<PAGE>
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
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 4)
------------------------------------
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
(Name of Subject Company)
REEDY RIVER PROPERTIES, L.L.C.
INSIGNIA PROPERTIES, L.P.
INSIGNIA PROPERTIES TRUST
INSIGNIA FINANCIAL GROUP, INC.
(Bidders)
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class of Securities)
NONE
(Cusip Number of Class of Securities)
------------------------------------
JEFFREY P. COHEN
SENIOR VICE PRESIDENT
INSIGNIA FINANCIAL GROUP, INC.
375 PARK AVENUE, SUITE 3401
NEW YORK, NEW YORK 10152
(212) 750-6070
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidders)
COPY TO:
JOHN A. HEALY, ESQ.
ROGERS & WELLS
200 PARK AVENUE
NEW YORK, NEW YORK 10166
(212) 878-8000
------------------------------------
CALCULATION OF FILING FEE
- -------------------------------------------------------------------------------
Transaction Valuation*: $18,000,000 Amount of Filing Fee: $3,600
- -------------------------------------------------------------------------------
* For purposes of calculating the fee only. This amount assumes the
purchase of 45,000 units of limited partnership interest ("Units") of
the subject partnership for $400 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 bidders.
o 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: Not Applicable Filing Party: Not Applicable
Form or Registration No.: Not Applicable Date Filed: Not Applicable
- -------------------------------------------------------------------------------
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<TABLE>
<CAPTION>
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CUSIP No. NONE 14D-1 AND 13D/A Page 2
- ---------------------------------- -----------------------------------
<S> <C> <C>
========================================================================================================================
1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
REEDY RIVER PROPERTIES, L.L.C.
- ------------------------------------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a)|_|
(b)|X|
- ------------------------------------------------------------------------------------------------------------------------
3. SEC Use Only
- ------------------------------------------------------------------------------------------------------------------------
4. Sources of Funds
AF
- ------------------------------------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or 2(f)
|_|
- ------------------------------------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization
DELAWARE
- ------------------------------------------------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
50,096
- ------------------------------------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
|_|
- ------------------------------------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
25%
- ------------------------------------------------------------------------------------------------------------------------
10. Type of Reporting Person
OO
========================================================================================================================
</TABLE>
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<TABLE>
<CAPTION>
- ---------------------------------- -----------------------------------
CUSIP No. NONE 14D-1 AND 13D/A Page 3
- ---------------------------------- -----------------------------------
<S> <C> <C>
========================================================================================================================
1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
INSIGNIA PROPERTIES, L.P.
- ------------------------------------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a)|_|
(b)|X|
- ------------------------------------------------------------------------------------------------------------------------
3. SEC Use Only
- ------------------------------------------------------------------------------------------------------------------------
4. Sources of Funds
WC
- ------------------------------------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or 2(f)
|_|
- ------------------------------------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization
DELAWARE
- ------------------------------------------------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
50,096
- ------------------------------------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
|_|
- ------------------------------------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
25%
- ------------------------------------------------------------------------------------------------------------------------
10. Type of Reporting Person
PN
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</TABLE>
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<TABLE>
<CAPTION>
- ---------------------------------- -----------------------------------
CUSIP No. NONE 14D-1 AND 13D/A Page 4
- ---------------------------------- -----------------------------------
<S> <C> <C>
========================================================================================================================
1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
INSIGNIA PROPERTIES TRUST
- ------------------------------------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a)|_|
(b)|X|
- ------------------------------------------------------------------------------------------------------------------------
3. SEC Use Only
- ------------------------------------------------------------------------------------------------------------------------
4. Sources of Funds
NOT APPLICABLE
- ------------------------------------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or 2(f)
|_|
- ------------------------------------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization
MARYLAND
- ------------------------------------------------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
50,096
- ------------------------------------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
|_|
- ------------------------------------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
25%
- ------------------------------------------------------------------------------------------------------------------------
10. Type of Reporting Person
OO
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------- -----------------------------------
CUSIP No. NONE 14D-1 AND 13D/A Page 5
- ---------------------------------- -----------------------------------
<S> <C> <C>
========================================================================================================================
1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
INSIGNIA FINANCIAL GROUP, INC.
- ------------------------------------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a)|_|
(b)|X|
- ------------------------------------------------------------------------------------------------------------------------
3. SEC Use Only
- ------------------------------------------------------------------------------------------------------------------------
4. Sources of Funds
NOT APPLICABLE
- ------------------------------------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or 2(f)
|_|
- ------------------------------------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization
DELAWARE
- ------------------------------------------------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
50,096
- ------------------------------------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
|_|
- ------------------------------------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
25%
- ------------------------------------------------------------------------------------------------------------------------
10. Type of Reporting Person
CO
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</TABLE>
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<TABLE>
<CAPTION>
- ---------------------------------- -----------------------------------
CUSIP No. NONE 14D-1 AND 13D/A Page 6
- ---------------------------------- -----------------------------------
<S> <C> <C>
========================================================================================================================
1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
ANDREW L. FARKAS
- ------------------------------------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a)|_|
(b)|X|
- ------------------------------------------------------------------------------------------------------------------------
3. SEC Use Only
- ------------------------------------------------------------------------------------------------------------------------
4. Sources of Funds
NOT APPLICABLE
- ------------------------------------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or 2(f)
|_|
- ------------------------------------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization
UNITED STATES
- ------------------------------------------------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
50,096
- ------------------------------------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
|_|
- ------------------------------------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
25%
- ------------------------------------------------------------------------------------------------------------------------
10. Type of Reporting Person
IN
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</TABLE>
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SCHEDULE 14D-1/AMENDMENT NO. 4 TO SCHEDULE 13D
This Tender Offer Statement on Schedule 14D-1 (the "Statement") also
constitutes Amendment No. 4 to the Statement on Schedule 13D previously filed
by Insignia Properties, L.P. ("IPLP"), Insignia Properties Trust ("IPT"),
Insignia Financial Group, Inc. ("Insignia"), and Andrew L. Farkas in connection
with their beneficial ownership of Units (as defined below). The item numbers
and responses thereto set forth below are in accordance with the requirements
of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Consolidated Capital
Institutional Properties, a California limited partnership (the "Partnership").
The address of the Partnership's principal executive offices is One Insignia
Financial Plaza, Greenville, South Carolina 29602.
(b) This Statement relates to an offer by Reedy River Properties,
L.L.C., a Delaware limited liability company (the "Purchaser"), to purchase up
to 45,000 of the outstanding units of limited partnership interest ("Units") of
the Partnership at a purchase price of $400 per Unit, net to the seller in
cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated October 30, 1997 (the "Offer to Purchase") and the related
Assignment of Partnership Interest (which, together with any supplements or
amendments, collectively constitute the "Offer"), copies of which are filed as
Exhibits (a)(1) and (a)(2) hereto, respectively. The information set forth in
the Offer to Purchase under "Introduction" is incorporated herein by reference.
(c) The information set forth in the Offer to Purchase in Section 13
("Background of the Offer") is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) This Statement is being filed by the Purchaser, IPLP, IPT
and Insignia (collectively, the "Bidders"). The information set forth in the
Offer to Purchase under "Introduction," in Section 11 ("Certain Information
Concerning the Purchaser, IPLP, IPT and Insignia") and in Schedules II, III and
IV to the Offer to Purchase is incorporated herein by reference.
(e)-(f) During the last five years, none of the Bidders nor, to the
best of their knowledge, any of the persons listed in Schedules II, III and IV
to the Offer to Purchase (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 further violations of, or prohibiting activities subject
to, federal or state securities laws or finding any violation with respect to
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.
7
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ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in the Offer to Purchase in Section 10
("Conflicts of Interest and Transactions with Affiliates") and in Section 12
("Source of Funds") is incorporated herein by reference.
(b)-(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(b), (e) The information set forth in the Offer to Purchase under
"Introduction" and in Section 8 ("Future Plans of Insignia, IPT and the
Purchaser") is incorporated herein by reference.
(c) The information set forth in the Offer to Purchase in Section 8
("Future Plans of Insignia, IPT and the Purchaser"), in Section 10 ("Conflicts
of Interest and Transactions with Affiliates") and in Section 13 ("Background
of the Offer") is incorporated herein by reference.
(d) Not applicable.
(f)-(g) The information set forth in the Offer to Purchase in Section
7 ("Effects of the Offer") is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Offer to Purchase under
"Introduction," in Section 11 ("Certain Information Concerning the Purchaser,
IPLP, IPT and Insignia") and in Schedule I to the Offer to Purchase is
incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Offer to Purchase under
"Introduction," in Section 7 ("Effects of the Offer"), Section 10 ("Conflicts
of Interest and Transactions with Affiliates"), Section 11 ("Certain
Information Concerning the Purchaser, IPLP, IPT and Insignia") and Section 13
("Background of the Offer") is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Offer to Purchase under
"Introduction" and in Section 16 ("Fees and Expenses") is incorporated herein
by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in the Offer to Purchase in Section 11
("Certain Information Concerning the Purchaser, IPLP, IPT and Insignia") is
incorporated herein by reference. In addition, the following are expressly
incorporated in this Statement by reference: (i) the audited financial
statements of Insignia set forth at Part I-Item 8 of Insignia's Annual Report
on Form 10-K for the year ended December 31, 1996, which is on file with the
Commission; and (ii) the unaudited financial statements of Insignia set
8
<PAGE>
forth at Part I-Item 1 of Insignia's Quarterly Report on Form 10-Q/A for the
period ended June 30, 1997, which is on file with the Commission.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(d) The information set forth in the Offer to Purchase in Section
15 ("Certain Legal Matters") is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the related
Assignment of Partnership Interest, copies of which are filed as Exhibits
(a)(1) and (a)(2) hereto, respectively, is incorporated herein by reference in
its entirety.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated October 30, 1997.
(a)(2) Assignment of Partnership Interest and Related Instructions.
(a)(3) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(4) Cover Letter, dated October 30, 1997, from the Purchaser
to the Limited Partners of the Partnership.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(z)(1) Summaries of appraisals referred to in the Offer to
Purchase in Section 13 ("Background of the Offer").
(z)(2) Agreement of Joint Filing, dated October 30, 1997, among
the Purchaser, IPLP, IPT, Insignia and Andrew L. Farkas.
9
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: October 30, 1997
REEDY RIVER PROPERTIES, L.L.C. INSIGNIA FINANCIAL GROUP, INC.
By: /s/ JEFFREY P. COHEN By: /s/ FRANK M. GARRISON
-------------------------- -------------------------------
Jeffrey P. Cohen Frank M. Garrison
Manager Executive Managing Director
INSIGNIA PROPERTIES, L.P. SOLELY FOR PURPOSES OF, AND INSOFAR
AS THIS FILING CONSTITUTES, AMENDMENT
By: Insignia Properties Trust, NO. 4 TO THE STATEMENT ON SCHEDULE
its General Partner 13D
By: /s/ JEFFREY P. COHEN /s/ ANDREW L. FARKAS
-------------------------- ------------------------------------
Jeffrey P. Cohen ANDREW L. FARKAS
Senior Vice President
INSIGNIA PROPERTIES TRUST
By: /s/ JEFFREY P. COHEN
--------------------------
Jeffrey P. Cohen
Senior Vice President
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints Jeffrey P. Cohen his true and lawful
attorney-in-fact and agent, with full power of substitution and
re-substitution, to sign in any and all capacities any and all amendments to
this combined Tender Offer Statement on Schedule 14D-1 and Amendment No. 4 to
the Statement on Schedule 13D and to file the same with all exhibits thereto
and other documents in connection therewith with the Securities and Exchange
Commission, granting to such attorney-in-fact and agent full power and
authority to do all such other acts and execute all such other documents as he
may deem necessary or desirable in connection with the foregoing, as fully as
the undersigned might or could do in person, hereby ratifying and confirming
that such attorney-in-fact and agent may lawfully do or cause to be done by
virtue hereof.
/s/ ANDREW L. FARKAS
- ---------------------------------------
Chairman of the Board, President and
Chief Executive Officer
Insignia Financial Group, Inc.
Dated: October 30, 1997
10
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
(a)(1) Offer to Purchase, dated October 30, 1997.
(a)(2) Assignment of Partnership Interest and Related
Instructions.
(a)(3) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(4) Cover Letter, dated October 30, 1997, from the
Purchaser to the Limited Partners of the Partnership.
(z)(1) Summaries of appraisals referred to in the Offer to
Purchase in Section 13 ("Background of the Offer").
(z)(2) Agreement of Joint Filing, dated October 30, 1997,
among the Purchaser, IPLP, IPT, Insignia and
Andrew L. Farkas.
11
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Offer to Purchase for Cash
Up to 45,000 Units of Limited Partnership Interest
in
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES,
a California limited partnership
for
$400 Net Per Unit
by
REEDY RIVER PROPERTIES, L.L.C.
- --------------------------------------------------------------------------------
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK TIME, ON NOVEMBER 26, 1997, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
IMPORTANT
Reedy River Properties, L.L.C., a Delaware limited liability company
(the "Purchaser"), is offering to purchase up to 45,000 of the outstanding
units of limited partnership interest ("Units") in Consolidated Capital
Institutional Properties, a California limited partnership (the "Partnership"),
at a purchase price of $400 per 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 Assignment of Partnership
Interest (which, together with any supplements or amendments, collectively
constitute the "Offer"). The Purchase Price is subject to adjustment under
certain circumstances, as described herein. Holders of Units (each, a "Limited
Partner") who tender their Units in response to the Offer will not be obligated
to pay any commissions or partnership transfer fees. The Purchaser is an
affiliate of ConCap Equities, Inc., which is the general partner of the
Partnership (the "General Partner").
Limited Partners are urged to consider the following factors:
o The Purchaser and the General Partner are both affiliates of
and controlled by Insignia Properties Trust ("IPT"), which is
controlled by Insignia Financial Group, Inc. ("Insignia").
IPT, through its operating partnership Insignia Properties,
L.P. ("IPLP"), currently owns 50,096 Units (42,843 Units of
which were originally acquired by an entity which was an
affiliate of the General Partner but was not an affiliate of
Insignia, IPT or the Purchaser, at a purchase price of $225
per Unit, pursuant to a tender offer commenced in October
1992).
o The net liquidation value per Unit (the "Estimated
Liquidation Value") estimated by the Purchaser (which is an
affiliate of the General Partner) is $521.44. The Purchaser
does not believe, however, that the Estimated Liquidation
Value represents a fair estimate of the market value of a
Unit, primarily due to the fact that such estimate does not
take into account timing considerations, market uncertainties
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 Limited Partner can
realistically expect to obtain on a sale of a Unit in the
near term.
<PAGE>
o 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 Units, it will be able to
significantly influence all voting decisions with respect to
the Partnership, including decisions regarding liquidation,
amendments to the Limited Partnership Agreement, removal and
replacement of the General Partner and mergers,
consolidations and other extraordinary transactions. Because
IPT already owns (through IPLP) approximately 25% of the
outstanding Units, however, it will be able to significantly
influence the outcome of all voting decisions with respect to
the Partnership regardless of the number of Units the
Purchaser acquires pursuant to the Offer.
o The Purchaser (which is an affiliate of the General Partner)
is making the Offer with a view to making a profit.
Accordingly, there is a conflict between the desire of the
Purchaser (which is an affiliate of the General Partner) to
purchase Units at a low price and the desire of the Limited
Partners to sell their Units at a high price.
THE OFFER IS NOT CONDITIONED ON FINANCING OR UPON ANY MINIMUM
AGGREGATE NUMBER OF UNITS BEING TENDERED.
----------------------------------------
Any Limited Partner desiring to tender Units should complete and sign
the Assignment of Partnership Interest or a facsimile copy thereof in
accordance with the Instructions to the Assignment of Partnership Interest and
mail or deliver the signed Assignment of Partnership Interest to the
Depositary. A Limited Partner may tender any or all of the Units owned by that
Limited Partner; provided, however, that because of restrictions in the
Partnership's Limited Partnership Agreement, a partial tender of Units must be
for a minimum of five Units (other than Limited Partners who hold Units in an
Individual Retirement Account or Keogh Plan). Tenders of fractional Units will
not be permitted, except by a Limited Partner who is tendering all of the Units
owned by that Limited Partner.
Questions and requests for assistance or for additional copies of this
Offer to Purchase and the Assignment of Partnership Interest may be directed to
the Information Agent at the address and telephone numbers set forth below and
on the back cover of this Offer to Purchase. No soliciting dealer fees or other
payments to brokers for tenders are being paid by the Purchaser (which is an
affiliate of the General Partner).
----------------------------------------
For More Information or for Further Assistance Please Call:
Beacon Hill Partners, Inc.
at
(800) 854-9486
October 30, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
INTRODUCTION.................................................................................................... 1
The Purchaser; Affiliation with the General Partner......................................................... 1
Some Factors to Be Considered by Limited Partners........................................................... 2
Reasons for and Effects of the Offer........................................................................ 3
Certain Tax Considerations.................................................................................. 3
Originally Anticipated Term of the Partnership; General Policy Regarding
Sales and Refinancings of Partnership Properties; Alternatives.......................................... 4
Conditions.................................................................................................. 5
Distributions............................................................................................... 5
Outstanding Units........................................................................................... 6
THE OFFER....................................................................................................... 7
Section 1. Terms of the Offer; Expiration Date; Proration.................................................. 7
Section 2. Acceptance for Payment and Payment for Units.................................................... 8
Section 3. Procedure for Tendering Units................................................................... 8
Valid Tender............................................................................................ 8
Signature Requirements.................................................................................. 9
Delivery of Assignment of Partnership Interest.......................................................... 9
Appointment as Proxy; Power of Attorney................................................................. 9
Assignment of Interest in Future Distributions.......................................................... 10
Determination of Validity; Rejection of Units; Waiver of Defects;
No Obligation to Give Notice of Defects.............................................................. 10
Backup Federal Income Tax Withholding................................................................... 10
FIRPTA Withholding...................................................................................... 10
Binding Obligation...................................................................................... 10
Section 4. Withdrawal Rights............................................................................... 10
Section 5. Extension of Tender Period; Termination; Amendment.............................................. 11
Section 6. Certain Federal Income Tax Matters.............................................................. 12
General................................................................................................. 12
Gain or Loss Generally.................................................................................. 12
Unrealized Receivables and Certain Inventory............................................................ 12
Passive Activity Loss Limitation........................................................................ 13
Partnership Termination................................................................................. 13
Backup Withholding and FIRPTA Withholding............................................................... 14
Section 7. Effects of the Offer............................................................................ 14
Limitations on Resales.................................................................................. 14
Effect on Trading Market; Registration Under Section 12(g) of the Exchange Act.......................... 14
Control of Limited Partner Voting Decisions by Purchaser;
Effect of Relationship with General Partner.......................................................... 15
Section 8. Future Plans of Insignia, IPT and the Purchaser................................................. 15
Section 9. Certain Information Concerning the Partnership and CCEP......................................... 16
General................................................................................................. 16
Originally Anticipated Term of Partnership; Alternatives................................................ 17
General Policy Regarding Sales and Refinancings of Partnership Properties............................... 17
Selected Financial and Property-Related Data............................................................ 18
Cash Distributions History.............................................................................. 23
Operating Budgets of the Partnership and CCEP........................................................... 24
Section 10. Conflicts of Interest and Transactions with Affiliates......................................... 24
Conflicts of Interest with Respect to the Offer......................................................... 24
</TABLE>
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<TABLE>
<CAPTION>
PAGE
<S> <C>
Voting by the Purchaser................................................................................. 25
Financing Arrangements.................................................................................. 25
Transactions with Affiliates............................................................................ 25
Section 11. Certain Information Concerning the Purchaser, IPLP, IPT and Insignia........................... 26
The Purchaser........................................................................................... 26
IPT and IPLP............................................................................................ 26
Insignia................................................................................................ 28
Section 12. Source of Funds................................................................................ 30
Section 13. Background of the Offer........................................................................ 30
Affiliation with the General Partner.................................................................... 30
Previous Tender Offer................................................................................... 30
General Partner's Affiliation with CCEP................................................................. 30
Determination of Purchase Price......................................................................... 30
Section 14. Conditions of the Offer........................................................................ 38
Section 15. Certain Legal Matters.......................................................................... 40
General................................................................................................. 40
Antitrust............................................................................................... 40
Margin Requirements..................................................................................... 40
Section 16. Fees and Expenses.............................................................................. 40
Section 17. Miscellaneous.................................................................................. 40
SCHEDULE I - Transactions in the Units Effected by IPLP in the Past 60 Days...........................S-1
SCHEDULE II - Information Regarding the Managers of the Purchaser......................................S-2
SCHEDULE III - Information Regarding the Trustees and Executive Officers of IPT.........................S-3
SCHEDULE IV - Information Regarding the Directors and Executive Officers of Insignia...................S-5
SCHEDULE V - IPT Partnerships.........................................................................S-8
</TABLE>
ii
<PAGE>
TO THE LIMITED PARTNERS OF
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
INTRODUCTION
Reedy River Properties, L.L.C. (the "Purchaser"), which is a Delaware
limited liability company and an affiliate of the General Partner (as defined
below), hereby offers to purchase up to 45,000 of the outstanding units of
limited partnership interest ("Units"), representing approximately 23% of the
Units outstanding, in Consolidated Capital Institutional Properties, a
California limited partnership (the "Partnership") at a purchase price of $400
per 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 Assignment of Partnership Interest (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 Limited Partner may tender any or all of the Units owned by that
Limited Partner; provided, however, that because of restrictions in the
Partnership's Limited Partnership Agreement (the "Limited Partnership
Agreement"), a partial tender of Units must be for a minimum of five Units
(other than Limited Partners who hold Units in an Individual Retirement Account
("IRA") or Keogh Plan). Accordingly, any Limited Partner that owns five or
fewer Units (other than Limited Partners who hold Units in an IRA or Keogh
Plan) must tender all or none of its Units. Tenders of fractional Units will
not be permitted, except by a Limited Partner who is tendering all of the Units
owned by that Limited Partner. The Purchaser (which is an affiliate of the
General Partner) will pay all charges and expenses of Beacon Hill Partners,
Inc., who will serve as the Purchaser's information agent for the Offer (the
"Information Agent"), and Harris Trust Company of New York, who will act as the
depositary for the Offer (the "Depositary").
The Purchaser; Affiliation with the General Partner. ConCap Equities,
Inc., which is the general partner of the Partnership (the "General Partner"),
is a wholly-owned subsidiary of Insignia Properties Trust, a Maryland real
estate investment trust ("IPT"). The Purchaser is a newly-formed, wholly-owned
subsidiary of Insignia Properties, L.P., a Delaware limited partnership
("IPLP"), which is the operating partnership of IPT. IPT is the sole general
partner of IPLP (owning approximately 66% of the total equity interests in
IPLP), and Insignia Financial Group, Inc., a Delaware corporation ("Insignia"),
is the sole limited partner of IPLP (owning approximately 34% of the total
equity interests in IPLP). Insignia and its affiliates also own approximately
67% of the outstanding common shares of IPT. The Partnership owns (i) an
apartment property and a multiple-use building and (ii) a debt obligation (the
"Loan") owed by Consolidated Capital Equity Partners, L.P., a California
limited partnership ("CCEP"), in respect of amounts previously borrowed from
the Partnership by CCEP and a predecessor partnership of CCEP. The Loan is
secured by mortgages or deeds of trust on real properties owned by CCEP. ConCap
Holdings, Inc., a Texas corporation ("ConCap Holdings"), is the sole general
partner of CCEP and a wholly-owned subsidiary of the General Partner. See
Sections 9 and 13. Since late December 1994, Insignia Residential Group, L.P.
("IRG") and Insignia Commercial Group, Inc. ("ICG"), which are affiliates of
Insignia and the Purchaser, have provided property management services to the
Partnership and CCEP, and Insignia (directly or through affiliates) has
performed asset management and partnership administration services for the
Partnership and CCEP. See Section 13. By reason of these relationships, the
General Partner has conflicts of interest in considering the Offer. The General
Partner has indicated in a Statement on Schedule 14D-9 (the "Schedule 14D-9")
filed with the Securities and Exchange Commission (the "Commission") that it is
remaining neutral and making no recommendation as to whether Limited Partners
should tender their Units in response to the Offer. LIMITED PARTNERS ARE URGED
TO READ THIS OFFER TO PURCHASE AND THE RELATED MATERIALS AND THE SCHEDULE 14D-9
CAREFULLY AND IN THEIR ENTIRETY BEFORE DECIDING WHETHER TO TENDER THEIR UNITS.
See Section 10.
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Some Factors to Be Considered by Limited Partners. In considering the
Offer, Limited Partners may wish to consider the following factors:
Potential Adverse Aspects of the Offer for Limited Partners
o The Purchaser, the General Partner and ConCap Holdings (which
is the general partner of CCEP) 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 or CCEP'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. See Section 10.
o The net liquidation value per Unit (the "Estimated
Liquidation Value") estimated by the Purchaser (which is an
affiliate of the General Partner) is $521.44. See Section 13
for a discussion of why the Purchaser (which is an affiliate
of the General Partner) believes that the Estimated
Liquidation Value is not necessarily indicative of the fair
market value of a Unit. THE PURCHASER (WHICH IS AN AFFILIATE
OF THE GENERAL PARTNER) MAKES NO REPRESENTATION AND EXPRESSES
NO OPINION AS TO THE FAIRNESS OR ADEQUACY OF THE PURCHASE
PRICE.
o As with any rational investment decision, the Purchaser
(which is an affiliate of the General Partner) is making the
Offer with a view to making a profit. Accordingly, there is a
conflict between the desire of the Purchaser (which is an
affiliate of the General Partner) to purchase Units at a low
price and the desire of the Limited Partners to sell their
Units at a high price.
o If the Purchaser is successful in acquiring a significant
number of Units pursuant to the Offer, the Purchaser (which
is an affiliate of the General Partner) 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 Limited
Partnership Agreement, removal and replacement of the General
Partner and mergers, consolidations and other extraordinary
transactions. Because IPT already owns (through IPLP)
approximately 25% of the outstanding Units, however, it will
be able to significantly influence the outcome of all voting
decisions with respect to the Partnership regardless of the
number of Units the Purchaser acquires pursuant to the Offer.
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 non-tendering
Limited Partners.
