<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
-----------------------
DE ANZA PROPERTIES - X
(Name of Subject Company)
MORAGA CAPITAL, LLC
(Bidder)
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class of Securities)
NONE
(CUSIP Number of Class of Securities)
-----------------------
Michael L. Ashner Copy to:
Jericho Associates, L.P. Mark I. Fisher, Esq.
100 Jericho Quandrangle, Ste. 214 Rosenman & Colin
Jericho, New York 11753 575 Madison Avenue
New York, New York 10022
Copy to:
C.E. Patterson Paul J. Derenthal, Esq.
MacKenzie Patterson Inc. Derenthal & Dannhauser
1640 School Street, Suite 100 455 Market Street, Suite 1600
Moraga, California 94556 San Francisco, California 94105
(510) 631-9100 (415) 243-8070
(Name, Address and Telephone Number of
Person Authorized to Receive Notices and
Communications on Behalf of Bidder)
Calculation of Filing Fee
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Transaction Amount of
Valuation* Filing Fee
----------- ----------
<S> <C>
$2,550,000 $510
- --------------------------------------------------------------------------------
</TABLE>
* For purposes of calculating the filing fee only. This amount assumes
the purchase of 5,665 Units of Limited Partnership Interest ("Units")
of the subject company at $450.00 in cash per Unit.
/ / 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:
Form or Registration Number:
Filing Party:
Date Filed:
<PAGE> 2
CUSIP NO. None 14D-1 Page 2 of ___ Pages
- --------------------------------------------------------------------------------
1. Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
MORAGA CAPITAL, LLC
- --------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(See Instructions)
(a) / /
(b) / /
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Sources of Funds (See Instructions)
WC, AF
- --------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f)
/ /
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person 1,639
- --------------------------------------------------------------------------------
8. Check if the Aggregate in Row (7) Excludes Certain Shares
(See Instructions)
/ /
- --------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7) 7.2%
- --------------------------------------------------------------------------------
10. Type of Reporting Person (See Instructions)
OO
<PAGE> 3
Item 1. Security and Subject Company.
(a) This Schedule relates to units of limited partnership
interest (the "Units") of De Anza Properties - X (the "Issuer"), the subject
company. The address of the Issuer's principal executive offices is: 9171
Wilshire Boulevard, Beverly Hills, California 90210.
(b) This Schedule relates to the offer by Moraga Capital, LLC, a
Delaware limited liability company (the "Purchaser"), to purchase up to 5,665
Units for cash at a price equal to $450 per Unit less the amount of any
distributions made or declared with respect to the Units between November 29,
1995 and December 29, 1995, or such later date to which the Purchaser may extend
the offer, upon the terms and subject to the conditions set forth in the Offer
to Purchase dated November 29, 1995 (the "Offer to Purchase") and the related
Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1)
and (a)(2), respectively. The Issuer had 22,640.5 Units outstanding as of
September 30, 1995, according to its quarterly report on Form 10-Q for the
quarter then ended.
(c) The information set forth under the captions "Introduction -
Establishment of the Offer Price" and "Effects of the Offer" in the Offer to
Purchase is incorporated herein by reference.
Item 2. Identity and Background.
(a)-(d) The information set forth in "Introduction," "Certain
Information Concerning the Purchasers" and in Schedule I of the Offer to
Purchase is incorporated herein by reference.
(e)-(g) The information set forth in "Certain Information Concerning
the Purchasers" and Schedule I in the Offer to Purchase is incorporated herein
by reference. Other than as set forth in the Offer to Purchase, during the last
five years, neither the Purchaser nor, to the best of the knowledge of the
Purchaser, any person named on Schedule I to the Offer to Purchase nor any
affiliate of the Purchaser (i) has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) was a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding were or are subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, Federal or state securities laws or finding any violation of such laws.
Item 3. Past Contacts, Transactions or Negotiations with the Subject
Company.
(a)-(b) Since January 1, 1992, there have been no transactions
between any of the persons identified in Item 2 and the Issuer or, to the
knowledge of the Purchaser, any of the Issuer's affiliates or general partners,
or any directors or executive officers of any such affiliates or general
partners.
Item 4. Source and Amount of Funds or Other Consideration.
(a) The information set forth under the caption "Source of
Funds" of the Offer to Purchase is incorporated herein by reference.
(b)-(c) Not applicable.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder.
(a)-(e) and (g) The information set forth under the caption "Future
Plans" in the Offer to Purchase is incorporated herein by reference.
(f) Not applicable.
3
<PAGE> 4
Item 6. Interest in Securities of the Subject Company.
(a) and (b) The information set forth in "Certain Information
Concerning the Purchasers" of the Offer to Purchase is incorporated herein by
reference.
Item 7. Contracts, Arrangements, Understandings or Relationships with
Respect to the Subject Company's Securities.
The information set forth in "Certain Information Concerning the
Purchasers" of the Offer to Purchase is incorporated herein by reference.
Item 8. Persons Retained, Employed or To Be Compensated.
None.
Item 9. Financial Statements of Certain Bidders.
Not applicable.
Item 10. Additional Information.
(a) None.
(b)-(c) The information set forth in "Certain Legal Matters" of the
Offer to Purchase is incorporated herein by reference.
(d) None.
(e) None.
(f) Reference is hereby made to the Offer to Purchase and the
related Letter of Transmittal, copies of which are attached hereto as Exhibits
(a)(1) and (a)(2), respectively, and which are incorporated herein in their
entirety by reference.
Item 11. Material to be Filed as Exhibits.
(a)(1) Offer to Purchase dated November 29, 1995.
(a)(2) Letter of Transmittal.
(a)(3) Form of Letter to Unitholders dated November 29, 1995.
(b)-(f) Not applicable.
4
<PAGE> 5
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: November 29, 1995
MORAGA CAPITAL, LLC
BY ITS MEMBERS:
JERICHO ASSOCIATES, L.P.
By: /s/ MICHAEL L. ASHNER November 29, 1995
----------------------------- -----------------
Michael L. Ashner, Date
Its General Partner
MORAGA PARTNERS, INC.
By: /s/ C.E. PATTERSON November 29, 1995
----------------------------- -----------------
C.E. Patterson, President Date
CAL-KAN, INC.
By: /s/ C.E. PATTERSON November 29, 1995
----------------------------- -----------------
C.E. Patterson, President Date
LP SECONDARY MARKET FUND, L.P.
