<PAGE>
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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
-----------------------------
UNIVERSITY REAL ESTATE PARTNERSHIP V
(Name of Subject Company)
UREPV ACQUISITION, L.P.
(Bidder)
INCOME UNITS OF LIMITED PARTNERSHIP INTEREST
AND
GROWTH/SHELTER UNITS OF
LIMITED PARTNERSHIP INTEREST
(Title of Class of Securities)
NONE
(CUSIP Number of Class of Securities)
-------------------------------------
DAVID RONCK
UREPV ACQUISITION, L.P.
2001 ROSS AVENUE, SUITE 4600
DALLAS, TEXAS 75201
(214) 740-2200
(Name, Address and Telephone Number of
Person Authorized to Receive Notices and
Communications on Behalf of Bidder)
with copy to:
SALLY SCHREIBER, ESQ.
MUNSCH HARDT KOPF HARR & DINAN, P.C.
4000 FOUNTAIN PLACE
1445 ROSS AVENUE
DALLAS, TEXAS 75202-2790
Calculation of Filing Fee
Transaction Amount of
Valuation Filing Fee
$ 744,000.00 $ 148.80
*For purposes of calculating the filing fee only. This amount assumes
the purchase of 12,000 Income Units of Limited Partnership Interest
("Income Units") of the subject company at $60.00 in cash per unit and
the purchase of 16,558 Growth/Shelter Units of Limited Partnership
Interest ("Growth Units") of the subject company for $2.00 in cash per
unit. The amount of the filing fee, calculated in accordance with
Section 14(g)(3) and Rule 0-11(d) under the Securities Exchange Act of
1934, as amended, equals 1/50th of one percent of the aggregate of the
cash offered by the bidder.
[ ] 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: Filing Party:
Form or Registration Number: Date Filed:
<PAGE>
CUSPID NO. None 14D-1 Page 2 of 5 Pages
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) This Schedule relates to Income Units of limited partnership
interest ("Income Units") and Growth/Shelter Units of limited partnership
interest ("G/S Units" and collectively, the "Units") of University Real Estate
Partnership V (the "Issuer"), the subject company. The address of the Issuer's
principal executive offices is: 2001 Ross Avenue, Suite 4600, Dallas, Texas
75201.
(b) This Schedule relates to the offer by UREPV Acquisition,
L.P. ( the "Purchaser") to purchase up to twelve thousand (12,000) Income Units
for cash at a price equal to $60.00 per unit and up to twelve thousand (12,000)
G/S Units for cash at a price equal to $2.00 per unit, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated December 22,
1997 (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 a total of 34,281 Limited Partnership Units outstanding as of
December 15, 1997 consisting of 17,723 Income Units and 16,558 G/S Units,
according to the Issuer's internal records. The Offer relates to both the Income
Units and the G/S Units.
(c) There is no formal or other secondary market in which the
Units are traded. The Purchaser has no knowledge of the sales prices of Units
negotiated in private transactions. The information set forth under Section 7,
"Effects of the Offer," and under Section 13, "Background of the Offer," in the
Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) This statement is being filed by the Purchaser. The
information set forth under the caption "Introduction," Section 11, "Certain
Information Concerning the Purchaser," and Schedule I of the Offer to Purchase
is incorporated herein by reference.
(e)-(g) The information set forth under Section 11, "Certain
Information Concerning the Purchaser" in the Offer to Purchaser 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 or entity named in Section 11, "Certain Information
Concerning the Purchaser," or on Schedule I to the Offer to Purchaser 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 was or is 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) The information set forth in the Offer to Purchase under
"Introduction," in Section 10, "Conflicts of Interest and Transactions with
Affiliates," and in Section 13, "Background of the Offer," is incorporated
herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(c) The information set forth in Section 12, "Source of Funds,"
of the Offer to Purchase is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) and (g) The information set forth in Section 8, "Future
Plans," in the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth in Section 11, "Certain Information
Concerning the Purchaser," of the Offer to Purchase is incorporated herein by
reference.
<PAGE>
CUSPID NO. None 14D-1 Page 3 of 5 Pages
(b) To the best knowledge of the Purchaser, no transactions in the
Units have been effected during the past 60 days by the Purchaser or any of its
partners, controlling entities or persons, executive officers, directors, or
subsidiaries.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in Section 10, "Conflicts of Interest and
Transactions with Affiliates," and Section 11, "Certain Information Concerning
the Purchaser," 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 Section 15, "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 December 22, 1997
(a)(2) Letter of Transmittal
(a)(3) Form of Letter to Unitholders dated December 22, 1997
(b) Loan Agreement (to be filed by amendment).
(c) The Agreement of Limited Partnership is incorporated by
reference to Form 10 of the Registration Statement filed by the Issuer on
January 6, 1978.
(d) None
(e) Not applicable
(f) Not applicable
<PAGE>
CUSPID NO. None 14D-1 Page 4 of 5 Pages
SIGNATURES
After due inquiry and to the best of the undersigned's knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
UREPV ACQUISITION, L.P.
By: OS GENERAL PARTNER COMPANY,
Its General Partner
Dated: December 22, 1997 By:____________________________________
David K. Ronck, Vice President
<PAGE>
CUSPID NO. None 14D-1 Page 5 of 5 Pages
EXHIBIT INDEX
Exhibit Description
(a)(1) Offer to Purchase dated December 22, 1997
(a)(2) Letter of Transmittal
(a)(3) Form of Letter to Unitholders dated December 22, 1997
(b) Loan Agreement (to be filed by amendment).
(c) The Agreement of Limited Partnership is incorporated by reference
to Form 10 of the Registration Statement filed by the Issuer on
January 6, 1978.
(d) None
(e) Not applicable
(f) Not applicable
<PAGE>
Exhibit (a)(1)
Offer to Purchase for Cash
Up to 12,000 Income Units and Up to 12,000 Growth/Shelter Units
of Limited Partnership Interest
in
UNIVERSITY REAL ESTATE PARTNERSHIP V
a California limited partnership
for
$60 Net Per Unit for Each Income Unit and
$2 Net Per Unit for Each Growth/Shelter Unit
by
UREPV ACQUISITION, L.P.
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION
PERIOD WILL EXPIRE AT 12:00 MIDNIGHT, CENTRAL STANDARD
TIME, ON JANUARY 21, 1988, UNLESS THE OFFER IS
EXTENDED.
UREPV Acquisition, L.P. (the "PURCHASER") is offering to purchase up to
12,000 of the outstanding "Income Units" of limited partnership interest (the
"INCOME UNITS") and up to 12,000 of the outstanding "Growth/Shelter Units" of
limited partnership interest (the "G/S UNITS") in University Real Estate
Partnership V (the "PARTNERSHIP"). The purchase price for the Offer is $60 per
Income Unit and $2 per G/S Unit (the "PURCHASE PRICE"), net to the seller in
cash, without interest, upon the terms and subject to the conditions set forth
in this Offer to Purchase and in the related Letter of Transmittal (which,
together with any supplements or amendments, collectively constitute the
"OFFER"). The Income Units and the G/S Units are hereafter collectively referred
to as the "UNITS." The Purchase Price is subject to adjustment under certain
circumstances, as described herein. Holders of Units (each, a "UNITHOLDER") who
tender their Units in response to this Offer will not be obligated to pay any
commissions or partnership transfer fees. The Purchaser is an affiliate of
University Advisory Company, which is the general partner of the Partnership
(the "GENERAL PARTNER").
This Offer is being made in response to recent tender offers for the
purchase of Income Units by Accelerated High Yield Institutional Fund 1, L.P.,
MacKenzie Patterson Special Fund, Peachtree Partners and Accelerated High Yield
Pension Investors, L.P. (collectively, the "MACKENZIE BIDDERS"), Everest
Properties II, LLC ("EVEREST") and by Bond Purchase, L.L.C. ("BOND") (Bond and,
together with the MacKenzie Bidders and Everest, collectively the "OTHER
BIDDERS"). The Purchaser believes it can achieve a better long-term return on
investment in the Units than the price being offered by the Other Bidders and
therefore believes it can offer a higher Purchase Price for the Units. In order
to protect the continuity and long-term interests of the Partnership, the
Purchaser is also seeking to gain a voting majority of the Units of the
Partnership. IN THE EVENT A UNITHOLDER HAS TENDERED UNITS TO ONE OF THE OTHER
----------------------------------------------------------------
BIDDERS AND NOW DESIRES TO PARTICIPATE IN THIS OFFER INSTEAD, THE UNITHOLDER
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MUST WITHDRAW THE TENDERED UNITS FROM THE OTHER BIDDER BY THE EXPIRATION DATE OF
- --------------------------------------------------------------------------------
THE TENDER OFFER OF THAT OTHER BIDDER, WHICH IS CURRENTLY DECEMBER 31, 1997, FOR
- --------------------------------------------------------------------------------
THE MACKENZIE BIDDERS OFFER, JANUARY 8, 1998, FOR THE EVEREST OFFER AND DECEMBER
- --------------------------------------------------------------------------------
31, 1997, FOR THE BOND OFFER. IT IS POSSIBLE THAT THE
- ------------------------------------------------------
<PAGE>
EXPIRATION DATES MAY BE EXTENDED BY ONE OR MORE OF THE OTHER BIDDERS. THE
- ------------------------------------------------------ ------------------
PURCHASER WILL ARRANGE FOR SUCH WITHDRAWAL IF THE UNITHOLDER COMPLETES AND
- --------------------------------------------------------------------------
DELIVERS TO THE DEPOSITARY (BY FACSIMILE, HAND DELIVERY OR MAIL) A COMPLETED
- ----------------------------------------------------------------------------
LETTER OF TRANSMITTAL SUFFICIENTLY IN ADVANCE OF THE RELEVANT EXPIRATION DATE TO
- --------------------------------------------------------------------------------
PERMIT IT TO FORWARD THE WITHDRAWAL TO THE OTHER BIDDER BY ITS EXPIRATION DATE.
- ------------------------------------------------------------------------------
Unitholders are urged to consider the following factors:
. The Purchaser is a newly-formed Texas limited partnership. The Purchaser
and the General Partner are both affiliates of and controlled by OSGP (as
defined below). The General Partner has conflicts of interest in
considering the Offer, including (i) as a result of the fact that a sale or
liquidation of the Partnership's assets would result in a decrease or
elimination of the fees paid to the General Partner and/or its affiliates
and (ii) the fact that, as a consequence of the Purchaser's ownership of
Units, the Purchaser may have incentives to seek to maximize the value of
its ownership of Units, which in turn may result in a conflict for the
General Partner in attempting to reconcile the interests of the Purchaser
with the interests of the other Unitholders.
. The Purchaser is making the Offer with a view to making a profit.
Accordingly, there is a conflict between the desire of the Purchaser to
purchase Units at a low price and the desire of the Unitholders to sell
their Units at a high price.
. The net liquidation value per Unit (the "ESTIMATED LIQUIDATION VALUE")
estimated by the Purchaser for an Income Unit is $81.26 and for a G/S Unit
is $0.00. The Purchaser does not believe, however, that the Estimated
Liquidation Values represent a fair estimate of the current market value of
the Income Units, primarily due to the fact that such estimate does not
take into account timing considerations and legal and other expenses that
would be incurred in connection with a liquidation of the Partnership. See
Section 13. Accordingly, the Purchaser does not believe that the Estimated
Liquidation Value should be viewed as representative of the amount a
Unitholder can realistically expect to obtain on liquidation of the
Partnership assets in the near term. In the case of the G/S Units, while
the Purchaser does not believe that the G/S Units have any current
liquidation value as the Income Units have a cash distribution preference
over the G/S Units, it is possible that they could have some value in the
future as a result of changing market conditions. The Purchaser is willing
to purchase the G/S Units for this reason and as an accommodation to
Unitholders who desire to sell their Units.
. The Purchaser will have the right to vote all Units acquired pursuant to
the Offer. Accordingly, if the Purchaser (which is an affiliate of the
General Partner) is successful in acquiring a significant number of either
the Income Units or G/S Units, it will be able to significantly influence
all voting decisions with respect to the Partnership, including decisions
regarding liquidation, amendments to the Agreement of Limited Partnership
of the Partnership, removal and replacement of the General Partner and
mergers, consolidations and other extraordinary transactions.
-ii-
<PAGE>
THIS OFFER IS NOT CONDITIONED UPON ANY MINIMUM AGGREGATE NUMBER OF UNITS BEING
TENDERED.
Any Unitholder desiring to tender Units and withdraw Units previously
tendered pursuant to recent offers by Other Bidders should complete and sign the
Letter of Transmittal (or a copy thereof) in accordance with the Instructions to
the Letter of Transmittal and mail, facsimile or deliver the signed Letter of
Transmittal to Wallace Sanders & Co. at the address and facsimile number
indicated below. A Unitholder may tender any or all of the Units owned by that
Unitholder; provided, however, that, pursuant to the Agreement of Limited
Partnership of the Partnership, a Unitholder may not own less than ten Units.
