<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CONSENT SOLICITATION STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [_]
Filed by a party other than the registrant [X]
Check the appropriate box:
[X] Preliminary consent solicitation [_] Confidential, for Use of the
statement Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive consent solicitation statement
[_] Definitive additional materials
[_] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
RIVERCHASE INVESTORS I, LTD.
----------------------------
(Name of Registrant as Specified in Its Charter)
Colonial Realty Limited Partnership
-----------------------------------
John H. McClintock, Jr., James H. Pugh, Jr., Battery Park Capital Corp.,
------------------------------------------------------------------------
Thomas H. Lowder, James K. Lowder, and Robert E. Lowder
-------------------------------------------------------
(Name of Person(s) Filing Consent Solicitation Statement, if other than the
Registrant)
Payment of filing fee (Check the appropriate box):
[_] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
n/a
--------------------------------------
(2) Aggregate number of securities to which transaction applies:
n/a
--------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
The registrant proposes to sell substantially all of its assets to
------------------------------------------------------------------
Colonial Realty Limited Partnership, a subsidiary of Colonial
-------------------------------------------------------------
Properties Trust, for an aggregate amount set forth in (4)
---------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
$8,480,000
--------------------------------------
(5) Total fee paid:
$1696
--------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
--------------------------------------
(2) Form, schedule or registration statement no.:
--------------------------------------
(3) Filing party:
--------------------------------------
(4) Date filed:
--------------------------------------
<PAGE>
Exhibit 17(d)
RIVERCHASE INVESTORS I, LTD.
2101 6th Avenue North
Suite 750, P.O. Box 11687
Birmingham, Alabama 35202-1687
205/250-8700
NOTICE TO UNITHOLDERS
On September 2, 1997, Riverchase Investors I, Ltd. (the "Partnership")
entered into a Real Estate Sales Contract (the "Sales Contract") with Colonial
Realty Limited Partnership, a Delaware limited partnership (the "Purchaser" or
"Operating Partnership") and an indirect subsidiary of Colonial Properties
Trust, an Alabama real estate investment trust ("Colonial"), to sell Riverchase
Apartments -- Phase I, consisting of 248 apartment units, related improvements
and the land on which the apartment units and improvements are located in Temple
Terrace, Florida (the "Project"), to the Purchaser at a price of $_______ in
cash (the "Purchase Price"). The consummation of the sale of the Project
pursuant to the Sales Contract is subject to and conditioned upon, among other
things, the approval by the limited partners of the Partnership (the "Limited
Partners") holding a majority in interest of the outstanding units of limited
partnership of the Partnership (the "Units") of (i) an amendment to the
Partnership's Amended and Restated Certificate and Agreement of Limited
Partnership (the "Partnership Agreement") and (ii) the sale of the Project.
John H. McClintock, Jr., James H. Pugh, Jr., Battery Park Capital Corp.,
Thomas H. Lowder, James K. Lowder, and Robert E. Lowder, collectively, the
general partners of the partnership (the "General Partners"), at the request of
the Purchaser, are soliciting the consent of the Limited Partners to:
1. Approve an amendment of the Partnership Agreement (the "Amendment") to
waive the restriction against selling the Project to an affiliate of any of the
General Partners pursuant to the Sales Contract (See, "The Amendment Proposal");
and
2. Approve the sale of the Project to the Purchaser pursuant to the Sales
Contract (the "Sale") (See, "The Sale Proposal").
The consummation of the Sale will constitute the sale of substantially all
of the assets of the Partnership. The Partnership Agreement provides that the
Partnership shall be dissolved upon a sale of all interests in the Project and
any other assets of the Partnership. Accordingly, the consummation of the Sale
will result in the dissolution of the Partnership and the distribution of
proceeds in liquidation as provided in the Partnership Agreement. The General
Partners estimate that liquidation will result in a distribution to the Limited
Partners of approximately $_____ per Unit (approximately $_____ per Unit
representing a return of capital and approximately $_____ per Unit representing
income [and gain]).
The close of business on __________ __, 1997 has been set by the General
Partners as the record date for determining the holders of the Units entitled to
vote upon the Amendment Proposal and the Sale Proposal (the "Proposals"). The
time period for approval of the Proposals will expire at [5:00 p.m.] on
[weekday], [month] __, 1997. A Consent Solicitation Statement and Consent Form
------- -----
are enclosed with this notice. The Consent Solicitation Statement contains a
detailed description of the Proposals.
<PAGE>
Certain of the General Partners are affiliates of the Purchaser and
Colonial and, therefore, may be deemed to have substantial conflicts of interest
with respect to the Proposals. Accordingly, the General Partners make no
recommendation to any Limited Partner as to whether to vote for or against the
Proposals. Each Limited Partner must make his or her own decision whether or
not to vote for or against the Proposals.
The General Partners believe that the proposed Sale is fair to the Limited
Partners. The General Partners have obtained an opinion of Robert A. Stanger &
Co., Inc., an independent research, investment banking and consulting services
firm, that, subject to the assumptions, limitations and qualifications set forth
therein, the Purchase Price is fair from a financial point of view to the
Limited Partners.
Approval of the Proposals will require the affirmative consent of Limited
Partners holding a majority of the issued and outstanding Units. Your vote on
these matters is very important. Abstentions or failure to return the enclosed
Consent Form will have the same effect as voting AGAINST the Amendment and the
Sale. Therefore, you are requested to complete, sign and return the Consent
Form in the enclosed pre-paid envelope at your earliest convenience and, in any
event, by [5:00 p.m.], New York City time, on [weekday], [month] [date], 1997 to
__________________. Consent Forms that are executed but contain no voting
instructions will be deemed to have consented to each of the Proposals.
John H. McClintock, Jr.
James H. Pugh, Jr.
Battery Park Capital Corp.
Thomas H. Lowder
James K. Lowder
Robert E. Lowder
General Partners
Date: __________ __, 1997
Birmingham, Alabama
ii
<PAGE>
RIVERCHASE INVESTORS I, LTD.
CONSENT SOLICITATION STATEMENT
This Consent Solicitation Statement is being furnished to all holders of
units of limited partnership interest in Riverchase Investors I, Ltd., a Florida
limited partnership (the "Partnership"), in connection with the solicitation by
the general partners of the Partnership of consents of limited partners of the
Partnership to (i) an amendment to the Partnership's Amended and Restated
Certificate and Agreement of Limited Partnership and (ii) the sale of the
Riverchase Apartments--Phase I, consisting of 248 apartment units and related
improvements located in Temple Terrace, Florida, and the land on which such
apartment units and improvements are located, and the resulting distribution of
the net proceeds of such sale in liquidation of the Partnership.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF
SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
The date of this Consent Solicitation Statement is November __, 1997.
<PAGE>
SUMMARY
The following is a summary of certain information contained in this Consent
Solicitation Statement regarding the proposed sale of Riverchase Apartments--
Phase I, consisting of 248 apartment units and related improvements located in
Temple Terrace, Florida, and the land on which such apartment units and
improvements are located (the "Project"), owned by Riverchase Investors I, Ltd.,
a Florida limited partnership (the "Partnership"), to Colonial Realty Limited
Partnership, a Delaware limited partnership (the "Purchaser" or "Operating
Partnership") and an indirect subsidiary of Colonial Properties Trust, an
Alabama real estate investment trust ("Colonial"), and the resulting dissolution
and liquidation of the Partnership. This Summary is qualified in its entirety by
the more detailed information that follows it, and limited partners are urged to
review carefully the entire Consent Solicitation Statement, including the
Appendices, before voting.
Persons Making This Consent Solicitation Statement is being furnished to
Solicitation the limited partners of the Partnership (the "Limited
Partners") by John H. McClintock, Jr. ("McClintock"),
James H. Pugh, Jr. ("Pugh"), Battery Park Capital Corp.,
a New York corporation ("Battery Park"), Thomas H.
Lowder, James K. Lowder, and Robert E. Lowder (the
"Lowders"), each of which is a general partner of the
Partnership (collectively, the "General Partners"). The
Limited Partners and the General Partners are referred to
collectively as the "Partners."
The Partnership The Partnership was formed in 1985 for the purpose of
constructing, owning and operating the Project. The
Partnership sold 11,052 Units in 1985 in a registered
public offering for $1,000 per Unit. The objective of the
Partnership was to operate the Project to produce revenue
from the rental of apartment units.
The Project and the The Project was completed in 1987 and was the first phase
Complex of a three phase development of the Riverchase garden
apartment complex (the "Complex"). The second and third
phases of the Complex are owned by the Purchaser. The
Complex is operated as a single integrated property by
the Purchaser.
Summary of Sale The Limited Partners are being asked to approve a
transaction involving the sale of the Project to the
Purchaser, an affiliate of certain of the General
Partners, in exchange for $_______ in cash (the "Purchase
Price") pursuant to a Real Estate Sales Contract dated
September 2, 1997, between the Partnership and the
Purchaser (the "Sales Contract").
The Purchaser The Purchaser is the "operating partnership" of Colonial.
Colonial, through the Operating Partnership, is involved
in the ownership of multifamily, retail and office
properties
<PAGE>
located in Alabama, Florida, Georgia and South Carolina,
development of new properties, acquisition of existing
properties and build-to-suit development.
Purchase Price The Purchase Price under the Sales Contract is $______
(approximately _____ per apartment unit), all of which
will be paid in cash, as described further below,
resulting in an estimated distribution of approximately
$_____ per unit of limited partnership interest in the
Partnership (the "Units") to the Limited Partners. The
Purchaser will obtain the funds for payment of the
Purchase Price from its existing line of credit.
Matters to Be Voted The General Partners are soliciting the approval of:
Upon
(1) an amendment to the Partnership's Amended and
Restated Certificate and Agreement of Limited Partnership
(the "Partnership Agreement") necessary to permit the
consummation of the Sale to the Purchaser; and
(2) the sale of the Project, pursuant to the Sales
Contract.
Vote Required Approval of the proposed amendment to the Partnership
Agreement (the "Amendment") and the proposed sale of the
Project (the "Sale," and together with the Amendment, the
"Proposals") each will require the approval of Limited
Partners holding a majority in interest of the issued and
outstanding Units on the record date. As of the record
date, there were outstanding 11,052 Units held of record
by [1,225] holders.
Thomas Lowder, one of the General Partners of the
Partnership, owns 33 Units, which he intends to vote in
for approval of the Proposals.
The Sales Contract The Sales Contract establishes the terms of the proposed
Sale, the conditions to closing, and the rights and
obligations of the Partnership and the Operating
Partnership. As is customary in commercial real estate
transactions, the Sales Contract contains certain
representations, warranties and indemnities of the
Partnership. A copy of the Sales Contract is set forth as
Appendix A.
2
<PAGE>
Determination of The Purchase Price of $_______ ($_____ per
Purchase Price apartment unit) was established by negotiations
between the Purchaser and Thomas Lowder on behalf
of the General Partners. In April 1997, each of the
General Partners, other than Thomas Lowder (who
abstained due to the potential conflict of interest
between his position in the Partnership and the
Purchaser), agreed to accept the Purchase Price.
In establishing the Purchase Price, the Purchaser
considered the present value of net operating
income that the Purchaser believes the Project
could generate in the future. In addition, the
Purchaser considered the most recent annual
appraisal of the Project prepared by the Project's
Appraiser (as defined below) as well as the effect
Florida transfer taxes would have on the value the
Partnership could be expected to receive upon the
consummation of a sale of the Project.
The General Partners believe that the proposed Sale
is fair to the Limited Partners. Furthermore, the
General Partners have received an opinion from
Robert A. Stanger & Co., Inc. ("Stanger") to the
effect that, subject to the assumptions,
limitations and qualifications set forth therein,
the Purchase Price is fair to the Limited Partners
from a financial point of view. A copy of the
Stanger opinion is set forth as Appendix B.
Special Considerations Limited Partners should review carefully the
and Conflicts of Interest information set forth under the caption "Special
Factors" below in evaluating the Proposals. As
described therein under the sub-caption
"--Background of the Sale," the General Partners,
together with the Operating Partnership, have
participated in efforts to sell the Complex,
including the Project, for approximately three
years, but received no bids deemed acceptable.
In addition to being general partners of the
Partnership, the Lowders are equity owners in the
Operating Partnership and Colonial. Thomas Lowder
and James Lowder are trustees of Colonial, and
Thomas Lowder is the Chief Executive Officer of
Colonial. Accordingly, the Lowders may be deemed
to have a conflict of interest with regard to the
Proposals because of the desire of the Purchaser
to purchase the Project at the lowest possible
price and the desire of the Limited Partners to
sell the Project for the highest possible price.
In connection with efforts by Bear Stearns Real
Estate
3
<PAGE>
Group, Inc. ("Bear Stearns") to arrange a sale of
the Complex, Colonial has agreed to pay Bear
Stearns a marketing fee of $100,000 for its efforts
with regard to arrange a sale of Phase II and Phase
III of the Complex (both of which are owned by the
Purchaser). This fee will be paid by Colonial and
is unrelated to the proposed Sale.
Federal Income Tax The Sale to the Purchaser for cash will be a
Considerations taxable transaction for the Partnership and the
Limited Partners. The Partnership will recognize
gain on the sale to the extent that the cash
proceeds received exceed the Partnership's adjusted
basis in the Project. Such gain will be allocated
to the Limited Partners in accordance with the
applicable provisions of the Partnership Agreement.