By: MacKenzie Patterson, Inc.,
Its General Partner
By: /s/ C.E. PATTERSON November 29, 1995
----------------------------- -----------------
C.E. Patterson, President Date
MACKENZIE SPECIFIED INCOME FUND,
A CALIFORNIA LIMITED PARTNERSHIP
By: MacKenzie Patterson, Inc.,
Its General Partner
By: /s/ C.E. PATTERSON November 29, 1995
----------------------------- -----------------
C.E. Patterson, President Date
MACKENZIE PATTERSON SPECIAL FUND,
A CALIFORNIA LIMITED PARTNERSHIP
By: MacKenzie Patterson, Inc.,
Its General Partner
By: /s/ C.E. PATTERSON November 29, 1995
----------------------------- -----------------
C.E. Patterson, President Date
5
<PAGE> 6
PREVIOUSLY OWNED MORTGAGE PARTNERSHIPS
INCOME FUND 3, L.P.
By: MacKenzie Patterson, Inc.,
Its General Partner
By: /s/ C.E. PATTERSON November 29, 1995
----------------------------- -----------------
C.E. Patterson, President Date
CFS SECONDARY MARKET FUND, L.P.
By: /s/ WILLIAM R. COUSINS November 29, 1995
----------------------------- -----------------
William R. Cousins, Date
Its General Partner
MORAGA FUND 1, L.P.
By: Moraga Partners, Inc.,
Its General Partner
By: /s/ C.E. PATTERSON November 29, 1995
----------------------------- -----------------
C.E. Patterson, President Date
ACCELERATED HIGH YIELD INCOME FUND I, L.P.
By: MacKenzie Patterson, Inc.,
Its General Partner
By: /s/ C.E. PATTERSON November 29, 1995
----------------------------- -----------------
C.E. Patterson, President Date
ACCELERATED HIGH YIELD INCOME FUND II, L.P.
By: MacKenzie Patterson, Inc.,
Its General Partner
By: /s/ C.E. PATTERSON November 29, 1995
----------------------------- -----------------
C.E. Patterson, President Date
ACCELERATED HIGH YIELD GROWTH FUND I, L.P.
By: MacKenzie Patterson, Inc.,
Its General Partner
By: /s/ C.E. PATTERSON November 29, 1995
----------------------------- -----------------
C.E. Patterson, President Date
6
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description Page
- ------- ----------- ----
<S> <C> <C>
(a)(1) Offer to Purchase dated November 29, 1995.
(a)(2) Letter of Transmittal.
(a)(3) Form of Letter to Unitholders dated November 29, 1995.
</TABLE>
7
<PAGE> 1
EXHIBIT (a)(1)
<PAGE> 2
OFFER TO PURCHASE FOR CASH UP TO 5,665
UNITS OF LIMITED PARTNERSHIP INTEREST
OF
DE ANZA PROPERTIES - X
(a California Limited Partnership)
at
$450 PER UNIT
by
MORAGA CAPITAL, LLC
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00 MIDNIGHT,
PACIFIC STANDARD TIME, ON DECEMBER 29, 1995, UNLESS THE OFFER IS EXTENDED.
Moraga Capital, LLC (the "Purchaser") is a newly-formed Delaware
limited liability company organized to acquire Units of limited partnership
interest (the "Units") in De Anza Properties - X, a California limited
partnership (the "Partnership"). The Purchaser is not affiliated with the
Partnership. The Purchaser hereby offers to purchase up to 5,665 Units at a
purchase price equal to $450 PER UNIT, less the amount of any
distributions declared or made with respect to the Units between November 29,
1995 (the "Offer Date") and December 29, 1995, 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 5,665 Units sought pursuant to the Offer represent approximately
25% of the Units outstanding as of September 30, 1995.
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 Purchaser 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 purchase price offered by the Purchaser is less than the
$770 per Unit estimated by De Anza Corporation, the operating
general partner of the Partnership (the "General Partner") in
October 1995 as the value of the Units. The purchase price is
also less than the $628 per Unit estimated by the Purchaser to
be the liquidation value of the underlying assets of the
Partnership as of June 30, 1995.
<PAGE> 3
- The Purchaser is 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 $450 per Unit, the
Purchaser was motivated to establish the lowest price which
might be acceptable to Unitholders consistent with the
Purchaser's objectives.
- 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. See Section 7 below.
- The Purchaser may accept only a portion of the Units tendered
by a Unitholder in the event a total of more than 5,665 Units
are tendered.
THE OFFER TO PURCHASE IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF UNITS BEING
TENDERED. IF MORE THAN 5,665 UNITS ARE VALIDLY TENDERED AND NOT WITHDRAWN, THE
PURCHASER WILL ACCEPT FOR PURCHASE 5,665 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 Purchaser expressly reserves the right, in its 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) to terminate the Offer and not accept for payment any Units
not theretofore accepted for payment or paid for, (iii) upon the occurrence of
any of the conditions specified in Section 13 of this Offer to Purchase, to
delay the acceptance for payment of, or payment for, any Units not theretofore
accepted for payment or paid for, and (iv) 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.
November 29, 1995
2
<PAGE> 4
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 printed on blue
paper and enclosed with this Offer to Purchase) 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 CCP Administrators,
Inc. (the "Depositary"), an affiliate of certain members of the Purchaser, at
the address or facsimile number set forth below.
CCP ADMINISTRATORS, INC.
1640 SCHOOL STREET, SUITE 100
MORAGA, CALIFORNIA 94556
TELEPHONE: 800-854-8357
FACSIMILE TRANSMISSION: 510-631-9119
Questions or requests for assistance or additional copies of this Offer to
Purchase or the Letter of Transmittal may be directed to the Purchaser at
1-800-854-8357.
---------------------------
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR ANY
REPRESENTATION ON BEHALF OF THE PURCHASER 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 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
is 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 Purchaser has filed with the Commission a Tender Offer Statement on
Schedule 14D-1 (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> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
TENDER OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 1. Terms of the Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2. Proration; Acceptance for Payment and Payment for Units . . . . . . . . . . . . . 9
Section 3. Procedures for Tendering Units . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4. Withdrawal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5. Extension of Tender Period; Termination; Amendment . . . . . . . . . . . . . . . . 12
Section 6. Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . 13
Section 7. Effects of the Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8. Future Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 9. The Business of the Partnership . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 10. Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 11. Certain Information Concerning the Purchaser . . . . . . . . . . . . . . . . . . . 19
Section 12. Source of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 13. Conditions of the Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 14. Certain Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 15. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 16. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Schedule I - The Purchaser's Members and Their Respective Principals
</TABLE>
4
<PAGE> 6
To the Holders of Units of Limited Partnership Interest
of De Anza Properties - X
INTRODUCTION
The Purchaser hereby offers to purchase up to 5,665 Units of the
Partnership at a purchase price of $450 per Unit, less the amount of any
distributions declared or paid with respect to the Units between the Offer Date
and the Expiration Date ("Offer Price"), in cash, without interest, upon the
terms and subject to the conditions set forth in the Offer. 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 Purchaser will pay all such costs and all charges and expenses of the
Depositary, an affiliate of certain members of the Purchaser, as depositary in
connection with the Offer.