Tenders of fractional Units will not be permitted except by a Unitholder who is
tendering all of the Units owned by that Unitholder.
Questions and requests for assistance or for additional copies of this
Offer to Purchase and the Letter of Transmittal may be directed to the
Information Agent at the telephone numbers set forth below and in the Letter of
Transmittal. No soliciting dealer fees or other payments to brokers for tenders
are being paid by the Purchaser.
For more information or for further assistance please call:
Equinet Fund Administrators, Inc.
at
(800) 648-1336
Deliver the Letter of Transmittal to:
Wallace Sanders & Co.
8131 LBJ Freeway, Suite 875
Dallas, Texas 75251
(214) 669-3462 (facsimile)
-iii-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INTRODUCTION............................................................................ 1
THE OFFER............................................................................... 5
Section 1. Terms of the Offer; Expiration Date; Proration........................ 7
Section 2. Acceptance for Payment and Payment for Units.......................... 7
Section 3. Procedure for Tendering Units......................................... 7
Section 4. Withdrawal Rights..................................................... 10
Section 5. Extension of Tender Period; Termination; Amendment.................... 10
Section 6. Certain Federal Income Tax Matters.................................... 11
Section 7. Effects of the Offer.................................................. 14
Section 8. Future Plans.......................................................... 15
Section 9. Certain Information Concerning the Partnership........................ 16
Section 10. Conflicts of Interest and Transactions with Affiliates................. 19
Section 11. Certain Information Concerning the Purchaser, and the General Partner.. 21
Section 12. Source of Funds........................................................ 21
Section 13. Background of the Offer................................................ 21
Section 14. Conditions of the Offer................................................ 23
Section 15. Certain Legal Matters.................................................. 25
Section 16. Fees and Expenses...................................................... 26
Section 17. Miscellaneous.......................................................... 26
</TABLE>
SCHEDULE I - Information Regarding the Managers of the Purchaser
SCHEDULE II - Depreciation and Amortization Schedule
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<PAGE>
TO THE UNITHOLDERS OF UNIVERSITY REAL ESTATE PARTNERSHIP V
INTRODUCTION
UREPV Acquisition, L.P., a Texas limited partnership (the "PURCHASER"),
hereby offers to purchase up to 12,000 of the outstanding "Income Units" of
limited partnership interest (the "INCOME UNITS") and up to 12,000
"Growth/Shelter Units" of limited partnership interest (the "G/S UNITS") (Income
Units and G/S Units are collectively referred to as "UNITS") in University Real
Estate Partnership V (the "PARTNERSHIP"). The Units for which this offer is made
represent approximately 68% of the outstanding Income Units, 72% of the
outstanding G/S Units and 70% of all outstanding Units. The purchase price for
this Offer is $60 per Income Unit and $2 per G/S Unit of the Partnership (the
"PURCHASE PRICE"), net to the seller in cash, without interest, upon the terms
and subject to the conditions set forth in this Offer to Purchase and in the
related Letter of Transmittal (which, together with any supplements or
amendments, collectively constitute the "OFFER"). The Offer is not conditioned
on any aggregate minimum number of Units being tendered. A Unitholder may tender
any or all of the Units owned by that Unitholder. However, pursuant to the
Agreement of Limited Partnership of the Partnership, a Unitholder may not own
less than ten Units (three Units for a trustee of a Keogh Plan trust or other
qualified retirement plan trust so long as the beneficiary of such trust holds
directly or as beneficiary of such trust at least ten Units). Tenders of
fractional Units will not be permitted, except by a Unitholder who is tendering
all of the Units owned by that Unitholder. The Purchaser will pay all charges
and expenses of Equinet Fund Administrators, Inc., who will serve as the
Purchaser's information agent for the Offer (the "INFORMATION AGENT"), and
Wallace Sanders & Co., who will act as Depositary for the Offer (the
"DEPOSITARY").
The Purchaser; Affiliation with the General Partner. University Advisory
---------------------------------------------------
Company, a California partnership, is the general partner of the Partnership
(the "GENERAL PARTNER"). The Purchaser is a newly-formed Texas limited
partnership. Both the General Partner and the Purchaser are controlled by OS
General Partner Company, a Texas corporation ("OSGP"), and are considered
affiliated with each other and the Partnership. Notice should therefore be taken
that the Purchaser and the General Partner share common interests with respect
to the Partnership.
In analyzing the Offer, Unitholders may wish to consider the following
factors:
Potential Adverse Aspects of the Offer for Unitholders
------------------------------------------------------
. The Purchaser and the General Partner are affiliates of and controlled by
OSGP. The General Partner has conflicts of interest in considering the
Offer, including (i) as a result of the fact that a sale or liquidation of
the Partnership's assets would result in a decrease or elimination of the
fees paid to the General Partner and/or its affiliates and (ii) the fact
that, as a consequence of the Purchaser's ownership of Units, the Purchaser
may have incentives to seek to maximize the value of its ownership of
Units, which in turn may result in a conflict for the General Partner in
attempting to reconcile the interests of the Purchaser with the interests
of the other Unitholders. See Section 10.
. The net liquidation value per Unit (the "ESTIMATED LIQUIDATION VALUE")
estimated by the Purchaser is $81.26 per Income Unit and $0.00 per G/S
Unit. See Section 13 for a
-1-
<PAGE>
discussion of why the Purchaser believes that the Estimated Liquidation Values
are not necessarily indicative of the fair market value of the Units. THE
PURCHASER MAKES NO REPRESENTATION AND EXPRESSES NO OPINION AS TO THE FAIRNESS OR
ADEQUACY OF THE PURCHASE PRICE.
. As with any rational investment decision, the Purchaser is making the Offer
with a view to making a profit. Accordingly, there is a conflict between
the desire of the Purchaser to purchase Units at a low price and the desire
of the Unitholders to sell their Units at a high price.
. If the Purchaser is successful in acquiring a significant number of Units
pursuant to the Offer, the Purchaser will have the right to vote those
Units and thereby significantly influence all voting decisions with respect
to the Partnership, including decisions concerning liquidation, amendments
to the Agreement of Limited Partnership, removal and replacement of the
General Partner and mergers, consolidations and other extraordinary
transactions. The General Partner currently owns approximately 1.8% of the
outstanding Income Units and approximately .76% of the outstanding G/S
Units. Depending on the number of Units the Purchaser acquires pursuant to
the Offer, the Purchaser may be able to significantly influence the outcome
of all voting decisions with respect to the Partnership.
Potentially Beneficial Aspects of the Offer for Unitholders
-----------------------------------------------------------
. Although there are some limited resale mechanisms available to Unitholders
wishing to sell their Units, there is no formal trading market for Units.
Accordingly, THE OFFER AFFORDS UNITHOLDERS AN OPPORTUNITY TO DISPOSE OF
THEIR UNITS FOR CASH THAT OTHERWISE MIGHT NOT BE AVAILABLE TO THEM.
. Unitholders who sell Units pursuant to this Offer will not be charged any
sales commissions (which generally range from 3% to 10% of the sales price)
or partnership transfer fees (which are $25 per transfer). The Purchaser
will pay all transfer fees imposed by the Partnership in connection with
sales of Units pursuant to the Offer.
. Real estate markets in the United States generally have recovered and
experienced an upward trend since the end of the last recession. That
recovery and upward trend might continue. On the other hand, those markets
also may be adversely affected by a variety of factors, including possible
fluctuations in interest rates, economic slowdowns and overbuilding.
Accordingly, ownership of the Units continues to be a speculative
investment. THE OFFER MAY PROVIDE UNITHOLDERS WITH THE OPPORTUNITY TO
LIQUIDATE THEIR INTERESTS IN THE PARTNERSHIP AND REPLACE THEM WITH
INVESTMENTS THAT ARE LESS SPECULATIVE.
. The Offer may be attractive to Unitholders who wish to avoid future
expenses, delays and complications in filing personal income tax returns
that may be caused by ownership of Units. In addition, A UNITHOLDER WHO
SELLS 100% OF ITS UNITS PURSUANT TO THE OFFER WILL NO LONGER BE SUBJECT TO
THE PASSIVE ACTIVITY LOSS LIMITATION WITH RESPECT TO "SUSPENDED" LOSSES
ATTRIBUTABLE TO THOSE UNITS AND, THEREFORE, WILL BE ABLE TO UTILIZE FULLY
ANY SUCH LOSSES.
-2-
<PAGE>
. Since late December 1994, Insignia Residential Group, L.P. ("IRG") has
provided property management services to the Partnership and Insignia
Financial Group ("INSIGNIA") has performed asset management partnership
administration services for the Partnership. The Purchaser believes that
continued involvement by IRG and Insignia with the affairs of the
Partnership is important to the Partnership's long-term value and desires
to insure that their involvement continues.
The Offer may be attractive to those Unitholders who have become
disenchanted with real estate investments generally and with the perceived
illiquidity of investments made through limited partnerships because it affords
an immediate opportunity for those Unitholders to liquidate their investments in
the Partnership. On the other hand, Unitholders who tender their Units will be
giving up the opportunity to participate in any potential future benefits
represented by the ownership of those Units, including, for example, the right
to participate in any future distributions of cash or property, whether from
operations, the proceeds of a sale or refinancing of one or more of the
Partnership's properties or in connection with any future liquidation of the
Partnership. Instead, any such distributions of cash or property with respect to
Units tendered in the Offer and purchased by the Purchaser will be paid to the
Purchaser.
Neither the Purchaser nor the General Partner makes any recommendation to
any Unitholder as to whether to tender or refrain from tendering Units pursuant
to the Offer. Each Unitholder must make its own decision, based on the
Unitholder's particular circumstances, as to whether to tender Units and, if so,
how many Units to tender. Unitholders should consult with their respective
advisors regarding the financial, tax, legal and other implications of accepting
the Offer. UNITHOLDERS ARE URGED TO READ THIS OFFER TO PURCHASE AND THE RELATED
MATERIALS CAREFULLY AND IN THEIR ENTIRETY BEFORE DECIDING WHETHER TO TENDER
THEIR UNITS.
Reasons for and Effects of the Offer. This Offer is being made in response
------------------------------------
to recent tender offers by the Other Bidders. The Purchaser's purpose in making
the Offer is to provided liquidity to the Unitholders and increase the
Purchaser's equity interest in the Partnership, primarily for investment
purposes and with a view to making a profit. In order to protect the continuity
and long-term interests of the Partnership, the Purchaser is also seeking to
gain a voting majority of the Units of the Partnership. If the Purchaser is
successful in acquiring all or a substantial portion of the Units it is
soliciting, it will also be in a position to exercise significant influence over
the outcome of any vote by Unitholders and protect the interests of the
Purchaser.
Certain Tax Considerations. A sale by a Unitholder pursuant to the Offer
--------------------------
will result in taxable gain (or loss) equal to the excess (deficit) of the
amount realized by the Unitholder for the Units sold over such Unitholder's
adjusted tax basis in those Units. In the case of a Unitholder who is an
individual and who has held Units since their issue by the Partnership, the sale
is expected to result in a gain, which may be taxable as ordinary income,
capital gain or gain from real estate depreciation recapture. Unitholders who
have suspended "passive losses" from the Partnership or other passive activity
investments generally may deduct these losses up to the amount of gain from the
sale. A sale pursuant to the Offer of all of a Unitholder's Units will
terminate his or her investment in the Partnership and, commencing with the year
following the year of sale, the
-3-
<PAGE>
Unitholder will no longer receive Partnership tax information or have to report
the complicated tax information currently required of Unitholders. See Section
6.
Originally Anticipated Term of Partnership; Alternatives. According to the
--------------------------------------------------------
Partnership's Prospectus dated January 6, 1978, the then general partners
(predecessors to the current General Partner) anticipated that the Partnership
would sell and/or refinance its properties three to seven years after their
acquisition, depending upon the then current real estate and money markets,
economic climate and income tax consequences to the Unitholders. For a variety
of reasons, this was not done. Under the Agreement of Limited Partnership of the
Partnership, the term of the Partnership will continue until December 31, 2027,
unless sooner terminated as provided in the Agreement of Limited Partnership or
by law. Unitholders could, as an alternative to tendering their Units, take a
variety of possible actions, including voting to liquidate the Partnership or
causing the Partnership to merge with another entity or engage in a "roll-up" or
similar transaction.
General Policy Regarding Sales and Refinancings of Partnership Properties.
