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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
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SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
CENTURY PROPERTIES FUND XVIII,
A CALIFORNIA LIMITED PARTNERSHIP
(Name of Subject Company)
CENTURY PROPERTIES FUND XVIII,
A CALIFORNIA LIMITED PARTNERSHIP
(Name of Person(s) Filing Statement)
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class of Securities)
N/A
(Cusip Number of Class of Securities)
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WILLIAM H. JARRARD, JR.
PRESIDENT
FOX CAPITAL MANAGEMENT CORPORATION
ONE INSIGNIA FINANCIAL PLAZA
P.O. BOX 19059
GREENVILLE, SOUTH CAROLINA 29602
(864) 239-1300
(Name, Address and Telephone Number of Person
Authorized to Receive Notice and Communications on Behalf of
the person(s) filing statement)
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Century Properties Fund
XVIII, a California limited partnership (the "Partnership"), and the address
of the principal executive offices of the Partnership is One Insignia
Financial Plaza, Greenville, South Carolina 29602. The title of the class of
equity securities to which this statement relates is the units of limited
partnership interest ("Units") of the Partnership.
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to an offer by Madison River Properties,
L.L.C., a Delaware limited liability company (the "Purchaser"), to purchase up
to 30,000 of the outstanding Units at a purchase price of $70 per Unit, net to
the seller in cash, without interest, upon the terms and subject to the
conditions set forth in an Offer to Purchase dated December 17, 1997 (the
"Offer to Purchase") and related Assignment of Partnership Interest (which
collectively constitute the "Offer"). A Tender Offer Statement on Schedule
14D-1 with respect to the Offer has been filed by the Purchaser, Insignia
Properties, L.P., a Delaware limited partnership ("IPLP"), Insignia Properties
Trust, a Maryland real estate investment trust ("IPT") and Insignia Financial
Group, Inc., a Delaware corporation ("Insignia") (collectively, the
"Bidders").
The address of the Purchaser's principal executive offices is
One Insignia Financial Plaza, P.O. Box 19059, Greenville, South Carolina
29602.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Partnership, which is
the person filing this statement, are set forth in Item 1 above.
(b)(1) The Partnership's general partner is Fox Partners, a
California general partnership and an affiliate of the Purchaser (the "General
Partner").
The General Partner is organized as a California general
partnership, the general partners of which are: Fox Capital Management
Corporation, a California corporation ("FCMC"); Fox Realty Investors, a
California general partnership ("FRI"); and Fox Partners 82, a California
general partnership. FCMC is the managing general partner of the General
Partner. The managing general partner of FRI is NPI Equity Investments II,
Inc. ("NPI Equity"), which (prior to December 1996) was a wholly-owned
subsidiary of National Property Investors, Inc. ("NPI"). In January 1996, IFGP
Corporation, which is a wholly-owned subsidiary of Insignia, acquired all of
the outstanding stock of NPI (and thus all of the outstanding stock of NPI
Equity and the managing general partner interest in FRI). In June 1996,
Insignia Properties Corporation ("IPC"), which at the time was a wholly-owned
subsidiary of Insignia, acquired all of the outstanding stock of FCMC. In
December 1996, as part of the formation of IPT, NPI contributed all of the
outstanding stock of NPI Equity to IPT and IPC was merged with and into IPT.
As a result of the foregoing transactions, each of FCMC and NPI Equity is now
a wholly-owned subsidiary of IPT, and IPT controls the General Partner. Fox
Partners 82 is not affiliated with the Purchaser, IPT or Insignia. The
Purchaser is a newly formed, wholly-owned subsidiary of IPLP, which is the
operating partnership of IPT. IPT is the sole general partner of IPLP (owning
approximately 66% of the total equity interests in IPLP) and Insignia is the
sole limited partner of IPLP (owning approximately 34% of the total equity
interests in IPLP). Insignia and its affiliates also own approximately 67% of
the outstanding common shares of IPT. NPI-AP Management, L.P. ("NPI-AP"), which
is the
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property manager for the Partnership's properties, is currently an
indirect, wholly-owned subsidiary of Insignia. Insignia acquired NPI-AP in
January 1996 in connection with the foregoing transactions. By reason of these
relationships, the General Partner has conflicts of interest in considering
the Offer.
