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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NOONEY REAL PROPERTY INVESTORS--FOUR, L.P.
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(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No filing fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction: $3,952,000
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(5) Total fee paid: $791
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[X] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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NOONEY REAL PROPERTY INVESTORS--FOUR, L.P.
500 North Broadway, Suite 1200
St. Louis, Missouri 63102
December 11, 1998
Dear Limited Partner:
You are cordially invited to attend a Special Meeting of Limited
Partners (the "Special Meeting") of Nooney Real Property Investors-Four, L.P.
(the "Partnership") to be held at 9:00 A.M. on January 21, 1999 at 500 North
Broadway, Suite 1200, St. Louis, Missouri.
At the Special Meeting, the Limited Partners will consider two related
proposals. Proposal 1 consists of an amendment to Section 5.2 of the
Partnership's Amended and Restated Agreement of Limited Partnership, dated April
7, 1982 (as amended and supplemented from time to time, the "Partnership
Agreement"), which amendment (the "Amendment") is being proposed in order to
permit the Partnership to enter into certain transactions with American Spectrum
Realty Inc., a Maryland corporation or its assigns (the "Purchasing Affiliate").
The Purchasing Affiliate is an affiliate of Nooney Capital Corp., a Missouri
corporation which serves as a General Partner of the Partnership (the "General
Partner"). Proposal 2 would authorize the Partnership, pursuant to Section 5.2
of the Partnership Agreement, as amended in the manner described by Proposal 1,
to sell (the "Sale") the Partnership's Woodhollow Apartments property
("Woodhollow") and the Partnership's Cobblestone Court Shopping Center property
(Cobblestone") to the Purchasing Affiliate. The Sale would constitute the sale
of substantially all of the Partnership's assets and would therefore result in
the dissolution of the Partnership. Upon the dissolution of the Partnership, the
General Partner is required to liquidate the Partnership and distribute the
proceeds of such liquidation to, among others, the Limited Partners in
accordance with the terms of the Partnership Agreement. THE GENERAL PARTNER WILL
NOT RECEIVE ANY PROCEEDS FROM THE LIQUIDATION OF THE PARTNERSHIP OR ANY
COMMISSIONS OR OTHER FEES IN CONNECTION WITH THE SALE.
The materials accompanying this letter, which include a Notice of
Special Meeting, a Proxy Statement relating to the actions to be taken by the
Limited Partners at the Special Meeting and a Proxy card, discuss these
proposals in greater detail.
In accordance with the terms of the Partnership Agreement, the
Partnership Agreement may be amended in the manner described in Proposal 1 by
the affirmative vote of the Limited Partners whose combined Capital
Contributions represent at least a majority of the total Capital Contributions
of the Limited Partners. Similarly, if Proposal 1 is approved by the Limited
Partners, the sale of Woodhollow and Cobblestone to the Purchasing Affiliate
would require the affirmative vote of the Limited Partners whose combined
Capital Contributions represent at least a majority of the total Capital
Contributions of the Limited Partners. This means that Limited Partners holding
at least $5,742,011 of the Capital Contributions of the Limited Partners must
approve both the Amendment and the Sale before the Partnership can consummate
the Sale and cause the dissolution of the Partnership. If both Proposals 1 and 2
are not approved by the requisite Limited Partners, the Partnership will not be
able to consummate the Sale. In addition, even if Proposals 1 and 2 are approved
by the requisite Limited Partners, there can be no assurance that the
Partnership will consummate the Sale. In the event only Proposal 1 is approved,
the Partnership will have the ability to sell Woodhollow or Cobblestone to an
affiliate of a General Partner, but will not be able to undertake such a sale
without prior approval by the Limited Partners.
Whether or not you plan to attend the Special Meeting, please complete,
sign, date and return your Proxy or Proxies in the enclosed postage prepaid
envelope. If you attend the Special Meeting, you may vote in person if you wish,
even though you have previously returned your Proxy or Proxies. It is important
that your limited partnership units be represented and voted at the Special
Meeting.
Sincerely,
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
By: Nooney Capital Corporation, General Partner
By: /s/ William J. Carden
---------------------------------------------
William J. Carden, Chairman
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NOONEY REAL PROPERTY INVESTORS--FOUR, L.P.
500 North Broadway, Suite 1200
St. Louis, Missouri 63102
NOTICE OF SPECIAL MEETING OF LIMITED PARTNERS
TO BE HELD JANUARY 21, 1999
To the Limited Partners of
Nooney Real Property Investors--Four, L.P.
Notice is hereby given that a Special Meeting of Limited Partners
(the "Special Meeting") of Nooney Real Property Investors--Four, L.P. (the
"Partnership") will be held at 9:00 A.M. on January 21, 1999 at 500 North
Broadway, Suite 1200, St. Louis, Missouri, for the following purposes:
1. Approving an amendment (the "Amendment") to Section 5.2 of the
Partnership's Amended and Restated Agreement of Limited Partnership
dated April 7, 1982 (as amended and supplemented from time to time, the
"Partnership Agreement"), which Amendment would amend the Partnership
Agreement to permit, among other things, the Partnership to sell one or
more of its properties to affiliates of the general partners of the
Partnership under certain circumstances.
2. Approving the sale (the "Sale") of the Woodhollow Apartments property
and the Cobblestone Court Shopping Center property to American Spectrum
Realty Inc., a Maryland corporation, or its assigns (the "Purchasing
Affiliate"). The Purchasing Affiliate is an affiliate of Nooney Capital
Corp., a Missouri corporation which is a general partner of the
Partnership (the "General Partner"). The Sale would constitute the sale
of substantially all of the assets of the Partnership and would
therefore, in accordance with the terms of the Partnership Agreement,
result in the dissolution of the Partnership.
The foregoing proposals are more particularly described in the accompanying
Proxy Statement.
Limited Partners of record at the close of business on October 30,
1998, have been provided with notice of the Special Meeting. Each Limited
Partner owning interests in the Partnership on the date of the Special Meeting,
or any continuance(s) or adjournment(s) thereof, shall be entitled to vote such
interests at the Special Meeting.
The affirmative vote of the Limited Partners whose combined Capital
Contributions represent at least a majority of the total Capital Contributions
of the Limited Partners is required for approval of each of Proposal 1 and
Proposal 2. This means that Limited Partners holding at least $5,742,011 of the
Capital Contributions of the Limited Partners must vote in favor of the
Amendment and the Sale in order for the proposals related thereto to be deemed
approved by the Limited Partners. Failure to vote will be considered a vote
against the Amendment and the Sale.
The General Partner has already approved the Amendment and the Sale.
Even if you plan to be present at the meeting, please fill in, date, sign and
promptly mail the enclosed Proxy or Proxies in the enclosed postage pre-paid
envelope to ensure that your units of limited partnership interest are
represented at the Special Meeting. If you attend the Special Meeting, you may
vote in person if you wish to do so even though you have previously sent in your
Proxy or Proxies. Should you wish to change your Proxy or Proxies, you may
revoke a Proxy by granting a subsequent Proxy to the General Partner or to a
third party. Proxies which are received from parties which are no longer Limited
Partners on the date of the Special Meeting, or any continuance(s) or
adjournment(s) thereof, will be disregarded.
By order of the General Partner
NOONEY CAPITAL CORPORATION
By: /s/ William J. Carden, Chairman
---------------------------------------
William J. Carden, Chairman
December 11, 1998
St. Louis, Missouri
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NOONEY REAL PROPERTY INVESTORS--FOUR, L.P.
500 North Broadway, Suite 1200
St. Louis, Missouri 63102
PROXY STATEMENT
SPECIAL MEETING OF LIMITED PARTNERS
TO BE HELD JANUARY 21, 1999
The enclosed Proxy (the "Proxy") is solicited on behalf of Nooney Real
Property Investors--Four, L.P., a Missouri limited partnership (the
"Partnership"), for use at the Special Meeting of Limited Partners (the "Special
Meeting") to be held at 9:00 A.M. on January 21, 1999, at 500 North Broadway,
St. Louis, Missouri, and at any continuance(s) or adjournment(s) thereof, for
the purposes set forth in the accompanying Notice of Special Meeting of Limited
Partners (the "Notice of Special Meeting"). This proxy statement (the "Proxy
Statement") and the enclosed form of Proxy are being first mailed to Limited
Partners on or about December 11, 1998. Capitalized terms used, but not defined,
herein shall have the meaning assigned to such terms in the Partnership's
Amended and Restated Agreement of Limited Partnership dated April 7, 1982 (as
amended and supplemented from time to time, the "Partnership Agreement").
The close of business on October 30 1998, has been fixed by Nooney
Capital Corp., a Missouri corporation which is a general partner of the
Partnership (the "General Partner," and together with the other general partners
of the Partnership, the "General Partners") as the record date for the
determination of Limited Partners entitled to receive notice of the Special
Meeting. As of October 30, 1998, there were 1,136 Limited Partners who were
record holders of units of limited partnership interest (the "Units") in the
Partnership. Each Unit represents a $1,000 Capital Contribution to the
Partnership.
Each Limited Partner of record on the date of the Special Meeting, or
any continuance(s) or adjournment(s) thereof, is entitled to one vote per Unit.
All properly executed proxies in the accompanying form received prior to the
Special Meeting will be voted in accordance with instructions given in the
Proxy, except that proxies received from parties who do not own the number of
Units specified on the Proxy on the date of the Special Meeting, or any
continuance(s) or adjournment(s) thereof, will be disregarded to the extent, and
only to the extent, that such Units are not owned by such party on the date of
the Special Meeting. A Limited Partner may revoke his/her Proxy at any time
before it is voted by delivering to the Partnership another Proxy bearing a
later date, by submitting written notice to the Partnership of such revocation,
or by appearing in person at the Meeting and casting a contrary vote.