-------------------------------------------------------------------------
In general, the General Partner regularly evaluates the Partnership's properties
by considering various factors, such as the Partnership's financial position and
real estate and capital market conditions. The General Partner monitors each
property's specific locale and sub-market conditions, evaluating current trends,
competition, new construction and economic changes. The General Partner
oversees each asset's operating performance and continuously evaluates the
physical improvement requirements. In addition, the financing structure for
each property, tax implications and the investment climate are all evaluated by
the General Partner. Any of these factors, and possibly others, could
potentially contribute to any decision of the General Partner to sell,
refinance, upgrade with capital improvements or hold a particular Partnership
property. The General Partner has advised the Purchaser that it is in the
process of preliminarily evaluating a sale or refinancing of the Glasshouse
Square Shopping Center in San Diego, California, that may generate net cash
proceeds to the Partnership; however, there can be no assurance as to whether
this sale or refinancing will occur as expected or whether it will in fact
generate net cash proceeds to the Partnership. Moreover, no determination has
been made as to whether any net cash proceeds generated by such sale or
refinancing will be distributed to Unitholders, which determination will be made
at the time of the refinancing and will be based on, among other things, the
Partnership's working capital requirements at the time. There are no other
plans to sell or refinance any other property or asset at the present time.
Conditions. The Offer is not conditioned on any aggregate minimum number
----------
of Units being tendered; however, certain other conditions apply. See Section
14.
Distributions. The Partnership suspended cash distributions in 1991 in
-------------
order to make capital improvements to the Partnership's properties and to
resolve other Partnership matters, some of which are described below. Prior to
1993, the Partnership held a leasehold interest in the Glasshouse Shopping
Center land. In 1993, the Partnership exercised its option to acquire the fee
simple interest in the land, which collapsed the ground lease. This transaction
improved the overall value of the Glasshouse Shopping Center. Following the
purchase of the land, the Partnership utilized in excess of $150,000 of its
capital reserves to remediate an environmental issue created by leaking
underground storage tanks at the Glasshouse property. This problem has now been
resolved to the satisfaction of the State of California. In connection with the
refinancing of the Washington Tower Apartments, the Partnership completed
approximately $250,000 in
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<PAGE>
improvements in 1995 at the lender's request. Additional Partnership capital
reserves were utilized to effect the sale of the Bank of San Pedro office
building in Long Beach, California. The General Partner has advised the
Purchaser that the Partnership may be in a financial position to resume cash
distributions in late 1998 or in 1999. However, tendering Unitholders will not
be entitled to receive any distributions in respect of tendered Units that are
made on or after the date on which the Purchaser pays for such Units pursuant to
the Offer, regardless of the fact that the record date for any such distribution
may be a date prior to the date of purchase. See Section 3.
Outstanding Units. According to information supplied by the Partnership, as
-----------------
of December 4, 1997, there were a total of 34,281 Units, comprised of 17,723
Income Units and 16,558 G/S Units, issued and outstanding, which were held of
record by 1,556. Unitholders. The General Partner currently owns 569 Income
Units and 126 G/S Units. The Income Units and G/S Units have identical rights
and privileges except that the Income Units receive certain preferential
distributions before any distributions are made with respect to G/S Units, and
have certain exclusive voting rights with respect to such preferential
distributions.
THE OFFER
SECTION 1. TERMS OF THE OFFER; EXPIRATION DATE; PRORATION. Upon the terms
and subject to the conditions of the Offer, the Purchaser will accept for
payment and purchase up to 12,000 Income Units at $60 per Unit and up to 12,000
G/S Units at $2 per Unit that are validly tendered on or prior to the Expiration
Date and not withdrawn in accordance with the procedures set forth in Section 4.
For purposes of the Offer, the term "EXPIRATION DATE" means12:00 midnight,
Central Standard time, on January 21,1997, unless the Purchaser, in its sole
discretion, extends the period of time for which the Offer is open, in which
event the term "EXPIRATION DATE" means the latest time and date on which the
Offer, as extended by the Purchaser, shall expire. See Section 5 for a
description of the Purchaser's right to extend the period of time during which
the Offer is open and to amend or terminate the Offer.
THE PURCHASE PRICE WILL AUTOMATICALLY BE REDUCED BY THE AGGREGATE AMOUNT OF
DISTRIBUTIONS PER UNIT, IF ANY, MADE BY THE PARTNERSHIP TO UNITHOLDERS ON OR
AFTER DECEMBER 22, 1997, AND PRIOR TO THE DATE ON WHICH THE PURCHASER PAYS FOR
UNITS PURCHASED PURSUANT TO THE OFFER.
IF, PRIOR TO THE EXPIRATION DATE, THE PURCHASER INCREASES THE CONSIDERATION
OFFERED TO UNITHOLDERS PURSUANT TO THE OFFER, THE INCREASED CONSIDERATION WILL
BE PAID FOR ALL UNITS ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER, REGARDLESS OF
WHETHER THE UNITS WERE TENDERED PRIOR TO THE INCREASE IN THE CONSIDERATION
OFFERED.
UNITHOLDERS WHO HAVE RECENTLY TENDERED THEIR UNITS TO ANY OF THE OTHER
BIDDERS MAY WITHDRAW SUCH TENDER AT ANY TIME PRIOR TO THE EXPIRATION DATE OF
SUCH OTHER BIDDER'S OFFER. THE EXPIRATION DATE FOR THE OFFERS BY THE MACKENZIE
BIDDERS AND BY BOND IS CURRENTLY DECEMBER 31, 1997, AND IS CURRENTLY DECEMBER
24, 1997, FOR THE OFFER BY EVEREST. EXPIRATION DATES MAY BE EXTENDED BY ANY OR
ALL OF THE OTHER BIDDERS. TO WITHDRAW PREVIOUSLY TENDERED UNITS IN ORDER TO
PARTICIPATE IN THIS OFFER, IT IS IMPORTANT THAT THE UNITHOLDER COMPLETE AND
DELIVER THE LETTER OF
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<PAGE>
TRANSMITTAL TO THE DEPOSITARY SUFFICIENTLY BEFORE THE EXPIRATION DATE OF THE
BIDDER TO WHOM UNITS WERE PREVIOUSLY TENDERED TO PERMIT YOUR WITHDRAWAL TO REACH
THE OTHER BIDDER BY ITS EXPIRATION DATE. NO SIGNATURE GUARANTEE IS REQUIRED WITH
RESPECT TO THE PURCHASER'S LETTER OF TRANSMITTAL. THE LETTER OF TRANSMITTAL MAY
BE DELIVERED TO THE DEPOSITARY BY FACSIMILE AT (214) 669-3462 OR BY HAND
DELIVERY OR REGULAR MAIL.
If more than 12,000 Units of a class are validly tendered prior to the
Expiration Date and not properly withdrawn prior to the Expiration Date in
accordance with the procedures specified in Section 4, the Purchaser will, upon
the terms and subject to the conditions of the Offer, accept for payment and
purchase an aggregate of 12,000 of the Units of such class so tendered, pro rata
according to the number of Units of such class validly tendered by each
Unitholder and not properly withdrawn on or prior to the Expiration Date, but
with appropriate adjustments to avoid purchases of fractional Units. Adjustments
will also be made to insure that tendering Unitholders will not violate Section
8 of the Agreement of Limited Partnership of the Partnership, which requires
each Unitholder to own at least ten Units (three Units for a trustee of a Keogh
Plan trust or other qualified retirement plan trust so long as the beneficiary
of such trust holds directly or as beneficiary of such trust at least ten
Units). If the number of Units of a class validly tendered and not properly
withdrawn on or prior to the Expiration Date is less than or equal to 12,000
Units, the Purchaser will purchase all of such class Units so tendered and not
withdrawn upon the terms and subject to the conditions of the Offer to the
extent doing so will not cause any tendering Unitholder to own some but less
than ten Units (three Units for a trustee of a Keogh Plan trust or other
qualified retirement plan trust so long as the beneficiary of such trust holds
directly or as beneficiary of such trust at least ten Units), which is not
permitted by the Agreement of Limited Partnership of the Partnership.
If proration of tendered Units is required, then, due to the difficulty of
determining the number of Units validly tendered and not withdrawn, the
Purchaser may not be able to announce the final results of such proration until
at least approximately seven business days after the Expiration Date. Subject
to the Purchaser's obligation under Rule 14e-1(c) under the Securities Exchange
Act of 1934 (the "EXCHANGE ACT") to pay Unitholders the Purchase Price in
respect of Units tendered or return those Units promptly after the termination
or withdrawal of the Offer, the Purchaser does not intend to pay for any Units
accepted for payment pursuant to the Offer until the final proration results are
known. NOTWITHSTANDING ANY SUCH DELAY IN PAYMENT, NO INTEREST WILL BE PAID ON
THE PURCHASE PRICE.
The Offer is Conditioned on Satisfaction of Certain Conditions. See
--------------------------------------------------------------
Section 14, which sets forth in full the conditions of the Offer. The Purchaser
reserves the right (but in no event shall be obligated), in its sole discretion,
to waive any or all of those conditions. If, on or prior to the Expiration Date,
any or all of the conditions have not been satisfied or waived, the Purchaser
reserves the right to (i) decline to purchase any of the Units tendered and
terminate the Offer, (ii) waive all of the unsatisfied conditions and, subject
to complying with applicable rules and regulations, 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, and/or
(iv) amend the Offer.
-6-
<PAGE>
This Offer to Purchase and the related Letter of Transmittal are first
being mailed on December 22, 1997 by the Purchaser to the persons shown by the
Partnership's records to have been Unitholders or (in the case of Units owned of
record by IRAs and qualified plans) beneficial owners of Units as of December
15, 1997.
SECTION 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS. Upon the terms
and subject to the conditions of the Offer, the Purchaser will accept for
payment, purchase and pay for all Units validly tendered and not withdrawn in
accordance with the procedures specified in Section 4 as promptly as practicable
following the Expiration Date. In all cases, payment for Units purchased
pursuant to the Offer will be made only after timely receipt by the Depositary
of a properly completed and duly executed Letter of Transmittal and any other
documents required by the Letter of Transmittal. See Section 3. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE BY REASON OF ANY DELAY
IN MAKING SUCH PAYMENT.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment pursuant to the Offer and purchased validly tendered Units if, as
and when the Purchaser gives verbal or written notice to the Depositary of the
Purchaser's acceptance of those Units for payment pursuant to the Offer. Upon
the terms and subject to the conditions of the Offer, payment for Units accepted
for payment pursuant to the Offer will be made by deposit of the Purchase Price
with the Depositary, which will act as agent for tendering Unitholders for the
purpose of receiving payments from the Purchaser and transmitting those payments
to Unitholders whose Units have been accepted for payment.
If none of the Units tendered by a Unitholder are purchased for any reason,
the Letter of Transmittal with respect to such Units will be destroyed by the
Purchaser. If for any reason 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 14, the
Depositary may, nevertheless, on behalf of the Purchaser, retain tendered Units
and those Units may not be withdrawn except to the extent that the tendering
Unitholders are entitled to withdrawal rights as described in Section 4;
subject, however, to the Purchaser's obligation under Rule 14e-1(c) under the
Exchange Act to pay Unitholders the Purchase Price in respect of Units tendered
or return those Units promptly after termination or withdrawal of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more of the Purchaser's affiliates, the right to
purchase Units tendered pursuant to the Offer, but any such transfer or
assignment will not relieve the Purchaser of its obligations under the Offer or
prejudice the rights of tendering Unitholders to receive payment for Units
validly tendered and accepted for payment pursuant to the Offer.
SECTION 3. PROCEDURE FOR TENDERING UNITS.
Valid Tender. In order for a tendering Unitholder to participate in the
------------
Offer, such Units must be validly tendered and not withdrawn on or prior to the
Expiration Date. To validly tender Units, a properly completed and duly
executed Letter of Transmittal and any other documents required by the Letter of
Transmittal must be received by the Depositary, at its address set forth in the
top
-7-
<PAGE>
of the Letter of Transmittal, on or prior to the Expiration Date; provided,
however, that in the event a Unitholder desires to withdraw Units recently
tendered one of the Other Bidders, the Letter of Transmittal must be received by
the Depositary sufficiently in advance of the Other Bidder's tender offer
expiration date to permit the Depositary to forward that Unitholder's withdrawal
to the Other Bidder by its expiration date. A Unitholder may tender any or all
of the Units owned by that Unitholder; provided, however, that, pursuant to the
Agreement of Limited Partnership of the Partnership, a Unitholder may not own
less than ten Units (three Units for a trustee of a Keogh Plan trust or other
qualified retirement plan trust so long as the beneficiary of such trust holds
directly or as beneficiary of such trust at least ten Units). Tenders of
fractional Units will not be permitted except by a Unitholder who is tendering
all of the Units owned by that Unitholder. No alternative, conditional or
contingent tenders will be accepted.
Delivery of Letter of Transmittal. THE LETTER OF TRANSMITTAL MAY BE
---------------------------------
DELIVERED TO THE DEPOSITARY BY FACSIMILE AT (214) 669-3462 OR BY HAND DELIVERY
OR REGULAR MAIL. IT IS IMPORTANT THAT THE LETTER OF TRANSMITTAL IS RECEIVED BY
THE DEPOSITARY ON OR BEFORE THE EXPIRATION DATE OF ONE OF THE OTHER BIDDERS IF
THE LIMITED PARTNER DESIRES TO WITHDRAW A PRIOR TENDER MADE TO SUCH OTHER
BIDDER. 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. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.
