SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
American Community Properties Trust
(Name of Issuer)
Common Stock
(Title of Class of Securities)
02520N106
(CUSIP Number)
Robert L. Chapman, Jr., Chapman Capital L.L.C.
Continental Grand Plaza #411, 300 N. Continental Blvd.
El Segundo, California 90245
Tel: (310) 563-6900
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
July 14, 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>
Page 4 of 29
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
373,400
9. SOLE DISPOSITIVE POWER
0
10. SHARED DISPOSITIVE POWER
373,400
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
373,400
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.2%
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
373,400
9. SOLE DISPOSITIVE POWER
0
10. SHARED DISPOSITIVE POWER
373,400
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
373,400
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.2%
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
375,400
9. SOLE DISPOSITIVE POWER
0
10. SHARED DISPOSITIVE POWER
375,400
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
375,400
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.2%
14. TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
This statement is filed pursuant to Rule 13d-2(a) with respect to the
shares of common stock (the "Common Stock") of American Communities Properties
Trust (the "Issuer") beneficially owned by the Reporting Persons specified
herein as of July 14, 2000 and amends and supplements the Schedule 13D dated
March 30, 2000, as amended (the "Schedule 13D"). Except as set forth herein, the
Schedule 13D, as previously amended, is unmodified.
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 $1,631,005
ITEM 4. Purpose of Transaction.
On July 14, 2000, Robert L. Chapman, Jr. wrote a letter to Edwin L. Kelly,
the President of the Issuer, requesting that two representatives of Chapman
Capital L.L.C. be added to the Issuer's Board of Trustees. A copy of this letter
is attached hereto as Exhibit D.
As previously reported on Schedule 13D:
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 has demanded the 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 estimated at
$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 375,400
shares of Common Stock constituting 7.2% 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, 373,400 shares of the
Common Stock beneficially owned by them. Robert L. Chapman, Jr. has sole power
to vote or direct the vote of, and to dispose or direct the disposition of,
2,000 shares of the Common Stock beneficially owned by the Reporting Persons.
<PAGE>
(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)
05/10/00 Common 6,800 $4.04
05/22/00 Common 1,200 $3.92
05/23/00 Common 6,000 $3.92
05/24/00 Common 5,000 $3.92
05/25/00 Common 2,000 $3.92
05/26/00 Common 4,500 $3.81
05/30/00 Common 200 $3.90
05/31/00 Common 2,000 $4.18
06/30/00 Common 48,100 $4.04
07/06/00 Common 1,000 $4.11
07/07/00 Common 1,000 $4.11
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 7. Material to be Filed as Exhibits
Exhibit D - Letter from Chapman Capital L.L.C. to Issuer dated July 14, 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: July 14, 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 D
CHAPMAN
CAPITAL LLC.
Takeovers & Turnarounds
Robert L. Chapman, Jr.
Managing Member
July 14, 2000
Mr. Edwin L. Kelly
President
American Community Properties Trust
222 Smallwood Village Center
St. Charles, MD 20602
Phone: (301) 843-8600 x 5223
Via Airborne Express: Airbill # 3097906280
Dear Mr. Kelly,
As you may have concluded after dealing with Chapman Capital for several
years, our philosophy regarding phone calls and other correspondences is to
respond immediately. In stark contrast to the habits exhibited by you, ACPT CEO
J. Michael Wilson and his father Jim Wilson (once freed from the constraints of
the courtroom that transiently convicted him), I have returned your infrequent
phone calls often within minutes and responded to your April 13, 2000 letter
within a week. However, with much premeditation, I decided to allow several
months to pass before penning a response to your May 3, 2000 correspondence. The
reason for my postponement actually forms the foundation of this letter's
message: you and the other members of ACPT management have exhausted your public
shareholders' patience.
