purposes. It is possible that the Partnership could terminate for
federal income tax purposes as a result of consummation of the Offer (although
the Partnership Agreement prevents transfers of Units that would cause such a
termination). A tax termination of the Partnership could have an effect on a
corporate or other non-individual Unit holder whose tax year is not the calendar
year, as such a Unit holder might recognize more than one year's Partnership tax
items in one tax return, thus accelerating by a fraction of a year the effects
from such items.
CERTAIN LEGAL MATTERS
General. Except as set forth herein, the Purchasers are not aware of any
filings, approvals or other actions by any domestic or foreign governmental or
administrative agency that would be required prior to the acquisition of Units
by the Purchasers pursuant to the Offer. The Purchasers' obligation to purchase
and pay for Units is subject to certain conditions, including conditions related
to the legal matters discussed herein.
State Takeover Statutes. The Partnership was formed under the laws of the
State of Delaware, which currently does not have any takeover statute applicable
to limited partnerships. However, it is a condition to the Offer that no state
or federal statute impose a material limitation on the Purchasers' right to vote
the Units purchased pursuant to the Offer. If this condition is not met,
Purchasers may terminate or amend the Offer.
If any person seeks to apply any state takeover statute, the Purchasers
will take such action as then appears desirable, which action may include
challenging the validity or applicability of any such statute in appropriate
court proceedings. If there is a claim that one or more takeover statutes apply
16
to the Offer, and it is not determined by an appropriate court that such
statutes do not apply or are invalid as applied to the Offer, the Purchasers
might be required to file certain information with, or receive approvals from,
the relevant state authorities. This could prevent the Purchasers from
purchasing or paying for Units tendered pursuant to the Offer, or cause delay in
continuing or consummating the Offer. In such case, the Purchasers may not be
obligated to accept for payment or pay for Units tendered.
Fees and Expenses. Purchasers will not pay any fees or commissions to any
broker, dealer or other person for soliciting tenders of Units pursuant to the
Offer. Employees of the Purchasers may solicit tenders of Units without any
additional compensation. The Purchasers will pay all costs and expenses of
printing and mailing the Offer and its legal fees and expenses.
Miscellaneous. The Offer is not made to (nor will tenders be accepted on
behalf of) Unit Holders residing in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the securities
or other laws of such jurisdiction. However, the Purchasers may take such action
as they deem necessary to make the Offer in any jurisdiction and extend the
Offer to Unit Holders in such jurisdiction.
In any jurisdiction where the securities or other laws require the Offer to
be made by a licensed broker or dealer, the Offer will be deemed to be made on
behalf of the Purchasers by one or more registered brokers or dealers that are
licensed under the laws of such jurisdiction.
The Purchasers have filed with the Securities and Exchange Commission a
Tender Offer Statement on Schedule TO pursuant to Rule 14d-3 under the Exchange
Act, furnishing certain additional information with respect to the Offer, and
may file amendments thereto. The Schedule TO and any amendments thereto,
including exhibits, may be inspected and copies may be obtained at the same
places and in the same manner as set forth under the caption "Certain
Information Concerning The Partnership -- General."
No person has been authorized to give any information or to make any
representation on behalf of the Purchasers 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.
EVEREST PROPERTIES II, LLC
▇▇▇▇▇ MILL INVESTOR, LLC
MPF PACIFIC GATEWAY, LLC
November 14, 2005
17
SCHEDULE I
EXECUTIVE OFFICERS
EVEREST PROPERTIES II, LLC
▇▇▇▇▇▇▇'s manager is Everest Properties, LLC, a California limited
liability company, which has no employees of its own. Both Everest and its
manager have the same executive officers and no directors. The business address
of each executive officer of Everest Properties II, LLC is ▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Each executive officer is a
United States citizen. The name and principal occupation or employment of each
executive officer of Everest Properties II, LLC ("EPII"), are set forth below.
Present Principal Occupation or Employment
Name Position and Five-Year Employment History
▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ President of EPII from 1996 - present. President
and Director of Everest Properties, Inc. from
1994 - present. President and Director of KH
Financial, Inc. from 1994 - present.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Executive Vice President and Secretary of EPII
from 1996 - present. Executive Vice President of
Everest Properties, Inc. from 1995 - present.
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Vice President and the General Counsel of EPII
since 1998. Senior Staff Counsel and then
Director of Corporate Legal of ▇▇▇▇▇▇▇▇▇'▇, Inc.
from 1995 - 1998.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Vice President and the Chief Financial Officer
of EPII since 1996. Chief Financial Officer and
Director of Everest Properties, Inc. since 1996.