Appointment as Proxy; Power of Attorney. By executing Letter of
---------------------------------------
Transmittal, a tendering Unitholder irrevocably appoints the Purchaser and its
General Partner and designees as the Unitholder's proxies, in the manner set
forth in the Letter of Transmittal, each with full power of substitution, to the
full extent of the Unitholder's rights with respect to the Units tendered by the
Unitholder and accepted for payment by the Purchaser. Each such proxy shall be
considered coupled with an interest in the tendered Units. Such appointment will
be effective when, and only to the extent that, the Purchaser accepts the
tendered Units for payment. Upon such acceptance for payment, all prior proxies
given by the Unitholder with respect to the Units will, without further action,
be revoked and no subsequent proxies may be given (and if given will not be
effective). The Purchaser and its General Partner and designees will, as to
those Units, be empowered to exercise all voting and other rights of the
Unitholder as they, in their sole discretion, may deem proper at any meeting of
Limited Partners, by written consent or otherwise. The Purchaser reserves the
right to require that, in order for Units to be deemed validly tendered,
immediately upon the Purchaser's acceptance for payment of the Units, the
Purchaser must be able to exercise full voting rights with respect to the Units,
including voting at any meeting of Limited Partners then scheduled or acting by
written consent without a meeting.
By executing a Letter of Transmittal, a tendering Unitholder also
irrevocably constitutes and appoints the Purchaser and its General Partner and
designees as the Unitholder's attorneys-in-fact, each with full power of
substitution, to the full extent of the Unitholder's rights with respect to the
Units tendered by the Unitholder and accepted for payment by the Purchaser.
Such appointment will be effective when, and only to the extent that, the
Purchaser accepts the tendered Units for payment. The tendering Unitholder
agrees not to exercise any rights pertaining to the tendered Units without the
prior consent of the Purchaser. Upon such acceptance for payment, all prior
-8-
<PAGE>
powers of attorney granted by the Unitholder with respect to such Units will,
without further action, be revoked and no subsequent powers of attorney may be
granted (and if granted will not be effective). Pursuant to such appointment as
attorneys-in-fact, the Purchaser and its General Partner and designees each will
have the power, among other things, (i) to transfer ownership of such Units on
the Partnership books maintained by the General Partner (and execute and deliver
any accompanying evidences of transfer and authenticity any of them may deem
necessary or appropriate in connection therewith), (ii) upon receipt by the
Depositary (as the tendering Unitholder's agent) of the Purchase Price, to
become a substituted Limited Partner, to receive any and all distributions made
by the Partnership on or after the date on which the Purchaser purchases such
Units and to receive all benefits and otherwise exercise all rights of
beneficial ownership of such Units in accordance with the terms of the Offer,
(iii) to execute and deliver to the General Partner a change of address form
instructing the General Partner to send any and all future distributions to
which the Purchaser is entitled pursuant to the terms of the Offer in respect of
tendered Units to the address specified in such form, and (iv) to endorse any
check payable to or upon the order of such Unitholder representing a
distribution to which the Purchaser is entitled pursuant to the terms of the
Offer, in each case in the name and on behalf of the tendering Unitholder.
Assignment of Interest in Future Distributions. By executing a Letter of
----------------------------------------------
Transmittal, a tendering Unitholder irrevocably assigns to the Purchaser and its
assigns all of the right, title and interest of the Unitholder in and to any and
all distributions made by the Partnership, on or after the date on which the
Purchaser purchases such Units, in respect of the Units tendered by such
Unitholder and accepted for payment by the Purchaser, regardless of the fact
that the record date for any such distribution may be a date prior to the date
of such purchase. The Purchaser will seek to be admitted to the Partnership as
a substituted Limited Partner upon consummation of the Offer.
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 Offer 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 of any particular Units
determined by it not to be in proper form or if the acceptance of or payment for
those Units may, in the opinion of the Purchaser's counsel, be unlawful or
violate the Agreement of Limited Partnership of the Partnership. The Purchaser
also reserves the absolute right to waive or amend any of the conditions of the
Offer that it is legally permitted to waive as to the tender of any particular
Units and to waive any defect or irregularity in any tender with respect to any
particular Units of any particular Unitholder. 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. No tender of Units
will be deemed to have been validly made until all defects and irregularities
have been cured or waived. None of the Purchaser, the Information Agent, the
Depositary or 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.
Backup Federal Income Tax Withholding. To prevent the possible application
-------------------------------------
of backup federal income tax withholding of 31% with respect to payment of the
Purchase Price, each tendering Unitholder must provide the Purchaser with the
Unitholder's correct taxpayer
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<PAGE>
identification number by completing the Substitute Form W-9 included in the
Letter of Transmittal. See the Instructions to the Letter of Transmittal and
Section 6.
FIRPTA Withholding. To prevent the withholding of federal income tax in an
------------------
amount equal to 10% of the amount of the Purchase Price plus Partnership
liabilities allocable to each Unit purchased, each tendering Unitholder must
complete the FIRPTA Affidavit included in the Letter of Transmittal certifying
the Unitholder's taxpayer identification number and address and that such
Unitholder is not a foreign person. See the Instructions to the Letter of
Transmittal and Section 6.
Binding Obligation. A tender of Units pursuant to and in accordance with
------------------
the procedures described in this Section 3 and the acceptance for payment of
such Units will constitute a binding agreement between the tendering Unitholder
and the Purchaser on the terms set forth in this Offer to Purchase and in the
Letter of Transmittal.
SECTION 4. WITHDRAWAL RIGHTS. Tenders of Units pursuant to the Offer are
irrevocable, except that Units tendered pursuant to the Offer may be withdrawn
at any time prior to the Expiration Date and, unless already accepted for
payment as provided in this Offer to Purchase, may also be withdrawn at any time
after February 22, 1998. For withdrawal to be effective, a written notice of
withdrawal must be timely received by the Depositary at its address set forth on
the top of the Letter of Transmittal. Any such notice of withdrawal must
specify the name of the persons 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. 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.
If payment for Units is delayed for any reason or if the Purchaser is
unable to 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 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, however, to the Purchaser's obligation, pursuant to Rule 14e-1(c) under
the Exchange Act, to pay Unitholders the Purchase Price in respect of Units
tendered or return those Units promptly after termination or withdrawal of the
Offer.
All questions as to the validity and form (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. None of the
Purchaser, the Information Agent, the Depositary or any other person will be
under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
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, validly
tendered Units, (ii) to terminate the Offer and not accept for payment any Units
not already accepted for payment or paid for, (iii) upon the occurrence of any
of the conditions specified in Section 14, to delay the acceptance for payment
of, or payment for, any Units not already accepted for payment or paid for, and
(iv) to amend the Offer in any respect
-10
<PAGE>
(including, without limitation, by increasing the consideration offered,
increasing or decreasing the number of Units being sought, or both). Notice of
any such extension, termination or amendment will be disseminated promptly to
Unitholders in a manner reasonably designed to inform Unitholders of such change
in compliance with Rule 14d-4(c) under the Exchange Act. In the case of an
extension of the Offer, the extension will be followed by a press release or
public announcement that will be issued no later than 9:00 a.m., Central
Standard time, on the next business day after the then scheduled Expiration
Date, in accordance with Rule 14e-1(d) under the Exchange Act.
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's rights under the Offer, the Depositary may
retain tendered Units and those Units may not be withdrawn except to the extent
tendering Unitholders are entitled to withdrawal rights as described in Section
4; subject, however, to the Purchaser's obligation, pursuant to Rule 14e-1(c)
under the Exchange Act, to pay Unitholders the Purchase Price in respect of
Units tendered or return those Units promptly after 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 and disseminate additional tender offer
materials to the extent required by Rules 14d-4(c) and 14d-6(d) 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 will depend upon the facts and circumstances, including the relative
materiality of the change in the terms or information. In the view of the
Securities and Exchange Commission (the "COMMISSION"), an offer should remain
open for a minimum of five business days from the date the material change is
first published, sent or given to security holders, and if material changes are
made with respect to information that approaches the significance of price or
the percentage of securities sought, a minimum of ten business days may be
required to allow for adequate dissemination to security holders and 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, Central Standard time.
SECTION 6. CERTAIN FEDERAL INCOME TAX MATTERS.
General. The following summary is a general discussion of certain of the
-------
federal income tax consequences of a sale of Units pursuant to the Offer. This
summary is based on the Internal Revenue Code of 1986, as amended (the "CODE"),
applicable Treasury regulations thereunder, administrative rulings, practice and
procedures and judicial authority, all as of the date of the Offer. All of the
foregoing are subject to change, and any such change could affect the continuing
accuracy of this summary. This summary does not discuss all aspects of federal
income taxation that may be relevant to a particular Unitholder in light of such
Unitholder's specific circumstances or to certain types of Unitholders subject
to special treatment under the federal income tax laws (for example, foreign
persons, dealers in securities, banks, insurance companies and tax-exempt
organizations), nor (except as otherwise expressly indicated) does it describe
any aspect of state, local, foreign or other tax laws. Sales of Units pursuant
to the Offer will be taxable transactions for federal income tax purposes and
also may be taxable transactions under applicable state, local,
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<PAGE>
foreign and other tax laws. EACH UNITHOLDER SHOULD CONSULT ITS OWN TAX ADVISOR
AS TO THE PARTICULAR TAX CONSEQUENCES TO SUCH UNITHOLDER OF SELLING UNITS
PURSUANT TO THE OFFER.
Gain or Loss Generally. In general, a Unitholder will recognize gain or
----------------------
loss on a sale of Units pursuant to the Offer equal to the difference between
(i) the Unitholder's "amount realized" on the sale and (ii) the Unitholder's
adjusted tax basis in the Units sold. Generally, a Unitholder's adjusted tax
basis with respect to a Unit equals its cost, increased by the amount of income
and the amount of Partnership liabilities (as determined under Code Section 752)
allocated to the Unit, and decreased by (i) any distributions made with respect
to such Unit, (ii) the amount of deductions or losses allocated to the Unit and
(iii) any decrease in the amount of Partnership liabilities (as determined under
Code Section 752) allocated to the Unit. Thus, the amount of a Unitholder's
adjusted tax basis in tendered Units will vary depending upon the Unitholder's
particular circumstances. The "amount realized" with respect to a Unit will be a
sum equal to the amount of cash received by the Unitholder for the Unit pursuant
to the Offer plus the amount of the Partnership's liabilities allocable to the
Unit (as determined under Code Section 752). Unitholders who purchased their
interests from the Partnership in the original issue of the Units are expected
to recognize taxable gain on the sale in an amount in excess of the Cash
Purchase Price.
A portion of the gain or loss recognized by a Unitholder on a sale of a
Unit pursuant to the Offer will be treated as a capital gain or loss, if (as is
generally expected to be the case) the Unit was held by the Unitholder as a
capital asset. Under the Taxpayer Relief Act of 1997, the capital gains rate
for individuals and other non-corporate taxpayers is reduced to 20% for sales of
capital assets after July 28, 1997, if such assets were held for more than 18
months. However, any gain from the sale of such assets attributable to the
recapture of depreciation with respect to real property (as defined in Code
Section 1250) is taxed at a maximum rate of 25%. The 28% rate continues to apply
to individual and noncorporate taxpayers who sell a capital asset held for more
than one year but not more than 18 months. Corporate taxpayers are taxed at a
maximum marginal rate of 35% for both capital gains and ordinary income. The
maximum marginal federal income tax rate for ordinary income of individuals and
other noncorporate taxpayers is 39.6%. Capital losses are deductible only to the
extent of capital gains, except that, subject to the passive activity loss
limitations discussed below, non-corporate taxpayers may deduct up to $3,000 of
capital losses in excess of the amount of their capital gains against ordinary
income. Excess capital losses generally can be carried forward to succeeding
years (a corporation's carry forward period is five years and a non-corporate
taxpayer can carry forward such losses indefinitely); and a corporation is
permitted to carry back excess capital losses to the three preceding taxable
years, provided the carryback does not increase or produce a net operating loss
for any of those years.
A tendering Unitholder will be allocated a pro rata share of the
Partnership's taxable income or loss for the year of sale with respect to the
Units sold in accordance with the provisions of the Agreement of Limited
Partnership of the Partnership concerning transfers of Units. Such allocation
and any cash distributed by the Partnership to the Unitholder for that year will
affect the Unitholder's adjusted tax basis in Units and, therefore, the amount
of such Unitholder's taxable gain or loss upon a sale of Units pursuant to the
Offer.
