<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. 2)
------------------------------------
CONSOLIDATED CAPITAL PROPERTIES IV
(Name of Subject Company)
IPLP ACQUISITION I LLC
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*: $11,900,000 Amount of Filing Fee: $2,380.00
- -------------------------------------------------------------------------------
* For purposes of calculating the fee only. This amount assumes the
purchase of 85,000 units of limited partnership interest ("Units") of
the subject partnership for $140 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
- -------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
- ---------------------------------- -----------------------------------
CUSIP No. NONE 14D-1 AND 13D/A Page 2
- ---------------------------------- -----------------------------------
========================================================================================================================
1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
IPLP ACQUISITION I LLC
- ------------------------------------------------------------------------------------------------------------------------
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
66,076.5
- ------------------------------------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
[ ]
- ------------------------------------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
19.3%
- ------------------------------------------------------------------------------------------------------------------------
10. Type of Reporting Person
OO
========================================================================================================================
<PAGE>
- ---------------------------------- -----------------------------------
CUSIP No. NONE 14D-1 AND 13D/A Page 3
- ---------------------------------- -----------------------------------
========================================================================================================================
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
66,076.5
- ------------------------------------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
[ ]
- ------------------------------------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
19.3%
- ------------------------------------------------------------------------------------------------------------------------
10. Type of Reporting Person
PN
========================================================================================================================
<PAGE>
- ---------------------------------- -----------------------------------
CUSIP No. NONE 14D-1 AND 13D/A Page 4
- ---------------------------------- -----------------------------------
========================================================================================================================
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
66,076.5
- ------------------------------------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
[ ]
- ------------------------------------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
19.3%
- ------------------------------------------------------------------------------------------------------------------------
10. Type of Reporting Person
OO
========================================================================================================================
<PAGE>
- ---------------------------------- -----------------------------------
CUSIP No. NONE 14D-1 AND 13D/A Page 5
- ---------------------------------- -----------------------------------
========================================================================================================================
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
66,076.5
- ------------------------------------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
[ ]
- ------------------------------------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
19.3%
- ------------------------------------------------------------------------------------------------------------------------
10. Type of Reporting Person
CO
========================================================================================================================
<PAGE>
- ---------------------------------- -----------------------------------
CUSIP No. NONE 14D-1 AND 13D/A Page 6
- ---------------------------------- -----------------------------------
========================================================================================================================
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
66,076.5
- ------------------------------------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
[ ]
- ------------------------------------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
19.3%
- ------------------------------------------------------------------------------------------------------------------------
10. Type of Reporting Person
IN
========================================================================================================================
</TABLE>
<PAGE>
SCHEDULE 14D-1/AMENDMENT NO. 2 TO SCHEDULE 13D
This Tender Offer Statement on Schedule 14D-1 (the "Statement") also
constitutes Amendment No. 2 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
Properties IV, 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 IPLP Acquisition I LLC, a
Delaware limited liability company (the "Purchaser"), to purchase up to 85,000
of the outstanding units of limited partnership interest ("Units") of the
Partnership at a purchase price of $140 per Unit, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to
Purchase dated August 28, 1997 (the "Offer to Purchase") and the related
Assignment of Partnership Interest (which, 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.
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.
7
<PAGE>
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 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 Unit, copies of which are filed as Exhibits
(a)(1) and (a)(2) hereto, respectively, is incorporated herein by reference in
its entirety.
8
<PAGE>
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated August 28, 1997.
(a)(2) Assignment of Partnership Interest and Related
Instructions.
(a)(3) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(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 August 28, 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: August 28, 1997
IPLP ACQUISITION I LLC
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
SOLELY FOR PURPOSES OF, AND INSOFAR
AS THIS FILING CONSTITUTES, AMENDMENT
NO. 2 TO THE STATEMENT ON SCHEDULE
13D
/s/ ANDREW L. FARKAS
-------------------------------
ANDREW L. FARKAS
10
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
(a)(1) Offer to Purchase, dated August 28, 1997.
(a)(2) Assignment of Partnership Interest and Related
Instructions.
(a)(3) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(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 August 28, 1997, among
the Purchaser, IPLP, IPT, Insignia and Andrew L.
Farkas.
11
<PAGE>
Offer to Purchase for Cash
Up to 85,000 Units of Limited Partnership Interest
in
CONSOLIDATED CAPITAL PROPERTIES IV,
a California limited partnership
for
$140 Net Per Unit
by
IPLP ACQUISITION I LLC
- -----------------------------------------------------------------------------
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION
PERIOD WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
TIME, ON SEPTEMBER 25, 1997, UNLESS THE OFFER IS
EXTENDED.
- -----------------------------------------------------------------------------
IMPORTANT
IPLP Acquisition I LLC, a Delaware limited liability company (the
"Purchaser"), is offering to purchase up to 85,000 of the outstanding units of
limited partnership interest ("Units") in Consolidated Capital Properties IV,
a California limited partnership (the "Partnership"), at a purchase price of
$140 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 66,076.5 Units (of which approximately 64,000 were purchased in
January 1995 by an affiliate of Insignia (Insignia CCP IV
Acquisition, L.L.C.) at a purchase price of $60 per Unit, pursuant
to a tender offer commenced in December 1994).
o The net liquidation value per Unit (the "Estimated Liquidation
Value") estimated by the Purchaser (which is an affiliate of the
General Partner) is $205.38. 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
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.
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
19.3% of the outstanding Units, however, it will be able to
significantly influence the outcome of all voting decisions with
<PAGE>
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 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. 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
August 28, 1997
<PAGE>
TABLE OF CONTENTS
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PAGE
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INTRODUCTION.......................................................................................................... 1
The Purchaser; Affiliation with the General Partner.............................................................. 1
Some Factors to Be Considered by Limited Partners................................................................ 1
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............................................... 3
Conditions....................................................................................................... 4
Distributions.................................................................................................... 4
Outstanding Units................................................................................................ 4
THE OFFER............................................................................................................. 5
Section 1. Terms of the Offer; Expiration Date; Proration....................................................... 5
Section 2. Acceptance for Payment and Payment for Units......................................................... 6
Section 3. Procedure for Tendering Units........................................................................ 6
Valid Tender ............................................................................................... 6
Signature Requirements....................................................................................... 7
Delivery of Assignment of Partnership Interest............................................................... 7
Appointment as Proxy; Power of Attorney...................................................................... 7
Assignment of Interest in Future Distributions............................................................... 7
Determination of Validity; Rejection of Units; Waiver of Defects;
No Obligation to Give Notice of Defects................................................................... 8
Backup Federal Income Tax Withholding........................................................................ 8
FIRPTA Withholding........................................................................................... 8
Binding Obligation........................................................................................... 8
Section 4. Withdrawal Rights.................................................................................... 8
Section 5. Extension of Tender Period; Termination; Amendment................................................... 9
Section 6. Certain Federal Income Tax Matters................................................................... 9
General ............................................................................................... 9
Gain or Loss Generally....................................................................................... 10
Unrealized Receivables and Certain Inventory................................................................. 10
Passive Activity Loss Limitation............................................................................. 10
Partnership Termination...................................................................................... 11
Backup Withholding and FIRPTA Withholding.................................................................... 11
Section 7. Effects of the Offer................................................................................. 12
Limitations on Resales....................................................................................... 12
Effect on Trading Market; Registration Under Section 12(g) of the Exchange Act............................... 12
Control of Limited Partner Voting Decisions by Purchaser;
Effect of Relationship with General Partner............................................................... 12
Section 8. Future Plans of Insignia, IPT and the Purchaser...................................................... 13
Section 9. Certain Information Concerning the Partnership....................................................... 14
General ............................................................................................... 14
Originally Anticipated Term of Partnership; Alternatives..................................................... 14
General Policy Regarding Sales and Refinancings of Partnership Properties.................................... 14
Selected Financial and Property-Related Data................................................................. 15
Cash Distributions History................................................................................... 19
Operating Budgets of the Partnership......................................................................... 19
Section 10. Conflicts of Interest and Transactions with Affiliates.............................................. 20
Conflicts of Interest with Respect to the Offer.............................................................. 20
Voting by the Purchaser...................................................................................... 20
i
<PAGE>
PAGE
Financing Arrangements....................................................................................... 20
Transactions with Affiliates................................................................................. 21
Section 11. Certain Information Concerning the Purchaser, IPLP, IPT and Insignia................................ 21
The Purchaser ............................................................................................... 21
IPT and IPLP ............................................................................................... 21
Insignia ............................................................................................... 23
Section 12. Source of Funds..................................................................................... 25
Section 13. Background of the Offer............................................................................. 25
Affiliation with the General Partner......................................................................... 25
Previous Tender Offer........................................................................................ 25
Determination of Purchase Price.............................................................................. 25
Section 14. Conditions of the Offer............................................................................. 32
Section 15. Certain Legal Matters............................................................................... 33
General ............................................................................................... 33
Antitrust ............................................................................................... 33
Margin Requirements.......................................................................................... 34
Section 16. Fees and Expenses................................................................................... 34
Section 17. Miscellaneous....................................................................................... 34
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 PROPERTIES IV
INTRODUCTION
IPLP Acquisition I LLC (the "Purchaser"), which is a Delaware
limited liability company and an affiliate of the General Partner, hereby
offers to purchase up to 85,000 Units, representing approximately 25% of the
Units outstanding, at a purchase price of $140 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, a partial tender of Units must be for a minimum
of six Units (or, other than Limited Partners who are residents of Missouri,
who must tender a minimum of ten Units). Accordingly, any Limited Partner that
owns six or fewer Units (or, for Missouri residents, ten or fewer Units) 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
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 68% 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 32% of the total equity interests in IPLP). Insignia and its
affiliates also own approximately 70% of the outstanding common shares of IPT.
Since late December 1994, Insignia Residential Group, L.P. ("IRG"), which is
an affiliate of Insignia and the Purchaser, has provided property management
services to the Partnership, and Insignia (directly or through affiliates) has
performed asset management and partnership administration services for the
Partnership. 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.
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 and the General Partner are affiliates of and
controlled by IPT, which is controlled by Insignia. The General
Partner has conflicts of interest in considering the Offer,
including (i) as a result of the fact that a sale or liquidation of
the Partnership's assets would result in a decrease or elimination
of the fees paid to the General Partner and/or its affiliates and
(ii) the fact that as a consequence of the Purchaser's ownership of
Units, the Purchaser (which is an affiliate of the General Partner)
may have incentives to seek to maximize the value of its ownership
of Units, which in turn may result in a conflict for the General
Partner in attempting to reconcile the interests of the Purchaser
(which is an affiliate of the General Partner) with the interests of
the other Limited Partners. 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 $205.38. See Section 13 for a discussion of why
<PAGE>
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 19.3% 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 6%
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
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
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NO LONGER BE SUBJECT TO THE PASSIVE ACTIVITY LOSS LIMITATION WITH
RESPECT TO "SUSPENDED" LOSSES ATTRIBUTABLE TO THOSE UNITS AND,
THEREFORE, WILL BE ABLE TO UTILIZE FULLY ANY SUCH LOSSES.