Potentially Beneficial Aspects of the Offer for Limited Partners
o Although there are some limited resale mechanisms available
to Limited Partners wishing to sell their Units, there is no
formal trading market for Units. Accordingly, THE OFFER
AFFORDS LIMITED PARTNERS AN OPPORTUNITY TO DISPOSE OF THEIR
UNITS FOR CASH WHICH OTHERWISE MIGHT NOT BE AVAILABLE TO
THEM.
o THE OFFER MAY BE ATTRACTIVE TO LIMITED PARTNERS WHO HAVE AN
IMMEDIATE NEED FOR CASH. The Purchase Price is approximately
10.2% greater than the highest reported sales price of any
Unit during the past six months (based on published
information and information provided by the General Partner).
However, reported secondary market sales prices do not take
into account commissions and transfer fees typically payable
by a Limited Partner in connection with a
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secondary market sale. Therefore, the actual proceeds
received by a Limited Partner who sells Units in the
secondary market are typically significantly less than the
reported sales prices.
o LIMITED PARTNERS WHO SELL UNITS PURSUANT TO THE 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 TYPICALLY $100 PER TRANSFER). The Purchaser
will pay all transfer fees imposed by the Partnership in
connection with sales of Units pursuant to the Offer.
o 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 Units continues
to be a speculative investment. THE OFFER MAY PROVIDE LIMITED
PARTNERS WITH THE OPPORTUNITY TO LIQUIDATE THEIR INTERESTS IN
THE PARTNERSHIP AND REPLACE THEM WITH INVESTMENTS THAT ARE
LESS SPECULATIVE.
o The Offer may be attractive to Limited Partners who wish to
avoid in the future the expenses, delays and complications in
filing personal income tax returns which may be caused by
ownership of Units. In addition, A LIMITED PARTNER 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, IF ANY, ATTRIBUTABLE TO THOSE UNITS
AND, THEREFORE, WILL BE ABLE TO UTILIZE FULLY ANY SUCH
LOSSES.
o The Offer may be attractive to those Limited Partners who
have become disenchanted with real estate investments
generally, and in particular with the perceived illiquidity
of investments made through limited partnerships, because it
may afford an immediate opportunity for those Limited
Partners to liquidate their investments in the Partnership.
On the other hand, Limited Partners 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.
The Purchaser (which is an affiliate of the General Partner) makes no
recommendation to any Limited Partner as to whether to tender or refrain from
tendering Units and has been advised by the General Partner that the General
Partner also expects to make no recommendation. Each Limited Partner must make
its own decision, based on the Limited Partner's particular circumstances, as
to whether to tender Units and, if so, how many Units to tender. Limited
Partners should consult with their respective advisors regarding the financial,
tax, legal and other implications of accepting the Offer. LIMITED PARTNERS 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. The Purchaser's purpose in
making the Offer is to increase IPT's equity interest in the Partnership,
primarily for investment purposes and with a view to making a profit. Although
the number of Units sought in the Offer will not give the Purchaser (which is
an affiliate of the General Partner) absolute control over the Partnership, if
the Purchaser is successful in acquiring all or a substantial portion of the
Units it is tendering for, it will be in a position to exercise significant
influence over the outcome of any vote by Limited Partners. Because IPT already
owns (through IPLP) approximately 25% of the outstanding Units, however, it
will be able to significantly influence the outcome of all voting decisions
with respect to the Partnership regardless of the number of Units the Purchaser
acquires pursuant to the Offer. See Sections 8 and 10.
Certain Tax Considerations. A sale by a Limited Partner pursuant to
the Offer will result in taxable gain (or loss) equal to the excess (deficit)
of the amount realized by the Limited Partner for the Units sold over such
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Limited Partner's adjusted tax basis in those Units, which may be taxable as
ordinary income or loss, capital gain or loss or gain from real estate
depreciation recapture. If a Limited Partner has suspended "passive losses"
from the Partnership or other passive activity investments, such Limited
Partner generally may deduct these losses up to the amount of any gain from the
sale. A sale pursuant to the Offer of all of a Limited Partner's Units will
terminate his or her investment in the Partnership and, commencing with the
year following the year of sale, the Limited Partner will no longer receive
Partnership tax information or have to report the complicated tax information
currently required of Limited Partners. See Section 6.
Originally Anticipated Term of the Partnership; General Policy
Regarding Sales and Refinancings of Partnership Properties; Alternatives. The
Partnership was formed for the purpose of making loans to a predecessor
partnership of CCEP. CCEP's indebtedness in respect of the loans made to it and
its predecessor partnership by the Partnership now is represented by the Loan.
The Loan is secured by deeds of trust or mortgages on apartment complexes and
office buildings owned by CCEP (each, a "CCEP Property" and collectively, the
"CCEP Properties"). The non-recourse provisions of the Loan mean that CCEP's
obligation to repay the Loan is secured only by the value of the collateral
(that is, the CCEP Properties), and the Partnership has no right to make
further claims against CCEP other than to the extent of the value of those
properties. According to the Partnership's Prospectus dated April 26, 1982,
Consolidated Capital Equity Partners ("ConCap Partners") (CCEP's predecessor in
interest) anticipated that it would sell and/or refinance its properties, and
consequently repay the Loan, ten years after their acquisition, depending upon
the then current real estate and money markets, economic climate and income tax
consequences to the partners of ConCap Partners. The reorganization of ConCap
Partners and its subsequent conversion into CCEP in 1990 resulted in a de facto
extension of the originally anticipated ten-year time period.
See Sections 9 and 13.
The Loan is scheduled to mature, and will be repayable in full, in
November 2000. Because the outstanding principal amount of the Loan, including
accrued unpaid interest, exceeds the General Partner's estimate of the fair
market value of the CCEP Properties that secure the Loan by a very large
margin, the General Partner expects that at maturity either (i) the Partnership
will foreclose on or otherwise acquire outright ownership of the CCEP
Properties or (ii) the maturity of the Loan will be extended to a later date.
The General Partner, as a result of its affiliation with ConCap Holdings (which
is the general partner of CCEP), will have several conflicts of interest in
deciding which of these approaches is appropriate. See Section 13.
In general, the General Partner and ConCap Holdings (which is an
affiliate of the General Partner) regularly evaluate the assets of the
Partnership and CCEP, respectively, by considering various factors, such as the
financial position of the Partnership and CCEP and real estate and capital
markets conditions. In this process, the General Partner and ConCap Holdings
monitor each property's specific locale and sub-market conditions, evaluating
current trends, competition, new construction and economic changes. The General
Partner and ConCap Holdings oversee each asset's operating performance and
continuously evaluate the physical improvement requirements. In addition, the
financing structure for each property, tax implications and the investment
climate are all considered. Any of these factors, and possibly others, could
potentially contribute to any decision of the General Partner or ConCap
Holdings to sell, obtain financing on, refinance, upgrade with capital
improvements or hold a particular Partnership property or any CCEP Property,
respectively. The Partnership and CCEP could seek to arrange mortgage loans
secured by the CCEP Properties that would have priority over the Loan, and to
use the proceeds of those loans for distributions to the Limited Partners or
other appropriate purposes. The Participating Note Master Loan Agreement, dated
July 23, 1981, by and between the Partnership and ConCap Partners (the
"Original Loan Agreement"), contained a provision (the "CCEP Debt Limit
Provision") to the effect that CCEP was not permitted to incur indebtedness
owed to unaffiliated third parties on the CCEP Properties in an amount that
exceeded 25% of the original aggregate purchase price of the CCEP Properties.
The Limited Partnership Agreement describes the CCEP Debt Limit Provision and
references further information as found in the Original Loan Agreement. The
Amended Loan Agreement, dated November 15, 1990, by and between the Partnership
and ConCap Partners (the "Amended Loan Agreement") which by its terms replaced
the Original Loan Agreement, does not contain the CCEP Debt Limit Provision;
however, the Purchaser has been advised that the General Partner has not
determined whether the CCEP Debt Limit Provision contained in the Original Loan
Agreement continues to apply despite the absence of that provision in the
Amended Loan Agreement. Such a determination is not likely to be made except in
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connection with a future proposed financing, if any, and would depend heavily
on the advice received from legal counsel to the Partnership and the General
Partner. In any event, as a matter of law, CCEP would need the consent of the
Partnership in order to incur mortgage indebtedness secured by the CCEP
Properties that would have priority over the deeds of trust securing the Loan.
The Limited Partnership Agreement provides that Limited Partners holding a
majority of the outstanding Units may, with the consent of the General Partner,
approve amendments to the Amended Loan Agreement. The General Partner has
advised the Purchaser that it may in the future, if it deems it necessary or
appropriate under the circumstances, solicit the consent of the Limited
Partners in connection with the incurrence of additional or new mortgage
indebtedness that would be senior in priority to the Loan. Because these plans
are subject to change, there can be no assurance that any consent, if deemed
required, will be sought as described above, that CCEP will seek to obtain
financing of the type described above, or as to the amount or timing of any
distribution that might be made to Limited Partners from the proceeds of any
such financing. The Purchaser has been advised that the Partnership has almost
completed extensive capital improvements to The Sterling Apartment Homes and
Commerce Center in Philadelphia, Pennsylvania, and that upon completion of such
renovations and subsequent lease-up of the renovated apartments the General
Partner will seek to obtain financing for that property which may result in a
special distribution to Limited Partners; however, there can be no assurance as
to whether the General Partner will obtain this financing as expected or
whether such financing will in fact generate net cash proceeds to the
Partnership. The Purchaser also has been advised that the General Partner and
ConCap Holdings are in the process of negotiating the sale of Northlake
Quadrangle in Tucker, Georgia to an unaffiliated third party for a price of
$2,450,000. The net cash proceeds (after repayment of third party mortgage debt
and payment of additional expenses and other costs of sale), from such expected
sale would be payable to the Partnership under the terms of the Loan; however,
there can be no assurance as to whether this sale will occur as expected or as
to the amount of cash proceeds that might result from such a sale. Moreover, no
determination has been made as to whether any net cash proceeds generated by
obtaining such potential financings or sale would be distributed to Limited
Partners, which determination will be made at the time that such financing is
obtained or upon the sale, respectively, and will be based on, among other
things, the Partnership's working capital requirements at the time. Based on
the above considerations and except for the potential sale of Northlake
Quadrangle, the General Partner and ConCap Holdings are not currently
contemplating the sale of any other Partnership properties or the CCEP
Properties.
Under the Limited Partnership Agreement the term of the Partnership
will continue until December 31, 2011, unless sooner terminated as provided in
the Limited Partnership Agreement or by law. Limited Partners 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.
Conditions. The Offer is not conditioned on any aggregate minimum
number of Units being tendered. Certain other conditions do apply, however.
See Section 14.
Distributions. The Partnership made cash distributions to Limited
Partners of $9.94 per Unit in 1997 (through October 30), and made cash
distributions to Limited Partners of $85.25 per Unit in 1996 and $14.92 per
Unit in 1995. The 1996 distribution was not made completely out of operating
cash flow; rather, that distribution was made primarily out of the amount of
working capital reserves, including the proceeds from financing obtained on
certain of the Partnership's properties and the CCEP Properties, that exceeded
the amount required to be held under the Limited Partnership Agreement. The
Limited Partnership Agreement requires that the General Partner maintain
minimum working capital reserves ($7,300,000 as of June 30, 1997) equal to 5%
of net Invested Capital (as defined in the Limited Partnership Agreement). In
total, original investors in the Partnership have received $906.87 of their
original $1,000 investment made in 1982. See Section 9. The Partnership is
currently generating positive cash flow from operations, and the Purchaser
(which is an affiliate of the General Partner) believes that the Partnership
will continue to generate positive cash flow from operations, depending upon
the real estate, capital markets and general economic conditions at the time.
The General Partner has advised the Purchaser (which is an affiliate of the
General Partner) that the General Partner presently expects the Partnership to
make an operating cash flow distribution of approximately $10.00 per Unit in
December 1997; however, there can be no assurance that such distribution will
be made or as to the amount or timing of such distribution. The potential for
this and other future distributions was considered by the Purchaser (which is
an affiliate of the General Partner) when establishing the
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Purchase Price. Limited Partners who tender their Units in response to the
Offer will retain all of the distributions made through October 30, 1997, and
will be entitled to receive any subsequent distributions made by the
Partnership prior to the date on which the Purchaser pays for tendered Units
pursuant to the Offer, although any such subsequent distribution will result in
a reduction of the Purchase Price. See Section 1. However, tendering Limited
Partners will not be entitled to receive or retain any distributions in respect
of tendered Units which 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 (as opposed to the payment 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 October 1, 1997 there were 199,052 Units issued and
outstanding, which were held of record by 23,330 Limited Partners. IPLP
currently owns 50,096 Units. See Schedule I to this Offer to Purchase for a
list of transactions in the Units effected by IPLP within the past 60 days.
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THE OFFER
SECTION 1. TERMS OF THE OFFER; EXPIRATION DATE; PRORATION. Upon the
terms and subject to the conditions of the Offer, the Purchaser (which is an
affiliate of the General Partner) will accept for payment (and thereby
purchase) up to 45,000 Units 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" shall mean
12:00 midnight, New York City time, on November 26, 1997, unless the Purchaser
(which is an affiliate of the General Partner) in its sole discretion shall
have extended the period of time for which the Offer is open, in which event
the term "Expiration Date" shall mean the latest time and date on which the
Offer, as 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 LIMITED
PARTNERS ON OR AFTER OCTOBER 30, 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 (which is an affiliate
of the General Partner) increases the consideration offered to Limited Partners
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.
If more than 45,000 Units 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 (which is an affiliate of
the General Partner) will, upon the terms and subject to the conditions of the
Offer, accept for payment and pay for an aggregate of 45,000 of the Units so
tendered, pro rata according to the number of Units validly tendered by each
Limited Partner and not properly withdrawn on or prior to the Expiration Date,
with appropriate adjustments to avoid (i) purchases of fractional Units and
(ii) purchases that would violate Section 5.01 of the Limited Partnership
Agreement (which generally requires that a Limited Partner transfer a minimum
of five Units (other than Limited Partners who hold Units in an IRA or Keogh
Plan)). If the number of Units validly tendered and not properly withdrawn on
or prior to the Expiration Date is less than or equal to 45,000 Units, the
Purchaser (which is an affiliate of the General Partner) will purchase all
Units so tendered and not withdrawn, upon the terms and subject to the
conditions of the Offer.
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 (which is an affiliate of the General Partner) 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 Limited Partners the Purchase Price in respect
of Units tendered or return those Units promptly after the termination or
withdrawal of the Offer, the Purchaser (which is an affiliate of the General
Partner) 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
(which is an affiliate of the General Partner) 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 of the Commission, purchase all Units validly
tendered, (iii) extend the Offer and, subject to the right of Limited Partners
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.
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This Offer to Purchase and the related Assignment of Partnership
Interest are being mailed by the Purchaser (which is an affiliate of the
General Partner) to the persons shown by the Partnership's records to have been
Limited Partners or (in the case of Units owned of record by IRAs and qualified
plans) beneficial owners of Units as of October 1, 1997.
SECTION 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS. Upon the
terms and subject to the conditions of the Offer, the Purchaser (which is an
affiliate of the General Partner) will accept for payment (and thereby
purchase) and will 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. A tendering beneficial owner of
Units whose Units are owned of record by an IRA or other qualified plan will
not receive direct payment of the Purchase Price; rather, payment will be made
to the custodian of such account or plan. 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 Assignment of Partnership
Interest (or a facsimile copy) and any other documents required by the
Assignment of Partnership Interest. 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 (which is an affiliate of the
General Partner) will be deemed to have accepted for payment pursuant to the
Offer, and thereby purchased, validly tendered Units if, as and when the
Purchaser (which is an affiliate of the General Partner) 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 Limited Partners for the purpose of receiving payments from
the Purchaser and transmitting those payments to Limited Partners whose Units
have been accepted for payment.
If any tendered Units are not purchased for any reason, the Assignment
of Partnership Interest with respect to such Units will be destroyed by the
Purchaser (which is an affiliate of the General Partner). 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 (which is an affiliate of the General Partner) retain
tendered Units, and those Units may not be withdrawn except to the extent that
the tendering Limited Partners 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 Limited Partners the Purchase Price in
respect of Units tendered or return those Units promptly after termination or
withdrawal of the Offer.
The Purchaser (which is an affiliate of the General Partner) 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 Limited Partners 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 Limited Partner to participate
in the Offer, its 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 Assignment of Partnership Interest (or a facsimile copy) and any other
documents required by the Assignment of Partnership Interest must be received
by the Depositary, at its address set forth on the back cover of this Offer to
Purchase, on or prior to the Expiration Date. A Limited Partner may tender any
or all of the Units owned by that Limited Partner; provided, however, that
because of restrictions in the Limited Partnership Agreement, a partial tender
of Units must be for a minimum of five Units (other than Limited Partners who
hold Units in an IRA or Keogh Plan). Accordingly, any Limited Partner that owns
five or fewer Units (other than Limited Partners who Units in an IRA or Keogh
Plan) must tender all or none of its Units. Tenders of fractional
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Units will not be permitted, except by a Limited Partner who is tendering all
of the Units owned by that Limited Partner. No alternative, conditional or
contingent tenders will be accepted.
Signature Requirements. If the Assignment of Partnership Interest is
signed by the registered holder of the Units and payment is to be made directly
to that holder, then no signature guarantee is required on the Assignment of
Partnership Interest. Similarly, if the Units are tendered for the account of a
member firm of 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 (each an "Eligible Institution"),
no signature guarantee is required on the Assignment of Partnership Interest.
HOWEVER, IN ALL OTHER CASES, ALL SIGNATURES ON THE ASSIGNMENT OF PARTNERSHIP
INTEREST MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION. Please contact the
Information Agent for assistance in obtaining a signature guarantee.
Delivery of Assignment of Partnership Interest. THE METHOD OF DELIVERY
OF THE ASSIGNMENT OF PARTNERSHIP INTEREST AND ALL OTHER REQUIRED DOCUMENTS IS
AT THE OPTION AND RISK OF THE TENDERING LIMITED PARTNER, 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 an Assignment of
Partnership Interest, a tendering Limited Partner irrevocably appoints the
Purchaser (which is an affiliate of the General Partner), and its managers and
designees as the Limited Partner's proxies, in the manner set forth in the
Assignment of Partnership Interest, each with full power of substitution, to
the full extent of the Limited Partner's rights with respect to the Units
tendered by the Limited Partner and accepted for payment by the Purchaser
(which is an affiliate of the General Partner). 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 (which is an
affiliate of the General Partner) accepts the tendered Units for payment. Upon
such acceptance for payment, all prior proxies given by the Limited Partner
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 (which is an affiliate of the General Partner) and its managers and
designees will, as to those Units, be empowered to exercise all voting and
other rights of the Limited Partner as they in their sole discretion may deem
proper at any meeting of Limited Partners, by written consent or otherwise. The
Purchaser (which is an affiliate of the General Partner) 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 an Assignment of Partnership Interest, a tendering
Limited Partner also irrevocably constitutes and appoints the Purchaser and its
managers and designees as the Limited Partner's attorneys-in-fact, each with
full power of substitution, to the full extent of the Limited Partner's rights
with respect to the Units tendered by the Limited Partner 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 Limited Partner 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 powers of attorney granted by the Limited Partner 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 managers 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
Limited Partner'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
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to or upon the order of such Limited Partner 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 Limited Partner.
Assignment of Interest in Future Distributions. By executing an
Assignment of Partnership Interest, a tendering Limited Partner irrevocably
assigns to the Purchaser (which is an affiliate of the General Partner) and its
assigns all of the right, title and interest of the Limited Partner 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
Limited Partner 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
(which is an affiliate of the General Partner), in its sole discretion, which
determination shall be final and binding. The Purchaser (which is an affiliate
of the General Partner) 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. The Purchaser (which is an affiliate of the
General Partner) 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 Limited Partner. The
Purchaser's interpretation of the terms and conditions of the Offer (including
the Assignment of Partnership Interest 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 (which is an affiliate of the General Partner), 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 Limited Partner must provide the
Purchaser (which is an affiliate of the General Partner) with the Limited
Partner's correct taxpayer identification number by completing the Substitute
Form W-9 included in the Assignment of Partnership Interest. See the
Instructions to the Assignment of Partnership Interest 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 Limited Partner
must complete the FIRPTA Affidavit included in the Assignment of Partnership
Interest certifying the Limited Partner's taxpayer identification number and
address and that such Limited Partner is not a foreign person.
See the Instructions to the Assignment of Partnership Interest 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 Limited
Partner and the Purchaser (which is an affiliate of the General Partner) on the
terms set forth in this Offer to Purchase and in the Assignment of Partnership
Interest.
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 December 28, 1997. For withdrawal to be effective, a written or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at its address set forth on the back cover of this Offer to
Purchase. Any such notice of withdrawal must specify the name of the person who
tendered the Units to be withdrawn and must be signed by the person(s) who
signed the Assignment of Partnership Interest in the same manner as the
Assignment of Partnership Interest was signed (including signature guarantees
by an Eligible Institution). Units properly withdrawn
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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
(which is an affiliate of the General Partner) 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 Limited Partners 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 Limited
Partners 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 (which is an
affiliate of the General Partner), 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 (which is an affiliate of the General Partner) 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 (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 Limited Partners in a manner reasonably designed to inform Limited
Partners 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 which will be issued no later than
9:00 a.m., New York City 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 (which is an affiliate of the General Partner)
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 Limited
Partners 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 Limited Partners the Purchase Price in respect of Units
tendered or return those Units promptly after termination or withdrawal of the
Offer.
If the Purchaser (which is an affiliate of the General Partner) 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 Commission's view, 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 securityholders, 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 securityholders 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, New York City time.
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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
Limited Partner in light of such Limited Partner's specific circumstances or to
certain types of Limited Partners 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, foreign and other tax laws. EACH
LIMITED PARTNER SHOULD CONSULT ITS OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO SUCH LIMITED PARTNER OF SELLING UNITS PURSUANT TO THE OFFER.
Gain or Loss Generally. In general, a Limited Partner will recognize
gain or loss on a sale of Units pursuant to the Offer equal to the difference
between (i) the Limited Partner's "amount realized" on the sale and (ii) the
Limited Partner's adjusted tax basis in the Units sold. Generally, a Limited
Partner'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 Limited Partner's adjusted tax basis in tendered
Units will vary depending upon the Limited Partner's particular circumstances.
The "amount realized" with respect to a Unit will be a sum equal to the amount
of cash received by the Limited Partner 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).
A portion of the gain or loss recognized by a Limited Partner on a
sale of a Unit pursuant to the Offer generally will be treated as a capital
gain or loss, if (as is generally expected to be the case) the Unit was held by
the Limited Partner 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 carryforward 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 Limited Partner 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 Limited Partnership
Agreement concerning transfers of Units. Such allocation and any cash
distributed by the Partnership to the Limited Partner for that year will affect
the Limited Partner's adjusted tax basis in Units and, therefore, the amount of
such Limited Partner'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 Limited Partner is attributable to "unrealized
receivables" (which includes depreciation recapture) or "substantially
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appreciated inventory" as defined in Code Section 751, then a portion of the
Limited Partner'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 Limited Partner who tenders Units
which are purchased pursuant to the Offer must file an information statement
with such Limited Partner's federal income tax return for the year of the sale
which provides the information specified in Treasury Regulation ss.
1.751-1(a)(3). A selling Limited Partner 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. A substantial portion of the Partnership's
post-1986 losses allocated to the Limited Partners from the Partnership would
have been passive losses. Thus, Limited Partners may have "suspended" passive
losses from the Partnership (i.e., post-1986 net taxable losses in excess of
statutorily permitted "phase-in" amounts which have not been used to offset
income from other passive activities or from the Partnership). Substantially
all gain or loss from a sale of Units pursuant to the Offer will be passive
income.
If a Limited Partner sells less than all of its Units pursuant to the
Offer, suspended passive losses, if any (including a portion of any loss
recognized on the sale of Units), can be currently deducted (subject to other
applicable limitations) to the extent of the Limited Partner'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
Limited Partner 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 Limited Partner 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 Limited Partner from its other income
(subject to any other applicable limitations), including ordinary income. A
tendering Limited Partner must sell all of its Units to receive these tax
benefits. If more than 45,000 of the outstanding Units are tendered, some
tendering Limited Partners 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. 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).
The Limited Partnership Agreement prohibits transfers of Units if a
transfer, when considered with all other transfers during the same applicable
twelve-month period, would cause a termination of the Partnership for tax
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purposes. The Purchaser believes that even if the maximum number of Units is
purchased pursuant to the Offer, those transfers will not cause a tax
termination.
Backup Withholding and FIRPTA Withholding. Limited Partners (other
than tax-exempt persons, corporations and certain foreign individuals) who
tender Units may be subject to 31% backup withholding unless those Limited
Partners provide a taxpayer identification number ("TIN") and certify that the
TIN is correct or properly certify that they are awaiting a TIN. A Limited
Partner 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 Limited Partner 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 Limited Partner.
Gain realized by a foreign Limited Partner 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
which 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 Limited Partner unless the Limited Partner properly
completes and signs the FIRPTA Affidavit included as part of the Assignment of
Partnership Interest certifying the Limited Partner's TIN and address, and that
such Limited Partner is not a foreign person. Amounts withheld would be
creditable against a foreign Limited Partner's federal income tax liability
and, if in excess thereof, a refund could be obtained from the Internal Revenue
Service by filing a U.S. income tax return.
SECTION 7. EFFECTS OF THE OFFER.
Limitations on Resales. The Limited Partnership Agreement prohibits
transfers of Units if a transfer, when considered with all other transfers
during the same applicable twelve-month period, would cause a termination of
the Partnership for federal or any applicable state income tax purposes. This
provision may limit sales of Units in the secondary market and in private
transactions for the twelve-month period following completion of the Offer. The
General Partner has advised the Purchaser that the Partnership will not process
any requests for recognition of substitution of Limited Partners upon a
transfer of Units during such twelve-month period which the General Partner
believes may cause a tax termination in contravention of the Limited
Partnership Agreement. In determining the number of Units for which the Offer
is made (representing approximately 23% of the outstanding Units if 45,000
Units are tendered), the Purchaser (which is an affiliate of the General
Partner) took this restriction into account so as to permit normal historical
levels of transfers to occur following the transfers of Units pursuant to the
Offer without violating this restriction.
