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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): May 10, 1999
REAL ESTATE ASSOCIATES LIMITED III
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(Exact name of Registrant as specified in charter)
California 2-66171 95-3547609
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
9090 Wilshire Boulevard
Suite 201
Beverly Hills, California 90211
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Address of Principal Executive Offices
Registrant's telephone number, including area code: 310/278-2191
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ITEM 5. OTHER EVENTS.
The Registrant recently became aware through several of its limited
partners that an entity identified as McDowell Foods, Inc. was apparently
conducting a tender offer for units in the Registrant pursuant to an "Offer to
Purchase Limited Partnership Interests for $77.00" dated May 10, 1999.
Registrant has no further information about this "Offer to Purchase" or McDowell
Foods, Inc. The Registrant's general partners, on behalf of the Registrants
advised the limited partners by letter dated May 17, 1999 to consult with their
tax advisors about the tax consequences that could result from a sale of their
units. Copies of the "Offer to Purchase" and the Registrant's letter are
attached hereto as exhibits.
EXHIBITS
The following exhibits are attached to this Current Report and thereby made
a part thereof:
1. Copy of the "Offer to Purchase" documents dated May 10, 1999 as received
from Registrant's limited partners.
2. Copy of Registrant's letter dated May 17, 1999 to its limited partners.
Page 2 of 3
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
DATED: June 18, 1999
REAL ESTATE ASSOCIATES LIMITED III
A CALIFORNIA LIMITED PARTNERSHIP
BY: NATIONAL PARTNERSHIP INVESTMENTS CORP.,
A CALIFORNIA CORPORATION,
ITS GENERAL PARTNER
BY: /s/ Bruce E. Nelson
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ITS: President
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MCDOWELL FOODS, INC.
P.O. Box 38003
Pittsburgh, PA 15238
412-967-9890
May 10, 1999
To the Holders of Limited Partnership Interest in REAL ESTATE ASSOCIATES LTD III
RE: Offer to Purchase Limited Partnership Interests For $77.00
Dear Investor:
We are offering you an opportunity to sell your limited partnership interests
(the "Units") in Real Estate Associates Ltd III (the "Partnership") for cash in
the amount of $77.00 per Unit (which amount will be reduced by any cash
distributions declared or paid by the Partnership after the date of this
letter). Our offer provides you with an opportunity to sell you Units NOW
without the commission costs (typically up to 10%) usually paid by the seller
in secondary market sales. All transfer costs and fees will be a reduction of
your sales proceeds.
In December 1998 this partnership sold a majority (19 of 32) of the local
partnership interests and you should have received a distribution of $1,201 per
unit. By SELLING you will be able to close out this long-term investment.
We believe that it is appropriate for investors to have financial choices. Our
offer gives you, the investor, the ability to make a decision about your
continued involvement with the Partnership. Please consider the following
points in evaluating our offer:
1. SIMPLIFIED TAX FILING. If you sell all your units to us, 1999 will be the
final year for which you will be obligated to file a K-1 for the
Partnership, with your tax return.
2. POTENTIAL TAX BENEFITS FROM THE SALES OF YOUR UNITS. You may be able to
realize a tax loss that would reduce your taxes for 1999.
3. ABILITY TO REDEPLOY SALE PROCEEDS INTO OTHER INVESTMENTS. The decision to
sell your Units for cash now would provide you with the ability to redeploy
your investment assets into potentially stronger and liquid investments.
Our offer is limited to purchasing a maximum of 560 of the 11,456 outstanding
Limited Partner Units. Acquiring more than the maximum number of shares would
cause administrative cost to become burdensome.
You will be paid promptly following confirmation of a valid, properly executed
Agreement of Transfer and other required transfer documents. All tenders of
Units will be irrevocable after we notify you in writing we accept your units
and may not be rescinded or withdrawn.
We are real estate investors who are not affiliated with the Partnership or the
General Partners. The General Partners of the Partnership have not analyzed,
approved, endorsed or made any recommendation as to acceptance of the offer.
The purchase offer has been determined solely at the discretion of McDowell
Foods, Inc. and does not necessarily represent the true market value of each
unit. We are seeking to acquire Units for investment purposes only and not
with a view to their resale.
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An Agreement of Transfer is enclosed which you can use to accept our offer.
Please execute page 3 of this document, as well as the Power of Attorney,
obtain all other required signatures and return it in the enclosed envelope. In
addition, please sign the back of your Unit Certificate, if you have it in
your possession. Return the signed certificate in the enclosed envelope. We
encourage you to act immediately if you are interested in accepting our offer
as only 560 Units will be purchased. If more than the maximum shares are offered
to us, we will prorate our purchases ratably to all sellers.
