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SUPPLEMENT TO
OFFER TO PURCHASE FOR CASH
AIMCO
AIMCO Properties, L.P.
is offering to purchase any and all units of limited partnership interests in
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2
FOR $31.00 PER UNIT IN CASH
Upon the terms and subject to the conditions set forth herein, we will accept
any and all units validly tendered in response to our offer. If units are
validly tendered and not properly withdrawn prior to the expiration date and the
purchase of all such units would result in there being less than 320
unitholders, we will purchase only 99% of the total number of units so tendered
by each limited partner.
Our offer price will be reduced for any distributions subsequently made by your
partnership prior to the expiration of our offer.
We have extended our offer; our offer and your withdrawal rights will expire at
5:00 P.M., New York City time, on September 20, 2000, unless we extend the
deadline.
We will pay the fee, up to $50, charged by a custodian of an IRA for tendering
units. You will pay any other fees and costs, including any transfer taxes.
Our offer is not subject to a minimum number of units being tendered.
SEE "RISK FACTORS" IN THE OFFER TO PURCHASE, DATED AUGUST 10, 2000, FOR
A DESCRIPTION OF RISK FACTORS THAT YOU SHOULD CONSIDER IN CONNECTION WITH OUR
OFFER, INCLUDING THE FOLLOWING:
o We determined the offer price of $31.00 per unit without any
arms-length negotiations. Accordingly, our offer price may not
reflect the fair market value of your units.
o In November 1999 and May 2000, we offered to buy your units
for $31.80 per unit and $32.00 per unit, respectively. Since
November 1999, your partnership has paid distributions of
$2.82 per unit from operations.
o In November 1999, an independent investment banking firm
estimated that the net asset value, going concern value and
liquidation value of your partnership were $32.00, $27.00, and
$31.00 per unit, respectively.
(continued on next page)
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If you desire to accept our offer, you should complete and sign the
enclosed letter of transmittal in accordance with the instructions thereto and
mail or deliver the signed letter of transmittal and any other required
documents to River Oaks Partnership Services, Inc., which is acting as
Information Agent in connection with our offer, at one of its addresses set
forth on the back cover of this Supplement. QUESTIONS AND REQUESTS FOR
ASSISTANCE OR FOR ADDITIONAL COPIES OF THE OFFER TO PURCHASE, THIS SUPPLEMENT OR
THE LETTER OF TRANSMITTAL MAY ALSO BE DIRECTED TO THE INFORMATION AGENT AT (888)
349-2005.
September 8, 2000
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(Continued from prior page)
o We are making this offer with a view to making a profit and,
therefore, there is a conflict between our desire to purchase
your units at a low price and your desire to sell your units
at a high price.
o Although your partnership's agreement of limited partnership
provides for termination in the year 2013, the prospectus
pursuant to which the units were sold in 1983 indicated that
the properties securing the loan owned by your partnership
might be sold within 12 years of their acquisition if
conditions permitted.
o Your general partner and the property manager of the
properties are subsidiaries of ours and, therefore, the
general partner has substantial conflicts of interest with
respect to our offer.
o Continuation of your partnership will result in our affiliates
continuing to receive management fees from your partnership.
Such fees would not be payable if your partnership was
liquidated.
o It is possible that we may conduct a future offer at a higher
price.
o For any units that we acquire from you, you will not receive
any future distributions from operating cash flow of your
partnership or upon a sale or refinancing of property owned by
your partnership.
o If we acquire a substantial number of units, we will increase
our ability to influence voting decisions with respect to your
partnership and may control such voting decisions, including
but not limited to the removal of the general partner, most
amendments to the partnership agreement and the sale of all or
substantially all of your partnership's assets.
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INTRODUCTION
On August 10, 2000, we commenced an offer to acquire all of the
outstanding units of your partnership, in exchange for $31.00 in cash per unit,
net to the seller, without interest, less the amount of distributions, if any,
made by your partnership in respect of any unit from August 10, 2000 until the
expiration date. If units are validly tendered and not properly withdrawn prior
to the expiration date and the purchase of all such units would result in there
being less than 320 unitholders, we will purchase only 99% of the total number
of units so tendered by each limited partner. Our offer is made upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated August
10, 2000, this Supplement and in the accompanying letter of transmittal.