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 Limited Partners. 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 (which is an affiliate of the General Partner) does
not believe a reduction in the number of Limited Partners will materially
further restrict the Limited Partners' ability to find purchasers for their
Units through secondary market transactions. See Section 13 for certain limited
information regarding recent secondary market sales of the Units.
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 (which is an affiliate of the General Partner) 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 persons, the Partnership could apply to de-register
the Units under the Exchange Act. Because the Units are widely held, however,
the Purchaser (which is an affiliate of the General Partner) believes that,
even if it purchases the maximum number of Units in the Offer, after that
purchase the Units will be held of record by more than 300 persons.
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Control of Limited Partner Voting Decisions by Purchaser; Effect of
Relationship with General Partner. The Limited Partnership Agreement 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. The
Purchaser (which is an affiliate of the General Partner) 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. Even if the Purchaser (which is an affiliate of the
General Partner) is not admitted to the Partnership as a substituted Limited
Partner, however, the Purchaser nonetheless will have the right to vote each
Unit purchased in the Offer pursuant to the irrevocable appointment by
tendering Limited Partners of the Purchaser and its managers and designees as
proxies with respect to the Units tendered by such Limited Partners and
accepted for payment by the Purchaser. See Section 3. As a result, the
Purchaser (which is an affiliate of the General Partner) could be in a position
to significantly influence all voting decisions with respect to the
Partnership. Because IPT already owns (through IPLP) approximately 25% of the
outstanding Units, however, it will be able to significantly influence the
outcome of all voting decisions with respect to the Partnership regardless of
the number of Units the Purchaser acquires pursuant to the Offer. This could
(i) prevent non-tendering Limited Partners from taking action they desire but
that IPT opposes and (ii) enable IPT to take action desired by IPT but opposed
by non-tendering 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. 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.
SECTION 8. FUTURE PLANS OF INSIGNIA, IPT AND THE PURCHASER. IPT,
through the Purchaser (which is an affiliate of the General Partner), is
seeking to acquire Units pursuant to the Offer in order to increase its equity
interest in the Partnership, primarily for investment purposes and with a view
to making a profit. Following the completion of the Offer, IPT and/or persons
related to or affiliated with it 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, and may be for cash or other
consideration. Insignia and IPT (which are affiliates of the General Partner)
also may consider disposing of some or all of the Units the Purchaser acquires
pursuant to the Offer, either directly or by a sale or other disposition of one
or more interests in IPT or the Purchaser itself, depending among other things
on the requirements from time to time of Insignia, IPT and their affiliates in
light of liquidity, strategic, tax and other considerations.
Neither IPT nor the Purchaser (which are affiliates of the General
Partner) has any present plans or intentions with respect to liquidating the
Partnership or selling assets, or obtaining financing on, or refinancing any of
the Partnership's properties or the CCEP Properties, other than the potential
financing of the CCEP Properties and a financing subsequent to the
rehabilitation of The Sterling Apartment Homes and Commerce Center, and the
potential sale of Northlake Quadrangle (each, as described in Section 9). IPT
and the Purchaser expect that consistent with the General Partner's fiduciary
obligations, the General Partner will seek and review opportunities (including
opportunities identified by IPT and the Purchaser) to engage in transactions
which 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 Limited Partners.
IPT and the Purchaser (which are affiliates of the General Partner)
have been advised that the possible future transactions the General Partner
expects to consider on behalf of the Partnership include (i) payment of
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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. Any such merger or consolidation transaction could
involve other limited partnerships in which the General Partner or its
affiliates serve as general partners, or a combination of the Partnership with
one or more existing, publicly traded entities (including, possibly, affiliates
of IPT (which is an affiliate of the General Partner) or IPT itself), in any of
which Limited Partners might receive cash, common stock or other securities or
consideration. There is no assurance, however, as to when or whether any of the
transactions referred to above might occur. If any such transaction is effected
by the Partnership and financial benefits accrue to the Limited Partners of the
Partnership, the Purchaser (and thus IPT) will participate in those benefits to
the extent of its ownership of Units. A merger or other consolidation
transaction and certain kinds of other extraordinary transactions would require
a vote of the Limited Partners, and if the Purchaser is successful in acquiring
a significant number of Units pursuant to the Offer (or otherwise), IPT will be
able to significantly influence the outcome of any such vote. Because IPT
already owns (through IPLP) approximately 25% of the outstanding Units,
however, it will be able to significantly influence the outcome of all voting
decisions with respect to the Partnership regardless of the number of Units the
Purchaser acquires pursuant to the Offer. IPT's primary objective in seeking to
acquire the Units through the Purchaser pursuant to the Offer is not, however,
to influence the vote on any particular transaction, but rather to generate a
profit on the investment represented by those Units.
SECTION 9. CERTAIN INFORMATION CONCERNING THE PARTNERSHIP AND CCEP.
Except as otherwise indicated, information contained in this Section 9 is based
upon documents and reports publicly filed by the Partnership (including
information on CCEP and the CCEP Properties contained in exhibits to the
Partnership's public documents) 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 which is derived from such public
documents, or for any failure by the Partnership to disclose events which may
have occurred and may affect the significance or accuracy of any such
information but which are unknown to the Purchaser.
General. The Partnership was organized on April 28, 1981 under the
laws of the State of California. Its principal executive offices are located at
One Insignia Financial Plaza, Greenville, South Carolina 29602, and its
telephone number at that address is (864) 239-2747.
The Partnership was formed for the purpose of making loans to a
predecessor partnership of CCEP. CCEP's indebtedness in respect of the loans
made to it and its predecessor partnership by the Partnership now is
represented by the Loan. The Loan is secured by deeds of trust or mortgages on
the CCEP Properties. The non-recourse provisions of the Loan mean that CCEP's
obligation to repay the Loan is secured only by the value of the collateral
(that is, the CCEP Properties), and the Partnership has no right to make
further claims against CCEP other than to the extent of the value of those
properties. The Loan Agreement provides that interest on the outstanding
principal balance accrues at a variable rate (12.5% per year at December 31,
1996), subject to a maximum rate of 12.5% per year, although such interest is
payable only to the extent CCEP has "excess cash flow" (generally defined as
net cash flow from operations after third party debt service and capital
improvements). Accrued unpaid interest is added to principal. At June 30, 1997,
the aggregate outstanding principal balance of the Loan (including interest
accrued and added to principal pursuant to the terms of the Loan) was
approximately $275,000,000. This amount is substantially greater than the
estimated fair market value of the CCEP Properties (which are the only source
of repayment for the Loan). Under the terms of the Loan, any net proceeds from
sales or refinancings of the CCEP Properties are paid to the Partnership, after
payment of a 3% disposition fee to ConCap Holdings (or to the General Partner
with respect to the Partnership's properties). ConCap Holdings (which is an
affiliate of the General Partner and the sole general partner of CCEP) has full
discretion with respect to conducting CCEP's business, including managing the
CCEP Properties and initiating and approving capital expenditures and asset
dispositions and obtaining financing on, or refinancing any CCEP Property.
Accordingly, the amounts of cash flows received by the Partnership pursuant to
the terms of the Loan depend heavily on the discretion exercised by ConCap
Holdings with respect to sales, obtaining financing on, or refinancing any CCEP
Property.
16
<PAGE>
In addition to the Loan, the Partnership owns two properties directly,
both of which were formerly collateral for the Loan but which the Partnership
later acquired through separate foreclosure proceedings: a 188-unit residential
apartment complex in Raleigh, North Carolina; and a combined 537-unit
residential apartment complex and 101,418 square foot commercial complex in
Philadelphia, Pennsylvania.
CCEP's investment portfolio currently consists of two office buildings
and 11 residential apartment complexes, all of which serve as collateral for
the Loan. The deeds of trust in favor of the Partnership that encumber the CCEP
Properties are subordinated to the mortgage liens in favor of unaffiliated
third parties that secure an aggregate indebtedness (the "Senior Mortgage
Indebtedness") of $23,265,000 (as of June 30, 1997). Those properties are as
follows: a 123,942 square foot commercial complex in San Francisco, California;
a 77,621 square foot commercial complex in Tucker, Georgia; a 343-unit
residential apartment complex in Fern Park, Florida; a 274-unit residential
apartment complex in Overland Park, Kansas; a 262-unit residential apartment
complex in Colorado Springs, Colorado; a 150-unit residential apartment complex
in Tampa, Florida; a 372-unit residential apartment complex in Plantation,
Florida; a 246-unit residential apartment complex in Baton Rouge, Louisiana; a
228-unit residential apartment complex in Shreveport, Louisiana; a 248-unit
residential apartment complex in El Paso, Texas; a 324-unit residential
apartment complex in Tampa, Florida; a 200-unit residential apartment complex
in Indian Harbor, Florida; and a 205-unit residential apartment complex in
Lexington, Kentucky.
Originally Anticipated Term of Partnership; Alternatives. According to
the Partnership's Prospectus dated April 26, 1982, ConCap Partners (CCEP's
predecessor in interest) anticipated that it would sell and/or refinance its
properties, and consequently repay the Loan, ten years after their acquisition,
depending upon the then current real estate and money markets, economic climate
and income tax consequences to the partners of ConCap Partners. The
reorganization of ConCap Partners and its subsequent conversion into CCEP in
1990 resulted in a de facto extension of the originally anticipated ten-year
time period. See Section 13. Under the Limited Partnership Agreement, the term
of the Partnership will continue until December 31, 2011, unless sooner
terminated as provided in the Limited Partnership Agreement or by law. Limited
Partners 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 and ConCap Holdings (which is an
affiliate of the General Partner) regularly evaluate the assets of the
Partnership and CCEP, respectively, by considering various factors, such as the
financial position of the Partnership and CCEP and real estate and capital
markets conditions. In this process, the General Partner and ConCap Holdings
monitor each property's specific locale and sub-market conditions, evaluating
current trends, competition, new construction and economic changes. The General
Partner and ConCap Holdings oversee each asset's operating performance and
continuously evaluate the physical improvement requirements. In addition, the
financing structure for each property, tax implications and the investment
climate are all considered. Any of these factors, and possibly others, could
potentially contribute to any decision of the General Partner or ConCap
Holdings to sell, obtain financing on, refinance, upgrade with capital
improvements or hold a particular Partnership property or any CCEP Property,
respectively. The Partnership and CCEP could seek to arrange mortgage loans
secured by the CCEP Properties that would have priority over the Loan, and to
use the proceeds of those loans for distributions to the Limited Partners or
other appropriate purposes. The Original Loan Agreement contained the CCEP Debt
Limit Provision to the effect that CCEP was not permitted to incur indebtedness
owed to unaffiliated third parties on the CCEP Properties in an amount that
exceeded 25% of the original aggregate purchase price of the CCEP Properties.
The Limited Partnership Agreement describes the CCEP Debt Limit Provision and
references further information as found in the Original Loan Agreement. The
Amended Loan Agreement which by its terms replaced the Original Loan Agreement,
does not contain the CCEP Debt Limit Provision; however, the Purchaser has been
advised that the General Partner has not determined whether the CCEP Debt Limit
Provision contained in the Original Loan Agreement continues to apply despite
the absence of that provision in the Amended Loan Agreement. Such a
determination is not likely to be made except in connection with a future
proposed financing, if any, and would depend heavily on the advice receive from
legal counsel to the Partnership and the General Partner. In any event, as a
matter of law, CCEP would need the consent of the Partnership in order to incur
mortgage indebtedness secured by the CCEP Properties that would have priority
over the deeds of trust securing the Loan. The Limited
17
<PAGE>
Partnership Agreement provides that Limited Partners holding a majority of the
outstanding Units may, with the consent of the General Partner, approve
amendments to the Amended Loan Agreement. The General Partner has advised the
Purchaser that it may in the future, if it deems it necessary or appropriate
under the circumstances, solicit the consent of the Limited Partners in
connection with the incurrence of additional or new mortgage indebtedness that
would be senior in priority to the Loan. Because these plans are subject to
change, there can be no assurance that any consent, if deemed required, will be
sought as described above, that CCEP will seek to obtain financing of the type
described above, or as to the amount or timing of any distribution that might
be made to Limited Partners from the proceeds of any such financing. The
Purchaser has been advised that the Partnership has almost completed extensive
capital improvements to The Sterling Apartment Homes and Commerce Center in
Philadelphia, Pennsylvania, and that upon completion of such renovations and
subsequent lease-up of the renovated apartments the General Partner will seek
to obtain financing for that property which may result in a special
distribution to Limited Partners; however, there can be no assurance as to
whether the General Partner will obtain this financing as expected or whether
such financing will in fact generate net cash proceeds to the Partnership. The
Purchaser also has been advised that the General Partner and ConCap Holdings
are in the process of negotiating the sale of Northlake Quadrangle in Tucker,
Georgia to an unaffiliated third party for a price of $2,450,000. The net cash
proceeds (after repayment of third party mortgage debt and payment of
transaction expenses and other costs of sale) from such expected sale would be
payable to the Partnership under the terms of the Loan; however, there can be
no assurance as to whether this sale will occur as expected or as to the amount
of cash proceeds that might result from such a sale. Moreover, no determination
has been made as to whether any net cash proceeds generated by such potential
financings or sale would be distributed to Limited Partners, which
determination will be made at the time that such financing is obtained or upon
the sale, respectively, and will be based on, among other things, the
Partnership's working capital requirements at the time. There are no other
plans to sell any property at the present time.
Selected Financial and Property-Related Data. Set forth below are
summaries of certain financial and statistical information with respect to the
Partnership, CCEP and each of the Partnership's properties and the CCEP
Properties, all of which has been excerpted or derived from the Partnership's
Annual Reports on Form 10-K for the years ended December 31, 1996, 1995, 1994,
1993 and 1992 and the Partnership's Quarterly Reports on Form 10-Q for the
periods ended June 30, 1997 and 1996. Information on CCEP and the CCEP
Properties is contained in exhibits to the Partnership's Annual Reports on Form
10-K and Quarterly Reports on Form 10-Q. 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.
18
<PAGE>
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
SELECTED FINANCIAL DATA
(in thousands, except Unit data)
<TABLE>
<CAPTION>
SIX MONTHS ENDED FISCAL YEAR ENDED
JUNE 30, DECEMBER 31,
------------------------ ------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
----------- ------------ ----------- ----------- ----------- ---------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Statements of Operations Data:
Rental Income................. $ 3,758 $ 3,596 $ 7,686 $ 2,069 $ 1,312 $ 1,195 $ 994
Other Income.................. $ 1,942 $ 911 $ 1,728 $ 3,196 $ 3,178 $ 4,985 $ 7,195
Total Revenues............. $ 5,700 $ 4,507 $ 9,414 $ 5,265 $ 4,490 $ 6,180 $ 8,189
Income (Loss) from Operations
(before extraordinary item) $ 1,568 $ 518 $ 828 $ (3,391) $ 2,994 $ (6,749) $ (2,703)
Net Income (Loss)............. $ 1,568 $ 518 $ 828 $ (3,391) $ 2,994 $ (6,749) $ (2,703)
Net Income (Loss) per Unit.... $ 7.80 $ 2.58 $ 4.12 $ (16.87) $ 14.90 $ (33.57) $ (13.44)
AS OF AS OF
JUNE 30, DECEMBER 31,
------------------------ ------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
----------- ------------ ----------- ----------- ----------- ---------- -------
(UNAUDITED)
Balance Sheets Data:
Total Assets.................. $ 90,121 $ 91,263 $ 91,657 $ 106,351 $ 107,630 $ 108,442 $ 120,876
Total Liabilities............. $ 5,964 $ 5,468 $ 7,069 $ 5,575 $ 426 $ 509 $ 464
Limited Partners' Equity
(Deficit) $ 84,541 $ 86,163 $ 84,968 $ 101,134 $ 107,498 $ 108,220 $ 120,575
Units Outstanding............. 199,052 199,052 199,052 199,052 199,045 199,046 199,051
Book Value per Unit........... $ 424.72 $ 432.87 $ 426.86 $ 508.08 $ 540.07 $ 543.69 $ 605.75
</TABLE>
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
SELECTED FINANCIAL DATA*
(in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED FISCAL YEAR ENDED
JUNE 30, DECEMBER 31,
----------------------- --------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- ----------- ----------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Statements of Operations Data:
Rental Income................. $ 9,601 $ 9,489 $ 19,848 $ 24,907 $ 22,987 $ 19,161 $ 17,214
Other Income.................. $ 686 $ 736 $ 140 $ 119 $ 77 $ 173 $ 1,959
Total Revenues............. $ 10,287 $ 10,225 $ 19,988 $ 25,026 $ 23,064 $ 19,334 $ 19,173
Income (Loss) from Operations
(before extraordinary item) $ (16,209) $ (14,765) $ (28,963) $ (37,915) $ (27,355) $ (24,515) $ (20,509)
Net Income (Loss)............. $ (16,209) $ (14,765) $ (28,963) $ (37,934) $ (27,355) $ (28,202) $ (20,509)
AS OF AS OF
JUNE 30, DECEMBER 31,
----------------------- --------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- ----------- ----------- -------
(UNAUDITED)
Balance Sheets Data:
Total Assets.................. $ 39,181 $ 44,836 $ 41,677 $ 45,601 $ 68,153 $ 70,968 $ 76,474
Total Liabilities............. $ 300,327 $ 275,575 $ 286,614 $ 261,575 $ 246,193 $ 221,653 $ 198,957
Limited Partners' Equity
(Deficit) $(258,535) $(228,432) $(242,488) $(213,815) $(176,260) $(149,178) $(121,258)
</TABLE>
- ---------
* Per unit data is not applicable because limited partnership interests in
CCEP are closely held, and are not in the form of units. Limited Partners in
the Partnership do not own any equity interests in CCEP; rather, the
principal asset of the Partnership is the Loan, which is an obligation of
CCEP.
19
<PAGE>
Description of Properties.
(a) 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 properties.
<TABLE>
<CAPTION>
DATE OF
PROPERTY PURCHASE TYPE OF OWNERSHIP USE
-------- -------- ----------------- ---
<S> <C> <C> <C>
The Loft Apartments 11/19/90 Fee ownership Residential Apartments
Raleigh, North Carolina (subject to first mortgage) (188 units)
The Sterling Apartment 12/01/95 Fee ownership Residential Apartments
Homes and Commerce Center (537 units)
Philadelphia, Pennsylvania Commercial Center
(101,418 sq. ft.)
</TABLE>
(b) Set forth below is a table showing the location, the nature of
CCEP's ownership interest in and the use of the CCEP Properties. All fee
ownership of the CCEP Properties is held subject to the Loan.
<TABLE>
<CAPTION>
PROPERTY TYPE OF OWNERSHIP USE
-------- ----------------- ---
<S> <C> <C>
444 De Haro Fee ownership Commercial Center
San Francisco, California (123,942 sq. ft.)
Indian Creek Village Fee ownership Residential Apartments
Overland Park, Kansas (subject to first mortgage) (274 units)
The Knolls Apartments Fee ownership Residential Apartments
Colorado Springs, Colorado (subject to first mortgage) (262 units)
Northlake Quadrangle Fee ownership Commercial Center
Tucker, Georgia (77,621 sq. ft.)
Palm Lake Fee ownership Residential Apartments
Tampa, Florida (subject to first mortgage) (150 units)
Plantation Gardens Apartments Fee ownership Residential Apartments
Plantation, Florida (subject to first mortgage) (372 units)
Regency/Granada Fee ownership Residential Apartments
Fern Park, Florida (343 units)
Magnolia Trace Fee ownership Residential Apartments
Baton Rouge, Louisiana (246 units)
Shirewood Townhomes Fee ownership Residential Apartments
Shreveport, Louisiana (228 units)
Silverado Fee ownership Residential Apartments
El Paso, Texas (248 units)
Society Park Fee ownership Residential Apartments
Tampa, Florida (324 units)
Society Park East Apartments Fee ownership Residential Apartments
Indian Harbor, Florida (subject to first mortgage) (200 units)
Tates Creek Village Fee ownership Residential Apartments
Lexington, Kentucky (subject to first mortgage) (205 units)
</TABLE>
20
<PAGE>
Accumulated Depreciation Schedule.
(a) Set forth below 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 ($ amounts in thousands).
<TABLE>
<CAPTION>
GROSS
CARRYING ACCUMULATED FEDERAL
PROPERTY VALUE DEPRECIATION RATE METHOD TAX BASIS
- ----------------------------------- ------------- ------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
The Loft Apartments $ 6,741 $ 2,353 5-20 yrs. S/L $ 5,665
The Sterling Apartment
Homes and Commerce Center 21,841 864 5-25 yrs. S/L 21,827
----------- ----------- -----------
TOTALS $ 28,582 $ 3,217 $ 27,492
=========== =========== ===========
</TABLE>
(b) Set forth below is a table showing the gross carrying value and
accumulated depreciation of the CCEP Properties as of December 31, 1996 ($
amounts in thousands).
<TABLE>
<CAPTION>
GROSS
CARRYING ACCUMULATED
PROPERTY VALUE DEPRECIATION RATE METHOD
- ----------------------------------- ------------- ------------- ---------- --------
<C> <C> <C> <C> <C>
444 De Haro $ 13,178 $ 9,296 3-18 yrs. S/L
Indian Creek Village 9,283 5,941 5-18 yrs. S/L
The Knolls 7,444 4,876 5-18 yrs. S/L
Northlake Quadrangle 5,137 3,343 5-18 yrs. S/L
Palm Lake 4,572 3,238 5-18 yrs. S/L
Plantation Gardens 14,877 9,675 5-18 yrs. S/L
Regency/Granada 10,544 7,439 5-18 yrs. S/L
Magnolia Trace 6,491 4,228 5-18 yrs. S/L
Shirewood Townhomes 6,462 4,413 5-18 yrs. S/L
Silverado 5,219 3,625 5-18 yrs. S/L
Society Park 9,230 6,275 5-18 yrs. S/L
Society Park East 5,652 3,353 5-18 yrs. S/L
Tates Creek Village 7,364 4,904 5-18 yrs. S/L
---------- ----------
TOTALS $ 105,453 $ 70,606
========== ==========
</TABLE>
Schedule of Mortgages.
(a) Set forth below is a table showing certain information regarding
the outstanding mortgage encumbering one of the Partnership's properties as of
December 31, 1996 ($ amounts in thousands).
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL
BALANCE AT STATED BALANCE
DECEMBER 31, INTEREST PERIOD MATURITY DUE AT
PROPERTY 1996 RATE AMORTIZED DATE MATURITY
- ---------------------------------- --------------- ---------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
The Loft Apartments $ 4,498 6.95% 30 yrs. 12/2005 $ 3,903
</TABLE>
21
<PAGE>
(b) Set forth below is a table showing certain information
regarding the outstanding mortgages encumbering the CCEP Properties as of
December 31, 1996 ($ amounts in thousands). All CCEP Properties, including
those listed below, are held subject to the Loan.
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL
BALANCE AT STATED BALANCE
DECEMBER 31, INTEREST PERIOD MATURITY DUE AT
PROPERTY 1996 RATE AMORTIZED DATE MATURITY
- ---------------------------------- --------------------- ----------------- --------------- -------------- --------
<S> <C> <C> <C> <C> <C>
Indian Creek Village $ 4,652 6.95% 30 yrs. 12/2005 $ 4,036
The Knolls 5,370 6.95% 30 yrs. 12/2005 4,659
Palm Lake 1,732 6.95% 30 yrs. 12/2005 1,503
Plantation Gardens 7,027 6.95% 30 yrs. 12/2005 6,097
Society Park East 2,039 6.95% 30 yrs. 12/2005 1,769
Tates Creek Village 2,573 6.95% 30 yrs. 12/2005 2,233
-------- --------
TOTALS $ 23,393 $20,297
======== =======
</TABLE>
Average Annual Rental Rate and Occupancy.
(a) Set forth below is a table showing the average annual rental rates
and occupancy percentages for each of the Partnership's properties during the
past two years.
<TABLE>
<CAPTION>
PROPERTY AVERAGE ANNUAL RENTAL RATE AVERAGE ANNUAL OCCUPANCY
-------- -------------------------- ------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
The Loft Apartments $ 8,093/unit $ 7,806/unit 95% 91%
The Sterling Apartment $ 10,886/unit $ 10,185/unit 84% 86%
Homes* (residential)
The Sterling Commerce $ 7.34/sq.ft. $ 6.76/sq.ft. 68% 64%
Center* (commercial)
</TABLE>
* 1995 occupancy and rental rates presented for The Sterling reflect only
the month of December, as the property was acquired by the Partnership on
November 30, 1995.
(b) Set forth below is a table showing the average annual rental rates
and occupancy percentages for the CCEP Properties during 1996.
<TABLE>
<CAPTION>
AVERAGE
AVERAGE ANNUAL ANNUAL
PROPERTY RENTAL RATE OCCUPANCY
- --------------------------- ----------------------- ---------
<C> <C> <C>
444 De Haro $ 13.48/sq.ft. 98%
Northlake Quadrangle $ 12.72/sq.ft. 76%
Indian Creek Village $ 6,962/unit 96%
The Knolls $ 7,151/unit 91%
Palm Lake $ 6,972/unit 92%
Plantation Gardens $ 8,045/unit 95%
Regency/Granada $ 6,008/unit 94%
Magnolia Trace $ 5,462/unit 89%
Shirewood Townhomes $ 4,799/unit 89%
Silverado $ 5,775/unit 88%
Society Park $ 5,178/unit 92%
Society Park East $ 6,080/unit 90%
Tates Creek Village $ 7,407/unit 90%
</TABLE>
22
<PAGE>
Schedule of Real Estate Taxes and Rates.
(a) Set forth below is a table showing the real estate taxes and rates
for 1996 for each of the Partnership's properties.
1996 1996
PROPERTY BILLING RATE
-------- --------- ----
The Loft Apartments $ 62,000 1.22%
The Sterling Apartment $ 589,000 8.18%
(b) Set forth below is a table showing the real estate taxes and
rates for 1996 for the CCEP Properties.