Our offer will expire at 5:00pm on June 15, 1999, unless extended.
Please call Melanie McKellar at (412) 967-9890 if you have any questions.
Sincerely,
McDowell Foods, Inc.
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AGREEMENT OF TRANSFER
FOR LIMITED PARTNERSHIP INTERESTS IN
REAL ESTATE ASSOCIATES LTD. III
Subject to and effective upon acceptance for payment, the undersigned
(the "Seller") hereby sells, assigns, transfers, conveys and delivers and
directs any custodian or trustee to sell, assign, transfer, convey and deliver
(the "Transfer") to McDowell Foods, Inc., a Missouri corporation (the
"Purchaser"), all of the Seller's right, title and interest in Units (the
"Units") of Real Estate Associates Ltd. III (the "Partnership"), for $77.00 per
Unit, net of the transfer costs, to the Seller in cash, which amount shall be
reduced by any distributions declared or paid by the Partnership after
January 1, 1999. The Seller may revoke this agreement by delivering written
notice by certified mail to Buyer before Buyer, in writing, accepts the units
for payment.
Such Transfer shall include, without limitation, all rights in, and
claims to, any Partnership profits and losses, cash distributions, voting
rights and other benefits of any nature whatsoever distributable or allocable
to such Units under the Partnership's Certificate and Agreement of Limited
Partnership, as amended (the "Partnership Agreement"). The Seller hereby
irrevocably constitutes and appoints the Purchaser as the true and lawful agent
and attorney-in-fact of the Seller with respect to such Units, with full power
of substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to vote, inspect Partnership books and records or
act in such manner as any such attorney-in-fact shall, in its sole discretion,
deem proper with respect to such Units, to deliver such Units and transfer
ownership of such Units on the Partnership's books maintained by the General
Partner of the partnership, together with all accompanying evidences of
transfer and authenticity to, or upon the order of, the Purchaser of the
purchase price, to receive all benefits and cash distributions, ownership of
such Units. The Purchaser shall not be required to post bond of any nature in
connection with this power of attorney.
The Seller hereby represents and warrants, to the Purchaser that the
Seller owns such Units and has full power and authority to validly sell,
assign, transfer, convey and deliver such Units to the Purchaser, and that when
any such Units are accepted for payment by the Purchaser, the Purchaser will
acquire good, marketable and unencumbered title thereto, free and clear of all
options, liens restrictions, charges, encumbrances, conditional sales
agreements or other obligations relating to the sale or transfer thereof, and
such Units will not be subject to any adverse claim. If the undersigned is
signing on behalf of the entity. The Seller further represents and warrants
that the Seller is a "United States person", as defined in Section 7701(a)(30)
of the Internal Revenue Code of 1986, as amended, or if the Seller is not a
United States person, that the Seller does not own beneficially or of record
more than 5% of the outstanding Units.
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Agreement of Transfer
Page 2
All authority herein conferred or agreed to be conferred shall
survive the death or incapacity or liquidation of the Seller and any
obligations of the Seller shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned. This agreement is
irrevocable and may not be withdrawn or rescinded.
Upon request, the Seller 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.
The Seller releases and discharges the General Partners, any IRA or
KEOGH Custodian, and their respective officers, shareholders, directors,
employees and agents from all causes of action, claims, or demands the Seller
has or may have against them resulting from their reliance on this Agreement of
Transfer or any of the terms and conditions contained herein.
The Seller hereby certifies, under penalties of perjury, that (1) the
number shown below on the form and the Seller's Taxpayer Identification Number
is correct and (2) Seller is not subject to backup withholding either because
Seller has not been notified by the Internal Revenue Service (the "IRS") that
Seller is subject to backup withholding as a result of a failure to report all
interest or dividends, or the IRS has notified Seller that Seller is no longer
subject to backup withholding.
The Seller hereby also certifies, under penalties of perjury, that
the Seller, if an individual, is not a nonresident alien for purpose of U.S.
income taxation, and if not an individual, is not a foreign corporation,
foreign partnership, foreign trust, or foreign estate (as those terms are
defined in the Internal Revenue Code and Income Tax Regulations). The Seller
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.
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Agreement of Transfer
Page 3
Date __________, 1999
- ---------------------------------- --------------------------------
(Specify Number of Units Tendered: (Signature of Owner)
Indicate "ALL" if Number Not
Available)
--------------------------------
Place Medallion Guarantee Stamp
Here
- ---------------------------------- --------------------------------
(Your Telephone Number) (Signature of Co-Owner)
--------------------------------
Place Medallion Guarantee Stamp
Here
- ---------------------------------- McDowell Foods, Inc.