Since IGC's spinoff of ACPT, Chap-Cap Partners, L.P., the investment
partnership of which Chapman Capital L.L.C. is general partner and investment
advisor, has waited for Jim Wilson's forecasts of $1.00 annual dividends and
realized net asset values to come to fruition. During that period, we have lived
through a failed and expensive effort to raise preferred equity and the
subsequent loss off a core division's REIT status. It is paramount that I
emphasize that we have bided our time for a period that would not classify us as
"short-term traders" or other pejorative labels often assigned to investors
lacking a long-term perspective. In this case, our wait has been almost two
years during which ACPT's stock has fallen by over 40%. Patience is simply a
trait that we have exhibited beyond reasonable limits.
Another motive for my delayed response to your May 3, 2000 letter was to
view the market's reaction to ACPT's 1Q2000 financial results and the attendant
filing of your 1Q2000 10-Q. I wanted to examine the filing to check your
frequently conveyed commitment to reducing ACPT's onerous debt load (standing at
78% of total capitalization -- $82 million in long-term debt / ($82 million in
long-term debt + $23 million in shareholder equity)). True to
consistently-disappointing form, the May 15, 2000 10-Q filing disclosed that not
only had you failed to use the proceeds from ACPT's dilatory sales efforts to
pay down significant amounts of debt, but you and Michael Wilson somehow found a
way to actually INCREASE ACPT's long-term liabilities. Apparently, despite the
manifold lessons in basic finance schooled to you by various institutional
shareholders such as Chapman Capital, Third Point Management, and Cadence
Investment Partners, you and your partners haven't noticed the correlation
between stock prices and exorbitant financial leverage. I think I speak for your
non-executive shareholders in saying that we would all support the utilization
of several thousand dollars in corporate funds to enroll you and the Wilsons in
an academic study of basic finance (perhaps the Manhattan College in the Bronx
offers such a course) to attempt a cure of your non-comprehension in this area.
One of ACPT's management's favorite alibis has been to claim that the REIT
sector has been out of favor, ignoring of course that neighboring Washington
Real Estate Trust (NYSE: WRE) has returned total gains of over 25% since ACPT
began trading. However, you personally (and correctly) differentiated ACPT from
the REIT class in your May 3rd letter to me in which you stated that "ACPT is
not a Trizec Hahn with a ... portfolio of divestible income producing office
properties ...." Thus, the proper comparables would be public land (vs. income
producing) companies such as Catellus Development (NYSE: CDX), Tejon Ranch Co.
(NYSE: TRC) and Newhall Land & Farming Company (NYSE: NHL). Interestingly,
during the period from the October 1998 spinoff date of ACPT to the present,
CDX, TRC and NHL have positively returned (including dividends, of course) over
45%, 15% and 35% respectively, thus outperforming ACPT's public shares (APO) by
over 85 %pts., 55 %pts., and 75 %pts. each. I am curious to see how you may
attempt to distance yourself from these successful public land companies as
well.
As your peer group seems to have learned the lesson of debt reduction long
ago, I think it only fair to compare their financial structures and shareholder
maximization programs to those of ACPT. As stated before, 78% (and climbing) of
ACPT's capitalization is in the form of borrowings (vs. equity). The highest
performer in the aforementioned group, Catellus Development, has only 59% of its
capitalization in the form of debt as the new management installed in the
mid-1990s successfully and steadily delivered on their debt-reduction plans
since joining the company. Concurrent with its restructuring, Catellus released
the details of a substantial stock buyback program, subsequently driving a 40%
increase in its share price. Taking balance sheet management to the next level,
Tejon Ranch's long-term debt-to-total capitalization ratio lies under 40%, a
conservative posture that positioned CEO Robert Stine to launch an aggressive
development plan on 4,000 acres owned in Los Angeles and Kern counties. Newhall
Land & Farming, which has been paying both regular and special dividends for
years, is capitalizing on its relatively low leverage by mounting a bold
initiative to increase shareholder value further, announcing in September of
last year a stock repurchase program consuming up to 20% of its outstanding
shares (effectively financed with over $200 million in asset sales this year).
