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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
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CENTURY PROPERTIES FUND XIX
(Name of Subject Company)
CENTURY PROPERTIES FUND XIX
(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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WILLIAM H. JARRARD, JR.
President
Fox Capital Management Corporation
One Insignia Financial Plaza
Greenville, South Carolina 29602
(864) 239-2854
(Name, Address, and Telephone Number of Person
Authorized to Receive Notices and Communications
on Behalf of the Person(s) filing Statement)
Copy to:
ARNOLD S. JACOBS, ESQ.
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
(212) 969-3210
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject partnership is Century Properties
Fund XIX, a California limited partnership (the "Partnership"), and the
address of its principal executive offices is One Insignia Financial Plaza,
Greenville, South Carolina 29602. The title of the class of equity securities
to which this statement relates is the Partnership's Limited Partnership Units
("Units").
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to an offer by IPLP Acquisition I
LLC, 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"), disclosed in a Tender Offer Statement on
Schedule 14D-1 dated August 28, 1997 (the "Schedule 14D-1"), to purchase up to
27,000 outstanding Units at a purchase price of $175 per Unit, net to the
seller in cash, without interest, upon the terms and subject to the conditions
set forth in the Offer to Purchase dated August 28, 1997 (the "Offer to
Purchase") and the related Assignment of Partnership Interest (which
collectively constitute the "Offer" and are contained within the Schedule
14D-1).
The address of the Purchaser's principal executive offices
is One Insignia Financial Plaza, 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)(i) The Partnership's sole general partner is Fox
Partners II, a California general partnership (the "General Partner") and an
affiliate of the Bidders.
The three general partners of the General Partner are Fox
Capital Management Corporation, a California corporation ("FCMC"), which is
the managing general partner, Fox Realty Investors, a California general
partnership ("FRI"), which is an affiliated general partner and Fox Partners
83, a California general partnership, which is an unaffiliated 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 Propery Investors, Inc. ("NPI").
In January 1996, IFGP Corporation, a wholly-owned subsidiary
of Insignia, acquired all of the outstanding stock of NPI (and thus acquired
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, in connection with 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,
FCMC and NPI Equity now are wholly-owned subsidiaries of IPT and IPT controls
the General Partner. 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 68% of the total equity interests in
IPLP), and Insignia is the sole limited partner of IPLP (owning approximately
32% of the total equity interests in IPLP). Insignia and its affiliates also
own approximately 70% of the outstanding common shares of beneficial interest
of IPT. NPI-AP Management, L.P. ("NPI-AP"), which since mid-January 1996 has
been an affiliate of Insignia and
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is an affiliate of IPT and the Purchaser, has provided property management
services to the Partnership, and since mid-January 1996 Insignia (directly or
through its affiliates) has performed asset management and partnership
administration services for the Partnership. 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"), which at the time was an affiliate of the General Partner
but not an affiliate of any of the Bidders, acquired 24,812 (or approximately
27.8%) of the outstanding Units at a purchase price of $65.70 per Unit
pursuant to a series of tender offers.
As a result of litigation instituted in connection with the
tender offers conducted by DeForest, 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) prohibits 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 tender offers
conducted by DeForest (which period has now expired).
In January 1996, 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 held by DeForest. In December 1996, in connection
with the formation of IPT, Insignia NPI was merged with and into IPLP and IPLP
acquired ownership of all of the foregoing Units.
The Partnership, the General Partner and NPI-AP (which is
the property manager for the Partnership) were not affiliates of Insignia
prior to mid-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 mid-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. No distributions
were made to the General Partner in respect of its interest in the Partnership
in 1996 or to date in 1997. The Partnership paid NPI-AP property management
fees for property management services in the aggregate amount of $737,000 for
the year ended December 31, 1996 and $369,000 for the six month period ended
June 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 $187,000 for the year ended December 31, 1996 and $78,000 during the first
six months of 1997. During the year ended 1996, the Partnership paid
approximately $7,000 to affiliates of the General Partner for expense
reimbursements in connection with the November 1996 refinancing of Sunrunner
Apartments. 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
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
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believe that the aggregate financial benefit derived by Insignia and its
affiliates from the arrangement described in the three preceding sentences has
been immaterial.
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.
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 "bullet" maturity after a relatively short
time or bears a high or increasing interest rate. In such a situation, the
General Partner may experience a conflict of interest in seeking to reconcile
the best interests of the Partnership with the need of its affiliates for cash
flow from the Partnership's activities.
If the Purchaser is successful in acquiring more than
19,498.34 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 28.2% 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; 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, under the Stipulation discussed above, 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
person affiliated with the General Partner. 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.
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The Offer will not result in any change in the compensation
payable to the General Partner or its affiliates. However, as a result of the
Offer, the Purchaser (which is an affiliate of the General Partner) will
participate, in its capacity as a Limited Partner, in any subsequent
distributions to Limited Partners to the extent of the Units purchased
pursuant to the Offer.
(b)(ii) 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 Unit holders
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 persons to make solicitations or
recommendations to Unit holders on its behalf concerning the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Except as set forth on 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.
None.
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ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a) Form of cover letter to Unit holders from the
Partnership dated August 28, 1997.
(b) None.
(c) None.
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SCHEDULE I
TRANSACTIONS IN THE UNITS
EFFECTED BY IPLP WITHIN THE PAST 60 DAYS
Number of Price
Date Units Purchased Per Unit
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8/12/97 10 $152.00
8/12/97 10 $159.00
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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: August 28, 1997
CENTURY PROPERTIES FUND XIX
By: FOX PARTNERS II
Its General Partner,
By: FOX CAPITAL MANAGEMENT CORPORATION,
Its General Partner
By: /s/ William H. Jarrard, Jr.
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William H. Jarrard, Jr.
President and Director
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EXHIBIT INDEX
Exhibit Description
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(a) Form of cover letter to Unit holders from the
Partnership dated August 28, 1997.
(b) None.
(c) None.
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Exhibit (a)
Century Properties Fund XIX
August 28, 1997
Dear Limited Partner:
Enclosed is the Schedule 14D-9 which was filed by Century
Properties Fund XIX (the "Partnership") with the Securities and Exchange
Commission in connection with an offer (the "Offer") by IPLP Acquisition I
LLC, 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 limited partnership units
("Units") of the Partnership.
The Partnership's sole general partner (the "General
Partner") is Fox Partners II, a California general partnership and 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 UNIT HOLDERS SHOULD TENDER THEIR UNITS IN
RESPONSE TO THE OFFER.
Limited partners are advised to carefully read the enclosed
Schedule 14D-9.
Century Properties Fund XIX
