SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
Amendment No. 1
To
SCHEDULE TO
Tender Offer Statement Pursuant to Section 14(d)(1) or 13(e)(1)
of the Securities Exchange Act of 1934
-----------------------
JMB INCOME PROPERTIES, LTD. - V
(Name of Subject Company)
MP VALUE FUND 5, LLC; MP VALUE FUND 4, LLC; MORAGA FUND 1, L.P.;
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, LTD.;
ACCELERATED HIGH YIELD INSTITUTIONAL FUND, LTD.; MORAGA-DEWAAY FUND, LLC;
MP FALCON FUND, LLC; MORAGA GOLD, LLC; MACKENZIE PATTERSON, INC. and
PREVIOUSLY OWNED MORTGAGE PARTNERSHIPS INCOME FUND, L.P.
(Bidders)
LIMITED PARTNERSHIP INTERESTS
(Title of Class of Securities)
NONE
(CUSIP Number of Class of Securities)
-----------------------
Copy to:
C.E. Patterson Paul J. Derenthal, Esq.
MacKenzie Patterson, Inc. Derenthal & Dannhauser
1640 School Street One Post Street, Suite 575
Moraga, California 94556 San Francisco, California 94104
(925) 631-9100 (415) 981-4844
(Name, Address and Telephone Number of
Person Authorized to Receive Notices and
Communications on Behalf of Bidder)
Calculation of Filing Fee
Transaction Amount of
Valuation* Filing Fee
$1,771,230 $354.25
* For purposes of calculating the filing fee only. Assumes the purchase
of 15,402 Units at a purchase price equal to $115 per Unit in cash. The
balance due after credit for the amount paid in the initial filing is
$107.82.
[X] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: $246.43
Form or Registration Number: Schedule TO
Filing Party: Above Named Bidders
Date Filed: May 3, 2000
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[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[X] third party tender offer subject to Rule 14d-1.
[ ] issuer tender offer subject to Rule 13e-4.
[ ] going private transaction subject to Rule 13e-3
[ ] amendment to Schedule 13D under Rule 13d-2
Check the following box if the filing is a final amendment reporting the results
of the tender offer: [ ]
<PAGE>
The Schedule TO filed as of May 3, 2000 by the above-named bidders is hereby
amended as set forth below. Items not amended remain unchanged, and capitalized
terms are used as defined in the original Schedule.
TENDER OFFER
This Tender Offer Statement on Schedule TO relates to the offer by MP
VALUE FUND 5, LLC; MP VALUE FUND 4, LLC; MORAGA FUND 1, L.P.; ACCELERATED HIGH
YIELD INSTITUTIONAL INVESTORS, LTD.; ACCELERATED HIGH YIELD INSTITUTIONAL FUND,
LTD.; MORAGA-DEWAAY FUND, LLC; MP FALCON FUND, LLC; MORAGA GOLD, LLC; and
PREVIOUSLY OWNED MORTGAGE PARTNERSHIPS INCOME FUND, L.P. (collectively the
"Purchasers") to purchase up to 15,402 limited partnership interests (the
"Units") in JMB INCOME PROPERTIES, LTD. - V, an Illinois limited partnership
(the "Issuer"), the subject company. Mackenzie Patterson, Inc. is named as an
offeror herein because it is deemed to control the Purchasers, but it is not
otherwise participating in the offer described in this schedule. The Purchasers
are hereby extending the Expiration Date for the Offer to June 16, 2000 and are
increasing the purchase price they are offering to equal $115 per Unit, less the
amount of any distributions declared or made with respect to the Units between
May 3, 2000 and June 16, 2000, or such other date to which this Offer may be
extended (the "Expiration Date"), Except as so amended, the Offer remains
subject to the terms and conditions set forth in the Offer to Purchase dated May
3, 2000 (the "Offer to Purchase") and the related Letter of Transmittal. As of
May 25, 2000, 638 Units had been tendered to the bidders by security holders and
not withdrawn.
The information in the Offer to Purchase, including all schedules and
annexes thereto, is hereby expressly incorporated herein by reference in
response to all the items of this Statement, except as otherwise set forth
below.
Item 12. Exhibits.
(a)(1) Revised Offer to Purchase dated May 3, 2000
(a)(2) Revised Letter of Transmittal
(a)(5) Form of Letter to Unitholders dated May 26, 2000
(a)(6) Press Release
(b)-(h) Not applicable.
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: May 25, 2000
MP VALUE FUND 4, LLC
By MacKenzie Patterson, Inc., Manager
By: /s/ C. E. Patterson
-------------------
C.E. Patterson, President
MP VALUE FUND 5, LLC
By MacKenzie Patterson, Inc., Manager
By: /s/ C. E. Patterson
-------------------
C.E. Patterson, President
MORAGA FUND 1, L.P.
By Moraga Partners, Inc., General Partner
By: /s/ C. E. Patterson
-------------------
C.E. Patterson, President
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, LTD.
By MacKenzie Patterson, Inc., General Partner
By: /s/ C. E. Patterson
-------------------
C.E. Patterson, President
ACCELERATED HIGH YIELD INSTITUTIONAL FUND, LTD.
By MacKenzie Patterson, Inc., General Partner
By: /s/ C. E. Patterson
-------------------
C.E. Patterson, President
MORAGA-DEWAAY FUND, LLC
By MacKenzie Patterson, Inc., Manager
By: /s/ C. E. Patterson
-------------------
C.E. Patterson, President
MP FALCON FUND, LLC
By MacKenzie Patterson, Inc., Manager
By: /s/ C. E. Patterson
-------------------
C.E. Patterson, President
MORAGA GOLD, LLC
By Moraga Partners, Inc., Member
By: /s/ C. E. Patterson
-------------------
C.E. Patterson, President
2
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PREVIOUSLY OWNED MORTGAGE PARTNERSHIPS INCOME FUND, LP
By MacKenzie Patterson, Inc., General Partner
By: /s/ C. E. Patterson
-------------------
C.E. Patterson, President
MACKENZIE PATTERSON, INC.
By: /s/ C. E. Patterson
-------------------
C.E. Patterson, President
3
<PAGE>
EXHIBIT INDEX
Exhibit Description Page
(a)(1) Revised Offer to Purchase dated May 3, 2000
(a)(2) Revised Letter of Transmittal
(a)(5) Form of Letter to Unit holders dated May 26, 2000
(a)(6) Press Release
Exhibit (a)(1)
<PAGE>
OFFER TO PURCHASE FOR CASH UP TO 15,402
UNITS OF LIMITED PARTNERSHIP INTEREST
OF
JMB INCOME PROPERTIES, LTD. - V
AT
$115 PER UNIT
MP VALUE FUND 5, LLC; MP VALUE FUND 4, LLC; MORAGA FUND 1, L.P.;
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, LTD.; ACCELERATED
HIGH YIELD INSTITUTIONAL FUND, LTD.; MORAGA-DEWAAY FUND, LLC; MP
FALCON FUND, LLC; MORAGA GOLD, LLC; and PREVIOUSLY OWNED MORTGAGE
PARTNERSHIPS INCOME FUND, L.P.
(collectively the "Purchasers")
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT
12:00 MIDNIGHT, PACIFIC STANDARD TIME, ON June 16, 2000, UNLESS THE
OFFER IS EXTENDED.
MP VALUE FUND 5, LLC; MP VALUE FUND 4, LLC; MORAGA FUND 1, L.P.;
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, LTD.; ACCELERATED HIGH YIELD
INSTITUTIONAL FUND, LTD.; MORAGA-DEWAAY FUND, LLC; MP FALCON FUND, LLC; MORAGA
GOLD, LLC; and PREVIOUSLY OWNED MORTGAGE PARTNERSHIPS INCOME FUND, L.P.
(collectively the "Purchasers") hereby seek to acquire limited partnership
interests (the "Units") in JMB INCOME PROPERTIES, LTD. - V, an Illinois limited
partnership (the "Partnership"). The Purchasers are not affiliated with the
Partnership or its General Partners. The Purchasers hereby offer to purchase up
to 15,402 Units at a purchase price equal to $115 per Unit, less the amount of
any distributions declared or made with respect to the Units between May 3, 2000
and June 16, 2000, or such other date to which this Offer may be extended (the
"Expiration Date"), in cash, without interest, upon the terms and subject to the
conditions set forth in this Offer to Purchase (the "Offer to Purchase") and in
the related Letter of Transmittal, as each may be supplemented or amended from
time to time (which together constitute the "Offer"). The 15,402 Units sought
pursuant to the Offer represent approximately 40% of the Units outstanding as of
December 31, 1999. The Purchasers and their affiliates currently beneficially
own an aggregate total of 619 Units or approximately 1.6% of the total of 38,505
outstanding Units.
Holders of Units ("Unitholders") are urged to consider the following factors:
- Unitholders who tender their Units will give up the
opportunity to participate in any future benefits from the
ownership of Units, including potential future
distributions by the Partnership, and the purchase price
per Unit payable to a tendering Unitholder by the
Purchasers may be less than the total amount which might
otherwise be received by the Unitholder with respect to the
Unit over the remaining term of the Partnership.
- The Purchasers are making the Offer for investment purposes
and with the intention of making a profit from the
ownership of the Units. In establishing the purchase price
of $115 per Unit, the Purchasers are motivated to establish
the lowest price which might be acceptable to Unitholders
consistent with the Purchasers' objectives. There is no
<PAGE>
public market for the Units, and neither the Unit holders
nor the Purchasers have any accurate means for determining
the actual present value of the Units. Although there can
be no certainty as to the actual present value of the
Units, the Purchasers have estimated, solely for the
purposes of determining an acceptable Offer price, that
the Units could have an estimated value of approximately
$140 per Unit. It should be noted, however, that the
Purchasers have not made an independent appraisal of the
Units or the Partnership's properties, and are not
qualified to appraise real estate. Accordingly, there can
be no assurance that this estimate accurately reflects an
approximate value of the Units or that the actual amounts
which may be realized by holders for the Units may not
vary substantially from this estimate.
- As a result of consummation of the Offer, the Purchaser may
be in a position to significantly influence all Partnership
decisions on which Unitholders may vote. The Purchaser will
vote the Units acquired in the Offer in its own interest,
which may be different from or in conflict with the
interests of the remaining Unitholders.
- The Purchasers may accept only a portion of the Units
tendered by a Unitholder in the event a total of more than
15,402 Units are tendered.
- The Depositary, MacKenzie Patterson, Inc., is an affiliate
of certain of the Purchasers. No independent party will
hold securities tendered until the offer closes and payment
is made. Because there is no independent intermediary to
hold the Purchasers' funds and tendered securities, the
Purchasers may have access to the securities before all
conditions to the Offer have been satisfied and selling
Unit holders have been paid.
THE OFFER TO PURCHASE IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF UNITS BEING
TENDERED. IF MORE THAN 15,402 UNITS ARE VALIDLY TENDERED AND NOT WITHDRAWN, THE
PURCHASERS WILL ACCEPT FOR PURCHASE 15,402 UNITS FROM TENDERING UNITHOLDERS ON A
PRO RATA BASIS, SUBJECT TO THE TERMS AND CONDITIONS HEREIN. A UNITHOLDER MAY
TENDER ANY OR ALL UNITS OWNED BY SUCH UNITHOLDER.
The Purchasers expressly reserve the right, in their sole discretion, at any
time and from time to time, (i) to extend the period of time during which the
Offer is open and thereby delay acceptance for payment of, and the payment for,
any Units, (ii) upon the occurrence of any of the conditions specified in
Section 13 of this Offer to Purchase, to terminate the Offer and not accept for
payment any Units not theretofore accepted for payment or paid for, or to delay
the acceptance for payment of, or payment for, any Units not theretofore
accepted for payment or paid for, and (iii) to amend the Offer in any respect.
