<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------------------
ANGELES PARTNERS XII
(Name of Subject Company)
BROAD RIVER PROPERTIES, L.L.C.
INSIGNIA PROPERTIES, L.P.
INSIGNIA PROPERTIES TRUST
INSIGNIA FINANCIAL GROUP, INC.
(Bidders)
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class of Securities)
NONE
(Cusip Number of Class of Securities)
------------------------------------
JEFFREY P. COHEN
SENIOR VICE PRESIDENT
INSIGNIA FINANCIAL GROUP, INC.
375 PARK AVENUE
SUITE 3401
NEW YORK, NEW YORK 10152
(212) 750-6070
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidders)
COPY TO:
JOHN A. HEALY, ESQ.
ROGERS & WELLS
200 PARK AVENUE
NEW YORK, NEW YORK 10166
(212) 878-8000
------------------------------------
CALCULATION OF FILING FEE
- -------------------------------------------------------------------------------
Transaction Valuation*: $9,250,000.00 Amount of Filing Fee: $1,850.00
- -------------------------------------------------------------------------------
* For purposes of calculating the fee only. This amount assumes the
purchase of 18,500 units of limited partnership interest ("Units") of
the subject partnership for $500 per Unit. The amount of the filing
fee, calculated in accordance with Section 14(g)(3) and Rule 0-11(d)
under the Securities Exchange Act of 1934, as amended, equals 1/50th
of one percent of the aggregate of the cash offered by the bidders.
[ ] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
Amount Previously Paid: Not Applicable Filing Party: Not Applicable
Form or Registration No.: Not Applicable Date Filed: Not Applicable
- -------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------- ---------------------------------
CUSIP No. NONE 14D-1 Page 2
- ---------------------------------- ---------------------------------
<S> <C> <C>
========================================================================================================================
1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
BROAD RIVER PROPERTIES, L.L.C.
- ------------------------------------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [X]
- ------------------------------------------------------------------------------------------------------------------------
3. SEC Use Only
- ------------------------------------------------------------------------------------------------------------------------
4. Sources of Funds
AF
- ------------------------------------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
[ ]
- ------------------------------------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization
DELAWARE
- ------------------------------------------------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
1,799
- ------------------------------------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
[ ]
- ------------------------------------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
4.0%
- ------------------------------------------------------------------------------------------------------------------------
10. Type of Reporting Person
OO
========================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------- ---------------------------------
CUSIP No. NONE 14D-1 Page 3
- ---------------------------------- ---------------------------------
<S> <C> <C>
========================================================================================================================
1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
INSIGNIA PROPERTIES, L.P.
- ------------------------------------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [X]
- ------------------------------------------------------------------------------------------------------------------------
3. SEC Use Only
- ------------------------------------------------------------------------------------------------------------------------
4. Sources of Funds
WC
- ------------------------------------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
[ ]
- ------------------------------------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization
DELAWARE
- ------------------------------------------------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
1,799
- ------------------------------------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
[ ]
- ------------------------------------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
4.0%
- ------------------------------------------------------------------------------------------------------------------------
10. Type of Reporting Person
PN
========================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------- ---------------------------------
CUSIP No. NONE 14D-1 Page 4
- ---------------------------------- ---------------------------------
<S> <C> <C>
========================================================================================================================
1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
INSIGNIA PROPERTIES TRUST
- ------------------------------------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [X]
- ------------------------------------------------------------------------------------------------------------------------
3. SEC Use Only
- ------------------------------------------------------------------------------------------------------------------------
4. Sources of Funds
NOT APPLICABLE
- ------------------------------------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
[ ]
- ------------------------------------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization
MARYLAND
- ------------------------------------------------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
1,799
- ------------------------------------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
[ ]
- ------------------------------------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
4.0%
- ------------------------------------------------------------------------------------------------------------------------
10. Type of Reporting Person
OO
========================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------- ---------------------------------
CUSIP No. NONE 14D-1 Page 5
- ---------------------------------- ---------------------------------
<S> <C> <C>
========================================================================================================================
1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
INSIGNIA FINANCIAL GROUP, INC.
- ------------------------------------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [X]
- ------------------------------------------------------------------------------------------------------------------------
3. SEC Use Only
- ------------------------------------------------------------------------------------------------------------------------
4. Sources of Funds
NOT APPLICABLE
- ------------------------------------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
[X]
- ------------------------------------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization
DELAWARE
- ------------------------------------------------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
1,799
- ------------------------------------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
[ ]
- ------------------------------------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
4.0%
- ------------------------------------------------------------------------------------------------------------------------
10. Type of Reporting Person
CO
========================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------- ---------------------------------
CUSIP No. NONE 14D-1 Page 6
- ---------------------------------- ---------------------------------
<S> <C> <C>
========================================================================================================================
1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
ANDREW L. FARKAS
- ------------------------------------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [X]
- ------------------------------------------------------------------------------------------------------------------------
3. SEC Use Only
- ------------------------------------------------------------------------------------------------------------------------
4. Sources of Funds
NOT APPLICABLE
- ------------------------------------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f)
[ ]
- ------------------------------------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization
UNITED STATES
- ------------------------------------------------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
1,799
- ------------------------------------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
[ ]
- ------------------------------------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row 7
4.0%
- ------------------------------------------------------------------------------------------------------------------------
10. Type of Reporting Person
IN
========================================================================================================================
</TABLE>
<PAGE>
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Angeles Partners XII, a
California limited partnership (the "Partnership"). The address of the
Partnership's principal executive offices is One Insignia Financial Plaza,
Greenville, South Carolina 29602.
(b) This Tender Offer Statement on Schedule 14D-1 (the "Statement")
relates to an offer by Broad River Properties, L.L.C., a Delaware limited
liability company (the "Purchaser"), to purchase up to 18,500 of the
outstanding units of limited partnership interest ("Units") of the Partnership
at a purchase price of $500 per Unit, net to the seller in cash, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
April 14, 1998 (the "Offer to Purchase") and the related Assignment of
Partnership Interest (which, together with any supplements or amendments,
collectively constitute the "Offer"), copies of which are filed as Exhibits
(a)(1) and (a)(2) hereto, respectively. The information set forth in the Offer
to Purchase under "Introduction" is incorporated herein by reference.
(c) The information set forth in the Offer to Purchase in Section 13
("Background of the Offer") is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) This Statement is being 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 information set forth in the Offer to Purchase under
"Introduction," in Section 11 ("Certain Information Concerning the Purchaser,
IPLP, IPT and Insignia") and in Schedules II, III and IV to the Offer to
Purchase is incorporated herein by reference.
(e)-(f) During the last five years, none of the Bidders nor, to the
best of their knowledge, any of the persons listed in Schedules II, III and IV
to the Offer to Purchase (i) has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) was a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining further violations of or prohibiting
activities subject to federal or state securities laws or finding any
violation with respect to such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Offer to Purchase under
"Introduction," in Section 10 ("Conflicts of Interest and Transactions with
Affiliates") and in Section 13 ("Background of the Offer") is incorporated
herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in the Offer to Purchase in Section 10
("Conflicts of Interest and Transactions with Affiliates") and in Section 12
("Source of Funds") is incorporated herein by reference.
(b)-(c) Not applicable.
7
<PAGE>
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(b), (e) The information set forth in the Offer to Purchase under
"Introduction" and in Section 8 ("Future Plans of Insignia, IPT and the
Purchaser") is incorporated herein by reference.
(c) The information set forth in the Offer to Purchase in Section 8
("Future Plans of Insignia, IPT and the Purchaser"), in Section 10 ("Conflicts
of Interest and Transactions with Affiliates") and in Section 13 ("Background
of the Offer") is incorporated herein by reference.
(d) Not applicable.
(f)-(g) The information set forth in the Offer to Purchase in Section
7 ("Effects of the Offer") is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Offer to Purchase under
"Introduction," in Section 11 ("Certain Information Concerning the Purchaser,
IPLP, IPT and Insignia") is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Offer to Purchase under
"Introduction," in Section 7 ("Effects of the Offer"), Section 10 ("Conflicts
of Interest and Transactions with Affiliates"), Section 11 ("Certain
Information Concerning the Purchaser, IPLP, IPT and Insignia") and Section 13
("Background of the Offer") is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Offer to Purchase under
"Introduction" and in Section 16 ("Fees and Expenses") is incorporated herein
by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in the Offer to Purchase in Section 11
("Certain Information Concerning the Purchaser, IPLP, IPT and Insignia") is
incorporated herein by reference. In addition, the following are expressly
incorporated in this Statement by reference: the audited financial statements
of Insignia set forth at Part I-Item 8 of Insignia's Annual Report on Form
10-K for the year ended December 31, 1997, which is on file with the
Commission.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(d) The information set forth in the Offer to Purchase in Section
15 ("Certain Legal Matters") is incorporated herein by reference.
(e) None.
8
<PAGE>
(f) The information set forth in the Offer to Purchase and the
related Assignment of Partnership Interest, copies of which are filed as
Exhibits (a)(1) and (a)(2) hereto, respectively, is incorporated herein by
reference in its entirety.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated April 14, 1998.
(a)(2) Assignment of Partnership Interest and Related Instructions.
(a)(3) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(4) Cover Letter, dated April 14, 1998, from the Purchaser to
the Limited Partners of the Partnership.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(z)(1) Summary of appraisal referred to in the Offer to Purchase
in Section 13 ("Background of the Offer").
9
<PAGE>
SIGNATURE
After due 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: April 14, 1998
BROAD RIVER PROPERTIES, L.L.C.
By: /s/ JEFFREY P. COHEN
---------------------
Jeffrey P. Cohen
Manager
INSIGNIA PROPERTIES, L.P.
By: Insignia Properties Trust,
its General Partner
By: /s/ JEFFREY P. COHEN
----------------------
Jeffrey P. Cohen
Senior Vice President
INSIGNIA PROPERTIES TRUST
By: /s/ JEFFREY P. COHEN
------------------------
Jeffrey P. Cohen
Senior Vice President
INSIGNIA FINANCIAL GROUP, INC.
By: /s/ FRANK M. GARRISON
---------------------------
Frank M. Garrison
Executive Managing Director
10
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
(a)(1) Offer to Purchase, dated April 14, 1998.
(a)(2) Assignment of Partnership Interest and Related
Instructions.
(a)(3) Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(a)(4) Cover Letter, dated April 14, 1998, from the
Purchaser to the Limited Partners of the
Partnership.
(z)(1) Summary of appraisal referred to in the Offer to
Purchase in Section 13 ("Background of the
Offer").
11
<PAGE>
Offer to Purchase for Cash
Up to 18,500 Units of Limited Partnership Interest
in
ANGELES PARTNERS XII,
a California limited partnership
for
$500 Net Per Unit
by
BROAD RIVER PROPERTIES, L.L.C.
- -------------------------------------------------------------------------------
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK TIME, ON MAY 11, 1998, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
IMPORTANT
Broad River Properties, L.L.C., a Delaware limited liability company
(the "Purchaser"), is offering to purchase up to 18,500 of the outstanding
units of limited partnership interest ("Units") in Angeles Partners XII, a
California limited partnership (the "Partnership"), at a purchase price of
$500 per Unit (the "Purchase Price"), net to the seller in cash, without
interest, upon the terms and subject to the conditions set forth in this Offer
to Purchase and in the related Assignment of Partnership Interest (which,
together with any supplements or amendments, collectively constitute the
"Offer"). The Purchase Price is subject to adjustment under certain
circumstances, as described herein. Holders of Units (each, a "Limited
Partner") who tender their Units in response to the Offer will not be
obligated to pay any commissions or partnership transfer fees. The Purchaser
is an affiliate of Angeles Realty Corporation II, which is the managing
general partner of the Partnership (the "Managing General Partner").
Limited Partners are urged to consider the following factors:
o The Purchaser and the Managing General Partner are both
affiliates of and controlled by Insignia Properties Trust
("IPT"), which is controlled by Insignia Financial Group,
Inc. ("Insignia"). IPT, through its operating partnership
Insignia Properties, L.P. ("IPLP"), currently owns 1,799
Units.
o The net asset value per Unit most recently estimated by the
Managing General Partner was $815.95 as of December 31,
1997, and the net liquidation value per Unit (the "Estimated
Liquidation Value") estimated by the Purchaser (which is an
affiliate of the Managing General Partner) in connection
with the Offer is $801.86. The Purchaser does not believe,
however, that either the Managing General Partner's net
asset value estimate or the Estimated Liquidation Value
represents a fair estimate of the market value of a Unit,
primarily due to the fact that such estimates do not take
into account timing considerations, market uncertainties and
legal and other expenses that would be incurred in
connection with a liquidation of the Partnership. See
Section 13. Accordingly, the Purchaser does not believe that
such estimates should be viewed as representative of the
amount a Limited Partner can realistically expect to obtain
on a sale of a Unit in the near term.
<PAGE>
o The Purchaser will have the right to vote all Units acquired
pursuant to the Offer. Accordingly, if the Purchaser (which
is an affiliate of the Managing General Partner) is
successful in acquiring a significant number of Units, it
will be able to significantly influence all voting decisions
with respect to the Partnership, including decisions
regarding liquidation, amendments to the Limited Partnership
Agreement and removal and replacement of the Managing
General Partner.
o The Purchaser (which is an affiliate of the Managing 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 Managing General
Partner) to purchase Units at a low price and the desire of
the Limited Partners to sell their Units at a high price.
THE OFFER IS NOT CONDITIONED ON FINANCING OR UPON ANY MINIMUM
AGGREGATE NUMBER OF UNITS BEING TENDERED.
----------------------------------------
Any Limited Partner desiring to tender Units should complete and sign
the Assignment of Partnership Interest in accordance with the Instructions to
the Assignment of Partnership Interest and mail or deliver the signed
Assignment of Partnership Interest to the Depositary. A Limited Partner may
tender any or all of the Units owned by that Limited Partner; provided,
however, that because of restrictions in the Partnership's Limited Partnership
Agreement, in order for a partial tender to be valid, after a sale of Units
pursuant to the Offer, the tendering Limited Partner must continue to hold a
minimum of five Units. Tenders of fractional Units will not be permitted,
except by a Limited Partner who is tendering all of the Units owned by that
Limited Partner.
Questions and requests for assistance or for additional copies of
this Offer to Purchase and the Assignment of Partnership Interest may be
directed to the Information Agent at the address and telephone numbers set
forth below and on the back cover of this Offer to Purchase. No soliciting
dealer fees or other payments to brokers for tenders are being paid by the
Purchaser (which is an affiliate of the Managing General Partner).
----------------------------------------
For More Information or for Further Assistance Please Call:
Beacon Hill Partners, Inc.
at
(800) 854-9486
April 14, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION.................................................................................................... 1
The Purchaser; Affiliation with the Managing General Partner................................................ 1
Some Factors to Be Considered by Limited Partners........................................................... 1
Reasons for and Effects of the Offer........................................................................ 3
Certain Tax Considerations.................................................................................. 3
Originally Anticipated Term of the Partnership; General Policy Regarding
Sales and Refinancings of Partnership Properties; Alternatives..................................... 4
Conditions.................................................................................................. 5
Distributions............................................................................................... 5
Outstanding Units........................................................................................... 5
THE OFFER....................................................................................................... 6
Section 1. Terms of the Offer; Expiration Date; Proration.................................................. 6
Section 2. Acceptance for Payment and Payment for Units.................................................... 7
Section 3. Procedure for Tendering Units................................................................... 7
Valid Tender............................................................................................ 7
Signature Requirements.................................................................................. 8
Delivery of Assignment of Partnership Interest.......................................................... 8
Appointment as Proxy; Power of Attorney................................................................. 8
Assignment of Interest in Future Distributions.......................................................... 9
Determination of Validity; Rejection of Units; Waiver of Defects; No Obligation
to Give Notice of Defects.......................................................................... 9
Backup Federal Income Tax Withholding................................................................... 9
FIRPTA Withholding...................................................................................... 9
Binding Obligation...................................................................................... 9
Section 4. Withdrawal Rights............................................................................... 9
Section 5. Extension of Tender Period; Termination; Amendment.............................................. 10
Section 6. Certain Federal Income Tax Matters.............................................................. 11
General................................................................................................. 11
Gain or Loss Generally.................................................................................. 11
Unrealized Receivables and Certain Inventory............................................................ 12
Passive Activity Loss Limitation........................................................................ 12
Partnership Termination................................................................................. 12
Backup Withholding and FIRPTA Withholding............................................................... 13
Section 7. Effects of the Offer............................................................................ 13
Limitations on Resales.................................................................................. 13
Effect on Trading Market; Registration Under Section 12(g) of the Exchange Act.......................... 13
Control of Limited Partner Voting Decisions by Purchaser; Effect of Relationship
with Managing General Partner...................................................................... 14
Section 8. Future Plans of Insignia, IPT and the Purchaser................................................. 14
Section 9. Certain Information Concerning the Partnership.................................................. 15
General................................................................................................. 15
Originally Anticipated Term of Partnership; Alternatives................................................ 15
General Policy Regarding Sales and Refinancings of Partnership Properties............................... 16
Selected Financial and Property-Related Data............................................................ 17
Cash Distributions History.............................................................................. 22
Operating Budgets of the Partnership.................................................................... 22
Section 10. Conflicts of Interest and Transactions with Affiliates......................................... 22
Conflicts of Interest with Respect to the Offer......................................................... 22
i
<PAGE>
Voting by the Purchaser................................................................................. 22
Financing Arrangements.................................................................................. 23
Transactions with Affiliates............................................................................ 23
Section 11. Certain Information Concerning the Purchaser, IPLP, IPT and Insignia........................... 23
The Purchaser........................................................................................... 23
IPT and IPLP............................................................................................ 24
Insignia................................................................................................ 25
Section 12. Source of Funds................................................................................ 27
Section 13. Background of the Offer........................................................................ 27
Affiliation with the Managing General Partner........................................................... 27
Determination of Purchase Price......................................................................... 28
Section 14. Conditions of the Offer........................................................................ 34
Section 15. Certain Legal Matters.......................................................................... 35
General................................................................................................. 35
Antitrust............................................................................................... 36
Margin Requirements..................................................................................... 36
Section 16. Fees and Expenses.............................................................................. 36
Section 17. Miscellaneous.................................................................................. 36
SCHEDULE I - Transactions in the Units Effected by IPLP in the Past 60 Days...........................S-1
SCHEDULE II - Information Regarding the Managers of the Purchaser......................................S-2
SCHEDULE III - Information Regarding the Trustees and Executive Officers of IPT.........................S-3
SCHEDULE IV - Information Regarding the Directors and Executive Officers of Insignia...................S-5
SCHEDULE V - IPT Partnerships.........................................................................S-9
</TABLE>
ii
<PAGE>
TO THE LIMITED PARTNERS OF
ANGELES PARTNERS XII
INTRODUCTION
Broad River Properties, L.L.C. (the "Purchaser"), which is a Delaware
limited liability company and an affiliate of the Managing General Partner (as
defined below), hereby offers to purchase up to 18,500 Units, representing
approximately 41% of the Units outstanding, in Angeles Partners XII, a
California limited partnership (the "Partnership"), at a purchase price of
$500 per Unit (the "Purchase Price"), net to the seller in cash, without
interest, upon the terms and subject to the conditions set forth in this Offer
to Purchase and in the related Assignment of Partnership Interest (which,
together with any supplements or amendments, collectively constitute the
"Offer"). The Offer is not conditioned on any aggregate minimum number of
Units being tendered. A Limited Partner may tender any or all of the Units
owned by that Limited Partner; provided, however, that because of restrictions
in the Partnership's Limited Partnership Agreement (the "Limited Partnership
Agreement"), in order for a partial tender to be valid, after a sale of Units
pursuant to the Offer, the tendering Limited Partner must continue to hold a
minimum of five Units. Accordingly, any Limited Partner that owns five or
fewer Units must tender all or none of its Units. Tenders of fractional Units
will not be permitted, except by a Limited Partner who is tendering all of the
Units owned by that Limited Partner. The Purchaser (which is an affiliate of
the Managing General Partner) will pay all charges and expenses of Beacon Hill
Partners, Inc., who will serve as the Purchaser's information agent for the
Offer (the "Information Agent"), and Harris Trust Company of New York, who
will act as depositary for the Offer (the "Depositary").
