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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
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NATIONAL PROPERTY INVESTORS 4
(Name of Subject Company)
NATIONAL PROPERTY INVESTORS 4
(Name of Person Filing Statement)
LIMITED PARTNERSHIP UNITS
(Title of Class of Securities)
N/A
(CUSIP Number of Class of Securities)
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WILLIAM H. JARRARD, JR.
President
NPI Equity Investments, Inc.
One Insignia Financial Plaza
Greenville, South Carolina 29602
(864) 239-2854
(Name, Address, and Telephone Number of Person
Authorized to Receive Notices and Communications
on Behalf of the Person(s) filing Statement)
Copy to:
ARNOLD S. JACOBS, ESQ.
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
(212) 969-3210
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject partnership is National Property
Investors 4, a California limited partnership (the "Partnership"), and the
address of its principal executive offices is One Insignia Financial Plaza,
Greenville, South Carolina 29602. The title of the class of equity securities
to which this statement relates is the Partnership's Limited Partnership Units
("Units").
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to an offer by IPLP Acquisition I
LLC, a Delaware limited liability company (the "Purchaser"), Insignia
Properties L.P., a Delaware limited partnership ("IPLP"), Insignia Properties
Trust, a Maryland real estate investment trust ("IPT"), and Insignia Financial
Group, Inc., a Delaware corporation ("Insignia" and, together with IPLP, IPT
and the Purchaser, the "Bidders"), disclosed in a Tender Offer Statement on
Schedule 14D-1 dated August 28, 1997 (the "Schedule 14D-1"), to purchase up to
16,000 outstanding Units at a purchase price of $180 per Unit, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated August 28, 1997, (the "Offer to Purchase") and the
related Assignment of Partnership Interest (which collectively constitute the
"Offer" and are contained within the Schedule 14D-1).
The address of the Purchaser's principal executive offices
is One Insignia Financial Plaza, Greenville, South Carolina 29602.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Partnership, which
is the person filing this statement, are set forth in Item 1 above.
(b)(i) The Partnership's sole general partner is NPI Equity
Investments, Inc., a Florida corporation (the "General Partner") and an
affiliate of the Bidders.
Prior to December 1996, the General Partner was a
wholly-owned subsidiary of National Property Investors, Inc. ("NPI"). In
January 1996, IFGP Corporation, which is a wholly-owned subsidiary of
Insignia, acquired all of the outstanding stock of NPI (and thus all of the
outstanding stock of the General Partner). In December 1996, as part of the
formation of IPT, Insignia caused NPI to contribute all of the outstanding
stock of the General Partner to IPT. As a result, the General Partner is now a
wholly-owned subsidiary of, and controlled by IPT. NPI-AP, which is the
property manager for the Partnership's properties, is currently an indirect,
wholly-owned subsidiary of Insignia. Insignia acquired NPI-AP in mid-January
1996 in connection with its acquisition of NPI and the General Partner.
The Purchaser is a newly-formed, wholly-owned subsidiary of
IPLP, which is the operating partnership of IPT. IPT is the sole general
partner of IPLP (owning approximately 68% of the total equity interests of
IPLP), and Insignia Financial Group, Inc., a Delaware corporation
("Insignia"), is the sole limited partner of IPLP (owning approximately 32% of
the total equity interests of IPLP). Insignia and its affiliates also own
approximately 70% of the outstanding common shares of IPT. NPI-AP Management,
L.L.C. ("NPIAP"), which since mid-January 1996 has been an affiliate of
Insignia and is an affiliate of IPT and the Purchaser, provides property
management services to the Partnership, and since mid-January 1996 Insignia
(directly or through affiliates) has performed asset management and
partnership administration services for the Partnership. By reason of these
relationships, the General Partner has conflicts of interest in considering
the Offer.
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Between October 1994 and June 1995, DeForest Ventures II,
L.P. ("DeForest") acquired approximately 32,400 (or approximately 54%) of the
outstanding Units, at a purchase price of $107.05 per Unit, pursuant to a
series of tender offers (the "DeForest Tender Offers"). At the time, DeForest
was affiliated with the General Partner but was not an affiliate of the
Purchaser, IPT or Insignia. As a result of a series of transactions that
occurred in connection with the transactions described in the previous two
paragraphs and the formation of IPT, IPLP now owns all of those Units.