1996 1996
PROPERTY BILLING RATE
- ------------------ --------- ------
444 De Haro $ 101,000 1.18%
Indian Creek Village $ 100,000 1.31%
The Knolls $ 52,000 6.88%
Northlake Quadrangle $ 44,000 1.66%
Palm Lake $ 53,000 2.52%
Plantation Gardens $ 284,000 2.40%
Regency/Granada $ 127,000 1.84%
Magnolia Trace $ 25,000 10.00%
Shirewood Townhomes $ 39,000 8.48%
Silverado $ 144,000 2.76%
Society Park $ 118,000 2.51%
Society Park East $ 107,000 2.13%
Tates Creek Village $ 50,000 1.00%
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 following table sets forth the cash
distributions to the Limited Partners and the General Partner made by the
Partnership since 1995. The 1996 distribution was not made completely out of
operating cash flow; rather, that distribution was made primarily out of the
amount of working capital reserves, including the proceeds from financing
obtained on certain of the Partnership's properties and certain of the CCEP
Properties, that exceeded the amount required to be held under the Limited
Partnership Agreement. The Limited Partnership Agreement requires that the
General Partner maintain minimum working capital reserves ($7,300,000 at June
30, 1997) equal to 5% of net Invested Capital (as defined in the Limited
Partnership Agreement). In total, original investors in the Partnership have
received $906.87 of their original $1,000 investment made in 1982.
23
<PAGE>
PER UNIT
DISTRIBUTION TO DISTRIBUTION TO AGGREGATE
YEAR LIMITED PARTNERS(1) GENERAL PARTNER DISTRIBUTION(2)
---- -------------------- -------------------- ------------------
1997* $ 9.94 $ 20,000 $ 1,999,000
1996** 85.25 30,000 17,016,000
1995 14.92 30,000 3,037,000
- ---------
(1) The amounts shown in this column only reflect actual cash distributions
paid directly to Limited Partners based on the weighted average numbers of
Units outstanding during the applicable year, and do not include amounts
withheld and paid directly to state tax authorities on behalf of Limited
Partners in respect of state income tax obligations.
(2) Pursuant to the Limited Partnership Agreement, cash distributions by the
Partnership generally are allocated 99% to the Limited Partners and 1% to
the General Partners.
* Through October 30, 1997.
** Of the amount distributed to Limited Partners, $70.33 per Unit was from
the reduction of working capital reserves, including proceeds from
financings, and $14.92 per Unit was from operating cash flow.
Operating Budgets of the Partnership and CCEP. A summary of the
combined fiscal 1996 and 1997 operating budgets and the audited results of
operations for fiscal 1996 of the Partnership and CCEP are set forth in the
table below. The budgeted amounts provided below are figures that were not
computed in accordance with generally accepted accounting principles ("GAAP").
Historically, budgeted operating results of operations for a particular fiscal
year have differed significantly in certain respects from the audited operating
results for that year. In particular, items that are categorized as capital
expenditures for purposes of preparing the operating budgets are often
re-categorized as expenses when the financial statements are audited and
presented in accordance with GAAP. Therefore, the summary operating budgets
presented for fiscal 1997 should not necessarily be considered as indicative of
what the audited operating results for fiscal 1997 will be. Furthermore, any
estimate of the future performance of a business, such as the Partnership's or
CCEP's business, is forward-looking and based on numerous assumptions, some of
which inevitably will prove to be incorrect. For this reason, it is probable
that the combined future operating results of the Partnership and CCEP will
differ from those projected in the operating budget, and those differences may
be material. Therefore, such information should not be relied on by Limited
Partners.
<TABLE>
<CAPTION>
FISCAL 1996 FISCAL 1996 FISCAL 1997
BUDGETED AUDITED BUDGETED
-------- ------- --------
<S> <C> <C> <C>
Total Revenues from Property Operations................. $ 28,216,005 $ 28,610,000 $ 29,278,089
Total Operating Expenses ............................... $ 15,275,071 $ 18,503,000 $ 16,007,458
Net Operating Income.................................... $ 12,940,934 $ 10,107,000 $ 13,270,631
Capital Expenditures.................................... $ 14,085,818 $ 9,720,000 $ 11,272,267
</TABLE>
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 set forth 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 IPT and 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 the General Partner and/or its affiliates and
(ii) as a consequence of the Purchaser's ownership of Units, because 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. In addition, the Purchaser (which is
an affiliate of the General Partner) is making the Offer with a view to making
a profit. Accordingly, there is a conflict between the desire of the Purchaser
(which is an affiliate of the General Partner) to purchase Units at a low price
and the desire of the Limited Partners to sell their Units at a high price. The
General Partner has indicated in the Schedule 14D-9 that it is remaining
neutral and making no recommendation as to whether Limited Partners should
tender their Units pursuant to the Offer. LIMITED PARTNERS ARE URGED TO READ
THIS OFFER TO PURCHASE AND THE
24
<PAGE>
SCHEDULE 14D-9 AND THE RELATED MATERIALS CAREFULLY AND IN THEIR ENTIRETY BEFORE
DECIDING WHETHER TO TENDER THEIR UNITS.
Voting by the Purchaser. The Limited Partnership Agreement 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. The
Purchaser (which is an affiliate of the General Partner) 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. Even if the Purchaser (which is an affiliate of the
General Partner) is not admitted to the Partnership as a substituted Limited
Partner, however, the Purchaser nonetheless will have the right to vote each
Unit purchased in the Offer pursuant to the irrevocable appointment by
tendering Limited Partners of the Purchaser (which is an affiliate of the
General Partner) and its managers and designees as proxies with respect to the
Units tendered by such Limited Partners and accepted for payment by the
Purchaser. See Section 3. As a result, if the Purchaser (which is an affiliate
of the General Partner) 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. Because IPT already owns (through IPLP) approximately 25% of
the outstanding Units, however, it will be able to significantly influence the
outcome of all voting decisions with respect to the Partnership regardless of
the number of Units the Purchaser acquires pursuant to the Offer. This could
(i) prevent non-tendering Limited Partners from taking action they desire but
that IPT opposes and (ii) enable IPT to take action desired by IPT but opposed
by non-tendering 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. When voting on these 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 IPT's best interests, 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. See
Section 7.
Financing Arrangements. 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. See Section 12. 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 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 "balloon" 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.
Transactions with Affiliates. 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 received from the Partnership in respect of its
interest in the Partnership cash distributions of $20,000 to date in 1997,
$30,000 in 1996 and $30,000 in 1995. In late December 1994, IRG and ICG (which
are affiliates of the Purchaser and the General Partner) assumed day-to-day
property management responsibilities for all of the Partnership's properties
and the CCEP Properties. The Partnership and CCEP paid IRG and ICG property
management fees for property management services in the amounts of
approximately $1,409,000 and $1,373,000 for the years ended December 31, 1996
and 1995, respectively, and have paid IRG and ICG property management fees
equal to $714,000 during the first six months of 1997. The Partnership and CCEP
reimbursed the General Partner, ConCap Holdings and their affiliates (including
Insignia) for expenses incurred in connection with asset management and
partnership administration services performed by them for the Partnership for
the two years ended December 31, 1996 and 1995 in the amounts of $1,022,000 and
$733,000, respectively, and have reimbursed them in the amount of $409,000
through June 30, 1997. The amounts of reimbursements include approximately
$369,000 and $128,000, respectively, for the year ended December 31, 1996 and
the six
25
<PAGE>
months ended June 30, 1997 for construction oversight costs. CCEP paid lease
commissions to an affiliate in the amounts of $69,000 and $221,000 for the
years ended December 31, 1996 and 1995, respectively. In addition, CCEP is
subject to an Investment Advisory Agreement between CCEP and an affiliate of
ConCap Holdings (which is an affiliate of the General Partner). This agreement
provides for an annual fee, payable in monthly installments, to an affiliate of
ConCap Holdings for advisory and consulting services for the CCEP Properties.
Advisory fees paid pursuant to this agreement were $182,000 and $233,000,
respectively, for the years ended December 31, 1996 and 1995, and $91,000 for
the six months ended June 30, 1997. During 1995, an affiliate of the General
Partner was paid $28,000 in connection with obtaining financing on one of the
Partnership's properties. On July 1, 1995, each of the Partnership and CCEP
began insuring its properties 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
during the 18-month period ended December 31, 1996 and since that date was
immaterial.
SECTION 11. CERTAIN INFORMATION CONCERNING THE PURCHASER, IPLP, IPT
AND INSIGNIA.
The Purchaser. The Purchaser (which is an affiliate of the General
Partner) is a newly formed entity controlled by IPT and organized for the
purpose of acquiring the Units. The Purchaser is a wholly-owned subsidiary of
IPLP. The Purchaser (which is an affiliate of the General Partner) has not
engaged in any business activity other than in connection with the Offer and
another tender offer for units of limited partnership interests in another IPT
Partnership (as defined below) being made contemporaneously with the Offer, and
has no significant assets or liabilities at the present time. Upon consummation
of the Offer and such other offer, the Purchaser's only significant assets will
be the Units it acquires pursuant to the Offer and the other limited
partnership units it acquires pursuant to such other offer.
The principal executive offices of the Purchaser (which is an
affiliate of the General Partner) are located at One Insignia Financial Plaza,
Greenville, South Carolina 29602, and its telephone number is (864) 239-1000.
For certain information concerning the managers of the Purchaser (which is an
affiliate of the General Partner), see Schedule II to this Offer to Purchase.
IPT and IPLP. IPT was formed by Insignia in May 1996 for the purpose
of acquiring and owning interests in multifamily residential properties,
principally through ownership of limited and general partner interests in real
estate limited partnerships (including the Partnership). IPT has been organized
and will operate in a manner that will qualify it to be taxed as a real estate
investment trust ("REIT") under the Code. Substantially all of IPT's
investments are held through IPLP, which is the operating partnership of IPT.
IPT is presently the sole general partner and Insignia is presently the sole
limited partner of IPLP.
In forming IPT, Insignia and its affiliates (i) transferred to IPT
equity interests in corporations comprising or controlling the general partners
of 36 public real estate limited partnerships (including the Partnership) (the
"IPT Partnerships") in exchange for common shares of beneficial interest of IPT
and (ii) transferred to IPLP limited partner interests in the IPT Partnerships
(or equity interests in entities owning limited partner interests in the IPT
Partnerships) in exchange for units of limited partner interest in IPLP. The
IPT Partnerships own, in the aggregate, 184 properties containing approximately
42,000 residential apartment units and approximately 4.2 million square feet of
commercial space. See Schedule V for a list of the IPT Partnerships.
IPT does not operate as a self-administered and self-managed REIT, but
rather has engaged, and will for the foreseeable future continue to engage,
Insignia to act as advisor to IPT and IPLP. In such capacity, Insignia and its
affiliates will provide a broad range of services to IPT and IPLP, including
executive advisory, investment advisory, acquisition, administrative, financial
and accounting services, including in connection with the Offer.
26
<PAGE>
On July 18, 1997, IPT, Insignia, MAE GP Corporation (which is an
affiliate of Insignia) and Angeles Mortgage Investment Trust, an unincorporated
California business trust ("AMIT"), entered into a definitive merger agreement
(the "AMIT Merger Agreement"), pursuant to which AMIT is to be merged with and
into IPT, with IPT being the surviving entity, in a stock for stock transaction
(the "AMIT Merger"). AMIT is a public company whose Class A shares trade on the
American Stock Exchange under the symbol ANM. Insignia and its affiliates
currently own 96,800 (or approximately 3.7%) of the 2,617,000 outstanding AMIT
Class A shares and all of the 1,675,113 outstanding AMIT Class B shares. If the
AMIT Merger is consummated, IPT will become a publicly traded company (IPT
presently intends to apply for listing of its shares on the New York Stock
Exchange, which listing would be subject to completion of the AMIT Merger), and
it is anticipated that Insignia and its affiliates will own approximately 56%
of post-merger IPT, the former AMIT shareholders (other than Insignia and its
affiliates) will own approximately 17% of post-merger IPT, and the current
unaffiliated shareholders of IPT will own the remaining 27% of post-merger IPT.
The AMIT Merger is expected to be completed in the fourth quarter of
1997. Consummation of the AMIT Merger is subject to several conditions,
including approval of the AMIT Merger Agreement and the AMIT Merger by the
respective shareholders of IPT and AMIT and the receipt by AMIT of a fairness
opinion from its financial advisor to the effect that the AMIT Merger is fair
to AMIT's shareholders from a financial point of view. Accordingly, there can
be no assurance as to when the AMIT Merger will occur, or that it will occur at
all.
IPT's principal executive offices are located at One Insignia
Financial Plaza, Greenville, South Carolina 29602, and its telephone number is
(864) 239-1000. For certain information concerning the trustees and executive
officers of IPT, see Schedule III to this Offer to Purchase. IPLP does not have
any officers or employees.
Set forth below is certain consolidated financial information with
respect to IPT and IPLP.
27
<PAGE>
INSIGNIA PROPERTIES TRUST SELECTED
CONSOLIDATED FINANCIAL INFORMATION (in
thousands, except share and unit data)
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
1997 1996
-------------- ------------
(unaudited) (audited)
<S> <C> <C>
Statements of Operations Data:
Revenues............................... $ 6,715 $ 9,705
Income Before Extraordinary Item....... $ 1,248 $ 3,557
Net Income............................. $ 1,248 $ 2,425
Supplemental Data:
Funds From Operations(1)............... $ 8,718 $ 12,563
Weighted Average IPT Common Shares
Outstanding........................ 11,539,240 --
IPLP Units Outstanding................. 8,399,499 8,399,499
---------- ----------
Weighted Average IPT Common
Shares and IPLP Units
Outstanding(2)..................... 19,938,739 --
========== ==========
Balance Sheets Data:
Cash................................... $ 35,520 $ 4,928
Investments in IPT Partnerships(3)..... $ 124,951 $ 118,741
Long-Term Debt......................... $ 19,950 $ 19,730
Shareholders' Equity(4)................ $ 163,466 $ 70,639
</TABLE>
- ---------
(1) Funds from Operations represent income or loss from real estate operations,
which is net income or loss in accordance with GAAP, excluding gains or
losses from debt restructuring or sales of property, plus depreciation and
provision for impairment.
(2) Assumes all outstanding IPLP units are exchanged for IPT Common Shares.
(3) Represents IPT's investment in 25 of the 36 IPT Partnerships which IPT
accounts for using the equity method. Of the remaining 11 IPT Partnerships,
IPT accounts for 10 using the cost method and one using the consolidation
method.
(4) Includes Insignia's investments in predecessor entities.
Insignia. Insignia is a fully integrated real estate services
organization. Insignia is the largest manager of multi-family residential
properties in the United States and is among the largest managers of commercial
properties. Insignia's real estate services include property management,
providing all of the day-to-day services necessary to operate a property,
whether residential or commercial; asset management, including long-term
financial planning, monitoring and implementing capital improvement plans, and
development and execution of refinancings and dispositions; real estate leasing
and brokerage; maintenance and construction services; marketing and
advertising; investor reporting and accounting; and investment banking,
including assistance in workouts and restructurings, mergers and acquisitions,
and debt and equity securitizations.
Insignia provides property and/or asset management services for
approximately 2,600 properties, which include approximately 290,000 residential
units (including cooperative and condominium units), and in excess of 150
million square feet of retail, commercial and industrial space, located in over
500 cities in 48 states. Insignia currently provides partnership administration
services to approximately 900 limited partnerships having approximately 330,000
limited partners. Insignia is a public company whose stock is traded on the New
York Stock Exchange under the symbol IFS.
Insignia is subject to the information and reporting requirements of
the Exchange Act and in accordance therewith is required to file periodic
reports, proxy statements and other information with the Commission relating to
its business, financial condition and other matters. Certain information, as of
particular dates, concerning Insignia's business, principal properties, capital
structure, material pending legal proceedings, operating results,
28
<PAGE>
financial condition, directors and officers (including their remuneration and
stock options granted to them), the principal holders of Insignia's securities,
any material interests of such persons in transactions with Insignia and
certain other matters is required to be disclosed in proxy statements and
annual reports distributed to Insignia's shareholders and filed with the
Commission. Such reports, proxy statements and other information may be
inspected and copied at the Commission's public reference facilities and should
also be available for inspection in the same manner as set forth with respect
to the Partnership in Section 9.
Insignia's principal executive offices are located at One Insignia
Financial Plaza, Greenville, South Carolina 29602, and its telephone number is
(864) 239-1000. For certain information concerning the directors and executive
officers of Insignia, see Schedule IV to this Offer to Purchase.
Set forth below is certain consolidated financial information with
respect to Insignia and its consolidated subsidiaries for its fiscal years
ended December 31, 1996, 1995 and 1994 and the six-month periods ended June 30,
1997 and 1996. More comprehensive financial and other information is included
in Insignia's Annual Report on Form 10-K for the year ended December 31, 1996
(including management's discussion and analysis of financial condition and
results of operations) and in other reports and documents filed by Insignia
with the Commission. The financial information set forth below is qualified in
its entirety by reference to such reports and documents filed with the
Commission and the financial statements and related notes contained therein.
These reports and other documents may be examined and copies thereof may be
obtained in the manner set forth above.
INSIGNIA FINANCIAL GROUP, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except per share data)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
------------------------- ----------------------------------
1997 1996 1996 1995 1994
----------- ------------ ------------ ------------ -------
(unaudited)
<S> <C> <C> <C> <C> <C>
Statements of Operations Data:
Total Revenues.................................. $ 154,527 $ 83,319 $ 227,074 $ 123,032 $ 75,451
Income Before Taxes and Extraordinary Item...... $ 7,630 $ 7,690 $ 14,946 $ 10,093 $ 12,101
Net Income...................................... $ 4,578 $ 4,768 $ 8,564 $ 5,806 $ 7,261
Earnings Per Share.............................. $ 0.14 $ 0.15 $ 0.27 $ 0.20 $ 0.35
AS OF AS OF
JUNE 30, DECEMBER 31,
------------------------- ----------------------------------
1997 1996 1996 1995 1994
----------- ------------ ------------ ------------ -------
(unaudited)
Balance Sheets Data:
Cash and Cash Equivalents....................... $ 77,083 $ 57,366 $ 54,614 $ 49,846 $ 36,596
Receivables..................................... $ 58,536 $ 19,101 $ 46,040 $ 26,445 $ 13,572
Total Assets................................ $ 530,224 $ 473,720 $ 492,402 $ 245,409 $ 174,272
Accounts Payable................................ $ 6,965 $ 2,491 $ 1,711 $ 1,497 $ 3,478
Commissions Payable............................. $ 26,937 -- $ 18,736 $ 602 --
Accrued and Sundry Liabilities.................. $ 37,725 $ 27,158 $ 40,741 $ 25,619 $ 18,790
Long-Term Debt.................................. $ 58,674 $ 141,388 $ 69,140 $ 42,996 $ 73,198
Total Liabilities........................... $ 130,301 $ 258,622 $ 130,328 $ 70,714 $ 95,466
Redeemable Convertible Preferred Stock.......... -- -- -- $ 15,000 --
Redeemable Convertible Preferred Securities
of Subsidiary Trust........................... $ 143,978 -- $ 144,169 -- --
Minority Interest of Consolidated Subsidiaries.. $ 31,535 $ 2,690 -- $ 2,682 --
Shareholders' Equity........................ $ 224,410 $ 212,408 $ 217,905 $ 157,013 $ 78,806
</TABLE>
Except as otherwise set forth herein, none of the Purchaser (which is
an affiliate of the General Partner), IPLP, IPT, Insignia or, to the best of
the Purchaser's knowledge, any of the persons listed on Schedules II, III or
29
<PAGE>
IV hereto, or any affiliate of the foregoing, (i) beneficially owns or has a
right to acquire any Units, (ii) has effected any transaction in the Units in
the last 60 days, or (iii) has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Partnership, including, but not limited to, contracts, arrangements,
understandings or relationships concerning the transfer or voting thereof,
joint ventures, loan or option arrangements, puts or calls, guarantees of
loans, guarantees against loss or the giving or withholding of proxies. Andrew
L. Farkas, who is the Chairman of the Board, Chief Executive Officer and
President of Insignia and a trustee of IPT, beneficially owns approximately 28%
of Insignia's outstanding common stock and, as a result, may be deemed to
beneficially own the Units owned by IPLP.
SECTION 12. SOURCE OF FUNDS. The Purchaser (which is an affiliate of
the General Partner) expects that approximately $18,400,000 will be required to
purchase 45,000 Units, if tendered, and to pay related fees and expenses. The
Purchaser (which is an affiliate of the General Partner) expects to obtain all
of those funds from IPLP, which in turn intends to use its cash on hand.
SECTION 13. BACKGROUND OF THE OFFER.
Affiliation with the General Partner. Upon the Partnership's formation
in 1981, Consolidated Capital Equities Corporation ("CCEC"), a Colorado
corporation, was the corporate general partner and Consolidated Capital
Management Company, a California general partnership, was the non-corporate
general partner. As a result of a succession of agreements, CCEC became the
Partnership's managing general partner. In 1988, through a series of
transactions, Southmark Corporation acquired control of CCEC. In December 1988,
CCEC filed for reorganization under Chapter 11 of the United States Bankruptcy
Code. In 1990, as part of CCEC's reorganization plan, the General Partner
acquired CCEC's general partner interests in the Partnership and in 15 other
affiliated public limited partnerships (the "Affiliated Partnerships") and the
General Partner replaced CCEC as the managing general partner of the
Partnership (and as the managing general partner of each of the Affiliated
Partnerships). The selection of the General Partner as the general partner of
the Partnership (and of each of the Affiliated Partnerships) was approved by a
majority of the Limited Partners in the Partnership (and by a majority of the
limited partners in each of the Affiliated Partnerships) pursuant to
solicitations commenced in August 1990. Insignia acquired the stock of the
General Partner through two transactions in December 1994 and October 1995, and
contributed that stock to IPT in December 1996 in connection with IPT's
formation.
Previous Tender Offer. In 1992, LP Acceptance Corporation ("LP
Corporation") acquired 42,843 (or approximately 21.5%) of the outstanding
Units, at a purchase price of $225 per Unit, pursuant to a tender offer
commenced in October 1992. LP Corporation was affiliated with the General
Partner at the time, but was not an affiliate of the Purchaser, IPT or
Insignia. Insignia acquired, as a result of a transaction that occurred in
December 1994, those Units and contributed such Units to IPLP following the
formation of IPT in December 1996.
General Partner's Affiliation with CCEP. In 1989, ConCap Partners
defaulted on certain interest payments that were due under the original loan
agreement between the Partnership and ConCap Partners, and ConCap Partners
subsequently filed for reorganization under Chapter 11 of the United States
Bankruptcy Code. In November 1990, as part of ConCap Partners' reorganization
plan, the Partnership and ConCap Partners executed the Loan Agreement and CCEP
renewed the deeds of trust on the CCEP Properties. ConCap Holdings (which is an
affiliate of the General Partner) is the sole general partner of CCEP, and has
full discretion with respect to conducting CCEP's business, including managing
the CCEP Properties and initiating and approving capital expenditures and asset
dispositions and obtaining financing on, or refinancing any CCEP Property.
Under the terms of the Loan, any net proceeds from sales or refinancings of the
CCEP Properties are paid to the Partnership, after payment of a 3% disposition
fee to ConCap Holdings (or to the Partnership with respect to the Partnership's
properties).
Determination of Purchase Price. In establishing the Purchase Price,
the Purchaser (which is an affiliate of the General Partner) reviewed certain
publicly available information and certain information made available to it by
the General Partner and ConCap Holdings and its other affiliates, including
among other things: (i) the Partnership's Limited Partnership Agreement, as
amended to date; (ii) the Partnership's Annual Report on Form
30
<PAGE>
10-K for the year ended December 31, 1996 and the Partnership's Quarterly
Report on Form 10-Q for the period ended June 30, 1997; (iii) unaudited results
of operations of the Partnership's properties and the CCEP Properties for the
period since the beginning of the Partnership's current fiscal year; (iv) the
combined operating budgets prepared by IRG and ICG with respect to the
Partnership's properties and the CCEP Properties for the year ending December
31, 1997; (v) independent appraisals of certain of the Partnership's properties
and the CCEP Properties; and (vi) other information obtained by IRG, ICG,
Insignia and other affiliates in their capacities as providers of property
management, asset management and partnership administration services to the
Partnership and CCEP. Information on CCEP and the CCEP Properties is contained
in exhibits to 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
year ended June 30, 1997. Based on the above information, the Purchaser (which
is an affiliate of the General Partner) considered several factors, as
discussed below.
Trading History of Units. Secondary market sales activity for the
Units, including privately negotiated sales, has been limited and sporadic.
According to information obtained from the General Partner, from July 1, 1995
to June 30, 1997 an aggregate of 11,134 Units (representing less than 5.6% of
the total outstanding Units) were transferred in sale transactions (excluding
the transfers of Units to IPLP by Insignia in connection with the formation of
IPT). Set forth in the table below are the high and low sales prices of Units
for the quarterly periods from July 1, 1995 to June 30, 1997, as reported by
the General Partner and by The Partnership Spectrum, which is an independent,
third-party source. The gross sales prices reported by The Partnership Spectrum
do not necessarily reflect the net sales proceeds received by sellers of Units,
which typically are reduced by commissions and other secondary market
transaction costs to amounts less than the reported prices; thus the Purchaser
does not know whether the information compiled by The Partnership Spectrum is
accurate or complete. The transfer paperwork submitted to the General Partner
often does not include the requested price information or contains conflicting
information as to the actual sales price; accordingly, Limited Partners should
not rely upon this information as being completely accurate.
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
REPORTED SALES PRICES OF PARTNERSHIP UNITS
<TABLE>
<CAPTION>
AS REPORTED BY AS REPORTED BY
THE GENERAL PARTNER(1) THE PARTNERSHIP SPECTRUM(2)
---------------------- ---------------------------
LOW SALES HIGH SALES LOW SALES HIGH SALES
PRICE PRICE PRICE PRICE
PER UNIT PER UNIT PER UNIT PER UNIT
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Fiscal Year Ended December 31, 1997:
Second Quarter.................................... $100 $345 $300 $363
First Quarter .................................... 10 350 275 355
Fiscal Year Ended December 31, 1996:
Fourth Quarter ................................... 11 326 270 335
Third Quarter..................................... 11 325 222 325
Second Quarter.................................... 50 299 250 355
First Quarter..................................... 88 355 230 380
Fiscal Year Ended December 31, 1995:
Fourth Quarter.................................... 18 325 260 360
Third Quarter..................................... 48 349 225 330
</TABLE>
- ---------
(1) Although the General Partner requests and records information on the
prices at which Units are sold, it does not regularly receive or maintain
information regarding the bid or asked quotations of secondary market
makers, if any. The General Partner processes transfers of Units only 12
times per year -- on the first day of each month. The prices in the table
are based solely on information provided to the General Partner by sellers
and buyers of Units transferred in sale transactions (i.e., excluding
transactions believed to result from the death of a Limited Partner,
rollover to an IRA account, establishment of a trust, trustee to trustee
transfers, termination of a benefit plan, distributions from a qualified
or non-qualified plan, uniform gifts, abandonment of Units or similar non-
sale transactions).
