SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ___)*
American Community Property Trust
(Name of Issuer)
Common Stock
(Title of Class of Securities)
02520N106
(CUSIP Number)
Martin D. Sklar, Esq., Kleinberg, Kaplan, Wolff & Cohen, P.C., 551 Fifth Avenue,
New York, New York 10176 Tel: (212) 986-6000 (Name, Address and Telephone Number
of Person Authorized to Receive Notices and Communications)
March 20, 2000
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
CUSIP Number: 02520N106
Page 21 of 10
1. NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Chap-Cap Partners, L.P., a Delaware Limited Partnership
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)[x]
(b)[ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7. SOLE VOTING POWER
0
8 SHARED VOTING POWER
277,400
9. SOLE DISPOSITIVE POWER
0
10. SHARED DISPOSITIVE POWER
277,400
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
277,400
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.4%
14. TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
1. NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Chapman Capital L.L.C., a Delaware Limited Liability Company
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)[x]
(b)[ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7. SOLE VOTING POWER
0
8 SHARED VOTING POWER
277,400
9. SOLE DISPOSITIVE POWER
0
10. SHARED DISPOSITIVE POWER
277,400
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
277,400
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.4%
14. TYPE OF REPORTING PERSON*
OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
1. NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Robert L. Chapman, Jr.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)[x]
(b)[ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7. SOLE VOTING POWER
0
8 SHARED VOTING POWER
279,400
9. SOLE DISPOSITIVE POWER
0
10. SHARED DISPOSITIVE POWER
279,400
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
279,400
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.4%
14. TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
ITEM 1. Security and Issuer
This statement relates to the common stock (the "Common Stock") of
American Community Properties Trust (the "Issuer"). The Issuer's principal
executive office is located at 222 Smallwood Village Center, St. Charles, MD
20602.
ITEM 2. Identity and Background
(a)-(c) This statement is being filed by Chap-Cap Partners, L.P., a
Delaware limited partnership ("Chap-Cap"), Chapman Capital L.L.C., a Delaware
limited liability company ("Chapman Capital"), and Robert L. Chapman, Jr.
(collectively, the "Reporting Persons"). Chap-Cap's present principal business
is investing in marketable securities. Chapman Capital's present principal
business is serving as the General Partner of Chap-Cap. Robert L. Chapman, Jr.'s
present principal occupation is serving as Managing Member of Chapman Capital.
Chapman Capital and Robert L. Chapman, Jr. each expressly disclaims equitable
ownership of and pecuniary interest in any Common Stock.
Chap-Cap, Chapman Capital and Robert L. Chapman, Jr.'s business address is
Citicorp Center, 23rd Floor, 725 S. Figueroa Street, Los Angeles, California
90017.
(d) and (e) During the last five years, none of the persons or entities
above has been (i) convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors); or (ii) a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
(f) Robert L. Chapman, Jr. is a citizen of the United States.
ITEM 3. Source and Amount of Funds or Other Consideration
The source and amount of funds used by the Reporting Persons in making their
purchases of the shares of Common Stock beneficially owned by them are set forth
below:
SOURCE OF FUNDS AMOUNT OF FUNDS
Working Capital $1,246,520.00
<PAGE>
ITEM 4. Purpose of Transaction
The Reporting Persons acquired the Common Stock beneficially owned by
them in the ordinary course of their trade or business of purchasing, selling,
trading and investing in securities.
The Reporting Persons intend to review their investment in the Issuer
on a continuing basis and, depending on various factors, including the Issuer's
business, affairs and financial position, other developments concerning the
Issuer, the price level of the Common Stock, conditions in the securities
markets and general economic and industry conditions, as well as other
investment opportunities available to them, may in the future take such actions
with respect to their investment in the Issuer as they deem appropriate in light
of the circumstances existing from time to time. Such actions may include,
without limitation, the purchase of additional shares of Common Stock in the
open market and in block trades, in privately negotiated transactions or
otherwise, the sale at any time of all or a portion of the Common Stock now
owned or hereafter acquired by them to one or more purchasers, or the
distribution in kind at any time of all or a portion of the Common Stock now
owned or hereafter acquired by them.