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 19.3% 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
Limited Partner's adjusted tax basis in those Units. In the case of a Limited
Partner who is an individual and who has held Units since their issue by the
Partnership, the sale is expected to result in a gain, which may be taxable as
ordinary income, capital gain or gain from real estate depreciation recapture.
Limited Partners who have suspended "passive losses" from the Partnership or
other passive activity investments generally may deduct these losses up to the
amount of gain from the sale. A sale pursuant to the Offer of all of a 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.
According to the Partnership's Prospectus dated March 10, 1983, the then
general partners (predecessors to the current General Partner) anticipated
that the Partnership would sell and/or refinance its properties three to seven
years after their acquisition, depending upon the then current real estate and
money markets, economic climate and income tax consequences to the Limited
Partners. In general, the General Partner regularly evaluates the
Partnership's properties by considering various factors, such as the
Partnership's financial position and real estate and capital market
conditions. The General Partner monitors each property's specific locale and
sub-market conditions evaluating current trends, competition, new construction
and economic changes. The General Partner oversees each asset's operating
performance and continuously evaluates the physical improvement requirements.
In addition, the financing structure for each property, tax implications and
the investment climate are all considered. Any of these factors, and possibly
others, could potentially contribute to any
3
<PAGE>
decision of the General Partner to sell, refinance, upgrade with capital
improvements or hold a particular Partnership property. The General Partner
has advised the Purchaser that it is in the process of preliminarily
evaluating a refinancing of the debt encumbering the South Port Apartments
complex in Tulsa, Oklahoma, and that it expects that this refinancing will
generate net cash proceeds to the Partnership; however, there can be no
assurance as to whether this refinancing will occur as expected or whether it
will in fact generate net cash proceeds to the Partnership. Moreover, no
determination has been made as to whether any net cash proceeds generated by
such refinancing will be distributed to Limited Partners, which determination
will be made at the time of the refinancing and will be based on, among other
things, the Partnership's working capital requirements at the time. Based on
the above considerations and except for the potential refinancing of South
Port Apartments, the General Partner has determined that it is not in the best
interest of Limited Partners to sell or refinance any other property at the
present time. 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 has made cash distributions to
Limited Partners of $4.07 per Unit in 1997 (through August 28), and made cash
distributions to Limited Partners of $12.91 per Unit in 1996 and $2.58 per
Unit in 1995. Prior to the 1995 distribution, the last distribution made by
the Partnership was in 1987 ($15.00 per Unit). The 1996 distribution was not
made out of operating cash flow; rather, that distribution was made out of
reserves after the Limited Partnership Agreement was amended to reduce the
minimum working capital reserve requirement from approximately $8,600,000 to
$2,200,000. In total, original investors in the Partnership have received only
$104.43 of their original $1,000 investment made in 1983. See Section 9.
However, 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. 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 additional operating cash flow distribution of
approximately $3.00 per Unit in 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 future distributions was considered by the
Purchaser (which is an affiliate of the General Partner) when establishing the
Purchase Price. Limited Partners who tender their Units in response to the
Offer will retain all of the distributions made through August 28, 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 distribution will result in a
reduction of the Purchase Price, as described in Section 1. However, tendering
Limited Partners will not be entitled to receive 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 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 August 1, 1997 there were 342,773 Units issued and
outstanding, which were held of record by approximately 13,889 Limited
Partners. IPLP currently owns 66,076.5 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.
4
<PAGE>
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 85,000 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 September 25, 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 AUGUST 28, 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 85,000 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 85,000
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
Partnership's Limited Partnership Agreement (which generally requires that a
Limited Partner transfer a minimum of six Units (other than Limited Partners
who are residents of Missouri, who must tender a minimum of ten Units). If the
number of Units validly tendered and not properly withdrawn on or prior to the
Expiration Date is less than or equal to 85,000 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.
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
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Partners or (in the case of Units owned of record by IRAs and qualified plans)
beneficial owners of Units as of August 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 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 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 Partnership's Limited Partnership Agreement, a
partial tender of Units must be for a minimum of six Units (other than Limited
Partners who are residents of Missouri, who must tender a minimum of ten
Units). Accordingly, any Limited Partner that owns six or fewer Units (or, for
residents of Missouri, ten or fewer Units) 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. No
alternative, conditional or contingent tenders will be accepted.
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<PAGE>
Signature Requirements. ALL SIGNATURES ON THE ASSIGNMENT OF
PARTNERSHIP INTEREST MUST BE GUARANTEED BY A BANK, BROKER, DEALER, CREDIT
UNION, SAVINGS ASSOCIATION OR OTHER ENTITY WHICH IS A MEMBER IN GOOD STANDING
OF THE SECURITIES TRANSFER MEDALLION PROGRAM (EACH 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.
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 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
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<PAGE>
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 October 26, 1997. For withdrawal to be effective,
a written 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 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.
8
<PAGE>
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.
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
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<PAGE>
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). Limited Partners
who purchased their interests from the Partnership in the original issue of
the Units are expected to recognize taxable gain on the sale in an amount in
excess of the cash purchase price.
A portion of the gain or loss recognized by a 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
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
10
<PAGE>
income as well as passive activity income for that year. Substantially all
post-1986 losses of Limited Partners from the Partnership are believed to be
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). Substantially all gain 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 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 85,000 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
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
11
<PAGE>
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 25% of the outstanding Units if 85,000
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.
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 19.3% 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
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<PAGE>
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 a liquidation of
the Partnership or a sale of assets or refinancing of any of the Partnership's
properties. However, 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
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 19.3% of the outstanding Units, however, it will be able
to significantly influence the outcome of almost 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.
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<PAGE>
SECTION 9. CERTAIN INFORMATION CONCERNING THE PARTNERSHIP. Except
as otherwise indicated, information contained in this Section 9 is based upon
documents and reports publicly filed by the Partnership with the Commission.
Although the Purchaser has no information that any statements contained in
this Section 9 are untrue, the Purchaser cannot take responsibility for the
accuracy or completeness of any information contained in this Section 9 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 September 22, 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's primary business is real estate ownership and
related operations. The Partnership was formed to acquire, own, operate,
improve, lease and otherwise manage for investment purposes, existing
income-producing real properties, including apartment buildings, shopping
centers, industrial projects, office buildings and other commercial properties
purchased from non-affiliated sellers.
The Partnership's investment portfolio currently consists of 17
residential apartment complexes: a 204-unit complex in Omaha, Nebraska; a
350-unit complex in Nashville, Tennessee; a 194-unit complex in Miami,
Florida; a 326-unit complex in Marietta, Georgia; a 260-unit complex in El
Paso, Texas; a 122-unit complex in Colorado Springs, Colorado; a 450-unit
complex in Salt Lake City, Utah; a 326-unit complex in Nashville, Tennessee; a
312- unit complex in Omaha, Nebraska; a 472-unit complex in Nashville,
Tennessee; a 252-unit complex in Memphis, Tennessee; a 120-unit complex in
Charleston, South Carolina; a 150-unit complex in Nashville, Tennessee; a 120-
unit complex in Auburn, Washington; a 240-unit complex in Tulsa, Oklahoma; a
223-unit complex in Austin, Texas; and a 137-unit complex in Cimarron Hills,
Colorado.
Originally Anticipated Term of Partnership; Alternatives. According
to the Partnership's Prospectus dated March 10, 1983, the then general
partners (predecessors to the current General Partner) anticipated that the
Partnership would sell and/or refinance its properties three to seven years
after their acquisition, depending upon the then current real estate and money
markets, economic climate and income tax consequences to the Limited Partners.
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 regularly evaluates the
Partnership's properties by considering various factors, such as the
Partnership's financial position and real estate and capital market
conditions. The General Partner monitors each property's specific locale and
sub-market conditions evaluating current trends, competition, new construction
and economic changes. The General Partner oversees each asset's operating
performance and continuously evaluates the physical improvement requirements.
In addition, the financing structure for each property, tax implications and
the investment climate are all considered. Any of these factors, and possibly
others, could potentially contribute to any decision of the General Partner to
sell, refinance, upgrade with capital improvements or hold a particular
Partnership property. The General Partner has advised the Purchaser that it is
in the process of preliminarily evaluating a refinancing of the debt
encumbering the South Port Apartments complex in Tulsa, Oklahoma, and that it
expects that this refinancing will generate net cash proceeds to the
Partnership; however, there can be no assurance as to whether this refinancing
will occur as expected or whether it will in fact generate net cash proceeds
to the Partnership. Moreover, no determination has been made as to whether any
net cash proceeds generated by such refinancing will be distributed to Limited
Partners, which determination will be made at the time of the refinancing and
will be based on, among other things, the Partnership's working capital
requirements at the time. There are no other plans to sell or refinance any
property at the present time.
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<PAGE>
Selected Financial and Property-Related Data. Set forth below is a
summary of certain financial and statistical information with respect to the
Partnership and its properties, all of which has been excerpted or derived
from the Partnership's Annual 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. 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.
<TABLE>
<CAPTION>
CONSOLIDATED CAPITAL PROPERTIES IV
SELECTED FINANCIAL DATA
(in thousands, except per Unit data)
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....................... $ 13,423 $ 12,862 $ 27,413 $ 26,354 $ 27,087 $ 26,913 $ 25,903
Other Income........................ $ 908 $ 1,002 $ 724 $ 1,114 $ 818 $ 350 $ 369
Total Revenues................... $ 14,331 $ 13,864 $ 28,137 $ 27,468 $ 27,905 $ 27,263 $ 26,272
Income (Loss) from Operations
(before extraordinary item)...... $ 608 $ (417) $ (873) $ (1,240) $ (4,420) $ (6,709) $ (7,330)
Net Income (Loss)................... $ 608 $ 2,577 $ 2,036 $ (1,197) $ 11,717 $ (7,274) $ (1,914)
Net Income (Loss) per Unit.......... $ 1.70 $ 7.22 $ 5.70 $ (3.35) $ 32.81 $ (20.36) $ (5.35)
AS OF AS OF
JUNE 30, DECEMBER 31,
-------------------------- --------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------------- ------------ ------------- ----------- ----------- ------------- ---------
(UNAUDITED)
Balance Sheets Data:
Total Assets........................ $ 52,316 $ 55,737 $ 53,844 $ 61,146 $ 56,812 $ 67,683 $ 75,387
Total Liabilities................... $ 74,403 $ 75,516 $ 75,086 $ 79,779 $ 73,327 $ 82,986 $ 96,345
Limited Partners' Equity (Deficit) . $ (15,964) $ (13,749) $ (15,153) $ (12,682) $ (10,649) $ (21,897) $ (14,914)
Units Outstanding................... 342,783 342,783 342,783 342,783 342,783 342,839 343,034
Book Value per Unit................. $ (46.57) $ (40.11) $ (44.21) $ (37.00) $ (31.07) $ (63.87) $ (43.48)
</TABLE>
15
<PAGE>
Description of Properties. Set forth below is a table showing the
location, the date of purchase, the nature of the Partnership's ownership
interest in and the use of each of the Partnership's properties.