While we are on the subject of ACPT's persistent debt problem, it has been
noted on your Yahoo Message Board (http://messages.yahoo.com followed by
entering APO into the search box) by an anonymous investor that the interest
rates ACPT is paying (up to Prime + 250 bps. and $11,000,000 subject to 2.5
%pt.+ escalators this year) appear to be egregiously above market for secured
loans. While this shareholder seemed to believe that such a rate structure could
only be explained by gross negligence or an impropriety he labeled a "kickback,"
we decided to analyze the issue independently before rendering an opinion.
Therefore, returning to previously discussed Catellus, Tejon, and Newhall, we
compared the floating rate debt and covenants for the three to those of ACPT.
What we learned is extremely disconcerting and, in light of the public
accusations, in need of an immediate explanation from ACPT management.
Following our investigation, we believe that whoever is responsible for
negotiating the terms of ACPT's debt failed to adequately research alternative
borrowing sources utilized and market rates paid by other public developers. I
cannot believe that such party personally received financial inducement to enter
into and maintain ACPT's apparently uncompetitive borrowing relationships, yet I
cannot find another explanation outside of gross negligence by a fiduciary.
To substantiate our claims, the following is a summary of the investigation's
results: 1. A substantial number of the floating rate loans, short and
long-term, utilized by CDX, TRC, NHL are indexed to LIBOR (London Interbank
Offer Rate), a rate that generally is significantly below Prime Rate. For
example, LIBOR today is almost 290 basis points BELOW the current Prime Rate of
9.5%.
2. Lest you suspect that what the banks lose on the index they make up on
spread, the average spread for the three companies is about 125 basis
points with no spread over LIBOR being more than 200 bps.
3. Most loans indexed to Prime had a spread of no more than 100 basis points.
Indeed, there were even a few that were Prime minus 50 bps.! For those few
loans that did exceed 100 bps., each was relatively small and short-term in
nature, generally deployed strictly for working capital purposes.
4. Of those loans that were secured, almost all were secured solely by the
assets in which the funds were deployed. For those few that were full
recourse, they tended to be relatively small and short-term in nature.
5. The CFOs of these companies with whom we spoke, when told of the nature of
your loans, described them as "outrageous" and "absurd".
Your most-recent letter to Chapman Capital claimed that "ACPT's board of
trustees and management are committed to a strategy of ... maintaining a stable
cash flow, increasing over time ...." However, we can find no evidence that ACPT
as a whole is either developing or maintaining any semblance of cash flow
stability, resulting in the unstable and decreasing equity component in your
capital structure. It is because ACPT lacks the ability to sustain adequate free
cash flow from the rental properties (owned and/or managed) that it must make
substantive asset sales to pay off the teetering debt load that burdens the
company's stock. Unfortunately, ACPT's balance sheet does not afford you the
luxury of casually selling a small parcel here and there and clearly prohibits
you from "pursuing opportunities such as [the] acquisition of real estate assets
in our area of operation." What training or intelligent ratiocination could
possibly lead you to believe that the addition of real estate assets and its
attendant debt (vs. selling similar assets and associated debt) will improve the
plight of your shareholders?
The overall theme of your May 3rd letter is that it is not feasible to sell
a substantial amount of assets in order to pay down the company's debt. In
excusing away the potential sale of the apartment projects you claim that due to
their HUD status (and thus rent-limited) "the value of these projects does not
move with market conditions generally." Yet, you fail to comprehend the obvious
corollary to your questionable claim: if the properties have rent limitations
and thus their value is limited (as you admit), then a sale of these projects to
pay down debt would neither eliminate a high-yielding asset nor exit the
investments prematurely (since they are not moving upward in value with the
market per your own claim). Immediately thereafter, you claim that "Given the
long-term efforts required to realize the value of our undeveloped land and
subsidized housing properties and our proven [evidence not provided] ability
over time to do so, we do not share your view that a wholesale [word never used
by Chapman Capital L.L.C.] liquidation of ACPT or a sale of a large part of its
assets is now in the best interests of our shareholders." Once again, you fail
to deduce the obvious axiom to your claim: if it will require "long-term efforts
to realize value," and your balance sheet finds itself highly-overleveraged in a
rising interest rate environment at the top of a real estate cycle, then selling
the assets now to reduce enterprise risk should take precedence over squeezing
the last dollar of profit out of a theoretical top-tick sale in the distant
future.