At the Special Meeting, two proposals will be considered. Proposal 1
("Proposal 1") relates to an amendment (the "Amendment") to Section 5.2 of the
Partnership Agreement. The Amendment would amend the Partnership Agreement to
permit, among other things, the Partnership to sell one or more of the
Partnership's properties to an affiliate of the General Partner under certain
circumstances. Pursuant to Section 10.10(A) of the Partnership Agreement, the
general partners of the Partnership, with the prior consent of the Limited
Partners of record whose combined Capital Contributions represent at least a
majority of the total Capital Contributions of the Limited Partners (the
"Consent of the Limited Partners"), may amend the Partnership Agreement.
Accordingly, Limited Partners holding at least $5,742,011 of the Capital
Contributions of the Limited Partners are required to approve the Amendment in
order for such Amendment to become effective.
Proposal 2 ("Proposal 2") relates to the sale (the "Sale") of the
Partnership's Woodhollow Apartments property ("Woodhollow") and Cobblestone
Court Shopping Center property ("Cobblestone") to American Spectrum Realty Inc.,
a Maryland corporation, or its assigns (the "Purchasing Affiliate"). The
principal executive offices of the Purchasing Affiliate are located at 2424 S.E.
Bristol, Suite 200, Newport Beach, California 92660 and its telephone number is
(949) 225-7500.
The Purchasing Affiliate is an affiliate of the General Partner. As
described in more detail below under "INTERESTS OF CERTAIN PERSONS IN THE
AMENDMENT AND THE SALE," CGS Real Estate Company, Inc., a Texas corporation
("CGS"), which owns all of the issued and outstanding capital stock of the
Purchasing Affiliate, also owns all of the issued and outstanding capital stock
of S-P Properties, Inc., a California corporation
<PAGE> 5
which owns a 75% interest in the General Partner. SN Alliance, Inc., the parent
company of Stifel, Nicolaus & Company, Incorporated owns a 12.5% interest in the
General Partner and Edward D. Jones & Co., L.P. owns the final 12.5% interest in
the General Partner. CGS, through its wholly owned subsidiaries including the
Purchasing Affiliate, manages over 25 million square feet of real property for
third party owners, its own account and several public partnership programs
where CGS or other of its affiliates acts as general partner.
The Sale contemplated by Proposal 2 may only be consummated if both
Proposals 1 and 2 are approved by the requisite Limited Partners. If Proposal 1
receives the Consent of the Limited Partners, the Partnership will be permitted,
subject to the satisfaction of certain conditions (including the General
Partner's receipt of the Consent of the Limited Partners to any such sale in
accordance with Section 5.2(B)(iii) of the Partnership Agreement), to sell one
or both of the Partnership's properties to the General Partner or an Affiliate
of the General Partner. Accordingly, the Sale requires the Consent of the
Limited Partners pursuant to Section 5.2(B)(iii). In addition, Limited Partners
should note that the Sale will constitute the sale of substantially all of the
assets of the Partnership. Section 5.2(B)(i) of the Partnership Agreement
requires the Consent of the Limited Partners prior to the sale of all or
substantially all of the Partnership's assets. As such, a vote in favor of
Proposal 2 will also be a vote in favor of a sale of all or substantially all of
the Partnership's assets for purposes of Section 5.2(B)(i) of the Partnership
Agreement.
MOREOVER, A SALE OF ALL OF THE PARTNERSHIP'S PROPERTIES CONSTITUTES AN
EVENT OF DISSOLUTION PURSUANT TO SECTION 2.4 OF THE PARTNERSHIP AGREEMENT.
THEREFORE, IF PROPOSAL 2 IS APPROVED BY THE REQUISITE LIMITED PARTNERS AND THE
PARTNERSHIP CONSUMMATES THE SALE, THE PARTNERSHIP WILL DISSOLVE. UPON THE
DISSOLUTION OF THE PARTNERSHIP, THE GENERAL PARTNER IS REQUIRED TO LIQUIDATE THE
PARTNERSHIP AND DISTRIBUTE THE PROCEEDS OF SUCH LIQUIDATION TO, AMONG OTHERS,
THE LIMITED PARTNERS IN ACCORDANCE WITH THE TERMS OF THE PARTNERSHIP AGREEMENT.
THE GENERAL PARTNER WILL NOT RECEIVE ANY PROCEEDS FROM THE LIQUIDATION OF THE
PARTNERSHIP OR ANY COMMISSION OR OTHER FEES IN CONNECTION WITH THE SALE.
Limited Partners holding at least $5,742,011 of the Capital
Contributions of the Limited Partners are required to approve the Sale in order
for the Partnership to be authorized to consummate such Sale. Limited Partners
should note, however, that even if Proposals 1 and 2 are approved by the
requisite Limited Partners, there can be no assurance that the Partnership will
consummate the Sale since the Sale is contingent upon a number of items which
are beyond the control of the Partnership. See "DESCRIPTION OF THE SALE-Terms of
the Sale-Conditions to Closing."
Proxies marked "withhold authority" with respect to Proposals 1 and/or
2 will have the same effect as if the Units represented thereby were voted
against the Amendment and/or against the Sale. Furthermore, because the actions
undertaken at the Special Meeting require the Consent of the Limited Partners,
rather than a percentage of Units represented, Units not represented at the
Special Meeting will have the same effect as Units voted against the Amendment
and against the Sale. You may revoke a proxy by granting a subsequent proxy. The
subsequent proxy may either be granted to the General Partner or to a third
party.
The Partnership will pay all costs of preparing and soliciting Proxies
for the Special Meeting. In addition to solicitation by mail, the Partnership
may solicit Proxies from Limited Partners personally or by telephone. The
Partnership also has retained Mackenzie Partners, Inc. to assist in soliciting
Proxies for a fee of approximately $10,000, plus reasonable expenses and costs.
The Partnership also will reimburse brokerage firms, banks and other nominees
for their reasonable costs incurred in forwarding Proxy materials for Units held
of record by them to the beneficial owners of such Units.
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PROPOSAL 1
PROPOSAL TO APPROVE AN AMENDMENT TO SECTION 5.2
OF THE PARTNERSHIP AGREEMENT
Section 5.2(D)(ii) of the Partnership Agreement prohibits the
Partnership from selling any of its properties to the General Partners or
affiliates of the General Partners. For purposes of the Partnership Agreement,
an affiliate ("Affiliate") means (i) any individual, partnership, corporation,
trust or other entity ("Person") directly or indirectly controlling, controlled
by or under common control with another Person, (ii) any Person owning or
controlling ten percent or more of the outstanding voting securities of such
other Person, (iii) any officer, director or partners of such Person, and (iv)
if such other Person is an officer, director or partner, any company of which
such Person acts in any such capacity. The Purchasing Affiliate is an Affiliate
of the General Partner for purposes of the Partnership Agreement. Therefore, in
order to consummate the Sale, the Partnership Agreement must be amended to
permit the sale of one or more of the Partnership's properties to an Affiliate
of the General Partner under certain circumstances.
THE PROPOSED AMENDMENT
For the reasons specified below, the General Partner proposes that
Section 5.2 of the Partnership Agreement be amended to permit the Partnership to
sell one or more of its properties to the General Partner or an Affiliate of the
General Partner provided that (i) the gross sales price for any such property is
no less than the fair market value of the property as determined by an
independent third party appraiser (where the "gross sales price" is the sales
price for the property prior to any reduction for the reasonable costs and
expenses of the Partnership in connection with the sale, which costs and
expenses may include the reimbursement by the Partnership of up to a maximum of
$50,000 of costs and expenses incurred by the purchaser of any such property for
matters such as title work, survey, escrow fees, environmental and engineering
studies and other due diligence expenses) and (ii) the Consent of the Limited
Partners is obtained prior to any such proposed sale. Section 5.2, if amended as
described herein, would read as set forth in Exhibit A attached hereto. Please
note that the version of Section 5.2 set forth in Exhibit A shows the proposed
additions to Section 5.2 as double underlined and the proposed deletions as
struck through.
REASONS FOR THE AMENDMENT
The General Partner believes it would be in the best interest of the
Limited Partners and the Partnership to amend Section 5.2 of the Partnership
Agreement in the manner described above and set forth on Exhibit A. This belief
is based on the following factors:
- THE SALE OF WOODHOLLOW AND COBBLESTONE BY THE PARTNERSHIP
TO THE PURCHASING AFFILIATE WOULD NOT BE PERMITTED WITHOUT
SUCH AN AMENDMENT TO THE PARTNERSHIP AGREEMENT.
- BASED ON THE FACTORS DESCRIBED UNDER THE HEADING "PROPOSAL
2-BACKGROUND AND REASONS FOR THE SALE" BEGINNING ON PAGE 5
OF THIS PROXY STATEMENT, THE GENERAL PARTNER BELIEVES THAT
THE SALE OF WOODHOLLOW AND COBBLESTONE TO THE PURCHASING
AFFILIATE IS IN THE BEST INTERESTS OF THE LIMITED
PARTNERS.
- CONSUMMATION OF THE SALE WOULD RESULT IN THE DISSOLUTION
OF THE PARTNERSHIP AND REQUIRE THE GENERAL PARTNER TO
LIQUIDATE THE PARTNERSHIP AND DISTRIBUTE THE PROCEEDS
THEREFROM TO THE LIMITED PARTNERS AS A RETURN OF CAPITAL.
THE GENERAL PARTNER RECOMMENDS A VOTE FOR THE ABOVE DESCRIBED AMENDMENT TO
SECTION 5.2 OF THE PARTNERSHIP AGREEMENT ON THE ENCLOSED PROXY CARD.