<TABLE>
<CAPTION>
DATE OF
PROPERTY PURCHASE TYPE OF OWNERSHIP USE
- ----------------------------------------- -------- ----------------------------------- -------------------------
<S> <C> <C> <C>
The Apartment 04/84 Fee ownership Residential Apartments
Omaha, Nebraska (subject to first mortgage) (204 units)
Arbour East Apartments 09/83 Fee ownership Residential Apartments
Nashville, Tennessee (subject to first mortgage) (350 units)
Briar Bay Racquet Club Apts. 09/82 Fee ownership Residential Apartments
Miami, Florida (subject to first mortgage) (194 units)
Chimney Hill Apartments 08/82 Fee ownership Residential Apartments
Marietta, Georgia (subject to first mortgage) (326 units)
Citadel Apartments 05/83 Fee ownership Residential Apartments
El Paso, Texas (subject to first mortgage) (260 units)
Citadel Village Apartments 12/82 Fee ownership Residential Apartments
Colorado Springs, Colorado (subject to first mortgage) (122 units)
Foothill Place Apartments 08/85 Fee ownership Residential Apartments
Salt Lake City, Utah (subject to first mortgage) (450 units)
Knollwood Apartments 07/82 Fee ownership Residential Apartments
Nashville, Tennessee (subject to first mortgage) (326 units)
Lake Forest Apartments 04/84 Fee ownership Residential Apartments
Omaha, Nebraska (subject to first mortgage) (312 units)
Nob Hill Villa Apartments 04/83 Fee ownership Residential Apartments
Nashville, Tennessee (subject to first mortgage) (472 units)
Overlook Apartments 11/85 Fee ownership Residential Apartments
Memphis, Tennessee (subject to first mortgage) (252 units)
Point West Apartments 11/85 Fee ownership Residential Apartments
Charleston, South Carolina (subject to first mortgage) (120 units)
Post Ridge Apartments 07/82 Fee ownership Residential Apartments
Nashville, Tennessee (subject to first mortgage) (150 units)
Rivers Edge Apartments 04/83 Fee ownership Residential Apartments
Auburn, Washington (subject to first mortgage) (120 units)
South Port Apartments 11/83 Fee ownership Residential Apartments
Tulsa, Oklahoma (subject to first mortgage) (240 units)
Stratford Place Apartments 08/85 Fee ownership Residential Apartments
Austin, Texas (subject to first mortgage) (223 units)
Village East Apartments 12/82 Fee ownership Residential Apartments
Cimarron Hills, Colorado (subject to first mortgage) (137 units)
</TABLE>
16
<PAGE>
Accumulated Depreciation Schedule. 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 Apartment $ 8,338 $ 5,424 5-18 yr. S/L $ 2,767
Arbour East Apartments 11,877 9,126 5-18 yr. S/L 2,997
Briar Bay Racquet Club Apts. 7,635 5,855 5-18 yr. S/L 2,261
Chimney Hill Apartments 10,408 8,822 5-18 yr. S/L 2,520
Citadel Apartments 7,393 5,806 5-18 yr. S/L 1,488
Citadel Village Apartments 3,761 3,258 5-18 yr. S/L 1,123
Foothill Place Apartments 14,829 7,616 5-18 yr. S/L 8,505
Knollwood Apartments 10,203 8,555 5-18 yr. S/L 2,025
Lake Forest Apartments 8,682 5,133 5-18 yr. S/L 2,851
Nob Hill Villa Apartments 12,109 9,775 5-15 yr. S/L 2,395
Overlook Apartments 4,370 2,959 5-40 yr. S/L 1,876
Point West Apartments 2,883 2,021 5-18 yr. S/L 1,503
Post Ridge Apartments 4,096 3,430 5-18 yr. S/L 779
Rivers Edge Apartments 3,178 2,344 5-18 yr. S/L 997
South Port Apartments 7,812 5,524 5-18 yr. S/L 2,246
Stratford Place Apartments 7,285 3,568 5-20 yr. S/L 2,902
Village East Apartments 3,269 2,718 5-18 yr. S/L 545
------------ ----------- -----------
TOTALS $ 128,128 $ 91,934 $ 39,780
============ =========== ===========
</TABLE>
Schedule of Mortgages. Set forth below is a table showing certain
information regarding the outstanding mortgages encumbering each of the
Partnership's properties as of December 31, 1996 ($ 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 Apartment $ 3,488 8.34% 25 years 09/00 $ 3,244
Arbour East Apartments 5,650 6.95% (a) 12/05 5,650
Briar Bay Racquet Club Apts. 3,500 6.95% (a) 12/05 3,500
Chimney Hill Apartments 5,400 6.95% (a) 12/05 5,400
Citadel Apartments 4,830 8.38% 25 years 10/00 4,488
Citadel Village Apartments 2,450 6.95% (a) 12/05 2,450
Foothill Place Apartments 10,100 6.95% (a) 12/05 10,100
Knollwood Apartments 6,780 6.95% (a) 12/05 6,780
Lake Forest Apartments 4,700 7.33% (a) 11/03 4,700
Nob Hill Villa Apartments 7,361 9.20% 22 years 04/05 6,250
Overlook Apartments 1,878 10.50% 25 years 12/98 1,817
Post Ridge Apartments 4,050 7.33% (a) 11/03 4,050
Rivers Edge Apartments 2,036 8.40% 25 years 09/00 1,895
South Port Apartments 3,464 10.85% 15 years 07/01 3,167
Stratford Place Apartments 2,657 8.65% 25 years 09/00 2,478
Village East Apartments 2,150 6.95% (a) 12/05 2,150
----------- -----------
TOTALS $ 70,494 $ 68,119
=========== ===========
</TABLE>
- --------------------------
(a) Interest only.
17
<PAGE>
Average Annual Rental Rate and Occupancy. 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 RENTAL RATE AVERAGE ANNUAL OCCUPANCY
- ----------------------------------------- --------------------------------- --------------------------------
1996 1995 1996 1995
--------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
The Apartment $5,821/unit $5,639/unit 92% 95%
Arbour East Apartments 6,784/unit 6,220/unit 95% 97%
Briar Bay Racquet Club Apts. 8,207/unit 8,055/unit 97% 93%
Chimney Hill Apartments 7,540/unit 6,901/unit 92% 96%
Citadel Apartments 6,753/unit 6,676/unit 91% 92%
Citadel Village Apartments 7,672/unit 7,050/unit 97% 98%
Foothill Place Apartments 7,300/unit 6,919/unit 97% 98%
Knollwood Apartments 7,194/unit 6,649/unit 97% 98%
Lake Forest Apartments 6,073/unit 5,662/unit 94% 97%
Nob Hill Villa Apartments 5,612/unit 5,183/unit 97% 98%
Overlook Apartments 3,945/unit 3,767/unit 83% 88%
Point West Apartments 5,121/unit 5,046/unit 90% 90%
Post Ridge Apartments 8,689/unit 8,143/unit 96% 97%
Rivers Edge Apartments 6,342/unit 6,242/unit 97% 93%
South Port Apartments 5,333/unit 5,282/unit 96% 84%
Stratford Place Apartments 6,494/unit 6,321/unit 92% 93%
Village East Apartments 6,142/unit 5,435/unit 99% 99%
</TABLE>
Note Receivable on Sold Property. The Partnership holds a 9%
interest bearing promissory note in the principal amount of $1,116,000 which
it received in connection with the sale of the Denbigh Village apartment
complex in August 1994. The original maturity of that note was March 1996, and
in March 1996 the Partnership extended the maturity to April 1997. The
maturity of the note has been further extended to April 1998, and in
connection therewith IRG has taken over property management responsibilities
for this property.
Schedule of Real Estate Taxes and Rates. Set forth below is a table
showing the real estate taxes and rates for 1996 for each of the Partnership's
properties.
<TABLE>
<CAPTION>
1996 1996
PROPERTY BILLING RATE
- ----------------------------------------------- --------- ------
<S> <C> <C>
The Apartment $147,000* 2.9%
Arbour East Apartments 105,000 3.5%
Briar Bay Racquet Club Apartments 149,000 2.3%
Chimney Hill Apartments 128,000 3.3%
Citadel Apartments 164,000 2.8%
Citadel Village Apartments 16,000 6.9%
Foothill Place Apartments 163,000 1.5%
Knollwood Apartments 114,000 3.5%
Lake Forest Apartments 202,000* 2.9%
Nob Hill Villa Apartments 127,000 4.5%
Overlook Apartments 63,000 3.2%
Point West Apartments 33,000 34.4%
Post Ridge Apartments 54,000 3.5%
Rivers Edge Apartments 56,000 1.5%
South Port Apartments 52,000 13.2%
Stratford Place Apartments 125,000 2.4%
Village East Apartments 14,000 7.0%
</TABLE>
- --------------------------
*Represents an estimate.
18
<PAGE>
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 Partners made by the
Partnership since 1995. Prior to the 1995 distribution, the last distribution
made by the Partnership was in 1987 ($15.00 per Unit). The 1996 distribution
was not made out of operating cash flow; rather, that distribution was made
out of working capital reserves after the Limited Partnership Agreement was
amended to reduce the minimum working capital reserve requirement from
approximately $8,600,000 to $2,200,000. In total, original investors in the
Partnership have received only $104.43 of their original $1,000 investment
made in 1983.
<TABLE>
<CAPTION>
PER UNIT
DISTRIBUTION TO DISTRIBUTION TO AGGREGATE
YEAR LIMITED PARTNERS(1) GENERAL PARTNER DISTRIBUTION(2)
---- ------------------------ ------------------------ --------------------
<S> <C> <C> <C>
1997** $ 4.07 $ 58,000 $1,453,000
1996 12.91 219,000 4,645,000
1995 2.58 37,000 921,000
</TABLE>
- ---------------------
(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 Partnership Agreement, cash distributions by the
Partnership generally are allocated 96% to the Limited Partners and 4%
to the General Partners.
** Through August 28, 1997.
Operating Budgets of the Partnership. A summary of the fiscal 1996
and 1997 operating budgets and the audited results of operations for fiscal
1996 of the Partnership 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 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 Partnership's future
operating results 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........... $ 27,324,287 $ 27,413,000 $ 28,769,814
Total Operating Expenses ......................... $ 12,993,616 $ 14,593,000 $ 13,357,904
Net Operating Income.............................. $ 14,330,671 $ 12,820,000 $ 15,411,910
Capital Expenditures.............................. $ 5,951,689 $ 4,945,000 $ 4,890,333
</TABLE>
19
<PAGE>
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 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 19.3%
of the outstanding Units, however, it will be able to significantly influence
the outcome of almost 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 "bullet"
maturity after a relatively short time or bears a high or increasing interest
rate. In such a situation, the General Partner may experience a conflict of
interest in seeking to reconcile the best interests of the Partnership with
the need of its affiliates for cash flow from the Partnership's activities.