The Purchaser; Affiliation with the Managing General Partner. Angeles
Realty Corporation II, which is the managing general partner of the
Partnership (the "Managing General Partner"), is a wholly-owned subsidiary of
Angeles Securitization Corporation ("ASC"), and IAP GP Corporation ("IAP")
owns all of the equity interests in ASC. IAP in turn is a wholly-owned
subsidiary of Insignia Properties Trust, a Maryland real estate investment
trust ("IPT"). The other general partners of the Partnership, Elliot
Accommodation Trust and Elliot Family Partnership, are prohibited by the
Limited Partnership Agreement from participating in the activities of the
Partnership. The Purchaser is a newly-formed, wholly-owned subsidiary of
Insignia Properties, L.P., a Delaware limited partnership ("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
Financial Group Inc., a Delaware corporation ("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") and Insignia Commercial Group, Inc. ("ICG"),
which are affiliates of Insignia and the Purchaser, have 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 these
relationships, the Managing General Partner has conflicts of interest in
considering the Offer. The Managing General Partner has indicated in a
Statement on Schedule 14D-9 (the "Schedule 14D-9") filed with the Securities
and Exchange Commission (the "Commission") that it is remaining neutral and
making no recommendation as to whether Limited Partners should tender their
Units in response to the Offer. LIMITED PARTNERS ARE URGED TO READ THIS OFFER
TO PURCHASE AND THE RELATED MATERIALS AND THE SCHEDULE 14D-9 CAREFULLY AND IN
THEIR ENTIRETY BEFORE DECIDING WHETHER TO TENDER THEIR UNITS. See Sections 10
and 13.
Some Factors to Be Considered by Limited Partners. In considering the
Offer, Limited Partners may wish to consider the following factors:
Potential Adverse Aspects of the Offer for Limited Partners
o The Purchaser and the Managing General Partner are both
affiliates of and controlled by IPT, which is controlled by
Insignia. See Sections 11 and 13. The Managing General
Partner has conflicts of interest in considering the Offer,
including (i) as a result of the fact that a sale or
<PAGE>
liquidation of the Partnership's assets would result in a
decrease or elimination of the fees paid to the Managing
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 Managing 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 Managing General Partner in attempting to
reconcile the interests of the Purchaser (which is an
affiliate of the Managing General Partner) with the
interests of the other Limited Partners. See Section 10.
o The net asset value per Unit most recently estimated by the
Managing General Partner was $815.95 as of December 31,
1997, and the net liquidation value per Unit (the "Estimated
Liquidation Value") estimated by the Purchaser (which is an
affiliate of the Managing General Partner) in connection
with the Offer is $801.86. See Section 13 for a discussion
of why the Purchaser (which is an affiliate of the Managing
General Partner) believes that such estimates are not
necessarily indicative of the fair market value of a Unit.
THE PURCHASER (WHICH IS AN AFFILIATE OF THE MANAGING GENERAL
PARTNER) MAKES NO REPRESENTATION AND EXPRESSES NO OPINION AS
TO THE FAIRNESS OR ADEQUACY OF THE PURCHASE PRICE.
o As with any rational investment decision, the Purchaser
(which is an affiliate of the Managing 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 Managing General
Partner) to purchase Units at a low price and the desire of
the Limited Partners to sell their Units at a high price.
o If the Purchaser is successful in acquiring a significant
number of Units pursuant to the Offer, the Purchaser (which
is an affiliate of the Managing General Partner) will have
the right to vote those Units and thereby significantly
influence all voting decisions with respect to the
Partnership, including decisions concerning liquidation,
amendments to the Limited Partnership Agreement and removal
and replacement of the Managing General Partner. 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 Managing General Partner) opposes and (ii)
IPT (which is an affiliate of the Managing General Partner)
may be able to take action desired by IPT but opposed by the
non-tendering Limited Partners.
Potentially Beneficial Aspects of the Offer for Limited Partners
o Although there are some limited resale mechanisms available
to Limited Partners wishing to sell their Units, there is no
formal trading market for Units. At present, Limited
Partners may seek to negotiate private sales or sales
through a trading system such as the American Partnership
Board, which publishes sell offers by Limited Partners in
respect of Units. Accordingly, THE OFFER AFFORDS LIMITED
PARTNERS AN OPPORTUNITY TO DISPOSE OF THEIR UNITS FOR CASH
WHICH OTHERWISE MIGHT NOT BE AVAILABLE TO THEM.
o THE OFFER MAY BE ATTRACTIVE TO LIMITED PARTNERS WHO HAVE AN
IMMEDIATE NEED FOR CASH. The Purchase Price is approximately
23% greater than the highest reported sales price of any
Unit (excluding Units transferred by Insignia to IPLP)
during the past six months (based on published information
and information provided by the Managing General Partner).
However, reported secondary market sales prices do not take
into account commissions and transfer fees typically payable
by a Limited Partner in connection with a secondary market
sale. Therefore, the actual proceeds received by a Limited
Partner who sells Units in the secondary market are
typically significantly less than the reported sales prices.
2
<PAGE>
o LIMITED PARTNERS WHO SELL UNITS PURSUANT TO THE OFFER WILL
NOT BE CHARGED ANY SALES COMMISSIONS (WHICH GENERALLY RANGE
FROM 3% TO 10% OF THE SALES PRICE) OR PARTNERSHIP TRANSFER
FEES (WHICH ARE TYPICALLY $150 PER TRANSFER). The Purchaser
will pay all transfer fees imposed by the Partnership in
connection with sales of Units pursuant to the Offer.
o Real estate markets in the United States generally have
recovered and experienced an upward trend since the end of
the last recession. That recovery and upward trend might
continue. On the other hand, those markets also may be
adversely affected by a variety of factors, including
possible fluctuations in interest rates, economic slowdowns
and overbuilding. Accordingly, ownership of Units continues
to be a speculative investment. THE OFFER MAY PROVIDE
LIMITED PARTNERS WITH THE OPPORTUNITY TO LIQUIDATE THEIR
INTERESTS IN THE PARTNERSHIP AND REPLACE THEM WITH
INVESTMENTS THAT ARE LESS SPECULATIVE.
o The Offer may be attractive to Limited Partners who wish to
avoid in the future the expenses, delays and complications
in filing personal income tax returns which may be caused by
ownership of Units. In addition, A LIMITED PARTNER WHO SELLS
100% OF ITS UNITS PURSUANT TO THE OFFER WILL NO LONGER BE
SUBJECT TO THE PASSIVE ACTIVITY LOSS LIMITATION WITH RESPECT
TO "SUSPENDED" LOSSES ATTRIBUTABLE TO THOSE UNITS AND,
THEREFORE, WILL BE ABLE TO UTILIZE FULLY ANY SUCH LOSSES.
o The Offer may be attractive to those Limited Partners who
have become disenchanted with real estate investments
generally, and in particular with the perceived illiquidity
of investments made through limited partnerships, because it
may afford an immediate opportunity for those Limited
Partners to liquidate their investments in the Partnership.
On the other hand, Limited Partners who tender their Units
will be giving up the opportunity to participate in any
potential future benefits represented by the ownership of
those Units, including, for example, the right to
participate in any future distributions of cash or property,
whether from operations, the proceeds of a sale or
refinancing of one or more of the Partnership's properties
or in connection with any future liquidation of the
Partnership. Instead, any such distributions of cash or
property with respect to Units tendered in the Offer and
purchased by the Purchaser will be paid to the Purchaser.
The Purchaser (which is an affiliate of the Managing General Partner)
makes no recommendation to any Limited Partner as to whether to tender or
refrain from tendering Units and has been advised by the Managing General
Partner that the Managing General Partner also expects to make no
recommendation. Each Limited Partner must make its own decision, based on the
Limited Partner's particular circumstances, as to whether to tender Units and,
if so, how many Units to tender. Limited Partners should consult with their
respective advisors regarding the financial, tax, legal and other implications
of accepting the Offer. LIMITED PARTNERS ARE URGED TO READ THIS OFFER TO
PURCHASE AND THE RELATED MATERIALS CAREFULLY AND IN THEIR ENTIRETY BEFORE
DECIDING WHETHER TO TENDER THEIR UNITS.
Reasons for and Effects of the Offer. The Purchaser's purpose in
making the Offer is to increase IPT's equity interest in the Partnership,
primarily for investment purposes and with a view to making a profit. Although
the number of Units sought in the Offer will not give the Purchaser (which is
an affiliate of the Managing General Partner) absolute control over the
Partnership, if the Purchaser is successful in acquiring all or a substantial
portion of the Units it is tendering for, it will be in a position to exercise
significant influence over the outcome of any vote by Limited Partners. See
Sections 8, 10 and 13.
Certain Tax Considerations. A sale by a Limited Partner pursuant to
the Offer will result in taxable gain (or loss) equal to the excess (deficit)
of the amount realized by the Limited Partner for the Units sold over such
Limited Partner's adjusted tax basis in those Units. In the case of a Limited
Partner who is an individual and who has held Units since their issuance by
the Partnership, the sale is expected to result in a gain, which may be
taxable as ordinary income, capital gain or gain from real estate depreciation
recapture. Limited Partners who have suspended "passive losses" from the
Partnership or other passive activity investments generally may deduct these
3
<PAGE>
losses up to the amount of gain from the sale. A sale pursuant to the Offer of
all of a Limited Partner's Units will terminate his or her investment in the
Partnership and, commencing with the year following the year of sale, the
Limited Partner will no longer receive Partnership tax information or have to
report the complicated tax information currently required of Limited Partners.
See Section 6.
Originally Anticipated Term of the Partnership; General Policy
Regarding Sales and Refinancings of Partnership Properties; Alternatives.
According to the Partnership's Prospectus dated February 14, 1984, the
Managing General Partner (which at the time was not affiliated with Insignia
or IPT) indicated that prior partnerships sponsored by affiliates of the
Managing General Partner had, on average, begun selling their properties
during the fifth or sixth year after the investments were made and had sold
all of their properties after eight years of ownership. The Prospectus further
stated, however, that the Managing General Partner was unable to predict how
long the Partnership would remain invested in the properties, and that the
Partnership acquired such properties for investment rather than resale. In any
event, according to the Prospectus, the Managing General Partner anticipated
that a disposition of the properties would depend on, among other things, the
current real estate and money markets, economic climate and income tax
consequences to the Limited Partners.
In general, the Managing General Partner regularly evaluates the
Partnership's properties by considering various factors, such as the
Partnership's financial position and real estate and capital markets
conditions. The Managing General Partner monitors each property's specific
locale and sub-market conditions evaluating current trends, competition, new
construction and economic changes. The Managing General Partner oversees each
asset's operating performance and continuously evaluates the physical
improvement requirements. In addition, the financing structure for each
property, tax implications and the investment climate are all considered. Any
of these factors, and possibly others, could potentially contribute to any
decision by the Managing General Partner to sell, refinance, upgrade with
capital improvements or hold a particular Partnership property. The
Partnership has received an unsolicited offer from an unaffiliated third party
to purchase for $2,000,000 (i) a ground lease underlying a 70,000 square foot
building at Cooper Point Plaza in Olympia, Washington, and (ii) a 20,000
square foot vacant building occupying a portion of Cooper Point Plaza. In the
event of a sale of the ground lease and building, the Managing General Partner
has advised the Purchaser (which is an affiliate of the Managing General
Partner) that it will use the net cash proceeds (after payment of costs of
sale) from such sale to reduce the existing mortgage debt encumbering Cooper
Point Plaza and for the redevelopment project (as described below). The
Managing General Partner also has advised the Purchaser (which is an affiliate
of the Managing General Partner) that it expects to undertake extensive
capital improvements to Cooper Point Plaza beginning sometime in late 1998 or
early 1999 (in any event, after the transaction described in the preceding two
sentences), and that such renovations may result in a higher valuation for the
property; however, there can be no assurance that the Managing General Partner
will in fact undertake such capital improvements as expected or as to the
increased value of the property resulting from such capital improvements.
Furthermore, the Managing General Partner has indicated that following
completion of any such redevelopment project, it may seek to refinance Cooper
Point Plaza. In the event that there are any excess cash proceeds from the
refinancing, the Managing General Partner has advised the Purchaser (which is
an affiliate of the Managing General Partner) that it may distribute to
Limited Partners such excess proceeds; however, there can be no assurance that
such refinancing will in fact occur or that a distribution will be made or as
to the amount or timing of such distribution. Moreover, no determination has
been made as to whether any net cash proceeds generated by such potential
refinancing would be distributed to Limited Partners, which determination will
be made at the time such refinancing is obtained and will be based on, among
other things, the Partnership's working capital and reserve requirements at
the time. The Purchaser also has been notified that pursuant to a
Reinstatement and Modification Agreement, dated as of December 31, 1997,
between the Partnership and Chase Manhattan Bank, as lender (the "Modified
Loan Agreement"), the lender granted certain concessions to the Partnership
following its default on a loan, $11,000,000 principal amount outstanding as
of December 31, 1997 (the "Loan"), secured by Southpointe Apartments in
Bedford Heights, Ohio and extended the maturity date of the Loan until January
1, 2002. Pursuant to the Modified Loan Agreement, the Partnership paid all
past due interest on the Loan. In addition, the lender agreed to advance real
estate tax payments up to a maximum of $180,000 through January 1, 2002, which
amounts will be amortized to January 1, 2002, and the Partnership agreed to
reduce from 5% to 3% the management fees payable to IRG and to invest $150,000
in capital improvements (which have been completed) on the property. Such
capital improvements may result in a higher valuation of the property; however
4
<PAGE>
there can be no assurance as to the increased value of the property resulting
from such renovations. The Purchaser (which is an affiliate of the Managing
General Partner) also has been advised that the Partnership and its affiliates
who are involved in the Princeton Golf Course Joint Venture (the "Joint
Venture"), in which the Partnership has a 44.5% interest, presently expect to
market for sale the Princeton Meadows Golf Course in Princeton, New Jersey
sometime during 1998. The Partnership presently expects that the Princeton
Meadows Golf Course, which is subject to a first mortgage of approximately
$1,567,000, will sell for approximately $3,500,000. In the event of a sale of
the Princeton Meadows Golf Course, the Managing General Partner has advised
the Purchaser (which is an affiliate of the Managing General Partner) that it
may distribute to Limited Partners the portion of the net cash proceeds
representing the Partnership's interest in the Joint Venture (after repayment
of any outstanding mortgage debt and payment of other costs of sale) from such
sale; however, there can be no assurance that such sale would in fact occur or
as to the amount of cash proceeds that might result from such sale. Further,
no determination has been made as to whether any net cash proceeds generated
by such sale would be distributed to Limited Partners, which determination
will be made at the time of such sale, and will be based on, among other
things, the Partnership's working capital and reserve requirements at the
time. Based on the foregoing considerations, and except for the Modified Loan
Agreement negotiated with respect to Southpointe Apartments, the potential
sale of Princeton Meadows Golf Course, the potential sale of the ground lease
and other commercial space on or adjacent to Cooper Point Plaza and the
potential refinancing of Cooper Point Plaza, the Managing General Partner has
determined that it is not in the best interest of Limited Partners to sell or
refinance any other Partnership property at the present time.
Under the Limited Partnership Agreement the term of the Partnership
will continue until December 31, 2035, unless sooner terminated as provided in
the Limited Partnership Agreement or by law. Limited Partners could, as an
alternative to tendering their Units, take a variety of possible actions,
including voting to liquidate the Partnership or amending the Limited
Partnership Agreement to authorize Limited Partners to cause the Partnership
to merge with another entity or engage in a "roll-up" or similar transaction.
Conditions. The Offer is not conditioned on any aggregate minimum
number of Units being tendered. Certain other conditions do apply, however.
See Section 14.
Distributions. The last distribution made by the Partnership was in
1989 ($15.00 per Unit). In total, original investors in the Partnership have
received distributions of only $30.00 in respect of their original $1,000
investment made in 1983. See Section 9. However, the Partnership is currently
generating positive cash flow from operations, and the Purchaser (which is an
affiliate of the Managing General Partner) believes that the Partnership will
continue to generate positive cash flow from operations. The Managing General
Partner has advised the Purchaser (which is an affiliate of the Managing
General Partner) that the Managing General Partner presently expects the
Partnership to make a distribution of approximately $22.00 per Unit sometime
during the second half of 1998; however, there can be no assurance that such
distribution will be made or as to the amount or timing of such distribution.
The potential for this and other future distributions was considered by the
Purchaser (which is an affiliate of the Managing General Partner) when
establishing the Purchase Price. Limited Partners who tender their Units in
response to the Offer will retain any distributions made through April 14,
1998, and will be entitled to receive and retain any subsequent distributions
made by the Partnership prior to the date on which the Purchaser pays for
tendered Units pursuant to the Offer, although any such subsequent
distribution will result in a reduction of the Purchase Price. See Section 1.
However, tendering Limited Partners will not be entitled to receive or retain
any distributions in respect of tendered Units which are made on or after the
date on which the Purchaser pays for such Units pursuant to the Offer,
regardless of the fact that the record date (as opposed to the payment date)
for any such distribution may be a date prior to the date of purchase. See
Section 3.