Robert L. Chapman Jr. has spoken extensively with management of the
Issuer regarding the possibility of, or seeking to influence the management of
the Issuer with respect to, business strategies, recapitalizations, sales of
assets, negotiated or open-market stock repurchases or other extraordinary
corporate transactions. In particular, Mr. Chapman seeks the partial or full
liquidation of the Issuer's assets, which, after the repayment of all
liabilities associated with the Issuer and its assets, Mr. Chapman believes
would result in residual liquidation value to common shareholders in excess of
$15.00 and possibly as high as $25 per share. Such estimate of residual value is
based on an appraisal conducted by Robert A. Stanger & Company in association
with the Issuer's spinoff from Interstate General Company L.P. in October 1998.
It is Mr. Chapman's belief that since the time of such appraisal, the Issuer's
assets have, as a whole, appreciated significantly based on the development and
positive investment environment for those assets.
The Reporting Persons may in the future consider a variety of different
alternatives to achieving their goal of maximizing shareholder value, including
negotiated transactions, tender offers, proxy contests, consent solicitations,
or other actions. However, it should not be assumed that the Reporting Persons
will take any of the foregoing actions. The Reporting Persons reserve the right
to participate, alone or with others, in plans, proposals or transactions of a
similar or different nature with respect to the Issuer.
Except as set forth above, as of the date of this filing none of the
Reporting Persons has any plans or proposals, which relate to or would result in
any of the actions set forth in parts (a) through (j) of Item 4. Such persons
may at any time reconsider and change their plans or proposals relating to the
foregoing.
ITEM 5. Interest in Securities of the Issuer
(a) Together, the Reporting Persons beneficially own a total of 279,400
shares of Common Stock constituting 5.4% of all of the outstanding shares of
Common Stock.
(b) The Reporting Persons have the shared power to vote or direct the
vote of, and to dispose or direct the disposition of, the shares of Common Stock
beneficially owned by them.
(c) The following transactions were effected by the Reporting Persons
during the past sixty (60) days:
Approximate Price
per Share
Amount of (inclusive of
Date Security Shares Bought commissions)
02/09/00 Common 3,200 $3.17
02/17/00 Common 4,700 $3.29
02/18/00 Common 3,300 $3.29
02/22/00 Common 200 $3.29
02/24/00 Common 3,200 $3.29
03/15/00 Common 7,800 $3.45
03/20/00 Common 25,800 $3.53
03/24/00 Common 200 $3.53
03/27/00 Common 400 $3.45
Approximate Price
per Share
Amount of (inclusive of
Date Security Shares Sold commissions)
03/24/00 Common 8,500 $3.30
The above transactions were effected by the Reporting Persons on the
American Stock Exchange.
Other than the transactions described above, no other transactions with
respect to the Common Stock were effected by the Reporting Persons during the
past sixty (60) days.
(d) No person other than the Reporting Persons has the right to receive
or the power to direct the receipt of dividends from, or the proceeds from the
sale of, the shares of Common Stock beneficially owned by the Reporting Persons.
(e) Not applicable.
ITEM 6. Contracts, Arrangements, Understandings or Relationships With Respect to
Securities of the Issuer
Not applicable.
ITEM 7. Material to be Filed as Exhibits
Exhibit A - Joint Filing Agreement
Exhibit B - Letter from Chapman Capital L.L.C. to Issuer dated 3/30/2000
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of its knowledge and belief,
the undersigned each certifies that the information with respect to it set forth
in this statement is true, complete and correct.
Dated: March 30, 2000
CHAP-CAP PARTNERS, L.P.
By: Chapman Capital L.L.C.,
as General Partner
By: /s/ Robert L. Chapman, Jr.
Robert L. Chapman, Jr.
Managing Member
CHAPMAN CAPITAL L.L.C.
By: /s/ Robert L. Chapman, Jr.
Robert L. Chapman, Jr.
Managing Member
/s/ Robert L. Chapman, Jr.
Robert L. Chapman, Jr.
