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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
SCHEDULE 14D-9
Solicitation/Recommendation Statement Pursuant to Section 14(d)(4)
of the Securities Exchange Act of 1934
______________
(AMENDMENT NO. 1)
CARLYLE REAL ESTATE LIMITED
PARTNERSHIP-VII
(Name of Subject Company)
CARLYLE REAL ESTATE LIMITED
PARTNERSHIP-VII
(Name of Person Filing Statement)
Limited Partnership Interests
(Title of Class of Securities)
143099307
(CUSIP Numbers of Classes of Securities)
______________
Gary Nickele
JMB REALTY CORPORATION
900 North Michigan Avenue
Chicago, Illinois 60611
(312) 440-4800
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications on Behalf of the Person(s) filing Statement)
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This Amendment amends and supplements the Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Statement") filed by Carlyle Real Estate
Limited Partnership-VII (the "Partnership") on May 26, 1998. Unless otherwise
indicated, capitalized terms used herein have the same meanings as set forth in
the originally filed Statement.
Item 2. Tender Offer of the Bidder
Item 2 of the Statement is amended to add the following information:
On June 5, 1998, the Purchasers, by Amendment No. 1 to the Purchaser's
Schedule 14d-1 dated June 5, 1998 amended the Offer (as so amended, the
"Amended Offer") to increase the number of Interests sought pursuant to the
Amended Offer to all of the outstanding Interests, to reduce the purchase
price to $20 per Interest, net to the seller in cash, without interest,
upon the terms and conditions set forth in the Amended Offer, and to extend
the expiration date under the Amended Offer to 12:00 midnight, Pacific
Standard time, on June 30, 1998, unless further extended.
Item 4. The Solicitation or Recommendation
Item 4 of the Statement is amended to add the following information:
Following the Partnership's receipt of the Amended Offer, the Special
Committee of the Board of Directors of JMB met to review and consider the
Amended Offer. Based on its analysis, including consideration of the
factors discussed below, the Special Committee has determined that the
Amended Offer is inadequate and not in the best interests of
Interestholders. Accordingly, the Partnership recommends that
Interestholders reject the Amended Offer and not tender their Interests
pursuant to the Amended Offer.
The Special Committee concluded that, in view of the fact that the
Partnership has sold all of its interests in real estate and is in
liquidation and that its assets are primarily cash or cash equivalents, it
would not be meaningful or cost-effective to have its financial advisor
prepare a current valuation of the Partnership's business and assets or the
value of an Interest or to express an opinion with regard to the adequacy
of the Amended Offer. Accordingly, the financial advisor was not requested
to render, and has not rendered, any such valuation or opinion in
connection with the Amended Offer. The Special Committee reached its
conclusions with respect to the Amended Offer after considering a variety
of factors, including, but not limited to, the following:
(i) On April 8, 1998, the Partnership sold its sole remaining
real property interest. The Partnership expects to make a final
liquidating distribution in December 1998. Based upon its estimate of
the likely expense of winding down its affairs (which assumes that
there are no claims made for breach of the representations, warranties
and covenants made by the Partnership in connection with the sale of
its sole remaining real property interest), the Partnership expects to
make a distribution to Interestholders of between approximately $40 to
$80 per Interest in December 1998.
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(ii) The Purchasers are making the Amended Offer with a view to
making a profit. Accordingly, there is a conflict of interest between
their desire to purchase the Interests at a low price and
Interestholders' desire to obtain the maximum cash return for their
Interests.
(iii) The Partnership believes that the Interests are an illiquid
investment whose full value generally can only be realized by an
Interestholder who retains his or her Interests through the
liquidation of the Partnership. In this regard, the Partnership has
sold its sole remaining real property interest and, pursuant to
Section 17.2 of the Partnership Agreement, is dissolved. Under Section
18.1 of the Partnership Agreement, JMB, as the Corporate General
Partner, is required to wind up the affairs of the Partnership,
subject to the discretion of the Corporate General Partner to
determine the time, manner and terms of the sale of any Partnership
property (e.g., securities investments) and the right of the Corporate
General Partner, pursuant to Section 18.2 of the Partnership
Agreement, to set up such reserves as it may deem reasonably necessary
for any contingent or unforeseen liabilities or obligations of the
Partnership. It is expected that the Partnership will complete its
liquidation and wind up its affairs during 1998. In such event, 1998
would be the last year for which an Interestholder would receive a
form K-1 from the Partnership.
(iv) The Amended Offer price of $20 per Interest is between 25%
and 50% of the high and low ends of the range of the amount that the
Partnership expects to distribute to Interestholders in December 1998.
Item 8. Additional Information to be Furnished
Item 8 of the Statement is amended to add the following information:
The Purchasers state in their Amended Offer, "As a result of the
[Amended] Offer, the Purchaser (sic) may be in a position to significantly
influence all Partnership decisions on which [Interestholders] may vote."