The Partnership, the General Partner and NPI-AP (which is
the property manager for the Partnership) were not affiliates of Insignia
prior to mid-January 1996. Accordingly, the following only discusses
transactions between the Partnership, on the one hand, and Insignia and its
affiliates (including the General Partner and NPI-AP) on the other hand, which
have occurred since mid-January 1996.
Under the Limited Partnership Agreement, 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. The General
Partner has received from the Partnership in respect of its interest in the
Partnership a cash distribution of $10,000 to date in 1997. The Partnership
paid NPI-AP property management fees for property management services in the
aggregate amounts of $311,000 for the year ended December 31, 1996 and
$158,000 for the six-month period ended June 30, 1997. Insignia and its
affiliates do not receive any fees from the Partnership for the asset
management or partnership administration services they provide, although,
pursuant to the Limited Partnership Agreement, the General Partner and its
affiliates are reimbursed by the Partnership for the expenses they incur in
connection with providing those services. 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 in the amounts of $147,000 for the year ended December 31,
1996 and $67,000 during the first six months of 1997. The Limited Partnership
Agreement also provides for a non-accountable expense reimbursement to the
General Partner of up to $100,000 per year for its services relating to the
administration and operation of the Partnership property. The General Partner
was paid $100,000 in 1997 pursuant to this provision. During 1996, an
affiliate of the General Partner was paid $195,000 in connection with a
refinancing of the Partnership's property. Since January 19, 1996, the
Partnership has insured its property under a master policy through an agency
and insurer unaffiliated with the General Partner. An affiliate of the General
Partner acquired, in the acquisition of a business, certain financial
obligations from an insurance agency which was later acquired by the agent who
placed the current year's master policy. The current agent assumed the
financial obligations to the affiliate of the General Partner who receives
payments on these obligations from the agent. Insignia and the General Partner
believe that the aggregate financial benefit derived by Insignia and its
affiliates from the arrangement described in the three preceding sentences has
been immaterial.
The Purchaser and the General Partner are affiliates of and
controlled by IPT, which is controlled by Insignia. 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 (which is an affiliate of the General
Partner) 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 (which is an affiliate
of the General Partner) with the interests of the other Limited Partners.
The Purchaser (which is an affiliate of the General Partner)
expects to pay for the Units it purchases pursuant to the Offer with funds
provided by IPLP as capital contributions. IPLP in turn intends to use its
cash on hand to make such contributions. It is possible, however, that in
connection with its future financing activities, IPT or IPLP may cause or
request the Purchaser (which is an affiliate of the General
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Partner) to pledge the Units as collateral for loans, or otherwise agree to
terms which provide IPT, IPLP and 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.
IPT already owns (through IPLP) approximately 54% of the
outstanding Units and, therefore, is able to control the outcome of almost all
voting decisions with respect to the Partnership, including decisions
concerning liquidation, amendments to the Limited Partnership Agreement,
removal and replacement of the General Partner and mergers, consolidations and
other extraordinary transactions not involving a "roll-up." This means that
(i) non-tendering Limited Partners could be prevented from taking action they
desire but that IPT (which is an affiliate of the General Partner) opposes and
(ii) IPT (which is an affiliate of the General Partner) may be able to take
action desired by IPT but opposed by the nontendering Limited Partners.
Under the Limited Partnership Agreement, 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 Limited Partnership
Agreement. However, under the Limited Partnership Agreement, the Partnership
may not enter into a "roll-up" transaction prior to January 1, 2000 unless
Limited Partners holding at least 80% of the outstanding Units approve such
transaction, and even if the Purchaser is successful in acquiring the maximum
number of Units it is seeking pursuant to the Offer, IPT will own less than
80% of the outstanding Units and thus will not by itself be able to control
the outcome of a vote with respect to a "roll-up" transaction prior to January
1, 2001. When voting on those and other matters, IPLP and the Purchaser (which
are affiliates of the General Partner) will vote the Units owned by them in
whatever manner they deem to be in the best interests of IPT, which, because
of their relationship with the General Partner, also may be in the interest of
the General Partner, but may not be in the interest of other Limited Partners.