Between October 1994 and June 1995, DeForest Ventures I, L.P.
("DeForest") acquired 21,513 (or approximately 28.7%) of the outstanding
Units, at a purchase price of $21.50 per Unit, pursuant to a series of tender
offers (the "DeForest Tender Offers"). At the time, DeForest was affiliated
with the General Partner but was not an affiliate of the Purchaser, IPT or
Insignia. As a result of litigation instituted in connection with the DeForest
Tender Offers, in March 1995 the General Partner (and certain of its
affiliates at the time) entered into an Amended Stipulation of Settlement (the
"Stipulation") which, among other things, (i) requires the General Partner to
prohibit the Partnership from entering into a "roll-up" transaction involving
the General Partner or any of its affiliates prior to January 1, 2000 unless
such "roll-up" transaction is approved by Limited Partners holding at least a
majority of the outstanding Units owned by persons who are unaffiliated with
the General Partner, and (ii) prohibited DeForest and its affiliates from
initiating or participating in any tender offer for Units for a period of 24
months following the completion of the DeForest Tender Offers (which period
has now expired). In January 1996, in connection with the transactions
described in the preceding paragraph, Insignia NPI L.L.C. ("Insignia NPI"),
which at the time was a wholly-owned subsidiary of Insignia, acquired from
DeForest all of the Units it acquired pursuant to the DeForest Tender Offers.
In December 1996, in connection with the formation of IPT, Insignia NPI was
merged with and into IPLP. As a result, IPLP now owns all of those Units.
NPI-AP, which since January 1996 has been an affiliate of
Insignia and is an affiliate of IPT, the General Partner and the Purchaser,
provides property management services to the Partnership, and since January
1996 Insignia (directly or through affiliates) has performed asset management,
partnership administration and investor relations services for the
Partnership.
The Partnership, the General Partner and NPI-AP (which is the
property manager for the Partnership) were not affiliates of Insignia prior to
January 1996. Accordingly, this section only discusses transactions between
the Partnership, on the one hand, and Insignia and its affiliates (including
the General Partner and NPI-AP), on the other hand, which have occurred since
January 1996.
Under the Limited Partnership Agreement, the General Partner
holds an interest in the Partnership and is entitled to participate in certain
cash distributions made by the Partnership to its partners. The General
Partner received from the Partnership in respect of its interest in the
Partnership's cash distributions of approximately $6,500 to date in 1997. The
Partnership paid NPI-AP property management fees for property management
services in the aggregate amounts of $235,000 for the year ended December 31,
1996 and $181,000 for the nine-month period ended September 30, 1997. Insignia
and its affiliates do not receive any fees from the Partnership for the asset
management or partnership administration services they provide, although,
pursuant to the Limited Partnership Agreement, the General Partner and its
affiliates are entitled to be reimbursed by the Partnership for the expenses
they incur in connection with providing those services. The Partnership
reimbursed the General Partner and its affiliates for expenses incurred in
connection with asset management and partnership administration services
performed by them for the Partnership in the amounts of $154,000 for the year
ended December 31, 1996 and $93,000 during the first nine months of 1997. On
January 19, 1996, the Partnership began insuring its properties under a master
policy through an agency and insurer unaffiliated with the General Partner. An
affiliate of the General Partner acquired, in the
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acquisition of a business, certain financial obligations from an insurance
agency which was later acquired by the agent who placed the current year's
master policy. The current agent assumed the financial obligations to the
affiliate of the General Partner who receives payments on these obligations
from the agent. Insignia and the General Partner believe that the aggregate
financial benefit derived by Insignia and its affiliates from the arrangement
described in the three preceding sentences has been immaterial.