If a Limited Partner has any unused suspended
"passive" losses from the Partnership or other
passive investments, such losses may be used to the
extent thereof to offset any gain recognized. EACH
LIMITED PARTNER SHOULD CONSULT ITS OWN TAX ADVISOR
WITH RESPECT TO THE TAX CONSEQUENCES OF A SALE OF
THE PROJECT TO THE PURCHASER FOR CASH AND THE
CONSEQUENT LIQUIDATION OF THE PARTNERSHIP.
For a detailed discussion of the procedures and requirements for voting,
see "Voting Rights and Information."
CERTAIN OF THE GENERAL PARTNERS ARE AFFILIATES OF COLONIAL AND THE
PURCHASER AND, THEREFORE, MAY BE DEEMED TO HAVE SUBSTANTIAL CONFLICTS OF
INTEREST WITH RESPECT TO THE AMENDMENT AND THE SALE. ACCORDINGLY, THE GENERAL
PARTNERS MAKE NO RECOMMENDATION AS TO WHETHER LIMITED PARTNERS SHOULD VOTE FOR
OR AGAINST THE PROPOSALS. EACH LIMITED PARTNER MUST MAKE HIS OR HER OWN
DECISION WHETHER OR NOT TO VOTE FOR OR AGAINST THE PROPOSALS.
4
<PAGE>
SPECIAL FACTORS
Background of the Sale
The Partnership. The Partnership was formed in 1985 for the purpose of
constructing, owning and operating Project. The Partnership sold 11,052 Units in
1985 in a registered public offering for $1,000 per Unit. The objective of the
Partnership was to develop and operate the Project to produce revenue from the
rental of apartment units. The Project constitutes substantially all of the
Partnership's assets.
The Project and the Complex. The Project consists of 31 buildings
containing 248 apartment units and the approximately 30 acres of land upon which
such apartment units are located in the Riverchase garden apartment complex
located in Temple Terrace, Hillsborough County, Florida. Temple Terrace is a
suburban community located approximately seven miles northeast of downtown
Tampa, Florida. The project was completed in 1987 and was the first phase of a
three phase development of the Complex.
The Complex consists of a total of 79 buildings containing a total of 776
apartment units situated on approximately 66 acres of land. The Project (Phase I
of the Complex) is owned by the Partnership. Phase II and Phase III of the
Complex are owned by the Purchaser. The Complex is operated as a single
integrated property by the Purchaser.
The Purchaser. The Purchaser is the "operating partnership" of Colonial.
Colonial, indirectly through a wholly owned subsidiary, is the sole general
partner of, and as of September 30, 1997, holds approximately 69.6% of the
interests in the Purchaser. The Purchaser's executive offices are located at
2101 Sixth Avenue North, Suite 750, Birmingham, Alabama 35203 and its telephone
number is (205) 250-8700. The Purchaser was formed in 1993 as a Delaware limited
partnership.
Colonial. Colonial, through the Operating Partnership, is one of the
largest developers, owners and operators of multifamily, retail and office
properties in the southeastern United States. Colonial's common shares of
beneficial interest (the "Common Shares") are traded on the New York Stock
Exchange under the symbol "CLP." Colonial, through its various subsidiaries
including the Operating Partnership, is a fully integrated real estate company
whose activities include, as of September 30, 1997, ownership of a diversified
portfolio of 83 properties located in Alabama, Florida, Georgia, Mississippi and
South Carolina, development of new properties, acquisition of existing
properties and build to suit development. Colonial is a self-administered equity
real estate investment trust ("REIT") whose real estate holdings presently
include more than 15,000 apartment units, 7.1 million square feet of retail
shopping space, and approximately 1.9 million square feet of leasable office
space. The principal executive offices of Colonial and the Operating Partnership
are located at 2101 Sixth Avenue North, Suite 750, Birmingham, Alabama 35202-
1687, and its telephone number is (205) 250-8700.
Previous Efforts to Sell the Project. The General Partners have engaged in
several attempts to sell the Project as part of a sale of the Complex.
Beginning in the second quarter of 1994, the Operating Partnership, on
behalf of the General Partners, solicited bids to purchase the Complex, which at
that time included
5
<PAGE>
only the Project and Phase II of the Complex. This effort resulted in two bids
during April 1995: one for $17,894,736 for the Complex ($35,729 per apartment
unit or an implied price of approximately $8.86 million for the Project) and one
for $17,800,000 for the Complex (allocating $8.65 million, or approximately
$34,879 per apartment unit, for the Project and $9.15 million, or approximately
$36,309 per apartment unit, for Phase II). Thomas Lowder, as the representative
of the General Partners, reviewed the bids and determined that neither bid was
acceptable due to the purchase price that was proposed and/or the closing
conditions that would have been imposed.
Beginning in May 1995, the Operating Partnership, on behalf of itself and
the General Partners, listed the Complex, including the Project, for sale
through Perlman Baird (a real estate firm) as broker. Perlman Baird received
only one written offer, which related only to the Project and Phase II of the
Complex. This written offer proposed a purchase price of $15,200,000 ($30,400
per apartment unit or an implied price of approximately $7.54 million for the
Project). Thomas Lowder, as the representative of the General Partners, reviewed
the bids and determined that neither bid was acceptable due to the purchase
price that was proposed and/or the closing conditions that would have been
imposed.
In March 1996, the General Partners, on behalf of the Partnership, retained
Bear Stearns, an affiliate of Battery Park, as its exclusive sales agent to
attempt to find a purchaser for the Project. At the same time the Operating
Partnership retained Bear Stearns as its sales agent to attempt to find a
purchaser for each of Phase II and Phase III of the Complex. Bear Stearns
prepared solicitation materials that were distributed to approximately 40
potential buyers that Bear Stearns believed to be qualified to purchase the
Complex. These solicitation materials set an asking price for the Complex of
$18.3 million for Phases I and II ($36,600 per apartment unit) plus the greater
of (i) $15.2 million or (ii) an amount equal to the net operating income
produced by Phase III during the month prior to closing multiplied by 12 with
the result being divided by 9.00%, for Phase III. Bear Stearns received five
written offers to purchase the Complex, one of which was subsequently withdrawn.
These offers provided for purchase prices for the Complex of $30.9 million
($31,960 per apartment unit in the Project and Phase II and $54,130 per
apartment unit in Phase III (or an implied price of approximately $7.93 million
for the Project)), $28.9 million ($32,600 per apartment unit in the Project and
Phase II and $45,290 per apartment unit in Phase III (or an implied price of
approximately $8.08 million for the Project)), $26 million ($33,505 per
apartment unit or an implied price of approximately $8.3 million for the
Project), and $25.7 million ($33,183 per apartment unit or an implied price of
approximately $8.23 million for the Project), respectively. Thomas Lowder, as
the representative of the General Partners, reviewed the various bids and
determined that due to the purchase price that was proposed and/or the closing
conditions that would have been imposed, such bids were not acceptable.
Purpose of the Sale
The General Partners anticipated at the time the Units were offered and
sold that, as with most real estate ventures, the Partnership would not continue
indefinitely, but would sell the Project (or the Complex) and be liquidated at
such time as a sale were determined to be in the best interests of the Limited
Partners. Consistent with the original expectation, the General Partners now
seek to sell the Project.
6
<PAGE>
The purpose of the Sale is to allow the Partnership to liquidate its
investment in the Project at a price which the General Partners believe is fair
to the Partnership and the Limited Partners.
The General Partners believe that the following are the principal potential
benefits and potential detriments to the Limited Partners of consummation of the
Sale.
Opportunity to Liquidate Investment
The Sale will provide the Limited Partners with an opportunity to liquidate
their investment in the Partnership. Upon consummation of the Sale, the net
proceeds from the Sale will be distributed in accordance with the terms of the
Partnership Agreement. Because there is no public market for them, the Units are
not readily convertible to cash. In the absence of a sale of the Project, the
Units are a relatively illiquid investment.
Opportunity to Obtain Value for the Project
The Sale provides the Partnership with an opportunity to sell the Project
for a price that the General Partners believe to be fair to the Partnership and
the Limited Partners. Furthermore, an independent third-party (Stanger) has
rendered an opinion that the Purchase Price is fair to the Limited Partners from
a financial point of view. In addition, under the terms of the Sales Contract
the entire net proceeds of the Sale will be released to the Partnership upon
consummation of the Sale, without retention of a portion of the proceeds in an
escrow account pending satisfaction of post-closing conditions.
Opportunity to Sell the Project without the Payment of Real Estate Sales
Commissions
The Sale provides the Partnership with an opportunity to sell the Project
without incurring the obligation to pay any real estate sales commissions. Such
commissions generally reduce the amount of proceeds to a seller of real estate
by approximately 3.5%.
Elimination of Risk of Real Estate Ownership
Ownership of Units is subject to the risks inherent in the ownership of
real estate, which include changes in general or local economic conditions,
changes in the supply of or demand for competing property in the area of the
Project, changes in interest rates, the need to maintain the Project and to
provide for substantial costs of major repairs, replacements, improvements, and
other capital expenditures, and the inability to collect rent from tenants due
to bankruptcy or insolvency of tenants or otherwise which may render difficult
the sale of the Project. The Sale would enable the Limited Partners to
terminate their investment in the Partnership and thereby eliminate these risks.
Detriments
The consummation of the Sale would result in the dissolution of the
Partnership and Limited Partners would not longer be equity owners of the
Partnership. As a result, Limited Partners would not participate in future
appreciation, if any, of the value of the Project.
7
<PAGE>
No unaffiliated representative was retained to act on behalf of the Limited
Partners for the purpose of negotiating the terms of the proposed sale of the
Project to the Purchaser. If an unaffiliated representative had been retained,
the terms of the Sales Contract may have been different, and possibly more
favorable to the Limited Partners. Moreover, the real estate market is
inherently unpredictable, and there can be no assurance that the real estate
and/or financing markets in general will not improve following the Sale,
creating an environment for a more favorable sale of the Project in the future.
Alternatives Considered
In considering whether or not to enter into the Sales Contract, the General
Partners considered several alternatives.
As noted above, beginning in the third quarter of 1994, the General
Partners have engaged in several attempts to sell the Project as part of a sale
of the Complex to an unaffiliated third party on an all cash basis. The General
Partners did not believe that any of the bids received as part of this process
were acceptable.
The General Partners also considered continuing to hold the Project for a
longer period of time in the hope of achieving capital appreciation. In
rejecting this alternative, the General Partners considered the age of the
Project and the need for additional capital expenditures to refurnish the
Project in order to compete with newer Class A apartment facilities and
concluded that the Limited Partners would be more interested in an opportunity
to liquidate their investment in Units at this time, and the General Partners
concluded that there was no assurance that the value of the Project would
increase substantially in the near future. The General Partners believe
generally that property values are currently high due to the availability of
capital for real estate investment and competition for available properties by a
large number of well capitalized real estate companies, including REITs. In any
event, the Limited Partners have the opportunity to determine by vote whether to
approve the Sale, in which event the Project will be sold, or to disapprove the
Sale, in which event the Project will continue to be owned and operated by the
Partnership.
Determination of the Purchase Price
The Purchase Price of $_____ ($_____ per apartment unit), as well as the
other terms and conditions of the Sales Contract, was established by
negotiations between the Purchaser, which manages the Project, and Thomas
Lowder, as a General Partner of the Partnership. Due to Thomas Lowder's
affiliation with both the Partnership and the Purchaser, the determination of
Purchase Price may not be deemed to be the result of arm's length negotiations
between the Purchaser and the Partnership. In April 1997, each of the General
Partners, other than Thomas Lowder (who abstained due to the potential conflict
of interest between his position in the Partnership and the Purchaser),
including the General Partners who are not affiliated with the Purchaser
(McClintock, Pugh and Battery Park (the "Unaffiliated General Partners")),
agreed to accept the Purchase Price. Additionally, the Unaffiliated General
Partners have reviewed and approved the terms of the Sales Contract. No
unaffiliated representative has been retained to act solely on behalf of the
Limited Partners to negotiate or evaluate the Sales Contract. If an
unaffiliated
8
<PAGE>
person had been engaged, the terms and conditions of the Sales Contract might
have been different, and possibly more favorable to the Partnership.
The Purchase Price was established at an amount that would equal the
Purchaser's projected present value of future net operating income that the
Purchaser believes the Project may generate less capital improvements necessary
for the future net operating income to be realized. In making this calculation,
the Purchaser made certain projections of the financial results of the Project
for the fiscal year ending December 31, 1998 based in part upon the year to date
results of the Project as of June 30, 1997. The Purchaser then applied a
capitalization rate it believed to be appropriate for an investment in multi-
family properties of the age and quality to the projected net operating income
for 1998 to determine the value of the total investment the Purchaser proposes
to make in the Project. The Purchaser then deducted the costs associated with
capital improvements that it would fund and it believed would be necessary in
order for its projections to be realized, to arrive at the Purchase Price. The
following table sets forth the projections made by the Purchaser in determining
the value of the total investment the Purchaser proposes to make in the Project.
Please note that these projections were prepared by the Purchaser.
