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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
SHELTER PROPERTIES V LIMITED PARTNERSHIP
A SOUTH CAROLINA LIMITED PARTNERSHIP
(Name of Subject Company)
SHELTER PROPERTIES V LIMITED PARTNERSHIP
A SOUTH CAROLINA 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
SHELTER REALTY V CORPORATION
ONE INSIGNIA FINANCIAL PLAZA
GREENVILLE, SOUTH CAROLINA 29602
(864) 239-2747
(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 Shelter Properties V Limited
Partnership, a South Carolina 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 Cooper River Properties, L.L.C., a
Delaware limited liability company (the "Purchaser"), to purchase up to 19,500
of the outstanding Units at a purchase price of $520 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 July 21, 1998 (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, 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 corporate general partner is Shelter Realty
V Corporation, a South Carolina corporation (the "General Partner") and an
affiliate of the Purchaser. The individual general partner of the Partnership,
N. Barton Tuck, Jr., is prohibited by the Limited Partnership Agreement from
participating in the activities of the Partnership.
In December 1990, Insignia purchased substantially all of the assets
of U.S. Shelter Corporation, a major property management and real estate
services company and an affiliate of the General Partner. In connection with
this acquisition, Insignia acquired general partner interests in approximately
150 limited partnerships, including the Partnership. The General Partner is a
wholly-owned subsidiary of IPT. 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 68% of the outstanding common shares of IPT.
For more than the past three years, Insignia Residential Group, L.P.
("IRG"), which is an affiliate of Insignia and the Purchaser, has provided
property management services to the Partnership, and Insignia (directly or
through affiliates) has performed asset management, partnership administration
and investor relations services for the Partnership.
By reason of the relationships described in the two preceding
paragraphs, the General Partner has conflicts of interest in considering the
Offer.
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Transactions with Affiliates. The Partnership paid IRG property
management fees for property management services in the amounts of approximately
$670,000, $632,000, and $615,000 for the fiscal years ended November 30, 1997,
1996 and 1995, respectively, and has paid IRG property management fees equal to
$351,000 for the six-month fiscal period ended May 31, 1998. The Partnership
reimbursed the General Partner and its affiliates (including Insignia) for
expenses incurred in connection with asset management and partnership
administration services performed by them for the Partnership for the fiscal
years ended November 30, 1997, 1996 and 1995 in the amounts of $286,000,
$238,000 and $200,000, respectively, and has reimbursed them for such services
in the amount of $126,000 for the six-month fiscal period ended May 31, 1998.
The reimbursement amount for the fiscal years ended November 30, 1997 and 1996,
and the six-month fiscal period ended May 31, 1998 include $54,000, $8,000 and
$4,000, respectively, which was paid to an affiliate of the General Partner for
costs incurred in connection with construction oversight services. For the
period December 1, 1995 through August 31, 1997, the Partnership insured its
properties under a master policy through an agency affiliated with the General
Partner, but with an 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 then current year's master policy. That agent assumed the
financial obligations to the affiliate of the General Partner who received
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 such arrangement was 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 with respect to the Offer, including conflicts
resulting from its affiliation with IPT and the Purchaser. The General Partner
also would have a conflict of interest (i) as a result of the fact that a sale
or liquidation of the Partnership's assets would result in a decrease or
elimination of the fees paid to the General Partner and/or its affiliates and
(ii) as a consequence of the Purchaser's ownership of Units, because the
Purchaser (which is an affiliate of the General Partner) may have incentives to
seek to maximize the value of its ownership of Units, which in turn may result
in a conflict for the General Partner in attempting to reconcile the interests
of the Purchaser (which is an affiliate of the General Partner) with the
interests of the other Limited Partners. In addition, the Purchaser (which is
an affiliate of the General Partner) is making the Offer with a view to making
a profit. Accordingly, there is a conflict between the desire of the Purchaser
(which is an affiliate of the General Partner) to purchase Units at a low price
and the desire of the Limited Partners to sell their Units at a high price.
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 and borrowings from its credit
facility with a commercial bank and financial institution to make such
contributions. See Section 12 of the Offer to Purchase. 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.