SCHEDULE II
MEMBERS AND EXECUTIVE OFFICERS
▇▇▇▇▇ MILL INVESTOR, LLC
The business address of each member and officer of ▇▇▇▇▇ Mill Investor, LLC
is ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ and their business
telephone number is (▇▇▇) ▇▇▇-▇▇▇▇. Each member and officer is a United States
citizen. The name and principal occupation or employment of each member and
officer of ▇▇▇▇▇ Mill Investor, LLC, are set forth below.
Present Principal Occupation or Employment
Name Position and Five-Year Employment History
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Chairman of ▇▇▇▇▇▇ Companies Inc., a real estate
development, ownership and management Member
company, since 1971.
▇▇▇▇▇▇ ▇▇▇▇▇▇ Chief Executive Officer of ▇▇▇▇▇▇ Companies Inc.,
a real estate development, ownership Member and
management company, since 1971.
SCHEDULE III
DIRECTORS AND EXECUTIVE OFFICERS
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, INC.
MPF has no employees or officers of its own. MPF's manager is ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc., a California corporation.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc.
The name and principal occupation or employment of each director and executive
officer of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc. is set forth below. Each individual
is a citizen of the United States of America. The principal business address of
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc., MPF, and each individual is ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the business telephone number for each is
▇▇▇-▇▇▇-▇▇▇▇.
▇.▇. ▇▇▇▇▇▇▇▇▇ is President and a director of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc.,
which acts as manager and general partner of a number of real estate investment
vehicles, and has served in those positions since January 1989. In 1981, ▇▇.
▇▇▇▇▇▇▇▇▇ founded ▇▇▇▇▇▇▇▇▇ Financial Services, Inc. (now MPF Advisers, Inc.), a
registered investment adviser ("MPFA"), with ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, as a
financial planning firm, and he has served as its President since that date. ▇▇.
▇▇▇▇▇▇▇▇▇ founded ▇▇▇▇▇▇▇▇▇ Real Estate Services, a licensed California Real
Estate Broker, in 1982. As President of MPFA, ▇▇. ▇▇▇▇▇▇▇▇▇ is responsible for
all investment counseling activities. He supervises the analysis of investment
opportunities for the clients of the firm. ▇▇. ▇▇▇▇▇▇▇▇▇ previously served as
president of Host Funding, Inc., an owner of lodging properties, from December
1999 through 2003. ▇▇. ▇▇▇▇▇▇▇▇▇ is also an officer and controlling shareholder
of Cal-Kan, Inc., a closely held real estate investment company. ▇▇. ▇▇▇▇▇▇▇▇▇,
through his affiliates, manages a number of investment and real estate
companies.
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ is a director of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc. and has
served in that capacity since January 1989. In 1981, ▇▇. ▇▇▇▇▇▇▇▇▇ and ▇.▇.
▇▇▇▇▇▇▇▇▇ established MPFA. She has served as Chair of the Board and Secretary
of MPFA since that date. Her responsibilities with MPFA include oversight of
administrative matters and monitoring of past projects underwritten by MPFA.
Since October 1990, ▇▇. ▇▇▇▇▇▇▇▇▇ has served as Chief Executive Officer of
Pioneer Health Care Services, Inc. and Santa ▇▇▇▇ Care Center, LLC and is
responsible for the day-to-day operations of their two nursing homes and over
200 employees.
▇▇▇▇ ▇. ▇▇▇▇▇▇ became senior vice president and a director of ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc. in May 2000. Since 2004 he has been a director and vice
president of MPFA. Prior to becoming senior vice president, from August 1998 to
April 2000, he was with ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc. as a portfolio manager
and research analyst. From December 1999 to 2003, ▇▇. ▇▇▇▇▇▇ served as an
officer and director of Host Funding, Inc. Prior to joining ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, Inc., from May 1996 to July 1998, ▇▇. ▇▇▇▇▇▇ ran the over-the-counter
trading desk for North Coast Securities Corp. (previously ▇▇▇▇▇▇ ▇▇▇▇▇▇ Capital
Group) with responsibility for both the proprietary and retail trading desks.
▇▇. ▇▇▇▇▇▇ was also the registered options principal and registered municipal
bond principal for North Coast Securities, a registered broker dealer. ▇▇.