Later you identified three tracts of undeveloped land owned directly or
indirectly by ACPT: Charles County, Parque Escorial and Parque El Comandante.
Once again, you use the "it's not ripe" excuse in all three cases to argue for a
non-sale scenario. In the case of Charles County, you postulate "it is unlikely
that a third party would invest substantial capital and take the other risks
associated with the long-term development of St. Charles." However, your claim
ignores the obvious tangent: THIS IS PRECISELY THE INVESTMENT CAPITAL AND
RISK-TAKING UNDERLYING ACPT'S CONTINUED HOLDING OF THE PROJECT. If you think
that no prudent real estate player would commit capital or take the risks
associated with St. Charles, then what justification do you have for subjecting
Chap-Cap Partners and your other shareholders to these same risks? Moreover,
since you have not hired an investment bank and/or real estate brokers to shop
this property (or Escorial or El Comandante) in part or full, you have no idea
as to the potential price we could receive in a sale and thus cannot make the
claim that "the price would be substantially below realizable values" and that
"its value lies in the future." Using that brilliant theory, no real estate
company would ever sell their land holdings -- since the beginning of time real
estate values have inevitably stair-cased their way higher.
Your comments regarding the negative impact of more than $30 million of
land sales on the NAV of the company proves that it is YOUR credibility that has
been strained by our debate. The definition of Net Asset Value is the residual
value of the equity after subtracting the liabilities from the value of the
assets. If ACPT has made $30 million in land sales over the past two years, the
proceeds from the sales were not squandered, lost or misappropriated by ACPT
management, and such sales were made in line with the estimates of those assets
by the company-appointed appraisers, then the "realizable values from the
liquidation or sale of a substantial portion of ACPT's assets" would be
unchanged from those derived from Robert A. Stanger & Co.'s October 1998
appraisal. This is simple arithmetic - there is nothing complex or arcane about
this concept in the least.
Further destroying any remaining vestige of credibility possessed by you
and the Wilsons is your claim that "If ACPT's assets were worth the values
quoted in your letter, we believe that someone would have offered to purchase a
controlling interest, however, no offers have been received." The fact that no
party has offered to buy ACPT at an enormous premium does not prove that it
lacks such value. In January this year, the market assigned a value of $8/share
to Nabisco Group Holdings common shares; yet, only after the company hired
Morgan Stanley and UBS Warburg to auction its core assets (shares in Nabisco
Holdings) did RJ Reynolds Tobacco surface with a $30.00 per share offer, almost
four times its recent market price. With ACPT's far more obscure stature on Wall
Street and reputation for being controlled by an inhospitable, unapproachable,
once-convicted patriarch (who has told at least one shareholder that a sale of
ACPT "will never happen"), it could be argued that based on ACPT's own $21/share
self-appraisal and the highly-leveraged nature of its common equity that an even
higher multiple to today's market price could be attained. Further strengthening
our case, even without a sale transaction Catellus Development's share price
advanced from a low of $5/share in March 1995 to $22/share in less than three
years. Once again, to my knowledge, "no offers have been received" by Catellus
Development either, yet their highly-educated and experienced management team
found ways to more than quadruple the share price.
Not one of the three peer companies described herein have more than a third
of their 11-12 board seats accounted for by insiders vs. the two-thirds claimed
by ACPT. While the Wilson family stake warrants disproportionate board
representation, their control being exerted over this public company has proven
excessively deleterious to its shareholders. Therefore, I hereby formally
request that two representatives of Chapman Capital L.L.C. be added to the Board
of Trustees. Chap-Cap Partners' greater than 7% stake in the company is the
largest owned by the public and reflects a sizable commitment of capital to the
enterprise. Our interests are precisely aligned with those of all the public
shareholders, a group which has suffered enormous losses under the Wilson regime
and thus deserves representation at the board level.