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PROPOSAL 2
PROPOSAL TO APPROVE THE SALE OF WOODHOLLOW AND COBBLESTONE TO AN
AFFILIATE OF THE GENERAL PARTNER
Section 5.2(B)(iii) of the Partnership Agreement, if amended in the
manner set forth in Proposal 1 hereof, would permit the Partnership to sell one
or more of its properties to the General Partner or to an Affiliate of the
General Partner, provided that (i) the Consent of the Limited Partners is
obtained prior to any such sale and (ii) the gross sales price for any such
property is no less than the fair market value of the property as determined by
an independent third party appraiser (where the "gross sales price" is the sales
price for the property prior to any reduction for the reasonable costs and
expenses of the Partnership in connection with the sale, which costs and
expenses may include the reimbursement by the Partnership of up to a maximum of
$50,000 of costs and expenses incurred by the purchaser of any such property for
matters such as title work, survey, escrow fees, environmental and engineering
studies and other due diligence expenses). In connection with such Amendment,
the General Partner requests approval of a proposal to authorize the Partnership
to sell Cobblestone and Woodhollow to the Purchasing Affiliate.
As described below, the Partnership and the Purchasing Affiliate have
entered into (i) a Sales Contract dated as of November 13, 1998 that
contemplates the sale of Cobblestone to the Purchasing Affiliate (the
"Cobblestone Purchase Agreement") and (ii) a Sales Contract dated as of November
13, 1998 that contemplates the sale of Woodhollow to the Purchasing Affiliate
(the "Woodhollow Purchase Agreement" and together with the Cobblestone Purchase
Agreement, the "Purchase Agreements"). The Sale is contingent on, among other
things, the approval of the Amendment described in Proposal 1 hereof and the
approval of the Sale described in this Proposal 2. The terms of the Purchase
Agreements are described in detail below. However, Limited Partners should note
that even if the Limited Partners approve both the Amendment and the Sale, there
can be no assurance that the Partnership will actually sell Woodhollow or
Cobblestone to the Purchasing Affiliate due to the contingent nature of the
Sale.
In addition, Limited Partners should note that Section 5.2(B)(i) of the
Partnership Agreement provides that the General Partner shall not sell all or
substantially all of the assets of the Partnership without receiving the Consent
of the Limited Partners. Substantially all of the Partnership's assets is
defined as either (i) sixty-six and two-thirds percent (66 2/3) or more in
number of the properties then owned by the Partnership or (ii) a property or
properties representing sixty-six and two-thirds percent (66 2/3) or more of
the net book value of all Partnership properties as of the end of the most
recent calendar quarter. The Sale will constitute the sale of substantially all
of the assets of the Partnership. Accordingly, a vote in favor of Proposal 2
shall also be deemed a vote in favor of a sale or all or substantially all of
the Partnership's assets in accordance with Section 5.2(B)(i) of the Partnership
Agreement.
MOREOVER, LIMITED PARTNERS SHOULD NOTE THAT A SALE OF ALL OF THE
PARTNERSHIP'S PROPERTIES CONSTITUTES AN EVENT OF DISSOLUTION PURSUANT TO SECTION
2.4 OF THE PARTNERSHIP AGREEMENT. THEREFORE, IF PROPOSAL 2 IS APPROVED BY THE
REQUISITE LIMITED PARTNERS AND THE PARTNERSHIP CONSUMMATES THE SALE, THE
PARTNERSHIP WILL DISSOLVE. UPON THE DISSOLUTION OF THE PARTNERSHIP, THE GENERAL
PARTNER IS REQUIRED TO LIQUIDATE THE PARTNERSHIP AND DISTRIBUTE THE PROCEEDS OF
SUCH LIQUIDATION TO, AMONG OTHERS, THE LIMITED PARTNERS IN ACCORDANCE WITH THE
TERMS OF THE PARTNERSHIP AGREEMENT. THE GENERAL PARTNER WILL NOT RECEIVE ANY
PROCEEDS FROM THE LIQUIDATION OF THE PARTNERSHIP OR ANY COMMISSION OR OTHER FEES
IN CONNECTION WITH THE SALE.
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<PAGE> 8
BACKGROUND OF THE PARTNERSHIP
The Partnership was formed under the Missouri Uniform Limited
Partnership Law on February 9, 1982, to invest, on a leveraged basis, in
income-producing real properties such as shopping centers, office buildings,
apartment complexes, office/warehouses and other commercial properties. The
Partnership is intended to be self-liquidating and proceeds, if any, from the
sale or refinancing of the Partnership's real property investments are not to be
invested in new properties but are to be distributed to the Limited Partners and
General Partners in accordance with the terms of the Partnership Agreement or,
at the discretion of the General Partner, applied to capital improvements to, or
the payment of indebtedness with respect to, existing properties, the payment of
other expenses or the establishment of reserves. The Partnership's principal
executive offices are located at 500 North Broadway, St. Louis, Missouri 63102,
and its telephone number is (314) 206-4600.
The Partnership has invested in a number of real properties over the
years. However, by the early 1990s, the Partnership had disposed of most of its
properties, keeping only two: Cobblestone and Woodhollow (collectively, the
"Properties").
The Partnership purchased the Cobblestone Court Shopping Center on
February 16, 1982. Cobblestone is a shopping center located at 14150 Nicollet
Avenue South in Burnsville, Minnesota, a suburb of Minneapolis, on an 11-acre
site which provides paved parking for 605 cars. The shopping center, which
contains approximately 98,000 net rentable square feet, was constructed in l980
of brick and concrete with a wood facade covering a portion of an enclosed
pedestrian walkway.
The Woodhollow Apartments property, which the Partnership purchased on
July 28, l982, is a 402-unit garden apartment complex located on Dorsett Road in
west St. Louis County, Missouri. The complex, which was constructed in phases in
l971 and l972, consists of 17 buildings containing one, two and three bedroom
apartments. The complex is located on a 26 acre site which provides paved
parking for 707 cars.
BACKGROUND AND REASONS FOR THE SALE
The General Partner has considered the appropriate course of action to
take with regard to the Properties. The General Partner has decided that the
most prudent course of action for the Partnership is to sell the Properties to
the Purchasing Affiliate and to use the proceeds to make a return of capital to
the Limited Partners. The General Partner's decision has been based on the
following factors:
1. THE PURCHASING AFFILIATE IS WILLING TO PURCHASE BOTH OF THE
PROPERTIES FROM THE PARTNERSHIP FOR THEIR RESPECTIVE APPRAISED FAIR MARKET
VALUES LESS CERTAIN EXPENSES.
In early 1998, affiliates of the Purchasing Affiliate expressed an
interest in acquiring the Properties from the Partnership. After some initial
discussions between the General Partner and these affiliates of the Purchasing
Affiliate, the parties agreed in the Spring of 1998 to hire independent third
party appraisers to ascertain the fair market value of the Properties.
Accordingly, in the Spring of 1998, the General Partner hired CB
Richard Ellis, Inc. Appraisal Services, an independent real estate appraisal
firm based in California, with a local office in St. Louis, Missouri, to provide
the General Partner with an appraisal of Woodhollow for a fee of $6,500. Douglas
A. Zink, MAI-CCIM, was the appraiser assigned to the job. Mr. Zink was selected
based on his experience and expertise in evaluating commercial real estate, in
particular, residential apartment communities in the St. Louis area. From
January 1, 1995 through September 19, 1997, Mr. Zink was employed as an
appraiser with Nooney Krombach Company, which was the property manager for the
Partnership. CB Richard Ellis, Inc. Appraisal Services determined that the fair
market value of Woodhollow was $14,600,000 after deducting $880,000 for needed
capital improvements.
Also in the Spring of 1998, the General Partner retained the firm of
Newcombe & Hansen Appraisals, Inc. of Minneapolis, Minnesota, to perform an
appraisal of Cobblestone for a fee of $3,500. The property was appraised by
Larry A. Hempler, SRA, and Berge Hansen, MAI. Mr. Hempler and Mr. Hansen were
selected based on their experience and expertise in evaluating commercial real
estate, in particular, retail properties in the
5
<PAGE> 9
Minneapolis area. Newcombe & Hansen Appraisals, Inc. determined that the fair
market value of the Cobblestone was $3,400,000.
The analysis, opinions and conclusions in the appraisal reports were
prepared in conformance with the Uniform Standards of Professional Appraisal
practice (USPAP), the Requirements of the Code of Professional Ethics and the
Standards of Professional Appraisal Practice of the Appraisal Institute, the
Financial Institutions Reform, Recovery, Enforcement Act of 1989 (FIRREA) and
Title XI Regulations.
The appraisers were given no special appraisal instructions. The market
value of the Properties was determined using the traditional real estate
valuation methods of cost, sales comparison, income capitalization and
discounted cash flow analysis. Each of the appraisals is available for
inspection at the Partnership's principal executive offices during regular
business hours by an interested Limited Partner or his representative designated
in writing.
The Purchasing Affiliate has agreed to purchase the Properties from the
Partnership for an aggregate sales price of $18,000,000 plus any capital
expenditures (not to exceed $880,000) made at Woodhollow from the date of the
appraisal to the date of closing in accordance with the schedule of needed
capital improvements contained in the Woodhollow appraisal (subject to the
reimbursement of certain expenses of the Purchasing Affiliate by the
Partnership) and on the other terms and conditions contained in the Purchase
Agreements, including a condition in each of the Purchase Agreements which
requires the Partnership to sell the Purchasing Affiliate both Properties at the
same time. See "DESCRIPTION OF THE SALE-Terms of the Sale-Conditions to
Closing." In light of the determination of the appraisers that the aggregate
fair market value of the Properties is $18,000,000, the General Partner believes
that an aggregate sales price of $18,000,000 (increased by the capital
expenditures, if any, referred to above) is a fair price for the Properties.
The General Partner believes it is necessary to continue the above
mentioned capital expenditure program because of the possibility that the
transaction proposed herein will not be completed.
2. THE GENERAL PARTNER BELIEVES THAT THE PARTNERSHIP IS UNABLE TO
BORROW SUFFICIENT FUNDS FOR THE PURPOSE OF MAKING CERTAIN CAPITAL IMPROVEMENTS
TO COBBLESTONE WHICH THE GENERAL PARTNER BELIEVES ARE NECESSARY TO LEASE THE
UNOCCUPIED SPACE AT THE SHOPPING CENTER IN A TIMELY FASHION.