(2) The gross sales prices reported by The Partnership Spectrum do not
necessarily reflect the net sales proceeds received by sellers of Units,
which typically are reduced by commissions and other secondary market
transaction costs to amounts less than the reported prices. The Purchaser
(which is an affiliate of the General Partner) does not know whether the
information compiled by The Partnership Spectrum is accurate or complete.
31
<PAGE>
The Purchaser (which is an affiliate of the General Partner) believes
that, although secondary market sales information probably is not a reliable
measure of value because of the limited and inefficient nature of the market
for Units, this information may be relevant to a Limited Partner's decision as
to whether to tender its Units pursuant to the Offer. At present, privately
negotiated sales and sales through intermediaries (e.g., through the trading
system operated by Chicago Partnership Board, Inc., which publishes sell offers
by holders of Units) are the only means available to a Limited Partner to
liquidate an investment in Units (other than the Offer) because the Units are
not listed or traded on any exchange or quoted on NASDAQ.
Appraisals. Certain of the Partnership's properties and the CCEP
Properties have been appraised in the past several years by independent, third
party appraisers (Joseph J. Blake & Associates, Inc. ("Blake"), Reaves C.
Lukens Company ("Lukens") or E&Y Kenneth Leventhal ("E&Y)). According to the
appraisal reports, the scope of the appraisals included an inspection of each
property and an analysis of the respective surrounding markets. In each case,
the applicable independent appraiser relied principally on the income
capitalization approach to valuation and secondarily on the sales comparison
approach, and represented that its report was prepared in accordance with the
Code of Professional Ethics and Standards of Professional Appraisal Practice of
the Appraisal Institute and the Uniform Standards of Professional Appraisal
Practice, and in compliance with the Appraisal Standards set forth in the
Financial Institutions Reform, Recovery and Enforcement Act of 1989 (known as
"FIRREA"). The estimated market values of the fee simple estate of each of the
Partnership's properties and the CCEP Properties specified in the most recent
appraisal reports for the Partnership's properties and the CCEP Properties
which have been appraised within the past three years are set forth in the
table below, and copies of the summaries of those appraisals have been filed as
exhibits to the Purchaser's Tender Offer Statement on Schedule 14D-1 filed with
the Commission.
APPRAISED DATE OF
PROPERTY NAME VALUE APPRAISAL APPRAISER
- ------------- ----- --------- ---------
The Loft Apartments $ 8,200,000 11/07/95 Blake
The Sterling* $ 14,500,000 08/01/96 E&Y
$ 19,250,000 12/22/95 Lukens
$ 19,250,000 05/12/95 Blake
Indian Creek Village $ 10,100,000 11/06/95 Blake
The Knolls $ 11,500,000 11/01/95 Blake
Palm Lake $ 4,100,000 10/15/95 Blake
Plantation Gardens $ 15,500,000 10/15/95 Blake
Society Park East $ 5,200,000 11/08/95 Blake
Tates Creek Village $ 6,100,000 11/01/95 Blake
- ---------
* For various reasons, the three appraisals performed on the property resulted
in different valuations, as noted. All of the appraisals were performed
prior to commencement of the current rehabilitation project on the property
and the appraised values do not reflect the improvements to the property
made since that date.
IPT Formation Values. In connection with the formation of IPT,
Insignia prepared estimates of the values of the Partnership's properties and
the CCEP Properties and of a Unit as of December 31, 1996 for purposes of
determining the number of units of limited partnership interest in IPLP it
would receive in exchange for the Units contributed to IPLP by Insignia and its
affiliates. For this purpose, Insignia estimated the aggregate value of the
Partnership's properties and the CCEP Properties to be $122,130,150 and the
value of a Unit to be $564. This aggregate property value estimate is
approximately $7,500,000 (or 5.8%) less than the Gross Real Estate Value
Estimate described below, principally due to (i) changes in the operating
performances of the properties between December 1996 and June 1997 and (ii)
improvements to the Sterling Apartment Homes and Commerce Center in that period
as part of its ongoing renovation, and this Unit value estimate is
approximately $43 (or 8%) greater than the Estimated Liquidation Value
described below, principally due to two factors: (i) changes in the
Partnership's net current assets between December 1996 and June 1997, and (ii)
this was an estimate of the "net asset value" of
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a Unit and not the "liquidation value" of a Unit and, therefore, Insignia did
not deduct a 2% reserve to account for the costs associated with liquidating
the Partnership's properties and the CCEP Properties, or a 3% non-subordinated
disposition fee payable to ConCap Holdings on the sale of the CCEP Properties
or to the General Partner on the sale of the Partnership's properties, each as
described below.
Purchaser's Estimate of Gross Real Estate Value. In estimating the
gross real estate value of the Partnership's properties and the CCEP Properties
(except where noted below), the Purchaser utilized the capitalization of income
approach. The estimate of the gross real estate value of the Partnership's
properties and the CCEP Properties prepared by the Purchaser does not purport
to be an estimate of the aggregate fair market value of the Units themselves,
nor should it be viewed as such by Limited Partners. Neither the Purchaser nor
any of its affiliates prepared any estimates of the values of the Partnership's
properties or the CCEP Properties based upon any other valuation method.
RESIDENTIAL PROPERTIES
The following is a description of the methodology employed by the
Purchaser in preparing such estimates for the residential properties owned by
the Partnership and CCEP (as used below, "net operating income" is calculated
before depreciation, amortization, debt service payments and certain capital
expenditure items):
THE LOFT APARTMENTS. In estimating the value of this property, the
Purchaser reviewed the income ($1,012,763) generated by the property for the
eight months ended August 31, 1997 (comprised of $978,256 of gross rental
income and $34,507 of other income), and then deducted from this amount the
total operating expenses of the property for the first eight months of 1997
($396,744), resulting in the Purchaser's estimate of net operating income for
the first eight months of 1997 ($616,019). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $924,029, and
then reduced that annualized net operating income amount by $400 per apartment
unit, representing the Purchaser's estimate of the adjustment that would be
imputed by a third party purchaser in underwriting the operating expenses,
including normal replacement reserves, of the property for valuation purposes.
Finally, the Purchaser capitalized its estimated adjusted net operating income
amount ($848,829) at a 10% capitalization rate, resulting in an estimated gross
property value of $8,488,290.
INDIAN CREEK VILLAGE. In estimating the value of this property, the
Purchaser reviewed the income ($1,361,711) generated by the property for the
eight months ended August 31, 1997 (comprised of $1,276,234 of gross rental
income and $85,477 of other income), and then deducted from this amount the
total operating expenses of the property for the first eight months of 1997
($635,283), resulting in the Purchaser's estimate of net operating income for
the first eight months of 1997 ($726,428). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $1,089,642.
Finally, the Purchaser capitalized its estimated adjusted net operating income
amount ($1,089,642) at a 10% capitalization rate, resulting in an estimated
gross property value of $10,896,420.
THE KNOLLS. In estimating the value of this property, the Purchaser
reviewed the income ($1,283,855) generated by the property for the eight months
ended August 31, 1997 (comprised of $1,194,784 of gross rental income and
$89,071 of other income), and then deducted from this amount the total
operating expenses of the property for the first eight months of 1997
($487,464), resulting in the Purchaser's estimate of net operating income for
the first eight months of 1997 ($796,391). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $1,194,587, and
then reduced that annualized net operating income amount by $250 per apartment
unit, representing the Purchaser's estimate of the adjustment that would be
imputed by a third party purchaser in underwriting the operating expenses,
including normal replacement reserves, of the property for valuation purposes.
Finally, the Purchaser capitalized its estimated adjusted net operating income
amount ($1,129,087) at a 10.5% capitalization rate, resulting in an estimated
gross property value of $10,753,210.
MAGNOLIA TRACE. In estimating the value of this property, the
Purchaser reviewed the income ($858,130) generated by the property for the
eight months ended August 31, 1997 (comprised of $815,224 of gross rental
income and $42,906 of other income), and then deducted from this amount the
total operating expenses of the property for the first eight months of 1997
($422,946), resulting in the Purchaser's estimate of net operating income
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for the first eight months of 1997 ($435,184). The Purchaser then annualized
this amount, resulting in estimated annual net operating income of $652,776,
and then reduced that annualized net operating income amount by $300 per
apartment unit, representing the Purchaser's estimate of the adjustment that
would be imputed by a third party purchaser in underwriting the operating
expenses, including normal replacement reserves, of the property for valuation
purposes. Finally, the Purchaser capitalized its estimated adjusted net
operating income amount ($578,976) at a 10% capitalization rate, resulting in
an estimated gross property value of $5,789,760.
PALM LAKE. In estimating the value of this property, the Purchaser
reviewed the income ($717,151) generated by the property for the eight months
ended August 31, 1997 (comprised of $670,742 of gross rental income and $46,409
of other income), and then deducted from this amount the total operating
expenses of the property for the first eight months of 1997 ($435,833),
resulting in the Purchaser's estimate of net operating income for the first six
months of 1997 ($281,318). The Purchaser then annualized this amount, resulting
in estimated annual net operating income of $421,977, and then increased that
annualized net operating income amount by $200 per apartment unit, representing
the Purchaser's estimate of the adjustment that would be imputed by a third
party purchaser in underwriting the operating expenses, including normal
replacement reserves, of the property for valuation purposes. Finally, the
Purchaser capitalized its estimated adjusted net operating income amount
($451,977) at a 10% capitalization rate, resulting in an estimated gross
property value of $4,519,770.
PLANTATION GARDENS. In estimating the value of this property, the
Purchaser reviewed the income ($2,007,634) generated by the property for the
eight months ended August 31, 1997 (comprised of $1,885,299 of gross rental
income and $122,335 of other income), and then deducted from this amount the
total operating expenses of the property for the first eight months of 1997
($1,027,057), resulting in the Purchaser's estimate of net operating income for
the first eight months of 1997 ($980,577). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $1,470,866, and
then increased that annualized net operating income amount by $100 per
apartment unit, representing the Purchaser's estimate of the adjustment that
would be imputed by a third party purchaser in underwriting the operating
expenses, including normal replacement reserves, of the property for valuation
purposes. Finally, the Purchaser capitalized its estimated adjusted net
operating income amount ($1,508,066) at a 10% capitalization rate, resulting in
an estimated gross property value of $15,080,660.
REGENCY/GRANADA. In estimating the value of this property, the
Purchaser reviewed the income ($1,346,316) generated by the property for the
eight months ended August 31, 1997 (comprised of $1,255,881 of gross rental
income and $90,435 of other income), and then deducted from this amount the
total operating expenses of the property for the first eight months of 1997
($851,971), resulting in the Purchaser's estimate of net operating income for
the first eight months of 1997 ($494,345). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $741,518, and
then increased that annualized net operating income amount by $250 per
apartment unit, representing the Purchaser's estimate of the adjustment that
would be imputed by a third party purchaser in underwriting the operating
expenses, including normal replacement reserves, of the property for valuation
purposes. Finally, the Purchaser capitalized its estimated adjusted net
operating income amount ($827,268) at a 10.5% capitalization rate, resulting in
an estimated gross property value of $7,878,743.
SHIREWOOD TOWNHOMES. In estimating the value of this property, the
Purchaser reviewed the income ($662,632) generated by the property for the
eight months ended August 31, 1997 (comprised of $621,877 of gross rental
income and $40,755 of other income), and then deducted from this amount the
total operating expenses of the property for the first eight months of 1997
($404,051), resulting in the Purchaser's estimate of net operating income for
the first eight months of 1997 ($258,581). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $387,872.
Finally, the Purchaser capitalized its estimated adjusted net operating income
amount ($387,872) at a 12% capitalization rate, resulting in an estimated gross
property value of $3,232,267.
SILVERADO. In estimating the value of this property, the Purchaser
reviewed the income ($889,847) generated by the property for the eight months
ended August 31, 1997 (comprised of $834,076 of gross rental income and $55,771
of other income), and then deducted from this amount the total operating
expenses of the property for the first eight months of 1997 ($620,688),
resulting in the Purchaser's estimate of net operating income for the first
eight months of 1997 ($269,159). The Purchaser then annualized this amount,
resulting in estimated
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annual net operating income of $403,739, and then increased that annualized net
operating income amount by $200 per apartment unit, representing the
Purchaser's estimate of the adjustment that would be imputed by a third party
purchaser in underwriting the operating expenses, including normal replacement
reserves, of the property for valuation purposes. Finally, the Purchaser
capitalized its estimated adjusted net operating income amount ($453,339) at an
11% capitalization rate, resulting in an estimated gross property value of
$4,121,264.
SOCIETY PARK. In estimating the value of this property, the Purchaser
reviewed the income ($1,098,896) generated by the property for the eight months
ended August 31, 1997 (comprised of $1,054,559 of gross rental income and
$44,337 of other income), and then deducted from this amount the total
operating expenses of the property for the first eight months of 1997
($781,229), resulting in the Purchaser's estimate of net operating income for
the first eight months of 1997 ($317,667). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $476,501, and
then increased that annualized net operating income amount by $250 per
apartment unit, representing the Purchaser's estimate of the adjustment that
would be imputed by a third party purchaser in underwriting the operating
expenses, including normal replacement reserves, of the property for valuation
purposes. Finally, the Purchaser capitalized its estimated adjusted net
operating income amount ($557,501) at a 10.5% capitalization rate, resulting in
an estimated gross property value of $5,309,533.
SOCIETY PARK EAST. In estimating the value of this property, the
Purchaser reviewed the income ($825,325) generated by the property for the
eight months ended August 31, 1997 (comprised of $782,322 of gross rental
income and $43,003 of other income), and then deducted from this amount the
total operating expenses of the property for the first eight months of 1997
($475,799), resulting in the Purchaser's estimate of net operating income for
the first eight months of 1997 ($349,526). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $524,289, and
then reduced that annualized net operating income amount by $100 per apartment
unit, representing the Purchaser's estimate of the adjustment that would be
imputed by a third party purchaser in underwriting the operating expenses,
including normal replacement reserves, of the property for valuation purposes.
Finally, the Purchaser capitalized its estimated adjusted net operating income
amount ($504,289) at a 10.5% capitalization rate, resulting in an estimated
gross property value of $4,802,752.
TATES CREEK VILLAGE. In estimating the value of this property, the
Purchaser reviewed the income ($974,674) generated by the property for the
eight months ended August 31, 1997 (comprised of $920,702 of gross rental
income and $53,972 of other income), and then deducted from this amount the
total operating expenses of the property for the first eight months of 1997
($582,311), resulting in the Purchaser's estimate of net operating income for
the first eight months of 1997 ($392,363). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $588,545, and
then increased that annualized net operating income amount by $200 per
apartment unit, representing the Purchaser's estimate of the adjustment that
would be imputed by a third party purchaser in underwriting the operating
expenses, including normal replacement reserves, of the property for valuation
purposes. Finally, the Purchaser capitalized its estimated adjusted net
operating income amount ($629,545) at a 10.5% capitalization rate, resulting in
an estimated gross property value of $5,995,667.
THE STERLING APARTMENT HOMES AND COMMERCE CENTER. In estimating the
value of the residential portion of the property, the Purchaser reviewed the
income ($3,703,802) generated by the residential portion of the property for
the eight months ended August 31, 1997 (comprised of $3,403,007 of gross rental
income and $300,795 of other income), and then deducted from this amount the
total operating expenses of the property for the first eight months of 1997
($2,285,977), resulting in the Purchaser's estimate of net operating income for
the first eight months of 1997 ($1,417,825). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $2,126,738, and
then increased that annualized net operating income amount by $1,000 per
apartment unit, representing the Purchaser's estimate of the adjustment that
would be imputed by a third party purchaser in underwriting the operating
expenses, including normal replacement reserves, of the property for valuation
purposes. This adjustment also represents the Purchaser's estimate of net
rental income that would be imputed by a third party purchaser due to the
continued positive trend in monthly rental revenues from the ongoing apartment
renovations. Finally, the Purchaser capitalized its estimated adjusted net
operating income amount ($2,663,738) at a 9.5% capitalization rate, resulting
in an estimated gross value of $28,039,347 for this portion of the property.
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COMMERCIAL PROPERTIES
The following is a description of the methodology employed by the
Purchaser in preparing the estimates of the values of the commercial properties
owned by the Partnership and CCEP:
444 DEHARO. In estimating the value of this property, the Purchaser
reviewed the income ($1,153,311) generated by the property for the eight months
ended August 31, 1997 (comprised of $1,089,800 of gross rental income and
$63,511 of other income), and then deducted from this amount the total
operating expenses of the property for the first eight months of 1997
($619,321), resulting in the Purchaser's estimate of net operating income for
the first eight months of 1997 ($533,990). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $800,985, and
then increased that annualized net operating income amount by $225,000,
representing the Purchaser's estimate of the adjustment that would be imputed
by a third party purchaser in underwriting the operating expenses, including
normal replacement reserves, and to reflect rental revenues from current leases
in effect on the property for valuation purposes. The Purchaser then
capitalized that estimated adjusted net operating income amount ($1,025,985) at
a 10% capitalization rate, resulting in an estimated gross property value of
$10,259,850. Finally, the Purchaser reduced the estimated gross property value
by $100,000 to reflect capital expenditures that the Purchaser believes a third
party purchaser would deem necessary at the time of acquisition or in
connection with recently executed leases, resulting in an estimated gross
property value of $10,159,850.
NORTHLAKE QUADRANGLE. The Purchaser has been informed that, pursuant
to a letter of intent, a third party purchaser has indicated it is willing to
pay a purchase price for the property of $2,450,000. Accordingly, for purposes
of this evaluation, the Purchaser has determined the value of the property to
be $2,450,000.
THE STERLING APARTMENT HOMES AND COMMERCE CENTER. In estimating the
value of the commercial portion of the property, the Purchaser reviewed the
income ($752,077) generated by the commercial portion of the property for the
eight months ended August 31, 1997 (comprised of $596,271 of gross rental
income and $155,806 of other income) and then deducted from this amount the
total operating expenses of the property for the first eight months of 1997
($580,552), resulting in the Purchaser's estimate of net operating income for
the first eight months of 1997 ($171,525). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $257,288, and
then capitalized this estimated annual net operating income amount at a 12%
capitalization rate, resulting in an estimated gross value of $2,144,063 for
this portion of the property.
* * *
Based on the individual estimates of the gross values of the
Partnership's properties and the CCEP Properties described above, the Purchaser
estimated that the current aggregate gross real estate value of the
Partnership's properties and the CCEP Properties is $129,661,596 (the "Gross
Real Estate Value Estimate"). The property-specific capitalization rates used
by the Purchaser in the valuation estimates described above were based upon the
Purchaser's, IPT's and Insignia's general knowledge of the revenues and
expenses associated with operating multi-family properties in the markets in
which the Partnership's properties and the CCEP Properties are located, their
general knowledge of property values in those markets and their experience in
the real estate market in general.
Although there are several other methods of estimating the value of
real estate of this type, the Purchaser believes that this approach represents
a reasonable method of estimating the aggregate gross value of the
Partnership's properties and the CCEP Properties (without taking into account
the costs of disposing of the properties), subject to the substantial
uncertainties inherent in any estimate of value. The use of other assumptions,
however, particularly as to the applicable capitalization rate, could produce
substantially different results. None of the Purchaser, IPT or Insignia
solicited any offers or inquiries from prospective buyers of the Partnership's
properties or the CCEP Properties in connection with preparing the Purchaser's
estimates of the fair market values of those properties, and the actual amounts
for which the Partnership's properties and the CCEP Properties might be sold
could be significantly higher or significantly lower than the Purchaser's
estimates.
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<PAGE>
The Gross Real Estate Value Estimate does not take into account (i)
the third-party debt (which is senior to the Loan) encumbering the
Partnership's properties and the CCEP Properties or the other liabilities of
the Partnership and CCEP, (ii) cash and other assets held by the Partnership
and CCEP, (iii) real estate transaction costs that would be incurred on a sale
of the Partnership's properties or the CCEP Properties, such as brokerage
commissions and other selling and closing expenses, (iv) timing considerations
or (v) costs associated with winding up the Partnership and CCEP. For this
reason, the Purchaser considers the Gross Real Estate Value Estimate to be less
meaningful in evaluating the Purchase Price offered by the Purchaser than its
pro forma estimate of the net liquidation value per Unit described below.
Purchaser's Pro Forma Estimate of Net Liquidation Value per Unit. The
Purchaser is offering to purchase Units, which are a relatively illiquid
investment, and is not offering to purchase the Partnership's underlying assets
or assume any of its liabilities. Consequently, the Purchaser does not believe
that the per-Unit amount which might be distributed to Limited Partners
following a future sale of all the Partnership's properties necessarily
reflects the present fair value of a Unit. Conversely, the realizable value of
the Partnership's assets clearly is a relevant factor in determining the price
a prudent purchaser would offer for Units.
The Loan held by the Partnership is not typical of the kinds of loans
traded in the secondary loan markets. Loans generally are traded at prices that
reflect the yield the purchaser expects to realize from scheduled payments
(including payments due at maturity) on the purchased loans. Because the Loan
is unusual, the Purchaser believes a conventional loan valuation analysis is
probably not a realistic approach to valuation. The Purchaser believes a
purchaser of the Loan more likely would view the Loan as approximately
equivalent to outright ownership of the CCEP Properties, because the
outstanding principal amount of the Loan, approximately $275,000,000 as of June
30, 1997, including interest accrued and added to principal pursuant to the
terms of the Loan exceeds the Purchaser's estimate of the aggregate gross
property value of the CCEP Properties ($90,989,896 as of June 30, 1997). It is
very unlikely that CCEP would voluntarily transfer title to the CCEP Properties
any earlier than that, even though the aggregate indebtedness under the Loan
exceeds the value of the CCEP Properties by a large amount, because disposition
of the CCEP Properties will have substantial adverse tax consequences for the
partners in CCEP. Any disposition of the CCEP Properties would result in net
cash proceeds, after repayment of the Senior Mortgage Indebtedness and payment
of transaction expenses and other costs of sale. Indeed, it is possible that
CCEP might seek bankruptcy protection when the Loan matures and becomes
repayable in full, simply in order to further postpone the adverse tax
consequences associated with disposition of the CCEP Properties. Accordingly,
while the pro forma liquidation analysis described below reflects an approach
that may be relevant in evaluating the Purchaser's Offer, the Purchaser
believes the Estimated Liquidation Value per Unit does not accurately reflect
the current fair market value per Unit.
In performing this analysis, the Purchaser made a pro forma
calculation of the amount each Limited Partner might receive in a theoretical
orderly liquidation of the Partnership (which may not be realistically
possible, particularly in the near term, due to real estate market conditions,
the general difficulty of disposing of real estate in a short period of time,
and other general economic factors), based on the Gross Real Estate Value
Estimate described above, the assumption that the Loan could be sold for an
aggregate price equal to the value of the aggregate value of the CCEP
Properties, and the other considerations described below. The Purchaser based
its pro forma liquidation analysis on the Gross Real Estate Value Estimate (and
thus on the Purchaser's estimates, described above, of the values of the
Partnership's properties and the CCEP Properties), as opposed to the appraised
values of those properties or the values estimated in connection with the
formation of IPT (as described above), because the Purchaser believes that the
Gross Real Estate Value Estimate represents the best estimate, based on
currently available information, of the values of the Partnership's properties
and the CCEP Properties.
In estimating the pro forma net liquidation value per Unit, the
Purchaser adjusted its Gross Real Estate Value Estimate of $129,661,596 to
reflect the Partnership's other assets and liabilities (excluding prepaid and
deferred expenses and security deposits). Specifically, the Purchaser added the
amounts of cash, accounts receivable and escrow deposits shown on the
Partnership's and CCEP's unaudited balance sheets at June 30, 1997
($11,244,000) (this represents $12,244,000, the total amount stated on the
Partnership's and CCEP's balance sheets, minus $1,000,000 in cash expended on
the rehabilitation of The Sterling Apartment Homes and Commerce Center
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since the date of those balance sheets which expenditures were taken into
account in the estimated gross property value of that property), and subtracted
the mortgage debt encumbering the Partnership's directly-owned properties
($4,474,000) and the Senior Mortgage Indebtedness encumbering the CCEP
Properties ($23,265,000) and all other liabilities shown on the balance sheets
of the Partnership and CCEP ($2,488,000). The Purchaser then deducted from that
amount $2,593,232, representing a reserve equal to 2% of the Gross Real Estate
Value Estimate (which represents the Purchaser's estimate of the probable costs
of real estate transfer taxes and other disposition expenses). The result,
$108,085,364, represents the Purchaser's pro forma estimate of the aggregate
net liquidation proceeds (before provision for the costs described in the
following sentence) which could be realized on an orderly liquidation of the
Partnership, based on the assumptions implicit in the calculations described
above. The Purchaser did not, however, deduct any amounts in respect of the
legal and other costs which the Purchaser expects would be incurred in a
liquidation, including the cost of exercising rights as a mortgagee under the
Loan or costs of negotiating purchase and sale contracts, possibly conducting a
consent solicitation in order to obtain the Limited Partners' approvals for the
sales as may be required by the Limited Partnership Agreement, and winding up
the Partnership, because of the difficulty of estimating those amounts.
To complete its pro forma estimate of the amount of the theoretical
liquidation proceeds that would be distributable per Unit, the Purchaser then
deducted $3,242,561 (which represents the 3% non-subordinated disposition fee
payable to the General Partner upon a sale of the Partnership's properties and
to ConCap Holdings upon a sale of the CCEP Properties), resulting in net
aggregate liquidation proceeds of $104,842,803. The Purchaser then deducted 1%
which is the percentage allocable to the General Partner in respect of its
non-subordinated interest in the Partnership, and the remaining $103,794,375
was then divided by the 199,052 Units reported as outstanding by the General
Partner as of October 1, 1997. The resulting estimated pro forma liquidation
value was $521.44 per Unit (the "Estimated Liquidation Value"), before
provision for the legal and other costs of liquidating the Partnership
described in the last sentence of the preceding paragraph.