▇▇▇▇▇▇ was formerly a NASD-registered options principal and registered bond
principal, and he held his NASD Series 7, general securities license (now
inactive). ▇▇. ▇▇▇▇▇▇ has also spent time working on the floor of the New York
Stock Exchange as a trading clerk and on the floor of the Pacific Stock Exchange
in San Francisco as an assistant specialist for LIT America.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ is senior vice president, general counsel, and a director of the
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc. Since 2004 he has been a director and vice
president of MPFA. Prior to joining ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc. in July
2003, he was a securities and corporate finance attorney with the national law
firm of ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP from August 2000 to January 2003. From August
1997 to May 2000 he attended the University of Michigan Law School, where he
graduated magna cum laude with a Juris Doctor Degree. Prior to law school, ▇▇▇▇
▇▇▇▇▇▇▇▇▇ taught physics, chemistry, and math at the high school level for three
years, from June 1994 to June 1997. He graduated with high distinction and Phi
Beta Kappa from the University of California at Berkeley with a Bachelor of Arts
Degree in Political Science. He also has prior experience in sales, retail, and
banking.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ is vice president of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc. and MPFA
and is responsible for the day-to-day management of research and securities
purchases and sales on behalf of the entities managed by ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, Inc. ▇▇. ▇▇▇▇▇▇▇ has served in that position since January 1997; from
January 1994 until her promotion to vice president, she was a research analyst
with ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc. She joined ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
Inc. as an administrative assistant in July 1990.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ is senior vice president and a director of MPFA and ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc. and has served as an officer and director of Sutter
Holding Company, Inc. since March 2002. ▇▇. ▇▇▇▇▇ received his Bachelor's degree
in economics from the University of California at Los Angeles in 1992. He worked
for ▇▇▇▇▇▇ Brothers, Inc. in equity sales and trading during 1993 and 1994. From
October 1994 to June, 1996 he worked for ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Inc. as a
securities research analyst. ▇▇. ▇▇▇▇▇ became a Chartered Financial Analyst in
1996, and received his Master of Business Administration degree from Cornell
University in 1998. In July of 1998 he began buying and selling securities for
his own account and that of the entities he controls, and he was principally
been engaged in that activity until May 2005, when he rejoined MPFA. ▇▇. ▇▇▇▇▇
was a registered representative of North Coast Securities from 1994 through
1997.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ is vice president of Trading and Portfolios for MPFA and
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc. As vice president of Trading and Portfolios,
▇▇. ▇▇▇▇▇ is responsible for handling the day-to-day operations of the trading
department. She graduated from St. Mary's College of California in 1997 with a
Bachelor of Science in Business Administration with a concentration in Finance
and a Minor in Accounting. Prior to joining MPFA in 1998, she worked for a year
for State Street Bank and Trust, one of the leading financial services
specialists worldwide, as a portfolio accountant.
APPENDIX A
The following information has been copied from the last Annual Report on
Form 10-K filed by the Partnership, which was for the fiscal year ended February
29, 2004 (the "Form 10-K"), and the last Quarterly Report on Form 10-Q filed by
the Partnership, which was for the fiscal quarter ended November 30, 2004 (the
"Form 10-Q"). The Partnership has not filed more recent financial reports.
Although the Purchasers have no information that any statements contained in
this Appendix A are untrue, the Purchasers have not independently investigated
the accuracy of statements, and takes no responsibility for the accuracy,
inaccuracy, completeness or incompleteness of any of the information contained
in the Form 10-K or Form 10-Q or for the failure by the Partnership to disclose
events which may have occurred and may affect the significance or accuracy of
any such information.
PART I
Item 1. Business
General Development of Business
Registrant (also referred to as the "Partnership") is a limited partnership
which was formed under the Delaware Revised Uniform Limited Partnership Act on
October 15, 1987. The general partner of the Partnership is ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Historic Corporation, a Delaware corporation (the "General Partner" or "WRHC").
Registrant was organized to acquire all of the limited partnership
interests in ▇▇▇▇▇ Mill Associates I (Phase One), Limited Partnership, ▇▇▇▇▇
Mill Associates II (Phase Two), Limited Partnership, and ▇▇▇▇▇ Mill Associates
III (Phase Three), Limited Partnership, each of which is a New Jersey limited
partnership (individually "▇▇▇▇▇ Mill I," "▇▇▇▇▇ Mill II" and "▇▇▇▇▇ Mill III,"
respectively, and collectively the "Operating Partnerships"). Each Operating
Partnership owns one phase ("Phase") of an aggregate 433-unit residential
apartment complex (the "Complex") located in Jersey City, New Jersey, that
consists of buildings designated as certified historic structures by the U.S.