Notice of any such extension, termination or amendment will promptly be
disseminated to Unitholders in a manner reasonably designed to inform
Unitholders of such change in compliance with Rule 14d-4(c) under the Securities
Exchange Act of 1934 (the "Exchange Act"). In the case of an extension of the
Offer, such extension will be followed by a press release or public announcement
which will be issued no later than 9:00 a.m., Eastern Standard Time, on the next
business day after the scheduled Expiration Date, in accordance with Rule
14e-1(d) under the Exchange Act.
May 3, 2000
2
<PAGE>
IMPORTANT
Any Unitholder desiring to tender any or all of such Unitholder's Units should
complete and sign the Letter of Transmittal (a copy of which is enclosed with
this Offer to Purchase, printed on yellow paper) in accordance with the
instructions in the Letter of Transmittal and mail, deliver or telecopy the
Letter of Transmittal and any other required documents to MacKenzie Patterson,
Inc. (the "Depositary"), an affiliate of certain of the Purchasers, at the
address or facsimile number set forth below.
MacKenzie Patterson, Inc.
1640 School Street
Moraga, California 94556
Telephone: 800-854-8357
Facsimile: 925-631-9119
E-Mail Address: [email protected]
Questions or requests for assistance or additional copies of this Offer to
Purchase or the Letter of Transmittal may be directed to the Purchasers at
1-800-854-8357.
- ---------------------------
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR ANY REPRESENTATION
ON BEHALF OF THE PURCHASERS OR TO PROVIDE ANY INFORMATION OTHER THAN AS
CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. NO SUCH RECOMMENDATION,
INFORMATION OR REPRESENTATION MAY BE RELIED UPON AS HAVING BEEN AUTHORIZED.
- ---------------------------
The Partnership is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is required to file reports and other
information with the Commission relating to its business, financial condition
and other matters. Such reports and other information are available on the
Commission's electronic data gathering and retrieval (EDGAR) system, at its
internet web site at www.sec.gov, may be inspected at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and are available for inspection and
copying at the regional offices of the Commission located in Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and at 7
World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can also be obtained from the Public Reference Room of the Commission
in Washington, D.C. at prescribed rates.
The Purchasers have filed with the Commission a Tender Offer Statement on
Schedule TO (including exhibits) pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, furnishing certain additional information
with respect to the Offer. Such statement and any amendments thereto, including
exhibits, may be inspected and copies may be obtained from the offices of the
Commission in the manner specified above.
3
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY TERM SHEET.............................................................5
INTRODUCTION...................................................................7
TENDER OFFER...................................................................9
Section 1. Terms of the Offer...........................................9
Section 2. Proration; Acceptance for Payment and Payment for Units.....10
Section 3. Procedures for Tendering Units..............................11
Section 4. Withdrawal Rights...........................................12
Section 5. Extension of Tender Period; Termination; Amendment..........13
Section 6. Certain Federal Income Tax Consequences.....................14
Section 7. Effects of the Offer........................................16
Section 8. Future Plans................................................17
Section 9. The Business of the Partnership.............................17
Section 10. Conflicts of Interest.......................................18
Section 11. Certain Information Concerning the Purchasers...............18
Section 12. Source of Funds.............................................19
Section 13. Conditions of the Offer.....................................19
Section 14. Certain Legal Matters.......................................21
Section 15. Fees and Expenses...........................................22
Section 16. Miscellaneous...............................................22
Schedule I - The Purchasers and Their Respective Principals
4
<PAGE>
SUMMARY TERM SHEET
The Purchasers are offering to purchase up to 15,402 Units for $115 per Unit in
cash. The following are some of the questions that you, as a Unit holder of the
Partnership may have and answers to those questions. The information in this
summary is not complete and we urge you to carefully read the remainder of this
Offer to Purchase and the accompanying Letter of Transmittal.
WHO IS OFFERING TO BUY MY SECURITIES?
The offer to purchase up to 15,402 Units is being made jointly by MP VALUE FUND
5, LLC; MP VALUE FUND 4, LLC; MORAGA FUND 1, L.P.; ACCELERATED HIGH YIELD
INSTITUTIONAL INVESTORS, LTD.; ACCELERATED HIGH YIELD INSTITUTIONAL FUND, LTD.;
MORAGA-DEWAAY FUND, LLC; MP FALCON FUND, LLC; MORAGA GOLD, LLC; and PREVIOUSLY
OWNED MORTGAGE PARTNERSHIPS INCOME FUND, L.P. Each of the Purchasers is a real
estate investment fund managed or advised by MacKenzie Patterson, Inc. a
private, independent real estate investment firm, or another of its affiliates.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are seeking to purchase up to 15,402 of the limited partnership interests,
which are the "Units" issued to public investors in the Partnership.
HOW MUCH ARE YOU OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
We are offering to pay $115 per Unit, net to you in cash, less the amount of any
distributions declared or made with respect to the Units between May 3, 2000 and
the date the Offer expires. If you tender your shares to us in the Offer, you
will not have to pay brokerage fees or similar expenses.
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
If the total amount of Units sought is purchased, the Purchasers' capital
commitment will be approximately $1.232 million. The Purchasers have an
aggregate of in excess of $3 million in current assets, including over $3
million in current assets available to pay selling Unit holders.
IS THE FINANCIAL CONDITION OF THE BIDDERS RELEVANT TO MY DECISION ON WHETHER TO
TENDER IN THE OFFER?
Because this is a cash offer that is not conditioned on financing being
available, and the Purchasers have more than adequate liquid resources and no
intention to take control of the Partnership, the Purchasers' financial
condition would seem to have little relevance to your decision.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have at least until 12:00 midnight, pacific standard time, on June 16,
2000, to decide whether to tender your shares in the Offer.
5
<PAGE>
CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
The Offer can be extended in our discretion.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will make a public announcement of the extension, not
later than 9:00 a.m., eastern standard time, on the day after the day on which
the Offer was scheduled to expire.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
There are no conditions to the offer based on minimum Units tendered, the
availability of financing or otherwise determined by the success of the offer.
However, we may not be obligated to purchase any Units in the event certain
conditions occur, such as legal or government actions which would prohibit the
purchase. Furthermore, we are not obligated to purchase any Units which are
validly tendered if, among other things, there is a material adverse change in
the Partnership or its business.
HOW DO I TENDER MY UNITS?
To tender your shares, you must deliver a completed Letter of Transmittal,
to the Depositary at: MacKenzie Patterson, Inc., 1640 School Street, Moraga,
California 94556 (Telephone: 800-854- 8357; Facsimile Transmission:
925-631-9119), no later than the time the Offer expires.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED UNITS?
You can withdraw previously tendered shares at any time until the Offer has
expired and, if we have not agreed to accept your shares for payment by July 1,
2000, you can withdraw them at any time after such time until we do accept your
shares for payment.
HOW DO I WITHDRAW PREVIOUSLY TENDERED UNITS?
To withdraw shares, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to the Depositary while you
still have the right to withdraw the shares.
WHAT DOES THE PARTNERSHIP'S GENERAL PARTNER THINK OF THE OFFER?
The Purchasers have not sought the approval or disapproval of the General
Partner. The General Partner may be expected to respond with its position on the
offer in the next two weeks.
WILL THE PARTNERSHIP CONTINUE AS A PUBLIC COMPANY?
The Partnership reported 3,091 holders of its outstanding Units as of the end of
1999, the most recent year for which it has filed an annual report. Unless the
total number of Unit holders were to fall below 300, the Partnership will
continue as a public reporting company. The Purchasers do not currently
anticipate that the offer will result in such a reduction in the number of Unit
holders, though it cannot now determine the results with any certainty.
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
The Purchasers do not anticipate that Units held by non-tendering Unit holders
will be affected by the completion of the offer. However, if the Purchasers
6
<PAGE>
should acquire all of the Units sought in the Offer, the Purchasers would
control a large, though not independently controlling, block of Units.
WHAT ARE THE PURCHASERS' FUTURE INTENTIONS CONCERNING THE PARTNERSHIP?
The Purchasers have no present intention to seek control of the Partnership or
to change the management or operations of the Partnership. The Purchasers do not
have any present intention to seek or cause a liquidation of the Partnership.
Although the Purchasers do not have any present intention to take any action
with respect to management or control of the Partnership, the Purchasers reserve
the right, at an appropriate time, to exercise their rights as limited partners
to vote on matters subject to a limited partner vote, including any vote to
cause the sale of the Partnership's properties and the liquidation and
dissolution of the Partnership.
WHAT IS THE MARKET VALUE OF MY SHARES?
According to the Partnership, the Units are not traded on any established
securities market, and the Purchasers' research indicates that few Units have
traded during the current year. Although there can be no certainty as to the
actual present value of the Units, the Purchasers have estimated, solely for the
purposes of determining an acceptable Offer price, that the Partnership's assets
could have an estimated value of approximately $140 per Unit. It should be
noted, however, that the Purchasers have not made an independent appraisal of
the Units or the Partnership's properties, and are not qualified to appraise
real estate. Furthermore, the timing of the sale of the Partnership's properties
and resulting liquidation of the Partnership remains uncertain, and,
consequently, the timing of amounts to be received by Unitholders in respect of
such sale and liquidation cannot be determined. Accordingly, there can be no
assurance that the Purchaser's estimate accurately reflects an approximate value
of the Units or that the actual amounts which may be realized by holders for the
Units may not vary substantially from this estimate.
WHOM CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You can call MacKenzie Patterson, Inc., toll free, at 800-854-8357.
7
<PAGE>
To the Unitholders of JMB INCOME PROPERTIES, LTD. - V
INTRODUCTION
The Purchasers hereby offer to purchase up to 15,402 Units (the
"Maximum Offer") at a purchase price of $115 per Unit ("Offer Price"), less the
amount of any distributions declared or paid with respect to the Units between
May 3, 2000, and the Expiration Date, in cash, without interest, upon the terms
and subject to the conditions set forth in the Offer. The Purchasers are unaware
of any distributions declared or paid since May 3, 2000. Unitholders who tender
their Units will not be obligated to pay any Partnership transfer fees, or any
other fees, expenses or commissions in connection with the tender of Units. The
Purchasers will pay all such costs and all charges and expenses of the
Depositary, an affiliate of certain of the Purchasers, as depositary in
connection with the Offer.
For further information concerning the Purchasers, see Section 11 below
and Schedule I.
The Managing General Partner of the Partnership is JMB Realty
Corporation, and Messrs. Neil G. Bluhm and Judd D. Malkin are the individual
general partners of the Partnership (together they are referred to as the
"General Partners"). None of the Purchasers nor the Depositary is affiliated
with the General Partners or with any affiliate of such persons.
Unitholders are urged to consider the following factors:
- Unitholders who tender their Units will give up the
opportunity to participate in any future benefits from the
ownership of Units, including potential future distributions
by the Partnership, and the purchase price per Unit payable to
a tendering Unitholder by the Purchasers may be less than the
total amount which might otherwise be received by the
Unitholder with respect to the Unit over the remaining term of
the Partnership.
- The Purchasers are making the Offer for investment purposes
and with the intention of making a profit from the ownership
of the Units. In establishing the purchase price of $115 per
Unit, the Purchasers are motivated to establish the lowest
price which might be acceptable to Unitholders consistent with
the Purchasers' objectives. There is no public market for the
Units, and neither the Unit holders nor the Purchasers have
any accurate means for determining the actual present value of
the Units. Although there can be no certainty as to the actual
present value of the Units, the Purchasers have estimated,
solely for the purposes of determining an acceptable Offer
price, that the Units could have an estimated value of $140
per Unit. It should be noted, however, that the Purchasers
have not made an independent appraisal of the Units or the
Partnership's properties, and are not qualified to appraise
real estate. Accordingly, there can be no assurance that this
estimate accurately reflects an approximate value of the Units
or that the actual amounts which may be realized by holders
for the Units may not vary substantially from this estimate.