While you may not appreciate the "invective" rhetoric of the message, you
are doomed to professional failure in your attempts to shoot the messenger.
Refuting the rationale underlying your decision to discontinue communicating
with your largest outside investor, Chap-Cap Partners' dealings in similar
activist situations consistently have resulted in significantly-increased value
for all the shareholders of the company. I refer you to Tower Semiconductor,
Corporate Renaissance and RISCORP for three pieces of evidence supporting this
claim. As I sign this letter, I hope that you are finally struck with the
overdue epiphany that my interests should be aligned precisely with those of
your effective employers, Jim and Michael Wilson.
Notwithstanding Chap-Cap Partners' support of ACPT's shares with two years
of consistent purchases, the company's stock has fallen by over 40% during the
implementation of your failed policies. It is patently clear that a new approach
is required to increase shareholder value in the market, and I have provided you
with the blueprint. All that is required now is for the Board of Trustees to
face the truth of the matter and adapt to the investment world that will make or
break the shareholders of American Community Properties Trust.
Very truly yours,
Robert L. Chapman, Jr.
cc: Cadence Investment Partners (Phil Broenniman)
Bessemer Partners (John MacDonald)
Third Point Partners (Daniel Loeb)
T. Michael Scott (Trustee)
Thomas Shafer (Trustee)
<PAGE>
CHAPMAN
CAPITAL LLC.
Takeovers & Turnarounds
Robert L. Chapman, Jr.
Managing Member
April 19, 2000
Mr. Edwin L. Kelly
President
American Community Properties Trust
222 Smallwood Village Center COPY
St. Charles, MD 20602
Phone: (301) 843-8600 x 5223
Via Airborne Express: Airbill Number 8218304021
Dear Mr. Kelly,
Having read your April 13, 2000 response (the "April Letter") to my March
30, 2000 letter (the "March Letter") to your senior executive Mr. J. Michael
Wilson (attached below), I remain astounded by the absolute void of market
sensitivity and managerial creativity that appears to dominate ACPT's
"leadership." It would appear that my highly-detailed correspondence to your
boss was inadequate in permeating the hardened minds that seem to confine
strategic planning at the company. This letter, therefore, is intended to apply
a sharper tool to, and more clearly define, the process of how to maximize
shareholder value (in any economy) by selling real assets in the private market
where the Old Economy still reigns supreme. If properly managed from a tax
standpoint, it is estimated that each ACPT share is worth as much as $25 to a
private market buyer of the company's assets.
Your April Letter acknowledges that the "capital markets have not given due
regard to the intrinsic value of ACPT's assets." However, typical of your
deportment since I became involved in ACPT, you attempt to distance yourself
from blame in the "New Economy Asylum" by claiming that "many real estate
companies and other traditional businesses and their investors share the same
complaint." However, what you apparently didn't grasp in my March Letter was the
citation of two of many examples (Baker, Fentress & Company (NYSE: BKF) and
Corporate Renaissance Group (NASDAQ: CREN)) where management has taken proactive
measures to deliver the intrinsic value of their companies' assets to the owners
of those assets -- their shareholders. In yet another effort to elucidate the
solution to the intrinsic value conundrum, I will strike closer to home by
giving you another example of proactive NAV-gap closing by one of your real
estate peers, TrizecHahn Corp.
On March 27, 2000, TrizecHahn Corp., one of North America's largest real
estate owners (public or private), announced that it had agreed to sell the
majority of its Canadian office portfolio and various U.S. office buildings for
approximately $2.9 billion (approximately a third of its property assets).