The Purchaser is a newly-formed Delaware limited liability company. For
further information concerning the members of the Purchaser, see Section 11
below.
Neither the Purchaser nor the Depositary is affiliated with the General
Partner or with any of the individual general partners of the Partnership or 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 Purchaser 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 purchase price offered by the Purchaser is less than the
$770 per Unit estimated by the General Partner in October 1995
as the value of the Units. The purchase price is also less than
the $628 per Unit estimated by the Purchaser to be the
liquidation value of the underlying assets of the Partnership
as of June 30, 1995.
- The Purchaser is 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 $450 per Unit, the
Purchaser was motivated to establish the lowest price which
might be acceptable to Unitholders consistent with the
Purchaser's objectives.
- 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. See Section 7 below.
- The Purchaser may accept only a portion of the Units tendered
by a Unitholder in the event a total of more than 5,665 Units
are tendered.
5
<PAGE> 7
The Offer will provide Unitholders with an opportunity to liquidate their
investment without the usual transaction costs associated with market sales.
Unitholders may no longer wish to continue with their investment in the
Partnership for a number of reasons, including the following:
- - the absence of a formal trading market for the Units and the difficulty
in selling units in secondary market transactions;
- - general disenchantment with real estate investments, particularly
long-term investments in limited partnerships;
- - the continuing administrative costs and resultant negative financial
impact on the value of the Units of a publicly registered limited
partnership;
- - a more immediate need to use the cash now tied up in an investment in
the Units;
- - a desire to eliminate the need for compliance with complicated and
costly tax return requirements and associated expenses which may result
from an investment in the Units; and
- - no termination or liquidation date has been fixed for the Partnership
other than the Partnership Agreement provision for the term of the
Partnership to extend until December 31, 2027 (unless dissolved
earlier), and the General Partner stated in October 1995 that it was
not in the best interests of the Partnership to sell its last remaining
property at that time.
The Offer is not conditioned upon any minimum number of Units being
tendered. If more than 5,665 Units are validly tendered and not withdrawn, the
Purchaser will accept for purchase a total of 5,665 Units from tendering
Unitholders on a pro rata basis, subject to the terms and conditions herein. See
"Tender Offer - Section 13. Conditions of the Offer" for certain conditions of
the Offer. The Purchaser expressly reserves the right, in its sole discretion
and for any reason, to waive any or all of the conditions of the Offer, although
the Purchaser does not presently intend to waive any such conditions.
Establishment of the Offer Price
The Purchaser has set the Offer Price at $450 per Unit, less the amount
of any distributions declared or made with respect to the Units between the
Offer Date and Expiration Date. In determining the Offer Price, the Purchaser
analyzed a number of quantitative and qualitative factors, including: (i) the
prices of recent secondary market resales of the Units; (ii) the lack of
liquidity of an investment in the Partnership; (iii) an estimate of the
liquidation value of the Partnership's assets; (iv) the costs to the Purchaser
associated with acquiring the Units; and (v) the administrative costs of
continuing to own the Partnership's assets through a publicly registered limited
partnership.
The Offer Price represents the price at which the Purchaser is 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 Purchaser or any affiliate of the Purchaser 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.
6
<PAGE> 8
According to reports published by Robert A. Stanger & Co., Inc., an
independent, third-party source, the low and high sales prices of Units during
the period from March 1994 through August 1995 were $250 and $570, respectively.
It should be noted that, in September 1995, the Partnership made an
extraordinary distribution of approximately $177 per Unit, reflecting net sales
proceeds from a property sold in July 1995. The gross sales prices reported also
do not necessarily reflect the net sales proceeds received by sellers of Units,
which typically are reduced by commissions and other secondary market
transaction costs to amounts less than the reported prices. In addition, the
Purchaser does not know whether the foregoing sales price information is
accurate or complete. During the period from March 1994 through August 1995 , an
affiliate of the Purchaser acquired 20 Units in privately negotiated
transactions with unrelated parties for $535 per Unit. As of November 8, 1995,
an affiliate of the Purchaser acquired an additional five Units from an
unrelated party in a privately negotiated transaction for $399 per Unit.
The Purchaser is offering to purchase Units which are a relatively
illiquid investment and is not offering to purchase the Partnership's underlying
assets. Consequently, the Purchaser does not believe that the underlying asset
value of the Partnership is determinative in arriving at the Offer Price.
Nevertheless, using publicly available information concerning the Partnership
contained in the Partnership's Form 10-K for the fiscal year ended December 31,
1994 and the Partnership's Form 10-Q for the quarter ended June 30, 1995, the
Purchaser derived an estimated liquidation value (the "Estimated Liquidation
Value") for the Partnership's assets.
In determining the Estimated Liquidation Value, the Purchaser first
calculated the "Estimated Net Sales Value" of the Partnership's sole remaining
property. The Estimated Net Sales Value was determined by dividing the
property's estimated net operating income ("NOI") of $1,943,000 for the twelve
month period commencing on January 1, 1995 and ending December 31, 1995 (which
amount was estimated by the Purchaser by annualizing the Partnership's actual
results of operations for the six months ended June 30, 1995 reported in the
Partnership's Form 10-Q and subtracting therefrom the portion of the reported
NOI for such period estimated by the Purchaser to be attributable to the
operation of a property (Aptos Pines) which was sold by the Partnership in July
1995). To determine the Estimated Net Sales Value of the property, the Purchaser
then divided the estimated NOI by a 9% capitalization rate (the "Cap Rate") and
reduced such result by (i) 3% ($648,000) to take into account the estimated
closing costs which would be incurred upon the sale by the Partnership of the
property, including brokerage commissions, title costs, surveys, appraisals,
legal fees and transfer taxes, and (ii) the $4,796,000 of mortgage debt
encumbering the property as of June 30, 1995. The resulting Estimated Net Sales
Value of the property was approximately $16,145,000.
The Purchaser believes that the Cap Rate utilized by it is within a
range of capitalization rates currently employed in the marketplace. The
utilization of different capitalization rates, however, could also be
appropriate. In this regard, Unitholders should be aware that the use of lower
capitalization rates would result in a higher Estimated Net Sales Value for the
Partnership's property.