<PAGE>
EXHIBIT A
JOINT FILING AGREEMENT
The undersigned hereby agree that the statement on Schedule 13D with
respect to the Common Stock of American Community Property Trust dated March
30,2000, is, and any further amendments thereto signed by each of the
undersigned shall be, filed on behalf of each of the undersigned pursuant to and
in accordance with the provisions of Rule 13d-1(f) under the Securities Exchange
Act of 1934, as amended.
Dated: March 30, 2000
CHAP-CAP PARTNERS, L.P.
By: Chapman Capital L.L.C.,
as General Partner
By: /s/ Robert L. Chapman, Jr.
Robert L. Chapman, Jr.
Managing Member
CHAPMAN CAPITAL L.L.C.
By: /s/ Robert L. Chapman, Jr.
Robert L. Chapman, Jr.
Managing Member
/s/ Robert L. Chapman, Jr.
Robert L. Chapman, Jr.
<PAGE>
[OBJECT OMITTED]
Robert L. Chapman, Jr.
Managing Member
March 30, 2000
Mr. J. Michael Wilson
Chairman, CEO
American Community Properties Trust
222 Smallwood Village Center
St. Charles, MD 20602
Phone: (301) 870-6632
Via Airborne Express:
Dear Mr. Wilson,
Over the past several years, Chapman Capital L.L.C., as general partner of
Chap-Cap Partners, L.P., has invested more capital into the shares of American
Community Properties Trust (ACPT) than any other shareholder. Despite the fact
that ACPT's predecessor Interstate General Company L.P. was (and continues to
be) headed by your father who at the time of our original investment was a
four-count convicted felon (by a jury of his peers after only 15 hours of
deliberation in a U.S. District Court, under Section 404 of the federal Clean
Water Act violations that landed him an un-served 21-month prison sentence), I
included your family's ownership position and apparent efforts to increase
shareholder value among the valid reasons to invest in a highly-undervalued
microcap company. Unfortunately, it now appears that the restructuring's true
motive may have been aimed at promoting Wilson family nepotism and furthering
lucrative related-party transactions mentioned in your SEC filings.
Specifically, on December 19, 1996 IGC announced that its effective Board
of Directors had "determined to pursue the development and implementation of a
plan to restructure the publicly-traded partnership in order to enhance
Unitholder value." The plan called for "placing the company's multi-family
apartment assets into a publicly traded Real Estate Investment Trust (REIT)
where their value can be more clearly evaluated, and disposing of land
development assets that require substantial additional capital investment, which
IGC found difficult to obtain." IGC CEO Jim Wilson proclaimed at the time "The
Board's purpose in approving this plan is to enhance Unitholder value as quickly
as possible. It is clear that our assets are being undervalued by the market in
our current structure." The 1998 Restructuring proxy statement further
encouraged Unitholders that "management of IGC and ACPT believe that the
combined trading price of the Common Shares and the IGC Units after the
Distribution will exceed the trading price of the IGC Units prior the
Distribution."
Almost two and one half years later, "Unitholders" owning IGC and its
spinoff APCT are left with anything but "enhanced" value. In fact, the combined
value of our investment has fallen by approximately 40% since your forecast of
an appreciation in blended value (cited above). Moreover, all IGC holders
unfortunate enough to have maintained their positions in the Equus Gaming
spinoff have lost close to 80% of their investment. Between ACPT's failed
efforts to raise $35 million in convertible preferred shares and its July 2,
1999 announcement that its American Rental Properties subsidiary will not be
eligible for REIT tax status prior to 2004, management's "work" seems to be
compounding strategic blunder on Wilson-family plunder. Indeed, it seems that
the only group earning any positive return from their association with
IGC-related entities are the Wilson family and closely-associated parties.
You have continually claimed to be taking steps to make ACPT more
attractive to institutional investors. The 1998 Restructuring proxy statement
predicted that "enlarging the group of potential investors for ACPT Common
Shares should produce a more liquid market than currently exists for IGC Units."
Later in your July 2, 1999 mea culpa disclosure of REIT status disqualification,
you stated "the primary purpose of the 1998 restructuring that led to ACPT's
formation was to create an investment vehicle ... eligible for investments by
pension trusts and mutual funds."
