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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 2
to
SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
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KRUPP REALTY FUND, LTD. - III
(Name of Subject Company)
KRUPP REALTY FUND, LTD. - III
(Name of Person Filing Statement)
LIMITED PARTNERSHIP UNITS
(Title of Class of Securities)
N/A
(CUSIP Number of Class of Securities)
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Laurence Gerber
The Krupp Corporation
470 Atlantic Avenue
Boston, Massachusetts 02210
(617) 423-2233
(Name, Address and Telephone Number of Person
Authorized to Receive Notice and Communications
on Behalf of the Person(s) filing Statement)
COPY TO:
Scott D. Spelfogel, Esq. James M. Dubin, Esq.
The Berkshire Group Paul, Weiss, Rifkind, Wharton & Garrison
470 Atlantic Avenue 1285 Avenue of the Americas
Boston, Massachusetts 02210 New York, New York 10019-6064
(617) 423-2233 (212) 373-3000
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This Amendment No. 2 amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
filed with the Securities and Exchange Commission (the "Commission") by Krupp
Realty Fund, Ltd. - III, a Massachusetts limited partnership (the
"Partnership"), on December 5, 1996, as amended by Amendment No. 1 filed with
the Commission on December 11, 1996, and relates to the tender offer made by
Krescent Partners L.L.C., a Delaware limited liability company, AP-GP Prom
Partners, Inc., a Delaware corporation, American Holdings I, L.P., a Delaware
limited partnership, American Holdings I-GP, Inc., a Delaware corporation, and
American Property Investors, Inc., a Delaware corporation (collectively, the
"Bidders"), disclosed in a Tender Offer Statement on Schedule 14D-1 originally
filed with the Commission on November 21, 1996, as amended by Amendments Nos. 1,
2, 3 and 4 thereto, to purchase up to 5,117 of the Partnership's issued and
outstanding Units of Investor Limited Partnership Interests (the "Units") at a
purchase price of $370 per Unit, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the
Purchaser's Offer to Purchase dated November 21, 1996, as amended by Amendments
Nos. 1, 2, 3 and 4 thereto, and the related Letter of Transmittal. The purpose
of this Amendment No. 2 is to amend Item 9 of the Partnership's Schedule 14D-9,
as amended, as set forth below. Terms defined in the Schedule 14D-9, as amended,
are used in this Amendment No. 2 with the same meanings as provided in the
Schedule 14D-9, as amended.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
Item 9 of the Schedule 14D-9, as previously amended, is hereby
further amended by adding the following:
(a)(iv) Form of letter to Unit holders from the Partnership dated
January 14, 1997
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: January 14, 1997
KRUPP REALTY FUND, LTD. - III
By: The Krupp Corporation, a
general partner
By: s/Laurence Gerber
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Name: Laurence Gerber
Title: President
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EXHIBIT INDEX
A new Exhibit 9 is hereby added to the Exhibit Index, as follows:
Exhibit Description
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9. Form of letter to Unit holders from the
Partnership dated January 14, 1997
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Exhibit 9
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KRUPP REALTY FUND, LTD. - III
January 14, 1997
Dear Limited Partner:
You may have recently received a communication from Krescent Partners
L.L.C. that announces, among other things, an increase in the offer price to
$370 per unit, the extension of its offer to January 31, 1997, and its agreement
to join forces with American Holdings I, L.P. (the "Bidders").
THE KRUPP CORPORATION, A GENERAL PARTNER OF THE PARTNERSHIP (A "GENERAL
PARTNER") STILL BELIEVES THAT THE BIDDERS' OFFER IS INADEQUATE AND NOT IN THE
BEST INTERESTS OF THE UNIT HOLDERS. THE GENERAL PARTNER RECOMMENDS THAT THE
HOLDERS OF UNITS REJECT THIS OFFER AND NOT TENDER THEIR UNITS PURSUANT THERETO.
The General Partner reached this conclusion after considering a number
of factors, including, but not limited to, the following:
o THE PRICE PER UNIT OFFERED BY THE BIDDERS DOES NOT REFLECT THE VALUE
INHERENT IN THE UNITS. Although the Bidders' offer price has been
increased to $370 per unit, such price remains well below the General
Partner's estimate of net asset value. This no doubt reflects the fact
that the Bidders' estimate of the liquidation value of the units is
between $395 and $426 per unit. As more fully described in the
Partnership's December 1996 correspondence, the General Partner has
estimated the net asset value of each unit to be $661, which is between
155% and 167% of the Bidders' estimate. If anything, the General
Partner believes its estimate to be conservative. The Bidders' new
price, combined with their lower estimates of value, can only be
explained by their desire to make you believe that they are offering
close to 100% of value. This, of course, is in conflict with their
stated objective of making a profit.
o THE BIDDERS SUGGEST THAT THE PARTNERSHIP'S EXISTING MORTGAGE
INDEBTEDNESS WILL HAVE AN ADVERSE EFFECT ON THE LIQUIDATION OF ITS
PROPERTIES. The General Partner fully considered the terms of the
mortgage indebtedness, including applicable prepayment penalties and
the timing of lockout provisions, in estimating the net asset value to
be $661 per unit.
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The General Partner believes that the market value of the Partnership's
assets has recently begun to recover. As you may know, real estate values fell
precipitously during the late 1980's and early 1990's. The Partnership survived
this turbulent period by adopting various measures, including the suspension of
distributions in 1990, the sale of certain properties, and the refinancing of
the remaining properties at favorable rates. The Partnership's properties have
begun to generate greater revenues and reflect increased property values.
Encouraged by this improvement, the General Partner authorized the reinstatement
of distributions in 1994.
The General Partner looks forward to continued success in recovering
the loss in value that occurred in the late 1980's and early 1990's. The General
Partner's strategy is to aggressively manage the Partnership's properties to
maximize their value and prepare the properties for sale when this goal is
reached.
Please do not hesitate to call our Investor Communication
representatives at 1- 800-255-7877 for assistance in any Partnership matter.
Sincerely yours,
Laurence Gerber
The Krupp Corporation, a General
Partner
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