To determine the Estimated Liquidation Value of the Partnership's
assets, the Purchaser added to the Estimated Net Sales Value of the
Partnership's property the Partnership's $1,344,000 of net current assets at
June 30, 1995 reported in the Partnership's Form 10-Q for the quarter ended as
of such date. The resulting Estimated Liquidation Value of the Partnership's
assets as of June 30, 1995 was approximately $17,489,000 or $628 per Unit (based
upon the percentage of capital distributions which the Purchaser believes
Unitholders are entitled under the Partnership's partnership agreement (the
"Partnership Agreement") after deducting amounts which the General Partner of
the Partnership is entitled to receive).
7
<PAGE> 9
Under the Partnership Agreement, the Partnership is not required to
sell its sole remaining property until the earlier of the date Unitholders
holding a majority of the Units vote to liquidate the Partnership or December
31, 2027. In addition, the General Partner indicated in its letter to
Unitholders referred to below that "...now is definitely not the time to sell
the [p]roperty...", that "...the Southern California economy is still poor" and
that "...it would not be in the best interests of the Partnership to sell the
[p]roperty at this time". Accordingly, the timing of the sale of the
Partnership's remaining property 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 (whether in excess of or
less than the Estimated Liquidation Value per Unit) cannot be determined.
Unitholders should note that, in October 1995, the General Partner sent
a letter to Unitholders in response to a solicitation by an unrelated third
party seeking to purchase Units. In its letter, the General Partner estimated
the value of the Units at $770 per Unit as compared to a December 1990 value of
$920 per Unit, which was based on a 1990 appraised value of the remaining
property. The General Partner also stated in its letter that (i) it did not
believe that it was in the best interests of the Partnership to sell the
Partnership's remaining property at that time and (ii) it could not recommend
acceptance by Unitholders of an offer significantly below the General Partner's
value of $770 per Unit.
As indicated above, the Offer Price represents the price at which the
Purchaser is 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 Purchaser or any affiliate of the
Purchaser 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.
General Background Information
Certain information contained in this Offer to Purchase which relates
to, or represents, statements made by the Partnership or the General Partner,
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 22,640.5 Units
issued and outstanding at December 31, 1994, held by approximately 2,061
Unitholders. The Purchaser owns 10 Units, and Affiliates of the Purchaser
currently beneficially own an aggregate of 1,629 additional Units, for a total
of 1,639 Units, or approximately 7.2% of the outstanding Units (see "Certain
Information Concerning the Purchaser" below).
Tendering Unitholders will not be obligated to pay transfer fees,
brokerage fees or commissions on the sale of the Units to the Purchaser pursuant
to the Offer. The Purchaser will pay all charges and expenses incurred in
connection with the Offer. The Purchaser desires to purchase all Units tendered
by each Unitholder.
IF, PRIOR TO THE EXPIRATION DATE, THE PURCHASER INCREASES 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.
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UNITHOLDERS ARE URGED TO READ THIS OFFER TO PURCHASE AND THE
ACCOMPANYING LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER
THEIR UNITS.
TENDER OFFER
SECTION 1. TERMS OF THE OFFER. Upon the terms and subject to the
conditions of the Offer, the Purchaser 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 December 29, 1995, unless
and until the Purchaser 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 Purchaser, 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 Purchaser
reserves the right (but shall not be obligated), in its 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 Purchaser
reserves 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.
THE PURCHASER DOES NOT ANTICIPATE AND HAS NO REASON TO BELIEVE THAT ANY
CONDITION OR EVENT WILL OCCUR THAT WOULD PREVENT THE PURCHASER 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 5,665 or less, the Purchaser, 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 5,665, the Purchaser, 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
Purchaser 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
Purchaser 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 Purchaser 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
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<PAGE> 11
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other documents required by the Letter of Transmittal.
For purposes of the Offer, the Purchaser shall be deemed to have
accepted for payment (and thereby purchased) tendered Units when, as and if the
Purchaser gives oral or written notice to the Depositary of the Purchaser's
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 Purchaser 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 Purchaser is
unable to accept for payment, purchase or pay for Units tendered pursuant to the
Offer, then, without prejudice to the Purchaser's 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 Purchaser, 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 Purchaser 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 and printed on blue 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 DECEMBER 29, 1995, 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 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
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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
Purchaser 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 Purchaser. Such appointment will be effective when,
and only to the extent that, the Purchaser accepts 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 Purchaser 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 Purchaser 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
Purchaser, in its sole discretion, which determination shall be final and
binding. The Purchaser reserves 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 Purchaser's
counsel, be unlawful. The Purchaser also reserves the right to waive any defect
or irregularity in any tender with respect to any particular Units of any
particular Unitholder, and the Purchaser's 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 Purchaser, 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
Purchaser upon the terms and subject to the conditions of the Offer, including
the tendering Unitholder's representation and warranty that (i) such Unitholder
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
Purchaser believes it is unlikely that any option trading or short selling
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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 after January 28, 1996
(or such later date as may apply in the event the Offer is extended).
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 Purchaser are unable to purchase or pay for Units for any reason, then,
without prejudice to the Purchaser's rights under the Offer, tendered Units may
be retained by the Depositary on behalf of the Purchaser 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 Purchaser, in its sole
discretion, which determination shall be final and binding. Neither the
Purchaser, 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
Purchaser expressly reserves the right, in its 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 giving oral or written notice of such extension to the Depositary, (ii) 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, (iii) 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, by giving oral or written notice of such termination or delay to the
Depositary, and (iv) 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
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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
Purchaser may choose to make any public announcement, except as provided by
applicable law (including Rule 14d-4(c) under the Exchange Act), the Purchaser
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 Purchaser 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 Purchaser extends the Offer, or if the Purchaser (whether before
or after its acceptance for payment of Units) is delayed in its payment for
Units or is unable to pay for Units pursuant to the Offer for any reason, then,
without prejudice to the Purchaser' rights under the Offer, the Depositary may
retain tendered Units on behalf of the Purchaser, 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 Purchaser to delay
payment for Units that the Purchaser has accepted for payment is limited by Rule
14e-1 under the Exchange Act, which requires that the Purchaser 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 Purchaser makes a material change in the terms of the Offer or
the information concerning the Offer or waives a material condition of the
Offer, the Purchaser 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
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.