Yet, as your largest non-Wilson family partner in ACPT, Chapman Capital
L.L.C.'s Chap-Cap Partners, L.P. can definitively label your behavior as
"investor-unfriendly." Our group has recorded time lapses of as long as one year
of delay in return phone calls from you, even after daily follow-up messages
were left with your secretary. Recently, ACPT president Edwin Kelly (who is
being paid $275,000 per year by ACPT's shareholders) has joined the obstruction
parade, returning our three-phone messages-per-day efforts only after an
outrageous three-week delay. Another large ACPT shareholder, Leeward
Investments, has informed us that it too is highly dissatisfied with your
performance and lack of communication. Making matters even more suspicious, we
have been informed by numerous prospective institutional investors that their
calls to management have never been returned. How do you expect to grow
institutional interest in ACPT while maintaining this kind of irresponsive and
insulting behavior towards Wall Street and the other institutional investors you
claim to be courting? Could it be that your true motive is to tacitly dissuade
institutional demand for ACPT shares so that the Wilson family can attempt a
low-ball, single-digit per share buyout offer for the public shares at some
point in the future?
In addition to the above "radio silence" with Wall Street, non-Wilson
family executive departures at IGC have also troubled existing and prospective
investors in ACPT for some time. Starting with the June 18, 1996 departure of
IGC COO Gregory Kreizenbeck and CFO John Hans soon thereafter, the Wilson family
has developed an alarming pattern of executive turnover. In January 1998, Jorge
Colon Nevares resigned as a director of IGMC, being replaced by Thomas Shafer
(who earns $30,000 per year in consulting fees). Recently, we discovered that
Benjamin Poole, who is listed as CFO of IGC in its documents and public filings
(and who your administrative staff continues to claim is active in that
position), is in fact no longer an officer at IGC and instead is working as an
independent consultant out of his home as of mid-March. In summary, to your
credit IGC has lost two CFOs, a COO and a key director over the past several
years, further damaging IGC and affiliate ACPT's reputation.
In the 1998 Restructuring, non-REIT qualifying assets (primarily
undeveloped land) were acquired by "Wilson family entities". Chapman Capital now
questions whether those transactions were in fact arms length, and exactly what
kind of auction process was utilized to ensure that IGC and APCT holders
received the highest price available in the market at the time of sale. IGC's
partnership agreement required that all transactions between IGC and the Wilson
family be supported by asset appraisals, yet we have not been able to find
evidence that such transactions were supported by an auction-style sale process.
Chapman Capital would also be interested in obtaining details of your personal
involvement in the June 30, 1997 purchase of 374 acres from ACPP for
$3,000,000.00 (requiring you to provide a mere 20% down payment) and your
personal involvement in the April 1, 1996 purchase of a note receivable for
$1,279,000 from ACPP.
In addition, Chapman Capital is interested in discovering the composition
of the > $4.5 million in "general and administrative" expenses (based on the
most recent Form 10-Q filing for the nine months ending September 30, 1999), an
amount which consumed two-thirds of APCT's rental property revenues in the third
quarter. At best this enormous cash outflow represents egregious inefficiencies
in managing the company (particularly in collecting management fees and notes
receivable), precluding the required distribution to shareholders of 45% of
taxable income as so little , if any, income remains. In fact, I am confident
that your public shareholders would be very interested to see exactly how many
APCT dollars are flowing into the hands of Wilson family entities, whether
labeled as incentive fees, $500,000 in consulting fees to your father,
management fees, distributions from unconsolidated partnerships, cost of
sales-community development, purchases of minority interests or any other
category of related-party transactions. Your shareholders have a legal right to
such information, and given your father's background with the legal system and
ACPT's never-ending water/sewer litigation with Charles County, I am confident
your father would feel at-home in a scenario where those facts underwent
discovery.