The Letter of Transmittal (the "Letter of Transmittal") included as part of
the Amended Offer purports to provide the Purchasers (or their designees)
with a proxy to vote the Interests of an Interestholder who sells his or
her Interests pursuant to the Amended Offer. Under the Partnership
Agreement, Limited Partners of the Partnership may vote on certain
specified matters. In order for the Purchasers to vote any Interests that
they acquire pursuant to the Amended Offer, the Purchasers must either hold
valid proxies to vote such Interests (assuming the Interests may be voted
by proxy) or must be admitted to the Partnership as substituted Limited
Partners with respect to such Interests. The Partnership Agreement does not
specify whether the Interests of a Limited Partner may be voted by proxy,
and in any event the Corporate General Partner has not decided whether it
would recognize the purported proxy in the Letter of Transmittal under the
circumstances provided for therein. Furthermore, under the Partnership
Agreement, the admission of the Purchasers as substituted Limited Partners
with respect to any Interests they acquire pursuant to the Amended Offer
depends upon, among other things, the written consent of the Corporate
General Partner, which may be granted or denied in the sole and absolute
discretion of the Corporate General Partner, and the Corporate General
Partner reserves the right to refuse to admit any or all of the Purchasers
as substituted
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Limited Partners of the Partnership with respect to any or all Interests
acquired pursuant to the Amended Offer. Under the Partnership Agreement,
"The rights of an assignee who does not become a substituted Limited
Partner, by reason of non-consent thereto by the Corporate General Partner,
shall be limited to receipt of his share of cash distributions and
Partnership profits or losses. . . ."
In addition, under the terms of the Amended Offer, the Purchasers are
seeking to purchase all outstanding Interests of the Partnership. Pursuant
to the Partnership Agreement, no assignment of an Interest will be
effective if such assignment would, in the opinion of counsel for the
Corporate General Partner, result in the termination of the Partnership for
purposes of the then-applicable provisions of the Internal Revenue Code
(which termination may occur when 50% or more of the total interests in the
Partnership capital and profits is transferred by sale or exchange in a
twelve-month period). Depending upon the number of Interests tendered
pursuant to the Amended Offer, sales of Interests on the secondary market
for the period following completion of the Amended Offer may be limited.
The Partnership will not process any requests for transfers of Interests
during a twelve-month period that, in the opinion of counsel for the
Corporate General Partner, would cause a tax termination. For this purpose,
during the period from July 1, 1997 to June 11, 1998, transfers of
approximately 370 (approximately 2.1%) of the Interests have been effected
or are currently pending. Because of the tax-related transfer restrictions,
in no event will an aggregate of 50% or more of the Interests be acquired
pursuant to the Amended Offer (reduced to the extent of any prior transfers
of Interests within the preceding twelve months unless such previously
transferred Interests can be traced to Interests accepted for purchase
under the Amended Offer). Thus, it is possible that only a portion of the
Interests tendered could be purchased pursuant to the Amended Offer.
Item 9. Material to be Filed as Exhibits
Item 9 of the Statement is amended to add the following exhibit:
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
(a)(2) Letter, dated June 15, 1998 from the
Partnership to its Interestholders.
</TABLE>
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SIGNATURE
After reasonable 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.
CARLYLE REAL ESTATE
LIMITED PARTNERSHIP-VII
By: JMB REALTY CORPORATION
Corporate General Partner of
the Partnership
/s/ Judd D. Malkin
By:______________________________
Name: Judd D. Malkin
Title: Chairman
Dated: June 15, 1998
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description Page No.
- ------ ----------- --------
<S> <C> <C>
(a)(2) Letter, dated June 15, 1998 from the
Partnership to its Interestholders.
</TABLE>
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EXHIBIT(a)(2)
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-VII
900 North Michigan Avenue
Chicago, Illinois 60611
(312) 440-4800
June 15, 1998
Dear Interestholders:
A group that includes affiliates of MacKenzie Patterson, Inc. has amended
it tender offer (the "Amended Offer") to acquire all of the outstanding limited
partnership interests (the "Interests") in Carlyle Real Estate Limited
Partnership-VII (the "Partnership") at a purchase price of $20 per Interest.
The Board of Directors of JMB Realty Corporation ("JMB"), the Corporate
General Partner of the Partnership, has formed a special committee (the "Special
Committee") consisting of certain Directors of JMB to consider and respond to
offers for Interests that may be received, including the Amended Offer. THE
SPECIAL COMMITTEE HAS DETERMINED THAT THE AMENDED OFFER IS INADEQUATE AND NOT IN
THE BEST INTERESTS OF INTERESTHOLDERS. ACCORDINGLY, THE SPECIAL COMMITTEE
RECOMMENDS THAT INTERESTHOLDERS REJECT THE AMENDED OFFER AND NOT TENDER THEIR
INTERESTS.
The Special Committee recommends that you consider the following, together
with the information in the Amendment No. 1 to the Partnership's Schedule 14D-9
accompanying this letter, in connection with the Amended Offer:
. On April 8, 1998, the Partnership sold its sole remaining real property
interest. The Partnership expects to make a final liquidating
distribution of between $40 and $80 per Interest, based upon its
estimate of the likely expense of winding down the Partnership's affairs
(which assumes that there are no claims made for breach of the
representations, warranties and covenants made by the Partnership in
connection with the sale of its sole remaining real property interest).
IF YOU SELL YOUR INTERESTS PURSUANT TO THE AMENDED OFFER YOU WILL NOT
RECEIVE THE BENEFIT OF THIS DISTRIBUTION.
. The Amended Offer price of $20 per Interest is between 25% and 50% of
the high and low ends of the range of the amount that the Partnership
expects to distribute in December 1998.
If you have tendered your Interests pursuant to the Amended Offer, you may
wish to withdraw your Interests by complying with the requirements of Section 4
of the Offer to Purchase, as amended to date. If you wish to retain your
Interests and have not already tendered them pursuant to the Amended Offer, you
need not take any action. You should consult with your personal tax advisor and
financial consultant prior to accepting any offer and tendering your Interests.
On behalf of the Special Committee.
Very truly yours,
CARLYLE REAL ESTATE
LIMITED PARTNERSHIP-VII
By: JMB REALTY CORPORATION
Corporate General Partner
By: Judd D. Malkin
Chairman