We will pay any transfer fees imposed for the transfer of units by your
partnership. However, you will have to pay any governmental transfer taxes that
apply to your sale. We will also pay up to $50 of fees for tendering your units
which are charged by any custodian or other trustee of any Individual Retirement
Account or benefit plan which is the owner of record of your units. Although the
fees charged for transferring units from an Individual Retirement Account vary,
such fees are typically $25-$50 per transaction. However, you will have to pay
any additional fees and any other fees and expenses, including any fees or
commissions imposed by your broker, and any taxes that apply to your sale. The
custodian for your IRA account should bill us for such fees by sending an
invoice to the Information Agent.
We have retained River Oaks Partnership Services, Inc. to act as the
Information Agent in connection with our offer. We will pay all charges and
expenses in connection with the services of the Information Agent. The offer is
not conditioned on any minimum number of the units being tendered. However,
certain other conditions do apply. See "The Offer - Section 17. Conditions of
the Offer," in the Offer to Purchase. Under no circumstances will we be required
to accept any unit if the transfer of that unit to us would be prohibited by the
agreement of limited partnership of your partnership.
We have extended the expiration date of our offer to 5:00 p.m., New
York City time, on September 20, 2000. If you desire to accept our offer, you
must complete and sign the letter of transmittal in accordance with the
instructions contained therein, and forward or hand deliver the enclosed
acknowledgment and agreement, together with any other required documents, to the
Information Agent. If you have already tendered your units in accordance with
the original letter of transmittal, you need not take any further action to
continue to tender your units. You may withdraw your tender of units pursuant to
the offer at any time prior to the expiration date of our offer and, if we have
not accepted such units for payment, on or after October 12, 2000.
We expressly reserve the right, in our reasonable discretion, at any
time and from time to time, to extend the period of time during which our offer
is open and thereby delay acceptance for payment of, and the payment for, any
unit. Notice of any such extension will promptly be disseminated to you in a
manner reasonably designed to inform you of such change. Further, any extension
may be followed by a press release or public announcement which will be issued
no later than 9:00 a.m., New York City time, on the next business day after the
scheduled expiration date of our offer, in accordance with Rule 14e-1(d) under
the Securities Exchange Act of 1934.
Our Offer to Purchase, dated August 10, 2000, is hereby further
supplemented as follows:
1. Since May 1, 2000, we have purchased in privately negotiated
transactions the following units in your partnership:
<TABLE>
<CAPTION>
DATE NUMBER OF UNITS SALE PRICE PER UNIT
---- --------------- -------------------
<S> <C> <C>
May 1 769 (1)
June 1 16,921 (2)
</TABLE>
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(1) Purchase prices are as follows: 278 units were purchased for $31.81 per
unit; 75 units were purchased as part of a group purchase of 10,700.45
units in various partnerships for an aggregate price of $1,431,361.20;
132 units were purchased as part of a group purchase of 1,318 units in
various partnerships for an aggregate price of $305,156; and 284 units
were purchased as part of a group purchase of 2,485.25 units in various
partnerships for an aggregate price of $489,818.
(2) Purchase prices are as follows: 16,865 units were purchased for $32.00
per unit; and 56 units were purchased as part of a group purchase of
883.50 units in various partnerships for an aggregate price of
$357,999.76.
2. The current executive officers of the general partner of your
partnership are the same as the executive officers of AIMCO.
3. Your general partner intends to seek approval of limited partners to
amend your partnership agreement to eliminate the current partnership mandatory
minimum set reserve requirement of approximately $5,391,188. Approval of this
amendment is likely based on the number of units held by us and our affiliates.
After adoption of the amendment, the general partner will be able to reduce the
necessary reserves and, as a result, it is expected that your partnership will
make a distribution to its partners in an aggregate amount equal to the
reduction in the reserves.