The Purchaser's pro forma liquidation analysis described above is
merely theoretical and does not itself reflect the value of the Units because
(i) there is no assurance that any such liquidation in fact will occur in the
foreseeable future, (ii) any such liquidation prior to the currently-scheduled
maturity of the Loan on November 15, 2000 would require the consent of the
partners in CCEP, and the Purchaser believes those partners would not consent
because of the substantially adverse tax consequences of such a liquidation to
those partners and (iii) any liquidation in which the estimated fair market
values described above might be realized would take an extended period of time
(at least a year, and quite possibly significantly longer), during which time
the Partnership and its partners would continue to be exposed to the risk of
fluctuations in asset values because of changing market conditions and other
factors. For any property sales in which the Partnership is required to
indemnify the buyer for matters arising after the closing, a portion of the
sales proceeds could be held by the Partnership until all possible claims were
satisfied, further extending the delay in the receipt by the Limited Partners
of liquidation proceeds. In light of these factors, the Purchaser (which is an
affiliate of the General Partner) believes the actual current value of the
Units is substantially less than its estimate of the Estimated Liquidation
Value. Conversely, there is a substantial possibility that the per-Unit value
realized in an orderly liquidation could be greater than the Estimated
Liquidation Value. A reduction in either operating expenses or capital
expenditures from the levels reflected in the property operating statements for
the six months ending June 30, 1997 would result in a higher liquidation value
under the method described above. Similarly, a higher liquidation value would
result if a buyer applied lower capitalization rates (reflecting a willingness
to accept a lower rate of return on its investment) to the applicable net
operating income generated by the Partnership's properties than the
capitalization rates applied by the Purchaser. For example, a 5% increase or
decrease in the value of the Partnership's properties would produce a
corresponding increase or decrease in the Estimated Liquidation Value of
approximately $31 per Unit. Furthermore, the analysis described above is based
on a series of assumptions, some of which may not be correct. Accordingly, this
analysis should be viewed merely as indicative of the Purchaser's approach to
valuing Units and not as any way predictive of the likely result of any future
transactions.
SECTION 14. CONDITIONS OF THE OFFER. Notwithstanding any other term of
the Offer, the Purchaser (which is an affiliate of the General Partner) 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
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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 (which is an
affiliate of the General Partner) 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 (which is an affiliate of the General Partner), (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 Limited Partners, (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;
(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, which is or may be materially adverse to the
Partnership, or the Purchaser (which is an affiliate of the General Partner)
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 which might affect, the extension of credit by lending institutions or
result in any imposition of currency controls in the United States, (iv) a
commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States, (v) a material
change in United States or other currency exchange rates or a suspension of, or
imposition of a limitation on, the markets thereof, or (vi) in the case of any
of the foregoing existing at the time of the commencement of the Offer, a
material acceleration or worsening thereof; or
(e) it shall have been publicly disclosed or the Purchaser (which is
an affiliate of the General Partner) 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
(which is an affiliate of the General Partner) 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 (which is an
affiliate of the General Partner) concerning the events described above will be
final and binding upon all parties.
39
<PAGE>
SECTION 15. CERTAIN LEGAL MATTERS.
General. The Purchaser (which is an affiliate of the General Partner)
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 (which is an affiliate of the General
Partner) pursuant to the Offer, other than the filing of a Tender Offer
Statement on Schedule 14D-1 with the Commission (which has already been filed)
and any required amendments thereto. 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. Although 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 other substantial
conditions complied with in order to obtain such approval or action, any of
which could cause the Purchaser (which is an affiliate of the General Partner)
to elect to terminate the Offer without purchasing Units thereunder.
Antitrust. The Purchaser (which is an affiliate of the General
Partner) does not believe that the Hart-Scott- Rodino Antitrust Improvements
Act of 1976, as amended, is applicable to the acquisition of Units contemplated
by 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, those regulations generally are not applicable to the Offer.
SECTION 16. FEES AND EXPENSES. Except as set forth in this Section 16,
the Purchaser (which is an affiliate of the General Partner) 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 (which is an affiliate of
the General Partner) has retained Beacon Hill Partners, Inc. to act as the
Information Agent and Harris Trust Company of New York to act as the Depositary
in connection with the Offer. The Purchaser (which is an affiliate of the
General Partner) 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 (which is an affiliate of the General Partner)
will also pay all costs and expenses of printing and mailing the Offer and its
legal fees and expenses.
SECTION 17. MISCELLANEOUS. The Purchaser (which is an affiliate of the
General Partner) is not aware of any jurisdiction in which the making of the
Offer is not in compliance with applicable law. If the Purchaser (which is an
affiliate of the General Partner) 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 (which is an affiliate of the General
Partner) cannot comply with any such law, the Offer will not be made to (nor
will tenders be accepted from or on behalf of) Limited Partners residing in
such jurisdiction. In those jurisdictions whose securities or blue sky laws
require the Offer to be made by a licensed broker or dealer, the Offer will be
deemed to be made on behalf of the Purchaser (which is an affiliate of the
General Partner) by one or more registered brokers or dealers licensed under
the laws of that jurisdiction.
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser (which is an affiliate of the General
Partner) not contained in this Offer to Purchase or in the Assignment of
Partnership Interest and, if given or made, such information or representation
must not be relied upon as having been authorized.
The Purchaser (which is an affiliate of the General Partner), IPLP,
IPT and Insignia have 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
40
<PAGE>
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).
REEDY RIVER PROPERTIES, L.L.C.
OCTOBER 30, 1997
41
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
SCHEDULE I
TRANSACTIONS IN THE UNITS
EFFECTED BY IPLP WITHIN THE PAST 60 DAYS
Number of Price
DATE Units Purchased Per Unit
9/17/97 2.0 $325
9/17/97 4.0 363
9/17/97 30.0 363
9/17/97 2.0 325
9/17/97 13.0 363
9/17/97 2.0 355
9/17/97 2.0 355
9/17/97 2.0 359
9/17/97 25.0 361
9/17/97 10.0 325
9/17/97 25.0 330
9/17/97 8.0 325
9/17/97 5.0 327
9/17/97 5.0 325
9/17/97 2.5 315
9/17/97 21.0 319
S-1
<PAGE>
SCHEDULE II
INFORMATION REGARDING THE MANAGERS OF THE PURCHASER
Set forth in the table below are the name and the present principal occupations
or employment and the name, principal business and address of any corporation
or other organization in which such occupation or employment is conducted, and
the five-year employment history of each of the managers of the Purchaser. Each
person identified below is employed by Insignia and is a United States citizen.
The principal business address of the Purchaser and, unless otherwise
indicated, the business address of each person identified below, is One
Insignia Financial Plaza, Greenville, South Carolina 29602.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ---- ----------------------------
<S> <C>
Jeffrey P. Cohen Jeffrey P. Cohen has been a Manager of the Purchaser since its inception in
375 Park Avenue October 1997. For additional information regarding Mr. Cohen, see Schedule
Suite 3401 III.
New York, NY 10152
John K. Lines John K. Lines has been a Manager of the Purchaser since its inception in
October 1997. For additional information regarding Mr. Lines, see Schedules
III and IV.
Ronald Uretta Ronald Uretta has been a Manager of the Purchaser since its inception in
October 1997. For additional information regarding Mr. Uretta, see Schedules
III and IV.
</TABLE>
S-2
<PAGE>
SCHEDULE III
INFORMATION REGARDING THE
TRUSTEES AND EXECUTIVE OFFICERS OF IPT
Set forth in the table below are the name and the present principal occupations
or employment and the name, principal business and address of any corporation
or other organization in which such occupation or employment is conducted, and
the five-year employment history of each of the trustees and executive officers
of IPT. Each person identified below is employed by Insignia and is a United
States citizen. The principal business address of IPT and, unless otherwise
indicated, the business address of each person identified below, is One
Insignia Financial Plaza, Greenville, South Carolina 29602. Trustees are
identified by an asterisk.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ---- ----------------------------
<S> <C>
Andrew L. Farkas* Andrew L. Farkas has served as a Trustee of IPT since December
1996, and has served as Chairman of the Board of Trustees
and Chief Executive Officer of IPT since January 1997. For
additional information regarding Mr. Farkas, see Schedule IV.
James A. Aston* James A. Aston has served as a Trustee and President of IPT since
its inception in May 1996. For additional information regarding
Mr. Aston, see Schedule IV.
Frank M. Garrison* Frank M. Garrison has served as a Trustee of IPT since December
102 Woodmont Boulevard 1996. Mr. Garrison also served as an Executive Managing
Suite 400 Director of IPT from January 1997 to April 1997. For additional
Nashville, TN 37205 information regarding Mr. Garrison, see Schedule IV.
Jeffrey P. Cohen Jeffrey P. Cohen has served as a Senior Vice President of IPT
375 Park Avenue since August 1997, and served as a Vice President of IPT from
Suite 3401 June 1997 until August 1997. Since April 1997, Mr. Cohen's
New York, NY 10152 principal occupation has been to serve as a Senior Vice President
-- Investment Banking of Insignia. Prior to April 1997, Mr.
Cohen's principal occupation was as an attorney with the law firm
of Rogers & Wells, New York, New York.
William D. Falls William D. Falls has served as the Controller of IPT since August
1997. Since April 1995, Mr. Falls' principal occupation has been
to serve as an accountant with Insignia. Prior to April 1995, Mr.
Falls' principal occupation was as a senior auditor with the
accounting firm of Ernst & Young LLP.
William H. Jarrard, Jr. William H. Jarrard, Jr. has served as a Senior Vice President of
IPT since August 1997, and served as Vice President and Director
of Operations of IPT from December 1996 until August 1997. Mr.
Jarrard's principal employment has been with Insignia for more
than the past five years. From January 1994 to September 1997,
Mr. Jarrard served as Managing Director-- Partnership
Administration of Insignia.
S-3
<PAGE>
John K. Lines John K. Lines has served as Secretary of IPT since December
1996, and has served as a Senior Vice President of IPT since
August 1997. Mr. Lines served as a Vice President IPT from May
1996 until August 1997. For additional information regarding Mr.
Lines, see Schedule IV.
Ronald Uretta Ronald Uretta has served as Treasurer of IPT since December
1996, and has served as a Senior Vice President of IPT since
August 1997. Mr. Uretta served as a Vice President of IPT from
December 1996 until August 1997 and as Chief Financial Officer
of IPT from May 1996 until December 1996. For additional
information regarding Mr. Uretta, see Schedule IV.
Carroll D. Vinson Carroll D. Vinson has served as Chief Operating Officer of IPT
since May 1997. Since August 1994, Mr. Vinson's principal
occupation has been to serve as President of the Various
corporate general partners of partnerships controlled by
Metropolitan Asset Enhancement, L.P., which is an affiliate of
Insignia.
</TABLE>
S-4
<PAGE>
SCHEDULE IV
INFORMATION REGARDING THE
DIRECTORS AND EXECUTIVE OFFICERS OF INSIGNIA
Set forth in the table below are the name and the present principal occupations
or employment and the name, principal business and address of any corporation
or other organization in which such occupation or employment is conducted, and
the five-year employment history of each of the directors and executive
officers of Insignia. Unless otherwise indicated, each person identified below
is employed by Insignia and is a United States citizen. The principal business
address of Insignia and, unless otherwise indicated, the business address of
each person identified below, is One Insignia Financial Plaza, Greenville,
South Carolina 29602. Directors are identified by an asterisk.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ---- ----------------------------
<S> <C>
Andrew L. Farkas* Andrew L. Farkas has been a Director and Chairman, President and Chief
Executive Officer of Insignia since its inception in January 1991. Mr. Farkas
has also been President of Metropolitan Asset Group, Ltd. ("MAG"), a real
estate investment banking firm, since 1983.
Robert J. Denison* Robert J. Denison has been a Director of Insignia since May 1996. For more
1212 North Summit Drive than the past five years, Mr. Denison's principal occupation has been
Santa Fe, NM 87501 as a General Partner of First Security Company II, L.P., an
investment advisory firm.
Robin L. Farkas* Robin L. Farkas has been a Director of Insignia since August 1993. Mr. Farkas
730 Park Avenue is the retired Chairman of the Board and Chief Executive Officer of Alexander's
New York, NY 10021 Inc., a real estate company. He also serves as a director of Refac Technology
Development Corporation, Noodle Kiddoodle, and Containerways International Ltd.
Merril M. Halpern* Merril M. Halpern has been a Director of Insignia since August 1993. For more
535 Madison Avenue than the past five years, Mr. Halpern's principal occupation has been as
New York, NY 10022 Chairman of the Board of Directors and Co-Chief Executive Officer of Charterhouse
Group International, Inc., a privately-owned investment firm which, among other
things, actively engages in making private equity investments in a broad range
of industrial and service companies located primarily in the United States.
Mr. Halpern is also a director of American Disposal Services, Inc., Designer
Holdings Ltd. and Microwave Power Devices, Inc.
Robert G. Koen* Robert G. Koen has been a Director of Insignia since August 1993. Since
125 West 55th Street February 1996, Mr. Koen has been a partner in the law firm of Akin, Gump,
New York, NY 10019 Strauss, Hauer & Feld, which represents Insignia and certain of its affiliates
from time to time. From January 1991 to February 1996, Mr. Koen was a partner
in the law firm LeBoeuf, Lamb, Greene & MacRae.
Michael I. Lipstein* Michael I. Lipstein has been a Director of Insignia since August 1993. For
110 East 59th Street more than the past five years, Mr. Lipstein's principal
occupation has been as New York, NY 10022 a self-employed consultant in the real
estate business, including ownership, management and lending.
S-5
<PAGE>
Buck Mickel* Buck Mickel has been a Director of Insignia since August 1993. For more than the
301 N. Main Street past five years, Mr. Mickel's principal occupation has been to serve as Chairman
Greenville, SC 29601 of the Board and Chief Executive Officer of RSI Holdings, a company which
distributes outdoor equipment. Mr. Mickel is also a director of Fluor Corporation,
The Liberty Corporation, NationsBank Corporation, Emergent Group, Inc., Delta
Woodside Industries, Inc., Duke Power Company, and Textile Hall Corporation.
James A. Aston James A. Aston's principal employment has been with Insignia for more than the
past five years. Mr. Aston currently serves as Chief Financial Officer of
Insignia (since August 1996) and with the Office of the Chairman (since July 1994).
Albert J. Frazia Albert Frazia has been a Senior Vice President -- Human Resources of Insignia
since August 1997. Prior to August 1997, Mr. Frazia's principal employment for
more than the prior five years was as Director -- Human Resources of E&Y
Kenneth Leventhal Real Estate Group, New York, New York.
Frank M. Garrison Frank M. Garrison's principal employment has been with Insignia for more than
102 Woodmont Boulevard the past five years. Mr. Garrison currently serves as an Executive Managing
Suite 400 Director of Insignia (since July 1994) and as President of Insignia Financial
Nashville, TN 37205 Services, a division of Insignia (since July 1994).
Jeffrey L. Goldberg Jeffrey L. Goldberg's principal employment has been with Insignia for more
375 Park Avenue than the past five years. Mr. Goldberg currently serves as a Managing
Suite 3401 Director -- Investment Banking of Insignia (since July 1994).
New York, NY 10152
Edward S. Gordon Edward S. Gordon has been with the Office of the Chairman of Insignia since
200 Park Avenue July 1996. Prior to July 1996, Mr. Gordon's principal employment for more
New York, NY 10166 than the prior five years was as a founder and Chairman of Edward S. Gordon
Company, Incorporated ("ESG"), a commercial property management and brokerage
firm located in New York, New York that was acquired by Insignia in June 1996.
Albert H. Gossett Albert H. Gossett's principal employment has been with Insignia for more than
the past five years. Mr. Gossett currently serves as a Senior Vice President
of Insignia (since July 1994) and as Chief Information Officer of Insignia
(since 1991).
Henry Horowitz Henry Horowitz's principal employment has been with Insignia since January 1993.
Mr. Horowitz currently serves as an Executive Managing Director of Insignia
(since June 1994) and Chief Operating Officer of Insignia Commercial Group
(since January 1997). From January 1987 to January 1993, Mr. Horowitz's
principal employment was as Chief Executive Officer of First Resource Realty,
Inc., a commercial property management organization located in Oklahoma that
Insignia acquired in January 1993.
S-6
<PAGE>
Neil Kreisel Neil Kreisel has been an Executive Managing Director of Insignia since September
909 Third Avenue 1995 and President of Insignia Residential Group since September 1997. Prior to
New York, NY 10022 September 1995, Mr. Kreisel's principal occupation was to serve as President and
Chief Executive Officer of Kreisel Company, Inc., a residential property
management firm located in New York, New York which Insignia acquired in
September 1995.
John K. Lines John K. Lines has been General Counsel of Insignia since June 1994 and Secretary
since July 1994. From May 1993 until June 1994, Mr. Lines' principal employment
was as Assistant General Counsel and Vice Corporation, a thrift holding company
located in West Palm Beach, Florida. From October 1991 until April 1993,
Mr. Lines' principal employment was as Senior Attorney of Banc One Corporation,
a bank holding company in Columbus, Ohio.
Martha Long Martha Long has been a Senior Vice President -- Finance of Insignia since
January 1997 and Controller of Insignia since June 1994. Prior to June 1994,
Ms. Long was Senior Vice President and Controller of The First Savings Bank
located in Greenville, South Carolina.
Stephen C. Schoenbaechler Stephen C. Schoenbaechler's principal employment has been with Insignia for
more than the past five years. Mr. Schoenbaechler currently serves as a
Senior Vice President -- Investment Banking of Insignia (since April 1997).
Thomas R. Shuler Thomas R. Shuler's principal employment has been with Insignia for more than the
past five years. Mr. Shuler currently serves as Chief Operating Officer of
Insignia Residential Group (since January 1997).
Stephen B. Siegel Stephen B. Siegel has been an Executive Managing Director of Insignia since
200 Park Avenue July 1996 and President of Insignia Commercial Group since January 1997.
New York, NY 10166 From February 1992 until July 1996, Mr. Siegel's principal employment was
as President of ESG.
Ronald Uretta Ronald Uretta's principal employment has been with Insignia for more than the
past five years. Mr. Uretta currently serves as Chief Operating Officer (since
August 1996) and Treasurer (since January 1992) of Insignia.
</TABLE>
S-7
<PAGE>
SCHEDULE V
IPT PARTNERSHIPS
Consolidated Capital Growth Fund
Consolidated Capital Institutional Properties
Consolidated Capital Institutional Properties/2
Consolidated Capital Institutional Properties/3
Consolidated Capital Properties III
Consolidated Capital Properties IV
Consolidated Capital Properties V
Consolidated Capital Properties VI
Shelter Properties I Limited Partnership
Shelter Properties II Limited Partnership
Shelter Properties III Limited Partnership
Shelter Properties IV Limited Partnership
Shelter Properties V Limited Partnership
Shelter Properties VI Limited Partnership
Shelter Properties VII Limited Partnership
National Property Investors III
National Property Investors 4
National Property Investors 5
National Property Investors 6
National Property Investors 7
National Property Investors 8
Century Properties Fund XIV
Century Properties Fund XV
Century Properties Fund XVI
Century Properties Fund XVII
Century Properties Fund XVIII
Century Properties Fund XIX
Century Properties Fund XX
Century Properties Growth Fund XXII
Century Pension Income Fund XXIII
Century Pension Income Fund XXIV
Johnstown/Consolidated Income Partners
Davidson Growth Plus, L.P.
Multi-Benefit Realty Fund 87-1
U.S. Realty Partners, L.P.
Fox Strategic Housing Income Partners
S-8
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Manually signed facsimile copies of the Assignment of Partnership Interest
will be accepted. The Assignment of Partnership Interest and any other required
documents should be sent or delivered by each Limited Partner or such Limited
Partner's broker, dealer, bank, trust company or other nominee to the
Depositary as set forth below.
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
By Mail: By Facsimile: To Confirm: By Hand/Overnight Delivery:
<S> <C> <C> <C>
Wall Street Station (212) 701-7636 (212) 701-7624 Wall Street Plaza
P.O. Box 1023 88 Pine Street, 19th Floor
New York, New York 10268-1023 New York, New York 10005
</TABLE>
Questions and requests for assistance or for additional copies of this
Offer to Purchase and the Assignment of Partnership Interest may be directed to
the Information Agent at its telephone number and address listed below. You may
also contact your broker, dealer, bank, trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the Offer is:
BEACON HILL PARTNERS, INC.
90 Broad Street
20th Floor
New York, New York 10004
(800) 854-9486
(Toll Free)
(212) 843-8500
(Call Collect)
<PAGE>
ASSIGNMENT OF PARTNERSHIP INTEREST
FOR THE TENDER OF UNITS OF LIMITED PARTNERSHIP INTEREST IN
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
PURSUANT TO THE OFFER TO PURCHASE DATED OCTOBER 30, 1997
- -------------------------------------------------------------------------------
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK TIME, ON NOVEMBER 26, 1997 UNLESS THE OFFER IS EXTENDED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
By Mail: By Facsimile: To Confirm: By Hand/Overnight Delivery:
<S> <C> <C> <C>
Wall Street Station (212) 701-7636 (212) 701-7624 Receive Window
P.O. Box 1023 Wall Street Plaza
New York, New York 10268-1023 88 Pine Street, 19th Floor
New York, New York 10005
</TABLE>
IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE IN COMPLETING THIS ASSIGNMENT
OF PARTNERSHIP INTEREST, PLEASE CALL OUR INFORMATION AGENT, BEACON HILL
PARTNERS, TOLL FREE AT (800) 854-9486.
DELIVERY OF THIS ASSIGNMENT OF PARTNERSHIP INTEREST (OR A FACSIMILE COPY)
OR ANY OTHER REQUIRED DOCUMENTS TO AN ADDRESS OR FACSIMILE NUMBER OTHER THAN AS
SET FORTH ABOVE DOES NOT CONSTITUTE VALID DELIVERY.
PLEASE CAREFULLY READ THE ACCOMPANYING INSTRUCTIONS
Ladies and Gentlemen:
The undersigned hereby tenders to Reedy River Properties, L.L.C., a
Delaware limited liability company (the "Purchaser"), the number of the
undersigned's units of limited partnership interest ("Units") in Consolidated
Capital Institutional Properties, a California limited partnership (the
"Partnership"), specified below, at a price of $400 per Unit (the "Purchase
Price"), net to the seller in cash, upon the terms and subject to the
conditions set forth in the offer to purchase dated October 30, 1997 (the
"Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Assignment of Partnership Interest (which, together with any supplements or
amendments, collectively constitute the "Offer"). The undersigned understands
and agrees that the Purchase Price will automatically be reduced by the
aggregate amount of distributions per Unit, if any, made by the Partnership on
or after October 30, 1997 and prior to the date on which the Purchaser pays for
the Units purchased pursuant to the Offer. Holders of Units ("Limited
Partners") who tender their Units will not be obligated to pay any commissions
or Partnership transfer fees, which commissions and Partnership transfer fees,
if any, will be borne by the Purchaser. The Purchaser reserves the right to
transfer or assign, in whole or from time to time in part, to one or more of
its affiliates, the right to purchase Units tendered pursuant to the Offer.
Subject to and effective upon acceptance for payment of and payment for the
Units tendered hereby, the undersigned hereby sells, assigns and transfers to
or upon the order of the Purchaser all right, title and interest in and to all
of the Units tendered hereby. The undersigned understands that upon acceptance
for payment of and payment for the tendered Units, the Purchaser will be
entitled to seek admission to the Partnership as a substituted Limited Partner
in substitution for the undersigned as to all the tendered Units.
The undersigned irrevocably appoints the Purchaser and its managers and
designees as the attorneys-in-fact and proxies of the undersigned, each with
full power of substitution, to exercise all voting and other rights with
respect to the Units tendered by the undersigned and purchased by the
Purchaser. Such power of attorney and proxy shall be considered coupled with an
interest in the tendered Units and is irrevocable. When the Units tendered
hereby are accepted for payment pursuant to the Offer, all prior proxies and
powers given by the undersigned with respect to the Units will, without further
action, be revoked, and no subsequent proxies or powers may be given (and if
given will not be effective). The Purchaser and its managers and designees
will, with respect to the Units, be empowered to exercise all voting and other
rights of the undersigned as they in their sole discretion may deem proper,
whether at any meeting of the Partnership's Limited Partners, by written
consent or otherwise, subject to the restrictions in the Limited Partnership
Agreement of the Partnership. The foregoing proxy and power may be exercised by
the Purchaser or any of the other persons referred to above acting alone.
In addition to and without limiting the generality of the foregoing, the
undersigned hereby irrevocably (a) appoints the Purchaser and its managers and
designees (each an "Agent") as the undersigned's attorneys-in-fact, each with
full power of substitution, with an irrevocable instruction to each Agent to
execute all or any instrument of transfer and/or other documents in the Agent's
discretion in relation to the Units tendered hereby and accepted for payment by
the Purchaser, and to do all such other acts and things as may in the opinion
of the Agent be necessary or expedient for the purpose of, or in connection
with, the undersigned's acceptance of the Offer and to vest in the Purchaser,
or as it may direct, those Units, effective when, and only to the extent that,
the Purchaser accepts the tendered Units for payment; (b) authorizes and
requests the Partnership and general partner (the "General Partner") to take
any and all acts as may be required to effect the transfer of the undersigned's
Units to the Purchaser (or its designee) and admit the Purchaser (or its
designee) as a substituted Limited Partner in the Partnership; (c) assigns to
the Purchaser and its assigns all of the right, title and interest of the
undersigned in and to any and all distributions made by the Partnership from
and after the expiration of the Offer in respect of the Units tendered by the
undersigned; (d) grants to the Purchaser and its assigns the right to receive
any and all distributions made by the Partnership on or after the date on which
the Purchaser pays for the Units tendered by the undersigned (regardless of the
record date for any such distribution), and to receive all benefits and
otherwise exercise all rights of beneficial ownership of such Units; (e)
empowers the Purchaser and the Agent 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 the address specified in the form, and to
endorse any check payable to or upon the order of such Limited Partner
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
Limited Partner; and (f) agrees not to exercise any rights pertaining to the
Units without the prior consent of the Purchaser.