- As a result of consummation of the Offer, the Purchaser may be
in a position to significantly influence all Partnership
decisions on which Unitholders may vote. The
8
<PAGE>
Purchaser will vote the Units acquired in the Offer in its own
interest, which may be different from or in conflict with the
interests of the remaining Unitholders.
- The Purchasers may accept only a portion of the Units tendered
by a Unitholder in the event a total of more than 15,402 Units
are tendered.
o The Depositary, MacKenzie Patterson, Inc., is an affiliate of
the Purchasers. No independent party will hold securities
tendered until the offer closes and payment is made. Because
there is no independent intermediary to hold the Purchasers'
funds and tendered securities, the Purchasers may have access
to the securities before all conditions to the Offer have been
satisfied and selling Unit holders have been paid.
The Offer will provide Unitholders with an opportunity to liquidate
their investment without the usual transaction costs associated with market
sales. Unitholders may have a more immediate need to use the cash now tied up in
an investment in the Units and wish to sell them to the Purchasers. Unit holders
who sell all of their Units will also eliminate the need to file form K-1
information for the Partnership with their federal tax returns for years after
2000.
Establishment of the Offer Price
The Purchasers have set the Offer Price at $115 per Unit, less the
amount of any distributions declared or made with respect to the Units between
May 3, 2000 and the Expiration Date. In determining the Offer Price, the
Purchasers analyzed a number of quantitative and qualitative factors,
including:(i) the lack of a secondary market for resales of the Units and the
resulting lack of liquidity of an investment in the Partnership; (ii) the
estimated value of the Partnership's real estate assets; and (iii) the costs to
the Purchasers associated with acquiring the Units.
The Partnership stated in its annual report on Form 10-K for the year
ended December 31, 1999, "There is no public market for Interests and it is not
anticipated that a public market for Interests will develop." The lack of any
public market for the sale of Units means that Unit holders have limited
alternatives if they seek to sell their Units. As a result of such limited
alternatives for Unit holders, the Purchasers may not need to offer as high a
price for the Units as they would otherwise. On the other hand, the Purchasers
take a greater risk in establishing a purchase price as there is no prevailing
market price to be used for reference and the Purchasers themselves will have
limited liquidity for the Units upon consummation of the purchase. The
Purchasers review of independent secondary market reporting publications such as
The Partnership Spectrum, and Dow Jones Investment Advisor, reported no sales of
Units on secondary markets during the current year. The information published by
these independent sources is believed to be the product of their private market
research and does not constitute the comprehensive transaction reporting of a
securities exchange. Accordingly, the Purchasers do not know whether the
foregoing information is accurate or complete. The Partnership made an
extraordinary distribution in the amount of $375 per Unit in November 1999, so
the Purchasers believe that any per Unit price information for transactions
prior to that date would not be indicative of any current market price.
The Purchasers and their affiliates currently beneficially own an
aggregate total of 619 Units or approximately 1.6% of the total outstanding
Units. None of these Units were purchased during the past six months.
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The Purchasers are offering to purchase Units which are an illiquid
investment and are not offering to purchase the Partnership's underlying assets.
The assets of the Partnership may not be liquidated for an indefinite period of
time. Accordingly, the underlying asset value of the Partnership is only one
factor used by the Purchasers in arriving at the Offer Price. However, in the
absence of trading price information, the Purchasers estimate of the net asset
value of the Partnership may be relevant to Unit holders review of the Offer
Price. Using publicly available information concerning the Partnership contained
in the Partnership's Form 10-K for the fiscal year ended December 31, 1999, the
Purchasers derived an estimated net asset value for the Units. The Purchasers
are not qualified as real estate appraisers and have relied solely on publicly
available information in making their estimate of the value of the Partnership's
assets. Their estimated value of Partnership assets was calculated solely for
purposes of formulating their offer and cannot be relied upon as representing an
amount which might actually be realized upon a liquidation of the Partnership's
assets, whether now or at any time in the future.
In determining their estimated value of the Units, the Purchasers first
calculated the "Estimated Net Sales Value" of the Partnership's real estate
joint venture investment. The Estimated Net Sales Value was determined by first
determining the property's net operating income ("NOI"). The NOI was calculated
by subtracting from rental income the cost of rental income, general and
administrative costs, and an estimate of anticipated near-term capital
expenditures, and then adding back to that sum the partnership administrative
costs. This NOI was then divided by a 12.5% capitalization rate (the "Cap Rate")
and the result reduced by 3% to take into account the estimated closing costs
which would be incurred upon sale by the Partnership of the property, including
brokerage commissions, title costs, surveys, appraisals, legal fees and transfer
taxes.
The Purchasers believe that the Cap Rate utilized is within a range of
capitalization rates currently employed in the marketplace for properties of
similar type, age and quality. The utilization of different capitalization
rates, however, could also be appropriate. In this regard, Unitholders should be
aware that the use of lower capitalization rate would result in a higher
Estimated Net Sales Value.
To determine the Estimated Liquidation Value of the Partnership's
assets, the Purchaser added to the Estimated Net Sales Value of the
Partnership's properties the net current assets and subtracted the Partnership's
notes payable, as reported in the Partnership's most recent Form 10-K, and
calculated the amount of the balance allocable to the Units. The resulting
Estimated Liquidation Value of the Partnership's assets per was approximately
$140 per Unit. The Purchasers emphasize that this value was calculated by them
solely for purposes of selecting an Offer Price. There can be no assurance as to
the actual liquidation value of Partnership assets or as to the amount or timing
of distributions of liquidation proceeds which may be received by Unitholders.
As discussed below, the Partnership has announced that it intends to commence an
orderly liquidation of its assets, but has not announced any pending offer to
purchase its assets. Accordingly, there can be no assurance as to the
availability or timing of any liquidation proceeds.
The Partnership holds (through a joint venture) one real estate
investment, its majority-owned venture, Wachovia Building Associates
("Wachovia"). Business activities consist of rentals to a variety of commercial
companies, and the ultimate sale or disposition of such real estate. According
to its most recent Form 10K, the Partnership currently expects to conduct an
orderly liquidation of its remaining investment portfolio as quickly as
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practicable and to wind up its affairs in 2002, after the expiration of the
Wachovia Bank lease in the Phillips Building. However, the Partnership may
liquidate prior to 2002 if it is able to sell the 301 N. Main and Phillips
Buildings.
The Offer Price represents the price at which the Purchasers are
willing to purchase Units. No independent person has been retained to evaluate
or render any opinion with respect to the fairness of the Offer Price and no
representation is made by the Purchasers or any affiliate of the Purchasers as
to such fairness. Other measures of the value of the Units may be relevant to
Unitholders. Unitholders are urged to consider carefully all of the information
contained herein and consult with their own advisors, tax, financial or
otherwise, in evaluating the terms of the Offer before deciding whether to
tender Units.
The Offer is not made with any current view toward or plan or purpose
of acquiring Units in a series of successive and periodic offers. Nevertheless,
as noted above, the Purchasers reserve the right to gauge the response to this
solicitation, and, if not successful in achieving the Maximum Offer, may
consider future offers. Factors affecting the Purchasers' future interest in
acquiring additional Units include, but are not limited to, the relative success
of the current Offer, any increase or decrease in the availability of capital
for investment by the Purchasers and their investment fund affiliates, the
current diversification and performance of each affiliated fund's portfolio of
real estate interests, the development of any public market in the Units or
actions by unrelated parties to tender for or purchase Units, the status of and
changes and trends in the Partnership's operations, announcement of pending
property sales and the proposed terms of sales, and local and national real
estate and financial market developments and trends.
General Background Information
Certain information contained in this Offer to Purchase which relates
to, or represents, statements made by the Partnership or the General Partners,
has been derived from information provided in reports filed by the Partnership
with the Securities and Exchange Commission.
According to publicly available information, there were 38,505 Units
issued and outstanding held by approximately 3,091 Unitholders at December 31,
1999.
Tendering Unitholders will not be obligated to pay transfer fees,
brokerage fees or commissions on the sale of the Units to the Purchasers
pursuant to the Offer. The Purchasers will pay all charges and expenses incurred
in connection with the Offer. The Purchasers desire to purchase all Units
tendered by each Unitholder.
If, prior to the Expiration Date, the Purchasers increase the
consideration offered to Unitholders pursuant to the Offer, such increased
consideration will be paid with respect to all Units that are purchased pursuant
to the Offer, whether or not such Units were tendered prior to such increase in
consideration.
Unitholders are urged to read this Offer to Purchase and the
accompanying Letter of Transmittal carefully before deciding whether to tender
their Units.
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TENDER OFFER
Section 1. Terms of the Offer. Upon the terms and subject to the conditions of
the Offer, the Purchasers will accept for payment and pay for Units validly
tendered on or prior to the Expiration Date and not withdrawn in accordance with
Section 4 of this Offer to Purchase. The term "Expiration Date" shall mean 12:00
midnight, Pacific Standard Time, on June 16, 2000, unless and until the
Purchasers shall have extended the period of time for which the Offer is open,
in which event the term "Expiration Date" shall mean the latest time and date on
which the Offer, as so extended by the Purchasers, shall expire.
The Offer is conditioned on satisfaction of certain conditions. See
Section 13, which sets forth in full the conditions of the Offer. The Purchasers
reserve the right (but shall not be obligated), in their sole discretion and for
any reason, to waive any or all of such conditions. If, by the Expiration Date,
any or all of such conditions have not been satisfied or waived, the Purchasers
reserve the right (but shall not be obligated) to (i) decline to purchase any of
the Units tendered, terminate the Offer and return all tendered Units to
tendering Unitholders, (ii) waive all the unsatisfied conditions and, subject to
complying with applicable rules and regulations of the Commission, purchase all
Units validly tendered, (iii) extend the Offer and, subject to the right of
Unitholders to withdraw Units until the Expiration Date, retain the Units that
have been tendered during the period or periods for which the Offer is extended
or (iv) to amend the Offer. Notwithstanding the foregoing, upon the expiration
of the Offer, if all conditions are either satisfied or waived, the Purchasers
will promptly pay for all validly tendered Units, and the Purchasers do not
intend to imply that the foregoing rights of the Purchasers would permit the
Purchasers to delay payment for validly tendered Units following expiration.
The Purchasers do not anticipate and have no reason to believe that any
condition or event will occur that would prevent the Purchasers from purchasing
tendered Units as offered herein.
Section 2. Proration; Acceptance for Payment and Payment for Units. If the
number of Units validly tendered prior to the Expiration Date and not withdrawn
is 15,402 or less, the Purchasers, upon the terms and subject to the conditions
of the Offer, will accept for payment all Units so tendered. If the number of
Units validly tendered prior to the Expiration Date and not withdrawn exceeds
15,402, the Purchasers, upon the terms and subject to the conditions of the
Offer, will accept for payment Units so tendered on a pro rata basis.
In the event that proration is required, because of the difficulty of
immediately determining the precise number of Units to be accepted, the
Purchasers will announce the final results of proration as soon as practicable,
but in no event later than five business days following the Expiration Date. The
Purchasers will not pay for any Units tendered until after the final proration
factor has been determined.
Upon the terms and subject to the conditions of the Offer (including,
if the Offer is extended or amended, the terms and conditions of any extension
or amendment), the Purchasers will accept for payment, and will pay for, Units
validly tendered and not withdrawn in accordance with Section 4, as promptly as
practicable following the Expiration Date. In all cases, payment for Units
purchased pursuant to the Offer will be made only after timely receipt by the
Depositary of a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) and any other documents required by the Letter of
Transmittal.