Unrealized Receivables and Certain Inventory. If any portion of the amount
--------------------------------------------
of gain realized by a Unitholder is attributable to "unrealized receivables"
(which includes depreciation recapture)
-12-
<PAGE>
or "substantially appreciated inventory" as defined in Code Section 751, then a
portion of the Unitholder's gain or loss may be ordinary rather than capital
and, in addition, a portion of such gain may be taxed at the 25% rate discussed
above. A portion, if not all, of the gain upon the sale of Units is expected to
be attributable to unrealized receivables. A Unitholder who tenders Units that
are purchased pursuant to the Offer must file an information statement with such
Unitholder's federal income tax return for the year of the sale that provides
the information specified in Treasury Regulation (S) 1.751-1(a)(3). A selling
Unitholder also must notify the Partnership of the date of the transfer and the
names, addresses and tax identification numbers of the transferor(s) and
transferee within 30 days of the date of the transfer (or, if earlier, by
January 15 of the following calendar year).
Passive Activity Loss Limitation. Under Code Section 469, a non-corporate
--------------------------------
taxpayer or personal service corporation generally can deduct "passive losses"
in any year only to the extent of the person's passive income for that year.
Closely held corporations (other than personal service corporations) may offset
such losses against active income as well as passive activity income for that
year. Substantially all post-1986 losses of Unitholders from the Partnership are
believed to be passive losses. Thus, Unitholders may have "suspended" passive
losses from the Partnership (i.e., post-1986 net taxable losses in excess of
statutorily permitted "phase-in" amounts that have not been used to offset
income from other passive activities). Substantially all gain from a sale of
Units pursuant to the Offer will be passive income.
If a Unitholder sells less than all of its Units pursuant to the Offer,
suspended passive losses can be currently deducted (subject to other applicable
limitations) to the extent of the Unitholder's passive income from the
Partnership for that year (including any gain recognized on the sale of Units)
plus any other passive income for that year. If, on the other hand, a Unitholder
sells 100% of its Units pursuant to the Offer, any "suspended" losses and any
losses recognized upon the sale of the Units will be offset first against any
other net passive gain to the Unitholder from the sale of the Units and any
other net passive activity income from other passive activity investments, and
the balance of any "suspended" net losses from the Units will no longer be
subject to the passive activity loss limitation and, therefore, will be
deductible by such Unitholder from its other income (subject to any other
applicable limitations), including ordinary income. A tendering Unitholder must
sell all of its Units to receive these tax benefits. If more than 12,000 of the
outstanding Income Units or 12,000 of the outstanding G/S Units are tendered,
some tendering Unitholders may not be able to sell 100% of their Units pursuant
to the Offer because of proration of the number of Units to be purchased by the
Purchaser. See Section 1.
Partnership Termination. Section 708(b) of the Code provides that a
-----------------------
partnership terminates for income tax purposes if there is a sale or exchange of
50% or more of the total interest in partnership capital and profits within a
twelve-month period (although successive transfers of the same interest within a
twelve-month period will be treated as a single transfer for this purpose).
Accordingly, it is possible that transfers of Units made pursuant to the Offer,
in combination with other transfers made within twelve months of the Offer, will
result in a termination of the Partnership. In the event of a termination, the
Partnership's tax year would close and the Partnership would be treated for
income tax purposes as if it had contributed all of its assets and liabilities
to a "new" partnership in exchange for an interest in the "new" partnership. The
Partnership would then be treated as making a distribution of the interests in
the "new" partnership to the new partners and the remaining partners, followed
by the liquidation of the Partnership.
-13-
<PAGE>
Because the "new" partnership would be treated as having acquired its assets on
the date of the deemed contribution, a new depreciation recovery period would
begin on such date, and the Partnership's annual depreciation deductions over
the next few years would be substantially reduced, and the Partnership would
have greater taxable income (or less tax loss) than if no tax termination
occurred. In addition, depreciation may be required to be allocated to those
Limited Partners that have a higher tax basis, such as the Purchaser. A tax
termination will not affect a Limited Partner who sells all of his Units but
will affect the taxation of a Limited Partner in respect of any Units retained
after the date of the tax termination. A tax termination of the Partnership will
also terminate any partnership in which the Partnership holds a majority
interest (50% or more).
Backup Withholding and FIRPTA Withholding. Unitholders (other than tax-
-----------------------------------------
exempt persons, corporations and certain foreign individuals) who tender Units
may be subject to 31% backup withholding unless those Unitholders provide a
taxpayer identification number ("TIN") and certify that the TIN is correct or
properly certify that they are awaiting a TIN. A Unitholder may avoid backup
withholding by properly completing and signing the Substitute Form W-9 included
as part of the Assignment of Partnership Interest. If a Unitholder who is
subject to backup withholding does not properly complete and sign the Substitute
Form W-9, the Purchaser will withhold 31% from payments to such Unitholder.
Gain recognized by a foreign Unitholder on the sale of a Unit pursuant to
the Offer will be subject to federal income tax. Under Code Section 1445, the
transferee of an interest held by a foreign person in a partnership that owns
United States real property generally is required to deduct and withhold a tax
equal to 10% of the amount realized on the disposition. In order to comply with
this requirement, the Purchaser will withhold 10% of the amount realized by a
tendering Unitholder unless the Unitholder properly completes and signs the
FIRPTA Affidavit included as part of the Letter of Transmittal, certifying the
Unitholder's TIN and address and that such Unitholder is not a foreign person.
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.
Tax Termination. In the event more than 50% of the outstanding Units are
---------------
collectively tendered to the Purchaser and any other competing bidder pursuant
to any current tender offer outstanding, the Partnership will be considered as
terminated under Code (S) 708(b)(1)(B). Such technical termination will have
the effects as described in Section 6 under the heading "Partnership
Termination."
Effect on Trading Market; Registration Under Section 12(g) of the Exchange
--------------------------------------------------------------------------
Act. If a substantial number of Units are purchased pursuant to the Offer, the
- ---
result will be a reduction in the number of Unitholders. In the case of certain
kinds of equity securities, a reduction in the number of security holders might
be expected to result in a reduction in the liquidity and volume of activity in
the trading market for the security. In this case, however, there is no
established public trading market for the Units and, therefore, the Purchaser
does not believe a reduction in the number of Unitholders will materially
further restrict the Unitholders' ability to find purchasers for their Units
through secondary market transactions.
-14-
<PAGE>
The Units are registered under Section 12(g) of the Exchange Act, which
means, among other things, that the Partnership is required to file periodic
reports with the Commission and to comply with the Commission's proxy rules.
The Purchaser does not expect or intend that consummation of the Offer will
cause the Units to cease to be registered under Section 12(g) of the Exchange
Act. If the Units were to be held by fewer than 300 investors, the Partnership
could apply to de-register the Units under the Exchange Act. Because the Units
are widely held, however, the Purchaser believes that, even if it purchases the
maximum number of Units in the Offer, after that purchase the Units will
continue to be held of record by more than 300 investors.
Control of Unitholder Voting Decisions by Purchaser; Effect of Relationship
---------------------------------------------------------------------------
with General Partner. The Agreement of Limited Partnership of the Partnership
- --------------------
provides that the General Partner has absolute discretion as to whether to admit
an assignee of Units to the Partnership as a substituted Limited Partner and
such substitution will be denied if the General Partner determines that the
federal income tax status of the Partnership will be jeopardized by the
substitution. The Purchaser will seek to be admitted to the Partnership as a
substituted Limited Partner upon consummation of the Offer and, if admitted,
will have the right to vote each Unit purchased pursuant to the Offer. The
General Partner, which is an affiliate of the Purchaser, has indicated its
intent to permit such substitution. Even if the Purchaser is not admitted to the
Partnership as a substituted Limited Partner, the Purchaser is granted the right
to vote each Unit purchased in the Offer pursuant to the tendering Unitholder's
irrevocable appointment of the Purchaser and its General Partner and designees
as proxies with respect to the Units tendered by such Unitholders and accepted
for payment by the Purchaser. See Section 3. As a result, and depending upon the
number of Units acquired by Purchaser pursuant to the Offer, the Purchaser could
be in a position to significantly influence all voting decisions with respect to
the Partnership. This could (i) prevent non-tendering Unitholders from taking
action they desire but that the Purchaser opposes and (ii) enable the Purchaser
to take action desired by the Purchaser but opposed by non-tendering
Unitholders. Under the Agreement of Limited Partnership, Limited Partners
holding a majority of the Units are entitled to take action with respect to a
variety of matters, including: removal of a general partner and, in certain
circumstances, election of new or successor general partners; dissolution of the
Partnership; the sale of all or substantially all of the assets of the
Partnership; and most types of amendments to the Agreement of Limited
Partnership of the Partnership. When voting on those and other matters, the
Purchaser (which is affiliated with the General Partner) will vote the Units
owned by it in whatever manner it deems to be in the best interests of the
Purchaser, which, because of its relationship with the General Partner, also may
be in the interest of the General Partner but may not be in the interest of
other Unitholders.
The Offer will not result in any change in the compensation payable to the
General Partner or its affiliates. However, as a result of the Offer, the
Purchaser will participate, in its capacity as a Unitholder, in any subsequent
distributions to Unitholders to the extent of the Units purchased pursuant to
the Offer.
SECTION 8. FUTURE PLANS. The Purchaser plans to hold the Units it
acquires primarily for investment purposes and with a view to making a profit.
Following the completion of the Offer, the Purchaser or persons related to or
affiliated with it, or both, may acquire additional Units. Any such acquisition
may be made through private purchases, through one or more future tender or
exchange offers or by any other means deemed advisable. Any such acquisition may
be at a price higher or lower than the price to be paid for the Units purchased
pursuant to the Offer.
-15-
<PAGE>
The General Partner has indicated that there are no current plans to
liquidate the Partnership's assets other than the possible sale or refinancing
of the Glasshouse Square Shopping Center located in San Diego, California, as
discussed in the Introduction. However, consistent with its fiduciary
obligations, the General Partner has indicated that it will seek and review
opportunities (including opportunities identified by the Purchaser) to engage in
transactions that could benefit the Partnership, such as sales or refinancings
of assets or a combination of the Partnership with one or more other entities,
with the objective of seeking to maximize returns to Unitholders.
The Purchaser has been advised that the possible future transactions the
General Partner expects to consider on behalf of the Partnership include (i)
payment of extraordinary distributions; (ii) refinancing, reducing or increasing
existing indebtedness of the Partnership; (iii) sales of assets, individually or
as part of a complete liquidation; and (iv) mergers or other consolidation
transactions involving the Partnership. Given the affiliation of the Purchaser
and the General Partner, it is likely that the Purchaser will vote its Units in
favor of any such action (or any other action) proposed and submitted to a vote
of the Limited Partners by the General Partner.
SECTION 9. CERTAIN INFORMATION CONCERNING THE PARTNERSHIP. Except as
otherwise indicated, information contained in this Section 9 is based upon
documents and reports publicly filed by the Partnership with the Commission.
Although the Purchaser has no information that any statements contained in this
Section 9 are untrue, the Purchaser cannot take responsibility for the accuracy
or completeness of any information contained in this Section 9 that is derived
from such public documents or for any failure by the Partnership to disclose
events that may have occurred and may affect the significance or accuracy of any
such information but that are unknown to the Purchaser.
General. The Partnership was organized under the laws of the State of
-------
California. Its principal executive offices are located at 2001 Ross Avenue,
Suite 4600, Dallas, Texas 75201 and its telephone number at that address is
(214) 740-2200.
The Partnership's primary business is real estate ownership and related
operations. The Partnership was formed to acquire, own, operate, improve, lease
and otherwise manage for investment purposes, existing income-producing real
properties, including apartment buildings, shopping centers, industrial
projects, office buildings and other commercial properties purchased from non-
affiliated sellers.
The Partnership's investment portfolio currently consists of The Washington
Town Apartments, a 148-unit apartment complex located in Atlanta, Georgia, the
Glasshouse Square Shopping Center, an approximately 92,839 square foot shopping
center located in San Diego, California, and a $250,000 promissory note secured
by a second lien on the Bank of San Pedro Building in Long Beach, California.
Originally Anticipated Term of Partnership; Alternatives. According to the
--------------------------------------------------------
Partnership's Prospectus dated January 6, 1978, the then general partners
(predecessors to the current General Partner) anticipated that the Partnership
would sell and/or refinance its properties three to seven years after their
acquisition, depending upon the then current real estate and money markets,
-16-
<PAGE>
economic climate and income tax consequences to the Unitholders. For a variety
of reasons, this was not done. Under the Agreement of Limited Partnership of
the Partnership, the term of the Partnership will continue until December 31,
2027, unless sooner terminated as provided in the Agreement of Limited
Partnership or by law. Unitholders could, as an alternative to tendering their
Units, take a variety of possible actions, including voting to liquidate the
Partnership or causing the Partnership to merge with another entity or engage in
a "roll-up" or similar transaction.
General Policy Regarding Sales and Refinancings of Partnership Properties.