TrizecHahn will re-invest the proceeds in a two-track plan to "create value for
its shareholders," which includes a $500 million share re-purchase program (~
20% of the total outstanding) and "new investments in technology initiatives
related to its real estate assets." TrizecHahn President and COO (your
counterpart at the company) Greg Wilkins stated, "At these prices, one of the
most effective uses of our cash - that offers compelling returns - is to buy
back our own shares .... It's been very frustrating to watch the performance of
the company do so well while the stock has not created shareholder value." The
second track of TrizecHahn's strategy builds on "opportunities in real
estate-related new economy ventures made possible by the technology revolution."
Like ACPT and its shareholders, TrizecHahn was frustrated with the weak
valuations placed on real estate related stocks. In its case, the market had
placed an estimated 40% discount to Net Asset Value (NAV) on its shares (source:
Lehman Brothers Inc.), taking its stock down 7% since the time of ACPT's spinoff
from IGC. If such a decline and resultant discount served as the catalyst for
the enormous undertaking by TrizecHahn described above, then how can ACPT defend
its "status quo" policy when its shares have fallen over 40% to an estimated 85%
discount to NAV over the same period? What exactly is it going to take for you
to realize that "continuing [your] strategy" is a prescription for ACPT's
continued depreciation in the public market? This is not solely Chapman
Capital's opinion -- the stock market's vote over the last two years clearly
shows your "long term strategy" has lost by a landslide.
TrizecHahn was formed by Chairman Peter Munk in the mid -1990s around the
same time as ACPT was conceptualized by Mr. Jim Wilson (Michael Wilson's
father). However, it appears this is where the similarities between the two real
estate operators ends, as Mr. Munk has evolved from one who eschewed
high-technology investments to an executive who has learned to embrace them:
Munk -- "We've got to be in this New Economy ... It's not a passing fad. We have
to adapt to what's going on. We have to marry the Old Economy with the New."
(source: Wall Street Journal, March 27, 2000). By comparison, you wrote in your
April Letter that while you and your co-trustees "have considered various
proposals [Chapman Capital has] made to [management] such as [its] recent
recommendation that ACPT invest in high tech companies" ... you do not "believe
it is in the interest of ACPT's shareholders to invest in businesses in which we
have neither experience nor special knowledge."
By summarily rejecting a similar strategic plan as those of leading real
estate peers, are you saying that ACPT cannot find any value creation from a
similar approach to its interest in 2,246 domestic and 2,653 Puerto Rican rental
units? As the President of ACPT, are you telling your shareholders that you see
no creative synergies between technology and the 4,700 acres for residential,
commercial and industrial use in the master planned communities of St. Charles,
Maryland and Parque Escorial, Puerto Rico? What exactly have you and your
co-trustees actually done to explore this kind of opportunity upon which your
competitors have been capitalizing with an accelerating pace? The shareholders
of ACPT who have contacted me since our original 13D filing are all curious as
to existence (if any) of creative strategies being employed by our elected
trustees.
It appears that your rigid operation of ACPT has precluded you from
understanding the very nature of my suggestions relating to technology
initiatives. You are well aware that I have never made a foolish, unguided
recommendation that ACPT invest in high tech companies, as that is the purview
of intelligent, hard-working managers specializing in that class of asset
management. Rather, my suggestion was that ACPT take an approach similar to that
of Reckson Associates Realty Corporation in their June 1998 spinoff of Reckson
Service Industries (now Frontline Capital Group), which began by developing and
managing a network of "B2B" technology businesses related to the real estate
sector. This particular restructuring caused their stock to appreciate from $2
3/4 at the time of the spinoff to a high of $68 per share a year and a half
later. In the case of TrizecHahn, it ventured into the "New Economy" last year
with the acquisition of a small interest in Allied Riser Communications Corp.,
which provides Internet and telephone networks to TrizecHahn's U.S. office
properties, and a small stake in Onsite Access, a communications provider to
various real estate locations. In last month's announcement of its new
technology initiatives, Messrs. Munk and Wilkins said the technology investments
will "take advantage of the fact that our corporate tenants, concentrated in
upscale city centers, are an ideal purchasing group for any e-company, whether
in the business-to-business or business-to-consumer area."