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For purposes of the Offer, the Purchasers shall be deemed to have
accepted for payment (and thereby purchased) tendered Units when, as and if the
Purchasers give oral or written notice to the Depositary of the Purchasers'
acceptance for payment of such Units pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Units purchased pursuant to
the Offer will in all cases be made by deposit of the Offer Price with the
Depositary, which will act as agent for the tendering Unitholders for the
purpose of receiving payment from the Purchasers and transmitting payment to
tendering Unitholders.
Under no circumstances will interest be paid on the Offer Price by
reason of any delay in making such payment.
If any tendered Units are not purchased for any reason, the Letter of
Transmittal with respect to such Units not purchased will be of no force or
effect. If, for any reason whatsoever, acceptance for payment of, or payment
for, any Units tendered pursuant to the Offer is delayed or the Purchasers are
unable to accept for payment, purchase or pay for Units tendered pursuant to the
Offer, then, without prejudice to the Purchasers' rights under Section 13 (but
subject to compliance with Rule 14e-1(c) under the Exchange Act), the Depositary
may, nevertheless, on behalf of the Purchasers, retain tendered Units, subject
to any limitations of applicable law, and such Units may not be withdrawn except
to the extent that the tendering Unitholders are entitled to withdrawal rights
as described in Section 4.
If, prior to the Expiration Date, the Purchasers shall increase the
consideration offered to Unitholders pursuant to the Offer, such increased
consideration shall be paid for all Units accepted for payment pursuant to the
Offer, whether or not such Units were tendered prior to such increase.
Section 3. Procedures for Tendering Units.
Valid Tender. For Units to be validly tendered pursuant to the Offer, a properly
completed and duly executed Letter of Transmittal (a copy of which is enclosed
with this Offer to Purchase, printed on yellow paper) with any other documents
required by the Letter of Transmittal must be received by the Depositary at its
address set forth on the back cover of this Offer to Purchase on or prior to the
Expiration Date. A Unitholder may tender any or all Units owned by such
Unitholder.
In order for a tendering Unitholder to participate in the Offer, Units must be
validly tendered and not withdrawn prior to the Expiration Date, which is 12:00
midnight, Pacific Standard Time, on June 16, 2000, or such date to which the
Offer may be extended.
The method of delivery of the Letter of Transmittal and all other required
documents is at the option and risk of the tendering Unitholder and delivery
will be deemed made only when actually received by the Depositary.
Backup Federal Income Tax Withholding. To prevent the possible application of
31% backup federal income tax withholding with respect to payment of the Offer
Price for Units purchased pursuant to the Offer, a tendering Unitholder must
provide the Depositary with such Unitholder's correct taxpayer identification
number and make certain certifications that such Unitholder is not subject to
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backup federal income tax withholding. Each tendering Unitholder must
insert in the Letter of Transmittal the Unitholder's taxpayer identification
number or social security number in the space provided on the front of the
Letter of Transmittal. The Letter of Transmittal also includes a substitute Form
W-9, which contains the certifications referred to above. (See the Instructions
to the Letter of Transmittal.)
FIRPTA Withholding. To prevent the withholding of federal income tax in an
amount equal to 10% of the sum of the Offer Price plus the amount of Partnership
liabilities allocable to each Unit tendered, each Unitholder must complete the
FIRPTA Affidavit included in the Letter of Transmittal certifying such
Unitholder's taxpayer identification number and address and that the Unitholder
is not a foreign person. (See the Instructions to the Letter of Transmittal and
"Section 6. Certain Federal Income Tax Consequences.")
Other Requirements. By executing a Letter of Transmittal as set forth above, a
tendering Unitholder irrevocably appoints the designees of the Purchasers as
such Unitholder's proxies, in the manner set forth in the Letter of Transmittal,
each with full power of substitution, to the full extent of such Unitholder's
rights with respect to the Units tendered by such Unitholder and accepted for
payment by the Purchasers. Such appointment will be effective when, and only to
the extent that, the Purchasers accept such Units for payment. Upon such
acceptance for payment, all prior proxies given by such Unitholder with respect
to such Units will, without further action, be revoked, and no subsequent
proxies may be given (and if given will not be effective). The designees of the
Purchasers will, with respect to such Units, be empowered to exercise all voting
and other rights of such Unitholder as they in their sole discretion may deem
proper at any meeting of Unitholders, by written consent or otherwise. In
addition, by executing a Letter of Transmittal, a Unitholder also assigns to the
Purchasers all of the Unitholder's rights to receive distributions from the
Partnership with respect to Units which are accepted for payment and purchased
pursuant to the Offer, other than those distributions declared or paid during
the period commencing on the Offer Date and terminating on the Expiration Date.
Determination of Validity; Rejection of Units; Waiver of Defects; No Obligation
to Give Notice of Defects. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance for payment of any tender of Units
pursuant to the procedures described above will be determined by the Purchasers,
in their sole discretion, which determination shall be final and binding. The
Purchasers reserve the absolute right to reject any or all tenders if not in
proper form or if the acceptance of, or payment for, the absolute right to
reject any or all tenders if not in proper form or if the acceptance of, or
payment for, the Units tendered may, in the opinion of the Purchasers' counsel,
be unlawful. The Purchasers also reserve the right to waive any defect or
irregularity in any tender with respect to any particular Units of any
particular Unitholder, and the Purchasers' interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and the
Instructions thereto) will be final and binding. Neither the Purchasers, the
Depositary, nor any other person will be under any duty to give notification of
any defects or irregularities in the tender of any Units or will incur any
liability for failure to give any such notification.
A tender of Units pursuant to any of the procedures described above
will constitute a binding agreement between the tendering Unitholder and the
Purchasers upon the terms and subject to the conditions of the Offer, including
the tendering Unitholder's representation and warranty that (i) such Unitholder
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owns the Units being tendered within the meaning of Rule 14e-4 under the
Exchange Act and (ii) the tender of such Unit complies with Rule 14e-4. Rule
14e-4 requires, in general, that a tendering security holder actually be able to
deliver the security subject to the tender offer, and is of concern particularly
to any Unitholders who have granted options to sell or purchase the Units, hold
option rights to acquire such securities, maintain "short" positions in the
Units (i.e., have borrowed the Units) or have loaned the Units to a short
seller. Because of the nature of limited partnership interests, the Purchasers
believe it is unlikely that any option trading or short selling activity exists
with respect to the Units. In any event, a Unit holder will be deemed to tender
Units in compliance with Rule 14e-4 and the Offer if the holder is the record
owner of the Units and the holder (i) delivers the Units pursuant to the terms
of the Offer, (ii) causes such delivery to be made, (iii) guarantees such
delivery, (iv) causes a guaranty of such delivery, or (v) uses any other method
permitted in the Offer (such as facsimile delivery of the Transmittal Letter).
Section 4. Withdrawal Rights. Except as otherwise provided in this Section 4,
all tenders of Units pursuant to the Offer are irrevocable, provided that Units
tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment as provided in this
Offer to Purchase, may also be withdrawn at any time on or after July 1, 2000.
For withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at the address or
the facsimile number set forth in the attached Letter of Transmittal. Any such
notice of withdrawal must specify the name of the person who tendered the Units
to be withdrawn and must be signed by the person(s) who signed the Letter of
Transmittal in the same manner as the Letter of Transmittal was signed.
If purchase of, or payment for, Units is delayed for any reason or if
the Purchasers are unable to purchase or pay for Units for any reason, then,
without prejudice to the Purchasers' rights under the Offer, tendered Units may
be retained by the Depositary on behalf of the Purchasers and may not be
withdrawn except to the extent that tendering Unitholders are entitled to
withdrawal rights as set forth in this Section 4, subject to Rule 14e-1(c) under
the Exchange Act, which provides that no person who makes a tender offer shall
fail to pay the consideration offered or return the securities deposited by or
on behalf of security holders promptly after the termination or withdrawal of
the tender offer.
All questions as to the form and validity (including time of receipt)
of notices of withdrawal will be determined by the Purchasers, in their sole
discretion, which determination shall be final and binding. Neither the
Purchasers, the Depositary, nor any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
will incur any liability for failure to give any such notification.
Any Units properly withdrawn will be deemed not to be validly tendered
for purposes of the Offer. Withdrawn Units may be re-tendered, however, by
following the procedures described in Section 3 at any time prior to the
Expiration Date.
Section 5. Extension of Tender Period; Termination; Amendment. The Purchasers
expressly reserve the right, in their sole discretion, at any time and from time
to time, (i) to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and the payment for, any Units by
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giving oral or written notice of such extension to the Depositary, (ii)
upon the occurrence or failure to occur of any of the conditions specified in
Section 13, to delay the acceptance for payment of, or payment for, any Units
not heretofore accepted for payment or paid for, or to terminate the Offer and
not accept for payment any Units not theretofore accepted for payment or paid
for, by giving oral or written notice of such termination to the Depositary, and
(iii) to amend the Offer in any respect (including, without limitation, by
increasing or decreasing the consideration offered or the number of Units being
sought in the Offer or both or changing the type of consideration) by giving
oral or written notice of such amendment to the Depositary. Any extension,
termination or amendment will be followed as promptly as practicable by public
announcement, the announcement in the case of an extension to be issued no later
than 9:00 a.m., Eastern Standard Time, on the next business day after the
previously scheduled Expiration Date, in accordance with the public announcement
requirement of Rule 14d-4(c) under the Exchange Act. Without limiting the manner
in which the Purchasers may choose to make any public announcement, except as
provided by applicable law (including Rule 14d-4(c) under the Exchange Act), the
Purchasers will have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by issuing a release to the
Dow Jones News Service. The Purchasers may also be required by applicable law to
disseminate to Unitholders certain information concerning the extensions of the
Offer and any material changes in the terms of the Offer.
If the Purchasers extend the Offer, or if the Purchasers (whether
before or after its acceptance for payment of Units) are delayed in their
payment for Units or are unable to pay for Units pursuant to the Offer for any
reason, then, without prejudice to the Purchasers' rights under the Offer, the
Depositary may retain tendered Units on behalf of the Purchasers, and such Units
may not be withdrawn except to the extent tendering Unitholders are entitled to
withdrawal rights as described in Section 4. However, the ability of the
Purchasers to delay payment for Units that the Purchasers have accepted for
payment is limited by Rule 14e-1 under the Exchange Act, which requires that the
Purchasers pay the consideration offered or return the securities deposited by
or on behalf of holders of securities promptly after the termination or
withdrawal of the Offer.
If the Purchasers make a material change in the terms of the Offer or
the information concerning the Offer or waive a material condition of the Offer,
the Purchasers will extend the Offer to the extent required by Rules 14d-4(c),
14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which an
offer must remain open following a material change in the terms of the offer or
information concerning the offer, other than a change in price or a change in
percentage of securities sought, will depend upon the facts and circumstances,
including the relative materiality of the change in the terms or information.
With respect to a change in price or a change in percentage of securities sought
(other than an increase of not more than 2% of the securities sought), however,
a minimum ten business day period is generally required to allow for adequate
dissemination to security holders and for investor response. As used in this
Offer to Purchase, "business day" means any day other than a Saturday, Sunday or
a federal holiday, and consists of the time period from 12:01 a.m. through 12:00
midnight, Pacific Standard Time.