-------------------------------------------------------------------------
In general, the General Partner regularly evaluates the Partnership's properties
by considering various factors, such as the Partnership's financial position and
real estate and capital market conditions. The General Partner monitors each
property's specific locale and sub-market conditions, evaluating current trends,
competition, new construction and economic changes. The General Partner
oversees each asset's operating performance and continuously evaluates the
physical improvement requirements. In addition, the financing structure for
each property, tax implications and the investment climate are all evaluated by
the General Partner. Any of these factors, and possibly others, could
potentially contribute to any decision of the General Partner to sell,
refinance, upgrade with capital improvements or hold a particular Partnership
property. The General Partner has advised the Purchaser that it is in the
process of preliminarily evaluating a sale or refinancing of the Glasshouse
Square Shopping Center in San Diego, California, that may generate net cash
proceeds to the Partnership; however, there can be no assurance as to whether
this sale or refinancing will occur as expected or whether it will in fact
generate net cash proceeds to the Partnership. Moreover, no determination has
been made as to whether any net cash proceeds generated by such sale or
refinancing will be distributed to Unitholders, which determination will be made
at the time of the refinancing and will be based on, among other things, the
Partnership's working capital requirements at the time. There are no other
plans to sell or refinance any other property or asset at the present time.
Selected Financial and Property-Related Data. Set forth below is a summary
--------------------------------------------
of certain financial and statistical information with respect to the Partnership
and its properties, all of which has been excerpted or derived from the
Partnership's Annual Report on Form 10-K for the year ended December 31, 1996,
and the Partnership's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997. More comprehensive financial and other information is
included in such reports and other documents filed by the Partnership with the
Commission, and the following summary is qualified in its entirety by reference
to such reports and other documents and all the financial information and
related notes contained therein.
-17-
<PAGE>
SELECTED FINANCIAL DATA
(in thousands, except per Unit data)
<TABLE>
<CAPTION>
Consolidated Statement Nine Months Ended
Of Operations September 30, Fiscal Year ended December 31,
(unaudited)
------------------------ --------------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
----------- ----------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Rental Income 1,761,944 1,604,130 $ 2,087,301 $ 2,329,859 $ 2,484,310 $ 1,946,723 $ 1,911,199
Interest Income 24,264 24,569 32,797 150,809 212,896 876,840 915,414
Other income 85.147 - 28,057 44,345 - - -
Expenses (before provision) (2,147,367) (2,427,657)
(3,063,489) (3,477,628) (3,792,909) (3,232,592) (3,442,298)
Loss on sale of note
receivable - - (350,000) - -
Loss on modification of note (530,695)
receivable - - - -
Provision for loss on note
receivable - (100,000) - - -
Loss on sale of repossessed
real estate - (121,518) - - -
Loss before extraordinary
items (915,334) (1,174,133) (1,976,398) (409,029) (884,885)
Extraordinary item - 75,000 - - -
------------ ------------ ------------ ------------ ------------
Net loss* (276,012) (798,958) $ (915,334) $(1,099,133) $(1,976,398) $ (409,029) $ (884,885)
============ ============ ============ ============ ============
Net loss* per Unit: Loss
before extraordinary items
$ (26.42) $ (33.84) $ (55.79) $ (11.75) $ (25.43)
Extraordinary item - 2.16 - - -
------------ ------------ ------------ ------------ ------------
Net loss (7.97) (23.02) $ (26.42) $ (31.68) $ (56.79) $ (11.75) $ (25.43)
============ ============ ============ ============ ============
</TABLE>
-18-
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheet September 30 (unaudited) December 31,
------------------------- ---------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------------- -------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Real estate, net 11,077,063 $11,398,265 $11,673,695 $11,799,899 $12,144,308 $10,646,914
Notes receivable, net 257,556 250,000 250,000 750,000 4,319,022 4,319.022
Total assets 12,377,838 12,670,367 13,416,272 14,666,336 17,469,314 17,172,610
Mortgage notes payable 10,708,949 10,789,414 10,674,931 9,453,587 11,778,476 11,052,490
Partners' equity 609,949 885,961 1,801,295 2,900,428 4,876,826 5,285,855
</TABLE>
____________
*Net loss per Unit is computed by dividing net loss allocated to the
Unitholders by the weighted average number of Units outstanding during the
year. Per Unit information has been computed based on 34,281, 34,301 and
34,353 Units outstanding for September 30, 1997 and for December 31, 1996
and 1995, respectively, and 34,453 Units outstanding in 1994, 1993 and
1992, respectively.
Description of Real Properties. Set forth below is a table showing
------------------------------
the location, the date of purchase, the nature of the Partnership's
ownership interest in and the use of each of the Partnership's real
properties.
<TABLE>
<CAPTION>
DATE OF TYPE OF
REAL PROPERTY PURCHASE OWNERSHIP USE
------------- -------- --------- ---
<S> <C> <C> <C>
The Washington Town 7/91 Fee ownership Residential (148 Units)
Apartments, Atlanta, GA
Glasshouse Square Shopping 12/78 Fee ownership Commercial
Center, San Diego, CA
</TABLE>
Accumulated Depreciation Schedule. Set forth on Schedule II attached
---------------------------------
hereto is a table showing the gross carrying value, accumulated
depreciation and federal tax basis of each of the Partnership's properties
as of December 31, 1996.
Schedule of Mortgages. Set forth below is a table showing certain
---------------------
information regarding the outstanding mortgages encumbering each of the
Partnership's properties as of December 31, 1996.
-19-
<PAGE>
<TABLE>
<CAPTION>
FACE CARRYING
FINAL AMOUNT AMOUNT
INTEREST MATURITY OF OF
DESCRIPTION RATE DATE MORTGAGE MORTGAGE
----------- ---- ---- -------- --------
<S> <C> <C> <C> <C>
Mortgage payable 8.625% October $1,750,000 $1,723,790
Washington Towne Apartments, 2005
secured by a first lien deed of trust
Mortgage payable on 9.5% December $7,314,713 $7,573,193
Glasshouse Square Shopping 2000
Center, secured by a first lien
deed of trust with an additional
advance note of $400,000
Mortgage payable on 11.0% September $1,492,431 $1,492,431
Glasshouse Square Shopping 2000
Center, secured by a second
lien deed of trust
</TABLE>
Other Information. The Partnership is subject to the information reporting
-----------------
requirements of the Exchange Act and, accordingly, is required to file reports
and other information with the Commission relating to its business, financial
results and other matters. Such reports and other documents may be inspected at
the Commission's Public Reference Section, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, where copies may be obtained at prescribed rates, and at
the regional offices of the Commission located in the Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, and 7 World Trade Center,
New York, New York 10048. Copies should be available by mail upon payment of the
Commission's customary charges by writing to the Commission's principal offices
at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains
a web site that contains reports, proxy and other information filed
electronically with the Commission, the address of which is http://www.sec.gov.
Cash Distributions History. The Partnership suspended cash distributions
--------------------------
in 1991 in order to make capital investments to the Partnership's properties, to
remediate very serious environmental issues with respect to the Glasshouse
Square Shopping Center and to resolve other Partnership matters. The General
Partner has advised the Purchaser that the Partnership may be in a financial
position to resume cash distributions in late 1998 or in 1999. However,
tendering Unitholders will not be entitled to receive any distributions in
respect of tendered Units that are made on or after the date on which the
Purchaser pays for such Units pursuant to the Offer, regardless of the fact that
the record date for any such distribution may be a date prior to the date of
purchase. See Section 3.
SECTION 10. CONFLICTS OF INTEREST AND TRANSACTIONS WITH AFFILIATES. The
General Partner and its affiliates have conflicts of interest with respect to
the Offer, as described below.
Conflicts of Interest with Respect to the Offer. The General Partner has
-----------------------------------------------
conflicts of interest with respect to the Offer, including conflicts resulting
from its affiliation with the Purchaser. The General Partner also would have a
conflict of interest (i) as a result of the fact that a sale or liquidation of
the Partnership's assets would result in a decrease or elimination of the fees
paid to
-20-
<PAGE>
the General Partner and/or its affiliates and (ii) as a consequence of the
Purchaser's ownership of Units, because the Purchaser may have incentives to
seek to maximize the value of its ownership of Units, which in turn may result
in a conflict for the General Partner in attempting to reconcile the interests
of the Purchaser with the interests of the other Unitholders. In addition, the
Purchaser is making the Offer with a view to making a profit. Accordingly, there
is a conflict between the desire of the Purchaser to purchase Units at a low
price and the desire of the Unitholders to sell their Units at a high price.
UNITHOLDERS ARE URGED TO READ THIS OFFER TO PURCHASE AND THE SCHEDULE 14D-1 AND
THE RELATED MATERIALS CAREFULLY AND IN THEIR ENTIRETY BEFORE DECIDING WHETHER TO
TENDER THEIR UNITS.
Voting by the Purchaser. The Agreement of Limited Partnership of the
-----------------------
Partnership provides that the General Partner has discretion as to whether to
admit an assignee of Units to the Partnership as a substituted Limited Partner
and will deny the substitution of a Limited Partner if the General Partner
determines that the tax status of the Partnership will be jeopardized by its
consent. The Purchaser will seek to be admitted to the Partnership as a
substituted Limited Partner upon consummation of the Offer and, if admitted,
will have the right to vote each Unit purchased pursuant to the Offer. The
General Partner, which is an affiliate of the Purchaser, has indicated its
intent to permit such substitution. Even if the Purchaser is not admitted to
the Partnership as a substituted Limited Partner, the Purchaser is granted the
right to vote each Unit purchased in the Offer pursuant to the tendering
Unitholder's irrevocable appointment of the Purchaser and its general partner
and designees as proxies with respect to the Units tendered by such Unitholders
and accepted for payment by the Purchaser. See Section 3. As a result, if the
Purchaser is successful in acquiring a significant number of Units pursuant to
the Offer, the Purchaser will have the right to vote those Units and thereby
significantly influence all voting decisions with respect to the Partnership.
This could (i) prevent non-tendering Unitholders from taking action they desire
but that the General Partner opposes and (ii) enable the General Partnership to
take action desired by the General Partner but opposed by non-tendering
Unitholders. Under the Agreement of Limited Partnership of the Partnership,
Limited Partners holding a majority of the Units are entitled to take action
with respect to a variety of matters, including: removal of a general partner
and, in certain circumstances, election of new or successor general partners;
dissolution of the Partnership; the sale of all or substantially all of the
assets of the Partnership; and most types of amendments to the Agreement of
Limited Partnership of the Partnership. When voting on these matters, the
Purchaser will vote its Units in whatever manner it deems to be in its best
interests, which, because of the Purchaser's relationship with the General
Partner, also may be in the interest of the General Partner but may not be in
the interest of other Unitholders. See Section 7.
Financing Arrangements. The Purchaser expects to pay for the Units it
----------------------
purchases pursuant to the Offer with funds loaned to it a lender, as described
in Section 12. In addition, it is possible that in connection with its future
financing activities, the Purchaser may pledge the Units as collateral for other
loans, or otherwise agree to terms that provide the Purchaser with incentives to
generate substantial near-term cash flow from the Purchaser's investment in the
Units. This could be the case, for example, if a loan has a "bullet" maturity
after a relatively short time or bears a high or increasing interest rate. In
such a situation, the General Partner may experience a conflict of interest in
seeking to reconcile the best interests of the Partnership with the need of its
affiliates for cash flow from the Partnership's activities.
-21-
<PAGE>
Transactions with Affiliates. Under the Agreement of Limited Partnership,
----------------------------
the General Partner holds an interest in the Partnership and is entitled to
participate in certain cash distributions made by the Partnership to its
partners. Cash distributions from the Partnership have been suspended since
1991 and, as such, the General Partner has not received any cash distributions
with respect to its interests. The Partnership reimbursed the General Partner
and its affiliates for expenses incurred in connection with asset management and
partnership administration services performed by them for the Partnership during
1996 and 1995 in the amounts of $236,246 and $243,219, respectively, and has
reimbursed them in the amount of $168,000 through September 30, 1997.
The Agreement of Limited Partnership also provides, at Section 6 thereof,
the terms of compensation payable to University Advisory Company, a California
general partnership ("UAC") for various functions including (i) a property
management fee of up to 5% of the gross rents from tenants at and from other
income from the Partnership's real properties, (ii) a general partner's interest
fee, including a fee of 8% of distributions from Operational Cash Flow, a fee
of 1% of distributions by the Partnership from certain other sources, and up to
an additional 11% of certain distributions from other sources made after
payments made to the Limited Partners of the Partnership, (iii) an investment
advisory fee of 9% of the gross proceeds on the sale of limited partnership
units, (iv) an acquisition fee of 9% of the proceeds of certain Units of the
Partnership sold in connection with the acquisition by the Partnership of real
property, and (v) a subordinated real estate commission of up to 9% of the gross
proceeds from the sale of Units allocated to certain real properties sold by
the Partnership.
The Agreement of Limited Partnership further provides that UAC, as General
Partner of the Partnership may employ persons in the operation and management of
the Partnership business or assets, including but not limited to supervisory
managing agents, contractors, engineers, appraisers, brokers and suppliers on
such terms and for such compensation as the General Partner shall determine.