As described above, the Purchaser and the General Partner are
affiliates of and controlled by IPT, which is controlled by Insignia. The
General Partner has conflicts of interest in considering the Offer, including
(i) as a result of the fact that a sale or liquidation of the Partnership's
assets would result in a decrease or elimination of the fees paid to the
General Partner and/or its affiliates and (ii) the fact that as a consequence
of the Purchaser's ownership of Units, the Purchaser (which is an affiliate of
the General Partner) may have incentives to seek to maximize the value of its
ownership of Units, which in turn may result in a conflict for the General
Partner in attempting to reconcile the interests of the Purchaser (which is an
affiliate of the General Partner) with the interests of the other Limited
Partners. In addition, the Purchaser (which is an affiliate of the General
Partner) is making the Offer with a view to making a profit. Accordingly,
there is a conflict between the desire of the Purchaser (which is an affiliate
of the General Partner) to purchase Units at a low price and the desire of the
Limited Partners to sell their Units at a high price.
As described in the Offer to Purchase, the Purchaser (which is
an affiliate of the General Partner) expects to pay for the Units it purchases
pursuant to the Offer with funds provided by IPLP as capital contributions.
IPLP in turn intends to use its cash on hand to make such contributions. It is
possible, however, that in connection with its future financing activities,
IPT or IPLP may cause or request the Purchaser (which is an affiliate of the
General Partner) to pledge the Units as collateral for loans, or otherwise
agree to terms which provide IPT, IPLP and the Purchaser with incentives to
generate substantial near-term cash flow from the Purchaser's investment in
the Units. This could be the case, for example, if a loan has a "balloon"
maturity after a relatively short time or bears a high or increasing interest
rate. In such a situation, the General Partner may experience a conflict of
interest in seeking to reconcile the best interests of the Partnership with
the need of its affiliates for cash flow from the Partnership's activities.
If the Purchaser is successful in acquiring more than 15,845
Units pursuant to the Offer, IPT (which is an affiliate of the General
Partner) will own in excess of 50% of the total Units outstanding and,
accordingly, will be able to control the outcome of almost all voting
decisions with respect to the Partnership, including decisions concerning
liquidation, amendments to the Limited Partnership Agreement, removal and
replacement of the General Partner and mergers, consolidations and other
extraordinary transactions not involving a "roll-up." Even if the Purchaser
acquires a lesser number of Units pursuant to the Offer, however, because IPT
already owns (through IPLP) approximately 28.9% of the outstanding Units it
will be able to significantly influence the outcome of almost all voting
decisions with respect to the Partnership. This means that, other than with
respect to "roll-up" transactions, (i) non-tendering Limited Partners could be
prevented from taking action they desire but that IPT (which is an affiliate
of the General Partner) opposes and (ii) IPT (which is an affiliate of the
General Partner) may be able to take action desired by IPT but opposed by the
non-tendering Limited Partners.
Under the Limited Partnership Agreement, Limited Partners
holding a majority of the Units are entitled to take action with respect to a
variety of matters, including removal of a general partner and in certain
circumstances election of new or successor general partners,
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dissolution of the Partnership, the sale of all or substantially all of the
assets of the Partnership, and most types of amendments to the Limited
Partnership Agreement. However, as a result of litigation instituted in
connection with tender offers by DeForest, an entity affiliated at the time
with the General Partner but not with the Purchaser, IPT or Insignia, under
the terms of an Amended Stipulation of Settlement entered into in March 1995,
the General Partner is required to prohibit the Partnership from entering into
a "roll-up" transaction involving the General Partner or any of its affiliates
prior to January 1, 2000 unless such "roll-up" transaction is approved by
Limited Partners holding at least a majority of the outstanding Units not held
by persons affiliated with the General Partner. In general, IPLP and the
Purchaser (which are affiliates of the General Partner) will vote the Units
owned by them in whatever manner they deem to be in the best interests of IPT,
which, because of their relationship with the General Partner, also may be in
the interest of the General Partner, but may not be in the interest of other
Limited Partners. This could (i) prevent non-tendering Limited Partners from
taking action they desire but that IPT opposes and (ii) enable IPT to take
action desired by IPT but opposed by non-tendering Limited Partners.