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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
Purchaser its 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 tax purposes. It is possible, although deemed by the Purchaser to be
unlikely (given the limited number of Units subject to the Offer and the limited
secondary market for the Units), that the Partnership could terminate for
federal income tax purposes as a result of consummation of the Offer. If so, the
Partnership will be treated as having made a liquidating distribution of an
undivided interest in all of its assets to the Unitholders, the partners of the
Partnership after consummation of the Offer (i.e., the nontendering Unitholders
and the Purchaser) would be treated as having recontributed their interests in
Partnership assets to the
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Partnership, and the capital accounts of all partners would be restated. A
Unitholder would recognize gain on the liquidating distribution only to the
extent that the amount of cash deemed distributed to the Unitholder exceeded the
Unitholder's basis in the Units. Depending on the Unitholders' bases in their
Units and the Partnership's tax basis in its property, a tax termination could
affect, perhaps adversely, the amount of depreciation deductions reported by the
Partnership for the period following the date of such termination. A tax
termination of the Partnership also could have the adverse effect on Unitholders
whose tax year is not the calendar year, of the inclusion of more than one year
of Partnership tax items in one tax return of such Unitholders, resulting in a
"bunching" of income. In addition, a tax termination could have the adverse
effect on non-tendering Unitholders who subsequently dispose of their Units at a
gain of requiring them to treat a greater portion of such gain as ordinary
income (due to the application of Code Section 735) than would otherwise be
required absent a tax termination of the Partnership.
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 Purchaser 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 Partnership Agreement does not restrict
transfers of Units, provided a transfer results in an assignee holding at least
five Units and complies with any applicable state securities laws (such as the
California consent to transfer rules). As the Purchaser is currently a
beneficial owner of Units, it should be deemed exempt from any California
consent to transfer requirements. Accordingly, the Purchaser neither anticipates
any limitation on its right to acquire the Units, nor that such acquisitions
will have the effect of limiting any further resales of Units.
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 PURCHASER. Depending on the number of Units acquired by
the Purchaser pursuant to the Offer, the Purchaser 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 Purchaser a
controlling voting interest.
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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. The Purchaser
does not believe that the purchase of Units pursuant to the Offer will result in
the Units becoming eligible for deregistration under the Exchange Act.
SECTION 8. FUTURE PLANS. Following the completion of the Offer, the
Purchaser, or its affiliates, may acquire additional Units. Any such acquisition
may be made through private purchases, through one or more future tender offers
or by any other means deemed advisable. Any such acquisition may be at a
consideration higher or lower than the consideration to be paid for the Units
purchased pursuant to the Offer.
The Purchaser is acquiring the Units pursuant to the Offer solely for
investment purposes. Although the Purchaser has no present intention to seek
control of the Partnership or to change the management or operations of the
Partnership, the Purchaser reserves the right, at an appropriate time, to
exercise its rights as a limited partner to vote on matters subject to a limited
partner vote, including a vote to cause the sale of the Partnership's remaining
property and the liquidation and dissolution of the Partnership.
SECTION 9. THE BUSINESS OF THE PARTNERSHIP. Information included herein
concerning the Partnership is derived from the Partnership's publicly-filed
reports. Additional 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 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 Purchaser expressly
disclaims any responsibility for the information included in such reports and
extracted in this discussion.
The Partnership was organized in 1977 as a California limited
partnership for the purpose of acquiring, developing, maintaining and operating
income-producing residential real properties for the benefit of its limited
partners. The Partnership's only remaining property has been held for
approximately 17 years. The Operating General Partner of the Partnership is De
Anza Corporation. As of December 31, 1994, there were 22,640.5 Units outstanding
held by approximately 2,061 Unitholders.
The Property. The Partnership currently owns one apartment complex,
the Woodbridge Meadows Apartments in Irvine, California (the "Property"). The
Property is a 375-unit complex situated on a 17-acre site in the community of
Woodbridge Village. The average occupancy for each of the last three full
calendar years was 83% in 1992, 91% in 1993 and 96% in 1994. The Property is
encumbered by a promissory note secured by first deed of trust in the principal
amount of $4,837,624 at December 31, 1994, bearing interest at a rate of 10% per
annum, requiring payment of monthly installments of principal and interest in
the amount of $47,093 and maturing in 2014. As of September 30, 1995, the
remaining principal balance was $4,774,530.
Selected Financial Data. Set forth below is a summary of certain
financial data for the Partnership which has been excerpted from the
Partnership's Annual Report on Form 10-K for the year ended December 31, 1994
and its Quarterly Reports on Form 10-Q for the quarters ended September 30, 1995
and September 30, 1994, respectively.
16
<PAGE> 18
The following table sets forth in comparative tabular form a summary of selected
financial data for each of the Partnership's last five full years and the nine
months ended September 30, 1995 and 1994:
<TABLE>
<CAPTION>
Nine Months Ended Years Ended December 31,
09/30/95 09/30/94 1994 1993 1992
-------- -------- ---------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating revenues: $ 3,312,876 5,739,456 $ 6,894,001 $ 7,775,005 $ 7,464,567
Gain on Sale of Property and Equipment 2,258,041 16,322,297 15,297,374 0.00 0.00
Net income 3,069,081 15,875,434 16,080,772 573,956 569,040
Net income
per cash general and
limited partner interest (1) 115.93 687.25 680.60 20.36 18.91
Total assets: 11,583,077 14,318.722 13,998,705 19,147,277 19,448,646
Long-term obligations 4,774,530 4,857,630 4,837,624 18,296,772 18,458,814
Cash distributions per $1,000 initial investment:
1. Limited Partner (2) 198.45 342.84 349.34 42.92 42.71
2. Cash General Partner (2) 198.45 342.84 349.34 42.92 42.71
3. General Partner (based on each 1%
General Partner Interest) (3) 7,151.53 -- 2,648.16 2,283.24 3,086.94
<CAPTION>
Years Ended December 31,
1991 1990
--------------------------------
<S> <C> <C>
Operating revenues: $ 7,587,455 $ 7,674,121
Gain on Sale of Property and Equipment 0.00 0.00
Net income 792,187 1,835,968
Net income
per cash general and
limited partner interest (1) 25.98 60.19
Total assets: 20,692,021 21,932,385
Long-term obligations 18,557,744 18,614,946
Cash distributions per $1,000 initial investment:
1. Limited Partner (2) 56.52 386.24
2. Cash General Partner (2) 56.52 386.24
3. General Partner (based on each 1%
General Partner Interest) (3) 4,308.80 6,776.38
</TABLE>
Assets were disposed of during 1994 and 1995 which materially affects the
comparability reflected in the selected financial data.
(1) Net income per cash general and limited partner interest is based on
the aggregate number of such interests outstanding (22,869 Units)
during each year.
(2) Cash distributions per limited partner and cash general partner
interest are based on the aggregate number of such interests
outstanding (22,869 Units) during each year.
(3) The calculations are based on 1% of the total subordinated general
partner interests.
17
<PAGE> 19
Accumulated Depreciation Schedule. Set forth below is a table
showing initial cost, gross carrying value, accumulated depreciation and other
information for the sole remaining real property as of December 31, 1994.