In association with the 1998 Restructuring of IGC (and creation of ACPT),
an appraisal of ACPT's assets was commissioned. By the company's own
calculation, as of December 31, 1996 the Net Asset Value (NAV) per share of ACPT
was estimated to be just under $21.00, or almost 6 x the current stock market
price of ACPT's shares (American Stock Exchange, 3/30/2000 price of $3 5/8 per
share). Since those appraisals by Robert F. McCloskey Associates (LDA's Parque
Escorial's saleable land, representing < 50% of its total acreage, at $35.9 MM
in 12/1996; Canovanas at $6.1 MM as of 6/1995), Smail Associates (Smallwood,
Westlake Village, Wooded Glen, and Piney Reach in St. Charles at $40.4 MM as of
12/1996), James B. Hooper, P.A. (Fairway Village in St. Charles at $23.2 MM as
of 5-10/1997), and by various parties for American Housing, American Management
and other interests, the real estate market in ACPT's areas of concentration
have been vibrant. Appreciation of 5-10% per year on average could be considered
conservative given the rate of real estate inflation experienced nationwide
since the mid 1990s. Based on the initial appraisals plus appreciation thereon,
Chapman Capital estimates an appraisal conducted today would assign a NAV of
over $25 per ACPT share as of year end 1999.
To escape any accusation that this letter offers much criticism without
proffering a solution, I will address that area now. ACPT is a partnership whose
structure is similar to a closed-end real estate fund. On Wall Street, when
individuals who understand their fiduciary duties manage this type of fund,
either major repurchase programs are instituted (which by definition accrete to
NAV/share) or a full liquidation is instituted. Recently, both Baker, Fentress &
Company (NYSE: BKF) and Corporate Renaissance Group (NASDAQ: CREN) adopted and
executed plans to increase shareholder value by selling substantially their
entire portfolios of investments and distributing the net proceeds to
shareholders. James Gorter, the highly-regarded chairman of the board of BKF,
said, "For some time, the board of directors has been concerned about the
persistent, large discount at which Baker Fentress shares have traded in the
market. After thoughtful deliberation over several months, the board has
concluded that the proposed plan is the best way to maximize returns to our
shareholders. The distribution of cash from the liquidation of the Company's
publicly-traded portfolio will allow shareholders to reinvest the proceeds in
other investment alternatives ...".
A partial or full liquidation of ACPT is clearly the most efficacious means
to maximizing shareholder value, or at a minimum dramatically narrowing the 85%
discount to estimated NAV/share. The U.S. and Puerto Rican real estate arenas
are clearly "seller's markets," allowing a restructuring involving the sale of
the company's appreciated properties to pay reduce debt and to pay shareholders
a special dividend immediately thereafter. At this point, APCT is not paying a
consistent dividends of any kind reflecting realized gains on its assets, and
its shareholders outside of the Wilson family are not on the company payroll or
consulting-fee gravy train. Thus, the only reward we can receive is through the
common shares' appreciation, a responsibility entrusted to the executive
management team that has failed to accomplish it. Unfortunately, you shirked
your responsibility and betrayed our trust by failing to achieve any reasonable
share price appreciation for several years now.
Chapman Capital L.L.C. seriously questions the integrity and dedication to
shareholder interests of the Wilson family. While the proxy statement for the
1998 Restructuring warned that "members of the Wilson family will be able to
exert substantial control over votes on matters affecting ACPT ... [which] is
subject to other conflicts of interest arising out its relationships with ...
members of management and their affiliates," never in our worst nightmares did
we envision the extent to which "certain decisions by these parties may have an
adverse effect on the interests of shareholders." If the Trustees desire to
continue running ACPT as a real-life version of Monopoly whereby a 32-year old
graduate of Manhattan College in the Bronx and former bank loan administrator is
named CEO by his father, then I strongly suggest you take the company private,
wherein underserved, nepotistic practices are not scrutinized.