20
<PAGE>
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 $58,000 to date in
1997, $219,000 in 1996 and $37,000 in 1995. In late December 1994, IRG (an
affiliate of Insignia and the General Partner) assumed day-to-day property
management responsibilities for 15 of the Partnership's properties, and in
January 1995, IRG assumed day-to-day property management responsibilities for
two other Partnership properties. Currently, one of the Partnership's
properties is managed by an unaffiliated party. The Partnership paid IRG
property management fees for property management services in the amounts of
approximately $1,316,000 and $1,223,000 for the years ended December 31, 1996
and 1995, respectively, and has paid IRG property management fees equal to
$688,000 during the first six months of 1997. The Partnership reimbursed the
General Partner and its affiliates (including Insignia) for expenses incurred
in connection with asset management and partnership administration services
performed by them for the Partnership during 1996 and 1995 in the amounts of
$605,000 and $645,000, respectively, and has reimbursed them in the amount of
$268,000 through June 30, 1997. The Partnership Agreement also provides for a
special management fee to be paid to the General Partner for executive and
administrative management services, equal to 9% of the total distributions of
cash flow from operations made to Limited Partners. The Partnership paid the
General Partner approximately $392,000 and $80,000 for the two years ended
December 31, 1996 and 1995, respectively, and has paid approximately $48,000
to the General Partner through June 30, 1997 pursuant to this provision. In
1995, the Partnership reimbursed an affiliate of the General Partner
approximately $42,000 for costs incurred in connection with evaluating the
feasibility of refinancing the debt encumbering several of the Partnership's
properties, and in 1996 and 1995 the Partnership paid the same affiliate
approximately $22,000 and $123,000, respectively, for loan costs incurred
during those years in connection with refinancing two of the Partnership's
properties in 1996 and eight properties in 1995. On July 1, 1995, the
Partnership 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
certain other tender offers for units of limited partnership interests in
other IPT Partnerships (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 offers, 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 offers.
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, primarily for
the purpose of acquiring and owning interests in multifamily residential
properties, including limited and general partner interests in limited
partnerships (including the Partnership) which hold such real estate
properties. 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, and it has elected to be taxed as a REIT beginning with its taxable year
ending December 31, 1996. Substantially all of IPT's operations are conducted
through IPLP, which is the operating partnership of IPT, and of which IPT is
presently the sole general partner and Insignia is presently the sole limited
partner.
21
<PAGE>
In forming IPT, Insignia and its affiliates (i) transferred to IPT
equity interests in corporations comprising or controlling the general
partners of 37 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 and the percentage of limited partner interests
IPLP owns in each.
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.
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), and it is anticipated that
Insignia and its affiliates will own approximately 58% of post-merger IPT, the
former AMIT shareholders (other than Insignia and its affiliates) will own
approximately 18% of post-merger IPT, and the current unaffiliated
shareholders of IPT will own the remaining 24% of post-merger IPT.
The AMIT Merger is expected to be completed sometime 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 unaudited consolidated financial
information with respect to IPT and IPLP.
22
<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) (unaudited)
<S> <C> <C>
Statements of Operations Data:
Revenues...................................... $ 6,715 $ 7,683
Income Before Extraordinary Item.............. $ 1,248 $ 1,535
Net Income.................................... $ 1,248 $ 403
Supplemental Data:
Funds From Operations(1)...................... $ 8,718 $ 6,691
IPT Common Shares Outstanding................. 15,501,487 11,168,036
IPLP Units Outstanding........................ 8,399,499 8,399,499
--------- ---------
IPT Common Shares Equivalents................. 23,900,986 19,567,535
========== ==========
Balance Sheets Data:
Cash.......................................... $ 35,520 $ 4,928
Investments in IPT Partnerships(2)............ $ 124,951 $ 118,741
Long-Term Debt................................ $ 19,950 $ 19,730
Stockholders' Equity(3)....................... $ 163,466 $ 121,068
</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) Represents IPT's investment in 25 of the 37 IPT Partnerships which IPT
accounts for using the equity method. Of the remaining 12 IPT
Partnerships, IPT accounts for 11 using the cost method and one using the
consolidation method.
(3) 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 270,000
residential units (including cooperative and condominium units), and in excess
of 147 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 400,000 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,
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
23
<PAGE>
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 $ 75,453
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 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
24
<PAGE>
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 $12,000,000 will be
required to purchase 85,000 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 Agent. 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 interest as Managing Agent in the Partnership and its
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 sole general partner of the Partnership (and as the sole
general partner of each of the Affiliated Partnerships). The selection of the
General Partner as the sole 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 January 1995, Insignia CCP IV
Acquisition, L.L.C. ("CCP IV Acquisition"), which was an affiliate of
Insignia, purchased approximately 64,000 Units, at a purchase price of $60 per
Unit, pursuant to a tender offer commenced in December 1994. All of the equity
interests in CCP IV Acquisition were contributed to or acquired by IPLP in
December 1996 in connection with the formation of IPT, and CCP IV Acquisition
was subsequently dissolved. As a result, IPLP now owns all of those Units.
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 its other affiliates, including among other
things: (i) the Limited Partnership Agreement, as amended to date; (ii) 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 period ended June
30, 1997; (iii) unaudited results of operations of the Partnership's
properties for the period since the beginning of the Partnership's current
fiscal year; (iv) the operating budgets prepared by IRG with respect to the
Partnership's properties for the year ending December 31, 1997; (v)
independent appraisals of certain of the Partnership's properties; and (vi)
other information obtained by IRG, Insignia and other affiliates in their
capacities as providers of property management, asset management and
partnership administration services to the Partnership. Based on that
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 11,943 Units (representing less than 3.5% of
the total outstanding Units) were transferred in sale transactions (excluding
the transfers of Units to IPLP by CCP IV Acquisition in connection with the
formation of IPT and the dissolution of CCP IV Acquisition). 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
25
<PAGE>
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 PROPERTIES IV
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............................ $35 $132 $119 $132
First Quarter ............................ 37 125 85 130
Fiscal Year Ended December 31, 1996:
Fourth Quarter ........................... 26 106 75 127
Third Quarter............................. 15 94 63 97
Second Quarter............................ 21 95 50 85
First Quarter............................. 25 78 40 65
Fiscal Year Ended December 31, 1995:
Fourth Quarter............................ 19 77 40 62
Third Quarter............................. 30 65 49 51
</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.
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 have been
appraised in the past several years by independent, third party appraisers
(either Koeppel Tener Real Estate Services, Inc. ("KTR") or Joseph J. Blake &
Associates, Inc. ("Blake")) in connection with refinancings of those
properties. 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 specified in
the most recent appraisal reports for the Partnership's 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.
26
<PAGE>
APPRAISED DATE OF
PROPERTY NAME VALUE APPRAISAL APPRAISER
- ------------- --------------- --------- ---------
Arbour East $ 11,300,000 11/08/95 Blake
Briar Bay Racquet $ 7,900,000 10/20/95 Blake
Chimney Hill $ 12,400,000 10/15/95 Blake
Citadel Village $ 4,600,000 11/01/95 Blake
Foothill Place $ 20,000,000 11/01/95 KTR
Knollwood $ 11,700,000 11/08/95 KTR
Lake Forest $ 8,550,000 04/19/96 KTR
Post Ridge $ 6,700,000 06/28/96 Blake
Village East $ 3,750,000 11/01/95 Blake
IPT Formation Values. In connection with the formation of IPT,
Insignia prepared estimates of the values of the Partnership's 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 to be $132,563,639 and the value of a Unit to be $212. This
aggregate property value estimate is approximately $1,322,065 (or 1.0%) less
than the Gross Real Estate Value Estimate described below, principally due to
changes in the operating performances of the properties between December 1996
and June 1997; and this Unit value estimate is approximately $6.62 (or 3.2%)
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 a Unit and not the "liquidation value" of a Unit and, therefore,
Insignia did not deduct a 4% reserve to account for the costs associated with
liquidating the Partnership's properties as described below.
Purchaser's Estimate of Gross Real Estate Value. In estimating the
gross real estate value of the Partnership's properties, the Purchaser
utilized the capitalization of income approach. The estimate of the gross real
estate value of the Partnership's 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 based upon any other valuation method.
The following is a description of the methodology employed by the
Purchaser in preparing such estimates (as used below, "net operating income"
is calculated before depreciation, amortization, debt service payments and
certain capital expenditure items):
THE APARTMENT. In estimating the value of this property, the
Purchaser reviewed the income ($651,786) generated by the property for the six
months ended June 30, 1997 (comprised of $595,301 of gross rental income and
$56,485 of other income), and then deducted from this amount the total
operating expenses of the property for the first six months of 1997
($285,385), resulting in the Purchaser's estimate of net operating income for
the first six months of 1997 ($366,401). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $732,802, and
then reduced that annualized net operating income amount by $750 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 ($579,802) at an 11.0% capitalization rate, resulting in an estimated
gross property value of $5,270,927.
ARBOUR EAST APARTMENTS. In estimating the value of this property,
the Purchaser reviewed the income ($1,223,229) generated by the property for
the six months ended June 30, 1997 (comprised of $1,167,136 of gross rental
income and $56,093 of other income), and then deducted from this amount the
total operating expenses of the property for the first six months of 1997
($563,003), resulting in the Purchaser's estimate of net operating income for
the first six months of 1997 ($660,226). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $1,320,452, 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
27
<PAGE>
valuation purposes. Finally, the Purchaser capitalized its estimated adjusted
net operating income amount ($1,215,452) at a 10.25% capitalization rate,
resulting in an estimated gross property value of $11,858,068.
BRIAR BAY RACQUET CLUB APARTMENTS. In estimating the value of this
property, the Purchaser reviewed the income ($778,557) generated by the
property for the six months ended June 30, 1997 (comprised of $744,357 of
gross rental income and $34,200 of other income), and then deducted from this
amount the total operating expenses of the property for the first six months
of 1997 ($405,393), resulting in the Purchaser's estimate of net operating
income for the first six months of 1997 ($373,164). The Purchaser then
annualized this amount, resulting in estimated annual net operating income of
$746,328 and then increased that 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
($785,128) at a 10.0% capitalization rate, resulting in an estimated gross
property value of $7,851,280.