Section 6. Certain Federal Income Tax Consequences. THE FEDERAL INCOME TAX
DISCUSSION SET FORTH BELOW IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY AND
DOES NOT PURPORT TO ADDRESS ALL ASPECTS OF TAXATION THAT MAY BE RELEVANT TO A
PARTICULAR UNITHOLDER. For example, this discussion does not address the effect
of any applicable foreign, state, local or other tax laws other than federal
income tax laws. Certain Unitholders (including trusts, foreign persons, tax-
exempt organizations or corporations subject to special rules, such as life
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insurance companies or S corporations) may be subject to special rules not
discussed below. This discussion is based on the Internal Revenue Code of 1986,
as amended (the "Code"), existing regulations, court decisions and Internal
Revenue Service ("IRS") rulings and other pronouncements. EACH UNITHOLDER
TENDERING UNITS SHOULD CONSULT SUCH UNITHOLDER'S OWN TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO SUCH UNITHOLDER OF ACCEPTING THE OFFER, INCLUDING
THE APPLICATION OF THE ALTERNATIVE MINIMUM TAX AND FEDERAL, FOREIGN, STATE,
LOCAL AND OTHER TAX LAWS.
The following discussion is based on the assumption that the
Partnership is treated as a partnership for federal income tax purposes and is
not a "publicly traded partnership" as that term is defined in the Code.
Gain or Loss. A taxable Unitholder will recognize a gain or loss on the sale of
such Unitholder's Units in an amount equal to the difference between (i) the
amount realized by such Unitholder on the sale and (ii) such Unitholder's
adjusted tax basis in the Units sold. The amount realized by a Unitholder will
include the Unitholder's share of the Partnership's liabilities, if any (as
determined under Code section 752 and the regulations thereunder). If the
Unitholder reports a loss on the sale, such loss generally could not be
currently deducted by such Unitholder except against such Unitholder's capital
gains from other investments. In addition, such loss would be treated as a
passive activity loss. (See "Suspended Passive Activity Losses" below.)
The adjusted tax basis in the Units of a Unitholder will depend upon
individual circumstances. (See also "Partnership Allocations in Year of Sale"
below.) Each Unitholder who plans to tender hereunder should consult with the
Unitholder's own tax advisor as to the Unitholder's adjusted tax basis in the
Unitholder's Units and the resulting tax consequences of a sale.
If any portion of the amount realized by a Unitholder is attributable
to such Unitholder's share of "unrealized receivables" or "substantially
appreciated inventory items" as defined in Code section 751, a corresponding
portion of such Unitholder's gain or loss will be treated as ordinary gain or
loss. It is possible that the basis allocation rules of Code Section 751 may
result in a Unitholder's recognizing ordinary income with respect to the portion
of the Unitholder's amount realized on the sale of a Unit that is attributable
to such items while recognizing a capital loss with respect to the remainder of
the Unit.
A tax-exempt Unitholder (other than an organization described in Code
Section 501(c)(7) (social club), 501(c)(9) (voluntary employee benefit
association), 501(c)(17) (supplementary unemployment benefit trust), or
501(c)(20) (qualified group legal services plan)) should not be required to
recognize unrelated trade or business income upon the sale of its Units pursuant
to the Offer, assuming that such Unitholder does not hold its Units as a
"dealer" and has not acquired such Units with debt financed proceeds.
Partnership Allocations in Year of Sale. A tendering Unitholder will be
allocated the Unitholder's pro rata share of the annual taxable income and
losses from the Partnership with respect to the Units sold for the period
through the date of sale, even though such Unitholder will assign to the
Purchasers their rights to receive certain cash distributions with respect to
such Units. Such allocations and any Partnership distributions for such period
would affect a Unitholder's adjusted tax basis in the tendered Units and,
therefore, the amount of gain or loss recognized by the Unitholder on the sale
of the Units.
Possible Tax Termination. The Code provides that if 50% or more of the capital
and profits interests in a partnership are sold or exchanged within a single
12-month period, such partnership generally will terminate for federal income
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tax purposes. It is possible that the Partnership could terminate for
federal income tax purposes as a result of consummation of the Offer. Although
the likelihood is remote, as the Maximum Offer is calculated as an amount which
is not expected to cause such a termination, a tax termination of the
Partnership could have an effect on a corporate or other non-individual
Unitholder whose tax year is not the calendar year, as such a Unitholder might
recognize more than one year's Partnership tax items in one tax return, thus
accelerating by a fraction of a year the effects from such items.
Suspended "Passive Activity Losses". A Unitholder who sells all of the
Unitholder's Units would be able to deduct "suspended" passive activity losses
from the Partnership, if any, in the year of sale free of the passive activity
loss limitation. As a limited partner of the Partnership, which was engaged in
real estate activities, the ability of a Unitholder, who or which is subject to
the passive activity loss rules, to claim tax losses from the Partnership was
limited. Upon sale of all of the Unitholder's Units, such Unitholder would be
able to use any "suspended" passive activity losses first against gain, if any,
on sale of the Unitholder's Units and then against income from any other source.
Foreign Unitholders. Gain realized by a foreign Unitholder on a sale of a Unit
pursuant to the Offer will be subject to federal income tax. Under Section 1445
of the Code, the transferee of a partnership interest held by a foreign person
is generally required to deduct and withhold a tax equal to 10% of the amount
realized on the disposition. The Purchasers will withhold 10% of the amount
realized by a tendering Unitholder from the purchase price payment to be made to
such Unitholder unless the Unitholder properly completes and signs the FIRPTA
Affidavit included as part of the Letter of Transmittal certifying the
Unitholder's TIN, that such Unitholder is not a foreign person and the
Unitholder's address. Amounts withheld would be creditable against a foreign
Unitholder's federal income tax liability and, if in excess thereof, a refund
could be obtained from the Internal Revenue Service by filing a U.S. income tax
return.
Section 7. Effects of the Offer.
Limitations on Resales. The Purchasers do not believe the provisions of the
Partnership Agreement should restrict transfers of Units pursuant to the Offer.
Effect on Trading Market. There is no established public trading market for the
Units and, therefore, a reduction in the number of Unitholders should not
materially further restrict the Unitholders' ability to find purchasers for
their Units on any secondary market.
Voting Power of Purchasers. Depending on the number of Units acquired by the
Purchasers pursuant to the Offer, the Purchasers may have the ability to exert
certain influence on matters subject to the vote of Unitholders, though the
maximum number of Units sought hereunder would not give the Purchasers a
controlling voting interest. The Partnerships does not hold annual or regular
meetings to elect directors, and does not have a representative board of
directors overseeing management. Votes of Unit holders would only be solicited,
if ever, for matters affecting the fundamental structure of the Partnership, and
the affirmative vote of more than 50% of the outstanding Units (not a mere
quorum) is required to effect action. The Purchasers and their affiliates do not
intend to call for any such vote in the foreseeable future, nor are they aware
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that the General Partner intends to do so. They would, nevertheless,
exercise any and all rights they might hold in the event that such a vote is
called by the general partner, or if, in the future, changes in circumstances
would dictate that limited partners exercise their right to call a vote. If the
Purchasers were to acquire all of the Units sought in the Offer, the Purchasers
would hold approximately 41% of the outstanding Units, too few to control any
vote of the Limited Partners. The Purchasers do not expect non-tendering Unit
holders to be affected because the Purchasers' influence will not be
controlling, any influence the Purchasers and their affiliates might wield would
only be in the event of an extraordinary vote (not a regular or annual vote),
and even in those circumstances, the Purchasers would not see any divergence
between the Purchasers' interests as holders and those of any other holder.
Other Potential Effects. The Units are registered under the Exchange Act, which
requires, among other things that the Partnership furnish certain information to
its Unitholders and to the Commission and comply with the Commission's proxy
rules in connection with meetings of, and solicitation of consents from,
Unitholders. Registration and reporting requirements could be terminated by the
Partnership if the number of record holders falls below 300, or below 500 if the
Partnership's total assets are below $10 million for three consecutive preceding
fiscal years. The Partnership reported a total of 3,091 limited partners as of
its most recent fiscal year end and in excess of $32 million in total assets.
The Purchasers believe the possibility is remote that the Offer could reduce the
number of record Unit holders below 300. Accordingly, the Purchasers do not
believe that the purchase of Units pursuant to the Offer will result in the
Units becoming eligible for de-registration under the Exchange Act.
Section 8. Future Plans. Following the completion of the Offer, the Purchasers,
or their affiliates, may acquire additional Units. Any such acquisitions may be
made through private purchases, one or more future tender offers or by any other
means deemed advisable or appropriate. Any such acquisitions may be at a
consideration higher or lower than the consideration to be paid for the Units
purchased pursuant to the Offer. The Purchasers are seeking to purchase a total
of 15,402 Units. If the Purchasers acquire fewer than 15,402 Units pursuant to
the Offer, the Purchasers may seek to make further purchases on the open market
at prevailing prices, or solicit Units pursuant to one or more future tender
offers at the same price, a higher price or, if the Partnership's circumstances
change, at a lower price. Alternatively, the Purchasers may discontinue any
further purchases of Units after termination of the Offer, regardless of the
number of Units purchased. The Offer is not made with any current view toward or
plan or purpose of acquiring Units in a series of successive and periodic
offers. Nevertheless, as noted above, the Purchasers reserve the right to gauge
the response to this solicitation, and, if not successful in achieving the
Maximum Offer, may consider future offers. Factors affecting the Purchasers'
future interest in acquiring additional Units include, but are not limited to,
the relative success of the current Offer, any increase or decrease in the
availability of capital for investment by the Purchasers and their investment
fund affiliates, the current diversification and performance of each affiliated
fund's portfolio of real estate interests, the development of any public market
in the Units or actions by unrelated parties to tender for or purchase Units,
the status of and changes and trends in the Partnership's operations,
announcement of pending property sales and the proposed terms of sales, and
local and national real estate and financial market developments and trends.
The Purchasers are acquiring the Units pursuant to the Offer solely for
investment purposes. The Purchasers have no present intention to seek control of
the Partnership or to change the management or operations of the Partnership.
The Purchasers do not have any present intention to seek or cause a liquidation
of the Partnership. The Purchasers nevertheless reserve the right, at an
appropriate time, to exercise their rights as limited partners to vote on
matters subject to a limited partner vote, including, but not limited to, any
vote to cause the sale of the Partnership's properties and the liquidation and
dissolution of the Partnership.
19
<PAGE>
Section 9. The Business of the Partnership. Information included herein
concerning the Partnership is derived from the Partnership's publicly-filed
reports. Information concerning the Partnership, its assets, operations and
management is contained in its Annual Reports on Form 10-K and Quarterly Reports
on Form 10-Q and other filings with the Securities and Exchange Commission. Such
reports and filings are available on the Commission's EDGAR system, at its
internet website at www.sec.gov, and are available for inspection at the
Commission's principal office in Washington, D.C. and at its regional offices in
New York, New York and Chicago, Illinois. The Purchasers have relied on such
information to the extent information is presented herein concerning the
Partnership, and expressly disclaim any responsibility for the information
included in such reports and extracted in this Offer.
Section 10. Conflicts of Interest. The Depositary is affiliated with certain
Purchasers. Therefore, by virtue of this affiliation, the Depositary may have
inherent conflicts of interest in acting as Depositary for the Offer. The
Depositary's role is administrative only, however, and any conflict of interest
should not be deemed material to Unit holders.
Section 11. Certain Information Concerning the Purchasers. The Purchasers are MP
VALUE FUND 4, LLC (MPV4); MP VALUE FUND 5, LLC (MPV5); MORAGA FUND 1, L.P.
(MF1); ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, LTD. (AHYII); ACCELERATED
HIGH YIELD INSTITUTIONAL FUND, LTD. (AHYIF); MORAGA-DEWAAY FUND, LLC (MDF); MP
FALCON FUND, LLC (MPF); MORAGA GOLD, LLC (MG); and PREVIOUSLY OWNED MORTGAGE
PARTNERSHIPS INCOME FUND, L.P. (POMPIF). For information concerning the
Purchasers and their respective principals, please refer to Schedule I attached
hereto. The principal business of each of the Purchasers is investment in
securities, particularly real estate-based securities. The principal business
address of each of the Purchasers is 1640 School Street, Moraga, California
94556.