<TABLE>
<CAPTION>
Budget to June 1997 Purchaser's Projection
(annualized) for 1998 (annualized)
<S> <C> <C>
Gross Potential Rent $1,667,102 $1,702,253
Other Income 69,714 64,584
Rent Concessions (73,562) (34,211)
Vacancy (231,238) (136,180)
---------- ----------
Total Revenue $1,432,016 $1,596,446
Management Fees $71,236 $63,858
Insurance 25,994 24,840
Operating Expenses 461,478 491,880
Taxes 171,432 171,432
---------- ----------
Total Expenses $730,140 $752,010
Net Operating Income $701,876 $844,436
Projected Net Operating Income $844,436
divided by capitalization rate /____%
equals Purchaser's estimated Project value
--------
Less: Capital Improvements to be funded by Purchaser $300,000
Document stamps 59,360
Engineering, Legal, Audit, Miscellaneous 15,000
--------
Purchase Price $
========
</TABLE>
9
<PAGE>
Neither the Partnership nor the General Partners participated in the
preparation of this projected data. The foregoing projections were not prepared
with a view to public disclosure or compliance with the published guidelines of
the Securities and Exchange Commission or the guidelines established by the
American Institute of Certified Public Accountants regarding projections and
forecasts and are included in this Consent Solicitation Statement only for
informational purposes. The Partnership's independent auditors have not
examined, compiled or applied any procedures with respect to this data and
express no opinion or any kind of assurance thereon. While presented with
numerical specificity, this projected data is based upon a variety of
assumptions relating to the business of the Partnership which may not be
realized and is subject to significant uncertainties and contingencies, many of
which are beyond the control of the Partnership and, therefore, this projected
data is inherently imprecise, and there can be no assurance that projected
financial results or any valuation assumed therein will be realized. It is
expected that there will be differences between actual and estimated or
projected information set forth above and actual results may vary materially
from those shown.
In determining the value it was willing to pay for the Project, the
Purchaser also considered the most recent annual appraisal of the Project
prepared by Consortium Appraisal Services, Inc. (the "Appraiser"), an
independent MAI real estate appraisal firm with substantial experience and
expertise in real estate appraising, particularly the value determined pursuant
to the Income Capitalization Approach (as described below). As set forth in the
Appraisal Report prepared by the Appraiser, the date of valuation for purposes
of the appraisal was January 17, 1997. The Appraiser based the appraisal on,
among other factors, a valuation process which included three generally
recognized approaches to the valuation of property: (i) a Cost Approach, (ii) a
Direct Sales Comparison Approach and (iii) an Income Capitalization Approach.
In preparing the Appraisal Report, the Appraiser made a physical inspection of
the Project and the surrounding area, reviewed the improvement plans and
existing improvements, researched the market conditions and the history of the
Project and considered such other factors as it deemed reasonable. The
Appraisal Report, which is available for inspection by Limited Partners at the
offices of the general partner of the Operating Partnership, estimated the fair
market value of the Project based on the Income Capitalization Approach to be
$8,681,000 or approximately $35,004 per Unit.
In considering the valuation of the Project indicated by the Appraisal
Report, the Purchaser also considered the effect Florida transfer taxes would
have on the value the Partnership could be expected to receive upon the
consummation of a sale of the Project. The Purchaser estimates that these
transaction costs would reduce the value received for the Project by
approximately $59,360 (0.7%). The Purchaser will pay the Florida transfer taxes
in connection with the Sale and the Purchase Price will not be reduced by the
amount of such costs.
Neither Stanger nor the Appraiser participated in establishing any terms of
the Sales Contract. Stanger was retained solely to render its opinion as to
whether the Purchase Price to be received by the Partnership pursuant to the
Sales Contract, is fair, from a financial point of view, to the Limited
Partners. The Appraiser was retained solely to estimate the market value of the
fee simple interest in the Project, including chattels, under market conditions
prevailing on January 17, 1997.
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The Purchaser will obtain the funds for payment of the Purchase Price from
its existing line of credit.
Position of the General Partners; Fairness of the Proposed Sale
Since certain of the General Partners are affiliates of the Purchaser and
Colonial, these General Partners may be deemed to have substantial conflicts of
interest with respect to the Sale. See "Special Factors--Interests of Certain
Persons; Potential Conflicts of Interest." Accordingly, the General Partners
make no recommendation to any Limited Partner as to whether to vote for or
against the Proposals. EACH LIMITED PARTNER MUST MAKE HIS OR HER OWN DECISION
WHETHER TO VOTE FOR OR AGAINST THE PROPOSALS BASED UPON A NUMBER OF FACTORS,
INCLUDING THE LIMITED PARTNER'S FINANCIAL POSITION, NEED OR DESIRE FOR
LIQUIDITY, OTHER FINANCIAL OPPORTUNITIES, WILLINGNESS AND ABILITY TO BEAR THE
ECONOMIC RISKS OF THE INVESTMENT AND TAX POSITION.
The General Partners believe that the proposed Sale is fair to the Limited
Partners. The General Partners base this belief on the following factors:
(i) the determination by the General Partners and the Operating
Partnership in the second quarter of 1994 to attempt to sell the Project as part
of a sale of the Complex;
(ii) the unsuccessful attempts by the General Partners and the Operating
Partnership to find a buyer for the Complex, including the Project, as described
above in "--Alternatives Considered";
(iii) the most recent annual Appraisal Report, which states that the fair
market value of the Project based upon the Income Capitalization Approach is
$8,681,000, as of January 17, 1997;
(iv) information with respect to the financial condition, results of
operations and prospects of the Project, as well as the current conditions and
risks involved with its business;
(v) the general illiquidity of the Units, and the fact that a sale of
the Project would enable the Limited Partners to liquidate their investment by
converting the value of the Project to cash;
(vi) the written opinion from Stanger described below in "Opinion of
Stanger" to the effect that the Purchase Price is fair to the Limited Partners
from a financial point of view, as well as the judgment of the General Partners
that the review performed by Stanger in arriving at its opinion was reasonable
and analytically sound;
(vii) the fact that, based upon the General Partners' experience in the
real estate industry, the General Partners believe the capitalization rate
applied to the projected net operating income of the Project by the Purchaser is
consistent with prevailing capitalization rates for other multi-family property
acquisitions;
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(viii) the determination of the General Partners that the Purchase Price
exceeds the going concern value of the Project;
(ix) the General Partners' belief that the Limited Partners anticipated
that the Project would be sold and the Partnership liquidated before this time,
and that the Sale would accomplish those objectives relatively quickly; and
(x) the fact that the Sales Contract would avoid the payment by the
Partnership of sales commissions or Florida transfer taxes in connection with
the sale of the Project.
The Unaffiliated General Partners considered each of the factors listed
above in light of the knowledge of the business and operations of the
Partnership and their business judgment. In reviewing the above factors,
Colonial and the Operating Partnership believe that the factors described were
favorable to the determination regarding the fairness of the Sale. No other
factors were considered by the Unaffiliated General Partners.
In view of the wide variety of factors considered in connection with the
evaluation of the Sale, the Unaffiliated General Partners did not find it
practical to, nor did they, quantify or otherwise attempt to assign relative
weights to the specific factors considered in reaching their belief that the
Sale is fair to the Limited Partners.
Opinion of Stanger
On July 31, 1997, the Partnership engaged Stanger, an independent financial
advisory firm with substantial real estate and partnership experience, to
deliver a written summary of its determination as to the fairness to the Limited
Partners, from a financial point of view, of the Purchase Price to be paid for
the Project in the Sale. The full text of the Stanger Fairness Opinion, which
contains a description of the assumptions made, matters considered and
limitations on the review and analysis, is attached as Appendix C to this
Consent Solicitation Statement and should be read in its entirety. Certain of
the material assumptions and limitations to the Stanger Fairness Opinion are
described below. The summary set forth below does not purport to be a complete
description of the analyses used by Stanger in rendering the Stanger Fairness
Opinion. Arriving at a fairness opinion is a complex analytical process not
necessarily susceptible to partial analysis or amenable to summary description.
Except for certain assumptions described more fully below which the
Partnership advised Stanger that it would be reasonable to make, the Partnership
imposed no conditions or limitations on the scope of Stanger's investigation or
the methods and procedures to be followed in rendering the Stanger Fairness
Opinion. The Partnership has agreed to indemnify Stanger against certain
liabilities arising out of Stanger's engagement to prepare and deliver the
Stanger Fairness Opinion.
Experience of Stanger. Since its founding in 1978, Stanger has provided
information, research, appraisal, investment banking and consulting services to
clients throughout the United States, including major New York Stock Exchange
firms and insurance companies and over seventy companies engaged in the
management and operation of partnerships and real estate investment trusts. The
investment banking activities of Stanger include financial advisory and fairness
opinion services, asset and
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securities valuations, industry and company research and analysis, litigation
support and expert witness services, and due diligence investigations in
connection with both publicly registered and privately placed securities
transactions.
Stanger, as part of its investment banking business, is regularly engaged
in the valuation of businesses and their securities in connection with mergers,
acquisitions, reorganizations and for estate, tax, corporate and other purposes.
Stanger's valuation practice principally involves partnerships, partnership
securities and the assets typically held through partnerships, such as real
estate, oil and gas reserves, cable television systems and equipment leasing
assets. The Partnership selected Stanger to provide fairness opinion services
because of its experience and reputation in connection with real estate
partnerships, real estate assets, and mergers and acquisitions.
Summary of Materials Considered. In the course of Stanger's analysis to
render its opinion, Stanger: reviewed a draft of the Consent Solicitation
Statement related to the Sale in substantially the form which will be filed with
the Securities and Exchange Commission ("SEC"); reviewed a draft of the Sales
Contract between the Partnership and the Purchaser, in substantially the form
which will be used to consummate the transaction; reviewed the Partnership's
annual reports filed with the SEC on Form 10-K for the three fiscal years ending
December 31, 1994, 1995 and 1996 and the quarterly reports filed with the SEC on
Form 10-Q for the three-month periods ending March 31, and June 30, 1997, which
reports the Partnership's management has indicated to be the most current
publicly available financial statements; reviewed summary historical operating
statements for the Project for 1994, 1995, 1996 and year-to-date through July
31, 1997, and operating budgets for 1997; performed a site inspection of the
Project and reviewed local real estate market conditions; reviewed information
regarding purchases and sales of apartment properties in the general market area
of the Project and other information relating to acquisition criteria for
apartment properties; reviewed the most recent annual appraisal of the Project,
dated January 17, 1997; discussed with management of the Partnership conditions
in the local market for apartment properties, conditions in the market for
sales/acquisitions of properties similar to that owned by the Partnership,
current and projected operations and performance of the Project, the physical
condition of the Project, and the financial condition of the Partnership;
reviewed purchases of multi-family properties performed by the Purchaser or its
affiliates during the 18 months ended August 31, 1997; interviewed
representatives of Bear Stearns regarding the process utilized in soliciting,
receiving and evaluating prior bids to purchase the Complex; reviewed the
offering materials provided to prospective purchasers of the Complex and a
summary of the bids which were received as a result of the bidding process; and
conducted other studies, analyses, inquires and investigations as Stanger deemed
appropriate.
Summary of Reviews. The following is a summary of certain reviews conducted
by Stanger in connection with and in support of its fairness opinion. The
summary of the opinion and reviews of Stanger set forth in this Consent
Solicitation Statement is qualified in its entirety by reference to the full
text of such opinion.
In preparing its opinion, Stanger performed a site inspection of the
Project on August 14, 1997. In the course of this site visit, the physical
facilities of the Project were inspected, current rental and occupancy
information for the Project were obtained, current
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<PAGE>
local market conditions were reviewed, a sample of primary competing properties
were identified and visited, and local property management personnel were
interviewed concerning the Project and local market conditions. In conducting
the reviews, Stanger also reviewed and relied upon information provided by the
Partnership and its General Partners, including, but not limited to: financial
schedules of historical and current lease rates, occupancies, income, expenses,
reserve requirements, cash flow and related financial information; property
descriptive information, including unit mix and rentable square footage; and
information relating to any required capital expenditures and deferred
maintenance.
Stanger also reviewed historical operating statements for the Project for
1994, 1995, 1996 and year-to-date through July 31, 1997, and operating forecasts
for 1997, and discussed with management the current and anticipated operating
results of the Project.
In addition, Stanger interviewed key management personnel of the
Partnership. Such interviews included discussions of competitive conditions in
the local market, area economic and development trends affecting the Project,
historical and budgeted operating revenues and expenses and occupancies and the
physical condition of the Project (including any deferred maintenance,
renovations, reconfigurations and other factors affecting the physical condition
of the improvements), and projected capital expenditures and building
improvements.
Stanger also reviewed the acquisition criteria used by owners, operators
and investors in the type of real estate owned by the Partnership, utilizing
published information and information derived from interviews conducted by
Stanger with various sources in the local property market, such as real estate
brokers, appraisers, and apartment property investors. In addition, Stanger
interviewed various sources in local markets to identify recent sales of similar
properties. Sources for such information included local appraisers and real
estate brokers. Stanger also reviewed transactions involving multi-family
properties performed by the Purchaser or its affiliates during the 18 months
ended August 31, 1997.
Stanger also considered that the Complex, which includes the Project
together with two adjacent projects owned by affiliates of the General Partners,
was offered for sale pursuant to a competitive bidding process. The prices
offered as a result of the bidding process were reviewed on a per apartment unit
and implied capitalization rate basis.