Finally, I must explicitly reprove and rectify several egregious
mischaracterizations in your April Letter:
You claimed that "without attempting a point-by-point rebuttal, much of the
criticism levied in [my] letter is either misinformed or misdirected." While
terribly convenient for you to forgo such an "attempt," I demand that you cite
any evidence that a single point of my criticism is misinformed or misdirected.
Given the paucity of academic and professional achievement listed for Mr. J.
Michael Wilson in the Restructuring Proxy, I challenge you to show me any
evidence that his selection as CEO of ACPT would have occurred if he were not
IGC founder Jim Wilson's son (please include the list of candidates considered
for the position following the trustees' thorough executive search among the
hundreds of qualified real estate veterans available for hire). Michael Wilson
had no reported experience as the head of a publicly-traded company since his
graduation from the prestigious Manhattan College in the Bronx, as compared to
dozens of alternative candidates for the job. Nepotism is the only explanation I
can find for his appointment as CEO of a company whose shares have fallen by
almost half under his leadership. Once again, if you can exhibit a thorough
search process that led to his selection, I will publicly-apologize for my error
of opinion. Yet, I am confident that your indignant refusal to rebut my critical
claims is nothing more than a weak attempt to hide the inability to do so. Since
your opinion of my commentary apparently is strong enough to merit attention in
your April Letter, I strongly encourage you to justify your position and prove
me wrong. 1) Chap-Cap Partners, L.P.'s sizable purchase of shares in ACPT is in
no way a
reflection of my level of satisfaction with the company's management.
Rather, it is the result of my belief that (for example) even a
relatively-inexperienced scion, the beneficiary of nepotistic abetment,
while assisted by sycophants and obsequious coat-tail riders, can
create value at a public company trading at an estimated 85% discount
to "intrinsic value". Given Mr. Wilson's performance to date, he
appears to be working hard at proving my thesis an overestimation of
his abilities. Thus, my fund's increase in its stake is not in the
least "curiously inconsistent with that of a dissatisfied investor."
Once again, let me make this point clear: I believe that management of
ACPT is horrific, pathetic and certifiably inept.
2) I have never suggested that ACPT purchase MY shares at a premium over
market. Instead, I responded to Mr. Michael Wilson's retort that I
should sell my shares if unhappy with the investment (advice which, if
it has been given to the many dissatisfied public partners of Mr.
Wilson, would help explain the stock's depressed valuation) by
suggesting that he make a premium offer to all shareholders for their
shares. Subject to the bid price reflecting the fair value of the
equity, I continue to believe that Chap-Cap Partners would be an
enthusiastic participant in such an offer.
3) Your claim that I made "threats to take certain actions to embarrass
[you] personally and others at ACPT if [you] do not accede to [my]
demands" is a flagrant mischaracterization of my comments. My dialog
included a promise that "you and the Wilsons will eventually be exposed
for your underperformance and poor treatment of your shareholders and
this will be an embarrassment." Apparently, you have settled
comfortably into a professional life where the loss of almost half of
your shareholders' investment to market depreciation is of little
consequence (blame the New Economy), personal humiliation or self
diminishment. I, on the other hand, believe such performance would
drive me to hara-kiri as I consider my fiduciary duty to maximize my
investors' wealth to be the raison d' etre of MY professional life.
In conclusion, the management team in place is implementing a long-term
strategy that IS NOT WORKING. If you understood, even slightly, that your job is
not to develop real estate but to build shareholder value in the public markets
through real-estate related development, this would be patently obvious to you.
Instead, your response, like all those that preceded it, confirms every fear I
have about the Wilson family's role in the tragic underperformance of this
asset-rich enterprise. Like TrizecHahn and others in the "Old Economy," selling
assets to the private market rather than waiting for the public market to
realize the estimated $25/share in intrinsic value is the only viable option.
Thus, on behalf of the public shareholders of ACPT, I demand that you begin an
orderly liquidation of the company immediately.