(Your Social Security or Taxpayer P.O. Box 38003
ID Number) Pittsburgh, PA 15238
(412) 967-9890
FAX (412) 967-9950
- ---------------------------------- McDowell Foods, Inc.
(Name of IRA Custodian, if
applicable)
BY: ____________________________
Its Authorized Representative
Note: All signatures on this agreement must be guaranteed by a member from a
registered national securities exchange, a member of the National Association
of Securities Dealers, Inc. or a commercial bank, savings bank, credit union,
savings and loan association or trust company having an office, branch or
agency in the United States which is a participant in the Security Transfer
Agent Medallion Program.
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POWER OF ATTORNEY/PROXY
In conjunction with the Assignor's (seller's) Assignment of Units dated as of
even date herewith. Seller irrevocably constitutes and appoints Melanie McKellar
and William Teel, or any of them, to be Seller's true and lawful special
attorneys-in-fact, with full power substitution to exercise in the name, place
and stead of Seller any and all rights, interest, powers, and duties with
respect to or arising out of the Seller's interest in:
REAL ESTATE ASSOCIATES LTD. III
which Units have been assigned to McDowell Foods, Inc. (the "Buyer") pursuant
to the Agreement of Transfer. This Power of Attorney shall include with
limitation, (1) the right to execute on behalf of Seller, all assignments,
certificates, documents and instruments that may be required for the purpose of
transferring the Units owned by the Seller, (2) the right to vote the Units or
to require or receive any information or report with respect to the
partnerships' books and records, (3) the right to endorse and cash any check
made payable by the partnership to Seller on or after the date hereof, and (4)
the right, if the Units are held in an IRA account or pension account, to
contact the Seller's custodian and direct him to facilitate in the transfer of
the units from the Seller to Buyer Fund. This Power of Attorney is part of and
hereby incorporated in the application for transfer. This Power of Attorney
shall not be affected by the subsequent mental disability of the undersigned,
as principal, is revocable with written notice by certified mail received
before Buyer has, in writing, accepted the units for payment and coupled with an
interest, and Buyer shall not be required to post bond in any nature in
connection with this Power of Attorney. This Power of Attorney shall also serve
as a Letter of Authorization directing the Assignor's custodian(s) and
trustee(s) to sign any documents necessary to facilitate the transfer of the
units being assigned in conjunction with this Power of Attorney as required by
the herein named attorneys-in-fact.
- --------------------------------- ---------------------------------
PRINT Assignor (Registered Name) PRINT Joint Assignor or
Custodian/Trustee
- --------------------------------- ---------------------------------
SIGNATURE of Assignor SIGNATURE Jnt. Assignor or
Custodian/Trustee
DATE ___________, 199_ DATE ___________, 199_
Signature Medallion Guarantee Signature Medallion Guarantee
- --------------------------------- ---------------------------------
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May 17, 1999
RE: REAL ESTATE ASSOCIATES LIMITED III
Dear Investor:
Several limited partners have called or written us to tell us that
they have received an unsolicited tender offer to buy their interests in Real
Estate Associates Limited III ("REAL III") from McDowell Foods for $77 per
$5,000 unit. The buyers represent that these purchases would be for investment
purposes only.
While the General Partners are unable to value the interests because
of a lack of market for them, and therefore cannot comment on the fairness of
McDowell Foods offer. Limited partners should also be aware that a sale of
their interests in REAL III would have tax consequences that should be
evaluated in consultation with each Limited Partner's own tax advisor.
Most of the Limited Partners have negative capital account balances
with respect to their interests in REAL III. Our accountants tell us that on
average, the negative capital account balance for a $5,000 investor at the end
of December 1998 was approximately $1,775. This means that an investor who sold
his or her unit on December 31, 1998 would recognize gain from the sale of his
or her unit in an amount equal to approximately $1,852 (the $1,775 negative
account balance plus the $77 cash sales price). Our accountants advise that in
light of the substantial disposition gains reported in 1998, it is unlikely
that an investor would have any remaining REAL III suspended passive losses
which might offset such gain. However, the gain could be offset by passive
losses which such investor may have from other sources. Unless a limited
partner has other suspended or current losses available, a substantial portion
of the gain would still be subject to tax liability.
PLEASE CONSULT WITH YOUR TAX ADVISOR ABOUT THE IMPACT OF SUCH A SALE
ON YOUR OWN PARTICULAR SITUATION.
The Corporate General Partner urges each investor to carefully
consider the foregoing information before tendering his or her units to the
tendering buyer. Although the offer letter states that investors cannot
withdraw units which may already have been tendered, you should consult with
your attorney to determine if this requirement is enforceable should you wish
to reconsider your decision to tender.
Sincerely,
National Partnership Investments Corp.
Charles H. Boxenbaum Bruce E. Nelson
Chairman of the Board President