The Purchasers have made binding commitments to contribute and have
available sufficient amounts of liquid capital necessary to fund the acquisition
of all Units subject to the Offer, the expenses to be incurred in connection
with the Offer, and all other anticipated costs of the Purchasers. The
Purchasers are not public companies and have not prepared audited financial
statements. Set forth below is summary of total net assets (that is, total
assets less total liabilities) and total current assets (defined for this
purpose as cash, cash equivalents and marketable securities) for each of the
entity Purchasers (numbers are expressed in thousands of dollars and are rounded
to the nearest thousand) as of April 11, 2000:
20
<PAGE>
Purchaser Current Assets Net Assets
- --------- -------------- ----------
MPV4 $ 264 2,156
MF1 185 1,015
MPV5 758 923
AHYII 139 2,380
AHYIF 53 1,398
MDF 184 195
MPF 189 1,424
MG 1,272 1,364
POMPIF 8 650
- ---------- ---------- ----------
Total $ 3,052 $ 8,334
Except as otherwise set forth herein, (i) neither the Purchasers nor,
to the best knowledge of the Purchasers, the persons listed on Schedule I nor
any affiliate of the Purchasers beneficially owns or has a right to acquire any
Units, (ii) neither the Purchasers nor, to the best knowledge of the Purchasers,
the persons listed on Schedule I nor any affiliate of the Purchasers, or any
director, executive officer or subsidiary of any of the foregoing has effected
any transaction in the Units within the past 60 days, (iii) neither the
Purchasers nor, to the best knowledge of the Purchasers, the persons listed on
Schedule I nor any affiliate of the Purchasers has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Partnership, including but not limited to, contracts,
arrangements, understandings or relationships concerning the transfer or voting
thereof, joint ventures, loan or option arrangements, puts or calls, guarantees
of loans, guarantees against loss or the giving or withholding of proxies,
consents or authorizations, (iv) there have been no transactions or business
relationships which would be required to be disclosed under the rules and
regulations of the Commission between any of the Purchasers or, to the best
knowledge of the Purchasers, the persons listed on Schedule I, or any affiliate
of the Purchasers on the one hand, and the Partnership or its affiliates, on the
other hand, and (v) there have been no contracts, negotiations or transactions
between the Purchasers, or to the best knowledge of the Purchasers any affiliate
of the Purchasers on the one hand, the persons listed on Schedule I, and the
Partnership or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, tender offer or other acquisition of securities,
an election of directors or a sale or other transfer of a material amount of
assets.
Section 12. Source of Funds. The Purchasers expect that approximately $1,232,160
would be required to purchase 15,402 Units, if tendered, and an additional
$20,000 may be required to pay related fees and expenses. The Purchasers
anticipate funding all of the purchase price and related expenses through their
existing liquid capital reserves. The cash to complete the entire purchase is in
the bidders' hands and is committed to that purpose. Accordingly, there are no
financing arrangements to fall through and no alternative financing plans.
Section 13. Conditions of the Offer. Notwithstanding any other term of the
Offer, the Purchasers shall not be required to accept for payment or to pay for
21
<PAGE>
any Units tendered if all authorizations, consents, orders or approvals of,
or declarations or filings with, or expirations of waiting periods imposed by,
any court, administrative agency or commission or other governmental authority
or instrumentality, domestic or foreign, necessary for the consummation of the
transactions contemplated by the Offer shall not have been filed, occurred or
been obtained on or before the Expiration Date.
The Purchasers shall not be required to accept for payment or pay for
any Units not theretofore accepted for payment or paid for and may terminate or
amend the Offer as to such Units if, at any time on or after the date of the
Offer and before the Expiration Date, any of the following conditions exists:
(a) a preliminary or permanent injunction or other order of any federal
or state court, government or governmental authority or agency shall have been
issued and shall remain in effect which (i) makes illegal, delays or otherwise
directly or indirectly restrains or prohibits the making of the Offer or the
acceptance for payment of or payment for any Units by the Purchasers, (ii)
imposes or confirms limitations on the ability of the Purchasers effectively to
exercise full rights of ownership of any Units, including, without limitation,
the right to vote any Units acquired by the Purchasers pursuant to the Offer or
otherwise on all matters properly presented to the Partnership's Unitholders,
(iii) requires divestiture by the Purchasers of any Units, (iv) causes any
material diminution of the benefits to be derived by the Purchasers as a result
of the transactions contemplated by the Offer or (v) might materially adversely
affect the business, properties, assets, liabilities, financial condition,
operations, results of operations or prospectus of the Purchasers or the
Partnership, in the reasonable judgment of the Purchasers;
(b) there shall be any action taken, or any statute, rule, regulation
or order proposed, enacted, enforced, promulgated, issued or deemed applicable
to the Offer by any federal or state court, government or governmental authority
or agency, other than the application of the waiting period provisions of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which might,
directly or indirectly, result in any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above;
(c) any change or development shall have occurred or been threatened
since the date hereof, in the business, properties, assets, liabilities,
financial condition, operations, results of operations or prospects of the
Partnership, which, in the reasonable judgment of the Purchasers, is or may be
materially adverse to the Partnership, or the Purchasers shall have become aware
of any fact that, in the reasonable judgment of the Purchasers, does or may have
a material adverse effect on the value of the Units;
(d) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange or
in the over-the-counter market in the United States, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any limitation by any governmental authority on, or other
event which might affect, the extension of credit by lending institutions or
result in any imposition of currency controls in the United States, (iv) a
commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States, (v) a material
change in United States or other currency exchange rates or a suspension of a
limitation on the markets thereof, or (vi) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material acceleration
or worsening thereof; or
22
<PAGE>
(e) it shall have been publicly disclosed or the Purchasers shall have
otherwise learned that (i) more than fifty percent of the outstanding Units have
been or are proposed to be acquired by another person (including a "group"
within the meaning of Section 13(d)(3) of the Exchange Act), or (ii) any person
or group that prior to such date had filed a Statement with the Commission
pursuant to Sections 13(d) or (g) of the Exchange Act has increased or proposes
to increase the number of Units beneficially owned by such person or group as
disclosed in such Statement by two percent or more of the outstanding Units.
The foregoing conditions are for the sole benefit of the Purchasers and
may be asserted by the Purchasers regardless of the circumstances giving rise to
such conditions or may be waived by the Purchasers in whole or in part at any
time and from time to time in their sole discretion, and the Offer will remain
open for a period of at least five business days following any such waiver of a
material condition. Any termination by the Purchasers concerning the events
described above will be final and binding upon all parties.
Section 14. Certain Legal Matters.
General. Except as set forth in this Section 14, the Purchasers are not aware of
any filings, approvals or other actions by any domestic or foreign governmental
or administrative agency that would be required prior to the acquisition of
Units by the Purchasers pursuant to the Offer. Should any such approval or other
action be required, it is the Purchasers' present intention that such additional
approval or action would be sought. While there is no present intent to delay
the purchase of Units tendered pursuant to the Offer pending receipt of any such
additional approval or the taking of any such action, there can be no assurance
that any such additional approval or action, if needed, would be obtained
without substantial conditions or that adverse consequences might not result to
the Partnership's business, or that certain parts of the Partnership's business
might not have to be disposed of or held separate or other substantial
conditions complied with in order to obtain such approval or action, any of
which could cause the Purchasers to elect to terminate the Offer without
purchasing Units thereunder. The Purchasers' obligation to purchase and pay for
Units is subject to certain conditions, including conditions related to the
legal matters discussed in this Section 14.
Antitrust. The Purchasers do not believe that the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, is applicable to the acquisition
of Units pursuant to the Offer.
Margin Requirements. The Units are not "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System and,
accordingly, such regulations are not applicable to the Offer.
State Takeover Laws. A number of states have adopted anti-takeover laws which
purport, to varying degrees, to be applicable to attempts to acquire securities
of corporations which are incorporated in such states or which have substantial
assets, security holders, principal executive offices or principal places of
business therein. These laws are directed at the acquisition of corporations and
not partnerships. The Purchasers, therefore, do not believe that any anti-
takeover laws apply to the transactions contemplated by the Offer.
Although the Purchasers have not attempted to comply with any state
anti-takeover statutes in connection with the Offer, the Purchasers reserve the
right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer nor any action taken in
23
<PAGE>
connection herewith is intended as a waiver of such right. If any state
anti- takeover statute is applicable to the Offer, the Purchasers might be
unable to accept for payment or purchase Units tendered pursuant to the Offer or
be delayed in continuing or consummating the Offer. In such case, the Purchasers
may not be obligated to accept for purchase or pay for any Units tendered.
Section 15. Fees and Expenses. The Purchasers have retained MacKenzie Patterson,
Inc., an affiliate of certain Purchasers, to act as Depositary in connection
with the Offer. The Purchasers will pay the Depositary reasonable and customary
compensation for its services in connection with the Offer, plus reimbursement
for out-of-pocket expenses, and will indemnify the Depositary against certain
liabilities and expenses in connection therewith, including liabilities under
the federal securities laws. The Purchasers will also pay all costs and expenses
of printing, publication and mailing of the Offer and all costs of transfer.
Section 16. Miscellaneous. THE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS BE
ACCEPTED FROM OR ON BEHALF OF) UNITHOLDERS IN ANY JURISDICTION IN WHICH THE
MAKING OF THE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH
THE LAWS OF SUCH JURISDICTION. THE PURCHASERS ARE NOT AWARE OF ANY JURISDICTION
WITHIN THE UNITED STATES IN WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE
THEREOF WOULD BE ILLEGAL.
No person has been authorized to give any information or to make any
representation on behalf of the Purchasers not contained herein or in the Letter
of Transmittal and, if given or made, such information or representation must
not be relied upon as having been authorized.
May 3, 2000
MP VALUE FUND 4, LLC; MP VALUE FUND 5, LLC; MORAGA FUND 1, L.P.;
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, LTD.; ACCELERATED HIGH YIELD
INSTITUTIONAL FUND, LTD.; MORAGA-DEWAAY FUND, LLC; MP FALCON FUND, LLC; MORAGA
GOLD, LLC; and PREVIOUSLY OWNED MORTGAGE PARTNERSHIPS INCOME FUND, L.P.
24
<PAGE>
SCHEDULE I
THE PURCHASERS AND THEIR RESPECTIVE PRINCIPALS
The Purchasers are MP VALUE FUND 4, LLC (MPV4); MP VALUE FUND 5,
LLC (MPV5); MORAGA FUND 1, L.P. (MF1); ACCELERATED HIGH YIELD INSTITUTIONAL
INVESTORS, LTD. (AHYII); ACCELERATED HIGH YIELD INSTITUTIONAL FUND, LTD.
(AHYIF); MORAGA-DEWAAY FUND, LLC (MDF); MP FALCON FUND, LLC (MPF); MORAGA GOLD,
LLC (MG); and PREVIOUSLY OWNED MORTGAGE PARTNERSHIPS INCOME FUND, L.P. (POMPIF).
The Managing Member or Manager of each of MPVF4, MPV5, MDF, and MPF, and the
general partner of AHYIF, AHYII, and POMPIF, is MacKenzie Patterson, Inc. The
Manager of MF1 is Moraga Partners, Inc. The names of the directors and executive
officers of MacKenzie Patterson, Inc., Moraga Partners, Inc., and Moraga Gold,
LLC, and the present principal occupations and five year employment histories of
each such person are set forth below. The Purchasers have jointly made the offer
and are jointly and severally liable for satisfying its terms. Other than the
foregoing, the Purchasers' relationship consists of an informal agreement to
share the costs associated with making the offer and to allocate any resulting
purchases of Units among them in such manner and proportions as they may
determine in the future. Each individual is a citizen of the United States of
America. AHYIF, and AHYII were organized in the State of Florida. All other
Purchasers are organized in the State of California.