Outstanding Units. According to information supplied by the
Partnership, as of April 1, 1998 there were 44,718 Units issued and
outstanding, which were held of record by 3,875 Limited Partners. IPLP
currently owns 1,799 (representing approximately 4.0%) of the outstanding
Units. See Schedule I to this Offer to Purchase for a list of transactions in
the Units effected by IPLP (other than the inter-company transactions referred
to in Section 13) within the past 60 days.
5
<PAGE>
THE OFFER
SECTION 1. TERMS OF THE OFFER; EXPIRATION DATE; PRORATION. Upon the
terms and subject to the conditions of the Offer, the Purchaser (which is an
affiliate of the Managing General Partner) will accept for payment (and
thereby purchase) up to 18,500 Units that are validly tendered on or prior to
the Expiration Date and not withdrawn in accordance with the procedures set
forth in Section 4. For purposes of the Offer, the term "Expiration Date"
shall mean 12:00 midnight, New York City time, on May 11, 1998, unless the
Purchaser (which is an affiliate of the Managing General Partner) in its sole
discretion shall have extended the period of time for which the Offer is open,
in which event the term "Expiration Date" shall mean the latest time and date
on which the Offer, as extended by the Purchaser, shall expire. See Section 5
for a description of the Purchaser's right to extend the period of time during
which the Offer is open and to amend or terminate the Offer.
THE PURCHASE PRICE WILL AUTOMATICALLY BE REDUCED BY THE AGGREGATE
AMOUNT OF DISTRIBUTIONS PER UNIT, IF ANY, MADE BY THE PARTNERSHIP TO LIMITED
PARTNERS ON OR AFTER APRIL 14, 1998, AND PRIOR TO THE DATE ON WHICH THE
PURCHASER PAYS FOR UNITS PURCHASED PURSUANT TO THE OFFER.
If, prior to the Expiration Date, the Purchaser (which is an
affiliate of the Managing General Partner) increases the consideration offered
to Limited Partners pursuant to the Offer, the increased consideration will be
paid for all Units accepted for payment pursuant to the Offer, regardless of
whether the Units were tendered prior to the increase in the consideration
offered.
If more than 18,500 Units are validly tendered prior to the
Expiration Date and not properly withdrawn prior to the Expiration Date in
accordance with the procedures specified in Section 4, the Purchaser (which is
an affiliate of the Managing General Partner) will, upon the terms and subject
to the conditions of the Offer, accept for payment and pay for an aggregate of
18,500 of the Units so tendered, pro rata according to the number of Units
validly tendered by each Limited Partner and not properly withdrawn on or
prior to the Expiration Date, with appropriate adjustments to avoid (i)
purchases of fractional Units and (ii) purchases that would violate Section
9.1 of the Limited Partnership Agreement (which generally requires that, in
order for a partial tender to be valid, a Limited Partner continues to hold a
minimum of five Units). If the number of Units validly tendered and not
properly withdrawn on or prior to the Expiration Date is less than or equal to
18,500 Units, the Purchaser (which is an affiliate of the Managing General
Partner) will purchase all Units so tendered and not withdrawn, upon the terms
and subject to the conditions of the Offer.
If proration of tendered Units is required, then, subject to the
Purchaser's obligation under Rule 14e-1(c) under the Securities Exchange Act
of 1934 (the "Exchange Act") to pay Limited Partners the Purchase Price in
respect of Units tendered or return those Units promptly after the termination
or withdrawal of the Offer, the Purchaser (which is an affiliate of the
Managing General Partner) does not intend to pay for any Units accepted for
payment pursuant to the Offer until the final proration results are known.
NOTWITHSTANDING ANY SUCH DELAY IN PAYMENT, NO INTEREST WILL BE PAID ON THE
PURCHASE PRICE.
The Offer is conditioned on satisfaction of certain conditions. See
Section 14, which sets forth in full the conditions of the Offer. The
Purchaser (which is an affiliate of the Managing General Partner) reserves the
right (but in no event shall be obligated), in its sole discretion, to waive
any or all of those conditions. If, on or prior to the Expiration Date, any or
all of the conditions have not been satisfied or waived, the Purchaser
reserves the right to (i) decline to purchase any of the Units tendered and
terminate the Offer, (ii) waive all of the unsatisfied conditions and, subject
to complying with applicable rules and regulations of the Commission, purchase
all Units validly tendered, (iii) extend the Offer and, subject to the right
of Limited Partners to withdraw Units until the Expiration Date, retain the
Units that have been tendered during the period or periods for which the Offer
is extended, and/or (iv) amend the Offer.
This Offer to Purchase and the related Assignment of Partnership
Interest are being mailed by the Purchaser (which is an affiliate of the
Managing General Partner) to the persons shown by the Partnership's records to
have
6
<PAGE>
been Limited Partners or (in the case of Units owned of record by IRAs and
qualified plans) beneficial owners of Units as of April 1, 1998.
SECTION 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS. Upon the
terms and subject to the conditions of the Offer, the Purchaser (which is an
affiliate of the Managing General Partner) will accept for payment (and
thereby purchase) and will pay for all Units validly tendered and not
withdrawn in accordance with the procedures specified in Section 4, as
promptly as practicable following the Expiration Date. A tendering beneficial
owner of Units whose Units are owned of record by an IRA or other qualified
plan will not receive direct payment of the Purchase Price; rather, payment
will be made to the custodian of such account or plan. In all cases, payment
for Units purchased pursuant to the Offer will be made only after timely
receipt by the Depositary of a properly completed and duly executed Assignment
of Partnership Interest and any other documents required by the Assignment of
Partnership Interest. See Section 3. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID ON THE PURCHASE PRICE BY REASON OF ANY DELAY IN MAKING SUCH PAYMENT.
For purposes of the Offer, the Purchaser (which is an affiliate of
the Managing General Partner) will be deemed to have accepted for payment
pursuant to the Offer, and thereby purchased, validly tendered Units if, as
and when the Purchaser (which is an affiliate of the Managing General Partner)
gives verbal or written notice to the Depositary of the Purchaser's acceptance
of those Units for payment pursuant to the Offer. Upon the terms and subject
to the conditions of the Offer, payment for Units accepted for payment
pursuant to the Offer will be made by deposit of the Purchase Price with the
Depositary, which will act as agent for tendering Limited Partners for the
purpose of receiving payments from the Purchaser and transmitting those
payments to Limited Partners whose Units have been accepted for payment.
If any tendered Units are not purchased for any reason, the
Assignment of Partnership Interest with respect to such Units will be
destroyed by the Purchaser (which is an affiliate of the Managing General
Partner). If for any reason acceptance for payment of, or payment for, any
Units tendered pursuant to the Offer is delayed or the Purchaser is unable to
accept for payment, purchase or pay for Units tendered pursuant to the Offer,
then, without prejudice to the Purchaser's rights under Section 14, the
Depositary may, nevertheless, on behalf of the Purchaser (which is an
affiliate of the Managing General Partner) retain tendered Units, and those
Units may not be withdrawn except to the extent that the tendering Limited
Partners are entitled to withdrawal rights as described in Section 4; subject,
however, to the Purchaser's obligation under Rule 14e-1(c) under the Exchange
Act to pay Limited Partners the Purchase Price in respect of Units tendered or
return those Units promptly after termination or withdrawal of the Offer.
The Purchaser (which is an affiliate of the Managing General Partner)
reserves the right to transfer or assign, in whole or from time to time in
part, to one or more of the Purchaser's affiliates, the right to purchase
Units tendered pursuant to the Offer, but any such transfer or assignment will
not relieve the Purchaser of its obligations under the Offer or prejudice the
rights of tendering Limited Partners to receive payment for Units validly
tendered and accepted for payment pursuant to the Offer.
SECTION 3. PROCEDURE FOR TENDERING UNITS.
Valid Tender. In order for a tendering Limited Partner to participate
in the Offer, its Units must be validly tendered and not withdrawn on or prior
to the Expiration Date. To validly tender Units, a properly completed and duly
executed Assignment of Partnership Interest and any other documents required
by the Assignment of Partnership Interest must be received by the Depositary,
at its address set forth on the back cover of this Offer to Purchase, on or
prior to the Expiration Date. A Limited Partner may tender any or all of the
Units owned by that Limited Partner; provided, however, that because of
restrictions in the Limited Partnership Agreement, in order for a partial
tender to be valid, after a sale of Units pursuant to the Offer, the tendering
Limited Partner must continue to hold a minimum of five Units. Accordingly,
any Limited Partner that owns five or fewer Units must tender all or none of
its Units. Tenders of fractional Units will not be permitted, except by a
Limited Partner who is tendering all of the Units owned by that Limited
Partner. No alternative, conditional or contingent tenders will be accepted.
7
<PAGE>
Signature Requirements. If the Assignment of Partnership Interest is
signed by the registered holder of the Units and payment is to be made
directly to that holder, then no signature guarantee is required on the
Assignment of Partnership Interest. Similarly, if the Units are tendered for
the account of a member firm of a registered national securities exchange, a
member of the National Association of Securities Dealers, Inc. or a commercial
bank, savings bank, credit union, savings and loan association or trust
company having an office, branch or agency in the United States (each an
"Eligible Institution"), no signature guarantee is required on the Assignment
of Partnership Interest. HOWEVER, IN ALL OTHER CASES, ALL SIGNATURES ON THE
ASSIGNMENT OF PARTNERSHIP INTEREST MUST BE GUARANTEED BY AN ELIGIBLE
INSTITUTION. Please contact the Information Agent for assistance in obtaining
a signature guarantee.
Delivery of Assignment of Partnership Interest. The method of
delivery of the Assignment of Partnership Interest and all other required
documents is at the option and risk of the tendering Limited Partner, and
delivery will be deemed made only when actually received by the Depositary. In
all cases, sufficient time should be allowed to assure timely delivery.
Appointment as Proxy; Power of Attorney. By executing an Assignment
of Partnership Interest, a tendering Limited Partner irrevocably appoints the
Purchaser (which is an affiliate of the Managing General Partner), and its
managers and designees as the Limited Partner's proxies, in the manner set
forth in the Assignment of Partnership Interest, each with full power of
substitution, to the full extent of the Limited Partner's rights with respect
to the Units tendered by the Limited Partner and accepted for payment by the
Purchaser (which is an affiliate of the Managing General Partner). Each such
proxy shall be considered coupled with an interest in the tendered Units. Such
appointment will be effective when, and only to the extent that, the Purchaser
(which is an affiliate of the Managing General Partner) accepts the tendered
Units for payment. Upon such acceptance for payment, all prior proxies given
by the Limited Partner with respect to the Units will, without further action,
be revoked, and no subsequent proxies may be given (and if given will not be
effective). The Purchaser (which is an affiliate of the Managing General
Partner) and its managers and designees will, as to those Units, be empowered
to exercise all voting and other rights of the Limited Partner as they in
their sole discretion may deem proper at any meeting of Limited Partners, by
written consent or otherwise. The Purchaser (which is an affiliate of the
Managing General Partner) reserves the right to require that, in order for
Units to be deemed validly tendered, immediately upon the Purchaser's
acceptance for payment of the Units, the Purchaser must be able to exercise
full voting rights with respect to the Units, including voting at any meeting
of Limited Partners then scheduled or acting by written consent without a
meeting.
By executing an Assignment of Partnership Interest, a tendering
Limited Partner also irrevocably constitutes and appoints the Purchaser and
its managers and designees as the Limited Partner's attorneys-in-fact, each
with full power of substitution, to the full extent of the Limited Partner's
rights with respect to the Units tendered by the Limited Partner and accepted
for payment by the Purchaser. Such appointment will be effective when, and
only to the extent that, the Purchaser accepts the tendered Units for payment.
The tendering Limited Partner agrees not to exercise any rights pertaining to
the tendered Units without the prior consent of the Purchaser. Upon such
acceptance for payment, all prior powers of attorney granted by the Limited
Partner with respect to such Units will, without further action, be revoked,
and no subsequent powers of attorney may be granted (and if granted will not
be effective). Pursuant to such appointment as attorneys-in-fact, the
Purchaser and its managers and designees each will have the power, among other
things, (i) to transfer ownership of such Units on the Partnership books
maintained by the Managing General Partner (and execute and deliver any
accompanying evidences of transfer and authenticity any of them may deem
necessary or appropriate in connection therewith), (ii) upon receipt by the
Depositary (as the tendering Limited Partner's agent) of the Purchase Price,
to become a substituted Limited Partner, to receive any and all distributions
made by the Partnership on or after the date on which the Purchaser purchases
such Units, and to receive all benefits and otherwise exercise all rights of
beneficial ownership of such Units in accordance with the terms of the Offer,
(iii) to execute and deliver to the Managing General Partner a change of
address form instructing the Managing General Partner to send any and all
future distributions to which the Purchaser is entitled pursuant to the terms
of the Offer in respect of tendered Units to the address specified in such
form, and (iv) to endorse any check payable to or upon the order of such
Limited Partner representing a
8
<PAGE>
distribution to which the Purchaser is entitled pursuant to the terms of the
Offer, in each case in the name and on behalf of the tendering Limited
Partner.
Assignment of Interest in Future Distributions. By executing an
Assignment of Partnership Interest, a tendering Limited Partner irrevocably
assigns to the Purchaser (which is an affiliate of the Managing General
Partner) and its assigns all of the right, title and interest of the Limited
Partner in and to any and all distributions made by the Partnership on or
after the date on which the Purchaser purchases such Units, in respect of the
Units tendered by such Limited Partner and accepted for payment by the
Purchaser, regardless of the fact that the record date for any such
distribution may be a date prior to the date of such purchase. The Purchaser
will seek to be admitted to the Partnership as a substituted Limited Partner
upon consummation of the Offer.
Determination of Validity; Rejection of Units; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tender of Units pursuant to the Offer will be determined by the Purchaser
(which is an affiliate of the Managing General Partner), in its sole
discretion, which determination shall be final and binding. The Purchaser
(which is an affiliate of the Managing General Partner) reserves the absolute
right to reject any or all tenders of any particular Units determined by it
not to be in proper form or if the acceptance of or payment for those Units
may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser
(which is an affiliate of the Managing General Partner) also reserves the
absolute right to waive or amend any of the conditions of the Offer that it is
legally permitted to waive as to the tender of any particular Units and to
waive any defect or irregularity in any tender with respect to any particular
Units of any particular Limited Partner. The Purchaser's interpretation of the
terms and conditions of the Offer (including the Assignment of Partnership
Interest and the Instructions thereto) will be final and binding. No tender of
Units will be deemed to have been validly made until all defects and
irregularities have been cured or waived. None of the Purchaser (which is an
affiliate of the Managing General Partner), the Information Agent, the
Depositary or any other person will be under any duty to give notification of
any defects or irregularities in the tender of any Units or will incur any
liability for failure to give any such notification.
Backup Federal Income Tax Withholding. To prevent the possible
application of backup federal income tax withholding of 31% with respect to
payment of the Purchase Price, each tendering Limited Partner must provide the
Purchaser (which is an affiliate of the Managing General Partner) with the
Limited Partner's correct taxpayer identification number by completing the
Substitute Form W-9 included in the Assignment of Partnership Interest.
See the Instructions to the Assignment of Partnership Interest and Section 6.
FIRPTA Withholding. To prevent the withholding of federal income tax
in an amount equal to 10% of the amount of the Purchase Price plus Partnership
liabilities allocable to each Unit purchased, each tendering Limited Partner
must complete the FIRPTA Affidavit included in the Assignment of Partnership
Interest certifying the Limited Partner's taxpayer identification number and
address and that such Limited Partner is not a foreign person.
See the Instructions to the Assignment of Partnership Interest and Section 6.
Binding Obligation. A tender of Units pursuant to and in accordance
with the procedures described in this Section 3 and the acceptance for payment
of such Units will constitute a binding agreement between the tendering
Limited Partner and the Purchaser (which is an affiliate of the Managing
General Partner) on the terms set forth in this Offer to Purchase and in the
Assignment of Partnership Interest.
SECTION 4. WITHDRAWAL RIGHTS. Tenders of Units pursuant to the Offer
are irrevocable, except that Units tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless already
accepted for payment as provided in this Offer to Purchase, may also be
withdrawn at any time after June 12, 1998. For withdrawal to be effective, a
written or facsimile transmission notice of withdrawal must be timely received
by the Depositary at its address set forth on the back cover of this Offer to
Purchase. Any such notice of withdrawal must specify the name of the person
who tendered the Units to be withdrawn and must be signed by the person(s) who
signed the Assignment of Partnership Interest in the same manner as the
Assignment of Partnership Interest was signed (including signature guarantees
by an Eligible Institution). Units properly withdrawn will be
9
<PAGE>
deemed not to be validly tendered for purposes of the Offer. Withdrawn Units
may be re-tendered, however, by following the procedures described in Section
3 at any time prior to the Expiration Date.
If payment for Units is delayed for any reason or if the Purchaser
(which is an affiliate of the Managing General Partner) is unable to pay for
Units for any reason, then, without prejudice to the Purchaser's rights under
the Offer, tendered Units may be retained by the Depositary and may not be
withdrawn except to the extent that tendering Limited Partners are entitled to
withdrawal rights as set forth in this Section 4; subject, however, to the
Purchaser's obligation, pursuant to Rule 14e-1(c) under the Exchange Act, to
pay Limited Partners the Purchase Price in respect of Units tendered or return
those Units promptly after termination or withdrawal of the Offer.
All questions as to the validity and form (including time of receipt)
of notices of withdrawal will be determined by the Purchaser (which is an
affiliate of the Managing General Partner), in its sole discretion, which
determination shall be final and binding. None of the Purchaser, the
Information Agent, the Depositary or any other person will be under any duty
to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.
SECTION 5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT. The
Purchaser (which is an affiliate of the Managing General Partner) expressly
reserves the right, in its sole discretion, at any time and from time to time,
(i) to extend the period of time during which the Offer is open and thereby
delay acceptance for payment of, and the payment for, validly tendered Units,
(ii) to terminate the Offer if any condition referred to in Section 14 has not
been satisfied or upon the occurrence of any event specified in Section 14,
(iii) to amend the Offer in any respect (including, without limitation, by
increasing the consideration offered, increasing or decreasing the number of
Units being sought, or both). Notice of any such extension, termination or
amendment will be disseminated promptly to Limited Partners in a manner
reasonably designed to inform Limited Partners of such change in compliance
with Rule 14d-4(c) under the Exchange Act. In the case of an extension of the
Offer, the extension will 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 then scheduled Expiration Date, in
accordance with Rule 14e-1(d) under the Exchange Act.