CHIMNEY HILL APARTMENTS. In estimating the value of this property,
the Purchaser reviewed the income ($1,186,611) generated by the property for
the six months ended June 30, 1997 (comprised of $1,137,454 of gross rental
income and $49,157 of other income), and then deducted from this amount the
total operating expenses of the property for the first six months of 1997
($613,851), resulting in the Purchaser's estimate of net operating income for
the first six months of 1997 ($572,760). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $1,145,520.
Finally, the Purchaser capitalized its estimated net operating income amount
at a 9.75% capitalization rate, resulting in an estimated gross property value
of $11,748,923.
CITADEL APARTMENTS. In estimating the value of this property, the
Purchaser reviewed the income ($847,123) generated by the property for the six
months ended June 30, 1997 (comprised of $812,351 of gross rental income and
$34,772 of other income), and then deducted from this amount the total
operating expenses of the property for the first six months of 1997
($455,547), resulting in the Purchaser's estimate of net operating income for
the first six months of 1997 ($391,576). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $783,152, and
then reduced that annualized net operating income amount by $150 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 ($744,002) at an 11.0% capitalization rate, resulting in an estimated
gross property value of $6,763,655.
CITADEL VILLAGE APARTMENTS. In estimating the value of this
property, the Purchaser reviewed the income ($497,466) generated by the
property for the six months ended June 30, 1997 (comprised of $467,891 of
gross rental income and $29,575 of other income), and then deducted from this
amount the total operating expenses of the property for the first six months
of 1997 ($201,049), resulting in the Purchaser's estimate of net operating
income for the first six months of 1997 ($296,417). The Purchaser then
annualized this amount, resulting in estimated annual net operating income of
$592,834, and then reduced that annualized net operating income amount by $350
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 ($550,134) at a 10.5% capitalization rate, resulting
in an estimated gross property value of $5,239,371.
FOOTHILL PLACE APARTMENTS. In estimating the value of this
property, the Purchaser reviewed the income ($1,681,036) generated by the
property for the six months ended June 30, 1997 (comprised of $1,602,276 of
gross rental income and $78,760 of other income), and then deducted from this
amount the total operating expenses of the property for the first six months
of 1997 ($632,305), resulting in the Purchaser's estimate of net operating
income for the first six months of 1997 ($1,048,731). The Purchaser then
annualized this amount, resulting in estimated annual net operating income of
$2,097,462, 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 ($1,962,462) at a 9.5% capitalization
rate, resulting in an estimated gross property value of $20,657,495.
28
<PAGE>
KNOLLWOOD APARTMENTS. In estimating the value of this property, the
Purchaser reviewed the income ($1,208,535) generated by the property for the
six months ended June 30, 1997 (comprised of $1,163,583 of gross rental income
and $44,952 of other income), and then deducted from this amount the total
operating expenses of the property for the first six months of 1997
($557,860), resulting in the Purchaser's estimate of net operating income for
the first six months of 1997 ($650,675). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $1,301,350, and
then reduced 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 ($1,236,150) at a 10.0% capitalization rate, resulting in an estimated
gross property value of $12,361,500.
LAKE FOREST APARTMENTS. In estimating the value of this property,
the Purchaser reviewed the income ($1,031,325) generated by the property for
the six months ended June 30, 1997 (comprised of $945,329 of gross rental
income and $85,996 of other income), and then deducted from this amount the
total operating expenses of the property for the first six months of 1997
($508,665), resulting in the Purchaser's estimate of net operating income for
the first six months of 1997 ($522,660). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $1,045,320, and
then reduced that annualized net operating income amount by $450 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 ($904,920) at a 10.5% capitalization rate, resulting in an estimated
gross property value of $8,618,286.
NOB HILL VILLA APARTMENTS. In estimating the value of this
property, the Purchaser reviewed the income ($1,362,177) generated by the
property for the six months ended June 30, 1997 (comprised of $1,310,095 of
gross rental income and $52,082 of other income), and then deducted from this
amount the total operating expenses of the property for the first six months
of 1997 ($606,320), resulting in the Purchaser's estimate of net operating
income for the first six months of 1997 ($755,857). The Purchaser then
annualized this amount, resulting in estimated annual net operating income of
$1,511,714, and then reduced that annualized net operating income amount by
$500 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 ($1,275,714) at a 10.5% capitalization
rate, resulting in an estimated gross property value of $12,149,657.
OVERLOOK APARTMENTS. In estimating the value of this property, the
Purchaser reviewed the income ($442,141) generated by the property for the six
months ended June 30, 1997 (comprised of $430,610 of gross rental income and
$11,531 of other income), and then deducted from this amount the total
operating expenses of the property for the first six months of 1997
($309,025), resulting in the Purchaser's estimate of net operating income for
the first six months of 1997 ($133,116). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $266,232 and
then increased that 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 ($291,432) at
an 11.0% capitalization rate, resulting in an estimated gross property value
of $2,649,382.
POINT WEST APARTMENTS. In estimating the value of this property,
the Purchaser reviewed the income ($317,601) generated by the property for the
six months ended June 30, 1997 (comprised of $310,374 of gross rental income
and $7,227 of other income), and then deducted from this amount the total
operating expenses of the property for the first six months of 1997
($163,130), resulting in the Purchaser's estimate of net operating income for
the first six months of 1997 ($154,471). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $308,942, and
then reduced that net annualized 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 ($272,942) at a 10.5% capitalization rate, resulting in an estimated
gross property value of $2,599,448.
29
<PAGE>
POST RIDGE APARTMENTS. In estimating the value of this property,
the Purchaser reviewed the income ($665,967) generated by the property for the
six months ended June 30, 1997 (comprised of $648,945 of gross rental income
and $17,022 of other income), and then deducted from this amount the total
operating expenses of the property for the first six months of 1997
($290,911), resulting in the Purchaser's estimate of net operating income for
the first six months of 1997 ($375,056). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $750,112, and
then reduced that annualized net operating income amount by $500 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 ($675,112) at a 10.0% capitalization rate, resulting in an estimated
gross property value of $6,751,120.
RIVERS EDGE APARTMENTS. In estimating the value of this property,
the Purchaser reviewed the income ($397,438) generated by the property for the
six months ended June 30, 1997 (comprised of $384,495 of gross rental income
and $12,943 of other income), and then deducted from this amount the total
operating expenses of the property for the first six months of 1997
($174,009), resulting in the Purchaser's estimate of net operating income for
the first six months of 1997 ($223,429). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $446,858, 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 ($398,858) at a 10.5% capitalization rate, resulting in an estimated
gross property value of $3,798,648.
SOUTH PORT APARTMENTS. In estimating the value of this property,
the Purchaser reviewed the income ($628,431) generated by the property for the
six months ended June 30, 1997 (comprised of $594,409) of gross rental income
and $34,022 of other income), and then deducted from this amount the total
operating expenses of the property for the first six months of 1997
($272,421), resulting in the Purchaser's estimate of net operating income for
the first six months of 1997 ($356,010). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $712,020, and
then reduced 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 ($664,020) at an 11.0% capitalization rate, resulting in an estimated
gross property value of $6,036,545.
STRATFORD PLACE APARTMENTS. In estimating the value of this
property, the Purchaser reviewed the income ($684,724) generated by the
property for the six months ended June 30, 1997 (comprised of $655,400 of
gross rental income and $29,324 of other income), and then deducted from this
amount the total operating expenses of the property for the first six months
of 1997 ($407,226), resulting in the Purchaser's estimate of net operating
income for the first six months of 1997 ($277,498). The Purchaser then
annualized this amount, resulting in estimated annual net operating income of
$554,996. Finally, the Purchaser capitalized its estimated annual net
operating income amount at an 11.0% capitalization rate, resulting in an
estimated gross property value of $5,045,418.
VILLAGE EAST APARTMENTS. In estimating the value of this property,
the Purchaser reviewed the income ($466,280) generated by the property for the
six months ended June 30, 1997 (comprised of $441,070 of gross rental income
and $25,210 of other income), and then deducted from this amount the total
operating expenses of the property for the first six months of 1997
($203,366), resulting in the Purchaser's estimate of net operating income for
the first six months of 1997 ($262,914). The Purchaser then annualized this
amount, resulting in estimated annual net operating income of $525,828, 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 ($471,028) at a 10.5% capitalization rate, resulting in an estimated
gross property value of $4,485,981.
Based on the individual estimates of the gross values of the
Partnership's properties described above, the Purchaser estimated that the
current aggregate gross real estate value of the Partnership's properties is
$133,885,704
30
<PAGE>
(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 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 (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 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 might be sold could be significantly higher or significantly lower
than the Purchaser's estimates.
The Gross Real Estate Value Estimate does not take into account (i)
the debt encumbering the Partnership's properties or the other liabilities of
the Partnership, (ii) cash and other assets held by the Partnership, (iii)
real estate transaction costs that would be incurred on a sale of the
Partnership's properties, such as brokerage commissions and other selling and
closing expenses, (iv) timing considerations or (v) costs associated with
winding up the Partnership. 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. In
considering this factor, 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 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 of the values of the Partnership's properties described
above), as opposed to the appraised values of the Partnership's 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.
In estimating the pro forma net liquidation value per Unit, the
Purchaser adjusted its Gross Real Estate Value Estimate of $133,885,704 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 unaudited balance sheet at June 30, 1997 ($15,645,000), and
subtracted the mortgage debt encumbering the Partnership's properties
($71,561,000) and all other liabilities shown on that balance sheet
($2,215,000). The Purchaser then deducted from that amount $5,355,428,
representing a reserve equal to 4% of the Gross Real Estate Value Estimate
(which represents the Purchaser's estimate of the probable costs of brokerage
commissions, real estate transfer taxes and other disposition expenses). The
result, $70,399,276, 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 Limited 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 costs of negotiating purchase
and sale contracts, possibly conducting a consent solicitation
31
<PAGE>
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
divided the estimated aggregate net liquidation proceeds of $70,399,276 by the
342,773 Units reported as outstanding by the General Partner as of August 1,
1997. The resulting estimated pro forma liquidation value was $205.38 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 and (ii) 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 $18.75 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 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;
32
<PAGE>
(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.
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.
33
<PAGE>
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
Information Agent and Harris Trust Company of New York to act as 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 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).
IPLP ACQUISITION I LLC
AUGUST 28, 1997
34
<PAGE>
SCHEDULE I
TRANSACTIONS IN THE UNITS
EFFECTED BY IPLP WITHIN THE PAST 60 DAYS
Number of Price
DATE Units Purchased Per Unit
---- --------------- --------
07/22/97 10 $123.00
08/19/97 40 $119.50
08/19/97 25 $120.00
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 August 1997. For additional information regarding Mr. Cohen, see Schedule III.
Suite 3401
New York, NY 10152
John K. Lines John K. Lines has been a Manager of the Purchaser since its inception in
August 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
August 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 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. For
additional information regarding Mr. Jarrard, see Schedule IV.
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.