ACPT's stated business objective is "to maximize Shareholder value by
investing, holding and developing assets that will generate cash for
distribution to Shareholders." Having received a grand total of 5c in
distributions since the 1998 Restructuring, it is fair to say that you have
failed in accomplishing this objective. Chapman Capital is perplexed by your
cognitive dissonance relating to losing REIT status as well: the 1998
Restructuring proxy statement noted "Treatment of American Rental as an
association taxable as a corporation ... would have a significant adverse effect
on the value of the Common Shares," whereas you claimed on July 2, 1999 that
"American Rental's inability to comply with REIT requirements will not have a
material effect on ACPT's financial condition." While Leeward's Mr. Von der
Porten appears willing to passively subject his investors to significantly
underperforming investments like that of ACPT, Chapman Capital will not idly
stand by and watch the Wilsons treat ACPT like a private family company. As ACPT
is essentially a partnership, Chap-Cap Partners are your partners, and until
such time as that is no longer the case, we demand that the Board of Trustees
take actions to compel you to treat them as such.
Very truly yours,
Robert L. Chapman, Jr.
<PAGE>
EXHIBIT: RELATED PARTY DEALINGS OF ACPT
Certain officers, directors and a general partner, IBC, of IGC and certain
officers and trustees of the Company have ownership interests in various
entities that conducted business with the Company during the last two years. In
addition, the Company transacts business with substantially all of its non-
consolidated subsidiaries. The financial impact of the related party
transactions on the accompanying financial statements are reflected below:
================================================================================
CONSOLIDATED STATEMENT OF INCOME:
================================================================================
================================================================================
Nine Months Ended Three Months Ended
================================================================================
================================================================================
September 30, September 30,
================================================================================
================================================================================
1999 1998 1999 1998
================================================================================
================================================================================
Community Development - Land Sales (A)
================================================================================
================================================================================
Homebuilding joint venture $ 1,488 $ 1,179 $ 415 $ 559
================================================================================
================================================================================
================================================================================
================================================================================
Cost of Land Sales
================================================================================
================================================================================
Homebuilding joint venture $ 1,182 $ 936 $ 323 $ 446
================================================================================
================================================================================
================================================================================
================================================================================
Management and Other Fees (B)
================================================================================
================================================================================
Unconsolidated subsidiaries $ 1,554 $ 1,717 $ 519 $ 510
================================================================================
================================================================================
Affiliate of IBC, general
partner of IGC 265 261 93 78
================================================================================
================================================================================
Affiliate of James Michael
Wilson, trustee, former IGC
================================================================================
================================================================================
Director, Thomas B. Wilson,
trustee, former IGC director,
================================================================================
================================================================================
and James J. Wilson,
IGC director 123 118 43 41
================================================================================
================================================================================
Affiliate of James Michael Wilson,
trustee, former IGC
================================================================================
================================================================================
Director, Thomas B. Wilson,
trustee, former IGC director,
================================================================================
================================================================================
James J. Wilson, IGC director,
and an Affiliate of IBC,
================================================================================
================================================================================
General partner of IGC 47 62 15 22
================================================================================
================================================================================
$ 1,989 $ 2,158 $ 670 $ 651
================================================================================
================================================================================
Interest and Other Income
================================================================================
================================================================================
Unconsolidated subsidiaries $ 163 $ 42 $ 59 $ 18
================================================================================
================================================================================
Affiliate of IGC former
director 296 97 264 40
================================================================================
================================================================================
$ 459 $ 139 $ 323 $ 58
================================================================================
================================================================================
General and Administrative
Expense
================================================================================
================================================================================
Affiliate of IBC,
general partner of IGC (C1) $ 245 $ 246 $ 84 $ 84
================================================================================
================================================================================
Reserve additions and other
write-offs-
================================================================================
================================================================================
Affiliate of IBC,
general partner of IGC (B1) - (109) - (225)
================================================================================
================================================================================