If the Purchaser (which is an affiliate of the Managing General
Partner) extends the Offer, or if the Purchaser (whether before or after its
acceptance for payment of Units) is delayed in its payment for Units or is
unable to pay for Units pursuant to the Offer for any reason, then, without
prejudice to the Purchaser's rights under the Offer, the Depositary may retain
tendered Units and those Units may not be withdrawn except to the extent
tendering Limited Partners are entitled to withdrawal rights as described in
Section 4; subject, however, to the Purchaser's obligation, pursuant to Rule
14e-1(c) under the Exchange Act, to pay Limited Partners the Purchase Price in
respect of Units tendered or return those Units promptly after termination or
withdrawal of the Offer.
If the Purchaser (which is an affiliate of the Managing General
Partner) makes a material change in the terms of the Offer or the information
concerning the Offer or waives a material condition of the Offer, the
Purchaser will extend the Offer and disseminate additional tender offer
materials to the extent required by Rules 14d-4(c) and 14d-6(d) under the
Exchange Act. The minimum period during which an offer must remain open
following a material change in the terms of the offer or information
concerning the offer will depend upon the facts and circumstances, including
the relative materiality of the change in the terms or information. In the
Commission's view, an offer should remain open for a minimum of five business
days from the date the material change is first published, sent or given to
securityholders, and if material changes are made with respect to information
that approaches the significance of price or the percentage of securities
sought, a minimum of ten business days may be required to allow for adequate
dissemination to securityholders and investor response. As used in this Offer
to Purchase, "business day" means any day other than a Saturday, Sunday or a
federal holiday, and consists of the time period from 12:01 a.m. through 12:00
midnight, New York City time.
10
<PAGE>
SECTION 6. CERTAIN FEDERAL INCOME TAX MATTERS.
General. The following summary is a general discussion of certain of
the federal income tax consequences of a sale of Units pursuant to the Offer.
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), applicable Treasury regulations thereunder, administrative rulings,
practice and procedures and judicial authority, all as of the date of the
Offer. All of the foregoing are subject to change, and any such change could
affect the continuing accuracy of this summary. This summary does not discuss
all aspects of federal income taxation that may be relevant to a particular
Limited Partner in light of such Limited Partner's specific circumstances or
to certain types of Limited Partners subject to special treatment under the
federal income tax laws (for example, foreign persons, dealers in securities,
banks, insurance companies and tax-exempt organizations), nor (except as
otherwise expressly indicated) does it describe any aspect of state, local,
foreign or other tax laws. Sales of Units pursuant to the Offer will be
taxable transactions for federal income tax purposes, and also may be taxable
transactions under applicable state, local, foreign and other tax laws. EACH
LIMITED PARTNER SHOULD CONSULT ITS OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO SUCH LIMITED PARTNER OF SELLING UNITS PURSUANT TO THE OFFER.
Gain or Loss Generally. In general, a Limited Partner will recognize
gain or loss on a sale of Units pursuant to the Offer equal to the difference
between (i) the Limited Partner's "amount realized" on the sale and (ii) the
Limited Partner's adjusted tax basis in the Units sold. Generally, a Limited
Partner's adjusted tax basis with respect to a Unit equals its cost, increased
by the amount of income and the amount of Partnership liabilities (as
determined under Code Section 752) allocated to the Unit, and decreased by (i)
any distributions made with respect to such Unit, (ii) the amount of
deductions or losses allocated to the Unit and (iii) any decrease in the
amount of Partnership liabilities (as determined under Code Section 752)
allocated to the Unit. Thus, the amount of a Limited Partner's adjusted tax
basis in tendered Units will vary depending upon the Limited Partner's
particular circumstances. The "amount realized" with respect to a Unit will be
a sum equal to the amount of cash received by the Limited Partner for the Unit
pursuant to the Offer, plus the amount of the Partnership's liabilities
allocable to the Unit (as determined under Code Section 752). Limited Partners
who purchased their interests from the Partnership in the original issuance of
the Units are expected to recognize taxable gain on the sale in an amount in
excess of the Purchase Price.
A portion of the gain or loss recognized by a Limited Partner on a
sale of a Unit pursuant to the Offer generally will be treated as a capital
gain or loss, if (as is generally expected to be the case) the Unit was held
by the Limited Partner as a capital asset. Under the Taxpayer Relief Act of
1997, the capital gains rate for individuals and other non-corporate taxpayers
is reduced to 20% for sales of capital assets after July 28, 1997 if such
assets were held for more than 18 months. However, any gain from the sale of
such assets attributable to the recapture of depreciation with respect to real
property (as defined in Code Section 1250) is taxed at a maximum rate of 25%.
The 28% rate continues to apply to individual and noncorporate taxpayers who
sell a capital asset held for more than one year but not more than 18 months.
Corporate taxpayers are taxed at a maximum marginal rate of 35% for both
capital gains and ordinary income. The maximum marginal federal income tax
rate for ordinary income of individuals and other noncorporate taxpayers is
39.6%. Capital losses are deductible only to the extent of capital gains,
except that, subject to the passive activity loss limitations discussed below,
non-corporate taxpayers may deduct up to $3,000 of capital losses in excess of
the amount of their capital gains against ordinary income. Excess capital
losses generally can be carried forward to succeeding years (a corporation's
carryforward period is five years and a non-corporate taxpayer can carry
forward such losses indefinitely); and a corporation is permitted to carry
back excess capital losses to the three preceding taxable years, provided the
carryback does not increase or produce a net operating loss for any of those
years.
A tendering Limited Partner will be allocated a pro rata share of the
Partnership's taxable income or loss for the year of sale with respect to the
Units sold in accordance with the provisions of the Limited Partnership
Agreement concerning transfers of Units. Such allocation and any cash
distributed by the Partnership to the Limited Partner for that year will
affect the Limited Partner's adjusted tax basis in Units and, therefore, the
amount of such Limited Partner's taxable gain or loss upon a sale of Units
pursuant to the Offer.
11
<PAGE>
Unrealized Receivables and Certain Inventory. If any portion of the
amount of gain realized by a Limited Partner is attributable to "unrealized
receivables" (which includes depreciation recapture) or "substantially
appreciated inventory" as defined in Code Section 751, then a portion of the
Limited Partner's gain or loss may be ordinary rather than capital and, in
addition, a portion of such gain may be taxed at the 25% rate discussed above.
A portion, if not all, of the gain upon the sale of Units is expected to be
attributable to unrealized receivables. A Limited Partner who tenders Units
which are purchased pursuant to the Offer must file an information statement
with such Limited Partner's federal income tax return for the year of the sale
which provides the information specified in Treasury Regulation ss.
1.751-1(a)(3). A selling Limited Partner also must notify the Partnership of
the date of the transfer and the names, addresses and tax identification
numbers of the transferor(s) and transferee within 30 days of the date of the
transfer (or, if earlier, by January 15 of the following calendar year).
Passive Activity Loss Limitation. Under Code Section 469, a
non-corporate taxpayer or personal service corporation generally can deduct
"passive losses" in any year only to the extent of the person's passive income
for that year. Closely held corporations (other than personal service
corporations) may offset such losses against active income as well as passive
activity income for that year. A substantial portion of any post-1986 losses
of Limited Partners from the Partnership would have been passive losses. Thus,
Limited Partners may have "suspended" passive losses from the Partnership
(i.e., post-1986 net taxable losses in excess of statutorily permitted
"phase-in" amounts which have not been used to offset income from other
passive activities or from the Partnership). Substantially all gain or loss
from a sale of Units pursuant to the Offer will be passive income or loss.
If a Limited Partner sells less than all of its Units pursuant to the
Offer, suspended passive losses, if any (including a portion of any loss
recognized on the sale of Units), can be currently deducted (subject to other
applicable limitations) to the extent of the Limited Partner's passive income
from the Partnership for that year (including any gain recognized on the sale
of Units) plus any other passive income for that year. If, on the other hand,
a Limited Partner sells 100% of its Units pursuant to the Offer, any
"suspended" losses and any losses recognized upon the sale of the Units will
be offset first against any other net passive gain to the Limited Partner from
the sale of the Units and any other net passive activity income from other
passive activity investments, and the balance of any "suspended" net losses
from the Units will no longer be subject to the passive activity loss
limitation and, therefore, will be deductible by such Limited Partner from its
other income (subject to any other applicable limitations), including ordinary
income. If a tendering Limited Partner has suspended passive losses from the
Partnership, such Limited Partner must sell all of its Units to receive these
tax benefits. If more than 18,500 of the outstanding Units are tendered, some
tendering Limited Partners may not be able to sell 100% of their Units
pursuant to the Offer because of proration of the number of Units to be
purchased by the Purchaser. See Section 1.
Partnership Termination. Section 708(b) of the Code provides that a
partnership terminates for income tax purposes if there is a sale or exchange
of 50% or more of the total interest in partnership capital and profits within
a twelve-month period (although successive transfers of the same interest
within a twelve-month period will be treated as a single transfer for this
purpose). In the event of a termination, the Partnership's tax year would
close and the Partnership would be treated for income tax purposes as if it
had contributed all of its assets and liabilities to a "new" partnership in
exchange for an interest in the "new" partnership. The Partnership would then
be treated as making a distribution of the interests in the "new" partnership
to the new partners and the remaining partners, followed by the liquidation of
the Partnership. Because the "new" partnership would be treated as having
acquired its assets on the date of the deemed contribution, a new depreciation
recovery period would begin on such date, the Partnership's annual
depreciation deductions over the next few years would be substantially
reduced, and the Partnership would have greater taxable income (or less tax
loss) than if no tax termination occurred. In addition, depreciation may be
required to be allocated to those Limited Partners that have a higher tax
basis. A tax termination of the Partnership would also terminate any
partnership in which the Partnership holds a majority interest (50% or more).
The Limited Partnership Agreement prohibits transfer of Units if a
transfer, when considered with all other transfers during the same applicable
twelve-month period, would cause a termination of the Partnership for tax
purposes. The Purchaser believes that even if the maximum number of Units is
purchased pursuant to the Offer, those transfers will not cause a tax
termination of the Partnership.
12
<PAGE>
Backup Withholding and FIRPTA Withholding. Limited Partners (other
than tax-exempt persons, corporations and certain foreign individuals) who
tender Units may be subject to 31% backup withholding unless those Limited
Partners provide a taxpayer identification number ("TIN") and certify that the
TIN is correct or properly certify that they are awaiting a TIN. A Limited
Partner may avoid backup withholding by properly completing and signing the
Substitute Form W-9 included as part of the Assignment of Partnership
Interest. If a Limited Partner who is subject to backup withholding does not
properly complete and sign the Substitute Form W-9, the Purchaser will
withhold 31% from payments to such Limited Partner.
Gain realized by a foreign Limited Partner on the sale of a Unit
pursuant to the Offer will be subject to federal income tax. Under Code
Section 1445, the transferee of an interest held by a foreign person in a
partnership which owns United States real property generally is required to
deduct and withhold a tax equal to 10% of the amount realized on the
disposition. In order to comply with this requirement, the Purchaser will
withhold 10% of the amount realized by a tendering Limited Partner unless the
Limited Partner properly completes and signs the FIRPTA Affidavit included as
part of the Assignment of Partnership Interest certifying the Limited
Partner's TIN and address, and that such Limited Partner is not a foreign
person. Amounts withheld would be creditable against a foreign Limited
Partner's federal income tax liability and, if in excess thereof, a refund
could be obtained from the Internal Revenue Service by filing a U.S. income
tax return.
SECTION 7. EFFECTS OF THE OFFER.
Limitations on Resales. The Limited Partnership Agreement prohibits
transfers of Units if a transfer, when considered with all other transfers
during the same applicable twelve-month period, would cause a termination of
the Partnership for federal income tax purposes. This provision may limit
sales of Units in the secondary market and in private transactions for the
twelve-month period following completion of the Offer. The Managing General
Partner has advised the Purchaser that the Partnership will not process any
requests for recognition of substitution of Limited Partners upon a transfer
of Units during such twelve-month period which the Managing General Partner
believes may cause a tax termination in contravention of the Limited
Partnership Agreement. In determining the number of Units for which the Offer
is made (representing approximately 41% of the outstanding Units if 18,500
Units are tendered), the Purchaser (which is an affiliate of the Managing
General Partner) took this restriction into account so as to permit normal
historical levels of transfers to occur following the transfers of Units
pursuant to the Offer without violating this restriction.
Effect on Trading Market; Registration Under Section 12(g) of the
Exchange Act. If a substantial number of Units are purchased pursuant to the
Offer, the result will be a reduction in the number of Limited Partners. In
the case of certain kinds of equity securities, a reduction in the number of
security-holders might be expected to result in a reduction in the liquidity
and volume of activity in the trading market for the security. In this case,
however, there is no established public trading market for the Units and,
therefore, the Purchaser (which is an affiliate of the Managing General
Partner) does not believe a reduction in the number of Limited Partners will
materially further restrict the Limited Partners' ability to find purchasers
for their Units through secondary market transactions. See Section 13 for
certain limited information regarding recent secondary market sales of the
Units.
The Units are registered under Section 12(g) of the Exchange Act,
which means, among other things, that the Partnership is required to file
periodic reports with the Commission and to comply with the Commission's proxy
rules. The Purchaser (which is an affiliate of the Managing General Partner)
does not expect or intend that consummation of the Offer will cause the Units
to cease to be registered under Section 12(g) of the Exchange Act. If the
Units were to be held by fewer than 300 persons, the Partnership could apply
to de-register the Units under the Exchange Act. Because the Units are widely
held, however, the Purchaser (which is an affiliate of the Managing General
Partner) believes that, even if it purchases the maximum number of Units in
the Offer, after that purchase the Units will be held of record by more than
300 persons.
13
<PAGE>
Control of Limited Partner Voting Decisions by Purchaser; Effect of
Relationship with Managing General Partner. The Limited Partnership Agreement
provides that the Managing General Partner has absolute discretion as to
whether to admit an assignee of Units to the Partnership as a substituted
Limited Partner. The Purchaser (which is an affiliate of the Managing General
Partner) will seek to be admitted to the Partnership as a substituted Limited
Partner upon consummation of the Offer and, if admitted, will have the right
to vote each Unit purchased pursuant to the Offer. Even if the Purchaser
(which is an affiliate of the Managing General Partner) is not admitted to the
Partnership as a substituted Limited Partner, however, the Purchaser may have
the right to vote each Unit purchased in the Offer pursuant to the irrevocable
appointment by tendering Limited Partners of the Purchaser and its managers
and designees as proxies with respect to the Units tendered by such Limited
Partners and accepted for payment by the Purchaser. See Section 3. As a
result, the Purchaser (which is an affiliate of the Managing General Partner)
could be in a position to significantly influence all voting decisions with
respect to the Partnership. In general, IPLP and the Purchaser (which are
affiliates of the Managing 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 Managing General Partner, also may be
in the interest of the Managing 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. 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 Managing General Partner or the other
non-managing general partners and in certain circumstances election of a new
or successor managing general partner or non-managing general partners;
dissolution of the Partnership; and most types of amendments to the Limited
Partnership Agreement.
The Offer will not result in any change in the compensation payable
to the Managing General Partner or its affiliates. However, as a result of the
Offer, the Purchaser (which is an affiliate of the Managing 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.
SECTION 8. FUTURE PLANS OF INSIGNIA, IPT AND THE PURCHASER. IPT,
through the Purchaser (which is an affiliate of the Managing General Partner),
is seeking to acquire Units pursuant to the Offer in order to increase its
equity interest in the Partnership, primarily for investment purposes and with
a view to making a profit. Following the completion of the Offer, IPT and/or
persons related to or affiliated with it may acquire additional Units. Any
such acquisition may be made through private purchases, through one or more
future tender or exchange offers or by any other means deemed advisable. Any
such acquisition may be at a price higher or lower than the price to be paid
for the Units purchased pursuant to the Offer, and may be for cash or other
consideration. Insignia and IPT (which are affiliates of the Managing General
Partner) also may consider disposing of some or all of the Units the Purchaser
acquires pursuant to the Offer, either directly or by a sale or other
disposition of one or more interests in IPT or IPLP, depending among other
things on the requirements from time to time of Insignia, IPT and their
affiliates in light of liquidity, strategic, tax and other considerations.
Other than the potential sale of Princeton Meadows Golf Course, the
potential sale of the ground lease and other commercial space on or adjacent
to Cooper Point Plaza and the potential refinancing of Cooper Point Plaza
(each, as described in Section 9), neither IPT nor the Purchaser (which are
affiliates of the Managing General Partner) has any present plans or
intentions with respect to an extraordinary transaction, such as a merger,
reorganization or liquidation, involving the Partnership or a sale of assets
or refinancing of any of the Partnership's properties. However, IPT and the
Purchaser expect that consistent with the Managing General Partner's fiduciary
obligations, the Managing General Partner will seek and review opportunities
(including opportunities identified by IPT and the Purchaser) to engage in
transactions which could benefit the Partnership, such as sales or
refinancings of assets or a combination of the Partnership with one or more
other entities, with the objective of seeking to maximize returns to Limited
Partners.
IPT and the Purchaser (which are affiliates of the Managing General
Partner) have been advised that the possible future transactions the Managing
General Partner expects to consider on behalf of the Partnership include (i)
payment of extraordinary distributions; (ii) refinancing, reducing or
increasing existing indebtedness of the
14
<PAGE>
Partnership; (iii) sales of assets, individually or as part of a complete
liquidation; and (iv) mergers or other consolidation transactions involving
the Partnership. Any such merger or consolidation transaction could involve
other limited partnerships in which the Managing General Partner or its
affiliates serve as general partners, or a combination of the Partnership with
one or more existing, publicly traded entities (including, possibly,
affiliates of IPT (which is an affiliate of the Managing General Partner) or
IPT itself), in any of which Limited Partners might receive cash, common stock
or other securities or consideration. There is no assurance, however, as to
when or whether any of the transactions referred to above might occur. If any
such transaction is effected by the Partnership and financial benefits accrue
to the Limited Partners of the Partnership, the Purchaser (and thus IPT) will
participate in those benefits to the extent of its ownership of Units. The
Limited Partnership Agreement prohibits Limited Partners from voting on
actions taken by the Partnership, unless otherwise specifically permitted
therein. Limited Partners may vote on a liquidation, and if the Purchaser is
successful in acquiring a significant number of Units pursuant to the Offer
(or otherwise), IPT will be able to significantly influence the outcome of any
such vote. IPT's primary objective in seeking to acquire the Units through the
Purchaser pursuant to the Offer is not, however, to influence the vote on any
particular transaction, but rather to generate a profit on the investment
represented by those Units.