MacKenzie Patterson, Inc.
C.E. Patterson is President and a director of MacKenzie Patterson, Inc. He
is the co-founder and President of Patterson Financial Services, Inc. In 1981,
Mr. Patterson founded PFS with Berniece A. Patterson, as a financial planning
firm. Mr. Patterson founded Patterson Real Estate Services, a licensed
California Real Estate Broker, in 1982. As President of PFS, Mr. Patterson is
responsible for all investment counseling activities. He supervises the analysis
of investment opportunities for the clients of the firm. He is a trustee of
Consolidated Capital Properties Trust, a liquidating trust formed out of the
bankruptcy court proceedings involving Consolidated Capital Properties, Ltd. Mr.
Patterson is also an officer and controlling shareholder of Cal-Kan, Inc., a
director and executive officer of Host Funding, Inc., an executive officer and
controlling shareholder of Moraga Partners, Inc., and trustee of the Pat
Patterson Western Securities, Inc. Profit Sharing Plan. Mr. Patterson, through
his affiliates, manages a number of investment and real estate partnerships.
Berniece A. Patterson is a director of MacKenzie Patterson, Inc. In 1981,
Ms. Patterson and C.E. Patterson established Patterson Financial Services, Inc.
She serves as Chair of the Board and Vice President of PFS. Her responsibilities
with PFS include oversight of administrative matters and monitoring of past
projects underwritten by PFS. Ms. Patterson is Chief Executive Officer of an
affiliate, Pioneer Health Care Services, Inc., and is responsible for the
day-to-day operations of three nursing homes and over 300 employees.
Christine Simpson is vice president of MacKenzie Patterson, Inc. and is
responsible for the day-to-day management of research, and securities purchases
and sales on behalf of the entities managed by MacKenzie Patterson, Inc. Ms.
Simpson has been employed by MacKenzie Patterson, Inc. since 1990.
Glen W. Fuller is assistant vice president and a director of MacKenzie
Patterson, Inc., with responsibility for new product development. Prior to
joining MacKenzie Patterson, Inc., Mr. Fuller was a registered options principal
25
<PAGE>
at Morgan Fuller Capital Group, a registered broker dealer. Before joining
Morgan Fuller Capital Group, he was an assistant specialist on the floor of the
Pacific Stock Exchange.
Moraga Gold, LLC
The members of Moraga Gold, LLC are Moraga Partners, Inc. and the David B.
Gold Trust. Information concerning Moraga Partners, Inc. is set forth below.
The David B. Gold Trust is a private trust of which Barbara Lurie is the
trustee and Steven Gold is responsible for certain investments. The sole
beneficiary of the trust is a nonprofit charitable foundation. The business
address of the trust is Four Embarcadero, Suite 3610, San Francisco, California
94111. Barbara Lurie has been employed for the last five years as a physician by
the University of California, San Francisco and the University of Minnesota.
Steven Gold, a California attorney, has been self-employed during the last five
years analyzing investments for his own account and for that of the trust. In
addition, he has participated in starting a number of business ventures,
including T/O devices, an import/export company.
Moraga Partners, Inc.
Moraga Partners, Inc. is a California corporation owned by C. E. Patterson.
Mr. Patterson is also an executive officer and director of Moraga Partners, Inc.
Information regarding Mr. Patterson is set forth above.
26
Exhibit (a)(2)
<PAGE>
LETTER OF TRANSMITTAL
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, PACIFIC STANDARD TIME, ON June 16, 2000 (THE "EXPIRATION DATE") UNLESS
EXTENDED.
Deliver to: MacKenzie Patterson, Inc.
1640 School Street
Moraga, California 94556
For Assistance: (800) 854-8357
Via Facsimile: (925) 376-7983
E-Mail Address: [email protected]
(PLEASE INDICATE CHANGES OR CORRECTIONS TO THE ADDRESS
PRINTED TO THE LEFT)
To participate in the Offer, a duly executed copy of this Letter of
Transmittal and any other documents required by this Letter of Transmittal must
be received by the Depositary on or prior to the Expiration Date.
Delivery of this Letter of Transmittal or any other required documents
to an address other than as set forth above does not constitute valid delivery.
The method of delivery of all documents is at the election and risk of the
tendering Unitholder. Please use the pre-addressed, postage-paid envelope
provided.
This Letter of Transmittal is to be completed by holders of Units of
limited partnership interest in JMB INCOME PROPERTIES, LTD. - V, an Illinois
limited partnership(the "Partnership"), pursuant to the procedures set forth in
the Offer to Purchase (as defined below). Capitalized terms used herein and not
defined herein have the meanings ascribed to such terms in the Offer to
Purchase.
PLEASE CAREFULLY READ THE ACCOMPANYING INSTRUCTIONS
Gentlemen: The undersigned hereby tenders to MP VALUE FUND 4, LLC; MP VALUE
FUND 5, LLC; MORAGA FUND 1, L.P.; ACCELERATED HIGH YIELD INSTITUTIONAL
INVESTORS, LTD.; ACCELERATED HIGH YIELD INSTITUTIONAL FUND, LTD.; MORAGA-DEWAAY
FUND, LLC; MP FALCON FUND, LLC; MORAGA GOLD, LLC; and PREVIOUSLY OWNED MORTGAGE
PARTNERSHIPS INCOME FUND, L.P. (collectively the "Purchasers") all of the Units
of limited partnership interest ("Units") in the Partnership held by the
undersigned as set forth above (or, if less than all such Units, the number set
forth below in the signature box), at a purchase price equal to $115 per Unit,
less the amount of any distributions made or declared with respect to the Units
between May 3, 2000 and the Expiration Date, and upon the other terms and
subject to the conditions set forth in the Offer to Purchase, dated May 3, 2000
(the "Offer to Purchase") and in this Letter of Transmittal, as each may be
supplemented or amended from time to time (which together constitute the
"Offer"). Receipt of the Offer to Purchase is hereby acknowledged. The
undersigned recognizes that, if more than 15,402 Units are validly tendered
prior to or on the Expiration Date and not properly withdrawn, the Purchasers
will, upon the terms of the Offer, accept for payment from among those Units
tendered prior to or on the Expiration Date 15,402 Units on a pro rata basis,
with adjustments to avoid purchases of certain fractional Units, based upon the
number of Units validly tendered prior to the Expiration Date and not withdrawn.
Subject to and effective upon acceptance for payment of any of the Units
tendered hereby, the undersigned hereby sells, assigns and transfers to, or upon
the order of, Purchasers all right, title and interest in and to such Units
which are purchased pursuant to the Offer. The undersigned hereby irrevocably
constitutes and appoints the Purchasers as the true and lawful agent and
attorney-in-fact and proxy of the undersigned with respect to such Units, with
full power of substitution (such power of attorney and proxy being deemed to be
an irrevocable power and proxy coupled with an interest), to deliver such Units
and transfer ownership of such Units, on the books of the Partnership, together
with all accompanying evidences of transfer and authenticity, to or upon the
order of the Purchasers and, upon payment of the purchase price in respect of
such Units by the Purchasers, to exercise all voting rights and to receive all
benefits and otherwise exercise all rights of beneficial ownership of such Units
all in accordance with the terms of the Offer. Subject to and effective upon the
purchase of any Units tendered hereby, the undersigned hereby requests that each
of the Purchasers be admitted to the Partnership as a "substitute Limited
Partner" under the terms of the Partnership Agreement of the Partnership. Upon
the purchase of Units pursuant to the Offer, all prior proxies and consents
1
<PAGE>
given by the undersigned with respect to such Units will be revoked and no
subsequent proxies or consents may be given (and if given will not be deemed
effective). In addition, by executing this Letter of Transmittal, the
undersigned assigns to the Purchasers all of the undersigned's rights to receive
distributions from the Partnership with respect to Units which are purchased
pursuant to the Offer, other than distributions declared or paid through the
Expiration Date and to change the address of record for such distributions on
the books of the Partnership. Upon request, the Seller will execute and deliver,
and irrevocably directs any custodian to execute and deliver, any additional
documents deemed by the Purchaser to be necessary or desirable to complete the
assignment, transfer and purchase of such Units.
The undersigned hereby represents and warrants that the undersigned owns
the Units tendered hereby within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended, and has full power and authority to validly
tender, sell, assign and transfer the Units tendered hereby, and that when any
such Units are purchased by the Purchasers, the Purchasers will acquire good,
marketable and unencumbered title thereto, free and clear of all liens,
restrictions, charges, encumbrances, conditional sales agreements or other
obligations relating to the sale or transfer thereof, and such Units will not be
subject to any adverse claim. Upon request, the undersigned will execute and
deliver any additional documents deemed by the Purchasers to be necessary or
desirable to complete the assignment, transfer and purchase of Units tendered
hereby.
The undersigned understands that a tender of Units to the Purchasers will
constitute a binding agreement between the undersigned and the Purchasers upon
the terms and subject to the conditions of the Offer. The undersigned recognizes
the right of the Purchasers to effect a change of distribution address to
MacKenzie Patterson, Inc. at 1640 School Street, Moraga, California, 94556. The
undersigned recognizes that under certain circumstances set forth in the Offer
to Purchase, the Purchasers may not be required to accept for payment any of the
Units tendered hereby. In such event, the undersigned understands that any
Letter of Transmittal for Units not accepted for payment will be destroyed by
the Purchasers. All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of the undersigned and any obligations of the
undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Except as stated in the Offer to
Purchase, this tender is irrevocable.
================================================================================
SIGNATURE BOX
(Please complete Boxes A, B, C and D on the following page as necessary)
================================================================================
Please sign exactly as your name is
printed (or corrected) above, and X---------------------------------------
insert your Taxpayer Identification (Signature of Owner) Date
Number or Social Security Number in
the space provided below your
signature. For joint owners, each joint
owner must sign.
(See Instructions 1) The signatory X---------------------------------------
hereto hereby certifies under penalties (Signature of Owner) Date
of perjury the statements in Box B,
Box C and if applicable, Box D.
If the undersigned is tendering less
than all Units held the number of
Units tendered is set forth below.
Otherwise, all Units held by the
undersigned are tendered hereby.
Taxpayer I.D. or Social #------------------
_____________ Units Telephone No. (day)---------------------
(eve.)--------------------
1 (cont.)
<PAGE>
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BOX A
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Medallion Signature Guarantee
(Required for all Sellers)
(See Instruction 1)
Name and Address of Eligible Institution: --------------------------------------
Authorized Signature ----------------------------- Title --------------------
Name ---------------------------- Date ---------------------- ,200-----------
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BOX B
SUBSTITUTE FORM W-9
(See Instruction 3 - Box B)
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The person signing this Letter of Transmittal hereby certifies the
following to the Purchasers under penalties of perjury:
(i) The TIN set forth in the signature box on the front of
this Letter of Transmittal is the correct TIN of the Unitholder, or if this box
[ ] is checked, the Unitholder has applied for a TIN. If the Unitholder has
applied for a TIN, a TIN has not been issued to the Unitholder, and either: (a)
the Unitholder has mailed or delivered an application to receive a TIN to the
appropriate IRS Center or Social Security Administration Office, or (b) the
Unitholder intends to mail or deliver an application in the near future (it
being understood that if the Unitholder does not provide a TIN to the Purchasers
within sixty (60) days, 31% of all reportable payments made to the Unitholder
thereafter will be withheld until a TIN is provided to the Purchasers); and
(ii) Unless this box [ ] is checked, the Unitholder is not
subject to backup withholding either because the Unitholder: (a) is exempt from
backup withholding, (b) has not been notified by the IRS that the Unitholder is
subject to backup withholding as result of a failure to report all interest or
dividends, or (c) has been notified by the IRS that such Unitholder is no longer
subject to backup withholding.