Unconsolidated
subsidiaries (B) 14 15 5 5
================================================================================
================================================================================
Reimbursement to IBC for ACPT's share of
================================================================================
================================================================================
J. Michael Wilson's salary 68 68 23 23
================================================================================
================================================================================
Reimbursement of
administrative costs-IGC (C6) (87) - (20) -
================================================================================
================================================================================
James J. Wilson,
IGC director (C3,C5) 375 43 125 -
================================================================================
================================================================================
Thomas J. Shafer,
trustee (C2) 23 20 8 8
================================================================================
================================================================================
$ 638 $ 283 $ 225 $ (105)
================================================================================
================================================================================
Interest Expense
================================================================================
================================================================================
Unconsolidated subsidiaries $ 17 $ - $ - $ -
================================================================================
================================================================================
IGC (C4) 173 171 47 57
================================================================================
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IBC, general partner
of IGC - 8 - 8
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$ 190 $ 179 $ 47 $ 65
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BALANCE SHEET IMPACT:
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Increase Increase
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Balance (Decrease) Balance (Decrease)
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September 30, in Reserves December 31, in Reserves
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1999 1999 1998 1998
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Assets Related to
Rental Properties
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Receivables, all
unsecured and due
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on demand-
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Unconsolidated
subsidiaries (C8) $ 3,389 $ 14 $ 2,646 $ 19
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Affiliate of IBC,
general partner of IGC (33) - 84 (110)
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Affiliate of James
Michael Wilson, trustee,
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Former IGC director and
James J. Wilson,
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IGC director 21 - 7 -
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$ 3,377 $ 14 $ 2,737 $ (91)
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Assets Related to Community Development
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Notes receivable and accrued
interest-
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Affiliate of a former
IGC director, Interest P+1%
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Secured by land Paid
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September 1,
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1999 (A1) $ - $ - $ 1,970 $ 43
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Other Assets
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Receivables - All unsecured
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Affiliate of IBC, general partner
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of IGC, and Thomas B. Wilson
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Trustee, former
IGC director Demand $ (8) $ - $ 5 $ -
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IBC, general
partner of IGC Demand (113) - 32 -
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IGC 9 - 98 -
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$ (112) $ - $ 135 $ -
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Liabilities Related to
Community Development
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Notes payable
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IGC (C4) $ 7,986 $ - $ 7,500 $ -
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Other Liabilities
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IGC (C7) $ 2,226 $ - $ 2,188 $ -
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Affiliate of IBC,
general partner of
IGC (C1) 107 - 18 -
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$ 2,333 $ - $ 2,206 $ -
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Other transactions with related parties are as follows:
(1) The Company rents executive office space and other property from
affiliates both in the United States and Puerto Rico pursuant to leases
that expire through 2005. In management's opinion, all leases with
affiliated persons are on terms no less favorable than those available
to unaffiliated persons for comparable property.
(2) ACPT pays Mr. Shafer consulting fees of $2,500 per month.
(3) James J. Wilson, as a former partner of IGP, was entitled to priority
distributions made by each housing partnership in which IGP is the
general partner up until the Distribution Date. If IGP received a
distribution which represents 1% or less of a partnership's total
distribution, Mr. Wilson received the entire distribution. If IGP
received a distribution which represents more than 1% of a
partnership's total distribution, Mr. Wilson received the first 1% of
such total.
(4) Pursuant to the terms of IGC's restructuring, IGC retained a note
receivable due from LDA. In addition to the portion of interest
incurred on this note payable to IGC that was expensed, interest costs
of $327,000 and $371,000; $122,000 and $122,000 were allocated to land
development and capitalized in the first nine and three months of 1999
and 1998, respectively.
(5) Fees paid to James J. Wilson pursuant to a consulting and retirement
agreement. Effective October 5, 1998, the consulting agreement provides
for annual cash payments for the first two years of $500,000 and annual
cash payments for eight years thereafter of $200,000. At Mr. Wilson's
request, these payments are made to IGC.
(6) During the transition period after the Distribution, the Company
provided land development, accounting, tax, human resources, payroll
processing and other miscellaneous administrative support services to
IGC. After the transition period, ACPT has agreed to continue to
provide human resources, payroll processing and tax services to IGC on
a cost reimbursement basis.
(7) Reflects ACPT's obligation to reimburse IGC for the taxes that were
generated by Puerto Rico source income prior to the Distribution date.
This obligation accompanied the Puerto Rico assets that were
transferred to ACPT during IGC's restructuring.
(8) The Company has provided working capital and completion advances to the
two projects that are undergoing condominium conversion. These advances
will be repaid over the next year as the condominiums close. The
outstanding balances of these advances as of September 30, 1999 and
December 31, 1998 were $2,682,000 and $1,885,000, respectively.