Conclusions. Stanger concluded, based upon the foregoing and its analysis
and the assumptions, qualifications, and limitations stated below, and as of the
date of the Stanger Fairness Opinion, that the Purchase Price to be paid for the
Project in the Sale is fair to the Limited Partners from a financial point of
view.
Assumptions. In rendering the Stanger Fairness Opinion, Stanger relied,
without independent verification, on the accuracy and completeness of all
financial and other information contained in the Consent Solicitation Statement
or that was otherwise made available, furnished or otherwise communicated to
Stanger by the Partnership, the General Partners of the Partnership, or the
management of the Project, Bear Stearns, or third party sources. Stanger was
not engaged to and has not performed an independent
14
<PAGE>
appraisal, engineering study or environmental study of the assets and
liabilities of the Partnership. Stanger relied upon the representations of the
General Partners of the Partnership and management of the Project concerning any
environmental liabilities, deferred maintenance and estimated capital
expenditure requirements. Stanger also relied upon the assurance of the
Partnership, the General Partners of the Partnership, and the management of the
Project that any financial statements, projections, forecasts, or capital
expenditure estimates and other information provided to Stanger were reasonably
prepared and adjusted on bases consistent with actual historical experience and
reflect the best currently available estimates and good faith judgments; that no
material changes have occurred in the value of the Project or other information
reviewed between the date of such information provided and the date of the
Opinion, and that the Partnership, the General Partners of the Partnership, and
the management of the Project are not aware of any information or facts that
would cause the information supplied to Stanger to be incomplete or misleading
in any material respect.
Limitations and Qualifications of Fairness Opinion. Stanger was not asked
to and therefore did not: (i) appraise the Project; (ii) select the method of
determining the Purchase Price offered in the Sale; (iii) make any
recommendations to the partners of the Partnership with respect to whether to
approve or reject the Sale; or (iv) express any opinion as to the business
decision to effect the Sale, alternatives to the Sale, or tax factors resulting
from the Sale. The Stanger Fairness Opinion is based on business, economic,
real estate and securities markets, and other conditions as they existed and
could be evaluated as of the date of Stanger's analysis, and does not reflect
any changes in those conditions that may have occurred since that date.
In connection with preparing the Stanger Fairness Opinion, Stanger was not
engaged to, and consequently did not, prepare any written report or compendium
of its analysis for internal or external use beyond the analysis set forth in
Appendix C. Stanger will not deliver any additional written summary of the
analysis.
Compensation and Material Relationships. Stanger has been paid a fee by
the Partnership of $60,000 for preparing the Stanger Fairness Opinion relating
to the Sale. In addition, Stanger will be reimbursed for all reasonable out-of-
pocket expenses, including legal fees, up to a maximum of $5,000 and indemnified
against certain liabilities, including certain liabilities under the federal
securities laws. The fee was negotiated between the Partnership and Stanger.
Payment of the fee to Stanger is not dependent upon completion of the Sale.
The Partnership has not retained Stanger to render any services during the
past two years. Likewise, the Purchaser has not retained Stanger to render any
services during the past two years. However, in connection with the formation
of Colonial in 1993, Stanger was retained by each of the partnerships included
in the formation of Colonial and the general partners thereof to render an
opinion on behalf of the limited partners of these partnerships as to the fair
market value of the real estate owned by each partnership and the fairness of
the consideration received by each partnership.
15
<PAGE>
Position of Colonial and the Operating Partnership Regarding Fairness of the
Proposed Sale
Colonial and the Purchaser believe that, based upon their experience in
purchasing, operating, and managing properties, the Sale is fair to the Limited
Partners. In reaching this determination, Colonial and the Operating Partnership
considered the following factors:
(i) the unsuccessful attempts by the General Partners and the Operating
Partnership to find a buyer for the Complex, including the Project, as described
above in "--Alternatives Considered";
(ii) the most recent annual Appraisal Report, which states that the fair
market value of the Project determined in accordance with the Income
Capitalization Approach is $8,681,000;
(iii) the fact that Limited Partners anticipated that the Project would be
sold and the Partnership liquidated before this time, and the Sale would
accomplish those objectives relatively quickly;
(iv) information with respect to the financial condition, results of
operations and prospects of the Project, as well as current conditions and risks
involved with its business;
(v) the general illiquidity of the Units, and the fact that a sale of
the Project would enable the Limited Partners to liquidate their investment by
converting the value of the Project to cash;
(vi) the fact that the consummation of the Sale is conditioned upon
approval by holders of a majority in interest of the Units, thereby allowing the
Limited Partners collectively to determine whether the Sale of the Project is
consummated;
(vii) the Purchaser's belief that the Sale represents an opportunity for
Limited Partners to obtain fair value for the Project in a market and at a time
when the prospects for a future sale on significantly better terms is uncertain;
(viii) the possibility of future increases of the value of the Project;
and
(ix) while Colonial and the Purchaser have not relied upon, they have
considered the written opinion from Stanger described above in "--Opinion of
Stanger" to the effect that the Purchase Price to be received by the Partnership
pursuant to the Sales Contract is fair to the Limited Partners from a financial
point of view.
In view of the wide variety of factors considered in connection with the
evaluation of the Sale, Colonial and the Purchaser did not find it practical to,
nor did they, quantify or otherwise attempt to assign relative weights to the
specific factors considered in reaching their opinion. Colonial and the
Purchaser considered each of the factors listed above in light of the knowledge
of the business and operations of the Partnership and their business judgment.
In reviewing the above factors, Colonial and the Purchaser believe that the
factors described in paragraphs (i) - (v), (vii) and (ix) were favorable to the
determination
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<PAGE>
regarding the fairness of the Sale, since the Project may increase in value in
the future (although there can be no assurance that this will occur) the factor
described in paragraph (viii) may be deemed unfavorable to the determination of
the fairness of the Sale, and that the factor described in paragraph (vi) was
neither favorable nor unfavorable. No other factors were considered by Colonial
and the Purchaser.
Plans for the Partnership; Certain Effects of the Sale
The consummation of the Sale will constitute a sale of substantially all of
the assets of the Partnership. The Partnership Agreement provides that the
Partnership shall be dissolved upon a sale of all interests in the Project and
any other assets of the Partnership. Accordingly, the consummation of the Sale
will result in the dissolution of the Partnership and the distribution of
proceeds in liquidation as provided in the Partnership Agreement. The General
Partners estimate that liquidation will result in a distribution to the Limited
Partners of approximately $_____ per Unit (approximately $_____ per Unit
representing a return of capital and approximately $_____ per Unit representing
income and gain).
As a result of the Sale, the Purchaser will own the Project and be entitled
to all net income, if any, derived from the Project. Following the Sale, the
Purchaser will be entitled to all the benefits from any future increase in the
value of the Project, but also will bear the risk of any decrease in the value
of the Project.
Interests of Certain Persons; Potential Conflicts of Interest
In considering whether to vote for or against the Proposals, Limited
Partners should be aware that certain of the General Partners and the Purchaser
are affiliated parties and, therefore, may be deemed to have substantial
conflicts of interest with respect to the Amendment and Sale. The Lowders, who
are general partners of the Partnership, as of September 30, 1997, own 1,599,968
Units of the Partnership and indirectly own approximately 13.7% of the equity of
the Purchaser. Thomas Lowder and James Lowder also serve on the Board of
Trustees of Colonial, and Thomas Lowder serves as Colonial's President and Chief
Executive Officer. See, "Special Considerations --Conflicts of Interest of the
General Partners."
In connection with efforts by Bear Stearns to arrange a sale of the
Complex, Colonial has agreed to pay Bear Stearns a marketing fee of $100,000 for
its efforts with regard to a sale of Phase II and Phase III of the Complex.
This fee will be paid by Colonial and is unrelated to the proposed Sale.
In connection with the completion of the Complex, Lowder Construction
Company, an Alabama corporation of which the Lowders own equity interests,
developed Phase III of the Complex and was paid a fee of $552,000. This fee was
paid by Colonial and was unrelated to the Project and the Partnership.
In their evaluation of the Proposals, Limited Partners should carefully
consider the information set forth in the "Special Considerations" section.
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VOTING RIGHTS AND INFORMATION
Record Date
The General Partners have set the close of business on _________, 1997 as
the record date (the "Record Date") for the determination of Limited Partners
entitled to notice of and to vote upon the Proposals. Only Unitholders of
record as of the Record Date who have been admitted to the Partnership as
Limited Partners will be entitled to vote upon the Proposals. On the Record
Date, there were 11,052 Units issued and outstanding, held of record by [1,225]
Unitholders. Thomas Lowder, a General Partner, owns of record 33 Units. The
Partnership has no other class of securities.
Required Vote
Under the Partnership Agreement, Limited Partner approval of the Proposals
requires the affirmative consent of Limited Partners holding a majority in
interest of the issued and outstanding Units. Accordingly, an abstention or
failure to return the enclosed Consent Form will have the same effect as a vote
AGAINST the Amendment and the Sale.
Solicitation Period
The Solicitation Period is the time during which Limited Partners may vote
for or against the Proposals. The Solicitation Period will commence upon
delivery of this Consent Solicitation Statement and the Consent Form and will
continue until the later of [5:00 p.m.], New York City time, on __________,
_____________, 1997, or such later date chosen by the General Partners and as to
which notice is given to Unitholders. The General Partners, in their sole
discretion, may elect to extend the Solicitation Period. Notice to Unitholders
of such an extension will be by written notice mailed to Unitholders.
Execution and Revocation of Consents
A Consent Form is included with this Consent Solicitation Statement. All
Consent Forms that are properly executed and returned to ______________ prior to
the expiration of the Solicitation Period will be voted in accordance with the
instructions contained therein. All properly executed Consent Forms that
contain no voting instructions will be deemed to have consented to the Amendment
Proposal and the Sale Proposal. Consent Forms will be effective only when
actually received by ________ at the address or facsimile number set forth
below. Consent Forms may be withdrawn at any time prior to the expiration of
the Solicitation Period. In addition, subsequent to the submission of a Consent
Form, but prior to the expiration of the Solicitation Period, Limited Partners
may change their votes. For a withdrawal or change of vote to be effective,
Limited Partners must execute and deliver, prior to the expiration of the
Solicitation Period, a subsequently dated Consent Form or a written notice
stating that the consent is withdrawn to [name] [address]
----------------- ----------------------
facsimile number (800) ___-____. Consent Forms and notices of withdrawal or
change of vote dated or received after the expiration of the Solicitation Period
will not be valid. Questions concerning (i) how to complete the Consent Form,
(ii) where to return the Consent Form and (iii) obtaining additional Consent
Forms should be directed to __________ (the "Information Agent"), [address],
--------------
(800) ___-____. Substantive
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questions concerning the Consent Form should be directed to Investor Relations
at Colonial, at (800) 645-3917.
Effective Date of the Amendment
If approved by the Limited Partners, the Amendment will become effective
when the General Partners execute a Second Amended and Restated Certificate and
Agreement of Limited Partnership incorporating the Amendment, which will occur
following the expiration of the Solicitation Period and immediately prior to the
consummation of the Sale. If the Sale Proposal is not approved or if for any
reason the Sale is not consummated, the Amendment to the Partnership Agreement
will not be implemented, even if it receives Limited Partner approval.
Consummation of the Sale
If the Sale Proposal and the Amendment Proposal are approved by the Limited
Partners, the Partnership and the Purchaser will consummate the Sale as soon as
practicable following the expiration of the Solicitation Period.
No Special Meeting
The Partnership Agreement does not require a special meeting of Limited
Partners to consider the Proposals. Accordingly, no such meeting will be held.
Cost of Solicitation
The Purchaser has retained the Information Agent at an estimated cost of
$4,600 plus reimbursement of expenses to assist in the solicitation of consents.
The total cost of the solicitation will be approximately $8,500. All expenses of
this solicitation, including the cost of preparing and mailing this Consent
Solicitation Statement, will be borne by the Partnership. In addition, consents
may be solicited by directors, officers and employees of the Purchaser in person
or by mail, telephone, telegram or other means of communication. These
directors, officers and employees will not be additionally compensated, but may
be reimbursed for out-of-pocket expenses incurred in connection with the
solicitation. Arrangements also will be made to furnish copies of solicitation
materials to custodians, nominees, fiduciaries and brokerage houses for
forwarding to beneficial owners of Units. Such persons will be paid for
reasonable expenses incurred in connection therewith.
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THE AMENDMENT PROPOSAL
(PROPOSAL NO. 1)
The Proposed Amendment
The Partnership Agreement presently contains a provision which limits the
authority of the General Partners to permit the Partnership to sell or lease the
Project to a General Partner or any affiliate of a General Partner. Because the
Purchaser is an affiliate of the Lowders, the Sales Contract could not be
consummated unless that provision of the Partnership Agreement is amended. The
General Partners are soliciting the consent of the Limited Partners to approve
an amendment to the Partnership Agreement that would provide a specific
exception for the Sales Contract.
The Amendment would amend the limitation set forth in Section 13(d)(x) of
the Partnership Agreement to provide an exception for the Sale of the Project
pursuant to the Sales Contract. The Amendment would not permit any other sale or
lease of the Project or otherwise modify the limitations on the authority of the
General Partners set forth in this section of the Partnership Agreement.