4. THE MASTER LOAN. The principal balance of the Master Loan due to
your partnership pursuant to the terms of that certain Amended Loan Agreement,
dated as of November 15, 1990, by and between Consolidated Capital Equity
Partners/Two, a California limited partnership ("CCEP/2") and your partnership
(the "Master Loan"), but not recognized in the income statements, totaled
approximately $11,358,000 for the six months ended June 30, 2000. At June 30,
2000, such cumulative unrecognized interest totaled approximately $212,301,000
and was not included in the balance of the investment in Master Loan. The
allowance for possible losses totaled approximately $29,129,000 at June 30,
2000. The Master Loan matures in November, 2000 and as of June 30, 2000,
$259,056,935 was owed under the Master Loan.
Principal payments received from CCEP/2 on the Master Loan
was$54,000 for the six months ended June 30, 2000. Approximately $1,198,000 for
the six months ended June 30, 2000, was recorded as interest income on
investment in Master Loan to affiliate based upon cash generated as a result of
the operations of the properties which secure the loan. Of the $1,198,000
received during 2000, $853,000 was received from Village Brooke as a result of
its receipt of a portion of the insurance proceeds due from the destruction of
the property.
CCEP/2 is in the process of refinancing the first mortgages on three
of its four properties. The fourth property was destroyed by a tornado in 1999.
These transactions are expected to be completed in September 2000. In connection
with such transactions, your partnership will agree not to foreclose or exercise
any other remedy under the Master Loan on the properties securing the new
mortgages until these proposed ten-year loans are repaid in full. The Master
Loan is subordinated to the current first mortgages and will be subordinated to
any new first mortgages. From such mortgages, CCEP/2 is expected to pay your
partnership under the terms of the Master Loan, approximately $7,297,992. Upon
receipt of any of such funds, the general partner will evaluate your
partnership's cash needs to determine what portion of such funds can be
distributed to the partners. The general partner of CCEP/2 does not have any
current intention of selling any of these properties.
CCEP/2's fourth property was destroyed by a tornado in 1999 and the
general partner has decided to rebuild with insurance proceeds.
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CCEP/2 does not have sufficient current assets to pay the Master
Loan. Further, the net proceeds that would be realized upon the sale of CCEP/2's
properties securing the Master Loan are estimated to be substantially less than
the amount due under the Master Loan. When the Master Loan matures, the general
partner will have to determine whether or not to extend the Master Loan or
pursue other remedies. However, as a result of current and proposed
subordination agreements, the general partner could only foreclose on one
property.
PROPOSED ELIMINATION OF MANDATORY RESERVE REQUIREMENT. Your general
partner intends to seek the approval of limited partners to amend your
partnership agreement to eliminate the current mandatory minimum working capital
and contingency reserve requirement of approximately $5,391,000. Further, the
actual reserves currently held by your partnership is $6,072,000. If this
amendment is approved, which is likely given the number of units held by us and
our affiliates, it is expected that your partnership will be able to make, and
will make, a distribution to its partners shortly after such amendment is
adopted.
POTENTIAL SUBSTANTIAL POTENTIAL FUTURE DISTRIBUTIONS. Your
partnership may in the near future pay substantial distributions to its partners
from the following sources:
o the proposed refinancing of first mortgages on three
of CCEP/2's properties; and
o the proposed elimination of minimum working capital
and contingency reserve requirements.
No assurances can be given that any of the proposed transactions
will be consummated, the amounts that will be received by your partnership or
the timing and amounts of any distributions, if any However, it is not
anticipated that any distributions will be made before our tender offer is
completed.
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The letter of transmittal and any other required documents should be
sent or delivered by each unitholder or such unitholder's broker, dealer, bank,
trust company or other nominee to the Information Agent at one of its addresses
set forth below.
THE INFORMATION AGENT FOR THE OFFER IS:
RIVER OAKS PARTNERSHIP SERVICES, INC.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
P.O. Box 2065 111 Commerce Road 111 Commerce Road
S. Hackensack, N.J. 07606-2065 Carlstadt, N.J. 07072 Carlstadt, N.J. 07072
Attn.: Reorganization Dept. Attn.: Reorganization Dept.
</TABLE>
For information, please call:
TOLL FREE: (888) 349-2005
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