SECTION 9. CERTAIN INFORMATION CONCERNING THE PARTNERSHIP. Except as
otherwise indicated, information contained in this Section 9 is based upon
documents and reports publicly filed by the Partnership with the Commission.
General. The Partnership was organized on May 26, 1983 under the laws
of the State of California. Its principal executive offices are located at One
Insignia Financial Plaza, Greenville, South Carolina 29602, and its telephone
number at that address is (864) 239-2747.
The Partnership's primary business is real estate ownership and
related operations. The Partnership was formed for the purpose of making
investments in various types of real properties which offered capital
appreciation and cash distributions to Limited Partners.
The Partnership's investment portfolio currently consists of nine
residential apartment complexes and one shopping center, as follows: a 73-unit
residential complex in Cedar Rapids, Iowa; a 324-unit residential complex in
Harrisburg, Pennsylvania; a 328-unit residential complex in Cedar Rapids,
Iowa; a 264-unit residential complex in Plainsboro, New Jersey; a 304-unit
residential complex in Plainsboro, New Jersey; a 328-unit residential complex
in Plainsboro, New Jersey; a 336-unit residential complex in Indianapolis,
Indiana; a 499-unit residential complex in Bedford Heights, Ohio; a 399-unit
residential complex in Westmont, Illinois; and a 103,473 square foot retail
complex in Olympia, Washington. In addition, the Partnership owns a 44.5%
interest in a joint venture that owns a golf course in Princeton, New Jersey.
Originally Anticipated Term of Partnership; Alternatives. According
to the Partnership's Prospectus dated February 14, 1984, the Managing General
Partner (which at the time was not affiliated with Insignia or IPT) indicated
that prior partnerships sponsored by affiliates of the Managing General
Partner had, on average, begun selling their properties during the fifth or
sixth year after the investments were made and had sold all of their
properties after eight years of ownership. The Prospectus further stated,
however, that the Managing General Partner was unable to predict how long the
Partnership would remain invested in the properties, and that the Partnership
acquired such properties for investment rather than resale. In any event,
according to the Prospectus, the Managing General Partner anticipated that a
disposition of the properties would depend on, among other things, the current
real estate and money markets, economic climate and income tax consequences to
the Limited Partners. Under the Limited Partnership Agreement, the term of the
Partnership will continue until December 31, 2035, unless sooner terminated as
provided in the Limited Partnership Agreement or by law. Limited Partners
could, as an alternative to tendering their Units, take a variety of possible
actions including voting to liquidate the Partnership or amending the Limited
Partnership Agreement to authorize Limited Partners to cause the Partnership
to merge with another entity or engage in a "roll-up" or similar transaction.
15
<PAGE>
General Policy Regarding Sales and Refinancings of Partnership
Properties. In general, the Managing General Partner regularly evaluates the
Partnership's properties by considering various factors, such as the
Partnership's financial position and real estate and capital markets
conditions. The Managing General Partner monitors each property's specific
locale and sub-market conditions evaluating current trends, competition, new
construction and economic changes. The Managing General Partner oversees each
asset's operating performance and continuously evaluates the physical
improvement requirements. In addition, the financing structure for each
property, tax implications and the investment climate are all considered. Any
of these factors, and possibly others, could potentially contribute to any
decision by the Managing General Partner to sell, refinance, upgrade with
capital improvements or hold a particular Partnership property. The
Partnership has received an unsolicited offer from an unaffiliated third party
to purchase for $2,000,000 (i) a ground lease underlying a 70,000 square foot
building at Cooper Point Plaza in Olympia, Washington, and (ii) a 20,000
square foot vacant building occupying a portion of Cooper Point Plaza. In the
event of a sale of the ground lease and building, the Managing General Partner
has advised the Purchaser (which is an affiliate of the Managing General
Partner) that it will use the net cash proceeds (after payment of costs of
sale) from such sale to reduce the existing mortgage debt encumbering Cooper
Point Plaza and for the redevelopment project (as described below). The
Managing General Partner also has advised the Purchaser (which is an affiliate
of the Managing General Partner) that it expects to undertake extensive
capital improvements to Cooper Point Plaza beginning sometime in late 1998 or
early 1999 (in any event, after the transaction described in the preceding two
sentences), and that such renovations may result in a higher valuation for the
property; however, there can be no assurance that the Managing General Partner
will in fact undertake such capital improvements as expected or as to the
increased value of the property resulting from such capital improvements.
Furthermore, the Managing General Partner has indicated that following
completion of any such redevelopment project, it may seek to refinance Cooper
Point Plaza. In the event that there are any excess cash proceeds from the
refinancing, the Managing General Partner has advised the Purchaser (which is
an affiliate of the Managing General Partner) that it may distribute to
Limited Partners such excess proceeds; however, there can be no assurances
that such refinancing will in fact occur or that a distribution will be made
or as to the amount or timing of such distribution. Moreover, no determination
has been made as to whether any net cash proceeds generated by such potential
refinancing would be distributed to Limited Partners, which determination will
be made at the time such refinancing is obtained and will be based on, among
other things, the Partnership's working capital and reserve requirements at
the time. The Purchaser also has been notified that pursuant to the Modified
Loan Agreement, the lender granted certain concessions to the Partnership
following its default on the Loan secured by Southpointe Apartments in Bedford
Heights, Ohio and extended the maturity date of the Loan to January 1, 2002.
Pursuant to the Modified Loan Agreement, the Partnership paid all past due
interest on the Loan. In addition, the lender agreed to advance real estate
tax payments up to a maximum of $180,000 through January 1, 2002, which
amounts will be amortized to January 1, 2002, and the Partnership agreed to
reduce from 5% to 3% the management fees payable to IRG and to invest $150,000
in capital improvements (which have been completed) on the property. Such
capital improvements may result in a higher valuation of the property; however
there can be no assurance as to the increased value of the property resulting
from such renovations. The Purchaser (which is an affiliate of the Managing
General Partner) also has been advised that the Partnership and its affiliates
who are involved in the Joint Venture, in which the Partnership has a 44.5%
interest, presently expect to market for sale the Princeton Meadows Golf
Course in Princeton, New Jersey sometime during 1998. The Partnership
presently expects that the Princeton Meadows Golf Course, which is subject to
a first mortgage of approximately $1,567,000, will sell for approximately
$3,500,000. In the event of a sale of the Princeton Meadows Golf Course, the
Managing General Partner has advised the Purchaser (which is an affiliate of
the Managing General Partner) that it may distribute to Limited Partners the
portion of the net cash proceeds representing the Partnership's interest in
the Joint Venture (after repayment of any outstanding mortgage debt and
payment of other costs of sale) from such sale; however, there can be no
assurance that such sale would in fact occur or as to the amount of cash
proceeds that might result from such sale. Further, no determination has been
made as to whether any net cash proceeds generated by such sale would be
distributed to Limited Partners, which determination will be made at the time
of such sale, and will be based on, among other things, the Partnership's
working capital and reserve requirements at the time. Based on the foregoing
considerations, and except for the Modified Loan Agreement negotiated with
respect to Southpointe Apartments, the potential sale of Princeton Meadows
Golf Course, the potential sale of the ground lease and other commercial space
on or adjacent to Cooper Point Plaza and the potential refinancing of Cooper
Point Plaza, there are no other plans to sell or refinance any Partnership
property at the present time.
16
<PAGE>
Selected Financial and Property-Related Data. Set forth below is a
summary of certain financial and statistical information with respect to the
Partnership and its properties, all of which has been excerpted or derived
from the Partnership's Annual Reports on Form 10-KSB for the years ended
December 31, 1997, 1996, 1995, 1994 and 1993. More comprehensive financial and
other information is included in such reports and other documents filed by the
Partnership with the Commission, and the following summary is qualified in its
entirety by reference to such reports and other documents and all the
financial information and related notes contained therein.
ANGELES PARTNERS XII
SELECTED FINANCIAL DATA
(in thousands, except Unit data)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
DECEMBER 31,
-------------------------------------------------------------------------
1997 1996 1995 1994 1993
-------------- -------------- -------------- -------------- ---------
<S> <C> <C> <C> <C> <C>
Statements of Operations Data:
Rental Income......................... $ 20,007 $ 20,001 $ 19,505 $ 18,979 $ 18,525
Other Income.......................... $ 1,284 $ 1,320 $ 1,341 $ 1,073 $ 1,139
Total Revenues..................... $ 21,291 $ 21,321 $ 20,846 $ 20,052 $ 19,664
Income (Loss) from Operations
(before extraordinary item)........ $ (2,025) $ (1,802) $ (1,496) $ (3,412) $ (3,110)
Net Income (Loss)..................... $ (2,025) $ (1,802) $ (1,496) $ (3,412) $ (5,833)
Net Income (Loss) per Unit............ $ (44.83) $ (39.85) $ (33.09) $ (75.45) $ (128.97)
AS OF
DECEMBER 31,
--------------------------------------------------------------------------
1997 1996 1995 1994 1993
-------------- -------------- -------------- -------------- ---------
Balance Sheets Data:
Total Assets........................... $ 51,365 $ 53,430 $ 55,882 $ 56,537 $ 60,778
Total Liabilities...................... $ 75,980 $ 76,020 $ 76,670 $ 75,829 $ 76,657
Limited Partners' Equity (Deficit)..... $ (23,984) $ (21,979) $ (20,195) $ (18,714) $ (15,336)
Units Outstanding...................... 44,718 44,718 44,773 44,773 44,773
Book Value per Unit.................... $ (536.34) $ (491.50) $ (451.05) $ (417.98) $ (342.53)
</TABLE>
17
<PAGE>
Description of Properties. Set forth below is a table showing the
location, the date of purchase, the nature of the Partnership's ownership
interest in and the use of each of the Partnership's properties.
<TABLE>
<CAPTION>
DATE OF
PROPERTY PURCHASE TYPE OF OWNERSHIP USE
-------- -------- ----------------- ---
<S> <C> <C> <C>
Briarwood Apartments 06/25/85 Fee ownership Residential Apartments
Cedar Rapids, Iowa (subject to first and second (73 units)
mortgages)
Chambers Ridge Apartments 07/26/84 Fee ownership Residential Apartments
Harrisburg, Pennsylvania (subject to first and second (324 units)
mortgages)
Cooper Point Plaza 12/14/84 Fee ownership Retail Center
Olympia, Washington (subject to first mortgage) (103,473 sq.ft.)
Gateway Gardens Apartments 12/21/84 Fee ownership Residential Apartments
Cedar Rapids, Iowa (subject to first and second (328 units)
mortgages)
Hunters Glen Apartments - IV 01/31/85 Fee ownership Residential Apartments
Plainsboro, New Jersey (subject to first mortgage) (264 units)
Hunters Glen Apartments - V 01/31/85 Fee ownership Residential Apartments
Plainsboro, New Jersey (subject to first and second (304 units)
mortgages)
Hunters Glen Apartments - VI 01/31/85 Fee ownership Residential Apartments
Plainsboro, New Jersey (subject to first and second (328 units)
mortgages)
Pickwick Place Apartments 05/11/84 Fee ownership Residential Apartments
Indianapolis, Indiana (subject to first mortgage) (336 units)
Southpointe Apartments 06/12/85 Fee ownership Residential Apartments
Bedford Heights, Ohio (subject to first mortgage) (499 units)
Twin Lake Towers Apartments 03/30/84 Fee ownership Residential Apartments
Westmont, Illinois (subject to first and second (399 units)
mortgages)
Princeton Meadows 07/26/91 Fee ownership(1) Golf Course
Golf Course (subject to first mortgage)
Princeton, New Jersey
</TABLE>
- ----------
(1) The Partnership has a 44.5% interest in Princeton Golf Course Joint
Venture ("Joint Venture"). The Partnership entered into a General
Partnership Agreement with Angeles Income Properties, Ltd. II and Angeles
Partners XI, both California partnerships and affiliates of the Managing
General Partner, to form the Joint Venture. The Princeton Meadows Golf
Course represents the only property owned by the Joint Venture.
18
<PAGE>
Accumulated Depreciation Schedule. Set forth below is a table showing
the gross carrying value, accumulated depreciation and federal tax basis of
each of the Partnership's properties as of December 31, 1997 ($ amounts in
thousands).
<TABLE>
<CAPTION>
GROSS
CARRYING ACCUMULATED FEDERAL
PROPERTY VALUE DEPRECIATION RATE METHOD TAX BASIS
- ----------------------------------- ---------------------- ------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Briarwood Apartments $ 1,814 $ 1,124 5-40 yrs. (1) $ 688
Chambers Ridge Apartments 9,703 6,355 5-40 yrs. (1) 3,287
Cooper Point Plaza 8,865 5,052 5-40 yrs. (1) 4,859
Gateway Gardens Apartments 7,561 4,915 5-40 yrs. (1) 2,404
Hunters Glen Apartments - IV 11,199 6,280 5-40 yrs. (1) 4,573
Hunters Glen Apartments - V 13,043 7,347 5-40 yrs. (1) 5,279
Hunters Glen Apartments - VI 14,029 7,927 5-40 yrs. (1) 5,596
Pickwick Place Apartments 9,230 5,410 5-40 yrs. (1) 3,745
Southpointe Apartments 10,045 6,416 5-40 yrs. (1) 3,284
Twin Lake Towers Apartments 15,130 9,803 5-40 yrs. (1) 4,384
------- --------- ---------
TOTALS $100,619 $ 60,629 $ 38,099
======== ========= =========
</TABLE>
(1) Straight line and accelerated methods used.
19
<PAGE>
Schedule of Mortgages. Set forth below is a table showing certain
information regarding the outstanding mortgages encumbering each of the
Partnership's properties as of December 31, 1997 ($ amounts in thousands).
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL
BALANCE AT STATED BALANCE
DECEMBER 31, INTEREST PERIOD MATURITY DUE AT
PROPERTY 1997 RATE AMORTIZED DATE MATURITY
- ---------------------------------- --------------- ----------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
Briarwood Apartments
1st mortgage $ 1,557 7.83% 28.67 yrs. 10/2003 $ 1,404
2nd mortgage 50 7.83% (1) 10/2003 50
Chambers Ridge Apartments
1st mortgage 5,380 7.83% 28.67 yrs. 10/2003 4,849
2nd mortgage 174 7.83% (1) 10/2003 174
Cooper Point Plaza
1st mortgage 4,026 10.5% 28 yrs. 09/2012 43
Gateway Gardens Apartments
1st mortgage 6,276 7.83% 28.67 yrs. 10/2003 5,657
2nd mortgage 203 7.83% (1) 10/2003 203
Hunters Glen Apartments - IV
1st mortgage 8,345 8.43% 28.67 yrs. 10/2003 7,787
Hunters Glen Apartments - V
1st mortgage 8,787 7.83% 28.67 yrs. 10/2003 7,920
2nd mortgage 285 7.83% (1) 10/2003 285
Hunters Glen Apartments - VI
1st mortgage 9,146 7.83% 28.67 yrs. 10/2003 8,243
2nd mortgage 297 7.83% (1) 10/2003 297
Pickwick Place Apartments
1st mortgage 6,451 9.1% 28 yrs. 05/2005 5,775
Southpointe Apartments
1st mortgage 11,000 8.59% (1) 01/2002 11,000
Additional borrowing 23 9.00% (2) 01/2002 1
Twin Lake Towers Apartments
1st mortgage 10,854 7.83% 28.67 yrs. 10/2003 9,782
2nd mortgage 352 7.83% (1) 10/2003 352
-------- --------
73,206 $ 63,822
Less unamortized discounts (1,101) ========
--------
TOTALS $ 72,105
========
</TABLE>
(1) Interest only payments.
(2) The mortgage note secured by Southpointe Apartments was modified as of
December 31, 1997. The modification agreement extended the term of the
mortgage note from July 1999 to January 2002. The lender also agreed to
advance to the Partnership an amount up to $180,000 for the payment of
real estate taxes. The lender advanced approximately $23,000 to the
Partnership for this purpose in 1997.
20
<PAGE>
Average Annual Rental Rate and Occupancy. Set forth below is a table
showing the average annual rental rates and occupancy percentages for each of
the Partnership's properties during the past two years.
<TABLE>
<CAPTION>
PROPERTY AVERAGE ANNUAL RENTAL RATE AVERAGE ANNUAL OCCUPANCY
- ---------------------------------- ---------------------------- ------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Briarwood Apartments $ 6,485/unit $ 6,417/unit 96% 95%
Chambers Ridge Apartments(1) $ 6,874/unit $ 6,846/unit 91% 89%
Cooper Point Plaza(2) $ 11.40/sq.ft. $11.68/sq.ft. 53% 71%
Gateway Gardens Apartments(3) $ 6,331/unit $ 6,205/unit 94% 93%
Hunters Glen Apartments - IV $ 8,702/unit $ 8,573/unit 96% 94%
Hunters Glen Apartments - V $ 8,831/unit $ 8,573/unit 96% 95%
Hunters Glen Apartments - VI $ 8,712/unit $ 8,464/unit 96% 94%
Pickwick Place Apartments $ 6,805/unit $ 6,468/unit 91% 95%
Southpointe Apartments(4) $ 5,654/unit $ 5,535/unit 63% 80%
Twin Lake Towers Apartments $ 8,269/unit $ 7,914/unit 97% 96%
</TABLE>
(1) Although occupancy improved, this investment property is subject to heavy
market competition.
(2) This investment property has been adversely affected by the moving out of
several small tenants. The Managing General Partner is in the process of
making several spaces "rent ready" and also is working to fill vacant
spaces. Additionally, the Managing General Partner is planning major
renovations for signage, landscaping, parking lot repairs, and general
contract work in an effort to improve occupancy.
(3) Concessions have been offered at Pickwick Place Apartments in an effort to
increase occupancy.
(4) Southpointe Apartments' low occupancy is due to delays in renovations at
the property and the poor condition of the property. The mortgage
indebtedness encumbering this property was modified in December 1997. As
part of the agreement, the Partnership is required to advance $150,000 to
Southpointe Apartments for capital improvement projects. As of December
31, 1997, approximately $70,000 of the required improvements have been
completed.
Schedule of Real Estate Taxes and Rates. Set forth below is a table
showing the real estate taxes and rates for 1997 for each of the Partnership's
properties.
<TABLE>
<CAPTION>
1997 1997
PROPERTY BILLING RATE
- ---------------------------------------- ---------------------- -------------
<S> <C> <C>
Briarwood Apartments $ 73,000* 3.47%
Chambers Ridge Apartments $ 161,000 2.78%
Cooper Point Plaza $ 102,000 1.58%
Gateway Gardens Apartments $ 243,000** 3.13%
Hunters Glen Apartments - IV $ 277,000 2.45%
Hunters Glen Apartments - V $ 299,000 2.45%
Hunters Glen Apartments - VI $ 303,000 2.45%
Pickwick Place Apartments $ 196,000* 7.11%
Southpointe Apartments $ 235,000 5.86%
Twin Lake Towers Apartments $ 267,000* 5.59%
</TABLE>
* Estimate for 1997 billing. Tax bills not yet received.