Consequently, in the event the Amendment is approved but the Sales Contract is
not consummated, the limitations set forth in this section of the Partnership
Agreement would continue to be operative notwithstanding Limited Partner
approval of the Amendment.
Text of the Amendment
Section 13(d)(x) of the Partnership Agreement is proposed to be amended to
add the underlined language set forth below:
Except with regard to the Site acquisition as described in the
Prospectus, permit the Partnership to purchase or lease property in which a
General Partner or any Affiliate has an interest or, except pursuant to the
----------------------
terms of that certain Real Estate Sales Contract dated September 2, 1997
------------------------------------------------------------------------
between the Partnership and Colonial Realty Limited Partnership, sell or
----------------------------------------------------------------
lease the Project to a General Partner or any Affiliate.
No other amendments to the Partnership Agreement are being proposed.
20
<PAGE>
THE SALE PROPOSAL
(PROPOSAL NO. 2)
The General Partners also are soliciting consents from Limited Partners to
approve the Sale of the Project to the Operating Partnership for an aggregate
purchase price of $_______. The terms of the Sale are set forth in the Sales
Contract, a copy of which is attached to this Solicitation Statement as Appendix
A. The discussion below is a summary of the Sales Contract and is qualified in
its entirety by reference to the Sales Contract.
Assets to be Sold
The assets to be acquired by the Purchaser are substantially all of the
assets of the Partnership and consist of the Project including all improvements,
easements, appurtenances, rights-of-way, privileges, adjacent strips, gores of
land and other matters belonging to or pertaining to the Project, personal
property, tradename, furniture, fixtures, and equipment located on or used in
connection with the Project, and all intangible property, including, without
limitation, all leases and contracts in effect as of the closing of the Sale.
The assets to be acquired do not include cash or cash items, such as the working
capital reserves of the Partnership.
Purchase Price
The Purchase Price to be paid by the Purchaser for the Project is $_______.
The Purchase Price is payable at the closing of the sale of the Project in cash.
The Sales Contract does not require retention of a portion of the Purchase Price
to provide funds for indemnification of the Purchaser. Accordingly, the full
amount of the Purchase Price will be released to the Partnership at the closing
of the Sale. The Sales Contract provides for customary prorations of rents,
taxes, utilities and other items, and provides for the payment of various
closing costs and expenses by the Partnership, including the Partnership's
attorney's fees.
It is expected that Limited Partners will receive an aggregate pre-tax
value of approximately $_____ per Unit upon the sale of the Project and
liquidation of the Partnership. See, "Distribution of Sale Proceeds and
Dissolution of the Partnership," below.
Conditions to Consummation of the Sale
Consummation of the Sale is subject to the satisfaction or waiver of
certain conditions, including (i) approval of the Sale by a majority in interest
of the Limited Partners of the Partnership, (ii) approval of the Amendment,
(iii) the conveyance of good, marketable and insurable title by the Partnership,
(iv) the continued accuracy of the representations and warranties of the parties
to the Sales Contract, and (v) various other customary provisions.
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DISTRIBUTION OF SALE PROCEEDS AND DISSOLUTION OF PARTNERSHIP
The consummation of the proposed Sale will result in the dissolution and
liquidation of the Partnership and the distribution to the Partners upon such
liquidation of the net proceeds of the Sale in accordance with the terms of the
Partnership Agreement.
Under the Partnership Agreement, the net proceeds of a disposition of the
Project will be distributed as follows: first, pro rata to all Partners with
positive capital accounts until each such partner has received an amount equal
to this capital account; second, 100% to the Limited Partners until each such
Partner has received an amount equal to his "adjusted capital value"/1/, less
any amounts distributed with regard to positive capital accounts described
above; third, 100% to the Limited Partners until each Limited Partner has
received an amount equal to the excess of (i) a 10% cumulative annual return
(calculated from the fiscal quarter ending September 30, 1987) with respect to
his adjusted capital value, over (ii) any net cash from operations actually
distributed to such Limited Partner (or a predecessor in interest); and the
balance, 75% to the Limited Partners and 25% to the General Partners (5% to each
of McClintock, Pugh and Battery Park and 10% to the Lowders).
The General Partners estimate that the liquidation of the Partnership will
result in distributions of cash to Limited Partners in the amount of
approximately $___ per Unit, [of which $___ per Unit would represent return of
capital and $___ per Unit would represent income [and gain]. The General
Partners estimate that the liquidation of the Partnership will result in no
distributions of cash to the General Partners. However, McClintock, Pugh and
Battery Park are each special limited partners of the Partnership and as such
will receive a distribution of $100 upon dissolution of the Partnership. The
General Partners will distribute the net sale proceeds after the sale of the
Project and the winding up of the Partnership's affairs. Consummation of the
Sale will be accounted for as a sale.
If the sale of the Project is consummated, the Limited Partners will have
no interest in the future operations of the Partnership or the Project.
- ---------------------------
/1/ "adjusted capital value" means the aggregate amount of cash contributed by
a Limited Partner (or predecessor in interest) to the Partnership, reduced by
the aggregate amount of distributions made to such Limited Partner (or
predecessor in interest) of net proceeds from sales occurring prior to the
current distribution of net proceeds from sales.
22
<PAGE>
SPECIAL CONSIDERATIONS
Limited Partners should consider certain special factors in
determining whether to approve or disapprove the Sale.
Tax Consequences to Limited Partners
The Sale will be a taxable transaction for the Partnership and the Limited
Partners. However, the tax consequences to a particular Limited Partner will
depend on such Limited Partner's particular circumstances. Accordingly, each
Limited Partner should consult its own tax advisor to determine the federal
income tax consequences of the Sale. See "Federal Income Tax Considerations."
Loss of Opportunity to Benefit from Potential Future Appreciation of Project
The determination of the Purchase Price has been based in part on current
market conditions for multifamily residential real estate property in the
Florida market. There can be no assurance that the real estate market in
general or the market for multifamily residential properties in particular will
not improve following the Sale, creating an environment for a more favorable
sale of the Project in the future.
Sales Contract Not Negotiated at Arms Length
The Operating Partnership is an affiliate of certain of the General
Partners, and the General Partners may be deemed to have certain conflicts of
interest in connection with the Sale. The Purchase Price was established by
negotiations between the Purchaser and Thomas Lowder on behalf of the General
Partners. After negotiation of the Purchase Price, each of the General
Partners, other than Thomas Lowder (who abstained due to the potential conflict
of interest between his position in the Partnership and the Purchaser), agreed
to accept the Purchase Price. Additionally, the Unaffiliated General Partners
have reviewed and approved the terms of the Sales Contract. Furthermore, the
Purchase Price is supported by the income capitalization approach set forth in
the Appraisal Report and the written opinion from Stanger to the effect that the
Purchase Price to be received by the Partnership in exchange for the Project is
fair to the Limited Partners from a financial point of view.
No Acceptable Third-Party Bids Received
Notwithstanding the prior efforts to sell the Complex (including the
Project), the General Partners did not receive from third-parties any offer to
acquire the Project that was deemed acceptable by the General Partners.
Potential Conflicts of Interest of the General Partners
Affiliated Nature of Sale. The Lowders are General Partners of the
Partnership and are also affiliates of the Operating Partnership by virtue of
the fact that Lowders in the aggregate own, indirectly, approximately 13.7% of
the equity securities of the Purchaser, as of September 30, 1997. Thomas Lowder
and James Lowder also are members of the Board of Trustees of Colonial, and
Thomas Lowder serves as its President and Chief Executive
23
<PAGE>
Officer. Colonial Properties Holding Company, Inc., an Alabama corporation and
wholly owned subsidiary of Colonial, in turn, serves as general partner of the
Purchaser and owns approximately 69.6% of the outstanding partnership interests
of the Purchaser, as of September 30, 1997.
As a result of this affiliation, a conflict may arise between the Lowders'
desire to purchase the Project at the lowest possible price and the desire of
the Limited Partners to maximize the sale price of the Project. In this
regard, although the Purchase Price was negotiated between the Purchaser and
Thomas Lowder on behalf of the General Partners, in April 1997, each of the
General Partners, other than Thomas Lowder (who abstained due to the potential
conflict of interest between his position in the Partnership and the Purchaser),
agreed to accept the Purchase Price. Additionally, the Unaffiliated General
Partners have reviewed and approved the terms of the Sales Contract.
Because the Purchaser owns Phase II and Phase III of the Complex, and
manages the entire Complex as a single entity, the interests of Colonial and the
Purchaser may conflict with the interests of the Partnership and the Limited
Partners. With respect to these potential conflicts of interest, Colonial and
the Operating Partnership retain a free right to compete with the Partnership's
Project, including the right to develop apartment complexes now and in the
future, in addition to those existing apartments in the Complex.
Elimination of Personal Liability. The liability of the Limited Partners
is limited to capital contributions (which have already been made), and the
Limited Partners are not bound by, or personally liable for, any expenses,
liabilities or obligations of the Partnership. In contrast, the General
Partners have unlimited liability for liabilities of the Partnership to the
extent the Partnership's assets are insufficient to discharge all such
liabilities or to the extent recourse for such liabilities is not limited to the
Partnership's assets. Following consummation of the Sale, the General Partners
(and thus the Lowders) will be relieved of future general partner liability with
respect to the Partnership and the Project.
Fiduciary Responsibility of General Partners. Despite the existence of the
conflicts of interest described above, the General Partners are under a
fiduciary duty to the Partnership and consequently must exercise good faith and
fair dealing toward the Partnership and the Limited Partners. The Partnership
Agreement provides that the General Partners have no liability to the
Partnership or to the Limited Partners for any loss or damage incurred by reason
of any act performed or omitted in connection with the activities of the
Partnership, if a General Partner determines, in good faith, that such course of
conduct is in the best interests of the Partnership and provided that such
course of conduct does not constitute fraud, negligence (gross or ordinary) or
breach of fiduciary duty. The Partnership Agreement further provides that the
Partnership shall indemnify and hold harmless the General Partners (and each of
them), their officers, directors, employees and partners, from any liability,
loss, or damage incurred by them or by the Partnership by reason of any act
performed or omitted to be performed by them in connection with the activities
of the Partnership or in dealing with third parties on behalf of the
Partnership, with respect to which they are protected under the Partnership
Agreement. As a result of these exculpation and indemnification provisions, a
Limited
24
<PAGE>
Partner's remedy with respect to claims against the General Partners arising
from the Sale may be more limited than otherwise would be the case.
No Appraisal Rights
Neither the Partnership Agreement nor Florida law provides any right to
Unitholders to have their respective Units appraised or redeemed in connection
with, or as a result of, the proposed Sale. Under the Partnership Agreement,
each Unitholder is entitled, upon prior written notice to the General Partner,
at reasonable times and at such Unitholder's own expense, (i) to obtain a copy
of a list of names and addresses of the Limited Partners and the number of Units
owned by each of them, and (ii) to inspect the books and records of account of
the Partnership.
In lieu of appraisal rights, Unitholders may have other rights and remedies
available to them in connection with the Sale. See, "--Potential Conflicts of
Interest of the General Partners--Fiduciary Responsibility of General Partners"
above. Likewise, under Florida law, the General Partners have a fiduciary duty
to exercise good faith, fairness and loyalty in all of their dealings with
respect to Partnership affairs, and Limited Partners, therefore, may have
certain legal remedies available under Florida state law.
25
<PAGE>
SELECTED FINANCIAL INFORMATION
Set forth below is a summary of certain historical financial information of
the Partnership as of and for the each of the years ended December 31, 1994,
1995 and 1996 and as of and for the fiscal quarters ended June 30, 1996 and
1997. The summary financial information for each of the years ended December
31, 1994, 1995 and 1996 is derived from audited financial statements of the
Partnership which are set forth in Appendix D to this Consent Solicitation
Statement. The summary financial information for each of the fiscal quarters
ended June 30, 1996 and 1997 is derived from unaudited financial statements of
the Partnership, and in the opinion of the Partnership, reflect all adjustments
(which include normally recurring adjustments) necessary to present fairly the
information set forth therein.
RIVERCHASE INVESTORS I, LTD.
(A Limited Partnership)
Selected Financial Data
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, December 31,
(unaudited)
1997 1996 1996 1995 1994
---------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Rental Revenue............... $ 681,150 $ 750,148 $1,433,043 $1,454,909 $1,431,176
Interest Income.............. 3,794 4,546 9,385 11,520 8,317
Other Income................. 30,761 19,219 45,913 45,498 45,328
Net Income................... 239,094 251,666 486,614 531,690 404,872
Net Income per Unit.......... 21.42 22.54 43.59 47.63 36.27
Total Assets................. 7,507,845 7,547,913 7,452,392 7,526,646 7,677,947
Partner's Capital............ 7,368,243 7,497,482 7,385,913 7,457,235 7,617,691
Cash Distributions per
Unit......................... $ 23.00 $ 27.00 $ 50.00 $ 62.00 $ 60.00
</TABLE>
26
<PAGE>
FEDERAL INCOME TAX CONSIDERATIONS
General
The following discussion summarizes certain federal income tax
considerations relevant to the Limited Partners in connection with the Sale by
the Partnership of the Project to the Operating Partnership. This discussion is
intended to be a general summary discussing only certain of those federal income
tax considerations that are generally applicable to all Limited Partners in
connection with the Sale. The specific tax consequences of the Sale may vary
for the Limited Partners depending upon their individual circumstances.