Department of the Interior. The Operating Partnerships have constructed,
substantially rehabilitated and are operating the Complex. The rehabilitation of
the Complex qualified for a rehabilitation tax credit in 1988, 1989 and 1990.
The general partner of the Operating Partnerships is ▇▇▇▇▇ Venture Corp. (the
"Operating General Partner"), which is not an affiliate of the Partnership or
WRHC.
Pursuant to the Partnership's prospectus dated May 13, 1988, (the
"Prospectus"), the Partnership offered $19,280,000 of units of limited
partnership interest in the Partnership (the "Units") at an offering price of
$24,100 per Unit. The Units were registered under the Securities Act of 1933
pursuant to a Registration Statement on Form S-11 (Registration No. 33-19646).
The closing of the offering of Units (the "Offering") occurred on July 15,
1988. At such closing, 800 Units were sold, representing $19,280,000 in gross
proceeds. After payment of $674,800 of organization and offering expenses,
$674,800 in an origination fee and $1,349,600 of selling commissions, the net
proceeds available for investment were $16,580,800. Of such net proceeds,
$16,388,000 was allocated to the investment in the Operating Partnerships, which
included investments in guaranteed investment contracts. The remainder of
$192,800 was designated as working capital to be used for operating expenses of
the Partnership.
A-1
PART II
Item 2. Properties
The Complex consists of approximately 34 historic mill buildings built
between 1847 and 1932, all of which are certified historic structures that have
been converted and substantially rehabilitated into a 433 unit luxury apartment
complex that has received financing exempt from Federal income taxation under
Internal Revenue Code Section 103(b)(4)(A). As a consequence of this tax exempt
financing, the Operating Partnerships are required to rent at least 15% of the
dwelling units ("D.U.'s") in the Complex to individuals or families of low or
moderate income as determined under such Code Section, currently based on their
income not exceeding 80% of the median income for the area as determined by the
United States Department of Housing and Urban Development ("HUD"). These income
limits are subject to increases pursuant to HUD guidelines. In the Complex, 68
studio and efficiency D.U.'s and 17 one-bedroom D.U.'s are set aside for rental
to low or moderate income persons. There are no rent ceilings on those D.U.'s
set aside for low or moderate income persons. Because such tax exempt financing
consists of bonds sold in 1985, the 80% of median income limit is not required
to be adjusted based on family size as would be required under the Tax Reform
Act of 1986.
The Complex is located on a 4-acre site in Jersey City, New Jersey. In
addition, one new five-story building, approximately 20 feet by 50 feet, was
built on the site. The Complex is located in the ▇▇▇▇▇ Crucible Redevelopment
Area, an area so designated pursuant to a redevelopment plan adopted in
September 1983 by ordinance of the City of Jersey City. The actual development
entails three Phases with each Phase owned by a separate New Jersey limited
partnership, respectively ▇▇▇▇▇ Mill I, ▇▇▇▇▇ Mill II and ▇▇▇▇▇ Mill III. Phase
I consists of seven industrial buildings which have been rehabilitated to
provide 134 D.U.'s, 55 underground and 77 surface parking spaces and
approximately 1,550 square feet of commercial space. Phase II consists of 11
industrial buildings which have been rehabilitated to provide 191 D.U.'s and 62
underground and 124 surface parking spaces. Phase III consists of four
industrial buildings which have been rehabilitated to provide 108 D.U.'s, 35
underground and 73 surface parking spaces and approximately 2,230 square feet of
commercial space.
The Complex features gardens, elevated walkways and brick paved walkways.
The Complex also has its own electronic security system and a free shuttle
service to the Grove Street PATH station is being provided. In addition, the
residents of the Complex have access to a private fitness facility. The
Complex's commercial space is designated for retail stores and/or professional
offices.
As of December 31, 2003 and 2002, the occupancy and rental rates were as
follows:
December 31, 2003 December 31, 2002
Occupancy Rate 98% 98%
Monthly Rental Rates:
Studio $ 609 - $1,095 $ 609 - $1,095
One-Bedroom $ 730 - $1,753 $ 730 - $1,752
Two-Bedroom $1,213 - $2,195 $1,213 - $2,284
Three-Bedroom $1,695 - $2,073 $1,870 - $2,073
The rental rates reflect significant ranges because the apartments vary as
to size and floor plans (i.e., square footage, duplex, triplex, penthouse) and
due to the low-moderate tenant income restrictions for 15% to 20% of the D.U.'s
resulting from the tax-exempt financing described above.