Cobblestone's occupancy rate has significantly declined over the past
several years, going from a 92% occupancy rate in December 1995 to a current
occupancy rate of 63%. The General Partner believes that Cobblestone needs to be
substantially renovated and updated in order to attract and retain sufficient
retail tenants to make the shopping center an attractive real estate investment.
The General Partner believes that the necessary renovations at Cobblestone would
include a reconfiguration of the shopping center so that shopping center
customers would have direct access to the retail tenants from the shopping
center's parking lot. Currently, access to the retail tenants of the shopping
center is through an enclosed pedestrian walkway. In addition, the General
Partner believes that the size of the shopping center's unoccupied store units
need to be increased in order to attract the proper tenant mix at the shopping
center. The General Partner's beliefs regarding the type of renovations that are
necessary are based in part upon the views expressed by potential tenants to the
General Partner and/or its leasing broker in connection with their efforts to
lease the shopping center's unoccupied space.
As a result of the declining occupancy rates at Cobblestone as
described above, the need for the Partnership to make certain repairs to the
shopping center's roof in 1997 and the inability of the Partnership (because of
certain restrictions contained in loan documents related to the Woodhollow
property described below) to use certain cash flows from Woodhollow for
Cobblestone purposes, the Partnership was delinquent in paying Cobblestone's
real estate taxes due in 1997. The Partnership did not pay the final installment
of the these taxes until March 1998. The Partnership did not timely pay the
first installment of Cobblestone's real estate taxes, in the amount of $138,540,
that were due in May 1998. In October 1998, the Partnership paid $155,165 as
payment in full for the taxes, penalties and interest due for the first
installment. The second installment of Cobblestone's real estate taxes in the
amount of $138,540 was due in October 1998. On November 30, 1998, the
Partnership used a portion of the proceeds from the Credit Facility to pay
$149,623 as payment in full for the taxes, penalties and interest due for the
second installment.
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<PAGE> 10
The Partnership's failure to pay these real estate taxes as and when
they became due and payable constituted a default under a mortgage loan which
the Partnership has with NationsBank, N.A. (the "Lender"). The Lender had a
first priority mortgage on Cobblestone and a second priority mortgage on
Woodhollow. These mortgages secured indebtedness of the Partnership to the
Lender of approximately $4,607,000. The first priority mortgage on Woodhollow
was held by Metropolitan Life Insurance Company ("Metropolitan Life") and
secured the Partnership's indebtedness to Metropolitan Life of approximately
$8,397,000.
As a result of the delinquent real estate taxes at Cobblestone and the
Partnership's general cash flow problems caused by the declining Cobblestone
occupancy rates, the Partnership recently completed a refinancing of the
Properties with the Lender by obtaining a credit facility from the Lender in an
aggregate principal amount of $14,000,000 (the "Credit Facility"). This
refinancing was effective as of November 30, 1998. In connection with the
refinancing, the Partnership paid in full its existing indebtedness to
Metropolitan Life and the Lender and paid the delinquent real estate taxes on
the Cobblestone property. The remaining proceeds under the Credit Facility will
be used by the Partnership to complete a previously undertaken capital
improvement program at Woodhollow, for general working capital purposes and to
begin preparing architectural and engineering plans with respect to the
renovations at Cobblestone described above. The Partnership currently has
approximately $13,500,465 outstanding under the Credit Facility.
As described above, the renovations which the General Partner believes
are necessary at Cobblestone are substantial. These renovations will likely
require significant additional capital. In addition, the General Partner
believes that these renovations should be done in the near future in order to
retain the existing tenant base and to permit Cobblestone to be effectively
marketed in the near future.
Because the Partnership does not have sufficient funds available to it
under the Credit Facility to undertake and complete these renovations and
because the General Partner does not believe that the Partnership could obtain
substitute financing in a timely fashion, the General Partner believes that a
sale of Cobblestone to the Purchasing Affiliate at this time is prudent.
3. THE TERMS OF THE PARTNERSHIP'S FINANCING ARRANGEMENTS ARE SUCH THAT
THE GENERAL PARTNER BELIEVES THAT THE PARTNERSHIP MUST SELL BOTH PROPERTIES AT
THE SAME TIME IF THE PARTNERSHIP IS GOING TO SELL EITHER OF THE PROPERTIES.
The deeds of trust which secure the Credit Facility contain provisions
which do not require the Lender to release its respective liens against the
Properties until the Credit Facility has been paid in full by the Partnership.
In effect, this means that in order for the Partnership to sell either one or
both of the Properties, it must obtain net proceeds from such sale in an amount
which is sufficient to permit the Partnership to pay off the Credit Facility in
full. Such provisions were required by the Lender in the deeds of trust (they
were required because the Lender wanted to ensure that it would not be in a
position where its only remaining collateral for its loan was Cobblestone). In
light of the fact that Cobblestone was appraised to have a fair market value of
$3,400,000, the General Partner does not believe that it can sell Cobblestone by
itself for sufficient consideration to pay off the Credit Facility.
The General Partner does believe, however, in light of the fact that
Woodhollow was appraised to have a fair market value of $14,600,000 after
deducting $880,000 for needed capital improvements and that the Purchasing
Affiliate has agreed to purchase such Property for an aggregate sales price of
$14,600,000 (increased by the capital expenditures, if any, referred to above),
that it can sell Woodhollow by itself for an amount sufficient to allow it to
pay off the Credit Facility in full.
However, in light of the discussion under item number 2 above, the
General Partner does not believe that it would be in the best interests of the
Partnership and the Limited Partners to sell Woodhollow without also selling
Cobblestone. The Partnership cannot be liquidated unless and until both
Woodhollow and Cobblestone are sold.
As a result of the foregoing, the General Partner believes that the
Partnership must sell both Properties at the same time if the Partnership is
going to sell either of the Properties.
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<PAGE> 11
4. CONSUMMATION OF THE SALE WOULD RESULT IN THE DISSOLUTION OF THE
PARTNERSHIP AND REQUIRE THE GENERAL PARTNER TO LIQUIDATE THE PARTNERSHIP AND
DISTRIBUTE THE PROCEEDS THEREFROM TO THE LIMITED PARTNERS AS A RETURN OF
CAPITAL.
The General Partner estimates that an aggregate of approximately
$3,952,000, or approximately $292 per Unit, of the aggregate sales proceeds will
be available for distribution to the Limited Partners following the application
of customary adjustments and prorations to the gross sales price, the payment of
customary closing costs in connections with the Sale and the payoff of the
existing mortgages on the Properties. The following table shows the expected net
proceeds from the Sale, the application of certain of the proceeds to the
anticipated closing costs and the disposition of the proceeds of the Sale.
<TABLE>
<CAPTION>
PURCHASE PRICE:
<S> <C> <C>
Woodhollow $14,600,000
Estimated capital additions
prior to sale 552,000
Cobblestone 3,400,000
Total $18,552,000
LESS:
Outstanding debt at time of sale (estimated) 13,800,000
LESS:
Sales Cost (estimated)
Proxy solicitation cost 100,000
General closing cost (including legal) 50,000
Closing adjustments 350,000
-----------
Total 500,000
LESS: Reserve for outstanding accounts payable,
including management fees and liquidation expense s 300,000
-----------
ESTIMATED NET PROCEEDS TO THE PARTNERSHIP $ 3,952,000
NUMBER OF UNITS 13,529
ESTIMATED DISTRIBUTION PER UNIT $292
</TABLE>
BY SELLING TO THE PURCHASING AFFILIATE, NO REAL ESTATE SALES
COMMISSIONS (WHICH, AT 3% OF GROSS SALES PRICE, WOULD BE APPROXIMATELY $556,000)
WILL BE PAID IN CONNECTION WITH THE SALE OF THE PROPERTIES; THIS ENABLES THE
PARTNERSHIP TO DISTRIBUTE MORE FUNDS TO THE LIMITED PARTNERS.
5. UPON A DISSOLUTION OF THE PARTNERSHIP, LIMITED PARTNERS WILL NO
LONGER BE REQUIRED TO MAKE ANY SPECIAL PROVISION FOR THEIR INTEREST IN THE
PARTNERSHIP IN CONNECTION WITH THEIR INCOME TAX RETURNS.
The Sale of the Properties and the dissolution of the Partnership will
mean that the Limited Partners will no longer receive Schedule K-1s with respect
to their interests in the Partnership. Each of the Limited Partners will receive
a Schedule K-1 for 1998 and for 1999, but, if the Sale takes place and the
Partnership is dissolved prior to November 30, 1999 (if the Amendment and the
Sale is approved by the Limited Partners and the other conditions to the Sale
have been satisfied, the Sale is expected to close in early 1999 and dissolve
immediately thereafter), the Limited Partners will not receive any Schedule K-1s
from the Partnership for any years subsequent to 1999. This means that the
Limited Partners will no longer have to deal with the special provisions of the
Internal Revenue Code of 1986, as amended, as a result of their interest in the
Partnership.
6. PAST EFFORTS TO SELL THE COBBLESTONE HAVE BEEN UNSUCCESSFUL; REASONS
FOR PURSUING THE SALE TO THE PURCHASING AFFILIATE.
Efforts to Sell Cobblestone. The General Partner has unsuccessfully
marketed Cobblestone for sale in the past. In early 1996, the Partnership
entered into a contract with a third party for the sale of Cobblestone for a
gross sales price of $5,600,000. This contract was later terminated by the
potential purchaser after it conducted due
8
<PAGE> 12
diligence investigations on Cobblestone. Furthermore, in late 1996, the
Partnership entered into a letter of intent with a different third party for the
sale of Cobblestone for a gross sales price of $4,400,000, which the parties
later agreed to lower to $4,000,000. After conducting its due diligence
investigation of Cobblestone, this prospective purchaser also elected not to
purchase Cobblestone. The inability to sell Cobblestone is due to the major
renovation and re-tenanting needed to make the property a viable investment. The
General Partner estimates that the needed renovations and releasing would cost
approximately $2,000,000.