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 (which is an affiliate of the General Partner) will
participate, in its capacity as a Limited Partner, in any subsequent
distributions to Limited Partners to the extent of the Units purchased
pursuant to the Offer.
(b)(ii) To the best knowledge of the General Partner, except
as described in this Schedule 14D-9, there are no other material agreements,
arrangements, understandings or any actual or potential conflicts of interest
between the Partnership, the General Partner and their affiliates and the
Bidders, their executive officers, directors or affiliates.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
Because of the existing and potential future conflicts of
interest described in Item 3 above, the Partnership and the General Partner
are remaining neutral and making no recommendation as to whether Unit holders
should tender their Units in response to the Offer.
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ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Neither the Partnership nor any person acting on its behalf
has employed, retained or compensated, or intends to employ, retain or
compensate, any person or class of persons to make solicitations or
recommendations to Unit holders on its behalf concerning the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Except as set forth on Schedule I attached hereto, no
transactions in the Units have been effected during the past 60 days by the
Partnership or the General Partner or, to the knowledge of the General
Partner, by any of its current or former executive officers, directors or
affiliates.
(b) To the knowledge of the Partnership, neither the General
Partner nor any of its current or former executive officers, directors or
affiliates intends to tender pursuant to the Offer any Units beneficially
owned by them.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
None.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
None.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a) Form of cover letter to Unit holders from the
Partnership dated August 28, 1997.
(b) None.
(c) None.
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SCHEDULE I
TRANSACTIONS IN THE UNITS
EFFECTED BY IPLP WITHIN THE PAST 60 DAYS
Number of Price
Date Units Purchased Per Unit
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07/09/97 14 $207.86
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: August 28, 1997
NATIONAL PROPERTY INVESTORS 4
By: Its managing general partner, NPI
Equity Investments, Inc., a California
corporation
By: /s/ William H. Jarrard, Jr.
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William H. Jarrard, Jr.
President
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EXHIBIT INDEX
Exhibit Description
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(a) Form of cover letter to Unit holders from the
Partnership dated August 28, 1997.
(b) None.
(c) None.
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Exhibit (a)
NATIONAL PROPERTY INVESTORS 4
August 28, 1997
Dear Limited Partner:
Enclosed is the Schedule 14D-9 which was filed by National
Property Investors 4 (the "Partnership") with the Securities and Exchange
Commission in connection with an offer (the "Offer") by IPLP Acquisition I
LLC, a Delaware limited liability company (the "Purchaser"), Insignia
Properties, L.P., a Delaware limited partnership ("IPLP"), Insignia Properties
Trust, a Maryland real estate investment trust ("IPT") and Insignia Financial
Group, Inc., a Delaware corporation ("Insignia," and together with IPLP, IPT
and the Purchaser, the "Bidders"), to purchase limited partnership units
("Units") of the Partnership.
The Partnership's sole general partner (the "General
Partner") is NPI Equity Investments, Inc., a Florida corporation and an
affiliate of the Bidders. Due to the affiliation between the General Partner
of the Partnership and the Bidders, the General Partner is subject to certain
conflicts of interest in connection with the response to the Offer.
UNIT HOLDERS SHOULD TENDER THEIR UNITS IN RESPONSE TO THE
OFFER AS A RESULT OF THE EXISTING AND POTENTIAL CONFLICTS OF INTEREST, NEITHER
THE PARTNERSHIP NOR THE GENERAL PARTNER EXPRESSES ANY OPINION AS TO THE OFFER
AND EACH IS REMAINING NEUTRAL AND MAKING NO RECOMMENDATION AS TO WHETHER UNIT
HOLDERS SHOULD TENDER THEIR UNITS IN RESPONSE TO THE OFFER.
Limited partners are advised to carefully read the enclosed
Schedule 14D-9.
National Property Investors 4