** Represents a fiscal year ending June 30, 1997.
Other Information. The Partnership is subject to the information
reporting requirements of the Exchange Act and accordingly is required to file
reports and other information with the Commission relating to its business,
financial results and other matters. Such reports and other documents may be
inspected at the Commission's Public Reference Section, Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, where copies may be obtained at
prescribed rates, and at the regional offices of the Commission located in the
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
and 7 World Trade Center, New York, New York 10048. Copies should be available
by mail upon payment of the Commission's customary charges by writing to the
Commission's principal offices at 450 Fifth Street, N.W., Washington, D.C.
20549. The Commission also maintains a web site
21
<PAGE>
that contains reports, proxy and other information filed electronically with
the Commission, the address of which is http://www.sec.gov.
Cash Distributions History. The last distribution made by the
Partnership was in 1989 ($15.00 per Unit). In total, original investors in the
Partnership have received distributions of only $30 in respect of their
original $1,000 investment made in 1983.
Operating Budgets of the Partnership. A summary of the fiscal 1997
and 1998 operating budgets and the audited results of operations for fiscal
1997 of the Partnership are set forth in the table below. The budgeted amounts
provided below are figures that were not computed in accordance with generally
accepted accounting principles ("GAAP"). Historically, budgeted operating
results of operations for a particular fiscal year have differed significantly
in certain respects from the audited operating results for that year. In
particular, items that are categorized as capital expenditures for purposes of
preparing the operating budgets are often re-categorized as expenses when the
financial statements are audited and presented in accordance with GAAP.
Therefore, the summary operating budget presented for fiscal 1998 should not
necessarily be considered as indicative of what the audited operating results
for fiscal 1998 will be. Furthermore, any estimate of the future performance
of a business, such as the Partnership's business, is forward-looking and
based on numerous assumptions, some of which inevitably will prove to be
incorrect. For this reason, it is probable that the Partnership's future
operating results will differ from those projected in the operating budget,
and those differences may be material. Therefore, such information should not
be relied on by Limited Partners.
<TABLE>
<CAPTION>
FISCAL 1997 FISCAL 1997 FISCAL 1998
BUDGETED AUDITED BUDGETED
------------ ------------ ------------
<S> <C> <C> <C>
Total Revenues from Property Operations...................... $ 22,058,000 $ 21,291,000 $ 22,265,000
Total Operating Expenses .................................... $ 11,146,000 $ 11,467,000 $ 10,592,000
Net Operating Income......................................... $ 10,912,000 $ 9,824,000 $ 11,673,000
Capital Expenditures......................................... $ 3,304,000 $ 1,671,000 $ 3,436,000
</TABLE>
SECTION 10. CONFLICTS OF INTEREST AND TRANSACTIONS WITH AFFILIATES.
The Managing General Partner and its affiliates have conflicts of interest
with respect to the Offer as set forth below.
Conflicts of Interest with Respect to the Offer. The Managing General
Partner has conflicts of interest with respect to the Offer, including
conflicts resulting from its affiliation with IPT and the Purchaser. The
Managing 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 Managing
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 Managing 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 Managing General Partner in attempting to reconcile the interests of the
Purchaser (which is an affiliate of the Managing General Partner) with the
interests of the other Limited Partners. In addition, the Purchaser (which is
an affiliate of the Managing 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 Managing General Partner) to purchase
Units at a low price and the desire of the Limited Partners to sell their
Units at a high price. The Managing General Partner has indicated in the
Schedule 14D-9 that it is remaining neutral and making no recommendation as to
whether Limited Partners should tender their Units pursuant to the Offer.
LIMITED PARTNERS ARE URGED TO READ THIS OFFER TO PURCHASE AND THE SCHEDULE
14D-9 AND THE RELATED MATERIALS CAREFULLY AND IN THEIR ENTIRETY BEFORE
DECIDING WHETHER TO TENDER THEIR UNITS.
Voting by the Purchaser. The Limited Partnership Agreement provides
that the General Partner has absolute discretion as to whether to admit an
assignee of Units to the Partnership as a substituted Limited Partner. The
Purchaser (which is an affiliate of the Managing General Partner) will seek to
be admitted to the Partnership as a substituted Limited Partner upon
consummation of the Offer and, when admitted, will have the right to vote each
Unit purchased pursuant to the Offer. Even if the Purchaser (which is an
affiliate of the Managing General Partner) is not admitted to the Partnership
as a substituted Limited Partner, however, the Purchaser may have the right to
vote each Unit purchased in the Offer pursuant to the irrevocable appointment
by tendering Limited Partners
22
<PAGE>
of the Purchaser (which is an affiliate of the Managing General Partner) and
its managers and designees as proxies with respect to the Units tendered by
such Limited Partners and accepted for payment by the Purchaser. See Section
3. As a result, if the Purchaser (which is an affiliate of the Managing
General Partner) is successful in acquiring a significant number of Units
pursuant to the Offer, the Purchaser will have the right to vote those Units
and thereby significantly influence all voting decisions with respect to the
Partnership. In general, IPLP and the Purchaser (which are affiliates of the
Managing General Partner) will vote the Units owned by them in whatever manner
they deem to be in IPT's best interests, which, because of their relationship
with the Managing General Partner, also may be in the interest of the Managing
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. 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
Managing General Partner or the other non-managing general partners and in
certain circumstances election of a new or successor managing general partner
or non-managing general partners; dissolution of the Partnership; and most
types of amendments to the Limited Partnership Agreement. See Section 7.
Financing Arrangements. The Purchaser (which is an affiliate of the
Managing 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. See Section
12. 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 Managing 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 Managing 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.
Transactions with Affiliates. The Partnership paid IRG and ICG
property management fees for property management services in the amounts of
approximately $1,029,000, $1,033,000 and $1,032,000 for the years ended
December 31, 1997, 1996 and 1995, respectively, and has paid IRG and ICG
property management fees equal to $255,080 during the first three months of
1998. The Partnership reimbursed the Managing 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 years ended December 31, 1997, 1996 and 1995 in the
amounts of $431,000, $453,000 and $443,000 respectively, and has reimbursed
them for such services in the amount of $104,119 through March 31, 1998. The
reimbursement amounts for the years ended December 31, 1997 and December 31,
1996 include $70,000 and $33,000, respectively, which were paid to an
affiliate of the Managing General Partner for costs incurred in connection
with construction oversight services. For the period January 1, 1996 through
August 31, 1997, the Partnership insured its properties under a master policy
through an agency and insurer unaffiliated with the Managing General Partner.
An affiliate of the Managing 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. That
agent assumed the financial obligations to the affiliate of the Managing
General Partner who received payments on these obligations from the agent.
Insignia and the Managing General Partner believe that the aggregate financial
benefit derived by Insignia and its affiliates from such arrangement was
immaterial.
SECTION 11. CERTAIN INFORMATION CONCERNING THE PURCHASER, IPLP, IPT
AND INSIGNIA.
The Purchaser. The Purchaser (which is an affiliate of the Managing
General Partner) is a newly-formed entity controlled by IPT and organized for
the purpose of making the Offer. The Purchaser is a wholly-owned subsidiary of
IPLP. The Purchaser (which is an affiliate of the Managing General Partner)
has not engaged in any business activity other than in connection with the
Offer and another tender offer for units of limited partnership interests in
one other partnership being made contemporaneously with the Offer, and has no
significant assets or liabilities at the present time. Upon consummation of
the Offer and such other offer, the Purchaser's only
23
<PAGE>
significant assets will be the Units it acquires pursuant to the Offer and the
other limited partnership units it acquires pursuant to such other offer.
The principal executive offices of the Purchaser (which is an
affiliate of the Managing General Partner) are located at One Insignia
Financial Plaza, P.O. Box 19059, Greenville, South Carolina 29602, and its
telephone number is (864) 239-1300. For certain information concerning the
managers of the Purchaser (which is an affiliate of the Managing General
Partner), see Schedule II to this Offer to Purchase.
IPT and IPLP. IPT was formed by Insignia in May 1996, for the purpose
of acquiring and owning interests in multi-family residential properties,
principally through ownership of limited and general partner interests in real
estate limited partnerships (including the Partnership). IPT has been
organized and operates in a manner that will qualify it to be taxed as a real
estate investment trust ("REIT") under the Code. Substantially all of IPT's
investments are held through IPLP, which is the operating partnership of IPT.
IPT is presently the sole general partner and Insignia is presently the sole
limited partner of IPLP. IPT has engaged Insignia to provide certain
investment banking and related services to IPT and IPLP, including in
connection with the Offer.
Substantially all of IPT's assets consist of (i) interests in
entities which comprise or control the managing general partners of real
estate limited partnerships, including the Partnership (the "IPT
Partnerships"), which interests are held by IPT directly, and (ii) limited
partner interests in the IPT Partnerships, which interests are held through
IPLP. The IPT Partnerships own, in the aggregate, 349 properties containing
approximately 73,000 residential apartment units and approximately 5.9 million
square feet of commercial space. See Schedule V for a list of the IPT
Partnerships in which IPT has a material investment.
On July 18, 1997, IPT, Insignia, MAE GP Corporation (which at the
time was an affiliate of IPT but has subsequently been merged into IPT -- see
Section 13) ("MAE GP"), and Angeles Mortgage Investment Trust, an
unincorporated California business trust ("AMIT"), entered into a definitive
merger agreement (the "AMIT Merger Agreement"), pursuant to which AMIT is to
be merged with and into IPT, with IPT being the surviving entity, in a stock
for stock transaction (the "AMIT Merger"). AMIT is a public company whose
Class A shares trade on the American Stock Exchange under the symbol ANM.
Insignia and its affiliates currently own 96,800 (or approximately 3.7%) of
the 2,617,000 outstanding AMIT Class A shares and all of the 1,675,113
outstanding AMIT Class B shares. If the AMIT Merger is consummated, IPT will
become a publicly traded company (IPT presently intends to apply for listing
of its shares on the New York Stock Exchange, which listing would be subject
to completion of the AMIT Merger), and it is anticipated that Insignia and its
affiliates will own approximately 57% of post-merger IPT, the former AMIT
shareholders (other than Insignia and its affiliates) will own approximately
17% of post-merger IPT, and the current unaffiliated shareholders of IPT will
own the remaining 26% of post-merger IPT (see, however, the discussion of the
merger of Insignia and AIMCO in the following subsection of this Section 9
captioned "Insignia"). The AMIT Merger is expected to be completed in the
second quarter of 1998. However, consummation of the AMIT Merger is subject to
several conditions, including approval of the AMIT Merger Agreement and the
AMIT Merger by the shareholders of AMIT. Accordingly, there can be no
assurance as to when the AMIT Merger will occur, or that it will occur at all.
The principal executive offices of IPT and IPLP are located at One
Insignia Financial Plaza, P.O. Box 19059, Greenville, South Carolina 29602,
and the telephone number of each is (864) 239-1300. For certain information
concerning the trustees and executive officers of IPT, see Schedule III to
this Offer to Purchase. IPLP does not have any officers or employees.
Set forth below is certain consolidated financial information with
respect to IPT and IPLP.
24
<PAGE>
INSIGNIA PROPERTIES TRUST
SELECTED CONSOLIDATED FINANCIAL
INFORMATION (in thousands, except share
and unit data)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
(audited) (audited)
<S> <C> <C>
Statements of Operations Data:
Revenues................................................................... $ 16,826 $ 9,705
Income Before Extraordinary Item........................................... $ 6,074 $ 3,557
Net Income................................................................. $ 6,004 $ 2,425
Supplemental Data:
Funds From Operations(1)................................................... $ 20,939 $ 12,563
IPT Common Shares Outstanding.............................................. 18,573,151 11,168,036
IPLP Units Outstanding..................................................... 9,415,947 8,399,499
---------- ----------
IPT Common Shares and IPLP Units Outstanding(2)............................ 27,989,098 19,567,535
========== ==========
Balance Sheets Data:
Cash....................................................................... $ 37,432 $ 4,928
Investments in IPT Partnerships(3)......................................... $ 159,469 $ 118,741
Long-Term Debt............................................................. $ 19,300 $ 19,730
Shareholders' Equity(4).................................................... $ 200,659 $ 121,068
</TABLE>
(1) Funds from Operations represent income or loss from real estate
operations, which is net income or loss in accordance with GAAP, excluding
gains or losses from debt restructuring or sales of property, plus
depreciation and provision for impairment.
(2) Assumes all outstanding IPLP units are exchanged for IPT Common Shares.
(3) As of December 31, 1997, represented IPT's investment in 28 of the 36 IPT
Partnerships which IPT accounts for using the equity method. Of the
remaining eight IPT Partnerships, IPT accounts for seven using the cost
method and one using the consolidation method.
(4) Includes Insignia's minority interest in IPLP.
Insignia. Insignia is a fully integrated real estate services
organization. Insignia is the largest manager of multi-family residential
properties in the United States and is among the largest managers of
commercial properties. Insignia's real estate services include property
management, providing all of the day-to-day services necessary to operate a
property, whether residential or commercial; asset management, including
long-term financial planning, monitoring and implementing capital improvement
plans, and development and execution of refinancings and dispositions; real
estate leasing and brokerage; maintenance and construction services; marketing
and advertising; investor reporting and accounting; and investment banking,
including assistance in workouts and restructurings, mergers and acquisitions,
and debt and equity securitizations.
Insignia provides property and/or asset management services for
approximately 2,700 properties, which include approximately 280,000
residential units (including cooperative and condominium units), and in excess
of 160 million square feet of retail, commercial and industrial space, located
in over 500 cities in 48 states, Italy and the United Kingdom. Insignia
currently provides partnership administration services to approximately 900
limited partnerships having approximately 350,000 limited partners. Insignia
is a public company whose stock is traded on the New York Stock Exchange under
the symbol IFS.
On March 17, 1998, Insignia, Insignia/ESG, Inc. (which is a
wholly-owned subsidiary of Insignia), Apartment Investment and Management
Company, a Maryland corporation ("AIMCO"), and AIMCO Properties, L.P., a
Delaware limited partnership of which AIMCO is the sole general partner,
entered into a definitive merger agreement (the "AIMCO Merger Agreement"),
pursuant to which Insignia is to be merged with and into AIMCO, with AIMCO as
the surviving corporation (the "AIMCO Merger"). AIMCO is a public REIT whose
Class A shares trade on the New York Stock Exchange under the symbol AIV. The
AIMCO Merger is expected to be completed in the third quarter of 1998.
However, consummation of the AIMCO Merger is subject to certain conditions,
25
<PAGE>
including the approval of the shareholders of Insignia. Accordingly, there can
be no assurance as to when the AIMCO Merger will occur, or that it will occur
at all.
Assuming the AIMCO Merger is consummated, AIMCO will succeed to
Insignia's ownership of IPT and IPLP, and thus IPT (and the Partnership) will
thereafter be controlled by AIMCO. In addition, AIMCO is required pursuant to
the AIMCO Merger Agreement to acquire all of the outstanding shares of IPT not
owned by Insignia by causing IPT to merge with and into AIMCO (or a subsidiary
of AIMCO) as soon as practicable after the consummation of the AIMCO Merger
(but not before August 15, 1998), in which event IPT would cease to exist as a
separate entity and AIMCO would effectively own all of the Units acquired by
the Purchaser pursuant to the Offer.
Insignia is subject to the information and reporting requirements of
the Exchange Act and in accordance therewith is required to file periodic
reports, proxy statements and other information with the Commission relating
to its business, financial condition and other matters. Certain information,
as of particular dates, concerning Insignia's business, principal properties,
capital structure, material pending legal proceedings, operating results,
financial condition, directors and officers (including their remuneration and
stock options granted to them), the principal holders of Insignia's
securities, any material interests of such persons in transactions with
Insignia and certain other matters is required to be disclosed in proxy
statements and annual reports distributed to Insignia's shareholders and filed
with the Commission. Such reports, proxy statements and other information may
be inspected and copied at the Commission's public reference facilities and
should also be available for inspection in the same manner as set forth with
respect to the Partnership in Section 9.
Insignia's principal executive offices are located at One Insignia
Financial Plaza, Greenville, South Carolina 29602, and its telephone number is
(864) 239-1000. For certain information concerning the directors and executive
officers of Insignia, see Schedule IV to this Offer to Purchase.
Set forth below is certain consolidated financial information with
respect to Insignia and its consolidated subsidiaries for its fiscal years
ended December 31, 1997, 1996 and 1995. More comprehensive financial and other
information is included in Insignia's Annual Report on Form 10-K for the year
ended December 31, 1997 (including management's discussion and analysis of
financial condition and results of operations) and in other reports and
documents filed by Insignia with the Commission. The financial information set
forth below is qualified in its entirety by reference to such reports and
documents filed with the Commission and the financial statements and related
notes contained therein. These reports and other documents may be examined and
copies thereof may be obtained in the manner set forth above.
26
<PAGE>
INSIGNIA FINANCIAL GROUP, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except per share data)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------------------
1997 1996 1995
----- ------ -----
<S> <C> <C> <C>
Statements of Operations Data:
Total Revenues.................................. $ 400,843 $ 227,074 $ 123,032
Income Before Taxes and Extraordinary Item...... $ 17,055 $ 14,946 $ 10,093
Net Income...................................... $ 10,233 $ 8,564 $ 5,806
Fully Diluted Earnings Per Share................ $ 0.32 $ 0.26 $ 0.20
AS OF
DECEMBER 31,
----------------------------------
1997 1996 1995
----------- ------------ --------
Balance Sheets Data:
Cash and Cash Equivalents....................... $ 88,847 $ 54,614 $ 49,846
Receivables..................................... $ 122,180 $ 46,040 $ 26,445
Total Assets................................ $ 800,223 $ 492,402 $ 245,409
Accounts Payable................................ $ 13,705 $ 1,711 $ 1,497
Commissions Payable............................. $ 51,285 $ 18,736 $ 602
Accrued and Sundry Liabilities.................. $ 102,009 $ 40,741 $ 25,619
Long-Term Debt.................................. $ 189,704 $ 69,140 $ 42,996
Total Liabilities........................... $ 356,703 $ 130,328 $ 70,714
Redeemable Convertible Preferred Stock.......... -- -- $ 15,000
Redeemable Convertible Preferred Securities
of Subsidiary Trust......................... $ 144,065 $ 144,169 --
Minority Interest in Consolidated Subsidiaries.. $ 61,546 -- $ 2,682
Shareholders' Equity........................ $ 237,909 $ 217,905 $ 157,013
</TABLE>
Except as otherwise set forth herein and in Schedule I, none of the
Purchaser (which is an affiliate of the Managing General Partner), IPLP, IPT,
Insignia or, to the best of the Purchaser's knowledge, any of the persons
listed on Schedules II, III or IV hereto, or any affiliate of the foregoing,
(i) beneficially owns or has a right to acquire any Units, (ii) has effected
any transaction in the Units in the last 60 days, or (iii) has any contract,
arrangement, understanding or relationship with any other person with respect
to any securities of the Partnership, including, but not limited to,
contracts, arrangements, understandings or relationships concerning the
transfer or voting thereof, joint ventures, loan or option arrangements, puts
or calls, guarantees of loans, guarantees against loss or the giving or
withholding of proxies. Andrew L. Farkas, who is the Chairman of the Board,
Chief Executive Officer and President of Insignia and a trustee of IPT,
beneficially owns approximately 28% of Insignia's outstanding common stock
and, as a result, may be deemed to beneficially own the Units owned by IPLP.