To the best knowledge of the General Partner, except as
described in this Schedule 14D-9, there are no other material agreements,
arrangements, understandings or any actual or potential conflicts of interest
between the Partnership, the General Partner and their affiliates and the
Bidders, their executive officers, directors or affiliates.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
Because of the existing and potential future conflicts of
interest described in Item 3 above, the Partnership and the General Partner
are remaining neutral and making no recommendation as to whether Limited
Partners should tender their Units in response to the Offer.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Neither the Partnership nor any person acting on its behalf has
employed, retained or compensated, or intends to employ, retain or compensate,
any person or class of person to make solicitations or recommendation to
Limited Partners on its behalf concerning the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTEREST WITH RESPECT TO SECURITIES.
(a) Except as described in Schedule I attached hereto, no
transactions in the Units have been effected during the past 60 days by the
Partnership or the General Partner or, to the knowledge of the General
Partner, by any of its current or former executive officers, directors or
affiliates.
(b) To the knowledge of the Partnership, neither the General
Partner nor any of its current or former executive officers, directors or
affiliates intends to tender pursuant to the Offer any Units beneficially
owned by them.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
None.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
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None.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a) Form of cover letter to Limited Partners of the
Partnership dated December 17, 1997.
(b) None.
(c) None.
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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: December 17, 1997
CENTURY PROPERTIES FUND XVIII,
a California limited partnership
By: Fox Capital Management Corporation
Its Managing General Partner
By: /s/ William H. Jarrard, Jr.
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William H. Jarrard, Jr.
President
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SCHEDULE I
TRANSACTIONS IN THE UNITS
EFFECTED BY IPLP WITHIN THE PAST 60 DAYS
NUMBER OF
DATE UNITS PURCHASED PER UNIT
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10/16/97 20 55.00
10/16/97 25 53.00
10/24/97 5 49.00
11/25/97 8 36.50
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
(a) Form of cover letter to Limited Partners from the
Partnership dated December 17, 1997
(b) None.
(c) None.
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Exhibit (a)
Century Properties Fund XVIII
December 17, 1997
Dear Limited Partner:
Enclosed is the Schedule 14D-9 which was filed by Century
Properties Fund XVIII (the "Partnership") with the Securities and Exchange
Commission in connection with an offer (the "Offer") by Madison River
Properties, L.L.C., a Delaware limited liability company (the "Purchaser"),
Insignia Properties, L.P., a Delaware limited partnership ("IPLP"), Insignia
Properties Trust, a Maryland real estate investment trust ("IPT"), and
Insignia Financial Group, Inc., a Delaware corporation ("Insignia," and
together with IPLP, IPT and the Purchaser, the "Bidders"), to purchase units
of limited partnership interest ("Units") in the Partnership.
The Partnership's sole general partner (the "General Partner")
is Fox Partners, which is an affiliate of the Bidders. Due to the affiliation
between the General Partner of the Partnership and the Bidders, the General
Partner is subject to certain conflicts of interest in connection with the
response to the Offer.
AS A RESULT OF THE EXISTING AND POTENTIAL CONFLICTS OF INTEREST,
NEITHER THE PARTNERSHIP NOR THE GENERAL PARTNER EXPRESSES ANY OPINION AS TO
THE OFFER AND EACH IS REMAINING NEUTRAL AND MAKING NO RECOMMENDATION AS TO
WHETHER LIMITED PARTNERS SHOULD TENDER THEIR UNITS IN RESPONSE TO THE OFFER.
Limited Partners are advised to carefully read the enclosed
Schedule 14D-9.
Century Properties Fund XVIII