<TABLE>
<CAPTION>
Initial Cost to Partnership
------------------------------- Cost
Buildings, Capitalized
Date of Date of Improvements Subsequent to
Property Construction Acquisition Encumbrances Land and Equipment Acquisition
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Woodbridge Meadows,
Irvine, California 1978-1979 11/13/78 $4,837,624 $2,700,000 $11,343,940 $5,370,778
</TABLE>
<TABLE>
<CAPTION>
Gross Amount Carried at Close Life on Which
of Period Ended December 31, 1994 Depreciation
-------------------------------------------------------- in Latest Income
Buildings, Statement Is
Improvements Accumulated Computed
Property Land and Equipment Total Depreciation (Years)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Woodbridge Meadows,
Irvine, California $2,939,265 $16,425,453 $19,414,718 (1) $9,311,681 5 to 35
</TABLE>
(1) Aggregate cost for federal income tax purposes is $19,414,718.
18
<PAGE> 20
SECTION 10. CONFLICTS OF INTEREST. The Depositary is affiliated with
certain members of the Purchaser. Therefore, by virtue of this affiliation, the
Depositary may have inherent conflicts of interest in acting as Depositary for
the Offer.
SECTION 11. CERTAIN INFORMATION CONCERNING THE PURCHASER. The
Purchaser, Moraga Capital, LLC, is a newly-formed Delaware limited liability
company of which the members are Jericho Associates, L.P., ("Jericho"); Moraga
Partners, Inc.("Moraga"); Cal-Kan, Inc. ("Cal-Kan"); LP Secondary Market Fund,
L.P., MacKenzie Specified Income Fund, a California Limited Partnership,
MacKenzie Patterson Special Fund, a California Limited Partnership, Previously
Owned Mortgage Partnerships Income Fund 3, L.P., CFS Secondary Market Fund,
L.P., Accelerated High Yield Income Fund I, L.P., Accelerated High Yield Income
Fund II, L.P., and Accelerated High Yield Growth Fund I, L.P. (the foregoing
eight limited partnerships are referred to as the "MPI Funds"); and Moraga Fund
1, L.P.
Jericho is a newly-formed Delaware limited partnership of which the
sole general partner is Michael L. Ashner.
The MPI Funds are controlled by C.E. Patterson and MacKenzie Patterson,
Inc., a corporation controlled by Mr. Patterson; Moraga Partners, Inc. and
Moraga Fund 1, L.P. are controlled by both Mr. Patterson and Thomas A. Frame.
Cal-Kan is controlled by Mssrs. Patterson and Frame.
The principal place of business of the Purchaser, Mr. Patterson,
Cal-Kan, the MPI Funds, Moraga and Moraga Fund 1, L.P. is located at 1640 School
Street, Suite 100, Moraga, California 94556. The principal place of business of
Jericho is 100 Jericho Quadrangle, Suite 214, Jericho, New York 11753.
For information concerning the members of the Purchaser and their
respective principals, please refer to Schedule I attached hereto.
The Purchaser acquired 10 Units as a capital contribution by MacKenzie
Specified Income Fund, a California Limited Partnership, one of its members, in
November, 1995, valued at $450 per Unit, in a privately negotiated transaction.
In addition, Previously Owned Mortgage Partnerships Income Fund 3, L.P., a
member of the Purchaser, purchased a total of five Units in a privately
negotiated transaction in November 1995 for a purchase price equal to $399 per
Unit. Other than the foregoing, neither the Purchaser nor any of its affiliates
has purchased any Units since September 1, 1995. The Purchaser and its
affiliates currently hold an aggregate of 1,639 Units, or approximately 7.2% of
the outstanding Units, as follows:
<TABLE>
<CAPTION>
Unitholder Units
---------- -----
<S> <C>
The Purchaser 10
Real Estate Securities Fund 1983 81
MacKenzie Fund III 281
MacKenzie Fund V, A California Limited Partnership 402
MacKenzie Fund VI, A California Limited Partnership 279
MacKenzie Specified Income Fund, A California Limited Partnership 270
MacKenzie Patterson Special Fund, A California Limited Partnership 231
Previously Owned Partnerships Income Fund 2, L.P. 75
Previously Owned Mortgage Partnerships Income Fund 3, L.P. 5
Vanderbilt Income and Growth Associates, L.L.C. 5
</TABLE>
19
<PAGE> 21
The principal business address of the first nine Unitholders identified
in the foregoing table is 1640 School Street, Suite 100, Moraga, California
94556, and the principal business address of the tenth is 100 Jericho
Quadrangle, Suite 214, Jericho, New York 11753.
The members of the Purchaser have executed binding commitments to
contribute to the capital of the Purchaser amounts sufficient to fund the
acquisition of all Units subject to the Offer, the expenses to be incurred in
connection with the Offer, and all organization and operating costs of the
Purchaser. The Purchaser and the members of the Purchaser are not public
companies and have not prepared audited financial statements. The Purchaser has
only nominal current net worth, but the members of the Purchaser and their
general partners have an aggregate net worth in excess of $15 million, including
net liquid assets of more than $5 million.
Except as otherwise set forth herein, (i) neither the Purchaser nor, to
the best knowledge of the Purchaser, the persons listed on Schedule I nor any
affiliate of the Purchaser beneficially owns or has a right to acquire any
Units, (ii) neither the Purchaser nor, to the best knowledge of the Purchaser,
the persons listed on Schedule I nor any affiliate of the Purchaser, 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
Purchaser nor, to the best knowledge of the Purchaser, the persons listed on
Schedule I nor any affiliate of the Purchaser 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 Purchaser or, to the best
knowledge of the Purchaser, the persons listed on Schedule I, or any affiliate
of the Purchaser 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 Purchaser, or to the best knowledge of the Purchaser any affiliate
of the Purchaser 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.
In March 1990, Patterson Financial Services, Inc. and C. E. Patterson,
affiliates of the Purchaser, were found by the National Association of
Securities Dealers, Inc. to have violated certain of the compensation guidelines
applicable to its member broker-dealer firms. The determination was made in
connection with transactions executed by registered representatives of Patterson
Financial Services, Inc. for the purchase and sale of certain partnership
interests which occurred in 1987.
SECTION 12. SOURCE OF FUNDS. The Purchaser expects that approximately
$2,550,000 would be required to purchase 5,665 Units, if tendered, and an
additional $150,000 would be required to pay related fees and expenses. The
Purchaser anticipates funding all of the purchase price and related expenses
through capital contributions from its members.
SECTION 13. CONDITIONS OF THE OFFER. Notwithstanding any other term of
the Offer, the Purchaser shall not be required to accept for payment or to pay
for 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.