SECTION 12. SOURCE OF FUNDS. The Purchaser (which is an affiliate of
the Managing General Partner) expects that approximately $9,500,000 will be
required to purchase 18,500 Units, if tendered, and to pay related fees and
expenses. The Purchaser (which is an affiliate of the Managing General
Partner) expects to obtain all of those funds from IPLP, which in turn intends
to use its cash on hand.
SECTION 13. BACKGROUND OF THE OFFER.
Affiliation with the Managing General Partner. The Managing General
Partner (which also serves as the general partner of ten other affiliated
public real estate limited partnerships) is a direct, wholly-owned subsidiary
of Angeles Securitization Corporation ("ASC"), which in turn is a direct,
wholly-owned subsidiary of IAP GP Corporation ("IAP"), which in turn is a
direct, wholly-owned subsidiary of IPT. ASC acquired all of the outstanding
stock of the Managing General Partner in November 1992 from Angeles Real
Estate Corporation, which
27
<PAGE>
in turn was a wholly-owned subsidiary of Angeles Corporation. At the time of
such acquisition, IAP and ASC were (and thus the Managing General Partner
became) wholly-owned subsidiaries of MAE GP. Effective March 7, 1998, MAE GP
was merged with and into IPT, with IPT being the surviving entity (the "MAE GP
Merger"). As a result of the MAE GP Merger, IAP, ASC and the Managing General
Partner are now wholly-owned subsidiaries of IPT and the Partnership is
controlled by IPT. In connection with the MAE GP Merger, effective February
17, 1998, Insignia contributed 1,769 Units owned by it and its subsidiaries
(representing all Units then owned by such entities) to IPLP in exchange for
additional units of partnership interest in IPLP.
Determination of Purchase Price. In establishing the Purchase Price,
the Purchaser (which is an affiliate of the Managing General Partner) reviewed
certain publicly available information and certain information made available
to it by the Managing General Partner and its other affiliates, including
among other things: (i) the Limited Partnership Agreement, as amended to date;
(ii) the Partnership's Annual Report on Form 10-KSB for the year ended
December 31, 1997; (iii) unaudited results of operations of the Partnership's
properties for the 1997 fiscal year and to date in 1998; (iv) the operating
budgets prepared by IRG and ICG with respect to the Partnership's properties
for the year ending December 31, 1998; (v) an independent appraisal of one of
the Partnership's properties; and (vi) other information obtained by IRG, ICG,
Insignia and other affiliates in their capacities as providers of property
management, asset management and partnership administration services to the
Partnership. The Purchaser's determination of the Purchase Price was based on
its review and analysis of the foregoing information, the other financial
information and analyses concerning the Partnership summarized below. In
determining the Purchase Price, the Purchaser did not rely upon any material,
non-public information concerning the Partnership not summarized below or
elsewhere in this Offer to Purchase.
Trading History of Units. Secondary market sales activity for the
Units, including privately negotiated sales, has been limited and sporadic.
According to information obtained from the Managing General Partner, from
January 1, 1996 to March 31, 1998 an aggregate of 5,803 Units (representing
less than 13% of the total outstanding Units) was transferred (excluding the
Units transferred by Insignia to IPLP in February 1998) in sale transactions.
Set forth in the table below are the high and low sales prices of Units for
the quarterly periods from January 1, 1996 to March 31, 1998, as reported by
the Managing General Partner and by The Partnership Spectrum, which is an
independent, third-party source. The gross sales prices reported by The
Partnership Spectrum do not necessarily reflect the net sales proceeds
received by sellers of Units, which typically are reduced by commissions and
other secondary market transaction costs to amounts less than the reported
prices; thus the Purchaser does not know whether the information compiled by
The Partnership Spectrum is accurate or complete. The transfer paperwork
submitted to the Managing General Partner often does not include the requested
price information or contains conflicting information as to the actual sales
price; accordingly, Limited Partners should not rely upon this information as
being completely accurate.
28
<PAGE>
ANGELES PARTNERS XII
REPORTED SALES PRICES OF PARTNERSHIP UNITS
<TABLE>
<CAPTION>
AS REPORTED BY AS REPORTED BY
THE MANAGING GENERAL PARTNER(A) THE PARTNERSHIP SPECTRUM(B)
------------------------------- ---------------------------
LOW SALES HIGH SALES LOW SALES HIGH SALES
PRICE PRICE PRICE PRICE
PER UNIT PER UNIT PER UNIT PER UNIT
-------------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Fiscal Year Ended December 31, 1998:
First Quarter..................................... $175 $403 $369 $379
Fiscal Year Ended December 31, 1997:
Fourth Quarter.................................... 125 406 368 375
Third Quarter ................................... 125 406 365 406
Second Quarter.................................... 125 420 360 406
First Quarter .................................... 125 450 360 400
Fiscal Year Ended December 31, 1996:
Fourth Quarter ................................... 65 397 350 425
Third Quarter..................................... 110 395 360 410
Second Quarter.................................... 110 368 337 396
First Quarter..................................... 150 372 241 397
</TABLE>
(a) Although the Managing General Partner requests and records information on
the prices at which Units are sold, it does not regularly receive or
maintain information regarding the bid or asked quotations of secondary
market makers, if any. The Managing General Partner processes transfers
of Units 12 times per year - on the first day of each month. The prices
in the table are based solely on information provided to the Managing
General Partner by sellers and buyers of Units transferred in sale
transactions (i.e., excluding transactions believed to result from the
death of a Limited Partner, rollover to an IRA account, establishment of
a trust, trustee to trustee transfers, termination of a benefit plan,
distributions from a qualified or non-qualified plan, uniform gifts,
abandonment of Units or similar non-sale transactions).
(b) The gross sales prices reported by The Partnership Spectrum do not
necessarily reflect the net sales proceeds received by sellers of Units,
which typically are reduced by commissions and other secondary market
transaction costs to amounts less than the reported prices. The Purchaser
(which is an affiliate of the Managing General Partner) does not know
whether the information compiled by The Partnership Spectrum is accurate
or complete.
The Purchaser (which is an affiliate of the Managing General Partner)
believes that, although secondary market sales information probably is not a
reliable measure of value because of the limited and inefficient nature of the
market for Units, this information may be relevant to a Limited Partner's
decision as to whether to tender its Units pursuant to the Offer. At present,
privately negotiated sales and sales through intermediaries (e.g., through the
trading system operated by American Partnership Board, which publishes sell
offers by holders of Units) are the only means available to a Limited Partner
to liquidate an investment in Units (other than the Offer) because the Units
are not listed or traded on any exchange or quoted on NASDAQ.
Appraisals. Southpointe Apartments was appraised in September 1995 by
an independent, third party appraiser, Koeppel Tener Real Estate Services,
Inc. ("KTR"), in connection with a refinancing of the property. According to
the appraisal report, the scope of the appraisal included an inspection of the
property and an analysis of the surrounding market. KTR relied principally on
the income capitalization approach to valuation and secondarily on the sales
comparison approach, and represented that its report was prepared in
accordance with the Code of Professional Ethics and Standards of Professional
Appraisal Practice of the Appraisal Institute and the Uniform Standards of
Professional Appraisal Practice, and in compliance with the Appraisal
Standards set forth in the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 (known as "FIRREA"). The estimated market value of the
fee simple estate of the property specified in that appraisal report was
$9,750,000. A copy of the summary of the appraisal has been filed as an
exhibit to the Purchaser's Tender Offer Statement on Schedule 14D-1 filed with
the Commission. Independent appraisals have not been conducted for any of the
Partnership's other properties in the past three years.
Managing General Partner's Annual Estimates of Net Asset Value. The
Managing General Partner prepares annual estimates of the Partnership's net
asset value per Unit. The Managing General Partner's three most recent
estimates of the Partnership's net asset value per Unit were $815.95, $582 and
$613 per Unit as of December 31,
29
<PAGE>
1997, 1996 and 1995, respectively. The Managing General Partner estimates net
asset value based on a hypothetical sale of all of the Partnership's
properties and the distribution to the Limited Partners and the Managing
General Partner of the gross proceeds of such sales, net of related
indebtedness, together with the Partnership's cash, proceeds from temporary
investments, and all other assets that are believed to have liquidation value,
after provision in full for all of the Partnership's other known liabilities.
The net asset value estimates prepared by the Managing General Partner do not
take into account (i) timing considerations or (ii) costs associated with
winding up the Partnership. Therefore, the Purchaser believes that the
Managing General Partner's estimates of net asset value per Unit do not
necessarily represent either the fair market value of a Unit or the amount a
Limited Partner reasonably could expect to receive if the Partnership's
properties were sold and the Partnership was liquidated. For this reason, the
Purchaser considered the Managing General Partner's net asset value estimates
to be less meaningful in determining the Purchase Price than the pro forma
liquidation analysis described below.
Estimate of Net Asset Value in Connection with the MAE GP Merger. In
connection with the MAE GP Merger (as described in Section 11), IPT estimated
the net asset value of a Unit (as of December 31, 1997) to be $766.11. This
net asset value estimate was based on a hypothetical sale of all of the
Partnership's properties and the distribution to the Limited Partners and the
Managing General Partner of the gross proceeds of such sales, net of related
indebtedness, together with the Partnership's cash, proceeds from temporary
investments, and all other assets that are believed to have liquidation value,
after provision in full for all of the Partnership's other known liabilities.
This net asset value estimate did not take into account (i) timing
considerations or (ii) costs associated with winding up the Partnership.
Therefore, the Purchaser believes that IPT's estimate of the net asset value
of a Unit prepared in connection with the MAE GP Merger does not necessarily
represent either the fair market value of a Unit or the amount a Limited
Partner reasonably could expect to receive if the Partnership's properties
were sold and the Partnership was liquidated. For this reason, the Purchaser
considered such net asset value estimate to be less meaningful in determining
the Purchase Price than the pro forma liquidation analysis described below.
Purchaser's Estimate of Gross Real Estate Value. In estimating the
gross real estate value of the Partnership's properties, the Purchaser
utilized the capitalization of income approach. The estimate of the gross real
estate value of the Partnership's properties prepared by the Purchaser does
not purport to be an estimate of the aggregate fair market value of the Units
themselves, nor should it be viewed as such by Limited Partners. Neither the
Purchaser nor any of its affiliates prepared any estimates of the values of
the Partnership's properties based upon any other valuation method.
RESIDENTIAL PROPERTIES
The following is a description of the methodology employed by the
Purchaser in preparing such estimates of the residential properties owned by
the Partnership (as used below, "net operating income" is calculated before
depreciation, amortization, debt service payments and certain capital
expenditure items):
BRIARWOOD APARTMENTS. In estimating the value of this property, the
Purchaser reviewed the income ($491,068) generated by the property for the
year ended December 31, 1997 (comprised of $454,615 of gross rental income and
$36,453 of other income), and then deducted from this amount the total
operating expenses of the property for the year ended 1997 ($232,340),
resulting in the Purchaser's estimated net operating income for the year ended
1997 ($258,728). The Purchaser then reduced the estimated annual net operating
income amount by $250 per apartment unit, representing the Purchaser's
estimate of the adjustment that would be imputed by a third party purchaser in
underwriting the operating expenses, including normal replacement reserves, of
the property for valuation purposes. Finally, the Purchaser capitalized its
estimated adjusted net operating income amount ($240,478) at a 10.75%
capitalization rate, resulting in an estimated gross property value of
$2,237,005.
CHAMBERS RIDGE APARTMENTS. In estimating the value of this property,
the Purchaser reviewed the income ($2,124,247) generated by the property for
the year ended December 31, 1997 (comprised of $2,011,632 of gross rental
income and $112,615 of other income), and then deducted from this amount the
total operating expenses of the property for the year ended 1997 ($1,129,660),
resulting in the Purchaser's estimate of net operating income for the year
ended 1997 ($994,587). The Purchaser then reduced the estimated annual net
operating income
30
<PAGE>
amount by $250 per apartment unit, representing the Purchaser's estimate of
the adjustment that would be imputed by a third party purchaser in
underwriting the operating expenses, including normal replacement reserves, of
the property for valuation purposes. Finally, the Purchaser capitalized its
estimated adjusted net operating income amount ($913,587) at a 10.5%
capitalization rate, resulting in an estimated gross property value of
$8,700,829.
GATEWAY GARDENS APARTMENTS. In estimating the value of this property,
the Purchaser reviewed the income ($2,062,933) generated by the property for
the year ended December 31, 1997 (comprised of $1,916,516 of gross rental
income and $146,417 of other income), and then deducted from this amount the
total operating expenses of the property for the year ended 1997 ($1,015,363),
resulting in the Purchaser's estimate of net operating income for the year
ended 1997 ($1,047,570). The Purchaser then reduced the estimated annual net
operating income amount by $200 per apartment unit, representing the
Purchaser's estimate of the adjustment that would be imputed by a third party
purchaser in underwriting the operating expenses, including normal replacement
reserves, of the property for valuation purposes. Finally, the Purchaser
capitalized its estimated adjusted net operating income amount ($981,970) at a
10.75% capitalization rate, resulting in an estimated gross property value of
$9,134,605.
HUNTERS GLEN IV. In estimating the value of this property, the
Purchaser reviewed the income ($2,483,219) generated by the property for the
year ended December 31, 1997 (comprised of $2,148,807 of gross rental income
and $334,412 of other income), and then deducted from this amount the total
operating expenses of the property for the year ended 1997 ($1,171,073),
resulting in the Purchaser's estimate of net operating income for the year
ended 1997 ($1,312,146). The Purchaser then reduced the estimated annual net
operating income amount by $300 per apartment unit, representing the
Purchaser's estimate of the adjustment that would be imputed by a third party
purchaser in underwriting the operating expenses, including normal replacement
reserves, of the property for valuation purposes. Finally, the Purchaser
capitalized its estimated adjusted net operating income amount ($1,232,946) at
a 10% capitalization rate, resulting in an estimated gross property value of
$12,329,460.
HUNTERS GLEN V. In estimating the value of this property, the
Purchaser reviewed the income ($2,846,167) generated by the property for the
year ended December 31, 1997 (comprised of $2,541,531 of gross rental income
and $304,636 of other income), and then deducted from this amount the total
operating expenses of the property for the year ended 1997 ($1,263,089),
resulting in the Purchaser's estimate of net operating income for the year
ended 1997 ($1,583,078). The Purchaser then reduced the estimated annual net
operating income amount by $350 per apartment unit, representing the
Purchaser's estimate of the adjustment that would be imputed by a third party
purchaser in underwriting the operating expenses, including normal replacement
reserves, of the property for valuation purposes. Finally, the Purchaser
capitalized its estimated adjusted net operating income amount ($1,476,678) at
a 10% capitalization rate, resulting in an estimated gross property value of
$14,766,780.
HUNTERS GLEN VI. In estimating the value of this property, the
Purchaser reviewed the income ($3,027,695) generated by the property for the
year ended December 31, 1997 (comprised of $2,687,933 of gross rental income
and $339,762 of other income), and then deducted from this amount the total
operating expenses of the property for the year ended 1997 ($1,327,964),
resulting in the Purchaser's estimate of net operating income for the year
ended 1997 ($1,699,731). The Purchaser then reduced the estimated annual net
operating income amount by $350 per apartment unit, representing the
Purchaser's estimate of the adjustment that would be imputed by a third party
purchaser in underwriting the operating expenses, including normal replacement
reserves, of the property for valuation purposes. Finally, the Purchaser
capitalized its estimated adjusted net operating income amount ($1,584,931) at
a 10% capitalization rate, resulting in an estimated gross property value of
$15,849,310.
PICKWICK PLACE APARTMENTS. In estimating the value of this property,
the Purchaser reviewed the income ($2,101,186) generated by the property for
the year ended December 31, 1997 (comprised of $1,973,208 of gross rental
income and $127,978 of other income), and then deducted from this amount the
total operating expenses of the property for the year ended 1997 ($1,270,866),
resulting in the Purchaser's estimate of net operating income for the year
ended 1997 ($830,320). The Purchaser then increased the estimated annual net
operating income amount by $700 per apartment unit, representing the
Purchaser's estimate of the adjustment that would be imputed by a third party
purchaser in underwriting the operating expenses, including normal replacement
reserves, of the property for valuation purposes. Finally, the Purchaser
capitalized its estimated adjusted net operating income amount ($1,065,520) at
a 10% capitalization rate, resulting in an estimated gross property value of
$10,655,200.
31
<PAGE>
SOUTH POINTE APARTMENTS. In estimating the value of this property,
the Purchaser reviewed the income ($1,739,478) generated by the property for
the year ended December 31, 1997 (comprised of $1,619,760 of gross rental
income and $119,718 of other income), and then deducted from this amount the
total operating expenses of the property for the year ended 1997 ($1,404,512),
resulting in the Purchaser's estimate of net operating income for the year
ended 1997 ($334,966). The Purchaser then increased the estimated annual net
operating income amount by $950 per apartment unit, representing the
Purchaser's estimate of the adjustment that would be imputed by a third party
purchaser in underwriting the operating expenses, including normal replacement
reserves, of the property for valuation purposes. Finally, the Purchaser
capitalized its estimated adjusted net operating income amount ($809,016) at a
9.75% capitalization rate, resulting in an estimated gross property value of
$8,297,600. However, the total outstanding mortgage debt on the property
currently amounts to $11,000,000, and the Purchaser therefore used this amount
(which exceeds its estimate of $8,297,600) for purposes of this valuation.