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If the Purchaser (which is an affiliate of the General Partner) is
successful in acquiring more than 6,130 Units, IPT will own in excess of 50% of
the total Units outstanding and, accordingly, will be able to control the
outcome of all voting decisions with respect to the Partnership, including
decisions regarding liquidation, amendments to the Limited Partnership
Agreement, removal and replacement of the General Partner or an individual
general partner and mergers, consolidations and other extraordinary
transactions. Even if the Purchaser acquires a lesser number of Units pursuant
to the Offer, however, because IPT already owns (through IPLP) approximately
38% of the outstanding Units it will be able to significantly influence the
outcome of all voting decisions with respect to the Partnership. This means
that (i) non-tendering Limited Partners could be prevented from taking action
they desire but that IPT (which is an affiliate of the General Partner) opposes
and (ii) IPT (which is an affiliate of the General Partner) may be able to take
action desired by IPT but opposed by the non-tendering Limited Partners.
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 the General Partner or an individual 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. 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.
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.
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(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.
Litigation. On March 24, 1998, certain persons claiming to own limited
partner interests in certain limited partnerships (including the Partnership)
whose general partners (the "General Partners") are affiliates of Insignia (the
"Partnerships") filed a purported class and derivative action in California
Superior Court in the County of San Mateo (the "Complaint") against Insignia,
the General Partners (including the General Partner), certain persons and
entities who purportedly formerly controlled the General Partners, and
additional entities affiliated with and individuals who are officers, directors
and/or principals of several of the defendants. The complaint contains
allegations that, among other things, (i) the defendants breached their
fiduciary duties to the plaintiffs by selling or agreeing to sell their
"fiduciary positions" as stockholders, officers and directors of the General
Partners for a profit and retaining said profit rather than distributing it to
the plaintiffs; (ii) the defendants breached their fiduciary duties by
mismanaging the Partnerships and misappropriating the assets of the Partnerships
by (a) manipulating the operations of the Partnerships to depress the trading
price of limited partnership units (the "Units") of the Partnerships;
(b) coercing and fraudulently inducing unitholders to sell Units to certain of
the defendants at depressed prices; and (c) using the voting control obtained
by purchasing Units at depressed prices to entrench certain of the defendants'
positions of control over the Partnerships; and (iii) the defendants breached
their fiduciary duties to the plaintiffs by (a) selling assets of the
Partnerships such as mailing lists of unitholders; and (b) causing the General
Partners to enter into exclusive arrangements with their affiliates to sell
goods and services to the General Partners, the unitholders and tenants of
Partnership properties. The complaint also alleges that the foregoing
allegations constitute violations of various California securities,
corporate and partnership statutes, as well as conversion and common law fraud.
The complaint seeks unspecified compensatory and punitive damages, an
injunction blocking the sale of control of the General Partners to AIMCO and a
court order directing the defendants to discharge their fiduciary duties to the
plaintiffs. As of the date of this Offer to Purchase, defendants have not
served or filed a reply to the complaint. IPT and Insignia believe that the
allegations contained in the Complaint are without merit and intend to
vigorously contest the plaintiffs' action.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a) Form of cover letter to Limited Partners of the Partnership dated
July 21, 1998.
(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: July 21, 1998
SHELTER PROPERTIES V LIMITED PARTNERSHIP,
a South Carolina limited partnership
By: SHELTER REALTY V CORPORATION
Its 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
<TABLE>
<CAPTION>
NUMBER OF PRICE
DATE UNITS PURCHASED PER UNIT
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<S> <C> <C>
6/17/98 20 $425.00
</TABLE>
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
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<S> <C>
(a) Form of cover letter to Limited Partners from the Partnership
dated July 21, 1998.
(b) None.
(c) None.
</TABLE>
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Exhibit (a)
SHELTER PROPERTIES V LIMITED PARTNERSHIP
July 21, 1998
Dear Limited Partner:
Enclosed is the Schedule 14D-9 which was filed by Shelter Properties
V Limited Partnership (the "Partnership") with the Securities and Exchange
Commission in connection with an offer (the "Offer") by Cooper 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 general partners are Shelter Realty V Corporation
(the "General Partner"), which is an affiliate of the Bidders, and N. Barton
Tuck, Jr., an individual who is prohibited by the Partnership's Limited
Partnership Agreement from participating in the activities of the Partnership.
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.
SHELTER PROPERTIES V LIMITED PARTNERSHIP