Reasons for Proposed Sale. The General Partner has considered the
available methods for selling the Properties, including selling the Properties
separately to unaffiliated third parties. The General Partner has determined
that the real estate commissions associated with a sale to an unaffiliated third
party are typically a minimum of three percent of the sale price, which,
assuming sales at the current appraised values, would significantly reduce the
amount of net proceeds available for a distribution to the Limited Partners, as
compared to the proposed distribution resulting from the Sale to the Purchasing
Affiliate. As discussed in the preceding paragraph and in Section 2, the General
Partner has not been able to close a sale on Cobblestone due to the needed
improvements. While it may be possible to sell Woodhollow to an unaffiliated
third party in a reasonable period of time, the Partnership would be left with
the net proceeds from such a sale and the Cobblestone property. The General
Partner estimates that the sale of Woodhollow would generate less that half of
the funds necessary to make the needed renovations and releasings at
Cobblestone. This would place the Partnership is the undesirable position of
owning a single property that needs substantial improvements to become a viable
investment without having a revenue stream to fund such improvements. For these
reasons, the General Partner believes the only reasonable method of selling the
properties separately would be to renovate and sell Cobblestone before selling
Woodhollow. The General Partner estimates that funding the renovations to
Cobblestone with the cash flow from Woodhollow (which would require prior
approval from NationsBank) would take at least two years. Furthermore, the
General Partner estimates it would take at least one year from the date of
listing Cobblestone, and six months from the date of listing Woodhollow, to find
a purchaser and to close the respective sales. Due to the estimated time needed
to sell the Properties to an unaffiliated third party and the increased costs
associated with third party transactions, the General Partner believes that the
proposed Sale of the Properties to the Purchasing Affiliate is prudent.
THE GENERAL PARTNER RECOMMENDS A VOTE FOR THE PROPOSAL TO AUTHORIZE THE
PARTNERSHIP TO SELL WOODHOLLOW AND COBBLESTONE TO THE PURCHASING AFFILIATE ON
THE ENCLOSED PROXY CARD.
DESCRIPTION OF THE SALE
TERMS OF THE SALE
Introduction. Pursuant to the Cobblestone Purchase Agreement, the
Partnership agreed to sell and the Purchasing Affiliate agreed to purchase
Cobblestone from the Partnership for an aggregate sales price of $3,400,000,
subject to, among other things, the approval of the Amendment and the Sale by
the Limited Partners and the simultaneous closing of the transactions
contemplated by the Woodhollow Purchase Agreement. Similarly, pursuant to the
Woodhollow Purchase Agreement, the Partnership agreed to sell and the Purchasing
Affiliate agreed to purchase Woodhollow from the Partnership for an aggregate
sales price of $14,600,000, plus the amount of capital, up to $880,000, paid by
the Partnership for certain needed capital expenditures listed in the Woodhollow
appraisal from the date of the appraisal to the closing date of the Woodhollow
Purchase Agreement, subject to, among other things, the approval of the
Amendment and the Sale by the Limited Partners and the simultaneous closing of
the transactions contemplated by the Cobblestone Purchase Agreement.
The material terms of the Purchase Agreements are described below. The
description is only a summary of the Purchase Agreements and is qualified in its
entirety by reference to the Purchase Agreements. Limited Partners or any
Limited Partner representative designated as such in writing may review the
Purchase Agreements during regular business hours at the office of the
Partnership at 500 North Broadway, St. Louis, Missouri 63102.
Closing. The Purchase Agreements provide that possession of the
Properties shall be delivered by the Partnership to the Purchasing Affiliate at
the closing (the "Closing") subject to the rights of the existing tenants at the
Properties. The "Closing Date" under each of the Purchase Agreements shall be a
date designated by the Purchasing Affiliate in written notice to the Partnership
waiving any final contingencies set forth in the respective
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<PAGE> 13
Purchase Agreement, which date must be no earlier than ten (10) days from date
of said notice and no later than thirty (30) days from the date of said notice.
Under each of the Purchase Agreements, the Purchasing Affiliate has the right,
at its option, to extend the Closing Date for two additional periods of thirty
(30) days each upon giving to the Partnership written notice of each such
extension, at least five (5) days prior to the previously scheduled Closing
Date, each of which notices in order to be valid and effective, must be
accompanied by an additional nonrefundable earnest money deposit to the title
company in the amount of $50,000.
Certain Closing Adjustments. The Purchase Agreements provide that any
delinquent rents, common area payments or real estate tax or insurance payments
will not be prorated at Closing, but if collected by the Purchasing Affiliate
will be paid to the Partnership when received by the Purchasing Affiliate. Under
the Purchase Agreements, all amounts collected by the Purchasing Affiliate from
tenants in accordance with the foregoing shall first be applied to all amounts
due and payable with respect to the period from and after the Closing. Any
excess shall then be promptly paid to the Partnership to the extent of any
delinquent amounts due the Partnership from tenants. The Purchase Agreements
permit the Partnership to bring action against the tenants in question for any
such delinquencies provided the Partnership shall have no right to commence any
eviction action against any tenant without the Purchasing Affiliates prior
written consent. The Purchase Agreements also provide that all security deposits
paid by tenants under leases affecting the Properties shall be paid by the
Partnership to the Purchasing Affiliate at Closing. In addition, at Closing and
only on condition that Closing is actually consummated, the Partnership has
agreed in each of the Purchase Agreements to reimburse the Purchasing Affiliate
for the costs of an Owner's Policy of Title Insurance, a Mortgagee's Policy of
Title Insurance, an ALTA Survey of the subject property, title company closing
and escrow fees, environmental and engineering studies, tests and reports with
respect to the subject property, other reasonable expense of the Purchasing
Affiliate's due diligence exclusive of legal expense and the cost of the
Purchasing Affiliate's employees and officers, said reimbursement not to exceed
the sum of $50,000 in the aggregate under each of the Purchase Agreements (i.e.,
a total potential reimbursement of $100,000 under the Purchase Agreements).
Earnest Money Deposits. Upon fulfillment or waiver of the contingencies
specified in the Purchase Agreements, Purchaser will deposit with the title
company nonrefundable earnest money in the amount of $150,000 with respect to
Cobblestone and $250,000 with respect to Woodhollow, in each case, in an
interest bearing account with interest to be paid to the Purchasing Affiliate
prior to Closing. If the sale under the respective Purchase Agreement is closed,
the earnest money will be applied to the purchase price. If the sale under the
respective Purchase Agreement is not closed at the fault of the Purchasing
Affiliate, the earnest money will be paid over to the Partnership as liquidated
damages because the parties have stipulated and agreed that actual damages would
be very difficult to ascertain. If the Partnership fails or refuses to close
under a Purchase Agreement, the Purchasing Affiliate will be entitled to have
all nonrefundable earnest money returned to the Purchasing Affiliate, and the
Purchasing Affiliate will be entitled to terminate the applicable Purchase
Agreement or to specific performance of the Purchase Agreement but not to any
damages. The Partnership is not be entitled to specific performance or to any
remedy at law or in equity for breach of the applicable Purchase Agreement other
than the aforesaid liquidated damages.
Conditions to Closing. The obligation of the Partnership and the
Purchasing Affiliate to close under each of the Purchase Agreements is
contingent upon compliance with certain conditions and the occurrence of certain
events. If, for any reason, the consent of the Limited Partners to the Sale has
not been obtained by February 11, 1999, either party may, at any time
thereafter, terminate the Purchase Agreement by giving written notice of
termination to the other party. In addition, the Partnership's obligation to
close under the each of the Purchase Agreements is contingent upon a
simultaneous closing occurring under the other Purchase Agreement. Moreover, the
obligation of the Purchasing Affiliate to close under each of the Purchase
Agreement is contingent upon compliance with certain conditions and the
occurrence of certain events on or before the date which is 60 days after the
date on which the Purchasing Affiliate receives written notice from the
Partnership of the approval of the Limited Partners of the Amendment and the
Sale (the "Approval Date"). In the event that on or before the Approval Date,
there has not been compliance with any of the such conditions or any of the
specified events have not occurred, then the Purchasing Affiliate may, at its
option, terminate the respective Purchase Agreement or waive the unfulfilled
contingencies. Such conditions or events include the following: (a) the
Purchasing Affiliate shall have obtained, a commitment for an ALTA Form B
Owner's policy of title insurance on the applicable property with exception only
for such items as are satisfactory to the Purchasing Affiliate; (b) the
Purchasing Affiliate shall have received a survey and physical inspection report
for the applicable property which are
10
<PAGE> 14
satisfactory to the Purchasing Affiliate; (c) the Purchasing Affiliate shall
have obtained written environmental reports, satisfactory to the Purchasing
Affiliate, confirming that the applicable property and adjacent properties are
free of all hazardous materials which might cause the applicable property to be
in violation of any applicable environmental laws or governmental regulations;
(d) the Purchasing Affiliate shall have reviewed and approved of all existing
leases and financial information provided by the Partnership with respect to the
Properties; (e) the Purchasing Affiliate shall have reviewed and approved of all
maintenance, service agreements and other contracts affecting the applicable
property; (f) the Purchasing Affiliate shall have received evidence satisfactory
to the Purchasing Affiliate that the applicable property is constructed and
operated in accordance with all applicable zoning, building code and other
similar laws and ordinances; and (g) the Purchasing Affiliate shall have
obtained permission from NationsBank, N.A. to take title to the Properties
subject to the first lien financing. The obligation of the Purchasing Affiliate
to close under each of the Purchase Agreements is also expressly conditioned
upon there having occurred no material adverse change between the date of the
Purchasing Affiliate's notice waiving the contingencies described in (a) and (c)
above and the date of the Closing in the condition of title to the applicable
property or the environmental condition of the property and upon all of the
Partnership's representations and warranties contained in the applicable
Purchase Agreement remaining true and complete in all respects as of Closing.
