SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement [ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
............................Real Estate Associates Limited.II..................
(Name of registrant as specified in its charter)
...............................................................................
(Name of person(s) filing proxy statement if other than the registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
...................................................................
2) Aggregate number of securities to which transaction applies:
...................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
...................................................................
4) Proposed maximum aggregate value of transaction:
...................................................................
5) Total fee paid:
...................................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11-(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------
2) Form, Schedule or Registration Statement No:
---------------------------
3) Filing Party:
-----------------------------------------------------------
4) Date Filed:
-------------------------------------------------------------
758963.1
REAL ESTATE ASSOCIATES LIMITED II
9090 WILSHIRE BOULEVARD
BEVERLY HILLS, CALIFORNIA 90211
September 29, 1998
Dear Limited Partner:
The consent solicitation period for the proposed sale of the interests of the
Partnership in certain real estate properties, which was originally scheduled to
expire September 10, 1998, has been extended until October 15, 1998 to provide
sufficient time for more Limited Partners to vote. To date we have not received
your vote. The Managing General Partner believes that the Sale is in your best
interests and it is important that you vote as soon as possible.
For your convenience, we have enclosed a duplicate consent form. To be sure your
vote is represented, please sign, date and return this card as promptly as
possible. The proposed sale is described in the previously provided Consent
Solicitation Statement.
The Managing General Partner recommends the proposed sale for the following
reasons:
o Each of the seven properties to be included in the proposed sale are
subject to Housing Assistance Payments Contracts under Section 8 of the
United States Housing Act. Most of these contracts will expire by the
end of 2002. Under recently passed legislation, it is expected that
they will be renewed on significantly less favorable terms, resulting
in significantly reduced cash flow.
o Under this recently passed legislation, it is expected that the
property mortgages will be restructured, which could result in
significant adverse tax consequences to the Limited Partners, including
the cancellation of debt, which is taxed as ordinary income under the
Internal Revenue Code.
o The Managing General Partner expects the combination of reduced HAP
Contract payments and the restructuring of the mortgage loans will
result in a significant reduction in the cash flow generated by the
properties.
o The Managing General Partner believes that by approving the proposed
sale as soon as possible, the Limited Partners may reduce their tax
exposure with respect to the properties to be included in such sale. If
the proposed sale is not approved and the properties are instead
disposed of at a later date, there is a significant risk that the
Limited Partners will bear a greater tax burden.
761894.1
<PAGE>
o The Managing General Partner believes, in light of this recently passed
legislation, that there is currently no market for the properties
subject to HAP Contracts. Accordingly, it is unlikely that the
Partnership would be able to obtain a cash purchase price from a third
party that will enable Limited Partners to pay a portion of the taxes
that will be payable upon disposition.
o The properties to be included in the sale do not produce significant
cash flow from operations and the Partnership has not made any
distributions to date. The Partnership has substantially fulfilled its
original objective of providing tax benefits to the Limited Partners.
o The Partnership's investments in the properties were initially
structured primarily to obtain tax benefits and not to provide cash
distributions. Most Limited Partners no longer realize any material tax
benefits from continuing to hold their interests in the Partnerships.
o The Managing General Partner believes that the purchase price for the
properties is fair to the Limited Partners. In addition, the per unit
amounts to be distributed to the Limited Partners will be sufficient to
pay a portion of the federal and state taxes that will be due in
connection with such sale (based on the assumptions set forth in the
Consent Solicitation Statement).
Each of the points above is addressed more completely in the Consent
Solicitation Statement previously sent to you.
Your vote is important. Because approval of the proposed sale requires
the affirmative vote of a majority-in-interest of the outstanding units of
limited partnership interest, failure to vote will have the same effect as a
vote against the sale.
PLEASE RETURN YOUR SIGNED CONSENT FORM EITHER BY FACSIMILE TO
310-275-3640, OR IN THE ENCLOSED ENVELOPE BEFORE OCTOBER 15, 1998.
Limited Partners should also be aware of the following additional
developments:
The Managing General Partner has determined that one of the eight
properties originally contemplated to be included in the proposed sale, Westward
Ho Apartments, will no longer be included in the transaction. As a result of the
removal of the Westward Ho Apartments property, the long term capital gain
payable by the Limited Partners will be reduced from approximately $7,756 per
unit to $5,851 per unit. In connection therewith, the aggregate distribution to
Limited Partners will be reduced from $6,930,000 to $5,692,500 and the proposed
per unit distribution amount will be reduced from $1,296 to $1,065. The
exclusion of the Westward Ho Apartments property will have the effect of
reducing the net tax cost in excess of the cash distribution to Limited Partners
from approximately $1,031 per unit
761894.1
<PAGE>
to $690 per unit. Accordingly, the Limited Partners will benefit from the
removal of the Westward Ho Apartments property from the transaction despite the
reduction in the aggregate purchase price.
Robert A. Stanger & Co., Inc. has been advised that the Westward Ho
Apartments property will no longer be included in the sale and that, as a
result, the Aggregate Property Valuation referred to in the Consent Solicitation
Statement will be reduced to $54,675,841. Stanger has advised the Partnership
that the exclusion of such property from the proposed sale has no impact on its
opinion as to the fairness of the Aggregate Property Valuation of the other
properties to be included in the sale. Stanger has not updated, and has no
obligation to update, its fairness opinion for any subsequent events or changes
in market conditions.
On August 3, 1998, Bond Purchase L.L.C. offered to purchase up to 350
of the outstanding units of limited partnership for a purchase price of $353 per
unit, which is significantly less than the $1,296 per unit amount to be
distributed if the proposed sale is approved.
On August 27, 1998, two investors holding an aggregate of eight units
of limited partnership in Real Estate Associates Limited III (a NAPICO
Partnership) and two investors holding an aggregate of five units of limited
partnership interest in Real Estate Associates Limited VI (also a NAPICO
Partnership) commenced an action in the United States District Court for the
Central District of California against NAPICO, National Partnership Investments
Associates, National Partnership Investment Associates II, Alan I. Casden, Henry
C. Casden, Charles H. Boxenbaum, Bruce E. Nelson and seven NAPICO Partnerships,
including the Partnership. The complaint alleges that the defendants breached
their fiduciary duty to the limited partners of such NAPICO Partnerships and
made materially false and misleading statements in the consent solicitation
statements sent to the limited partners of such partnerships. The plaintiffs
seek preliminary and permanent injunctive relief and other equitable relief, as
well as compensatory and punitive damages. The Managing General Partner and the
other defendants believe that the plaintiffs' claims are totally without merit
and intend to contest the action vigorously.
PLEASE RETURN YOUR SIGNED CONSENT FORM TODAY. YOUR VOTE
IS IMPORTANT. PLEASE DO NOT DELAY.
If you have any questions, or if you would like to request an
additional copy of the Consent Solicitation Statement, please do not hesitate to
contact MacKenzie Partners, the Partnership's consent solicitation agent, toll
free at 800-322-2885 or collect at 212-929-5500.
Very truly yours,
National Partnership Investments Corp.
761894.1