20
<PAGE> 22
The Purchaser 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 acceptance of such Units for payment or the payment
therefor, 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 Purchaser, (ii) imposes or confirms limitations on the
ability of the Purchaser effectively to exercise full rights of
ownership of any Units, including, without limitation, the right to
vote any Units acquired by the Purchaser pursuant to the Offer or
otherwise on all matters properly presented to the Partnership's
Unitholders, (iii) requires divestiture by the Purchaser of any Units,
(iv) causes any material diminution of the benefits to be derived by
the Purchaser 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 Purchaser or the Partnership;
(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 sole judgment of the
Purchaser, is or may be materially adverse to the Partnership, or the
Purchaser shall have become aware of any fact that, in the sole
judgment of the Purchaser, 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
(e) it shall have been publicly disclosed or the Purchaser 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.
21
<PAGE> 23
The foregoing conditions are for the sole benefit of the Purchaser and
may be asserted by the Purchaser regardless of the circumstances giving rise to
such conditions or may be waived by the Purchaser in whole or in part at any
time and from time to time in their sole discretion. Any termination by the
Purchaser 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 Purchaser is 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 Purchaser pursuant to the Offer. Should any such
approval or other action be required, it is the Purchaser's 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 Purchaser to elect to terminate
the Offer without purchasing Units thereunder. The Purchaser's 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 Purchaser does 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 Purchaser, therefore, does not believe
that any anti-takeover laws apply to the transactions contemplated by the Offer.
Although the Purchaser has not attempted to comply with any state
anti-takeover statutes in connection with the Offer, the Purchaser reserves 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
connection herewith is intended as a waiver of such right. If any state
anti-takeover statute is applicable to the Offer, the Purchaser 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 Purchaser may
not be obligated to accept for purchase or pay for any Units tendered.
SECTION 15. FEES AND EXPENSES. The Purchaser has retained CCP
Administrators, Inc., an affiliate of certain members of the Purchaser, to act
as Depositary in connection with the Offer. The Purchaser 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
Purchaser will also pay all costs and expenses of printing, publication and
mailing of the Offer. Tendering Unitholders will bear the amount of any transfer
fees imposed by the Partnership.
22
<PAGE> 24
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 PURCHASER IS 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 Purchaser 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.
November 29, 1995 MORAGA CAPITAL, LLC
23
<PAGE> 25
SCHEDULE I
THE PURCHASER'S MEMBERS AND THEIR RESPECTIVE PRINCIPALS
The members of the Purchaser are Jericho Associates, L.P., ("Jericho");
Moraga Partners, Inc. ("Moraga"); Cal-Kan, Inc. ("Cal-Kan"); LP Secondary Market
Fund, L.P., Accelerated High Yield Income Fund I, L.P., Accelerated High Yield
Income Fund II, L.P., Accelerated High Yield Growth Fund I, L.P., MacKenzie
Specified Income Fund, a California Limited Partnership, MacKenzie Patterson
Special Fund, a California Limited Partnership, Previously Owned Mortgage
Partnerships Income Fund 3, L.P., and CFS Secondary Market Fund, L.P. (the
foregoing eight limited partnerships are referred to as the "MPI Funds"): and
Moraga Fund 1, L.P. The names of the general partner of Jericho, the directors
and executive officers of each other member of the Purchaser which is a
corporation, and each corporate general partner of the other partnership
members, and the present principal occupations and five year employment
histories of each such person are set forth below. Each individual is a citizen
of the United States of America.
JERICHO ASSOCIATES, L.P.
Michael L. Ashner is the sole general partner of Jericho.
Michael L. Ashner has been President and Chairman and Director
of National Property Investors, Inc. ("NPI") and a Director of NPI Property
Management Corporation ("NPI Management") since their formation in 1984. As the
President and a Director of NPI, Mr. Ashner has been involved with the
sponsoring of approximately 35 limited partnerships. Mr. Ashner is also the
President and Director of NPI Equity Investments, Inc. ("NPI Equity") and NPI
Equity Investments II, Inc. ("NPI Equity II"), each a wholly owned subsidiary of
NPI. NPI Equity and NPI Equity II control or are the managing general partners
of 29 public partnerships. Mr. Ashner is also the President and a Director of
DeForest Capital I Corporation and DeForest Capital II Corporation, the general
partners of DeForest Ventures I, L.P. and DeForest Ventures II, L.P.,
respectively (the latter two entities are referred to below as the "DeForest
Entities"). Between November 1994 and June 1995, the DeForest Entities made
tender offers for limited partnership units in the seven NPI series limited
partnerships, the three MRI Business Property Fund limited partnerships and nine
Century Properties Fund limited partnerships. In addition, since 1981 Mr. Ashner
has been President of Exeter Capital Corporation,a firm which has organized and
administered real estate limited partnerships. Prior to forming NPI in 1984, Mr.
Ashner served as a general partner of seven real estate limited partnerships
that were formed by Exeter Capital Corporation to own and operate income
producing real estate, including apartments, commercial office space and retail
space. He received his A.B. degree cum laude from Cornell University and
received a J.D. degree magna cum laude from the University of Miami School of
Law, where he was an editor of the law review.
MACKENZIE PATTERSON, INC.
MacKenzie Patterson, Inc., is the general partner or controlling
administrator of the MPI Funds and Moraga. C.E. Patterson is the principal
shareholder and principal officer of MacKenzie Patterson, Inc.
C.E. Patterson is President 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.
Patterson Real Estate Services, a licensed California Real Estate Broker, was
founded 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
<PAGE> 26
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., an
executive officer and controlling shareholder of Moraga Partners, Inc. general
partner of Moraga Partners 1, L.P. 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 250
employees.
Victoriaann Tacheira is vice president of MacKenzie Patterson, Inc.,
which she joined in 1988. Ms. Tacheira has eleven years of experience with the
NASD broker/dealer business and is experienced in all phases of broker/dealer
operations. She is licensed with the NASD as a General Securities Principal. She
is president and owner of North Coast Securities Corporation. Ms. Tacheira has
been certified by the College of Financial Planning in Denver, Colorado, as a
Financial ParaPlanner.
MORAGA PARTNERS, INC.
Moraga Partners, Inc. is a California corporation which is also the
general partner of Moraga Fund 1, L.P. It is owned by C.E. Patterson and Thomas
A. Frame. Mr. Patterson and Mr. Frame are also each an executive officer and
director of Moraga Partners, Inc. Information regarding Mr. Patterson is set
forth above.
Thomas A. Frame has been the president of Paradigm Investment
Corporation, a real estate limited partnership secondary market firm, since
1986. In 1973, Mr. Frame was a co-founder of Transcentury Real Estate Masters,
Oakland, California, a residential and commercial real estate brokerage firm. In
1973 he also co-founded, and has since then been a partner in, Transcentury
Property Management Company, which has syndicated privately-placed real estate
limited partnerships owning multi-family residential properties. 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.