Representations and Warranties. In each of the Purchase Agreements, the
Partnership makes certain representations and warranties with respect to the
Partnership and the applicable property which are customary in a transaction
like the Sale. Among other matters, these representations and warranties relate
to the following types of matters: (a) actions or proceedings pending in any
court or before any governmental agency by any tenant or by any other person
affecting the applicable property; (b) alleged violations of any fire, zoning,
building, health laws or regulations or of any other alleged violations which
affect the applicable property; (c) latent structural defects in the
improvements on the applicable property; (d) information with respect to the
leases and other contracts relating to the applicable property; (e) certain
environmental matters affecting the property; (f) solvency issues related to the
Partnership and (f) the authority of the Partnership to sell the applicable
property to the Purchasing Affiliate. In the event of a breach of any of the
representations, warranties or covenants of the Partnership, which the
Purchasing Affiliate discovers prior to Closing, the Purchasing Affiliate shall
have the right, as its exclusive remedy, of canceling the applicable Purchase
Agreement. In the event of breach of the representations, warranties or
covenants, which the Purchasing Affiliate discovers after Closing, the
Partnership shall have no responsibility whatsoever, it being stipulated in each
of the Purchase Agreements that the Purchasing Affiliate is relying upon its own
knowledge and due diligence. As such, all of the Partnership's representations,
warranties and covenants are waived and extinguished as of the consummation of
Closing.
Certain Covenants of the Partnership. In each of the Purchase
Agreements, the Partnership agreed, with certain exceptions, that it would not
enter into any new leases affecting the applicable property or modify or extend
any existing leases affecting the applicable property between the date of the
applicable Purchase Agreement and the date of the Closing without the prior
written consent of the Purchasing Affiliate. In addition, the Partnership
agreed, with certain exception, that it would not enter into any new service
contracts affecting the applicable property or modify or extend any existing
service contracts affecting the applicable property between the date of the
applicable Purchase Agreement and the date of the Closing.
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<PAGE> 15
Certain Other Rights. Pursuant to each of the Purchase Agreements, in
the event that all or any substantial portion of the property subject to such
Purchase Agreement becomes subject to an appropriation proceeding or a bona fide
threat thereof by an authority having power of eminent domain, the Purchasing
Affiliate may (a) elect to terminate the applicable Purchase Agreement (in which
event the Purchasing Affiliate shall be entitled to the return of all
non-refundable earnest money) or (b) elect to proceed with the transaction (in
which event the Purchasing Affiliate shall be entitled to the proceeds of any
award or payment in lieu thereof resulting from such proceedings or threat
thereof, subject to the terms and provisions of the leases affecting the
applicable property). In addition, in the event of any casualty damage to the
applicable property prior to Closing Date, which the Partnership does not repair
prior to Closing Date, the Purchasing Affiliate may, at its option, terminate
the applicable Purchase Agreement, or proceed with Closing. In the event of
termination, all non-refundable earnest money will be returned to the Purchasing
Affiliate. In the event of Closing, all insurance proceeds will be assigned to
the Purchasing Affiliate. In the event of any such casualty damage, the
Partnership will have the right, at its option but only with the Purchasing
Affiliate's consent, to extend the Closing Date for up to ninety (90) days in
order to repair the casualty damage.
ACCOUNTING TREATMENT OF THE SALE
The Sale will be accounted for as a sale of the assets of the
Partnership.
FEDERAL/STATE REGULATORY REQUIREMENTS RELATING TO THE SALE
There are no federal or state regulatory requirements that apply to the
Sale.
LACK OF DISSENTERS' RIGHTS OF APPRAISAL
Limited Partners will not be entitled to dissenters' rights under
Missouri law or under any other statute or under the terms of the Partnership
Agreement in connections with the Sale.
OTHER FACTORS TO CONSIDER
The General Partner has learned that a definitive consent solicitation
statement (the "Solicitation") has been filed with the Securities and Exchange
Commission in which it is stated that an affiliate of a limited partner of the
Partnership (the "Soliciting Affiliate") is seeking the approval of the Limited
Partners to remove the General Partner, elect the Soliciting Affiliate as the
replacement General Partner, sell the Properties, dissolve the Partnership and
make a final distribution to the Limited Partners.
The General Partner began contemplating the proposed sale of the
Cobblestone and Woodhollow properties in early 1998. See "PROPOSAL 2 -
Background and Reasons for the Sale." The filing of the Solicitation has not
affected the General Partner's decision to sell the properties to the Purchasing
Affiliate.
As of the date of this Proxy Statement, to the knowledge of the
Partnership, the Solicitation has not been mailed to the Limited Partners. In
the event the Solicitation is mailed to the Limited Partners, or for any other
reason, you may revoke your Proxy or Proxies by granting a subsequent Proxy to
the General Partner or to a third party.
FEDERAL AND STATE INCOME TAX
CONSEQUENCES OF THE SALE
GENERAL
The Sale, if approved, will have certain tax implications to the
Limited Partners that must be considered. The following summarizes the material
federal income tax consequences arising from the Sale and provides a general
overview of certain state income tax considerations. This summary is based upon
the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations, court decisions and published positions of the Internal Revenue
Service (the "Service"), each as in effect on the date of this Proxy Statement.
There can be no assurance that the Service will agree with the conclusions
stated herein or that future legislation or administrative
12
<PAGE> 16
changes or court decisions will not significantly modify the federal or state
income tax law regarding the matters described herein, potentially with
retroactive effect. This summary is not intended to, and should not, be
considered an opinion respecting the federal or state income tax consequences of
the Sale. Further, this summary is not intended to provide tax or other legal
advice to any Limited Partner.
TAXATION OF PARTNERSHIP AND LIMITED PARTNERS
The Partnership is not a taxable entity for federal income tax
purposes. Accordingly, any gain or loss recognized by the Partnership from the
Sale will be passed through to the Partners. Each Partner is required to take
into account in computing income tax liability his/her allocable share of the
Partnership's items of income, gain, loss, deduction and credit (hereinafter
referred to as "income or loss") in accordance with the Partnership Agreement.
The federal income tax consequences to a Partner of the Sale of the
Partnership assets will depend, among other things, upon (i) the income tax
rates in effect on the date of the Sale and on the date the proceeds of the Sale
are distributed to Partners by the Partnership; (ii) the individual
circumstances of each Partner (including each Partner's tax basis in the
Partnership interests); and (iii) the timing of the Sale and such distributions.
In general, however, upon a Sale of the Partnership assets, gain will be
recognized by the Partnership measured by the difference between the
Partnership's adjusted basis for the assets and the amount realized on the Sale.
The Partnership's adjusted basis in an asset is generally determined by its
cost, including the amount of debt incurred to purchase the asset, reduced by
depreciation or amortization deduction taken by the Partnership with respect to
that asset.
Each Limited Partner must report his/her allocable share of the gain or
loss on the Sale in the year in which the Sale occurs. Actual gain or loss
amounts may vary from the estimates set forth below. Each Limited Partner's
allocable share of any Section 1245 gain, Section 1231 gain or loss and
Partnership net taxable income or loss from operations will be reflected on
his/her applicable Schedule K-l (as determined in accordance with the allocation
provisions contained in the Partnership Agreement).
Under Sections 1245 and 1250 of the Code, a portion of the amount
allowed as depreciation expense with respect to Section 1231 Property may be
"recaptured" as ordinary income upon sale or other disposition rather than as
long-term capital gains ("Section 1245 gains" and "Section 1250 gains",
respectively).
If the proposed sale of the properties had occurred on November 30,
1997, each Unit would have recognized a per Unit gain of approximately $296,
assuming that the passive loss carryovers generated by the Partnership (which
amount to approximately $673 per Unit) had not been applied to other prior
gains.
CAPITAL GAINS
Recent legislation substantially changed the tax treatment for capital
gains for non-corporate taxpayers. Generally, for capital assets held more than
12 months, the maximum rate of tax on the net capital gains for individuals is
20%. Ordinary income (such as Section 1245 gain or Section 1250 gain) will be
taxed at a maximum rate of up to 39.6%. Under Sections 1245 and 1250 of the Code
(which govern recapture of depreciation taken with respect to personal and real
property, respectively), a portion of the amount allowed as depreciation expense
with respect to the Properties will be "recaptured" upon the Sale (and taxed at
different rates) rather than being characterized as capital gain ("Section 1245
Gain" and "Section 1250 Gain," respectively). Under the Act, the "unrecaptured"
Section 1250 gain is defined as the amount of long-term capital gain which would
be treated as ordinary income if section 1250 recapture applied to all
depreciation (rather than only to depreciation in excess of straight line
depreciation) from the sale of property. The amount of "unrecaptured" Section
1250 gain attributable to the disposition of property to which Section 1231
applies shall not exceed the Section 1231 gain for the year. The "unrecaptured"
Section 1250 gain is taxed at a maximum rate of 25 percent. The amount of net
capital loss that can be utilized to offset income is limited to the sum of net
capital gains from other sources recognized by the Limited Partner during the
tax year, plus $3,000 ($1,500 in the case of a married individual filing a
separate return). The excess amount of such net long-term capital loss may be
carried forward and utilized in subsequent years subject to the same
limitations.
13
<PAGE> 17
PASSIVE LOSS LIMITATIONS
Limited Partners who are individuals, trusts, estates or personal
service corporations are subject to the passive activity loss limitations rules.
A Limited Partner's allocable share of Partnership income or loss is treated as
derived from a passive activity. A Limited Partner's allocable share of any
Partnership gain realized on the Sale will be characterized as passive activity
income. Such passive activity income may be offset by passive activity losses
from other passive activity investments. Moreover, because the Sale and
Liquidation will terminate the Limited Partner's interest in the passive
activity, a Limited Partner's allocable share of any Partnership loss realized
on the sale of its investments, or loss realized by the Limited Partner upon
liquidation of his or her Units, will not be subject to the passive loss
limitations.
LIQUIDATION OF THE PARTNERSHIP
The tax consequences of the Partnership's distributions may differ,
depending upon whether the distribution is made in cash or property, and
depending upon whether the distribution is made prior to or upon liquidation.