The undersigned hereby represents and warrants that the undersigned owns
the Units tendered hereby and has full power and authority to validly tender,
sell, assign and transfer the Units tendered hereby and that when the same are
purchased by the Purchaser, the Purchaser will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges,
encumbrances, conditional sales agreements or other obligations relating to the
sale or transfer thereof, and such Units will not be subject to any adverse
claims. The undersigned will, upon request, execute and deliver any additional
documents deemed by the Purchaser to be necessary or desirable to complete the
sale, assignment and transfer of the Units tendered hereby.
The undersigned understands that a tender of Units pursuant to the
procedures described in the Offer to Purchase and in the Instructions to this
Assignment of Partnership Interest will constitute a binding agreement between
the undersigned and the Purchaser upon the terms and subject to the conditions
of the Offer. All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of the undersigned, and any obligation of the
undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned.
THIS TENDER IS IRREVOCABLE, EXCEPT THAT UNITS TENDERED PURSUANT TO THE
OFFER MAY BE WITHDRAWN AS DESCRIBED IN SECTION 4 OF THE OFFER TO PURCHASE.
<PAGE>
PLEASE COMPLETE ALL SHADED AREAS
SIGN HERE TO TENDER YOUR UNITS
B
O
X
A
- -------------------------------------------------------------------------------
The undersigned hereby tenders the number of Units specified below pursuant
to the terms of the Offer. The undersigned hereby certifies, under penalties of
perjury, that the information and representations provided in Boxes A, B and C
of this Assignment of Partnership Interest, which have been duly completed by
the undersigned, are true and correct as of the date hereof.
X-----------------------------------------------------------------------------
X-----------------------------------------------------------------------------
SIGNATURE(S) OF LIMITED PARTNER
DATE:
-------------------------------------------------------------------------
(MUST BE SIGNED BY REGISTERED LIMITED PARTNER EXACTLY AS
NAME(S) APPEAR(S) IN THE PARTNERSHIP'S RECORDS. IF SIGNATURE IS BY
AN OFFICER OF A CORPORATION, ATTORNEY-IN-FACT, AGENT, EXECUTOR,
ADMINISTRATOR, TRUSTEE, GUARDIAN OR OTHER PERSON(S) ACTING IN
FIDUCIARY OR REPRESENTATIVE CAPACITY, PLEASE COMPLETE THE LINE
CAPTIONED "CAPACITY (FULL TITLE):" AND SEE INSTRUCTION 5.)
PRINT NAME(S):
-------------------------------------------------
-------------------------------------------------
CAPACITY (FULL TITLE):
------------------------------------------
ADDRESS:
---------------------------------------------------------
- -----------------------------------------------------------------
(INCLUDE ZIP CODE)
(THE ADDRESS PROVIDED ABOVE MUST BE THE REGISTERED ADDRESS OF THE
LIMITED PARTNER)
- ---------------------------- ------------------------------------
AREA CODE AND SOCIAL SECURITY NUMBER
TELEPHONE NUMBER OR TAXPAYER IDENTIFICATION
NUMBER OF NUMBER OF
UNITS TENDERED: UNITS OWNED:
---------------- ----------------
(If no indication is given, all Units owned of record by the Limited Partner
will be deemed tendered.)
- -------------------------------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS - SECTION 1)
AUTHORIZED SIGNATURE: NAME OF FIRM:
----------------------- ------------------
NAME: ADDRESS:
-------------------------------------- -----------------------
DATE: AREA CODE AND TEL. NO.:
-------------------------------------- ----------
- -------------------------------------------------------------------------------
IMPORTANT!
LIMITED PARTNERS MUST ALSO COMPLETE BOTH BOX B AND BOX C BELOW.
B
O
X
B
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SUBSTITUTE PART 1-- PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND ---------------------
Form W-9 CERTIFY BY SIGNING AND DATING BELOW Social Security Number(s) or
Department of Employer Identification Number
the Treasury
Internal Revenue
Service
- -----------------------------------------------------------------------------------------------------------------------------------
PAYER'S PART 2-- Certification-- Under penalties of perjury, I certify that: (1) The number shown on this form is my
REQUEST FOR correct a result of Identification Number (or I am waiting for a number to be issued to me) and (2) I am not
TAXPAYER subject to back-up withholdilding. because I have not been notified by the Internal Revenue Service ("IRS")
IDENTIFICATION that I am subject to back-up withholding as failure to report all interest or dividends, or the IRS has
NUMBER (TIN) notified me that I am no longer subject to back-up withholding
------------------------------------------------------------------------------------------------------------------------
Certification Instructions -- You must cross out item (2) above if you have been notified by the IRS that
you are subject to back-up withholding because of underreporting interest or dividends on your
tax However, if after being notified by the IRS that you were subject to back-up withholding
you received another notification from the IRS that you are no longer subject to back-up
withholding, do not cross out item (2).
SIGNATURE: DATE:
----------------------------------- ---------------
- -----------------------------------------------------------------------------------------------------------------------------------
PART 3--
AWAITING TIN [__]
- -----------------------------------------------------------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
*(TO BE COMPLETED ONLY IF THE BOX IN PART 3 ABOVE IS CHECKED)
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(b) I intend to mail or deliver an application in the near future. I understand
that if I do not provide a taxpayer identification number within sixty days, 31
percent of all reportable payments made to me thereafter will be withheld until
I provide a number.
SIGNATURE SIGNATURE
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
B
O
X
C
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FIRPTA AFFIDAVIT -- CERTIFICATE OF NON-FOREIGN STATUS
<S> <C>
Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if
the transferor is a foreign person. To inform the Purchaser that withholding of tax is not required upon this disposition of a U.S.
real property interest, the undersigned hereby certifies the following on behalf of the tendering Limited Partner named above:
1. The Limited Partner, if an individual, is not a nonresident alien for purposes 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);
2. The Limited Partner's Social Security Number (for individuals) or Employer Identification Number (for non-individuals)
is:_________________; and
3. The Limited Partner's address is: _________________________
I understand that this certification may be disclosed to the Internal Revenue Service by the transferee and that any false
statement I have made here could be punished by fine, imprisonment, or both.
Under penalties of perjury I declare that I have examined this certification and to the best of my knowledge and belief it is
true, correct and complete.
_________________________________________________ ______________________________________________________
Signature Signature
Title:___________________________________________ Title:______________________________
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
INSTRUCTIONS
TO
ASSIGNMENT OF PARTNERSHIP INTEREST
FOR
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
FORMING PART OF TERMS AND CONDITIONS OF THE OFFER
- -------------------------------------------------------------------------------
IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE COMPLETING THE ASSIGNMENT OF
PARTNERSHIP INTEREST, PLEASE CALL BEACON HILL PARTNERS TOLL FREE AT
(800) 854-9486 OR COLLECT AT (212) 843-8500
- -------------------------------------------------------------------------------
1. GUARANTEE OF SIGNATURES. If the Assignment of Partnership Interest
is signed by the registered holder of the Units and payment is to be made
directly to that holder, then no signature guarantee is required on the
Assignment of Partnership Interest. Similarly, if the Units are tendered for
the account of a member firm of 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 (each an "Eligible
Institution"), no signature guarantee is required on the Assignment of
Partnership Interest. HOWEVER, IN ALL OTHER CASES, ALL SIGNATURES ON THE
ASSIGNMENT OF PARTNERSHIP INTEREST MUST BE GUARANTEED BY AN ELIGIBLE
INSTITUTION. A notarization is not the same thing as a signature guarantee, and
a notarization of the Assignment of Partnership Interest will not be
sufficient. IN THE MAJORITY OF CASES, THE LOCAL BANK AT WHICH YOU DO YOUR DAY
TO DAY BANKING IS AN ELIGIBLE INSTITUTION AND WILL BE ABLE TO PROVIDE YOU WITH
THE REQUIRED MEDALLION GUARANTEE.
2. DELIVERY OF ASSIGNMENT OF PARTNERSHIP INTEREST. The Assignment of
Partnership Interest is to be completed by all Limited Partners who wish to
tender Units in response to the Offer. For a Limited Partner validly to tender
Units, a properly completed and duly executed Assignment of Partnership
Interest (or a facsimile copy), along with the required signature guarantees by
an Eligible Institution and any other required documents, must be received by
the Depositary at one of its addresses set forth on the Assignment of
Partnership Interest on or prior to the Expiration Date (as defined in the
Offer to Purchase).
THE METHOD OF DELIVERY OF THE ASSIGNMENT OF PARTNERSHIP INTEREST AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING LIMITED
PARTNER 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.
No alternative, conditional or contingent tenders will be accepted,
and no fractional Units will be purchased (except from a Limited Partner who is
tendering all of the Units owned by that Limited Partner). All tendering
Limited Partners, by execution of the Assignment of Partnership Interest, waive
any right to receive any notice of the acceptance of their Units for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate,
additional information may be provided on a separate signed schedule attached
hereto.
4. MINIMUM TENDERS. A Limited Partner may tender any or all of his or
her Units; provided, however, that because of restrictions in the Partnership's
Limited Partnership Agreement, a partial tender of Units must be for a minimum
of five Units (other than Limited Partners who hold units in an Individual
Retirement Account or Keogh Plan). Tenders of fractional Units will be
permitted only by a Limited Partner who is tendering all Units owned by that
Limited Partner.
5. SIGNATURES ON ASSIGNMENT OF PARTNERSHIP INTEREST. If the Assignment
of Partnership Interest is signed by the registered Limited Partner(s), the
signature(s) must correspond exactly with the name(s) as shown on the records
of the Partnership, without alteration, enlargement or any change whatsoever.
If any of the Units tendered hereby are held of record by two or more
joint Limited Partners, each such Limited Partner must sign the Assignment of
Partnership Interest.
If the Assignment of Partnership Interest is signed by trustees,
executors, administrators, guardians, attorneys-in-fact, agents, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to
the Depositary of their authority to so act must be submitted.
6. WAIVER OF CONDITIONS. The Purchaser expressly reserves the absolute
right, in its sole discretion, to waive any of the specified conditions of the
Offer, in whole or in part, in the case of any Units tendered.
7. REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions or
requests for assistance may be directed to Beacon Hill Partners, the
Information Agent, at its address and telephone number set forth on the back
cover of the Offer to Purchase. Copies of the Offer to Purchase and the
Assignment of Partnership Interest may be obtained from the Information Agent.
(Continued on Reverse Side)
<PAGE>
8. SUBSTITUTE FORM W-9. Each tendering Limited Partner is required to
provide the Depositary with a correct taxpayer identification number ("TIN"),
generally the Limited Partner's social security or federal employer's
identification number, on Substitute Form W-9, which is provided under
"Important Tax Information" below. You must cross out item (2) in the
Certification box on Substitute Form W-9 if you are subject to back-up
withholding. Failure to provide the information on the form may subject the
tendering Limited Partner to 31% federal income tax withholding on the payments
made to the Limited Partner with respect to Units purchased pursuant to the
Offer. The box in Part 3 of the form may be checked if the tendering Limited
Partner has not been issued a TIN and has applied for a TIN or intends to apply
for a TIN in the near future. If the box in Part 3 is checked and the
Depositary is not provided with a TIN within sixty (60) days, thereafter the
Depositary will withhold 31% on all such payments of the Purchase Price until a
TIN is provided to the Depositary.
9. FIRPTA AFFIDAVIT. To avoid potential withholding of tax pursuant to
Section 1445 of the Internal Revenue Code in an amount equal to 10% of the
purchase price for Units purchased pursuant to the Offer, plus the amount of
any liabilities of the Partnership allocable to such Units, each Limited
Partner who or which is a United States person must complete the FIRPTA
Affidavit contained in the Assignment of Partnership Interest stating, under
penalties of perjury, such Limited Partner's TIN and address, and that such
Limited Partner 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.
IMPORTANT: THE ASSIGNMENT OF PARTNERSHIP INTEREST (OR A FACSIMILE
COPY)(TOGETHER WITH ALL OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE
DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE.
----------------
IMPORTANT TAX INFORMATION
To prevent backup withholding on payments made to a Limited Partner or
other payee with respect to Units purchased pursuant to the Offer, the Limited
Partner is required to notify the Depositary of the Units of the Limited
Partner's correct TIN by completing the form below, certifying that the TIN
provided on Substitute Form W-9 is correct (or that such Limited Partner is
awaiting a TIN) and that (1) the Limited Partner has not been notified by the
Internal Revenue Service that the Limited Partner is subject to backup
withholding as a result of failure to report all interest or dividends or (2)
the Internal Revenue Service has notified the Limited Partner that the Limited
Partner is no longer subject to backup withholding. If backup withholding
applies, the Depositary is required to withhold 31% of any payments made to the
Limited Partner. Backup withholding is not an additional tax. Rather, the
federal income tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
The Limited Partner is required to give the Depositary the TIN (e.g.,
social security number or employer identification number) of the record owner
of the Units. If the Units are in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
Certain Limited Partners (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding
and reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that Limited Partner must submit to the Depositary a properly
completed Internal Revenue Service Form W-8, signed under penalties of perjury,
attesting to that Limited Partner's exempt status. A Form W-8 can be obtained
from the Depositary. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional institutions.
----------------
INDIVIDUAL RETIREMENT ACCOUNT (IRAS)
PLEASE NOTE THAT A TENDERING BENEFICIAL OWNER OF UNITS WHOSE UNITS ARE
OWNED OF RECORD BY AN INDIVIDUAL RETIREMENT ACCOUNT (IRA) OR OTHER QUALIFIED
PLAN WILL NOT RECEIVE DIRECT PAYMENT OF THE PURCHASE PRICE, RATHER, PAYMENT
WILL BE MADE TO THE CUSTODIAN OF SUCH ACCOUNT OR PLAN. IF THE UNITS ARE HELD IN
AN IRA ACCOUNT, THE CUSTODIAN OF THE ACCOUNT MUST SIGN THE ASSIGNMENT OF
PARTNERSHIP INTEREST.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER--Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
GIVE THE
TAXPAYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ----------------------------------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of
(joint account) the account or, if
combined funds, the first
individual on the account(1)
3. Husband and wife The actual owner of
(joint account) the account or, if joint
funds, either person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if the
minor is the only
contributor, the
minor(1)
6. Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent(3)
minor, or incompetent person(3)
7. a.The usual revocable savings trust The grantor-trustee(1)
account (grantor is also trustee)
b.So-called trust account that is not The actual owner(1)
a legal or valid trust under State
law
8. Sole proprietorship account The owner(4)
- ----------------------------------------------------------------------
<CAPTION>
- --------------------------------------- ------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE
TAXPAYER
IDENTIFICATION
NUMBER OF--
- ----------------------------------------------------------------------
<S> <C>
9. A valid trust, estate or pension The legal entity (Do not
trust furnish the identifying number
of the personal representative
or trustee unless the legal
entity itself is not
designated in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of The public entity
Agriculture in the name of a public
entity (such as a State or local
government, school district, or
prison) that receives agricultural
program payments
- ----------------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number or employer identification number.
(4) Show your individual name. You may also enter your business name. You
may use your social security number or employer identification number.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number
(for businesses and all other entities), at the local office of the Social
Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
o A corporation.
o A financial institution.
o An organization exempt from tax under section 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), or an individual
retirement plan.
o The United States or any agency or instrumentality thereof.
o A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
o A foreign government, a political subdivision of a foreign government,
or any agency or instrumentality thereof.
o An international organization or any agency or instrumentality thereof.
o A registered dealer in securities or commodities registered in the U.S.
or a possession of the U.S.
o A real estate investment trust.
o A common trust fund operated by a bank under section 584(a) of the Code.
o An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
o An entity registered at all times under the Investment Company Act of
1940.
o A foreign central bank of issue.
o A futures commission merchant registered with the Commodity Futures
Trading Commission.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
o Payments to nonresident aliens subject to withholding under section 1441
of the Code.
o Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
o Payments of patronage dividends where the amount received is not paid in
money.
o Payments made by certain foreign organizations.
o Payments made to an appropriate nominee.
o Section 404(k) payments made by an ESOP.
Payments of interest not generally subject to backup withholding include the
following:
o Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600
or more and is paid in the course of the payer's trade or business and
you have not provided your correct taxpayer identification number to the
payer.
o Payments of tax-exempt interest (including exempt-interest dividends
under section 852 of the Code).
o Payments described in section 6049(b)(5) of the Code to nonresident
aliens.
o Payments on tax-free covenant bonds under section 1451 of the Code.
o Payments made by certain foreign organizations.
o Payments of mortgage interest to you.
o Payments made to an appropriate nominee.
Exempt payees described above should file substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR
PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. IF YOU ARE A NONRESIDENT
ALIEN OR A FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER
A COMPLETED INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE--Section 6109 requires most recipients of dividend,
interest, or other payments to give correct taxpayer identification numbers
to payers who must report the payments to the IRS. The IRS uses the numbers
for identification purposes. Payers must be given the numbers whether or not
recipients are required to file a tax return. Payers must generally withhold
31% of taxable interest, dividend, and certain other payments to a payee who
does not furnish a correct taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER--If you
fail to furnish your correct taxpayer identification number to a payer, you
are subject to a penalty of $50 for each such failure unless your failure is
due to reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being
due to negligence and will be subject to a penalty of 20% on any portion of
an underpayment attributable to that failure unless there is clear and
convincing evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING--If you
make a false statement with no reasonable basis that results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Willfully falsifying
certifications or affirmations may subject you to criminal penalties
including fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE
<PAGE>
Exhibit (a)(4)
REEDY RIVER PROPERTIES, L.L.C.
One Insignia Financial Plaza
Greenville, South Carolina 29602
October 30, 1997
To: The Limited Partners of
Consolidated Capital Institutional Properties
Enclosed for your review and consideration are documents relating to
an offer by Reedy River Properties, L.L.C. ("Reedy River") to purchase your
units of limited partnership interests in Consolidated Capital Institutional
Properties for $400 in cash per unit. This offer will expire at 12:00 midnight,
New York City time, on November 26, 1997 (unless extended by Reedy River).
Reedy River is an affiliate of the General Partner of the Partnership.
THE ENCLOSED DOCUMENTS CONTAIN IMPORTANT INFORMATION AND SHOULD BE
READ CAREFULLY AND IN THEIR ENTIRETY BEFORE YOU DECIDE WHETHER TO SELL YOUR
UNITS TO REEDY RIVER PURSUANT TO THIS OFFER.
If you have any questions concerning the terms of the offer, or need
assistance in completing the forms necessary to tender your units, please
contact our Information Agent, Beacon Hill Partners, at (800) 854-9486.
Thank you.
Sincerely,
Reedy River Properties, L.L.C.
<PAGE>
EXECUTIVE SUMMARY -- The Loft Apartments
<TABLE>
<CAPTION>
<S> <C>
DATE OF VALUATION: October 12, 1995
DATE OF INSPECTION: October 12, 1995
PROPERTY ADDRESS: 214 Loft Lane
Raleigh, North Carolina 27609
TAX REFERENCE: 379-0016
DEED REFERENCE: 4858/129
CENSUS TRACT: 540.01
PROPERTY DESCRIPTION: The Lofts is a two-story garden apartment complex made up of 184 units
in 14 buildings and a total of 205,615 rentable square feet. The
improvements, which are situated on a 23.835-acre site, were completed
in 1975. The unit mix includes several variations of one, two and
three-bedroom units. The one bedroom and three bedroom units feature
lofts. The average unit size is 1,117 square feet.
ZONING: R-10 (Residence District)
MARKET BRIEF: Apartments continue to be a highly desirable investment property type
in Raleigh over the past year. The popularity of apartments is due
principally to the lower risk perceived by buyers. Advantageous investment
characteristics of multifamily properties include short term leases
normally at market rates, predictable demographics, low tenant
improvement costs at tenant turnover, and a market which generally
reflects the ability to raise rents to keep up with inflation. Occupancy
rates in Wake County are predominantly above 95% which adds to the
desirability of this investment type. Better financing terms are available
for multifamily investments than other commercial segments of the market.
</TABLE>
<PAGE>
3
EXECUTIVE SUMMARY -- The Loft Apartments
<TABLE>
<CAPTION>
<S> <C>
Because of the continued popularity, apartment prices are increasing
and capitalization rates are being driven lower. Although the current
market is very tight, approximately 2,600 units may be added to the
local market in the next two years. This increase in supply will
add competition to the subject's submarket.
Property Rights Appraised: Fee Simple Estate
Highest and Best Use: Multi-family Residential
Indicated Value by Approaches:
Income Capitalization
Approach: $8,200,000
Sales Comparison $8,100,000
Approach:
Cost Approach: $9,600,000
Final Conclusion of
Market Value: $8,200,000
</TABLE>
COMMENT
In estimating the subject's market value, the income capitalization approach
was given the most weight due to the income-producing nature of the subject
property. The sales comparison approach was also given weight due to the
number of recent comparable sales in the subject's market. Due to market
participants espousing the lack of the cost approach's applicability in a
market where estimating depreciation from all forms is extremely subjective,
the cost approach was given very little weight in our reconciliation of a
final value estimate. However, it should be noted that with the number of
current land sales, it is evident that the market has strengthened to the point
of warranting new development in some areas, which would indicate that the
applicability of the cost approach may be becoming a more meaningful value.
<PAGE>
[E&Y KENNETH LEVENTHAL LETTERHEAD]
August 1, 1996
Mr. Marcus McCall
Kennedy Boulevard Associates I, L.P.
1801-45 John F. Kennedy Boulevard
Philadelphia, Pennsylvania 19103
Dear Mr. McCall:
The enclosed report is a complete summary real estate appraisal which we have
prepared in response to your request. This appraisal has been preformed in
order to estimate the "As Is" market value of the fee simple interest in the
above-referenced property as of January 1, 1996. This valuation date coincides
with the date of value used by the City of Philadelphia for real estate
assessment purposes.
Our report is intended to comply with the Uniform Standards of Professional
Appraisal Practice (USPAP) for a Complete Summary Appraisal. The opinions of
value expressed herein are subject to the assumptions and limiting conditions
set forth in the body of this report. We do not accept responsibility for any
matters of an environmental nature and we have assumed for valuation purposes
that the property is not adversely affected by any hazardous material or
conditions related to environmental contamination.
Based on our research and analysis, it is our opinion that the "As Is" market
value of the fee simple interest in the subject property, as of January 1,
1996, was:
FOURTEEN MILLION FIVE HUNDRED THOUSAND DOLLARS
-- $14,500,000 --
<PAGE>
[REAVES C. LUKENS COMPANY LETTERHEAD]
December 22, 1995
Consolidated Capital Institutional Properties (CCIP)
c/o Marcus L. McCall
Insignia Financial Group
P.O. Box 1089
Greenville, SC 29602
RE: LIMITED APPRAISAL
The Carlton House
1801 J.F. Kennedy Blvd
Philadelphia, PA 19103
Account No. 95-183
Dear Mr. McCall:
In accordance with your request, we have conducted an limited appraisal
related to the captioned property. This restricted report sets forth only the
results of a limited appraisal process in which certain allowable departures
from specific guidelines of the Uniform Standards of Professional Practice
(USPAP) were invoked. This analysis, in our opinion, is sufficient so that the
results are not misleading based on the function of this report and your
specific needs.
This is a Summary Appraisal Report which is intended to comply with the
reporting requirements set forth under Standards Rule 2-2(b) of the Uniform
Standards of Professional Appraisal Practice (USPAP) for a summary appraisal
report. It is an update of our previous report dated January 28, 1993, and of
our Summary Appraisal Report of June 22, 1995, both of which by reference are
incorporated herein. As such it presents only the results of the appraisal
process used to delevop the appraisers' opinion of value. Supporting
documentation concerning the data, reasoning and analyses is retained in the
appraisers' file.
Significant assumptions and limiting conditions, and an executive summary
of the property are attached and are an integral part of this communication of
our value conclusion.
I. INTRODUCTION
A. SCOPE OF THE INVESTIGATION
As part of this assignment, we reviewed the investigations and analyses
were performed for the previous reports of the subject. Data already in our
files, which are updated on a regular basis, were also utilized in our
valuation analysis. Teresa M. Hoberg inspected and photographed
<PAGE>
Marcus L. McCall
Page 2
December 22, 1995
the property on May 12, 1995, and made an exterior inspection on December 20,
1995. In addition, we reviewed additional documents provided by ownership,
including current rent rolls, capital budget expenditures, and income and
expense summaries through the end of November 1995.
B. PROPERTY INTEREST APPRAISED
We have valued the fee simple interest in the subject property, subject
to existing leases to the retail, office and apartment tenants; that is, full
ownership rights, subject only to the power of taxation, eminent domain,
escheat, and police power.
C. PURPOSE AND FUNCTION
The purpose of this analysis is to estimate the market value of the
subject property, as defined by the Uniform Standards of Professional Appraisal
Practice published by the Appraisal Foundation, as of January 1, 1996, the
effective date of valuation for real estate assessment purposes.
The function of this analysis id to assist in determining the appropriate
level of real estate taxation for the subject property. The judgments and
conclusions contained herein would also pertain to any other function requiring
an estimate of market value.
II. THE SUBJECT PROPERTY
The subject property is essentially the same as described in our prior
reports incorporated herein by reference. Since then, repair work on the
swimming pool deck has been completed, an office tenant relocated, and some
base building improvements completed, including fire code compliance,
electrical and HVAC work. These are summarized below:
SUMMARY OF CAPITAL EXPENDITURES
YTD 1995
----------------------------------------
Swimming Pool $483,042
Electrical 6,285
Other Base Bldg 198,242
HVAC 2,296
Office Equipment 2,722
Apt Appliances 10,597
Carpet & Tile 102,318
----------------------------------------
TOTAL $805,502
REAVES C. LUKENS COMPANY
<PAGE>
Marcus L. McCall
Page 3
December 22, 1995
A. ASSESSMENT AND TAXES
The subject property is designated by Philadelphia County as tax parcel
88-01-035000. It is asscssed as follows:
SUMMARY OF ASSESSMENT AND TAXES
======================================================
Assessment $7,200,000.00
Ratio 32.00%
Implied Market Value $22,500,000.00
Market Value/SF NRA $36.13
Total Tax Rate, mils 82.64
Real Estate Tax $595,008.00
Tax/SF NRA $0.96
======================================================
We note that the subject appears to be somewhat over-assessed in
relation to our estimate of value, as presented later in this report.