Frame is co-owner and an executive officer and director of Cal-Kan, Inc., and
co-owner and an officer of Moraga Partners, Inc., general partner of Moraga Fund
1, L.P. Mr. Frame, through his affiliates, manages over $6 million dollars in
investor capital and is currently managing a total of 1,150 residential units in
four states.
CAL-KAN, INC.
Cal-Kan, Inc. is a Kansas corporation which is owned by C.E. Patterson
and Thomas A. Frame. Mr. Patterson and Mr. Frame are also each an executive
officer and director of Cal-Kan-Inc. Information regarding each of Mr. Patterson
and Mr. Frame is set forth above.
<PAGE> 1
EXHIBIT (a)(2)
<PAGE> 2
LETTER OF TRANSMITTAL
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION
PERIOD WILL EXPIRE AT 12:00 MIDNIGHT,
PACIFIC STANDARD TIME, ON DECEMBER 29, 1995
(THE "EXPIRATION DATE") UNLESS EXTENDED
Deliver to: CCP ADMINISTRATORS, INC.
1640 SCHOOL STREET, SUITE 100
MORAGA, CALIFORNIA 94556
(PLEASE INDICATE CHANGES Facsimile: (510) 631-9119
OR CORRECTIONS TO THE
ADDRESS PRINTED ABOVE) For assistance: (800) 854-8357
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 Unitholders of De Anza
Properties - X (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 Moraga Capital, LLC (the
"Purchaser"), all of the limited partnership units ("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 $450 per Unit, less the amount
of any distributions made or declared with respect to the Units between the
Offer Date and the Expiration Date, (the "Offer Price") and upon the other terms
and subject to the conditions set forth in the Offer to Purchase, dated November
29, 1995 (the "Offer to Purchase"), and this Letter of Transmittal (which
together constitute the "Offer"). Receipt of the Offer to Purchase is hereby
acknowledged.
The undersigned recognizes that, if more than 5,665 Units are validly
tendered prior to or on the Expiration Date and not properly withdrawn, the
Purchaser will, upon the terms of the Offer, accept for payment from among those
Units tendered prior to or on the Expiration Date 5,665 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, Purchaser 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 Purchaser as the true and lawful agent
and attorney-in-fact of the undersigned with respect to such Units, with full
power of substitution (such power of attorney being deemed to be an irrevocable
power 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 Purchaser
and, upon payment of the purchase price in respect of such Units by the
Purchaser, 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 the Purchaser 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 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 Purchaser 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
on or after the Offer Date and through the Expiration Date.
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 Purchaser, the Purchaser 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 Purchaser 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 Purchaser
will constitute a binding agreement between the undersigned and the Purchaser
upon the terms and subject to the conditions of the Offer. The undersigned
recognizes that under certain circumstances set forth in the Offer to Purchase,
the Purchaser 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
Purchaser. 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 insert
your Taxpayer Identification 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 hereto hereby certifies under penalties 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.
_______________ Units
- --------------------------------------------------------------------------------
X______________________________________________________________________________
(Signature of Owner) (Date)
X______________________________________________________________________________
(Signature of Owner) (Date)
Taxpayer I.D. or Social Security # __________________________________________
Telephone No. (day) _______________________ (eve.) _______________________
================================================================================
<PAGE> 3
================================================================================
BOX A
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
If signing as a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please provide the following information and see
Instruction 1.
Name and Capacity ___________________________________________________________
Address _____________________________________________________________________
Area Code and Telephone No. _________________________________________________
NOTARIZATION OF SIGNATURE
(If required. See Instruction 1)
STATE OF ____________________)
) ss.:
COUNTY OF ___________________)
On this ________ day of _______________, 199__, before me came personally
___________________________, to me known to be the person who executed the
foregoing Letter of Transmittal.
_____________________________
Notary Public
OR
SIGNATURE GUARANTEE
(If required. See Instruction 1)
Name and Address of Eligible Institution:_______________________________________
Authorized Signature ____________________ Title ______________________________
Name ____________________________________ Date ____________________, 199______
================================================================================
BOX B
SUBSTITUTE FORM W-9
(SEE INSTRUCTION 3 - BOX B)
- --------------------------------------------------------------------------------
The person signing this Letter of Transmittal hereby certifies the
following to the Purchaser 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 Purchaser within sixty (60) days, 31% of all reportable payments made to
the Unitholder thereafter will be withheld until a TIN is provided to the
Purchaser); 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 a sa 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.
================================================================================
BOX C
FIRPTA AFFIDAVIT
(SEE INSTRUCTION 3 - BOX C)
- --------------------------------------------------------------------------------
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 Purchaser 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 Purchaser and that any false
statements contained herein could be punished by fine, imprisonment, or both.
================================================================================
BOX D
SUBSTITUTE FORM W-8
(SEE INSTRUCTION 4 - BOX D)
- --------------------------------------------------------------------------------
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.
================================================================================
<PAGE> 4
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, no
notarization or 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 Dealer, 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"), no notarization or signature guarantee is
required. In all other cases, signatures on this Letter of Transmittal
must either be notarized or guaranteed by an Eligible Institution, by
completing the Notarization or 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 Purchaser 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
NOTARIZATIONS OR 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 Purchaser 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 Purchaser 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.
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. BOX D - 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 Purchaser by
calling 800-854-8357.
<PAGE> 1
EXHIBIT (a)(3)
<PAGE> 2
MORAGA CAPITAL, LLC
November 29, 1995
OFFER TO PURCHASE UNITS FOR $450 PER UNIT
Dear Limited Partner:
As described in the enclosed Offer to Purchase and related Letter of
Transmittal (the "Offer"), Moraga Capital, LLC (the "Purchaser") is offering to
purchase your Limited Partnership Units in De Anza Properties - X ("De Anza")
for $450 cash per Unit. The Offer will provide you with an opportunity to
liquidate all, or a portion of, your investment in the De Anza without the usual
transaction costs associated with market sales or partnership transfer fees. The
Purchaser and its affiliates currently own or control approximately 7.2% of the
Units.
Based on our records, you will receive $______ if all of your Units are
tendered and purchased under the Offer (subject to reduction if any
distributions are declared or made by De Anza prior to expiration of the Offer).
After carefully reading the enclosed 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 blue Letter of Transmittal
and any documents required by the Letter of Transmittal to the Depositary for
the Offer at:
CCP Administrators, Inc.
1640 School Street, Suite 100
Moraga, California 94556
Telecopier No: 510-631-9119
If you have any questions or need assistance, please call the Purchaser
at 800-854-8357.
MORAGA CAPITAL, LLC