Generally, the cash distributions to a Partner will be treated as a tax-free
return of capital only to the extent of such Partner's adjusted basis in his/her
Units immediately before the distribution.
A Partner's initial basis in his/her Units equals the purchase price of
such Units. A Partner's initial basis in his/her Units is increased by (i) such
Partner's proportionate share of the Partnership's recourse debt; (ii) such
Partner's allocable share of Partnership's taxable and tax-exempt income; and
(iii) such Partner's proportionate share of increases in the Partnership's
non-recourse debt. The Partner's adjusted basis in his/her Units is decreased by
(i) Partnership distributions to such Partner (including such Partner's
proportionate share of decreases and non-recourse debt); (ii) such Partner's
allocable share of Partnership losses and deductions; and (iii) such Partner's
allocable share of non-deductible Partnership expenses which are not properly
chargeable to a Capital Account for federal income tax purposes.
Generally, gain will be recognized upon a liquidating cash distribution
only to the extent that the cash distributed (including reductions in a
Partner's allocable share of Partnership non-recourse debt) exceeds the
Partner's adjusted basis in his/her Units. Once such adjusted basis is reduced
to zero, additional cash distributions generally will be treated as capital
gain, provided that the Partner's interest in the Partnership is a capital
asset. Losses may be recognized by reason of the liquidating cash distribution
if only cash is distributed and the Partner's adjusted basis in his/her Units
exceeds the amount of such cash.
CERTAIN STATE INCOME TAX CONSIDERATIONS
While a Partnership is not generally subject to state taxes, its
Partners may be subject to state income taxes, if any, on their respective
shares of Partnership income and loss in the state or states in which they
reside or in which the Partnership does business. Each Partner is urged to
consult his/her tax advisor for advice as to the state and local taxes which may
be payable by reason of the Sale and the Liquidation of the Partnership.
TAX CONCLUSION
The discussion set forth above is only a summary of the material
federal income tax consequences to the Limited Partners from the Sale and
Liquidation and of certain state income tax considerations. It does not address
all potential tax consequences that may be applicable to a Limited Partner and
may not be applicable to certain categories of Limited Partners, such as
non-United States persons, corporations, insurance companies, subchapter S
corporations, partnerships, tax-exempt entities or financial institutions. It
also does not address the state, local or foreign tax consequences of the
transactions. ACCORDINGLY, LIMITED PARTNERS SHOULD CONSULT THEIR OWN TAX
ADVISORS REGARDING THE SPECIFIC INCOME TAX CONSEQUENCES OF THE SALE AND
LIQUIDATION TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF FEDERAL, STATE,
LOCAL AND FOREIGN TAX LAWS.
14
<PAGE> 18
FINANCIAL DATA
This proxy statement is accompanied by the Partnership's Form 10-K for
the period ended November 30, 1997 (the "Form 10-K") and the Partnership's Form
10-Q for the quarter ended August 31, 1998 (the "Form 10-Q"). The information in
the Form 10-K and the Form 10-Q is hereby incorporated by reference into this
Proxy Statement.
SELECTED HISTORICAL FINANCIAL DATA
The following selected historical financial data for the Partnership
for each of the years in the five year period ended November 30, 1997, have been
derived from the Partnership's financial statements, which have been audited by
Deloitte & Touche LLP as independent accountants. The data for the nine month
period ended August 31, 1998, has been derived from unaudited financial
statements appearing in the Partnership's Form 10-Q, and which, in the opinion
of the General Partner, includes all adjustments, consisting only of normal
adjustments, necessary for the fair statement of the results for the unaudited
periods. The selected financial data are qualified in their entirety by and
should be read in conjunction with the Partnership's financial statements and
related notes appearing in the Partnership's Form 10-K and in the Partnership's
Form 10-Q.
<TABLE>
<CAPTION>
YEAR ENDED
----------
NINE MONTHS
ENDED
8/31/98 11/30/97 11/30/96 11/30/95 11/30/94 11/30/93
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Revenues $ 2,521,032 $ 3,412,192 $ 3,512,832 $ 3,395,026 $ 3,270,135 $ 3,620,743
Expenses 2,656,084 3,605,940 3,531,565 3,546,861 3,675,307 3,945,599
Earning (Loss) from (135,052) (193,748) (18,733) (151,835) (405,172) (324,856)
Continuing
Operations
Earnings (Loss) from (9.81) (14.07) (1.36) (11.03) (29.43) (23.60)
Continuing
Operations per Unit
-- Limited
Weighted Average Units 13,529 13,529 13,529 13,529 13,529 13,529
Outstanding -
Limited
BALANCE SHEET DATA
Total Assets $11,452,272 $11,628,080 $11,211,633 $11,322,989 $11,789,994 $12,303,761
Long Term Obligations 12,793,761 12,871,393 12,529,484 12,628,720 12,721,302 12,850,500
(Mtg. Only)
Distributions per Unit -0- -0- -0- -0- -0- -0-
Book Value per Unit (134.74) (124.76) (110.44) (109.06) (97.84) (67.89)
Partners' Equity (Deficit) (1,822,997) (1,687,945) (1,494,197) (1,475,464) (1,323,629) (918,457)
</TABLE>
15
<PAGE> 19
INTERESTS OF CERTAIN PERSONS IN THE
AMENDMENT AND THE SALE
IN CONSIDERING THE RECOMMENDATION OF THE GENERAL PARTNER WITH RESPECT
TO PROPOSAL 1 AND PROPOSAL 2, THE LIMITED PARTNERS SHOULD BE AWARE THAT THE
GENERAL PARTNER IS CONTROLLED BY THE PARENT COMPANY OF THE PURCHASING AFFILIATE
AND THEREFORE HAS INTERESTS IN PROPOSAL 1 AND PROPOSAL 2 THAT ARE DIFFERENT FROM
AND IN ADDITION TO THE INTERESTS OF THE LIMITED PARTNERS GENERALLY IN SUCH
PROPOSALS. THE GENERAL PARTNER WAS AWARE OF THESE INTERESTS AND TOOK THESE
INTERESTS INTO ACCOUNT IN APPROVING THE AMENDMENT AND THE SALE UPON THE TERMS
SET FORTH HEREIN.
The Purchasing Affiliate is under common control with the General
Partner as a result of the fact that CGS owns (i) all of the issued and
outstanding capital stock of the Purchasing Affiliate and (ii) all of the issued
and outstanding capital stock of S-P Properties, Inc., a California corporation
which owns a 75% interest in the General Partner. SN Alliance, Inc., the parent
company of Stifel, Nicolaus & Company, Incorporated owns a 12.5% interest in the
General Partner and Edward D. Jones & Co., L.P. owns the final 12.5% interest in
the General Partner. CGS also indirectly owns the controlling interests in the
corporate general partners of the various other Nooney-sponsored public
partnerships, namely Nooney Real Property Investors-Two, L.P., Nooney Income
Fund Ltd, L.P. and Nooney Income Fund Ltd. II, L.P. CGS is owned 50% by John N.
Galardi, Chairman of the Board of CGS, and William J. Carden, President of CGS.
Mr. Galardi is the founder to the Galardi Group which controls and manages over
500 fast food restaurants. Mr. Carden founded CGS in 1990 and has been active in
commercial real estate for over 25 years. CGS, through its wholly-owned
subsidiaries, including the Purchasing Affiliate, manages over 25 million square
feet of real estate for third party owners, its own account and several public
partnership programs where the CGS or other of its affiliates acts as the
general partner. Nooney, Inc., a wholly owned subsidiary of CGS is the managing
agent for the Properties.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
No person is known to the Partnership to be the beneficial owner of
more than 5% of the outstanding Units of the Partnership. In addition, to the
knowledge of the Partnership, none of the General Partners beneficially owns,
either directly or indirectly, any of the Units in the Partnership. Patricia A.
Nooney, a vice president of the General Partner, owns five Units in the
Partnership. To the knowledge of the Partnership, none of the other officers of
the General Partner beneficially owns, either directly or indirectly, any of the
Units in the Partnership. Moreover, there are no arrangements known to the
Partnership, the operation of which may at a subsequent date result in a change
in control of the Partnership.
CAUTIONARY STATEMENT REGARDING
FORWARD LOOKING STATEMENTS
The General Partner has made certain forward-looking statements in this
Proxy Statement that are subject to risks and uncertainties. Forward-looking
statements include those statements preceded by, followed by or that include the
words "believes," "expects," "anticipates" or similar expressions. For those
statements, the General Partner claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995.
MARKETS AND MARKET PRICES
There is no established public trading market on which the Units are
traded and no such trading market is expected to develop in the future. The
General Partner believes that the Units are traded on a limited and sporadic
basis in the secondary market. The Partnership Spectrum, an independent
publisher of a secondary market report, reported that sometime during March 1998
or April 1998, 25 Units of the Partnership (representing less than 0.2% of the
total outstanding Units) were transferred for a price of $100 per Unit. The
General Partner believes that this price represents gross sales prices for the
Units. Gross sales prices do not reflect the net sales proceeds received by
sellers of Units, which typically are reduced by commissions and other secondary
market transaction costs to amount less than the reported prices. In addition,
the information published by The Partnership Spectrum is the product of their
market research and does not constitute the comprehensive transaction reporting
of a securities
16
<PAGE> 20
exchange. Accordingly, the General Partner does not know whether the foregoing
sales price information is accurate or complete.
There is no public trading market in the shares of the Purchasing
Affiliate or CGS and none is expected to develop in the future.
INDEPENDENT AUDITORS
The financial statements of Nooney Real Property Investors--Four, L.P.,
a Missouri limited partnership, as of November 30, 1997 and 1996 and for each of
the three years in the period ended November 30, 1997 incorporated in this Proxy
Statement by reference from the Partnership's Annual Report on Form 10-K for the
year ended November 30, 1997 have been audited by Deloitte & Touche, independent
auditors, as stated in their report, which is incorporated herein by reference.