SECTION 11. CERTAIN INFORMATION CONCERNING THE PURCHASER AND THE GENERAL
PARTNER.
The Purchaser and General Partner. The Purchaser is a newly-formed Texas
---------------------------------
limited partnership organized for the sole purpose of acquiring the Units. The
Purchaser has not engaged in any business activity other than in connection with
the Offer and has no significant assets or liabilities at the present time.
Upon consummation of the Offer, the Purchaser's only significant assets will be
the Units it acquires pursuant to the Offer.
UAC is the General Partner of the Partnership and a limited partner of the
Purchaser. The principal business of UAC is to act as general or limited
partner of limited partnerships formed to acquire and manage real property. UAC
currently owes 569 Income Units (approximately 1.8% of the outstanding Income
Units) and 126 G/S Units (approximately .76% of the outstanding G/S Units).
The general partner of UAC and the general partner of the Purchaser is OS
General Partner Company, a Texas corporation ("OSGP"). A 99% general partner
controlling interest in UAC was purchased by OSGP under an option and assignment
agreement in 1995 from
-22-
<PAGE>
Southmark Corporation, which was liquidating all of its assets. The principal
business of OSGP is to act as general partner of limited partnerships formed to
acquire an manage real property. Curtis Boisfontaine, Jr. ("BOISFONTAINE") is
the sole shareholder, sole director and an officer of OSGP. David K. Ronck is
also an officer of OSGP. Boisfontaine's and Ronck's principal business is the
investment in and management of real estate.
The principal executive offices of the Purchaser, UAC, OSGP, Boisfontaine
and Ronck are located at 2001 Ross Avenue, Suite 4600, Dallas, Texas 75201, and
their telephone number is (214) 740-2200. For certain additional information
concerning the officers of the Purchaser, see Schedule I to this Offer to
Purchase.
SECTION 12. SOURCE OF FUNDS. The Purchaser expects to pay for the Units
it purchases pursuant to the Offer with funds loaned to it a lender (the
"LOAN"). The Loan will be collateralized by the Units purchased and will be
repaid with interest at 10% per annum. Interest payments will be made quarterly
and the principal sum will be payable within 5 years. Repayment of the loan will
be made with proceeds from distributions to Units held by the Purchaser or other
funds which are or become available to the Purchaser. As a result, the General
Partner may experience a conflict of interest in seeking to reconcile the best
interests of the Partnership with the need of its affiliates for cash flow from
the Partnership's activities to service the Loan.
SECTION 13. BACKGROUND OF THE OFFER.
Affiliation with the General Partner. Upon the Partnership's formation in
------------------------------------
1977, UAC, a California partnership, was the corporate general partner. In
1988, through a series of transactions, Southmark Corporation acquired control
of UAC. In 1989, Southmark Corporation sought protection under Chapter 11 of
the U.S. Bankruptcy Code and upon emerging from bankruptcy, liquidated most or
its assets. In 1996, by a series of transactions through several intermediary
entities, OSGP acquired the general partnership interests in UAC.
Determination of the Purchase Price. The Purchaser has set the Purchase
-----------------------------------
Price at $60.00 per Income Unit and $2.00 per G/S Unit. In determining the
Purchase Price, the Purchaser analyzed a number of quantitative and qualitative
factors, including: (i) the lack of liquidity of an investment in the
Partnership; (ii) the Purchaser's estimate of the potential liquidation value of
the Partnership's assets; and (iii) the costs to the Purchaser associated with
acquiring the Units.
The Purchase 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 Purchase Price and no
representation is made by the Purchaser or any affiliate of the Unitholders as
to such fairness. Other measures of the value of the Units may be relevant to
Unitholders. Unitholders are urged to consider carefully all of the information
contained herein and consult with their own advisors, tax, financial or
otherwise, in evaluating the terms of the Offer before deciding whether to
tender Units.
The Purchaser is not aware of any secondary market activity in the Units
and therefore has no prevailing market prices to compare to the Purchase Price.
-23-
<PAGE>
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
Purchase Price. Nevertheless, using publicly available information concerning
the Partnership contained in the Partnership's Form 10-K for the fiscal year
ended December 31, 1996, and in its Form 10-Q for the quarter ended September
30, 1997, the Purchaser used an estimated asset value to derive an estimated
market value for the Units solely for purposes of formulating its offer.
In determining their estimated value of the Income Units, the Purchaser
first calculated the "Estimated Net Sales Value" of the Partnership's
properties. The Estimated Net Sales Value of each property was determined by
first determining the property's estimated annual net operating income ("NOI")
for 1997, using the first nine months results as a basis. The NOI was calculated
by subtracting from rental income ($1,761,944) and other income ($85,147):
property taxes ($91,872) and other property operating costs ($617,429), and
annualized, to arrive at an NOI ($1,517,053). This NOI was then divided by an
11.5% capitalization rate (the "CAP RATE") and the result reduced by (i) 3%
($395,753) to take into account the estimated closing costs that would be
incurred upon sale by the Partnership of the properties, including brokerage
commissions, title costs, surveys, appraisals, legal fees and transfer taxes,
and (ii) the $10,708,949 of mortgage debt encumbering the properties as of
September 30, 1997. The resulting aggregate Estimated Net Sales Value of the
properties was approximately $2,087,066.
The Purchaser believes that the Cap Rate utilized by it is within a range
of capitalization rates currently employed in the marketplace for an apartment
building and shopping center of the ages and quality of the Partnership's
properties. The utilization of different capitalization rates, however, could
also be appropriate. In this regard, Unitholders should be aware that the use
of a lower capitalization rate would result in a higher Estimated Net Sales
Value.
To determine the Estimated Liquidation Value of the Partnership's assets,
the Purchaser added to the Estimated Net Sales Value of the Partnership's
property the approximately $138,474 of net current assets and $24,315 of
accounts receivable and subtracted the $233,222 of accrued mortgage interest,
$100,222 of accrued property taxes and $153,719 of accounts payable and accrued
expenses, the $549,218 of subordinated real estate commissions and the $22,559
of security deposits, all as reported in the Partnership's Form 10-Q for the
quarter ended September 30, 1997. The resulting Estimated Liquidation Value of
the Partnership's assets was approximately $1,440,915, or $81.26 per Income
Unit. The Purchaser does not currently attach any current value to the G/S
Units as the Purchaser does not believe the Partnership will achieve the minimum
returns to Income Units to which the G/S Units are subordinated. The Purchaser
is offering to purchase G/S Units partly as an accommodation to the G/S
Unitholders and partly in hopes that future conditions may confer some value on
the G/S Units.
The Purchaser emphasizes that this value was calculated by it solely for
purposes of calculating the Purchase Price. There can be no assurance as to the
actual liquidation value of Partnership assets or as to the amount or timing of
distributions of liquidation proceeds that may be received by Unitholders.
Under the Agreement of Limited Partnership, the Partnership is not required
to sell its remaining properties until the earlier of the date Limited Partners
holding a majority of all classes
-24-
<PAGE>
of Units vote to liquidate the Partnership or December 31, 2027. Accordingly,
the timing of the sale of Partnership's remaining properties and resulting
liquidation of the Partnership remains uncertain and, consequently, the timing
of amounts to be received by Unitholders in respect of such sale and liquidation
(whether in excess of or less than the Estimated Liquidation Value per Income
Unit) cannot be determined.
As indicated above, the Purchase 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 Purchase
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.
SECTION 14. CONDITIONS OF THE OFFER. Notwithstanding any other term of the
Offer, the Purchaser will 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. Furthermore, notwithstanding any other term of the Offer and in
addition to the Purchaser's right to withdraw the Offer at any time before the
Expiration Date, the Purchaser will not be required to accept for payment or pay
for any Units not theretofore accepted for payment or paid for and may terminate
or amend the Offer as to such Units if, at any time on or after the date of the
Offer and before the Expiration Date, any of the following conditions exists:
(a) a preliminary or permanent injunction or other order of any federal or
state court, government or governmental authority or agency shall have
been issued and shall remain in effect which (i) makes illegal, delays
or otherwise directly or indirectly restrains or prohibits the making
of the Offer or the acceptance for payment, purchase 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
prospects 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, which might, directly or indirectly,
result in any of the consequences referred to in clauses (i) through
(v) of paragraph (a) above;
-25-
<PAGE>
(c) any change or development shall have occurred or been threatened since
the date of the Offer to Purchase in the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects of the Partnership, that is or may be materially adverse to
the Partnership, or the Purchaser shall have become aware of any fact
that 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 that 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, or imposition 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 ten 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 Section 13(d) or (g)
of the Exchange Act has increased or proposes to increase the number
of Units beneficially owned by such person or group as disclosed in
such Statement by two percent or more of the outstanding Units.
The foregoing conditions are for the sole benefit of the 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 its sole discretion. Any determination by the Purchaser
concerning the events described above will be final and binding upon all
parties.
SECTION 15. CERTAIN LEGAL MATTERS.
General. Except as set forth in this Section 15, 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
-26-
<PAGE>
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 15.
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, that are incorporated in such states or that 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 16. FEES AND EXPENSES. Except as set forth in this Section 16, the
Purchaser will not pay any fees or commissions to any broker, dealer or other
person for soliciting tenders of Units pursuant to the Offer. The Purchaser has
retained Equinet Fund Administrators, Inc. to act as Information Agent and
Wallace Sanders & Company to act as Depositary in connection with the Offer. The
Purchaser will pay the Information Agent and the Depositary reasonable and
customary compensation for their respective services in connection with the
Offer, plus reimbursement for out-of-pocket expenses, and has agreed to
indemnify the Information Agent and 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
and mailing the Offer and its legal fees and expenses.
SECTION 17. MISCELLANEOUS. The Purchaser is not aware of any jurisdiction
in which the making of the Offer is not in compliance with applicable law. If
the Purchaser becomes aware of any jurisdiction in which the making of the Offer
would not be in compliance with applicable law, the Purchaser will make a good
faith effort to comply with any such law. If, after such good faith effort, the
Purchaser cannot comply with any such law, the Offer will not be made to (nor
will tenders be accepted from or on behalf of) Unitholders residing in such
jurisdiction.
-27-
<PAGE>
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser not contained in this Offer to
Purchase or in the Letter of Transmittal, and, if given or made, such
information or representation must not be relied upon as having been authorized.
The Purchaser has filed with the Commission a Tender Offer Statement on
Schedule 14D-1, pursuant to Rule 14d-3 under the Exchange Act, furnishing
certain additional information with respect to the Offer, and may file
amendments thereto. The Schedule 14D-1 and any amendments thereto, including
exhibits, may be inspected and copies may be obtained at the same places and in
the same manner as set forth in Section 9 (except that they will not be
available at the regional offices of the Commission).
-28-
<PAGE>
SCHEDULE 1
Curtis R. Boisfontaine, JR. Mr. Boisfontaine, age 38, had been involved in the
real estate industry since 1982. From 1982-1988 he
was associated with the Dallas, Texas based
Preston Carter Company, a local property
management and investment sales firm. From 1988-
1991, he was employed by Landmark Land Company as
Executive Vice President and Director of real
estate acquisitions for Landmark Land Company's
affiliate, Oak Tree Capital, Inc. From 1991 to the
present, he has served as Chief Executive Officer
of Dallas-based Hampton Real Estate Group and as
Sole Director of Meridian Realty Advisors. Mr.
Boisfontaine is also president of OS General
Partner Company which owns both University
Advisory Company, the General Partner of
University Real Estate Partnership V, and UREPV
Acquisition, L.P.
David K. Ronck Mr. Ronck, age 38, is a Certified Public
Accountant in the State of Texas, and has been
involved in the real estate industry since 1985.
From 1985-1987 has was the Chief Financial Officer
with The Cambridge Companies, a Dallas, Texas
based real estate development and management firm.
From 1987-1989 he was employed by Bright Realty
Corporation, the real estate subsidiary of Bright
Banc Savings Association, as the Senior Vice
President of Finance. During 1989 he joined the
J.E. Robert Companies, a national real estate
consulting and workout firm, as a senior asset
manager in charge of the oversight of a Southwest
Plan savings and loan. In late 1990, Mr. Ronck
assumed the position of Chief Operating Officer of
Gordon Investment Corporation's U.S. real estate
subsidiary and held that position until joining
Meridian Realty Advisors in 1995 as Chief
Financial Officer. Mr. Ronck is Vice President of
OS General Partner Company.