The information in this section is based on the Internal Revenue Code of
1986, as amended (the "Code"), existing and proposed Treasury Regulations
thereunder, and current administrative interpretations and court decisions. No
assurance can be given that future legislation, Treasury Regulations,
administrative interpretations and court decisions will not significantly change
the current law or adversely affect existing interpretations of current law.
Any such change could apply retroactively to transactions preceding the date of
change. This description does not constitute tax advice.
The following description is not intended to be exhaustive of all possible
tax considerations. For example, this summary does not discuss any state, local
or foreign tax considerations. Nor does it discuss all of the aspects of a
Limited Partner's particular circumstances. Except where indicated, the
discussion below describes general federal income tax considerations applicable
to individuals who are citizens or residents of the United States. Accordingly,
the following discussion has limited application to domestic corporations and
persons subject to specialized federal income tax treatment, such as foreign tax
persons, tax-exempt entities, regulated investment companies and insurance
companies.
LIMITED PARTNERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS TO DETERMINE
THE TAX CONSEQUENCES TO THEM OF THE TRANSACTION.
Taxation of Limited Partners Resulting from the Sale of the Project
Tax Effect of Sale of the Project for Cash. The sale of the Project for
cash to the Operating Partnership will be a taxable transaction for the
Partnership for federal income tax purposes. In a cash sale, the Partnership
will recognize gain on the sale of the Project in an amount equal to the excess
of (1) the cash proceeds from the sale of the Project (net of sales expenses)
over (2) the Partnership's adjusted tax basis in the Project. Such gain will be
allocated to the Limited Partners in accordance with the applicable provisions
of the Partnership Agreement. The estimated gain per Unit expected from the
sale of the Project for cash is approximately $312 per Unit.
The character of such gain is dependent on the allocation of the Purchase
Price between the real property components and the personal property components
of the Project Gain attributable to the real property components will be treated
as "Section 1231 gain." A Limited Partner will net this "Section 1231 gain"
against its other "Section 1231 gains and losses" recognized during the taxable
year of the Limited Partner in which the sale occurs.
27
<PAGE>
If the aggregate of such gains exceeds the aggregate of such losses for such
year, such gains and losses will generally constitute capital gains and losses.
Under prior law, such capital gains constituted long-term capital gains.
However, after passage of the new mid-term capital gains rates as part of the
Taxpayer Relief Act of 1997, it would appear that "Section 1231 gain" must be
bifurcated between long-term capital gains and mid-term capital gains (which are
described in greater detail below). If the aggregate of such losses exceeds the
aggregate of such gains, such gains and losses ordinarily will constitute
ordinary gains and losses. Gain attributable to the personal property components
will be treated as ordinary income to the extent of prior depreciation
deductions claimed with respect to those components, with any additional gain
being treated as "Section 1231 gain."
Based upon the allocation agreed to between the Partnership and the
Operating Partnership, substantially all of the gain recognized will be
attributable to the real property components, and therefore will be "Section
1231 gain." There can be no assurance, however, that the IRS will not seek to
allocate more of the Purchase Price (and therefore some of the gain) to the
personal property components.
Any gain recognized by the Limited Partners in connection with the Sale
will constitute "passive activity income" for purposes of the "passive activity
loss" rules. Accordingly, such income generally may be offset by losses from
all sources, including suspended "passive activity losses" with respect to the
Partnership and "passive" or active losses from other activities. Each Limited
Partner should consult with his or her own tax advisor concerning whether, and
the extent to which, he or she has available suspended "passive" losses from
either the Partnership or other investments that may be used to offset gain from
the Sale.
Tax Effect of Distributions and Liquidation. The gain allocable to a
Limited Partner from the sale of the Project will increase such Limited
Partner's adjusted tax basis in his or her Units. If the distribution of Sale
proceeds were to exceed the Limited Partner's adjusted basis in his or her Units
(as increased to reflect the gain from the Sale), such excess will be treated as
gain from the sale or exchange of a capital asset. If the amount distributed is
less than such Limited Partner's adjusted basis in the Units, such difference
generally will be treated as a capital loss.
Generally, for an individual or an estate or trust, the maximum tax rate
applicable to mid-term capital gains (gains from the sale of capital assets held
for more than one year but not more than 18 months) is 28% and the maximum tax
rate applicable to long-term capital gains (gains from the sale of capital
assets held for more than 18 months) is 20%. However, for such taxpayers long-
term capital gains resulting from sales of depreciable real property are taxed
at a rate of 25% to the extent of the depreciation deductions taken with respect
to such property.
Hypothetical Illustration of Tax Liability. A hypothetical taxable Limited
Partner in the Partnership who bought one Unit (original cost $1,000) in the
initial offering of Units would realize (assuming the sale of the Project for
cash and the liquidation of the Partnership on December 31, 1997) (1) an
estimated Section 1231 gain of $312 from the sale of the Project (all or
substantially all of which the Partnership believes will qualify as long-term
capital gain under the Taxpayer Relief Act of 1997), and (2) an estimated
capital
28
<PAGE>
gain of $14 attributable to his or her investment in the Partnership (assuming
the Unit was purchased in the original Partnership offering). The Section 1231
gain and the capital gain will result in an estimated aggregate capital gain of
$321 per Unit, assuming the Unit is the only investment being disposed of by the
Limited Partner in 1997. The resulting net federal income tax (assuming (i) an
effective tax on ordinary income of 31% and (ii) the capital gains are long-term
capital gains under the 1997 Act and taking into account the rules described
above) would be $79 per Unit, as rounded (of which, $76 per Unit would be
imposed at the 25% rate). The Limited Partner would have received a cash
distribution of $767 per Unit, as rounded, as a result of the Sale, resulting in
net after-tax cash proceeds of $688 per Unit, as rounded. (This illustration
does not take into account any state taxes payable by a Limited Partner.)
Because the specific circumstances of a Limited Partner will affect the
determination both of the amount of income or loss recognized in the Sale and
the consequences of the recognition of such income or loss, it is important that
each Limited Partner consult with his tax advisor regarding the consequences of
the Sale.
LIMITED PARTNERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE
TAX CONSEQUENCES TO THEM OF A SALE OF THE PROPERTY BY THE PARTNERSHIP TO THE
OPERATING PARTNERSHIP.
OTHER MATTERS
Certain Legal Matters
The General Partners are not aware of any filings (other than the filing of
an amendment to the Partnership Agreement to incorporate the Amendment),
approvals or other action by any federal or state governmental administrative or
regulatory authority that would be required for the acquisition of the Project
by the Purchaser as contemplated by the Sales Contract. Should any such other
approval or action be required, it is currently contemplated that such approval
or other action would be sought. There can be no assurance that any such
additional approval or other action, if needed, would be obtained without
substantial conditions or that adverse consequences might not result in the
event that such other approvals were not obtained or such other actions were not
taken. The Purchaser's obligations under the Sales Contract are subject to
certain conditions, including conditions relating to the legal matters discussed
in this subsection. See "The Sale Proposal--Conditions to Consummation of the
Sale."
Miscellaneous
The Partnership is subject to the information and reporting requirements of
the Securities Exchange Act of 1934, as amended, (the "Exchange Act") and as a
result are required to file reports and other information with the SEC relating
to its business, financial condition and other matters.
Pursuant to Rule 13e-3 of the General Rules and Regulations under the
Exchange Act, the Purchaser, the Partnership and the General Partners of the
Partnership have filed with the SEC a Transaction Statement on Schedule 13E-3,
together with exhibits, furnishing certain additional information with respect
to the proposed Sale. Such
29
<PAGE>
Statement and any amendments thereto, including exhibits, may be inspected at
the public reference facilities of the SEC at Room 1024, 450 5th Street, N.W.,
Washington, D.C. 20549. Copies may be obtained by mail, at prescribed rates,
from the SEC's principal office at 450 5th Street, N.W., Washington, D.C. 20549.
The SEC maintains a 'web site' that contains reports, proxy and information
statements and other information regarding issuers that file electronically with
the SEC. The address of such site is "http://www.sec.gov."
John H. Mcclintock, Jr.
James H. Pugh, Jr.
Battery Park Capital Corp.
Thomas H. Lowder
James K. Lowder
Robert E. Lowder
GENERAL PARTNERS
Date: November 10, 1997 By: /s/
---------------------- --------------------------
[Title]
30
<PAGE>
Appendix A
- ----------
SALES CONTRACT
<PAGE>
REAL ESTATE SALES CONTRACT
--------------------------
THIS REAL ESTATE SALES CONTRACT made and entered into as of this _____ day
of ______________, 1997 between:
SELLER: RIVERCHASE INVESTORS I, LTD., a Florida limited partnership;
and
PURCHASER: COLONIAL REALTY LIMITED PARTNERSHIP, a Delaware limited
partnership, its successors and assigns (hereinafter
referred to as "Purchaser").
The parties agree as follows:
1. AGREEMENT TO SELL AND PURCHASE: In consideration of the mutual
------------------------------
covenants and promises contained herein, Seller hereby agrees to sell and
Purchaser hereby agrees to purchase the real estate described on EXHIBIT "A",
which is attached hereto and incorporated herein by reference. Said real estate
is herein referred to as the "Property" and includes all improvements,
easements, appurtenances, rights-of-way, privileges, adjacent strips, gores of
land and other matters belonging to or pertaining to the Property. The Property
is commonly known as the Riverchase Apartments - Phase I. In addition to the
Property and as additional consideration for the payment of the purchase price,
Seller shall convey all personal property, tradename, furniture, fixtures and
equipment located on or used in connection with the Property.
2. PURCHASE PRICE: The purchase price shall be ____________. The Earnest
--------------
Money shall be a credit against the Purchase Price.
3. DEPOSIT: ______________________________ (the "Initial Deposit") will
-------
be deposited by Purchaser with an agent of Chicago Title Insurance Corporation
("Escrow Agent") upon Seller's acceptance of this offer as evidenced by Seller's
signature below. This Initial Deposit is paid as evidence of Purchaser's good
faith intention to review those materials provided in Paragraph 11 and such
other matters as Purchaser deems appropriate in order to determine if the
Property appears to be suitable for its portfolio. If Purchaser is satisfied
with the results of its inspection and investigation, then at the end of the Due
Diligence Period [as defined in Paragraph 4(a)], Purchaser will deposit the
additional sum of _____________________________ (the "Additional Deposit").
Both the Initial Deposit and this Additional Deposit are herein referred to as
the "Earnest Money." In the event Purchaser fails to make the Additional
Deposit prior to the expiration of the Due Diligence
<PAGE>
Period, the Initial Deposit (less $100.00 as consideration to Seller for
entering into this Agreement) shall be returned to Purchaser, and neither party
shall have any further obligation to the other. Upon making the Additional
Deposit, the Earnest Money shall be held by the Escrow Agent and applied to the
cash due at Closing. The Earnest Money shall be deposited in an interest bearing
account with all interest earned for the benefit of Purchaser.
4. DUE DILIGENCE PERIOD AND SELLER'S OBLIGATIONS UNTIL CLOSING:
-----------------------------------------------------------
(a) Purchaser shall have until October 31, 1997 (the "Due Diligence
Period") within which to satisfy itself as to all matters concerning its
acquisition, ownership and operation of the Property, including, without
limitation, matters concerning title, survey, zoning, subdivision laws,
environmental matters, review and approval of leases, contracts and financial
matters affecting the Property, existence of all required licenses, permits and
approvals, approval of the condition of the improvements on the Property, all
soil, landscaping and other physical conditions of the Property, availability
and sufficient quantities of all utilities, and other matters in its discretion.
From the date this Agreement is executed until the Closing, Seller hereby grants
to Purchaser and its agents full access to the Property and all of Sellers
records in order to conduct such inspections and tests as Purchaser deems
necessary in order to reach its decision by the end of the Due Diligence Period.
(b) At the end of the Due Diligence Period discussed in Paragraph 4(a)
above, in the event Purchaser makes the Additional Deposit, then the Earnest
Money will be at risk and, as Seller's sole remedy, will be forfeited as
liquidated damages in the event Purchaser fails to close, except due to a
default by the Seller or the failure of any condition to Purchaser's
obligations, as set forth herein.
(c) Seller hereby agrees that between the date of this Agreement and
Closing, Seller will (i) maintain the Property in good repair and first class
operating condition, (ii) prepare for rental any vacant units that now exist or
become vacant prior to Closing, and (iii) maintain all personal property and
equipment in good working order. Seller will continue to use its best efforts
to lease the Property at current market rates and on current market terms.
5. SURVEY AND TITLE COMMITMENT; PERMITTED EXCEPTIONS.
-------------------------------------------------
(a) Preliminary Title Report. Purchaser shall cause Chicago Title Insurance
------------------------
Company, or an agent thereof, ("Title Company") to issue and deliver to
Purchaser an
3
<PAGE>
A.L.T.A. Form B title commitment on the 1970 form ("Title Commitment") in the
amount of the Purchase Price, accompanied by one copy of all documents affecting
the Property and which constitute exceptions to the Title Commitment. Purchaser
shall give Seller written notice (the "Title Notice") on or before the
expiration of the Due Diligence Period, whether such title is or is not
acceptable to Purchaser. In the event that the condition of title is not
acceptable to Purchaser, Purchaser shall state in the Title Notice which
exceptions to the Title Commitment are unacceptable and Seller shall undertake
to eliminate those exceptions as set forth below; provided, however, that at
Closing mortgages may be satisfied or the liens thereof released as to the
Property. Upon receipt of the Title Notice, Seller shall use good faith efforts
to eliminate or modify all unacceptable matters to the satisfaction of
Purchaser. Purchaser may at any time waive in writing its objection to title and
accept title to the Property subject to the exceptions objected to by Purchaser.