In the meantime, I can assure you that Chapman Capital is not going away.
Until you understand and implement a strategy that will deliver the shareholder
appreciation owed to your public partners in ACPT, Chapman Capital L.L.C. will
continue to express its views for the benefit of all shareholders. As far as the
Wilson family is concerned, I feel confident that Michael Wilson's father can
keep him gainfully employed by appointing him to a senior position in another
family company such as IGC or Equus Gaming.
Very truly yours,
Robert L. Chapman, Jr.
cc: Bessemer Partners (John MacDonald)
Third Point Partners (Daniel Loeb)
<PAGE>
CHAPMAN
CAPITAL LLC.
Takeovers & Turnarounds
Robert L. Chapman, Jr.
Managing Member
March 30, 2000
Mr. J. Michael Wilson
Chairman, CEO
American Community Properties Trust
222 Smallwood Village Center COPY
St. Charles, MD 20602
Phone: (301) 870-6632
Via Airborne Express: Airbill Number 8218303623
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 too 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 has been 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
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 undeserved, 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>
CHAPMAN
CAPITAL LLC.
Takeovers & Turnarounds
PRESS RELEASE
CHAPMAN CAPITAL DEMANDS ACPT $25/SHARE LIQUIDATION
LOS ANGELES, CA. - ST. CHARLES, MD. APRIL 19, 2000 ... Chapman Capital
L.L.C. announced today that it has sent its second letter to American Community
Property Trust (AMEX: APO), demanding that the company re-evaluate Chapman
Capital's $25 per share liquidation proposal.
In discussing the proposals, Robert L. Chapman, Jr., Managing Member of
Chapman Capital said "I remain astounded by the absolute void of market
sensitivity and managerial creativity that appears to dominate ACPT's
'leadership.' Typical of your deportment since I became involved in ACPT, you
attempt to distance yourself from blame in the 'New Economy Asylum.' This letter
is intended to apply a sharper tool to, and more clearly define, the process of
how to maximize shareholder value (in any economy) by selling real assets in the
private market where the Old Economy still reigns supreme." Chapman Capital,
which has encouraged ACPT to consider the liquidation of its net assets (which
the company itself valued itself at approximately $21 per share in 1996 before
the real estate market materially appreciated), received a letter from ACPT
President Mr. Kelly dated April 13, 2000 rejecting Chapman Capital's liquidation
and other proposals.
In today's letter to ACPT, Mr. Chapman concluded: "The management team in
place is implementing a long-term strategy that IS NOT WORKING. If you
understood, even slightly, that your job is not to develop real estate but to
build shareholder value in the public markets through real-estate related
development, this would be patently obvious to you. Instead, your response, like
all those that preceded it, confirms every fear I have about the Wilson family's
role in the tragic underperformance of this asset-rich enterprise. Like
TrizecHahn and others in the "Old Economy," selling assets to the private market
rather than waiting for the public market to realize the estimated $25/share in
intrinsic value is the only viable option. Thus, on behalf of the public
shareholders of ACPT, I demand that you begin an orderly liquidation of the
company immediately."
Chapman Capital L.L.C. is an investment advisor specializing in small
capitalization reorganizations and turnarounds. The company is General Partner
of Chap-Cap Partners, L.P., a Delaware limited partnership that is the largest
non Wilson-family shareholder in American Community Properties Trust.
The full text of Chap-Cap Partners, L.P.'s communications with ACPT can be
found as exhibits to its 13-D filings with the Securities and Exchange
Commission. For those interested parties with Internet access, it is recommended
that one access the S.E.C.'s EDGAR system through the website
http://www.freeedgar.com and then enter in the second search box the Ticker
Symbol "APO". Then, to access the two separate 13-D filings from March 31 and
April 19, 2000, click on the "VIEW FILINGS" link under the symbol "APO" and
click the "Body: (Entire Filing)" link under "Table of Contents" in the left
panel.
Contact:
Robert L. Chapman, Jr.
Managing Member
(213) 895-4172