<PAGE>
SCHEDULE II
<TABLE>
<CAPTION>
Costs Gross Amount at
Initial Costs Capitalized Which Carried at Close of Period
-------------------------- -------------------------------------
Related Buildings and Subsequent to Cumulative Buildings and
Description Encumbrances Land Improvements Acquisition Write-downs Land Improvements Total(s)
- ----------- ------------ ----------- ------------ ----------- ----------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Glasshouse Square
Shopping Center
San Diego, CA $ 9,065.624 $ 1,540,892 $ 11,268,742 $ 4,759,625 $(2,400,000) $ 4,731,102 $12,243,843 $16,974,936
Washington Towne
Apartments
Atlanta GA 1,723,790 524,145 931,812 840,807 - 524,145 1,918,388 2,442,533
----------- ----------- ------------ ----------- ----------- ----------- ----------- -----------
$10,789,414 $ 2,065,037 $ 12,200,554 $ 5,600,432 $(2,400,000) $ 5,255,247 $14,162,222 $19,417,469
=========== =========== ============ =========== =========== =========== =========== ===========
<CAPTION>
Accumulated
Depreciation
and Date of Date Depreciable
Description Amortization Construction Acquired lives (years)
- ----------- ------------ ------------ --------- -------------
<S> <C> <C> <C> <C>
Glasshouse Square
Shopping Center
San Diego, CA $(7,499,669 1981 12/78 3-30
Washington Towne
Apartments
Atlanta GA (519,535) 1971 07/91 3-25
-----------
$(8,019,204)
===========
</TABLE>
<PAGE>
Exhibit (a)(2)
--------------
LETTER OF TRANSMITTAL
---------------------
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD
WILL EXPIRE AT 12:00 MIDNIGHT, CENTRAL STANDARD TIME,
ON JANUARY 21,1998 (the "Expiration Date") UNLESS EXTENDED.
Deliver to: Wallace Sanders & Co.
8131 LBJ Freeway, Suite 875
Dallas, Texas 75251
Via Facsimile: (214) 669-3462
For assistance: (800) 648-1336
(PLEASE INDICATE CHANGES OR CORRECTIONS
TO THE ADDRESS )
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.
IF YOU HAVE RECENTLY TENDERED UNITS TO A COMPETING BIDDER AND WOULD LIKE
INSTEAD TO PARTICIPATE IN THIS OFFER, YOU MUST COMPLETE BOXES (A) THROUGH (E)
AND DELIVER THE LETTER OF TRANSMITTAL IMMEDIATELY BY FACSIMILE TO THE DEPOSITARY
AT (214) 669-3462.
This Letter of Transmittal is to be completed by Unitholders of University
Real Estate Partnership V (the "Partnership"), pursuant to the procedures set
forth in the Offer to Purchase (as defined below). Capitalized terms used
herein that are defined in the Offer to Purchase and not otherwise defined in
this Letter of Transmittal have the meanings ascribed to such terms in the Offer
to Purchase.
PLEASE CAREFULLY READ THE ACCOMPANYING INSTRUCTIONS
Gentlemen:
The undersigned hereby tenders to UREPV ACQUISITION, L.P. (the "Purchaser")
all of the limited partnership Income Units and Growth/Shelter Units
(collectively with the Income Units, the "Units") in the Partnership held by the
undersigned as set forth in this Letter of Transmittal or, if less than all such
Units, the number set forth below in the signature box, at $60.00 per Income
Unit and $2.00 per Growth/Shelter Unit (the "Offer Price"), upon the other terms
and subject to the conditions set forth in the Offer to Purchase, dated December
22, 1997 (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 12,000 Units of a class 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
the Units of such class tendered prior to or on the Expiration Date, 12,000
Units of such class on a pro rata basis, based upon the number of Units of the
class validly tendered prior to the Expiration Date and not withdrawn, with
appropriate adjustments to avoid purchases of certain fractional Units and in
accordance with the minimum holding requirements of Section 8 of the Agreement
of Limited Partnership of the Partnership.
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 that are purchased pursuant to the Offer. The undersigned hereby
irrevocably constitutes and appoints the Purchaser and its general partner and
designees as the true and lawful agent and attorney-in-fact and proxy of the
undersigned with respect to such Units, with full power of substitution (such
power of attorney and proxy being deemed to be an irrevocable power and proxy
coupled with an interest), to deliver such Units and transfer ownership of such
Units, on the books of the Partnership, together with all accompanying evidences
of transfer and authenticity, to or upon the order of the Purchaser and, upon
payment of the Offer Price in respect of such Units by the Purchaser, to
exercise all voting rights and to receive all benefits and otherwise exercise
all rights of beneficial ownership of such Units all in accordance with the
terms of the Offer. Subject to and effective upon the purchase of any Units
tendered hereby, the undersigned hereby requests that the Purchaser be admitted
to the Partnership as a substitute Limited Partner under the terms of the
Agreement of Limited Partnership 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 that are purchased pursuant to the Offer, other than
distributions declared or paid on or after December 22, 1997 (the "Offer Date")
and through the Expiration Date. Upon request, the undersigned will execute and
deliver, and irrevocably directs any custodian to execute and deliver, any
additional documents deemed by the Purchaser to be necessary or desirable to
complete the assignment, transfer, and purchase of such Units and the
substitution of the Purchaser as a Limited Partner in respect of such Units.
The undersigned hereby represents and warrants that the undersigned owns
the Units tendered hereby within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended, and has full power and authority to validly
tender, sell, assign, and transfer the Units tendered hereby, and that when any
such Units are purchased by the Purchaser, the Purchaser will acquire good,
marketable, and unencumbered title thereto, free and clear of all liens,
restrictions, charges, encumbrances, conditional sales agreements and other
obligations relating to the sale or transfer thereof, and such Units will not be
subject to any adverse claim.
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 such Units 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.
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
SIGNATURE BOX
(Please complete Boxes A, B, C, D, and E on the following page as necessary)
====================================================================================================================================
<S> <C>
Please sign exactly as your name is printed (or
corrected) above, and insert your Taxpayer X________________________________________________________________
Identification Number (Federal Employer (Signature of Owner) (Date)
Identification Number or Social Security Number)
in the space provided below your signature. For
joint owners, each joint owner must sign. (See X________________________________________________________________
Instruction 1.) The signatory hereto hereby (Signature of Owner) (Date)
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.
====================================================================================================================================
Indicate number of Units tendered; otherwise, all
Units held by the undersigned are tendered hereby. Taxpayer Identification No. ("TIN") _____________________________
__________ Income Units Telephone No.____________________________________________________
__________ Growth/Shelter Units (day) (eve.)
====================================================================================================================================
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. See Instruction 1.
Name and Capacity___________________________________________________________________________________________________________
Address_____________________________________________________________________________________________________________________
Area Code and Telephone No._________________________________________________________________________________________________
====================================================================================================================================
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 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 as a 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 the
Partnership's gross assets consists of U.S. real property interests and 90% or more of the value of the partnership's 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 collected gains from transactions
with a broker or barter exchange.
====================================================================================================================================
BOX E
NOTICE OF WITHDRAWAL
====================================================================================================================================
The undersigned hereby withdraws all Units of Limited Partnership Interests in University Real Estate Partnership V previously
tendered to any bidder other than the Purchaser. (Please sign exactly as you signed the tender form sent to any such other
bidder.)
_________________________________
(Signature)
====================================================================================================================================
</TABLE>
<PAGE>
LETTER OF TRANSMITTAL
INSTRUCTIONS
------------
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Tender, Signature Requirements, Delivery. In order to tender Units, a
----------------------------------------
Unitholder must sign at the "X" in the Signature Box of the Letter of
Transmittal and insert the Unitholder's correct Taxpayer Identification
Number (Federal Employer Identification 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 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 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
--------------
fees and taxes if any, payable in respect of Units accepted for payment
pursuant to the Offer.
3. U.S. Persons. A Unitholder who or that 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 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 that is a
United States Person (as defined in 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)
648-1336.
<PAGE>
Exhibit (a)(3)
--------------
December 22, 1997
Re: Offer to Purchase Income and Growth Shelter Units of University Real
Estate Partnership V (the "Partnership")
Dear Unitholder:
UREPV Acquisition, L.P., a newly-formed Texas limited partnership (the
"Purchaser") that is an affiliate of the General Partner of the Partnership, is
offering to purchase up to a maximum of 12,000 Income Units in the Partnership
for $60.00 per unit and up to a maximum of 12,000 Growth/Shelter Units in the
Partnership for $2.00 per unit (the Income Units and Growth/Shelter Units are
collectively referred to as the "Units").
A formal Offer to Purchase (the "Offer") and a Letter of Transmittal are
enclosed which provide detailed information about the Offer and the manner in
which Unitholders may accept the Offer and tender their Units. The Offer will
expire on January 21, 1998, at 12:00 midnight, Central Standard Time;
accordingly, we encourage any Unitholder to review our Offer and act promptly.
Unitholders whose tender of Units is accepted will give up the opportunity to
participate in any future benefits of the ownership of those Units, including
potential future distributions by the Partnership. Unitholders who have their
Units purchased pursuant to this Offer will terminate their investment in the
Partnership in 1998 and will receive their last K-1 for the Partnership in 1998.
The purchase price per Unit payable to a tendering Unitholder by the
Purchaser may be less than the total amount that might otherwise be received by
the Unitholder with respect to the Unit over the remaining term of the
Partnership. The Purchaser is making the Offer in response to tender offers
recently made by other bidders, to provide liquidity to Unitholders and for
investment purposes. In establishing the purchase price of $60.00 per Income
Unit and $2.00 per Growth/Shelter Unit, the Purchaser is motivated to establish
a price that might be acceptable to Unitholders consistent with the Purchaser's
objectives.
IN THE EVENT A UNITHOLDER HAS TENDERED UNITS TO ONE OF THE OTHER BIDDERS
------------------------------------------------------------------------
AND NOW DESIRES TO PARTICIPATE IN THIS OFFER INSTEAD, THE UNITHOLDER MUST
- -------------------------------------------------------------------------
WITHDRAW THE TENDERED UNITS FROM THE OTHER BIDDER BY THE EXPIRATION DATE OF THE
- -------------------------------------------------------------------------------
TENDER OFFER OF THAT OTHER BIDDER, WHICH IS CURRENTLY DECEMBER 31, 1997, FOR THE
- --------------------------------------------------------------------------------
MACKENZIE BIDDERS OFFER, JANUARY 8, 1998, FOR THE EVEREST OFFER AND DECEMBER 31,
- --------------------------------------------------------------------------------
1997, FOR THE BOND OFFER. IT IS POSSIBLE THAT THE EXPIRATION DATES MAY BE
- --------------------------------------------------------------------------
EXTENDED BY ONE OR MORE OF THE OTHER BIDDERS. THE PURCHASER WILL ARRANGE FOR
- -----------------------------------------------------------------------------
SUCH WITHDRAWAL IF THE UNITHOLDER COMPLETES AND DELIVERS TO THE DEPOSITARY (BY
- -------------------------------------------------------------------------------
FACSIMILE, HAND DELIVERY OR MAIL) A COMPLETED LETTER OF TRANSMITTAL SUFFICIENTLY
- --------------------------------------------------------------------------------
IN ADVANCE OF THE RELEVANT EXPIRATION DATE TO PERMIT IT TO FORWARD THE
- ----------------------------------------------------------------------
WITHDRAWAL TO THE OTHER BIDDER BY ITS EXPIRATION DATE.
- -----------------------------------------------------
The original investors in University Real Estate Partnership V have not yet
received a return of their original invested capital and, if the Purchaser is
correct in its analysis of the remaining value of the assets, Unitholders are
not likely to receive distributions in the future that will result in
<PAGE>
a 100% return of capital. Many Unitholders have expressed a desire to terminate
their investment prior to liquidation of the Partnership itself for the
following reasons:
- No formal trading market for the Units
- Unpredictable cash flow that leads to unpredictable distributions from
the Partnership
- Lack of regular distributions due to the use of cash flow for property
improvements and Partnership administration
- General disenchantment with real estate investments, particularly when
the investment is in the form of an illiquid, long-term limited partnership
interest
- A more immediate use for cash
- Administrative burdens -- both time-consuming record keeping as well as
out-of-pocket expenses -- associated with owning the Units, including
complex tax work, that may not be justified by the size of a Unitholder's
investment.
This is an opportunity to sell all of your Units in the Partnership at a
net cash of $60.00 per Income Unit and $2.00 per Growth/Shelter Unit. There
will be no commissions or transfer fees associated with the sale. Unitholders
who desire liquidity now for whatever reason should carefully consider tendering
their Units to the Purchaser in conjunction with this Offer. If you wish to
sell all or a portion of your Units pursuant to this Offer please complete the
enclosed Letter of Transmittal for all of your Units and return it in the
postage paid envelope. In the event you have recently tendered your Units to a
competing bidder, but have yet to receive payment for the Units, you may be able
to withdraw your prior tender and retender your Units under this Offer.
Specific instructions for withdrawing Units from a recent competing tender offer
can be found in the enclosed Letter of Transmittal.
If you have any questions, please call Equinet Fund Administrators, Inc.,
our information agent at (800) 648-1336.
We thank you for your prompt attention to this matter.
Very truly yours,
UREPV Acquisition, L.P.
By:______________________________