S-3
<PAGE>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ---- -----------------------------
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
1212 North Summit Drive 1996. For more than the past five years, Mr. Denison's principal
Santa Fe, NM 87501 occupation has been 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
730 Park Avenue 1993. Mr. Farkas is the retired Chairman of the Board and
New York, NY 10021 Chief Executive Officer of Alexander's 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
535 Madison Avenue August 1993. For more than the past five years, Mr.
New York, NY 10022 Halpern's principal occupation has been as 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
125 West 55th Street 1993. Since February 1996, Mr. Koen has been a partner in
New York, NY 10019 the law firm of Akin, Gump, 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
110 East 59th Street August 1993. For more than the past five years, Mr. Lipstein's
New York, NY 10022 principal occupation has been as a self-employed consultant
in the real estate business, including ownership, management
and lending.
S-5
<PAGE>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ---- ----------------------------
Buck Mickel* Buck Mickel has been a Director of Insignia since August
1993. For more 301 N. Main Street than the past five years,
Mr. Mickel's principal occupation has been to serve
Greenville, SC 29601 as Chairman 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
102 Woodmont Boulevard Insignia for more than the past five years. Mr. Garrison
Suite 400 currently serves as an Executive Managing Director of
Nashville, TN 37205 Insignia (since July 1994) and as President of Insignia
Financial Services, a division of Insignia (since July
1994).
Jeffrey L. Goldberg Jeffrey L. Goldberg's principal employment has been with
375 Park Avenue Insignia for more than the past five years. Mr. Goldberg
Suite 3401 currently serves as a Managing Director -- Investment
New York, NY 10152 Banking of Insignia (since July 1994).
Edward S. Gordon Edward S. Gordon has been with the Office of the Chairman of
200 Park Avenue Insignia since July 1996. Prior to July 1996, Mr. Gordon's
New York, NY 10166 principal employment for more 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 January 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.
William H. Jarrard, Jr. William H. Jarrard, Jr.'s principal employment has been with
Insignia for more than the past five years. Mr. Jarrard
currently serves as Managing Director -- Partnership
Administration of Insignia (since January 1994).
S-6
<PAGE>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ---- ----------------------------
Neil Kreisel Neil Kreisel has been an Executive Managing Director of
909 Third Avenue Insignia since September 1995 and President of Insignia
New York, NY 10022 Residential Group since September 1997. Prior to 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 President of Ocwen Financial
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
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
200 Park Avenue Insignia since July 1996 and President of Insignia
New York, NY 10166 Commercial Group since January 1997. 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
<TABLE>
<CAPTION>
% OF LIMITED PARTNER
PARTNERSHIP NAME INTERESTS OWNED BY IPLP(a)
- ---------------- --------------------------
<S> <C>
Consolidated Capital Growth Fund 39.2%
Consolidated Capital Institutional Properties 25.1%
Consolidated Capital Properties/2 1.7%
Consolidated Capital Institutional Properties/3 11.1%
Consolidated Capital Properties III 25.0%
Consolidated Capital Properties IV 19.3%
Consolidated Capital Properties V (b)
Consolidated Capital Properties VI 22.9%
Shelter Properties I Limited Partnership 39.2%
Shelter Properties II Limited Partnership 33.1%
Shelter Properties III Limited Partnership 33.7%
Shelter Properties IV Limited Partnership(c) (b)
Shelter Properties V Limited Partnership 38.1%
Shelter Properties VI Limited Partnership 27.1%
Shelter Properties VII Limited Partnership 1.8%
National Property Investors III 44.6%
National Property Investors 4 54.1%
National Property Investors 5 45.0%
National Property Investors 6 43.6%
National Property Investors 7 41.9%
National Property Investors 8 37.0%
Century Properties Fund XIV 41.3%
Century Properties Fund XV 39.6%
Century Properties Fund XVI 36.6%
Century Properties Fund XVII 34.6%
Century Properties Fund XVIII 29.0%
Century Properties Fund XIX 28.2%
Century Properties Fund XX (b)
Century Properties Growth Fund XXII 20.8%
Century Pension Income Fund XXIII (b)
Century Pension Income Fund XXIV (b)
Johnstown/Consolidated Income Partners 9.1%
Johnstown/Consolidated Income Partners/2 (b)
Davidson Growth Plus, L.P. 8.5%
Multi-Benefit Realty Fund 87-1 (b)
U.S. Realty Partners, L.P. (b)
Fox Strategic Housing Income Partners (b)
</TABLE>
- -----------------------------
(a) As of August 15, 1997.
(b) Indicates that less than 1% of the outstanding limited partner interests
are owned by IPLP.
(c) IPLP holds an option to acquire approximately 31.0% of the limited
partner interests in Shelter Properties IV from Insignia and its
affiliates, in exchange for additional units of limited partner interest
in IPLP. This option is exercisable by IPT on or before December 31,
1997, and IPT presently expects that it will exercise the option before
it expires.
S-8
<PAGE>
Manually signed 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
By Mail: By Hand/Overnight Delivery:
Wall Street Station Receive Window
P.O. Box 1023 77 Water Street, 5th Floor
New York, New York 10268-1023 New York, New York 10005
Telephone:
(212) 701-7624
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 PROPERTIES IV
PURSUANT TO THE OFFER TO PURCHASE DATED AUGUST 28, 1997
- ------------------------------------------------------------------------------
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK TIME, ON SEPTEMBER 25, 1997, UNLESS THE OFFER IS EXTENDED
- ------------------------------------------------------------------------------
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
By Mail: By Hand/Overnight Delivery:
Wall Street Station Receive Window
P.O. Box 1023 77 Water Street, 5th Floor
New York, New York 10268-1023 New York, New York 10005
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 ANY OTHER REQUIRED
DOCUMENTS TO AN ADDRESS OTHER THAN THE ONE SET FORTH ABOVE DOES NOT CONSTITUTE
VALID DELIVERY.
PLEASE CAREFULLY READ THE ACCOMPANYING INSTRUCTIONS
Ladies and Gentlemen:
The undersigned hereby tenders to IPLP Acquisition I LLC, a Delaware
limited liability company (the "Purchaser"), the number of the undersigned's
units of limited partnership interest ("Units") in Consolidated Capital
Properties IV, a California limited partnership (the "Partnership"), specified
below, at a price of $140 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 August 28, 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 August 28, 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 the 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>
<TABLE>
PLEASE COMPLETE ALL SHADED AREAS
SIGN HERE TO TENDER YOUR UNITS
<S> <C>
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 ________________________________________________________ ADDRESS: ________________________________________________________
X ________________________________________________________ _________________________________________________________________
SIGNATURE(S) OF LIMITED PARTNER (INCLUDE ZIP CODE)
(THE ADDRESS PROVIDED ABOVE MUST BE THE REGISTERED ADDRESS OF THE
LIMITED PARTNER)
DATE:_____________________________________________________ ______________________________ ______________________________
AREA CODE AND SOCIAL SECURITY NUMBER
(MUST BE SIGNED BY REGISTERED LIMITED PARTNER EXACTLY AS TELEPHONE NUMBER OR TAXPAYER IDENTIFICATION
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) NUMBER OF NUMBER OF
ACTING IN FIDUCIARY OR REPRESENTATIVE CAPACITY, PLEASE UNITS TENDERED:_____________ UNITS OWNED:____________
COMPLETE THE LINE CAPTIONED "CAPACITY (FULL TITLE)"
AND SEE INSTRUCTION 5.)
PRINT NAME(S):____________________________________________
____________________________________________ (If no indication is given, all Units owned of record by the
Limited Partner will be deemed tendered.)
CAPACITY (FULL TITLE):____________________________________
- ----------------------------------------------------------------------------------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
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
- --------------------------------------------------------------------------------------------------------------------------------
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 Taxpayer Identification Number (or I am waiting for a number to be issued to me) and (2) I am not
TAXPAYER subject to back-up withholding either because I have not been notified by the Internal Revenue Service
IDENTIFICATION ("IRS") that I am subject to back-up withholding as a result of failure to report all interest or dividends,
NUMBER (TIN) or the IRS has 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 PART 3 -
notified by the IRS that you are subject to back-up withholding because of AWAITING TIN [ ]
underreporting interest or dividends on your tax return. 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:_________________________________
- ---------------------------------------------------------------------------------------------------------------------------------
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
B
O
X
C
- --------------------------------------------------------------------------------------------------------------------------------
FIRPTA AFFIDAVIT -- CERTIFICATE OF NON-FOREIGN STATUS
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 PROPERTIES IV
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. ALL SIGNATURES ON THE ASSIGNMENT OF
PARTNERSHIP INTEREST MUST BE MEDALLION GUARANTEED BY A BANK, BROKER, DEALER,
CREDIT UNION, SAVINGS ASSOCIATION OR OTHER ENTITY WHICH IS A MEMBER IN GOOD
STANDING OF THE SECURITIES TRANSFER MEDALLION PROGRAM (EACH 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, 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 six Units (other than Limited Partners who are residents of
Missouri, who must tender a minimum of ten Units). 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 (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 Unit 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>
EXECUTIVE SUMMARY -- ARBOUR EAST APARTMENTS
2
DATE OF VALUATION: ............ October 10, 1995
DATE OF INSPECTION: ........... October 10, 1995
PROPERTY ADDRESS: ............. 6001 Old Hickory Boulevard
Hermitage, Tennessee 37076
TAX REFERENCE: ................ 65-A-11
DEED REFERENCE: ............... 2560/1489
PROPERTY DESCRIPTION: ......... Arbour East is a two and three story
apartment complex made up of 350 units in 54
buildings and a total of 386,100 rentable
square feet. The improvements, which are
situated on a 27.997-acre site, were
completed in 1972-73. The unit mix includes
several variations of one, two and
three-bedroom units. The following page
identifies the unit mix at the subject
property.
<TABLE>
<CAPTION>
UNIT MIXTURE
- ---------------------------------------------------------
# UNITS UNIT TYPE % TYPE AREA(SF) TOTAL NSF
- --------- ----------------- -------- -------- -----------
<S> <C> <C> <C> <C>
55 1BR/1BA G 16% 770 42,350
5 1BR/1BA TH FP 1% 750 3,750
33 1BR/1BA TH 9% 750 24,750
17 1BR/1BA G W/D 5% 770 13,090
80 2BR/1.5BA 23% 1,110 88,800
27 2BR/2BA Split FP 8% 1,325 35,775
37 2BR/2BA W/O Split 11% 1,325 49,025
FP
20 2BR/1.5BA TH 6% 1,270 25,400
28 2BR/1.5BA TH FP 8% 1,270 35,560
32 3BR/2.5BA TH 9% 1,450 46,400
16 3BR/2BA CTG 4% 1,325 21,200
------- ---------
350 386,100
======= =========
</TABLE>
Note: G-Garden Apartment; TH-Townhouse, W/D Washer/dryer connection; Split-
Split level apartment; FP-Fireplace; CTG-Cottage.