In the event Purchaser does not waive its objections (as set forth in the Title
Notice) and if Seller is unwilling or unable, upon exercise of due diligence, to
remove the matters within thirty (30) days after receipt of the Title Notice,
Purchaser may, at its option (i) accept title subject to the objections raised
by Purchaser, in which event said objection(s) shall be deemed waived for all
purposes, or (ii) rescind this Agreement, whereupon this Agreement shall
terminate and all Earnest Money with interest (less $100.00 as consideration to
be paid to Seller) shall be returned to Purchaser.
(b) Current Survey. Purchaser shall obtain a current as-built survey of
--------------
the Property prepared by a duly licensed land surveyor (the Survey"). Such
surveyor shall follow the survey instructions attached hereto as Exhibit "B-1"
and certify the survey pursuant to the Surveyor's Certificate attached hereto as
Exhibit "B-2". In the event the Survey shows any encroachments or any
improvements upon, from, or onto the Property, or on or between any building
setback line, property line, or any easement, or any other matter objectionable
to Purchaser, said encroachment or objection shall be treated in the same manner
as a title defect under the procedure set forth in Paragraph 5(a) above. Notice
of any such Survey encroachment or objection must be provided by Purchaser to
Seller on or before the expiration of the Due Diligence Period.
(c) Permitted Exceptions. The Property shall be conveyed to Purchaser
--------------------
subject to ad valorem taxes for the current year, and any exceptions or
encumbrances on the Title Commitment not objected to by Purchaser pursuant to
Paragraph 5(a) above on or before the expiration of the Due Diligence Period or
which Purchaser thereafter agrees to accept (the "Permitted Exceptions").
6. PROVISIONS WITH RESPECT TO CLOSING.
----------------------------------
(a) Closing Date. The consummation of the transaction contemplated by this
------------
Agreement ("Closing") shall take place at the offices of Leitman, Siegal &
Payne, P.C., 600
4
<PAGE>
North 20th Street, Suite 400, Birmingham, Alabama 35203, on or before thirty
(30) days following the expiration of the Due Diligence Period, provided
Purchaser has made the Additional Deposit.
(b) Seller's Obligations at Closing. At Closing, Seller shall do the
-------------------------------
following:
(i) Execute, acknowledge, and deliver to Purchaser a General
Warranty Deed conveying the Property to Purchaser subject only
to the Permitted Exceptions, which deed shall be in form
attached hereto as Exhibit "C" which is incorporated herein by
reference. The legal description of the Property contained in
such deed shall be identical to the legal description of the
Property as contained in the Survey and the Title Commitment.
(ii) Deliver to Title Company evidence satisfactory to it of Seller's
authority to execute and deliver the documents necessary or
advisable to consummate the transaction contemplated hereby in
the form of resolutions or minutes of Seller.
(iii) Cause to be furnished and delivered to Purchaser, and the Title
Company such documents necessary for the Title Company to issue
an owner's Title Insurance Policy as described in Paragraph
5(a).
(iv) Execute and deliver to Purchaser and Title Company a Lien Waiver
Affidavit so as to cause Title Company to remove the mechanics'
lien and parties in possession standard exceptions from the
Title Commitment.
(v) Execute and deliver to Purchaser and Title Company a FIRPTA
certificate concerning resident alien or non-alien status for
IRS withholding purposes in the form attached hereto as Exhibit
"D".
(vi) Execute and deliver to Purchaser a Bill of Sale as to the
Tangible Personal Property in the form attached hereto as
Exhibit "E".
5
<PAGE>
(vii) Execute an Assignment of any guaranties or warranties,
including a termite bond, with respect to the Property in the
form attached as Exhibit "H".
(viii) Execute an Assignment of Leases in the form attached as
Exhibit "I".
(ix) Execute and deliver an Assignment of Intangibles in the form
attached hereto as Exhibit "J".
(x) Execute and deliver an Assignment and Assumption of Contracts
in the form attached hereto as Exhibit "K".
(xi) Deliver to Purchaser audited consolidated balance sheets of
Seller at December 31, 1995 and December 31, 1996 and the
related consolidated statements of income and expense for each
of the fiscal years then ended, together with the report
thereon of Seller's independent certified public accountants.
Seller shall also deliver such other financial information in
Seller's possession or reasonably obtained by Seller as
Purchaser may reasonably request, including monthly income and
expenses statements.
(xii) Execute such other documents, resolutions, or instruments as
may reasonably be required by Purchaser or the Title Company
required by this Agreement to effectuate the agreement
memorialized herein.
(xiii) Execute and deliver to Purchaser certified financial
statements, including income and expense statements for the
prior calendar year as well as up-to-date for the year of
Closing in order for Purchaser to file various forms required
of Purchaser with the Securities and Exchange Commission.
(xiv) Seller agrees to provide to Purchaser all financial statements
and other information necessary to permit Purchaser and its
independent certified public accountants to prepare audited
financial statements and other financial information required
by the rules and regulations of the Securities and Exchange
Commission, including but not limited to Rule 3.14 and Article
XI of Regulation S-X, to be included in any report,
registration statement, or other document required to be filed
6
<PAGE>
with the Securities and Exchange Commission by Purchaser or
Colonial Properties Trust. Notwithstanding any other provision
of this Agreement, Seller's obligation to provide such
information shall survive the Closing.
(c) Purchaser's Obligations at Closing. Contemporaneously with the
----------------------------------
performance by Seller of its obligations set forth in Paragraph 6(b) above,
Purchaser shall at Closing do the following:
(i) Subject to adjustments, costs and prorations provided for herein,
deliver the balance of the Purchase Price required to close
hereunder, in accordance with the terms of Paragraph 2 above, by
check or bank wire transfer to the Title Company's designated
account.
(ii) Execute and/or deliver any such other document, resolution, or
instrument reasonably required by Seller or Title Company or
required by this Agreement to effectuate the agreement
memorialized herein.
(d) Closing Costs. Closing costs shall be allocated as follows:
-------------
(i) Seller shall pay the following costs and expenses in connection
with the Closing:
(a) Seller's attorney's fees; and
(b) Real estate commission to Bear Stearns pursuant to Paragraph
9 hereof.
(c) The premium for the Title Commitment and the Title Policy
issued pursuant thereto, and all Survey costs; and
(d) Environmental report obtained by Purchaser;
(ii) Purchaser shall only be responsible for the following closing
costs and expenses in connection with the Closing:
(a) Purchaser's attorneys' fees;
7
<PAGE>
(b) Recording fees and documentary stamps for the deed;
(c) Structural reports obtained by Purchaser;
(d) Investigation costs of Purchaser during Due Diligence
Period; and
(e) Lease review costs of Purchaser.
(e) Proration of Taxes. Taxes for the year of the Closing shall be
------------------
prorated to the date of Closing. If the Closing shall occur before the tax rate
is fixed for the then current year, the apportionment of taxes shall be upon the
basis of the tax rate of the preceding year applied to the latest assessed
valuation. Subsequent to the Closing, when the tax rate is fixed for the year
in which the Closing occurs, Seller and Purchaser agree to adjust the proration
of taxes and, if necessary, to refund or pay, as the case may be, on or before
January 1 of the year following the Closing, an amount necessary to effect such
adjustments. These obligations survive Closing.
(f) Additional Prorations. All current rent and other income from the
---------------------
Property and all current assessments, utilities, maintenance charges and similar
expenses of the Property shall be prorated between Seller and Purchaser as of
the Closing Date and, to the extent of information then available, such
prorations shall be made at the Closing. For matters which cannot be prorated
at Closing, Purchaser shall receive a credit at Closing for an amount equal to
the previous month's invoice for such matter(s) ("Credit") which Purchaser shall
hold for use in payment of the invoice when it is received, prorating the
invoice for the period prior to Closing for which Seller shall be responsible.
For all sums for which Purchaser receives a Credit hereunder, Purchaser shall
account for all invoices within sixty (60) days following Closing. Any portion
of the Credit not used to pay Seller's portion of any invoices shall be refunded
to Seller at the expiration of this sixty (60) day period. A proration
accounting shall also be delivered to Seller with any refund. Any shortfall
shall be paid to Purchaser by Seller upon demand. Purchaser will collect all
rents after Closing whether past due or for future periods. Purchaser will
credit all receipts first to current rentals and other payments due and will
remit to Seller any excess amounts which may be applied to past due rents.
Purchaser will have no liability for failure to collect past due rents.
7. REPRESENTATIONS AND WARRANTIES: Attached hereto and incorporated
------------------------------
herein by reference designated Exhibit "F" is a list of matters concerning the
legality and proper operation of the Property which Seller is making to
Purchaser.
8
<PAGE>
8. PROVISIONS WITH RESPECT TO DEFAULT.
----------------------------------
(a) Default by Seller. In the event that Seller should fail to consummate
-----------------
the transaction contemplated herein for any reason, except Purchaser's default,
Purchaser may (i) enforce specific performance on this Agreement, (ii) elect to
receive a return of all Earnest Money along with any interest earned thereon, or
(iii) pursue its remedies available at law or in equity.
(b) Default by Purchaser. In the event Purchaser should fail to consummate
--------------------
the transaction contemplated herein for any reason after expiration of the Due
Diligence Period, provided, however, that the Additional Deposit is made, except
default by Seller or the failure of any condition to Purchaser's obligations, as
set forth herein, Seller may, as its sole and exclusive remedy, terminate this
Agreement and retain the Earnest Money, with accrued interest, such sum being
agreed upon as liquidated damages for the failure of Purchaser to perform the
duties and obligations imposed upon it by the terms and provisions of this
Agreement and because of the difficulty, inconvenience, and uncertainty of
ascertaining actual damages. No other damages, rights or remedies shall in any
case be collectible, enforceable or available to Seller other than as provided
in this Paragraph 8(b).
(c) Attorney's Fees, etc. Should either party employ an attorney or
---------------------
attorneys to enforce any of the provisions hereof, or to protect its interest in
any matter arising under this Agreement, or to specifically enforce or to
recover the Earnest Money for the breach of this Agreement, the party prevailing
shall be entitled to recover from the other party all reasonable costs, charges
and expenses, including attorney's fees, expended or incurred in connection
therewith, including fees and expenses incurred in arbitration, on appeal or in
any bankruptcy action.
9. COMMISSIONS. The commission payable to Bear Stearns (the "Broker")
-----------
pursuant to this Agreement shall be paid by Purchaser, pursuant to separate
written agreement between the Purchaser and the Broker. Seller and Purchaser
further agree to indemnify and hold each other harmless from and against any and
all other claims or demands with respect to any brokerage fees or agents'
commissions or other compensation asserted against the other party by any
persons, firm or corporation claiming through the indemnifying party in
connection with this Agreement or the transaction contemplated hereby. The
Broker's commission is payable only if, as and when the transaction closes. The
provisions of this paragraph shall survive closing.
10. EMINENT DOMAIN AND CASUALTY DAMAGE.
----------------------------------
(a) Eminent Domain. If, before Closing, proceedings are commenced for the
--------------
taking by exercise of the power of eminent domain of all or a part of the
Property which
9
<PAGE>
would render the Property unacceptable to Purchaser or unsuitable for
Purchaser's intended use, Purchaser shall have the right, by giving notice to
Seller within thirty (30) days after Seller gives written notice of the
commencement of such proceedings to Purchaser, to terminate this Agreement, in
which event this Agreement shall terminate and all Earnest Money, including
interest thereon shall be refunded to Purchaser. If, before the Closing Date,
Purchaser has the right to terminate this Agreement pursuant to the preceding
sentence but Purchaser does not exercise such right, then this Agreement shall
remain in full force and effect and, at Closing, the condemnation award (or, if
not theretofore received, the right to receive such award) payable on account of
the taking shall be transferred to Purchaser. Seller shall give written notice
to Purchaser promptly after Seller's receiving notice of the commencement of any
proceedings for the taking by exercise of the power of eminent domain of all or
any part of the Property. Purchaser shall have a period of thirty (30) days
after Seller has given the notice to Purchaser required by this Paragraph 10(a)
to evaluate the extent of the taking and make the determination as to whether to
terminate this Agreement. If necessary, the Closing Date shall be postponed
until Seller has given the notice to Purchaser required by this Paragraph 10(a)
and the period of thirty (30) days described in this Paragraph 10(a) has
expired.