Note: Place an "X" in the box in (ii) if you are unable to certify that the
Unitholder is not subject to backup withholding.
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BOX C
FIRPTA AFFIDAVIT
(See Instruction 3 - Box C)
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Under Section 1445(e)(5) of the Internal Revenue Code and Treas. Reg.
1.1445-11T(d), a transferee must withhold tax equal to 10% of the amount
realized with respect to certain transfers of an interest in a partnership if
50% or more of the value of its gross assets consists of U.S. real property
interests and 90% or more of the value of its gross assets consists of U.S. real
property interests plus cash equivalents, and the holder of the partnership
interest is a foreign person. To inform the Purchasers that no withholding is
required with respect to the Unitholder's interest in the Partnership, the
person signing this Letter of Transmittal hereby certifies the following under
penalties of perjury;
(i) Unless this box [ ] is checked, the Unitholder, if an
individual, is a U.S. citizen or a resident alien for purposes of U.S. income
taxation, and if other than an individual, is not a foreign corporation, foreign
partnership, foreign estate or foreign trust (as those terms are defined in the
Internal Revenue Code and Income Tax Regulations); (ii) the Unitholder's U.S.
social security number (for individuals) or employer identification number (for
non-individuals) is correctly printed in the signature box on the front of this
Letter of Transmittal; and (iii) the Unitholder's home address (for
individuals), or office address (for non-individuals), is correctly printed (or
corrected) on the front of this Letter of Transmittal. If a corporation, the
jurisdiction of incorporation is __________.
The person signing this Letter of Transmittal understands that this
certification may be disclosed to the IRS by the Purchasers and that any false
statements contained herein could be punished by fine, imprisonment, or both.
2
<PAGE>
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BOX D
SUBSTITUTE FORM W-8
(See Instruction 4 - Box D)
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By checking this box [ ], the person signing this Letter of
Transmittal hereby certifies under penalties of perjury that the Unitholder is
an "exempt foreign person" for purposes of the backup withholding rules under
the U.S. federal income tax laws, because the Unitholder:
(i) Is a nonresident alien individual or a foreign corporation,
partnership, estate or trust;
(ii) If an individual, has not been and plans not to be present in the U.S.
for a total of 183 days or more during the calendar year; and
(iii) Neither engages, nor plans to engage, in a U.S. trade or business
that has effectively connected gains from transactions with a broker
or barter exchange.
2(cont.)
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Tender, Signature Requirements; Delivery. After carefully reading and
completing this Letter of Transmittal, in order to tender Units a Unitholder
must sign at the "X" on the bottom of the first page of this Letter of
Transmittal and insert the Unitholder's correct Taxpayer Identification Number
or Social Security Number ("TIN") in the space provided below the signature. The
signature must correspond exactly with the name printed (or corrected) on the
front of this Letter of Transmittal without any change whatsoever. If this
Letter of Transmittal is signed by the registered Unitholder of the Units a
Medallion signature guarantee on this Letter of Transmittal is required.
Similarly, if Units are tendered for the account of a member firm of a
registered national security exchange, a member firm of the National Association
of Securities Dealers, Inc. or a commercial bank, savings bank, credit union,
savings and loan association or trust company having an office, branch or agency
in the United States (each an "Eligible Institution"), a Medallion signature
guarantee is required. In all other cases, signatures on this Letter of
Transmittal must be Medallion guaranteed by an Eligible Institution, by
completing the Signature guarantee set forth in BOX A of this Letter of
Transmittal. If any tendered Units are registered in the names of two or more
joint holders, all such holders must sign this Letter of Transmittal. If this
Letter of Transmittal is signed by trustees, administrators, guardians,
attorneys-in-fact, officers of corporations, or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing and must
submit proper evidence satisfactory to the Purchasers of their authority to so
act. For Units to be validly tendered, a properly completed and duly executed
Letter of Transmittal, together with any required signature guarantees in BOX A,
and any other documents required by this Letter of Transmittal, must be received
by the depositary prior to or on the Expiration Date at its address or facsimile
number set forth on the front of this Letter of Transmittal. No alternative,
conditional or contingent tenders will be accepted. All tendering Unitholders by
execution of this Letter of Transmittal waive any right to receive any notice of
the acceptance of their tender.
2. Transfer Taxes. The Purchasers will pay or cause to be paid all transfer
taxes, if any, payable in respect of Units accepted for payment pursuant to the
Offer.
3. U.S. Persons. A Unitholder who or which is a United States citizen or
resident alien individual, a domestic corporation, a domestic partnership, a
domestic trust or a domestic estate (collectively "United States persons") as
those terms are defined in the Internal Revenue Code and Income Tax Regulations,
should complete the following:
Box B - Substitute Form W-9. In order to avoid 31% federal income tax
backup withholding, the Unitholder must provide to the Purchasers the
Unitholder's correct Taxpayer Identification Number or Social Security Number
("TIN") in the space provided below the signature line and certify, under
penalties of perjury, that such Unitholder is not subject to such backup
withholding. The TIN that must be provided is that of the registered Unitholder
indicated on the front of this Letter of Transmittal. If a correct TIN is not
provided, penalties may be imposed by the Internal Revenue Service ("IRS"), in
addition to the Unitholder being subject to backup withholding. Certain
Unitholders (including, among others, all corporations) are not subject to
backup withholding. Backup withholding is not an additional tax. If withholding
results in an overpayment of taxes, a refund may be obtained from the IRS.
3
<PAGE>
Box C - FIRPTA Affidavit. To avoid potential withholding of tax
pursuant to Section 1445 of the Internal Revenue Code, each Unitholder who or
which is a United States Person (as defined Instruction 3 above) must certify,
under penalties of perjury, the Unitholder's TIN and address, and that the
Unitholder is not a foreign person. Tax withheld under Section 1445 of the
Internal Revenue Code is not an additional tax. If withholding results in an
overpayment of tax, a refund may be obtained from the IRS.
4. Foreign Persons. In order for a Unitholder who is a foreign person (i.e., not
a United States Person as defined in 3 above) to qualify as exempt from 31%
backup withholding, such foreign Unitholder must certify, under penalties of
perjury, the statement in BOX D of this Letter of Transmittal attesting to that
foreign person's status by checking the box preceding such statement. However,
such person will be subject to withholding of tax under Section 1445 of the
Code.
5. Additional Copies of Offer to Purchase and Letter of Transmittal.
Requests for assistance or additional copies of the Offer to Purchase and this
Letter of Transmittal may be obtained from the Purchasers by calling
800-854-8357.
3(cont.)
Exhibit (a)(5)
<PAGE>
May 26, 2000
TO: UNIT HOLDERS OF JMB INCOME PROPERTIES, LTD. - V
SUBJECT: OFFER TO PURCHASE UNITS by MP VALUE FUND 4, LLC; MP VALUE FUND 5,
LLC; MORAGA FUND 1, L.P.; ACCELERATED HIGH YIELD INSTITUTIONAL
INVESTORS, LTD.; ACCELERATED HIGH YIELD INSTITUTIONAL FUND, LTD.;
MORAGA-DEWAAY FUND, LLC; MP FALCON FUND, LLC; MORAGA GOLD, LLC;
and PREVIOUSLY OWNED MORTGAGE PARTNERSHIPS INCOME FUND, L.P.
(collectively the "Purchasers")
Dear Unit Holder:
You should recently have received our Offer to Purchase and related Letter
of Transmittal(the "Offer"), by which we are offering to purchase up to 15,402
Units of limited partnership interest (the "Units") in JMB INCOME PROPERTIES,
LTD. - V, an Illinois limited partnership(the "Partnership"). We are hereby
extending the Expiration Date of our Offer to June 16, 2000 and increasing our
purchase price to:
$115 per Unit
less the amount of any distributions declared or made with respect to the Units
between May 3, 2000 and June 16, 2000, or such other date to which this Offer
may be further extended.
The General Partner of the Partnership has announced a non-binding offer to
purchase the Partnership's properties. The General Partner has warned that the
offer is non-binding, that no negotiations have occurred, and extensive due
diligence investigations must still be performed by the offeror, so that no
assurances can be made that the offer will result in any binding sale agreement
or, if a binding agreement results, that it will be on the terms currently
offered. Nevertheless, the General Partner estimates that "aggregate
distributions of cash to be made to Investors from net current assets and sale
proceeds through the liquidation of the Partnership could be as much as $175 per
(Unit)". The General Partner's estimate of potential liquidation proceeds is $35
more than the Purchasers' prior estimate of $140 per Unit. The Purchasers have
therefore increased the offer price by $35 to $115 per Unit. It must be
emphasized that Unit holders tendering to the Purchasers are assured of prompt
payment of $115 per Unit, while there can be no assurance as to the timing or
amount of any future distributions by the Partnership. Furthermore, the General
Partner has stated that the offer on the properties permits up to six months of
due diligence investigation. Because the offeror's use of the full six months
would mean that the Partnership would likely not liquidate and dissolve until
some time in the year 2001 (or later if not all sale proceeds are received by
the Partnership in cash), it is likely that Unit holders will continue filing
K-1 tax information concerning the Partnership at least into the year 2002.
Those who sell their Units to the Purchasers will have no further tax filing
requirements with respect to the Partnership after filing their returns for the
year 2000.
1
<PAGE>
After carefully reading the entire Offer, if you elect to tender your
Units, mail (using the enclosed pre-addressed, postage paid envelope) or
telecopy a duly completed and executed copy of the Letter of Transmittal (the
yellow form) and Change of Address forms, and any other documents required by
the Letter of Transmittal, to the Depositary for the Offer at:
MacKenzie Patterson, Inc.,
1640 School Street
Moraga, California 94556
Facsimile: (925) 376-7983
E-Mail Address: [email protected]
If you have already tendered Units by submitting a Letter of Transmittal
(the green form), there is no need to submit a new transmittal form. All selling
Unit holders will receive the highest price offered by the Purchasers regardless
of the date of tender or the form used.
If you have any questions or need assistance, please call the Depository at
800-854-8357.
This Offer expires (unless extended) June 16, 2000.
2
Exhibit (a)(6)
<PAGE>
PRESS RELEASE
FOR IMMEDIATE RELEASE
MacKenzie Patterson, Inc.,
1640 School Street
Moraga, California 94556
May 26, 2000
Offer for units of limited partnership interest ("Units") in JMB INCOME
PROPERTIES, LTD. - V, an Illinois limited partnership (the "Partnership"),
extended through June 16, 2000 and purchase price increased to $115 per Unit
MP VALUE FUND 4, LLC; MP VALUE FUND 5, LLC; MORAGA FUND 1, L.P.;
ACCELERATED HIGH YIELD INSTITUTIONAL INVESTORS, LTD.; ACCELERATED HIGH YIELD
INSTITUTIONAL FUND, LTD.; MORAGA-DEWAAY FUND, LLC; MP FALCON FUND, LLC; MORAGA
GOLD, LLC; and PREVIOUSLY OWNED MORTGAGE PARTNERSHIPS INCOME FUND,
L.P.(collectively the "Purchasers") have extended the expiration date for their
tender offer to purchase up to 15,402 Units of the Partnership through June 16,
2000, and have increased the purchase price to $115 per Unit, less the amount of
any distributions declared or made with respect to the Units between May 3, 2000
and June 16, 2000, or such other date to which this Offer may be further
extended.
As of May 25, 2000, 638 Units had been tendered to the bidders by security
holders and not withdrawn.
For further information, contact Christine Simpson at the above address.