[JOSEPH J. BLAKE AND ASSOCIATES, INC. LETTERHEAD]
<PAGE>
EXECUTIVE SUMMARY -- ARBOUR EAST APARTMENTS
3
ZONING: ....................... R-8 (Medium Density Residential District)
MARKET BRIEF:
Apartments continue to be the most desirable investment property type in
Nashville 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 Davidson County are
predominantly in the 98% plus range, which adds to the desirability of this
investment type. Better financing terms are available for multifamily
investments than other commercial segments of the market.
Because of the continued popularity, apartment prices are increasing and
capitalization rates are being driven lower. Although the current market is
very tight, approximately 725 units are currently under construction, which
will add competition within the overall Nashville area. The following table
summarizes our income estimate for the subject property.
ESTIMATED RENTAL RATES FOR SUBJECT:
<TABLE>
<CAPTION>
NUMBER ANNUAL
UNIT TYPE OF UNITS NSF/UNIT TOTAL NSF S/SF/MO. S/MONTH INCOME
- -------------------- ---------- ---------- ----------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
1BR/1BA Garden 55 770 42,350 $0.55 $420 $ 277,200
1BR/1BA TH FP 5 750 3,750 $0.57 $430 $ 25,800
1BR/1BA TH 33 750 24,750 $0.56 $420 $ 166,320
1BR/1BA G W/D 17 770 13,090 $0.55 $420 $ 85,680
2BR/1.5BA G 80 1,110 88,800 $0.47 $525 $ 504,000
2BR/2BA Split FP 27 1,325 35,775 $0.48 $640 $ 207,360
2BR/2BA Split No. FP 37 1,325 49,025 $0.48 $630 $ 279,720
2BR/2BA TH 20 1,270 25,400 $0.45 $575 $ 138,000
2BR/2BA TH FP 28 1,270 35,560 $0.43 $550 $ 184,800
3BR/2.5BA TH 32 1,450 46,400 $0.46 $665 $ 255,360
3BR/2BA CTG 16 1,325 21,200 $0.50 $660 $ 126,720
TOTAL/AVERAGES: 350 1,103 386,100 $0.49 $536 $2,250,960
</TABLE>
ESTIMATED EFFECTIVE GROSS INCOME: $2,122,655 ($6,065/unit)
[JOSEPH J. BLAKE AND ASSOCIATES, INC. LETTERHEAD]
<PAGE>
EXECUTIVE SUMMARY -- ARBOUR EAST APARTMENTS
4
TOTAL EXPENSES
(EXCLUDING RESERVES): ......... $900,468 ($2,573/unit)
RESERVES: ..................... $87,500 ($250/unit)
OVERALL CAPITALIZATION RATE: .. 10.0%
VALUE INDICATION VIA
DIRECT CAPITALIZATION ANALYSIS: $11,300,000
$/UNIT: ....................... $32,286/unit
PROPERTY RIGHTS APPRAISED: .... Fee Simple Estate
HIGHEST AND BEST USE: ......... Multi-family Residential
INDICATED VALUE BY APPROACHES:
INCOME CAPITALIZATION
APPROACH: .................... $11,300,000
SALES COMPARISON
APPROACH: .................... $11,200,000
COST APPROACH: ............... $13,800,000
FINAL CONCLUSION OF
MARKET VALUE: ................ $11,300,000
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.
[JOSEPH J. BLAKE AND ASSOCIATES, INC. LETTERHEAD]
<PAGE>
EXECUTIVE SUMMARY
DATE OF VALUATION: ............ SEPTEMBER 26, 1995
DATE OF INSPECTION: ........... September 26, 1995
NAME: ......................... Briar Bay Racquet Club
PROPERTY ADDRESS: ............. 13100 SW 92nd Avenue
Dade County, Florida
TAX REFERENCE: ................ 30-5016-050-0020
PROPERTY DESCRIPTION: ......... Briar Bay Racquet Club is a 194-unit
apartment complex which was constructed in
1974. The complex is comprised of one,
four-story building and one, six-story
building, with a gross building area of
194,112 (plus or minus) square feet or a
total rentable area of 152,805 (plus or
minus) square feet, plus a one story
clubhouse building with 3,682 (plus or
minus) square feet. The buildings are of
concrete block construction, with painted
stucco exteriors, built up composition
roofing, and concrete shingle mansards. The
improvements are situated on a 6.49 (plus or
minus) acre site.
ZONING: ....................... RU-4M, Modified Apartment House District,
under the jurisdiction of Dade County,
Florida.
MARKET BRIEF: ................. The subject is located in the Dade County
apartment market. The vacancy rate in mature
(18+ months old) rental apartment complexes
in Dade County surged slightly from 3.4% to
4.7%, from August 1994 to May 1995. The
vacancy rate had stood at 0.6% in February,
1993, only six months after Hurricane
Andrew. The subject's apartment market has
an occupancy rate of 96.4% as of May 1995
which is down from 98.9% in August 1993.
Vacancy and rental rates are down slightly,
with rental rates on average decreasing by
1% from the previous year. The subject, as
of September 1995, was 93% occupied. The
occupancy rates for the rent comparable were
also in the mid 90s.
1
[JOSEPH J. BLAKE AND ASSOCIATES, INC. LETTERHEAD]
<PAGE>
EXECUTIVE SUMMARY
At the end of March 1995, there were 199
new, never before occupied rental units
available throughout Dade County. There have
been fewer than 200 units in inventory since
the end of 1991. There are 2,108 rental
units under construction in the county which
will provide some supply over the next few
months. The long-term outlook for the Dade
County apartment market is for continued
steady demand for rental housing which
should keep occupancy levels stable with
annual rental rates increasing.
PROPERTY RIGHTS APPRAISED: .... Fee Simple Estate
HIGHEST AND BEST USE: ......... Multifamily rental apartment complex.
INDICATED VALUE BY APPROACHES:
INCOME CAPITALIZATION
APPROACH: .................... $7,900,000
SALES COMPARISON APPROACH: ... $7,200,000-$7,900,000
COST APPROACH: ............... $7,400,000
FINAL CONCLUSION OF MARKET
VALUE: ....................... $7,900,000
COMMENT
In estimating the subject's market value, the Income Capitalization Approach
was given the most weight based on the income-producing nature of the
subject. The Sales Comparison Approach was also given weight because of 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. 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 cases, which would indicate that the
applicability of the Cost Approach may becoming a more meaningful value.
2
[JOSEPH J. BLAKE AND ASSOCIATES, INC. LETTERHEAD]
<PAGE>
EXECUTIVE SUMMARY
DATE OF VALUATION: ............ September 25, 1995
DATE OF INSPECTION: ........... September 25, 1995
NAME: ......................... Chimney Hill Apartments
PROPERTY ADDRESS: ............. 2855 Windy Hill Road
Marietta, Cobb County, Georgia 30067
TAX REFERENCE: ................ 17-0874-002L, 17-0874-002B, 17-0875-010
PROPERTY DESCRIPTION: ......... Chimney Hill Apartments is a 326-unit
apartment complex which was constructed in
1972. The complex is comprised of 27,
two-story buildings, with a gross building
area of 372,405 (plus or minus) square feet
or a total rentable area of 342,318 (plus or
minus) square feet. Additionally, the
subject has 4,828 (plus or minus) square
feet of breezeways and balconies, a one
story clubhouse building of 2,275 (plus or
minus) square feet, a 1,250 (plus or minus)
square foot maintenance building, a 484
(plus or minus) square foot laundry
building, and a 1,250 (plus or minus) square
foot pool house. The buildings are of wood
frame construction, with brick and stucco
veneer and asphalt shingle roofs. The
improvements are situated on a 26.301 (plus
or minus) acre site.
ZONING: ....................... RM-12, Multiple-Family Dwelling District,
under the jurisdiction of Cobb County,
Georgia.
MARKET BRIEF: ................. Rental rates in most sectors of the Atlanta
rental market have increased over the last
12 months. According to the Dale Henson
Associates, Apartment Market Tracker,
Midyear 1995 report, effective rents for
Class A apartments have increased by 8.5%,
and Class B rents have increased by 9.2%,
over the last 12 months. There has been a
significant amount of new construction in
the Atlanta market over the last 24 months.
So far, in 1995, there are 5,266 units under
construction in 18 properties. The Greater
Atlanta market has an average occupancy rate
in the range of 95% to 100%, with Cobb
County having an overall average occupancy
of 97.5%. There is significant investor
interest in the market, due in part to the
upcoming 1996 Olympics, and in part to the
strong job growth that has occurred in the
region.
1
[JOSEPH J. BLAKE AND ASSOCIATES, INC. LETTERHEAD]
<PAGE>
EXECUTIVE SUMMARY
PROPERTY RIGHTS APPRAISED: .... Fee Simple Estate
HIGHEST AND BEST USE: ......... Multifamily rental apartment complex
INDICATED VALUE BY APPROACHES:
INCOME CAPITALIZATION
APPROACH: .................... $12,400,000
SALES COMPARISON APPROACH: ... $12,300,000
COST APPROACH: ............... $12,100,000
FINAL CONCLUSION OF MARKET
VALUE: ....................... $12,400,000
DEFERRED MAINTENANCE,
DEDUCTED FROM THE VALUE
ESTIMATE: ..................... $0
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. The Cost Approach was used, however, in the estimation of the
subject's highest and best use.
2
[JOSEPH J. BLAKE AND ASSOCIATES, INC. LETTERHEAD]
<PAGE>
EXECUTIVE SUMMARY
DATE OF VALUATION: September 25, 1995
DATE OF INSPECTION: September 25, 1995
PROPERTY ADDRESS: 913 North Chelton Road
Colorado Springs, 80909, El Paso County, Colorado
TAX REFERENCE: 6410403006
6410403008
PROPERTY DESCRIPTION: Citadel Village is a two and three story apartment
complex made up of 122 units in 9 residential buildings
and a total of 110,125(plus or minus) rentable square
feet. The improvements, which are situated on a
9.19(plus or minus) acre site, were completed in 1974.
The unit mix includes several variations of one, two
and three-bedroom units.
ZONING: PUD, Planned Unit Development
MARKET BRIEF: Apartments continue 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 these investment type.
More attractive financing terms are typically
available for multi-family investments than other
commercial segments of the market.
PROPERTY RIGHTS
APPRAISED: Fee Simple Estate
HIGHEST AND BEST USE: Multi-family Residential
[JOSEPH J. BLAKE AND ASSOCIATES, INC. LETTERHEAD]
<PAGE>
EXECUTIVE SUMMARY
INDICATED VALUE BY APPROACHES:
INCOME CAPITALIZATION
APPROACH: $4,600,000
SALES COMPARISON
APPROACH: $4,650,000
COST APPROACH: $4,850,000
FINAL CONCLUSION OF
MARKET VALUE: $4,600,000
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.