Representatives of Deloitte & Touche LLP are expected to be present at
the Special Meeting. These representatives will have an opportunity to make
statements if they so desire and will be available to respond to appropriate
questions.
INCORPORATION BY REFERENCE
The following documents, which have been previously filed by the
Partnership with the Securities and Exchange Commission, are hereby incorporated
by reference:
(i) The Partnership's Annual Report on Form 10-K (filed February 27,
1998);
(ii) The Partnership's Quarterly Report on Form 10-Q for the quarter
ended August 31, 1998 (filed October 15, 1998); and
(iii) All other reports filed pursuant to Sections 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended, since the end of the fiscal
year covered by the Annual Report referred to in (i) above.
Pursuant to the regulations of the Securities and Exchange Commission,
the Partnership will provide to each Limited Partner of record on the date
hereof, without charge and upon written or oral request of such person, copies
all reports (excluding exhibits) filed pursuant to Sections 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended, since the end of the fiscal
year covered by the Annual Report in (i) above.
17
<PAGE> 21
EXHIBIT A
---------
PROPOSED AMENDMENT TO SECTION 5.2
5.2 Restrictions on Authority
A. Without the prior written consent of one hundred percent
(100%) of the Limited Partners, the General Partners shall not have the
authority to:
(i) Do any act in contravention of this Agreement.
(ii) Do any act which would make it impossible to carry on
the ordinary business of the Partnership.
(iii) Confess a judgment against the Partnership.
(iv) Possess Partnership property, or assign their rights
in specific Partnership property, for other than a Partnership purpose.
(v) Admit a Person as a General Partner, except as
provided in this Agreement.
(vi) Admit a Person as a Limited Partner, except as
provided in this Agreement.
B. Without the Consent of the Limited Partners (subject to the
provisions of Section 10.11 hereof), the General Partners shall not have the
authority:
(i) to sell or otherwise dispose of, at one time, all or
substantially all of the assets of the Partnership (except for the disposition
of the Partnership's final Property), <or>**
(ii) to dissolve the Partnership (except pursuant to
Section 2.4 hereof), [or]*
[(iii) to sell any of the Partnership's properties to a
General Partner or an Affiliate of a General Partner; provided, however, that in
no event (with or without the Consent of the Limited Partners) shall the General
Partners have the authority to sell a Partnership's property to a General
Partner or an Affiliate of a General Partner at a gross sales price which is
less that the fair market value of such property.]*
For purposes of this Section 5.2B the term "substantially all" shall be
deemed to mean either (i) sixty-six and two-thirds percent (66 2/3%) or more in
number of the Properties then owned by the Partnership, or (ii) a Property or
Properties representing sixty-six and two-thirds percent (66 2/3%) or more of
the net book value of all of the Partnership's Properties as of the end of the
most recently completed calendar quarter. [In addition, for purposes of this
Section 5.2B the term "fair market value of a property" shall be deemed to mean
the fair market value of a property as determined by an independent third party
appraiser who is either an M.A.I. member of the American Institute of Real
Estate Appraisers or an S.R.A. member of the Society of Real Estate Appraisers
(or any successor association or body of comparable standing if neither of such
associations is then in existence). Finally, notwithstanding anything to the
contrary contained herein, the "gross sales price" shall be deemed to be the
sales price of a Property prior to any reduction for the reasonable costs and
expenses of the Partnership incurred in connection with any such sale, which
costs and expenses may include up to a maximum of $50,000.00 for the
reimbursement of the costs and expenses (including for title, survey, escrow,
environmental and engineering studies and other reasonable due diligence costs)
incurred by the purchaser of such property in connection with any such sale;]*
C. The Partnership interest of the General Partners may not be
assigned, sold or transferred except in accordance with Article Six hereof.
D. The General Partners shall not cause or permit the Partnership to:
(i) Make any loans to the General Partners or their
Affiliates.
(ii) Acquire or lease any properties from or <sell or>**
lease any properties to the General Partners or their Affiliates; provided,
however, that the Partnership may purchase property from the General Partners or
their Affiliates if (1) the property was acquired by such General Partner or
Affiliate for the purpose of facilitating its acquisition by the Partnership,
facilitating the borrowing of money or the obtaining of financing for the
Partnership or any other purpose related to the business of the Partnership and
(2) the property is purchased by the Partnership for a cash payment no greater
than the cost of the property to such General Partner or Affiliate; provided
further, however, that any option to purchase a property taken in
*TEXT IN [ ]'s IS TO BE INSERTED.
**TEXT IN < >'s IS TO BE DELETED.
<PAGE> 22
the name of the General Partners or their Affiliate may be assigned to the
Partnership at the price paid by such General Partner or such Affiliate for such
option<; provided further, however, that the Partnership may, if the proceeds of
the Partnership's sales of Units (as described in Section 4.2 hereof) are
insufficient to make (or repay indebtedness incurred to make) required cash
payments in connection with the acquisition of any Property or Properties
acquired prior to the termination of the offering (as described in Section 4.2
hereof), sell to the General Partners or their Affiliates such Property or
Properties, but only on terms which provide for cash payments to the Partnership
equal to the Partnership's cash payments made and the assumption of all
indebtedness incurred in connection with the acquisition of such Property or
Properties>**.
(iii) Acquire any properties in exchange for Units.
(vi) Commingle the Partnership's funds with those of any
other person (except to the extent that funds are temporarily retained by
property managers).
(v) Reimburse the General Partners or their Affiliates
for expenses incurred except (a) for the Partnership's Organization and Offering
Expenses and (b) as provided for in Section 8.5.
(vi) Commit less than a Substantial Portion of the Capital
Contributions of the Partners toward Investment in Properties. As used herein, a
Substantial Portion of the Capital Contributions of the Partners shall equal the
greater of 80% of the total Capital Contributions reduced by .1625% for each 1%
of indebtedness encumbering Partnership Properties or 67% of the total Capital
Contributions. The remaining Capital Contributions may be used to pay Front-End
Fees.
(vii) Pay total real estate commissions to all persons for
the sale of any of the Properties in excess of a Competitive Real Estate
Commission, as defined below, or 6% of the contract price for the sale of the
property whichever is less, nor pay to the General Partners or their Affiliates
more than one-half of such commissions, not to exceed 3%. The General Partners
or their Affiliates may be paid a real estate commission for sale of any of the
Properties as above limited only if such General Partners or their Affiliates
provide a substantial amount of services in the sales effort and only after
payment of the amounts specified in Section 8.2B(i) through 8.2B(iii) or
Sections 8.4A(iv)(1) through 8.4A(iv)(6) hereof (whichever are then applicable)
have been made or provided for. If and to the extent commissions otherwise
payable to the General Partners or their Affiliates have been subordinated as
set forth above, the amount so subordinated shall be added to the commissions
which may be otherwise paid to the General Partners or their Affiliates in
connection with subsequent sales of Partnership properties, subject to the
limitations set forth above regarding subordination. In no event shall the
General Partners or any Affiliate thereof have an exclusive listing in
connection with sales of Properties of the Partnership. Competitive Real Estate
Commission as used herein means that real estate or brokerage commission paid
for the purchase or sale of property which is reasonable, customary and
competitive in light of the size, type and location of the property.
(viii) Pay to the General Partners or their Affiliates any
compensation, price or fee which is not comparable and competitive with the
compensation, price or fee of any other person who is rendering comparable
services or goods which could be reasonably made available to the Partnership.
(ix) Grant to any creditor who makes a non-recourse loan
to the Partnership any right to have or to acquire, at any time, as a result of
making the loan, any direct or indirect interest in the profits, capital, or
property of the Partnership other than as a secured creditor.
(x) Enter into any contract to construct a building
without such contract being guaranteed at the price contracted by an adequate
completion bond or other satisfactory arrangements, or purchase any property on
which improvements are under construction unless the completion of such
construction is guaranteed at the price contracted by an adequate completion
bond or other satisfactory arrangements.
E. No rebates or "give-ups" may be received by the General
Partners or their Affiliates, nor may the General Partners or their Affiliates
participate in any reciprocal business arrangements which would have the effect
of circumventing any provisions of this Agreement.
*TEXT IN [ ]'s IS TO BE INSERTED
**TEXT IN < >'s IS TO BE DELETED
<PAGE> 23
PROXY
NOONEY REAL PROPERTY INVESTORS-FOUR, L.P.
This Proxy is solicited on behalf of the Partnership
The undersigned does hereby appoints Gregory J. Nooney, Jr.
and Patricia A. Nooney the true and lawful attorneys-in fact and Proxies of the
undersigned with full power of substitution, to vote all Units of Limited
Partnership of the undersigned in Nooney Real Property Investors--Four, L.P. at
the Special Meeting of Limited Partners to be held on January 21, 1999,
commencing at 9:00 A.M., at 500 North Broadway, St. Louis, Missouri, and at any
continuance(s) or adjournment(s) thereof, upon all subjects that may properly
come before the Meeting, including the matters described in the Proxy Statement
furnished herewith, subject to any directions indicated on the reverse side of
this Proxy.
-----------------------------------------
Date
-----------------------------------------
Signature
-----------------------------------------
Signature, if held jointly
THE GENERAL PARTNER RECOMMENDS A VOTE FOR THE FOLLOWING
1. THE AMENDMENT TO SECTION 5.2 OF THE PARTNERSHIP AGREEMENT.
FOR THE AMENDMENT WITHHOLD AUTHORITY TO VOTE FOR THE AMENDMENT
[ ] [ ]
2. THE SALE OF THE WOODHOLLOW AND COBBLESTONE PROPERTIES TO AN AFFILIATE
OF THE GENERAL PARTNER, Which sale, if consummated, will Constitute a
sale of Substantially All of the Assets of the Partnership and will
result in the dissolution of the partnership.
FOR THE SALE WITHHOLD AUTHORITY TO VOTE FOR THE SALE
[ ] [ ]
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSAL 1 AND FOR PROPOSAL 2.