III. SUBJECT OPERATIONS
A. Overview of Operations
We reconsidered the operating results for year to date 1995 and the
1996 Budget. As summarized on the following page, the forecasted 1995 figures
are approximately $500,000 higher than indicated by the April 1995 statements
included in our last report. Overall vacancy of the apartment units has
decreased from 15.5% to 12%, and potential income increased by 10%. Of the
retail units, one small unit has been leased to a Dentist, which was
anticipated at the time of our last report. The restaurant, however, remains
vacant, and we had assumed that this would be occupied by the end of 1995. Of
the commercial office space, Bayada nurses has relocated and expanded, which
was anticipated at the time of our last appraisal. Commercial income has
increased by only 2% since the date of our last appraisal. Despite this
improvements, both the forecasted 1995 and Budget 1996 figures are well below
what we projected for the stabilized occupancy. As of our last appraisal,
ownership anticipated a total capital budget of $9,000,000 from 1995 to 1998.
The lastest revised budget, a copy of which is attached, indicates a total
budget of approximately $11,500,000 for 1996 and 1997.
<PAGE>
SUMMARY OF HISTORIC OPERATIONS: THE CARLTON HOUSE
<TABLE>
<CAPTION>
Budget 1995
------------------------------------
Stabilized
Total $/SF NRA % EGI Estimate $/SF NRA %EGI
---------- ---------- --------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
INCOME
Residential Rental Income 4,625,469 $9.26 77.73% $5,715,984 $10.97 76.42%
Residential Other Income 300,047 $0.58 4.83% $375,000 $0.72 5.01%
Commercial Rental Income 1,022,598 $10.07 16.47% $809,588 $10.40 10.82%
Commercial Other Income 60,000 $0.59 0.97% $118,932 $1.17 1.59%
Retail Rental Income 0 $0.00 0.00% $460,198 $19.43 6.15%
---------- ---------- --------- ----------- -------- --------
Total Income 8,208,114 $9.97 100.00% $7,479,702 $12.01 100.00%
OPERATING EXPENSE
Administrative 192,805 $0.31 3.11% $185,793 $0.30 2.50%
Marketing 177,050 $0.28 2.85% $155,661 $0.25 2.08%
Payroll 525,354 $0.84 8.46% $466,983 $0.75 6.24%
Contract Services 760,460 $1.22 12.25% $778,305 $1.25 10.41%
Utilities 1,069,200 $1.72 17.22% $1,089,527 $1.75 14.57%
Repair & Maintenance 237,299 $0.38 3.82% $217,925 $0.35 2.91%
Cleaning & Decorating 192,150 $0.31 3.10% $175,000 $0.28 2.34%
Insurance 146,025 $0.23 2.35% $149,435 $0.24 2.00%
Taxes 626,165 $1.01 10.09% $825,561 $1.33 11.04%
Management Fees 302,245 $0.49 4.87% $299,188 $0.48 4.00%
---------- ---------- --------- ----------- -------- --------
Total Operating Expense 4,228,753 $6.79 68.12% $4,344,478 $8.98 58.08%
NET OPERATING INCOME 1,979,361 $3.18 31.88% $3,135,223 $5.04 41.92%
CAPITAL EXPENSES
Non-Recurring 7,723,112 $12.40 124.40% ($164,961) ($0.26) -2.24%
Recurring 497,542
Commissions 128,156
Explosion Cost
---------- ---------- --------- ----------- -------- --------
Total Non-Recurring 8,348,810 $13.41 134.48% ($164,961) ($0.28) -2.21%
NET CASH FLOW (6,369,449) ($10.23) -102.60% $2,970,262 $4.77 39.71%
</TABLE>
<PAGE>
SUMMARY OF HISTORIC OPERATIONS: THE CARLTON HOUSE
<TABLE>
<CAPTION>
YTD November 1995 Budget 1996
----------------------------------------------- -----------------------------------
Actual Annual $/SF NRA % EGI Total $/SF NRA % EGI
--------- ---------- --------- -------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME
Residential Rental Income 4,119,770 4,494,295 $8.62 77.12% 5,474,805 $10.51 78.24%
Residential Other Income 292,352 318,929 $4.10 5.47% 353,660 $0.68 5.05%
Commercial Rental Income 667,012 945,831 $39.92 16.23% 1,085,000 $10.69 15.51%
Commercial Other Income 62,750 68,455 $2.80 1.17% 84,000 $0.83 1.20%
Retail Rental Income 0 0 ERR 0.00% 0 $0.00 0.00%
--------- ---------- --------- -------- ---------- ---------- ---------
Total Income 5,341,884 5,827,510 ERR 100.00% 6,997,465 $11.24 100.00%
OPERATING EXPENSE
Administrative 225,665 246,398 $0.40 4.23% 241,178 $0.39 3.45%
Marketing 128,994 140,721 $0.23 2.41% 183,510 $0.29 2.62%
Payroll 482,130 525,960 $0.64 9.03% 627,398 $1.01 8.97%
Contract Services 676,642 738,155 $1.19 12.67% 613,880 $0.99 8.77%
Utilities 972,601 1,061,019 $1.70 18.21% 1,155,100 $1.86 16.51%
Repair & Maintenance 101,118 110,311 $0.18 1.69% 127,808 $0.20 1.62%
Cleaning & Decorating 120,930 131,924 $0.21 2.26% 101,240 $0.16 1.45%
Insurance 175,310 191,247 $0.31 3.28% 262,937 $0.42 3.76%
Taxes 557,448 608,125 $0.98 10.44% 628,404 $1.01 8.98%
Management Fees 287,893 292,247 $0.47 8.01% 279,899 $0.45 4.00%
--------- ---------- --------- -------- ---------- ---------- ---------
Total Operating Expense 3,708,931 4,048,107 $6.50 89.43% 4,221,154 $6.76 80.32%
NET OPERATING INCOME 1,632,953 1,781,403 $2.86 30.57% 2,776,311 $4.46 39.68%
CAPITAL EXPENSES
Non-Recurring 805,505 878,733 $1.41 15.08% 8,058,609 $12.94 115.18%
Recurring 0 0 0
Commissions 0 0 0
Explosion Cost
--------- ---------- --------- -------- ---------- ---------- ---------
Total Non-Recurring 805,505 878,733 $1.41 15.08% 8,059,609 $12.94 115.18%
NET CASH FLOW 827,448 902,671 $1.45 15.49% (5,283,298) ($8.49) -75.50%
</TABLE>
<PAGE>
In short, while progress has been made towards improving occupancy,
increasing the net operating income, and completing repairs and renovations,
this has been offset by the increased costs of remaining capital expenditures.
Based on a review of the additional data, we believe that our stabilized income
and expense estimate remains valid.
Based upon our continuing review of the residential and commercial
market in the Center City Philadelphia area, we believe that market conditions
remain essentially as described in our prior report.
IV. HIGHEST AND BEST USE
Highest and best use of the subject property as improved remains as
defined in our prior report, i.e., the continuation of the present use as an
apartment and office building with ground floor commercial uses.
V. COMMENTS ON VALUATION
All of the recognized approaches to value have been considered in
estimating the market value of the subject. Both the Income Capitalization and
Sales Comparison Approaches were felt to be reliable indicators of value for
the subject is an income producing property. Additionally, there are no recent
sales of similar size apartment/office complexes in Center City Philadelphia.
We reconsidered our income capitalization approach assuming complete
rehabilitation. This is attached and indicates a value of $19,250,000. We also
considered a direct capitalization of the 1995 forecasted and 199 budget
income. Both these approaches indicate a value of $18,600,000, as summarized
below.
Forecasted Budget
1995 1996
------------ ------------
Forecasted NOI $1,781,403 $2,776,311
Add Back Taxes 608,125 628,404
NOI Before Taxes 2,389,528 3,404,715
Capitalization Rate* 12.78% 12.78%
Indicated Value 18,697,405 26,640,962
Less Capital Expenditures 0 (8,059,609)
------------ ------------
Indicated Value "As Is" $18,697,405 $18,581,353
10% Basic Rate + 2.78% Tax Factor
<PAGE>
VI. VALUATION
The income capitalization approaches indicate a range of values from
$18,600,000 to $19,250,000. We believe an investor in the property would
complete an analysis of the property assuming stabilized occupancy and
correction of deferred maintenance and other necessary renovations.
Therefore, after considering the above and other relevant factors in
connection with the subject property, it is our opinion that the market value
of the subject property, as of January 1, 1996 is:
-- NINETEEN MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS --
$19,250,000
Thank you for the opportunity to be of service and, we look forward to
servicing you again in the future.
Sincerely,
REAVES C. LUKENS COMPANY
Teresa M. Hoberg
PA General Appraiser GA-000763L
Attachments
EXECUTIVE SUMMARY
CERTIFICATION
ASSUMPTIONS, LIMITING CONDITIONS AND CONTINGENCIES
SUMMARY OF INCOME APPROACH
THE NEW CARLTON HOUSE RENOVATION PROJECT
<PAGE>
A-1
EXECUTIVE SUMMARY
-----------------
PROPERTY: The Carlton House
1801-45 J.F. Kennedy Boulevard
Philadelphia, PA 19103
INSPECTED BY: Teresa M. Hoberg
INSPECTION DATE: May 12, 1995
PROPERTY RIGHTS ANALYZED: Fee Simple Interest
EFFECTIVE DATE OF ANALYSIS: May 12, 1995
TYPE OF VALUE ESTIMATE: Market Value
LAND AREA: 38,880 (plus/minus) Square Feet
BUILDING AREA: 817,225 (plus/minus) sq. ft. Gross Building Area
622,549 (plus/minus) sq. ft. Gross Leasable Area
OCCUPANCY: Mixed use retail, office and apartment building
ZONING: C-5, Commercial
HIGHEST AND BEST USE: Continued use as a mixed use retail, office and
apartment building.
INDICATED VALUE: $19,250,000
$30.92/SF Gross Leasable Area
<PAGE>
1
EXECUTIVE SUMMARY
<TABLE>
<CAPTION>
<S> <C>
DATE OF VALUATION: October 12, 1995
DATE OF INSPECTION: October 12, 1995
PROPERTY ADDRESS: 10382 Conser Street
Overland Park, Kansas 66212
TAX REFERENCE: NP34000000-000A
DEED REFERENCE:
PROPERTY DESCRIPTION: Indian Creek Apartments is a two-story, garden apartment complex consisting
of 274 units (including a leasing office and one model unit) housed
in 20 buildings with a total net rentable area of 270,404 square feet.
The improvements were constructed in 1972 and are situated on a 20.640-acre
site. The unit mix consists of 26 different floor plans, which include
one, two, and three-bedroom apartment units and three-bedroom townhomes.
ZONING: RP3 (Planned Garden Apartment District)
MARKET BRIEF: As of June 30, 1995, the apartment inventory in Overland Park was comprised
of approximately 11,983 units with an additional 3,282 units approved,
but not constructed. Johnson County led the Kansas City metropolitan
area in apartment construction during the 1980s. As of the date of this
appraisal analysis, 2,000 conventional apartment units were under
construction in Overland Park and its neighboring Johnson County suburbs
of Lenexa and Olathe. As a result of new construction, market rental
rate growth throughout Johnson County is slowing and occupancies have
declined from the 98% to 100% to the high-80% to mid-90% range.
PROPERTY RIGHTS APPRAISED: Fee Simple Estate (subject to short term leases)
HIGHEST AND BEST USE: Multi-family Residential
</TABLE>
<PAGE>
2
EXECUTIVE SUMMARY
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INDICATED VALUE BY APPROACHES:
INCOME CAPITALIZATION AS IS AS CURED
APPROACH: $ 9,980,000 $10,100,000
SALES COMPARISON
APPROACH: $ 9,980,000 $10,100,000
COST APPROACH: $10,620,000 $10,500,000
FINAL CONCLUSION OF
MARKET VALUE, AS IS: $9,980,000
CONCLUSION OF MARKET VALUE,
AS CURED OF DEFERRED MAINTENANCE: $10,100,000
</TABLE>
COMMENT
In estimating the subject's market value, the Income Capitalization Approach
was given the most weight due to the income-producing nature of the subject.
The Sales Comparison Approach also was given weight due to the number of
recent comparable sales in the subject's market. Due to market participants
espousing the lack of the Cost Approach's applicability in a market where
estimating depreciation from all forms is extremely subjective, the Cost
Approach was given least emphasis in our reconciliation of a final value
estimate.
<PAGE>
2
EXECUTIVE SUMMARY
<TABLE>
<CAPTION>
<S> <C>
DATE OF VALUATION: September 26, 1995
DATE OF INSPECTION: September 26, 1995
PROPERTY ADDRESS: 1510 Gatehouse Circle
Colorado Springs, Colorado 80915
TAX REFERENCE: 7412200058
PROPERTY DESCRIPTION: The Knolls Apartments is a two-story apartment complex made up of 262
units in 38 residential buildings and a total of 242,682 (plus or minus)
rentable square feet. The improvements, which are situated on a 22.02
(plus or minus) acre site, were completed in 1974 and are currently
in the process of being renovated. The unit mix includes several variations
of one and two-bedroom units.
ZONING: "R-5," Multi-Family District
MARKET BRIEF: Apartments continued to be a popular investment property type in Colorado
Springs over the past year. The popularity of apartments is due principally
to the lower risk perceived by buyers. Advantageous investment
characteristics of multifamily properties include short term leases
normally at market rates, predictable demographics, low tenant improvement
costs at tenant turnover, and a market which generally reflects the
ability to raise rents to keep up with inflation. Occupancy rates in
the Colorado Springs area are predominantly in the 95% plus
range which adds to the desirability of this investment type. More attractive
financing terms are typically available for multifamily investments than
other commercial segments of the market.
PROPERTY RIGHTS APPRAISED: Fee Simple Estate
HIGHEST AND BEST USE: Multi-family Residential
</TABLE>
<PAGE>
3
EXECUTIVE SUMMARY
INDICATED "AS RENOVATED" MARKET VALUES BY APPROACHES:
<TABLE>
<CAPTION>
<S> <C>
INCOME CAPITALIZATION
APPROACH: $11,700,000
SALES COMPARISON
APPROACH: $11,300,000
COST APPROACH: $10,800,000
FINAL CONCLUSION OF
MARKET VALUE: $11,700,000
- AS RENOVATED:
- AS IS: $11,500,000
</TABLE>
COMMENT
In estimating the subject's market value, the Income Capitalization Approach
was given the most weight due to the income-producing nature of the subject.
The Sales Comparison Approach was also given weight due to the number of
comparable sales in the subject's market. Due to market participants
espousing the lack of the Cost Approach's applicability in a market where
estimating depreciation from all forms is extremely subjective, the Cost
Approach was given very little weight in our reconciliation of a final value
estimate.
<PAGE>
Palm Lake
EXECUTIVE SUMMARY
<TABLE>
<CAPTION>
<S> <C>
DATE OF VALUATION: September 26, 1995
DATE OF INSPECTION: September 26, 1995
PROPERTY ADDRESS: 13401 North 50th Street, Unincorporated Hillsborough
County, Florida
TAX REFERENCE: 036546-0000
DEED REFERENCE: 6133/1587
PROPERTY DESCRIPTION: The subject consists of a 150 unit, 2 story, garden style apartment
complex with 180,059 (plus or minus) SF of gross building area of which
153,700 (plus or minus) SF are net rentable area housed in 20 buildings.
The improvements, which sit on 9.36 (plus or minus) acres or 407,542
(plus or minus) SF of land, were built in 1972 and are of CBS and wood
frame construction.
ZONING: The site is zoned "SPI-UC-3"--Special Public Interest University
Community with a density of 20 units per acre, under the jurisdiction
of Hillsborough County, Florida.
MARKET BRIEF: The Hillsborough County apartment market is made up of 361 developments
totaling 70,211 (plus or minus) units. The average size of the developments
within this market is 194 units. The developments that are older than
20 years of age represent the largest portion of units within this
apartment market, 40.1%. The overall average occupancy rate in this
market was 96.51%.
The subject is located in the University (H1) apartment sub-market
of Hillsborough County, which is comprised of 89 developments totaling
15,871 (plus or minus) units. This market is delineated by Interstate
275 to the west and to the north as it becomes Interstate 75, Busch
Boulevard to 56th Street to the south, 56th Street to Fletcher Avenue
to the east and from 56th Street to the east Fletcher Avenue is the
southern boundary. The average size of the developments within this
submarket is 178 units. The developments that are older than 20 years
of age represent the largest segment, 48.4%, of units within this
sub-market. The overall average unit occupancy rate in this sub-market
was 94.51% as of the first quarter of 1995.
</TABLE>
1
<PAGE>
EXECUTIVE SUMMARY
<TABLE>
<CAPTION>
<S> <C>
PROPERTY RIGHTS APPRAISED: Fee Simple Estate
HIGHEST AND BEST USE:
AS VACANT - Development of a rental apartment complex
AS IMPROVED - Its existing use, a 150 unit apartment complex
INDICATED VALUE BY APPROACHES:
INCOME CAPITALIZATION
APPROACH: $4,100,000
SALES COMPARISON
APPROACH: $3,800,000 - $4,100,000
COST APPROACH: $4,800,000
INDICATED MARKET VALUE: $4,100,000
</TABLE>
COMMENT
In estimating the subject's market value, the Income Capitalization Approach
was given the most weight due to the income-producing nature of the subject.
The Sales Comparison Approach was also given weight due to the number of
recent comparable sales in the subject's market. Due to market participants
espousing the lack of the Cost Approach's applicability in a market where
estimating depreciation from all forms is extremely subjective, the Cost
Approach was given little weight in the reconciliation of a final value
estimate.
2
<PAGE>
EXECUTIVE SUMMARY
<TABLE>
<CAPTION>
<S> <C>
DATE OF VALUATION: October 11, 1995
DATE OF INSPECTION: October 11, 1995
NAME: Plantation Gardens Apartments
PROPERTY ADDRESS: 7712 NW 5th Street
Plantation, Broward County, Florida
TAX REFERENCE: 50-41-04-06-0010
PROPERTY DESCRIPTION: Plantation Gardens is a 372-unit apartment complex which was constructed
in 1972. The complex is comprised of 16 two and four-story buildings,
with a gross building area of 344,477 (plus or minus) square feet or a
total rentable area of 326,800 (plus or minus) square feet, plus
a one story clubhouse building of 2,375 (plus or minus) square feet. The
buildings are of concrete block construction, with stucco exteriors,
built up composition roofing and asphalt shingle mansards. The improvements
are situated on a 20.62 (plus or minus) acre site.
ZONING: PRD-17Q, Planned Residential District, under the jurisdiction of the
City of Plantation, Florida.
MARKET BRIEF: The Plantation apartment market is stable with occupancies averaging
in the mid to high 90% range. Over the past 24 months, the occupancy
rate at the subject has ranged from 80% to 98%, and is currently 97%.
In late 1994, the subject experienced somewhat higher vacancy than typical
for the market due to new management which, with the physical renovation
of the property, attempted to upgrade the tenant profile and improve
collection loss. As a result, the property's vacancy rate increased somewhat
until new, more desirable tenants were signed. Rental rates have increased
by an average of 4% annually with more substantial increases in 1995
due to the strength of the market and the physical improvements to the
property. Competition in the market is limited to a few older properties.
The newer, more upscale apartment complexes charge somewhat higher rental
rates and are therefore not considered direct competition.
</TABLE>
1
<PAGE>
EXECUTIVE SUMMARY
<TABLE>
<CAPTION>
<S> <C>
PROPERTY RIGHTS APPRAISED: Fee Simple Estate
HIGHEST AND BEST USE:
As Vacant: Development of a rental apartment complex
As Improved: Its existing use, a 372 unit apartment complex
INDICATED VALUE BY APPROACHES:
INCOME CAPITALIZATION APPROACH: $15,500,000
SALES COMPARISON APPROACH: $15,500,000 -$16,300,000
COST APPROACH: $15,300,000
INDICATED MARKET VALUE: $15,500,000
</TABLE>
COMMENTS
In estimating the subject's market value, the Income Capitalization Approach
was given the most weight due to the income-producing nature of the subject.
The Sales Comparison Approach was also given weight due to the number of
recent comparable sales in the subject's market. Due to market participants
espousing the lack of the Cost Approach's applicability in a market where
estimating depreciation from all forms is extremely subjective, the Cost
Approach was given little weight in the reconciliation of a final value
estimate.
2
<PAGE>
EXECUTIVE SUMMARY
<TABLE>
<CAPTION>
<S> <C>
DATE OF VALUATION: September 27, 1995
DATE OF INSPECTION: September 27, 1995
NAME: The Society Park East Apartments
PROPERTY ADDRESS: 201 Harbour City Parkway
Indian Harbour Beach, Brevard County, Florida
TAX REFERENCE: 27-37-14-01-03-001
PROPERTY DESCRIPTION: Society Park East Apartments is a 200-unit apartment complex which was
constructed in 1962/1965. The complex is comprised of 8, two-story
buildings, with a gross building area of 210,814 (plus or minus) square
feet or a total rentable area of 171,444 (plus or minus) square
feet. The buildings are of concrete block construction, with stucco
exteriors, and flat, built up tar and gravel roofs. Site amenities include
two swimming pools, a clubhouse, laundry facilities and attractively
landscaped courtyards. The property includes uncovered parking for 250
(plus or minus) vehicles. The improvements are situated on a 7.03 (plus
or minus) acre site.
ZONING: R-3, Multifamily Residential District, under the jurisdiction of Indian
Harbour Beach, Florida.
MARKET BRIEF: The South Brevard County (Melbourne, beach communities and Palm Bay)
apartment market is stable with occupancies averaging in the low to mid
90% range. Based on our survey of properties in the subject's primary
market area, the average occupancy rate is approximately 93%. Over
the past year, occupancy rates have remained generally stable. A
market survey we conducted one year ago in the subject's primary
market area indicated an average occupancy rate of 94%, indicating
minimal change. Over the past three years, the subject's occupancy has
ranged between 89% and 98%, with annual averages of 94%
in 1993, 95% in 1994 and 93% year to date 1995. Over the past
year, rental rates at some properties have increased moderately,
with rental rate increases ranging from 0 to 6%, with most in the
2% range. There has been no significant multi-family rental construction
in the market for several years, and none is presently underway or
proposed.
</TABLE>
1
<PAGE>
EXECUTIVE SUMMARY
<TABLE>
<CAPTION>
<S> <C>
PROPERTY RIGHTS APPRAISED: Fee Simple Estate
HIGHEST AND BEST USE:
INDICATED VALUE BY APPROACHES:
INCOME CAPITALIZATION APPROACH: $5,200,000
SALES COMPARISON APPROACH: $5,100,000 - $5,400,000
COST APPROACH: $5,000,000
FINAL CONCLUSION OF MARKET VALUE: $5,200,000
</TABLE>
COMMENTS
In estimating the subject's market value, the Income Capitalization Approach
was given the most weight due to the income-producing nature of the subject.
The Sales Comparison Approach was also given weight due to the number of
recent comparable sales in the subject's market. Due to market participants
espousing the lack of the Cost Approach's applicability in a market where
estimating depreciation from all forms is extremely subjective, the Cost
Approach was given little weight in the reconciliation of a final value
estimate. It should be noted that there has been little recent multi-family
apartment development and consequently no recent land sales of multi-family
apartment sites in the subject's market area.
2
<PAGE>
EXECUTIVE SUMMARY
<TABLE>
<CAPTION>
<S> <C>
DATE OF VALUATION: SEPTEMBER 26, 1995
MAP/SHEET/BLOCK: 200-48-40
LOCATION: 3051 Kirklevington Drive
Lexington, Fayette, County, Kentucky
DESCRIPTION: The subject is located at the northwest corner of Kirklevington Drive
and Tates Creek Road immediately south of the intersection of the New
Circle Road and Tates Creek Road, Fayette County, Kentucky. The property
consists of a 205-unit garden apartment complex situated on a 12 acre
site. The improvements were constructed in 1971 and consist of 39 two-and
three-story buildings and one clubhouse/leasing office.
CURRENT OCCUPANCY: 93%
NET RENTABLE AREA: 195,460 [plus & minus] square feet
NUMBER OF UNITS: 205
ZONING: R-3 , Fayette County, Kentucky
PROPERTY RIGHTS APPRAISED: Fee Simple Interest
HIGHEST AND BEST USE: Continued use as a residential apartment building.
VALUE VIA INCOME
CAPITALIZATION APPROACH: $6,100,000
VALUE VIA SALES
COMPARISON APPROACH: $6,000,000
VALUE VIA COST APPROACH: $6,200,000
FINAL CONCLUSION
OF MARKET VALUE: $6,100,000
</TABLE>
<PAGE>
EXHIBIT (z)(2)
AGREEMENT OF JOINT FILING
Reedy River Properties, L.L.C., Insignia Properties, L.P., Insignia
Properties Trust, Insignia Financial Group, Inc. and Andrew L. Farkas hereby
agree that the Amendment No. 4 to Statement on Schedule 13D to which this
agreement is attached as an exhibit shall be filed on behalf of each of them.
This agreement is intended to satisfy the requirements of Rule 13d-1(f)(1)(iii)
under the Securities Exchange Act of 1934, as amended.
Dated: October 30, 1997
REEDY RIVER PROPERTIES, L.L.C.
By: /s/ JEFFREY P. COHEN
------------------------------
Jeffrey P. Cohen
Manager
INSIGNIA PROPERTIES, L.P.
By: Insignia Properties Trust,
its General Partner
By: /s/ JEFFREY P. COHEN
------------------------------
Jeffrey P. Cohen
Senior Vice President
INSIGNIA PROPERTIES TRUST
By: /s/ JEFFREY P. COHEN
------------------------------
Jeffrey P. Cohen
Senior Vice President
INSIGNIA FINANCIAL GROUP, INC.
By: /s/ FRANK M. GARRISON
------------------------------
Frank M. Garrison
Executive Managing Director
/s/ ANDREW L. FARKAS
---------------------------------
ANDREW L. FARKAS