[JOSEPH J. BLAKE AND ASSOCIATES, INC. LETTERHEAD]
<PAGE>
EXECUTIVE SUMMARY
2
DATE OF VALUATION: ............ September 26, 1995
DATE OF INSPECTION: ........... September 26, 1995
PROPERTY ADDRESS: ............. 2260 Foothill Drive, Salt Lake City, County
of Salt Lake, Utah
TAX REFERENCE: ................ Parcels #16-23-101-004-0000 and
#16-23-152-009-0000
PROPERTY DESCRIPTION: ......... The Foothill Place Apartments is a
three-story apartment complex comprising 450
units in eight residential buildings.
Foothill Place has a total net rentable area
of 415,334 (plus or minus) square feet. The
improvements are situated on two adjacent
sites totaling 17.78 (plus or minus) acres.
The improvements were constructed in 1973
and include a unit mix containing several
variations of one and two-bedroom units.
ZONING: ....................... RMF-35, Moderate Density Multi-Family
Residential
MARKET BRIEF: ................. According to the Salt Lake Area Apartment
Vacancy Survey, the Salt Lake Valley area had
a mid-year 1995 vacancy rate of 3.5%.
Properties constructed since 1984 had a
vacancy rate of 2.6%, while properties
constructed prior to 1984 displayed average
vacancies of 2.8%. Properties constructed in
1994 and 1995 displayed average vacancies of
5.3% largely due to on-going lease-up.
Average monthly rents in the Salt Lake
Valley have increased $10 to $20 per unit
within the past six months. Multifamily
construction accelerated during the second
quarter of 1995. Strong, pent-up demand and
low vacancy rates continued to spur
multifamily developments. Multifamily
construction jumped 37.3% to 3,112 units
during the second quarter. Most new
development has been concentrated in the
metropolitan areas. Salt Lake and Utah
Counties comprise 72.9% of the new
construction.
PROPERTY RIGHTS APPRAISED: .... Fee Simple Estate
[JOSEPH J. BLAKE AND ASSOCIATES, INC. LETTERHEAD]
<PAGE>
EXECUTIVE SUMMARY
3
HIGHEST AND BEST USE: ......... Multi-family Residential
INDICATED VALUE BY APPROACHES:
INCOME CAPITALIZATION
APPROACH: .................... $20,000,000
SALES COMPARISON
APPROACH: .................... $20,500,000
COST APPROACH: ............... $19,900,000
FINAL CONCLUSION OF
MARKET VALUE: ................ $20,000,000
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.
[JOSEPH J. BLAKE AND ASSOCIATES, INC. LETTERHEAD]
<PAGE>
EXECUTIVE SUMMARY
2
DATE OF VALUATION: ............ October 10, 1995
DATE OF INSPECTION: ........... October 10, 1995
PROPERTY ADDRESS: ............. 865 Bellevue Road
Nashville, Tennessee 37221
TAX REFERENCE: ................ May #142, Parcel 30
DEED REFERENCE: ............... 8443/025
PROPERTY DESCRIPTION: ......... Knollwood is a two and three story apartment
complex made up of 326 units in 21 buildings
and a total of 356,792 rentable square feet.
The improvements, which are situated on a
30.85-acre site, were completed in 1972. The
unit mix includes several variations of one,
two and three-bedroom units.
ZONING: ....................... R-8 (Medium Density Residential District)
MARKET BRIEF: ................. Apartments continue to be the most desirable
investment property type in Nashville 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 Davidson County are
predominantly in the 98% plus range, which
adds to the desirability of this investment
type. Better financing terms are available
for multifamily investments than other
commercial segments of the market.
Because of the continued popularity,
apartment prices are increasing and
capitalization rates are being driven lower.
Although the current market is very tight,
approximately 725 units are currently under
construction which will add competition in
the overall Nashville area.
[JOSEPH J. BLAKE AND ASSOCIATES, INC. LETTERHEAD]
<PAGE>
EXECUTIVE SUMMARY 3
PROPERTY RIGHTS APPRAISED: .... Fee Simple Estate
HIGHEST AND BEST USE: ......... Multi-family Residential
INDICATED VALUE BY APPROACHES:
INCOME CAPITALIZATION
APPROACH: .................... $11,700,000
SALES COMPARISON
APPROACH: .................... $11,400,000
COST APPROACH: ............... $13,000,000
FINAL CONCLUSION OF
MARKET VALUE ................. $11,700,000
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.
[JOSEPH J. BLAKE AND ASSOCIATES, INC. LETTERHEAD]
<PAGE>
Lake Forest Apartments April 19, 1996
Omaha, Nebraska Page 1
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
PROPERTY NAME: ................ Lake Forest Apartments
LOCATION OF PROPERTY: ......... 11402 Evans Street, City of Omaha, Douglas
County, Nebraska.
PURPOSE OF THE APPRAISAL: ..... To estimate the Market Value of the subject.
PROPERTY RIGHTS APPRAISED: .... Fee Simple Estate.
HIGHEST AND BEST USE: ......... As Vacant -- To develop for multi-family use.
As Improved -- Considered to be that of the
existing improvements.
SITE DATA AND ZONING: ......... The subject parcel is 21.18 acres, irregular
in shape. It is accessible from the north
and south side of Evans Street, which
bisects the site into two parcels. The
parcel is also accessible by a network of
five internal roads. The site is level and
appears to be free from adverse easements
and encroachments. The site is zoned in
part, R6, Multiple-Family Residential
District.
IMPROVEMENT DATA: ............. The subject property consists of 312
dwelling units situated within twelve,
three-story buildings constructed on slab.
The property was constructed in 1971. The
subject property contains 300,300 square
feet of rentable area. The improvements are
in average condition with vacant units on a
capital improvement program. The capital
improvement program is scheduled for five
units per month and includes new kitchen
appliances, new paint, new carpet, and new
balconies. Parking is provided by 136
garages and approximately 332 open space.
TENANT DATA: .................. The Lake Forest Apartments cater primarily
to adults in the surrounding area. Leases
are typically signed for a 12-month term. As
of the date of inspection, the subject was
98% occupied.
<PAGE>
Lake Forest Apartments April 19, 1996
Omaha, Nebraska Page 2
SUMMARY OF SALIENT FACTS AND CONCLUSIONS (CONTINUED)
Date of Value Estimate: ....... March 22, 1996
SUMMARY OF STABILIZED PRO FORMA:
<TABLE>
<CAPTION>
TOTALS PER UNIT
------------- ----------
<S> <C> <C>
Potential Gross
Income................ $ 2,059,408 $ 6,601
Vacancy & Credit Loss . (102,970) (330)
Employee discounts .... (13,980) (45)
------------- ----------
Effective Gross
Income................ $ 1,942,458 $ 6,226
Operating Expenses .... (1,045,591) (3,351)
------------- ----------
Net Operating Income .. $ 896,867 $ 2,875
</TABLE>
VALUE CONCLUSIONS
The Income Capitalization Approach: $8,550,000
The Sales Comparison Approach: $8,500,000
Final Value Estimate: $8,550,000
<PAGE>
EXECUTIVE SUMMARY 2
DATE OF VALUATION: ............ March 26, 1996
DATE OF INSPECTION: ........... March 26, 1996
PROPERTY ADDRESS: ............. 595 Hicks Road
Nashville, Tennessee 37221
TAX REFERENCE: ................ Map #142, Parcel 99
DEED REFERENCE: ............... 9851/756
PROPERTY DESCRIPTION: ......... Post Ridge is a two and three story
apartment complex made up of 150 units in 21
buildings and a total of 223,340 rentable
square feet. The improvements, which are
situated on a 26.66-acre site, were
completed in 1974. The unit mix includes
several variations of two and three-bedroom
units. All of the units are exceptionally
large for the market as demonstrated by the
average unit size of 1,489 square feet.
ZONING: ....................... R-15 (Residential District)
MARKET BRIEF: ................. Apartments continue to be the most desirable
investment property type in Nashville over
the past year. The popularity of apartments
principally is due 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 Nashville area exceed
97%, which adds to the desirability of this
investment type. Additionally, at present,
better financing terms are available for
multifamily investments than other
commercial segments of the market.
Because of the continued popularity,
apartment prices are increasing and
capitalization rates are being driven lower.
Although the current market is very tight,
approximately 3,396 units are currently
under construction which will add
competition in the overall Nashville area.
[JOSEPH J. BLAKE AND ASSOCIATES, INC. LETTERHEAD]
<PAGE>
EXECUTIVE SUMMARY 3
PROPERTY RIGHTS APPRAISED: .... Fee Simple Estate
HIGHEST AND BEST USE: ......... Multi-family Residential
INDICATED VALUE BY APPROACHES:
INCOME CAPITALIZATION
APPROACH: .................... $6,500,000
SALES COMPARISON
APPROACH: .................... $6,400,000
COST APPROACH: ............... $7,300,000
FINAL CONCLUSION OF
MARKET VALUE: ................ $6,500,000
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.
[JOSEPH J. BLAKE AND ASSOCIATES, INC. LETTERHEAD]
<PAGE>
EXECUTIVE SUMMARY
2
DATE OF VALUATION: ............ September 26, 1995
DATE OF INSPECTION: ........... September 26, 1995
PROPERTY ADDRESS: ............. 781 Hathaway Drive
Colorado Springs, El Paso County, Colorado
80915
TAX REFERENCE: ................ 5407407036
5407407037
5407407038
PROPERTY DESCRIPTION: ......... Village East is a two and three story
apartment complex made up of 137 units in 6
residential buildings and a total of 103,095
(plus or minus) rentable square feet. The
improvements, which are situated on a 6.159
(plus or minus) acre site, were completed in
1973. The unit mix includes several
variation of one and two-bedroom units.
ZONING: ....................... R-4, Planned Development District
MARKET BRIEF: ................. Apartments continue 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. Attractive financing terms are
typically more prevalent for multifamily
investments than other commercial segments
of the market.
PROPERTY RIGHTS APPRAISED: .... Fee Simple Estate
HIGHEST AND BEST USE: ......... Multi-family Residential
[JOSEPH J. BLAKE AND ASSOCIATES, INC. LETTERHEAD]
<PAGE>
EXECUTIVE SUMMARY
3
INDICATED VALUE BY APPROACHES:
INCOME CAPITALIZATION
APPROACH: .................... $3,750,000
SALES COMPARISON
APPROACH: .................... $3,700,000
COST APPROACH: ............... $4,100,000
FINAL CONCLUSION OF
MARKET VALUE: ................ $3,750,000
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.
[JOSEPH J. BLAKE AND ASSOCIATES, INC. LETTERHEAD]
<PAGE>
Exhibit (z)(2)
AGREEMENT OF JOINT FILING
IPLP Acquisition I LLC, Insignia Properties, L.P., Insignia Properties
Trust, Insignia Financial Group, Inc. and Andrew L. Farkas hereby agree
that the Amendment No. 2 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: August 28, 1997
IPLP ACQUISITION I LLC
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