(b) Casualty Damage. If, before the Closing Date, all or any part of the
---------------
Property is damaged or destroyed by any casualty, Purchaser shall have the
right, by giving notice to Seller within thirty (30) days after Seller gives
written notice of the occurrence of such casualty to Purchaser, to terminate
this Agreement, in which event this Agreement shall terminate, and all Earnest
Money, including interest thereon shall be refunded to Purchaser. If, before
the Closing Date, all or any part of the Property are damaged by any casualty or
if Purchaser has the right to terminate this Agreement pursuant to the preceding
sentence but Purchaser does not exercise such right, then this Agreement shall
remain in full force and effect and, at Closing, any insurance proceeds shall be
assigned by Seller to Purchaser. Seller shall give written notice to Purchaser
promptly after the occurrence of any damage to the improvements on the Property
by any casualty. Purchaser shall have a period of thirty (30) days after Seller
has given the notice to Purchaser required by this Paragraph 10(b) to evaluate
the extent of the damage and make the termination as to whether to terminate
this Agreement. If necessary, the Closing shall be postponed until Seller has
given the notice to Purchaser required by this Paragraph 10(b) and the period of
thirty (30) days described in this Paragraph 10(b) has expired.
11. INFORMATION: Within five (5) days from the date this Agreement is
-----------
executed, Seller shall furnish such items as Purchaser shall reasonably request
but in any event including the following:
(a) Real estate tax bills for the current and two preceding years;
10
<PAGE>
(b) Owner's title insurance policy;
(c) Current survey;
(d) Environmental reports made or known to you with respect to the
Property;
(e) List of pending litigation and status report;
(f) Copies of covenants or restrictions pertaining to the Property, and
copies of approved site plan, zoning information, whether adjacent
roads have been accepted for public use, information as to
availability of utilities to the site, signage restrictions and
availability of signage to the Property, all zoning approvals,
variances and ordinances applicable;
(g) Utility bills for the current year;
(h) Copies of all contracts, if any, in effect such as janitorial,
maintenance, cable company, utility company, management, leasing or
other, as well as copies of any guaranties or warranties, including a
termite bond;
(i) Operating income and expenses for the current year;
(j) True and correct copies of the form lease and any amendments or
modifications thereof;
(k) Current rent roll;
(l) Present location of all utilities which will serve the premises,
whether underground or overhead, together with documentation
reflecting any easements or other rights pertaining thereto and the
ability of the owner of the Property to access such utilities and
easements;
(m) Copies of insurance policies and Loss Run regarding insurance;
(n) Engineering/structural reports on the Property;
(o) As-built constructions plans and site plans and drawings, certificates
of occupancy and building permits; and
11
<PAGE>
(p) List of all inventory, personal property, furniture, fixtures and
equipment located on or used in connection with the Property.
Note: Any management or leasing obligations must be satisfied and released
----
prior to Closing.
12. CONDITIONS PRECEDENT. This contract is conditioned upon the
--------------------
following being satisfied on or prior to Closing.
(a) Seller executing an amendment to its partnership agreement
permitting the sale of the Property; and
(b) approval by the limited partners of Seller to the transaction
contemplated by this contract.
In the event either of the conditions set forth above are not completed on or
prior to Closing, all Earnest Money shall be refunded to Purchaser, and this
Agreement shall terminate.
13. OTHER CONTRACTUAL PROVISIONS.
----------------------------
(a) Notices. Any notice to be given or to be served upon any party
-------
hereto in connection with this Agreement must be in writing, and may be given by
certified mail, or overnight receipt delivery service, and shall be deemed to
have been given and received when a certified letter containing such notice,
properly addressed, with postage prepaid, is deposited in the United States
mail; and, if given otherwise than by certified mail, it shall be deemed to have
been given when delivered to and received by the party to whom it is addressed.
Such notices shall be given to the parties hereto at the following addresses:
FOR PURCHASER: Colonial Realty Limited Partnership
c/o Colonial Properties Holding Company, Inc.
2101 6th Avenue North
Suite 750
Birmingham, Alabama 35203
Attention: Mr. Paul F. Earle
FOR SELLER: Riverchase Investors I, Ltd.
c/o Colonial Properties Management Association
2101 6th Avenue North, Suite 750
Birmingham, Alabama 35203
Attention: Mr. Thomas H. Lowder
12
<PAGE>
Any party hereto may, at any time by given written notice to the other party
hereto, designate any other address in substitution of the foregoing address to
which such notice shall be given and other parties to whom copies of all notices
hereunder shall be sent.
(b) Confidentiality. Seller acknowledges that it has been informed that
---------------
Purchaser is affiliated with Colonial Properties Trust (the "REIT"), a company
whose securities are publicly traded. Seller agrees not to disclose the
existence of this Agreement, or discussions about or the terms hereof (except to
its attorneys, accountants, other advisors and partners, provided that they
agree not to disclose such information) without Purchaser's consent, unless
required by law or unless such information is otherwise publicly available.
Seller also agrees not to utilize any confidential information about the REIT
learned as a result of this transaction in connection with investments and the
securities of the REIT.
(c) Entire Agreement; Modification. This Agreement embodies and
------------------------------
constitutes the entire understanding between the parties with respect to the
transaction contemplated herein. All prior or contemporaneous agreements,
understandings, representations, and statements, oral or written, are merged
into this Agreement. Neither this Agreement nor any provisions hereof may be
waived, modified, amended, discharged, or terminated except by an instrument in
writing signed by the party against whom the enforcement of such waiver,
modification, amendment, discharge or termination is sought, and then only to
the extent set forth in such instrument.
(d) Applicable Law. This Agreement shall be governed by, and construed in
--------------
accordance with, the laws of the State of Florida.
(e) Binding Effect. This Agreement shall be binding upon and inure to the
--------------
benefit of the parties hereto and their successors and assigns.
(f) Severability. In case any one or more of the provisions contained in
------------
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.
(g) Effective Date of Agreement. For all purposes herein, the "date" of
---------------------------
this Agreement shall be that date upon which the last of Seller or Purchaser
executes this Agreement.
(h) Gender. Whenever the context permits, singular shall include plural
------
and one gender shall include all.
13
<PAGE>
(i) Time of the Essence. Time is of the essence of this Agreement. Time
-------------------
periods herein of less than six (6) days, unless otherwise noted, shall in the
computation exclude Saturdays, Sundays and state or national legal holidays, and
any time period provided for herein which shall end on Saturday, Sunday or legal
holiday shall extend to 5:00 p.m. of the next business day.
(j) Risk of Loss. Except as otherwise set forth in this Agreement, Seller
------------
shall bear the risk of any loss to the Property prior to Closing.
(k) Construction. The parties hereby agree that each has played an equal
------------
part in the negotiations and drafting of this Agreement, and in the event any
ambiguities should be realized in the construction or interpretation of this
Agreement, the result of those ambiguities shall be equally assumed and realized
by each of the parties to this Agreement.
(l) Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be an original, but all of which shall constitute one and the same
Agreement.
(m) Survival. All provisions hereof which are executory in nature or
--------
otherwise by their context are intended to survive Closing shall be deemed to
survive such Closing.
(n) Radon Gas. Purchaser acknowledges the following statutory disclosure
---------
by Seller: Radon is a naturally occurring radioactive gas that, when it has
accumulated in a building in sufficient quantities, may present health risks to
persons who are exposed to it over time. Levels of radon that exceed federal
and state guidelines have been found in buildings in Florida. Additional
information regarding radon testing may be obtained from your county public
health unit.
14. ACCEPTANCE: The offer made in this Agreement by Purchaser shall
----------
expire and be null and void unless accepted, signed, and returned to
Purchaser by September _______, 1997. This offer supersedes any and all other
offers made by Purchaser with respect to the Property.
PURCHASER:
COLONIAL REALTY LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Colonial Properties Holding Company, Inc.,
an Alabama corporation
Its: General Partner
14
<PAGE>
By:
-------------------------------------
Charles A. McGehee
Its: Executive Vice President
SELLER:
RIVERCHASE INVESTORS I, LTD., a Florida limited
partnership
By:
-------------------------------------
Thomas H. Lowder
Its: General Partner
By:
-------------------------------------
James K. Lowder
Its: General Partner
By:
-------------------------------------
Robert E. Lowder
Its: General Partner
By:
-------------------------------------
John H. McClintoch, Jr.
Its: General Partner
By:
-------------------------------------
James H. Pugh
Its: General Partner
By: Battery Park Capital Corp.
Its: General Partner
By:
---------------------------------
Its:
--------------------------------
15
<PAGE>
LIST OF EXHIBITS
Exhibit A Legal Description of the Property
Exhibit B-1 Survey Instructions
Exhibit B-2 Surveyor Certificate
Exhibit C General Warranty Deed
Exhibit D FIRPTA Affidavit
Exhibit E Bill of Sale
Exhibit F Representations and Warranties
Exhibit G Assignment of Guaranties and Warranties
Exhibit H Assignment of Leases
Exhibit I Assignment of Intangibles
Exhibit J Assignment and Assumption of Contracts
<PAGE>
EXHIBIT "A"
LEGAL DESCRIPTION
-----------------
<PAGE>
Appendix B
- ----------
OPINION OF STANGER
<PAGE>
FORM OF OPINION
Riverchase Investors I, Ltd..
2101 6th Avenue North - Suite 750
Birmingham, Alabama 35202
Gentlemen:
You have advised us that Riverchase Investors I, Ltd. (the "Partnership")
is entering into a transaction (the "Sale") in which Riverchase Apartments -
Phase I, an apartment property consisting of 248 units owned by the Partnership
and located in Temple Terrace, Florida (the "Project"), will be sold to Colonial
Realty Limited Partnership (the "Purchaser"), an indirect subsidiary of Colonial
Properties Trust, a publicly-traded real estate investment trust affiliated with
the general partner of the Partnership, for an all-cash purchase price of $
(the "Purchase Price"). The limited partners of the Partnership will be asked
to approve the Sale.
The general partners of the Partnership (the "General Partners") have
requested on behalf of the Partnership that Robert A. Stanger & Co., Inc.
("Stanger") provide its opinion as to the fairness, from a financial point of
view, of the Purchase Price to be received by the Partnership in exchange for
the purchase of the Project.
In the course of our review to render this opinion, we have, among other
things:
. Reviewed a draft of the Consent Solicitation Statement related to the
Sale, which management has informed us is in substantially the form
which will be filed with the Securities and Exchange Commission
("SEC");
. Reviewed a draft of the Real Estate Sales Contract between the
Partnership and the Purchaser, which management has informed us is in
substantially the form which will be used to consummate the
transaction;
. Reviewed the Partnership's annual reports filed with the SEC on Form
10-K for the three fiscal years ending December 31, 1994, 1995 and
1996 and the quarterly reports filed with the SEC on Form 10-Q for the
three-month period ending March 31, and June 30, 1997, which reports
the Partnership's management has indicated to be the most current
publicly available financial statements;
2
<PAGE>
. Reviewed summary historical operating statements for the Project for
1994, 1995, 1996 and year-to-date through July 31, 1997, and operating
forecasts for 1997;
. Performed a site inspection of the Project and reviewed local real
estate market conditions;
. Reviewed information regarding purchases and sales of apartment
properties in the general market area of the Project and by entities
affiliated with the Partnership and/or the General Partner and other
information relating to acquisition criteria for apartment properties;
. Discussed with management of the Partnership conditions in the local
market for apartment properties, conditions in the market for
sales/acquisitions of properties similar to that owned by the
Partnership, current and projected operations and performance of the
Project, the physical condition of the Project, and the financial
condition of the Partnership;
. Interviewed representatives of Bear Stearns regarding the process of
soliciting, receiving and evaluating bids and conducting negotiations;
. Reviewed offering materials relating to the Project and the complex
provided to prospective Purchasers, and a summary of the bids which
were received as a result of the conduct of the bidding process; and
. Conducted other studies, analyses, inquires and investigations as
Stanger deemed appropriate.
In rendering this fairness opinion, we have relied upon and assumed,
without independent verification, the accuracy and completeness of all financial
and other information contained in the Consent Solicitation Statement or that
was furnished or otherwise communicated to us by the Partnership, the General
Partner and the Project manager. We have not performed an independent appraisal
of the assets and liabilities of the Partnership. We have relied on the
assurances of the Partnership that any financial statements, projections, or
forecasts contained in the Consent Solicitation Statement or otherwise provided
or communicated to us, were reasonably prepared on bases consistent with actual
historical experience and reflect the best currently available estimates and
good faith judgments; that no material changes have occurred in the information
reviewed between the date of such information and the date of this letter; and
that the Partnership is not aware of any information or facts that would cause
the information supplied to us to be incomplete or misleading in any material
respect.
We have not been requested to, and therefore did not: (i) select the method
of determining the Purchase Price offered in the Transaction; (ii) make any
recommendation to the partners of
3
<PAGE>
the Partnership with respect to whether to approve or reject the Sale; or (iii)
express any opinion as to the business decision to effect the Sale, alternatives
to the Sale, or tax factors resulting from the Sale. Our opinion is based on
business, economic, real estate and securities markets, and other conditions as
of the date of our analysis and addresses the Sale in the context of information
available and could be evaluated as of the date of our analysis. Events
occurring after that date may materially affect the assumptions used in
preparing the opinion.
Based upon and subject to the foregoing, and in reliance thereon, it is our
opinion that as of the date of this letter the Purchase Price to be received in
exchange for the Project in the Sale is fair to the Partnership from a financial
point of view.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. We have
advised the Partnership that our entire analysis must be considered as a whole
and that selecting portions of our analysis and the factors considered by us,
without considering all analyses and facts, could create an incomplete view of
the evaluation process underlying this opinion.
Yours truly,
Robert A. Stanger & Co., Inc.
Shrewsbury, New Jersey
August __, 1997
4