A-2
SELECTED FINANCIAL DATA
The following selected financial data has been copied or derived from the Form
10-K and Form 10-Q and should be read in conjunction with the financial
statements and the related notes set forth in such reports:
Partnership
Year End Nine Months Ended
------------------- ------------------------------
February February February November November
29, 2004 28, 2003 28, 2002 30, 2004 30, 2003
-------- -------- -------- -------- --------
Total revenues
(Interest income) $918 $ 2,115 $ 4,674 $214 $853
Equity in income (loss)
of investment in
Operating
Partnerships $413,727 $851,780 $ 386,617 $238,436 $322,502
Net income (loss) $110,448 $695,620 $ 342,738 $179,235 $196,467
Net income (loss) per
unit of limited
partnership interest $137 $ 861 $ 424 $221.80 $ 243.10
At year end:
Total assets $1,675,809 $2,571,508 $1,753,515
------------------
November 30, February 29,
2004 2004
Cash and cash equivalents................. $844,646 $14,982
Investments in operating partnerships and
other assets.............................. 963,054 1,660,827
------- ---------
$1,807,700 $1,675,809
Liabilities............................... 312,719 423,089
Partners' equity (deficit)................ $1,494,980 $1,252,720
---------------------------------------------------------------------------
A-3
Combined Operating Partnerships
The combined balance sheets of the Operating Partnerships and the combined
statements of earnings of the Operating Partnerships copied from the Form 10-K
and the Form 10-Q are as follows:
December 31, September 30, December 31,
2004* 2004 2003
ASSETS
Land, buildings and equipment,
less accumulated depreciation. $36,500,343 $36,285,936 $36,792,167
Cash and cash equivalents........ 5,738,066 6,755,538 6,788,271
Deferred costs, deposits and other
assets........................... 4,762,779 4,579,611 3,990,373
----------- ----------- -----------
$47,001,188 $47,621,085 $47,570,811
LIABILITIES
Mortgages payable................ 28,600,000 28,600,000 28,600,000
Other liabilities................ 2,840,882 2,573,387 2,729,283
----------- ----------- -----------
31,440,882 31,173,387 31,329,283
Partners' equity (deficit) 15,560,306 16,447,698 16,241,528
---------- ---------- ----------
$47,001,188 $47,621,085 $47,570,811
=========== =========== ===========
Year ended 9 Months ended Year ended
December 31, September 30, December 31,
2004* 2004 2003
Revenue
----------------------------------- $ 6,812,091 $ 5,096,231 $ 6,876,152
Rents......................... 54,802 - 46,287
---------- ---------- ----------
Interest......................
6,866,893 5,096,231 6,922,439
Expenses
Administrative................ 1,258,493 561,011 1,325,315
Operating..................... 2,873,378 2,248,938 2,985,769
Management fees............... 257,334 204,787 275,046
Financial..................... 395,654 488,152 335,062
Depreciation and amortization. 1,663,256 1,187,506 1,583,341
--------- --------- ---------
6,448,115 4,690,394 6,504,533
--------- --------- ---------
Net income....................... $ 418,778 $ 405,837 $ 417,906
========= ========= =========
-----------
* The Partnership has not yet filed its Annual Report on Form 10-K for
the fiscal year ended February 28, 2005; however, the Operating
General Partner, an affiliate of ▇▇▇▇▇, has received a copy of the
audited Combined Financial Statements of the Operating Partnerships,
in which the December 31, 2004 financial information appears.
A-4
The Letter of Transmittal, and any other required documents should be sent
or delivered by each Unit Holder or his broker, dealer, commercial bank, trust
company or other nominee to the Purchasers at its address set forth below.
Questions and requests for assistance may be directed to Everest on behalf
of the Purchasers, at its address and telephone number listed below. Additional
copies of this Offer to Purchase, the Letter of Transmittal, and other tender
offer materials may be obtained from Everest as set forth below, and will be
furnished promptly at the Purchasers' expense.
November 14, 2005 EVEREST PROPERTIES II, LLC
▇▇▇▇▇ MILL INVESTOR, LLC
MPF PACIFIC GATEWAY, LLC
For Information or Assistance Please Contact:
Everest Properties II, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ or (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