TWIN LAKE TOWERS. In estimating the value of this property, the
Purchaser reviewed the income ($3,248,503) generated by the property for the
year ended December 31, 1997 (comprised of $3,158,057 of gross rental income
and $90,446 of other income), and then deducted from this amount the total
operating expenses of the property for the year ended 1997 ($1,416,684),
resulting in the Purchaser's estimate of net operating income for the year
ended 1997 ($1,831,819). The Purchaser then reduced the estimated annual net
operating income amount by $350 per apartment unit, representing the
Purchaser's estimate of the adjustment that would be imputed by a third party
purchaser in underwriting the operating expenses, including normal replacement
reserves, of the property for valuation purposes. Finally, the Purchaser
capitalized its estimated adjusted net operating income amount ($1,692,269) at
a 10.75% capitalization rate, resulting in an estimated gross property value
of $15,741,107.
COMMERCIAL PROPERTIES
The following is a description of the methodology employed by the
Purchaser in preparing the estimates of the value of the commercial properties
owned by the Partnership:
COOPER POINT PLAZA. In estimating the value of this property, the
Purchaser reviewed the income ($83,241) generated by the property for the
month of March 1998 (comprised of $75,714 of gross rental income and $7,527 of
other income), and then deducted from this amount the total operating expenses
of the property for the month of March 1998 ($32,178), resulting in the
Purchaser's estimate of net operating income for the month of March 1998
($51,063). The Purchaser then annualized this amount, resulting in estimated
annual net operating income of $612,756. The Purchaser then capitalized that
estimated annual net operating income amount at a 12% capitalization rate,
resulting in an estimated gross property value of $5,106,300. The Purchaser
valued this property based on its performance during the month of March 1998
in order to reflect the increased revenue generated from recently signed
leases.
PRINCETON MEADOWS GOLF COURSE. The Purchaser (which is an affiliate
of the Managing General Partner) and its affiliates are not primarily involved
in golf course ownership and/or operations. In addition, golf courses
traditionally are not valued using the capitalization of income method, which
is the primary valuation method used by the Purchaser in valuing the
Partnership's properties. The Managing General Partner has advised the
Purchaser of its receipt of numerous indications of interest in purchasing the
property (including from the unaffiliated manager of the property), and that
such interested parties have suggested purchase prices of approximately
$3,500,000 for the property. The Purchaser therefore has used this number in
its valuation of the property. The Purchaser then estimated the portion of
this value attributable to the Partnership, based on the Partnership's 44.5%
interest in the Joint Venture which owns the property, resulting in a
valuation of $1,557,500.
* * *
Based on the individual estimates of the gross values of the
Partnership's properties described above, the Purchaser estimated that the
current aggregate gross real estate value of the Partnership's properties is
$107,078,096 (the "Gross Real Estate Value Estimate"). The property-specific
capitalization rates used by the Purchaser in the valuation estimates
described above were based upon the Purchaser's, IPT's and Insignia's general
knowledge of the revenues and expenses associated with operating multi-family
properties in the markets in which the
32
<PAGE>
Partnership's properties are located, their general knowledge of property
values in those markets and their experience in the real estate market in
general.
Although there are several other methods of estimating the value of
real estate of this type, the Purchaser believes that this approach represents
a reasonable method of estimating the aggregate gross value of the
Partnership's properties (without taking into account the costs of disposing
of the properties), subject to the substantial uncertainties inherent in any
estimate of value. The use of other assumptions, however, particularly as to
the applicable capitalization rate, could produce substantially different
results. None of the Purchaser, IPT or Insignia solicited any offers or
inquiries from prospective buyers of the Partnership's properties in
connection with preparing the Purchaser's estimates of the fair market values
of those properties, and the actual amounts for which the Partnership's
properties might be sold could be significantly higher or significantly lower
than the Purchaser's estimates.
The Gross Real Estate Value Estimate does not take into account (i)
the debt encumbering the Partnership's properties or the other liabilities of
the Partnership, (ii) cash and other assets held by the Partnership, (iii)
real estate transaction costs that would be incurred on a sale of the
Partnership's properties, such as brokerage commissions and other selling and
closing expenses, (iv) timing considerations or (v) costs associated with
winding up the Partnership. For this reason, the Purchaser considers the Gross
Real Estate Value Estimate to be less meaningful in evaluating the Purchase
Price offered by the Purchaser than its pro forma estimate of the net
liquidation value per Unit described below.
Purchaser's Pro Forma Estimate of Net Liquidation Value per Unit. The
Purchaser is offering to purchase Units, which are a relatively illiquid
investment, and is not offering to purchase the Partnership's underlying
assets or assume any of its liabilities. Consequently, the Purchaser does not
believe that the per-Unit amount which might be distributed to Limited
Partners following a future sale of all the Partnership's properties
necessarily reflects the present fair value of a Unit. Conversely, the
realizable value of the Partnership's assets clearly is a relevant factor in
determining the price a prudent purchaser would offer for Units. In
considering this factor, the Purchaser made a pro forma calculation of the
amount each Limited Partner might receive in a theoretical orderly liquidation
of the Partnership (which may not be realistically possible, particularly in
the near term, due to real estate market conditions, the general difficulty of
disposing of real estate in a short period of time, and other general economic
factors), based on the Gross Real Estate Value Estimate described above and
the other considerations described below. The Purchaser based its pro forma
liquidation analysis on the Gross Real Estate Value Estimate (and thus on the
Purchaser's estimates of the values of the Partnership's properties described
above), as opposed to the appraised values of the Partnership's properties or
the values estimated by IPT in connection with the MAE GP Merger or by the
Managing General Partner (each, as described above), because the Purchaser
believes that the Gross Real Estate Value Estimate represents the best
estimate, based on currently available information, of the values of the
Partnership's properties.
In estimating the pro forma net liquidation value per Unit, the
Purchaser adjusted its Gross Real Estate Value Estimate of $107,078,096 to
reflect the Partnership's other assets and liabilities (excluding prepaid and
deferred expenses and security deposits). Specifically, the Purchaser added
the amounts of cash, accounts receivable and escrow deposits shown on the
Partnership's unaudited balance sheet at March 31, 1998 ($8,800,568), and
subtracted the mortgage debt encumbering the Partnership's properties
($71,901,857) and all other liabilities shown on that balance sheet
($2,525,626). In addition, the Purchaser valued its 44.5% interest in the
Princeton Meadows Golf Course based on the Joint Venture's unaudited balance
sheet at March 31, 1998. The Purchaser estimated the amount of cash, accounts
receivable and escrow deposits reflected on that balance sheet ($272,622) and
subtracted the mortgage debt encumbering the Joint Venture's property
($1,567,301) and all other liabilities shown on that balance sheet ($835,984).
The Purchaser then multiplied the result (-$2,130,663) by its 44.5% interest
in the Joint Venture, and subtracted such amount (-$948,145) from the adjusted
Gross Real Estate Value Estimate as well. The Purchaser then deducted from
that amount $4,283,124, representing a reserve equal to 4% of the Gross Real
Estate Value Estimate (which represents the Purchaser's estimate of the
probable costs of brokerage commissions, real estate transfer taxes and other
disposition expenses). The result, $36,219,912, represents the Purchaser's pro
forma estimate of the aggregate net liquidation proceeds (before provision for
the costs described in the following sentence)
33
<PAGE>
which could be realized on an orderly liquidation of the Partnership, based on
the assumptions implicit in the calculations described above. The Purchaser
did not, however, deduct any amounts in respect of the legal and other costs
which the Purchaser expects would be incurred in a liquidation, including
costs of negotiating purchase and sale contracts, possibly conducting a
consent solicitation in order to obtain the Limited Partners' approvals for
the sales as may be required by the Limited Partnership Agreement, and winding
up the Partnership, because of the difficulty of estimating those amounts.
To complete its pro forma estimate of the amount of the theoretical
liquidation proceeds that would be distributable per Unit, the Purchaser then
deducted 1%, which would be the percentage allocable to the Managing General
Partner in respect of its non-subordinated interest in the Partnership, and
the remaining $35,857,713 was then divided by the 44,718 Units reported as
outstanding by the Managing General Partner as of April 1, 1998. The resulting
estimated pro forma liquidation value was $801.86 per Unit (the "Estimated
Liquidation Value"), before provision for the legal and other costs of
liquidating the Partnership described in the last sentence of the preceding
paragraph.
The Purchaser's pro forma liquidation analysis described above is
merely theoretical and does not itself reflect the value of the Units because
(i) there is no assurance that any such liquidation in fact will occur in the
foreseeable future and (ii) any liquidation in which the estimated fair market
values described above might be realized would take an extended period of time
(at least a year, and quite possibly significantly longer), during which time
the Partnership and its partners would continue to be exposed to the risk of
fluctuations in asset values because of changing market conditions and other
factors. For any property sales in which the Partnership is required to
indemnify the buyer for matters arising after the closing, a portion of the
sales proceeds could be held by the Partnership until all possible claims were
satisfied, further extending the delay in the receipt by the Limited Partners
of liquidation proceeds. In light of these factors, the Purchaser (which is an
affiliate of the Managing General Partner) believes the actual current value
of the Units is substantially less than its estimate of the Estimated
Liquidation Value. Conversely, there is a substantial possibility that the
per-Unit value realized in an orderly liquidation could be greater than the
Estimated Liquidation Value. A reduction in either operating expenses or
capital expenditures from the levels reflected in the property operating
statements for the year ended December 31, 1997 would result in a higher
liquidation value under the method described above. Similarly, a higher
liquidation value would result if a buyer applied lower capitalization rates
(reflecting a willingness to accept a lower rate of return on its investment)
to the applicable net operating income generated by the Partnership's
properties than the capitalization rates applied by the Purchaser. For
example, a 5% increase or decrease in the value of the Partnership's
properties would produce a corresponding increase or decrease in the Estimated
Liquidation Value of approximately $114 per Unit. Furthermore, the analysis
described above is based on a series of assumptions, some of which may not be
correct. Accordingly, this analysis should be viewed merely as indicative of
the Purchaser's approach to valuing Units and not as any way predictive of the
likely result of any future transactions.
SECTION 14. CONDITIONS OF THE OFFER. Notwithstanding any other term
of the Offer, the Purchaser (which is an affiliate of the Managing General
Partner) will not be required to accept for payment or to pay for any Units
tendered if all authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods imposed by,
any court, administrative agency or commission or other governmental authority
or instrumentality, domestic or foreign, necessary for the consummation of the
transactions contemplated by the Offer shall not have been filed, occurred or
been obtained prior to the Expiration Date. Furthermore, notwithstanding any
other term of the Offer and in addition to the Purchaser's right to withdraw
the Offer at any time before the Expiration Date, the Purchaser (which is an
affiliate of the Managing General Partner) will not be required to accept for
payment or pay for any Units not theretofore accepted for payment or paid for
and may terminate or amend the Offer as to such Units if, at any time on or
after the date of the Offer and before the Expiration Date, any of the
following conditions exists:
(a) a preliminary or permanent injunction or other order of any
federal or state court, government or governmental authority or agency shall
have been issued and shall remain in effect which (i) makes illegal, delays or
otherwise directly or indirectly restrains or prohibits the making of the
Offer or the acceptance for payment, purchase of or payment for any Units by
the Purchaser (which is an affiliate of the Managing General Partner), (ii)
34
<PAGE>
imposes or confirms limitations on the ability of the Purchaser effectively to
exercise full rights of ownership of any Units, including without limitation
the right to vote any Units acquired by the Purchaser pursuant to the Offer or
otherwise on all matters properly presented to the Partnership's Limited
Partners, (iii) requires divestiture by the Purchaser of any Units, (iv)
causes any material diminution of the benefits to be derived by the Purchaser
as a result of the transactions contemplated by the Offer, or (v) might
materially adversely affect the business, properties, assets, liabilities,
financial condition, operations, results of operations or prospects of the
Purchaser or the Partnership;
(b) there shall be any action taken, or any statute, rule, regulation
or order proposed, enacted, enforced, promulgated, issued or deemed applicable
to the Offer by any federal or state court, government or governmental
authority or agency, which might, directly or indirectly, result in any of the
consequences referred to in clauses (i) through (v) of paragraph (a) above;
(c) any change or development shall have occurred or been threatened
since the date of the Offer to Purchase, in the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects of the Partnership, which is or may be materially adverse to the
Partnership, or the Purchaser (which is an affiliate of the Managing General
Partner) shall have become aware of any fact that does or may have a material
adverse effect on the value of the Units;
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States, (ii) a
declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States, (iii) any limitation by any governmental
authority on, or other event which might affect, the extension of credit by
lending institutions or result in any imposition of currency controls in the
United States, (iv) a commencement of a war or armed hostilities or other
national or international calamity directly or indirectly involving the United
States, (v) a material change in United States or other currency exchange
rates or a suspension of, or imposition of a limitation on, the markets
thereof, or (vi) in the case of any of the foregoing existing at the time of
the commencement of the Offer, a material acceleration or worsening thereof;
or
(e) it shall have been publicly disclosed or the Purchaser (which is
an affiliate of the Managing General Partner) shall have otherwise learned
that (i) more than ten percent of the outstanding Units have been or are
proposed to be acquired by another person (including a "group" within the
meaning of Section 13(d)(3) of the Exchange Act), or (ii) any person or group
that prior to such date had filed a Statement with the Commission pursuant to
Section 13(d) or (g) of the Exchange Act has increased or proposes to increase
the number of Units beneficially owned by such person or group as disclosed in
such Statement by two percent or more of the outstanding Units.
The foregoing conditions are for the sole benefit of the Purchaser
(which is an affiliate of the Managing General Partner) and may be asserted by
the Purchaser regardless of the circumstances giving rise to such conditions
or may be waived by the Purchaser in whole or in part at any time and from
time to time in its sole discretion. Any determination by the Purchaser (which
is an affiliate of the Managing General Partner) concerning the events
described above will be final and binding upon all parties.
SECTION 15. CERTAIN LEGAL MATTERS.
General. The Purchaser (which is an affiliate of the Managing General
Partner) is not aware of any filings, approvals or other actions by any
domestic or foreign governmental or administrative agency that would be
required prior to the acquisition of Units by the Purchaser (which is an
affiliate of the Managing General Partner) pursuant to the Offer, other than
the filing of a Tender Offer Statement on Schedule 14D-1 with the Commission
(which has already been filed) and any required amendments thereto. Should any
such approval or other action be required, it is the Purchaser's present
intention that such additional approval or action would be sought. Although
there is no present intent to delay the purchase of Units tendered pursuant to
the Offer pending receipt of any such additional approval or the taking of any
such action, there can be no assurance that any such additional approval or
action,
35
<PAGE>
if needed, would be obtained without substantial conditions or that adverse
consequences might not result to the Partnership's business, or that certain
parts of the Partnership's business might not have to be disposed of or other
substantial conditions complied with in order to obtain such approval or
action, any of which could cause the Purchaser (which is an affiliate of the
Managing General Partner) to elect to terminate the Offer without purchasing
Units thereunder.
Antitrust. The Purchaser (which is an affiliate of the Managing
General Partner) does not believe that the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, is applicable to the acquisition of
Units contemplated by the Offer.
Margin Requirements. The Units are not "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System and,
accordingly, those regulations generally are not applicable to the Offer.
SECTION 16. FEES AND EXPENSES. Except as set forth in this Section
16, the Purchaser (which is an affiliate of the Managing General Partner) will
not pay any fees or commissions to any broker, dealer or other person for
soliciting tenders of Units pursuant to the Offer. The Purchaser (which is an
affiliate of the Managing General Partner) has retained Beacon Hill Partners,
Inc. to act as Information Agent and Harris Trust Company of New York to act
as Depositary in connection with the Offer. The Purchaser (which is an
affiliate of the Managing General Partner) will pay the Information Agent and
the Depositary reasonable and customary compensation for their respective
services in connection with the Offer, plus reimbursement for out-of-pocket
expenses, and has agreed to indemnify the Information Agent and the Depositary
against certain liabilities and expenses in connection therewith, including
liabilities under the federal securities laws. The Purchaser (which is an
affiliate of the Managing General Partner) will also pay all costs and
expenses of printing and mailing the Offer and its legal fees and expenses.
SECTION 17. MISCELLANEOUS. The Purchaser (which is an affiliate of
the Managing General Partner) is not aware of any jurisdiction in which the
making of the Offer is not in compliance with applicable law. If the Purchaser
(which is an affiliate of the Managing General Partner) becomes aware of any
jurisdiction in which the making of the Offer would not be in compliance with
applicable law, the Purchaser will make a good faith effort to comply with any
such law. If, after such good faith effort, the Purchaser (which is an
affiliate of the Managing General Partner) cannot comply with any such law,
the Offer will not be made to (nor will tenders be accepted from or on behalf
of) Limited Partners residing in such jurisdiction. In those jurisdictions
whose securities or blue sky laws require the Offer to be made by a licensed
broker or dealer, the Offer will be deemed to be made on behalf of the
Purchaser (which is an affiliate of the Managing General Partner) by one or
more registered brokers or dealers licensed under the laws of that
jurisdiction.
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser (which is an affiliate of the
Managing General Partner) not contained in this Offer to Purchase or in the
Assignment of Partnership Interest and, if given or made, such information or
representation must not be relied upon as having been authorized.
36
<PAGE>
The Purchaser (which is an affiliate of the Managing General
Partner), IPLP, IPT and Insignia have filed with the Commission a Tender Offer
Statement on Schedule 14D-1, pursuant to Rule 14d-3 under the Exchange Act,
furnishing certain additional information with respect to the Offer, and may
file amendments thereto. The Schedule 14D-1 and any amendments thereto,
including exhibits, may be inspected and copies may be obtained at the same
places and in the same manner as set forth in Section 9 (except that they will
not be available at the regional offices of the Commission).
BROAD RIVER PROPERTIES, L.L.C.
APRIL 14, 1998
37
<PAGE>
SCHEDULE I
TRANSACTIONS IN THE UNITS
EFFECTED BY IPLP IN THE PAST 60 DAYS
NUMBER OF PRICE
DATE UNITS PURCHASED PER UNIT
3/11/98 12 $378.29
3/11/98 13 378.30
3/11/98 5 329.70
3/13/98 5 378.30
S-1
<PAGE>
SCHEDULE II
INFORMATION REGARDING THE MANAGERS OF THE PURCHASER
Set forth in the table below are the name and the present principal
occupations or employment and the name, principal business and address of any
corporation or other organization in which such occupation or employment is
conducted, and the five-year employment history of each of the managers of the
Purchaser. Each person identified below is employed by Insignia and is a
United States citizen. The principal business address of the Purchaser and,
unless otherwise indicated, the business address of each person identified
below, is One Insignia Financial Plaza, Greenville, South Carolina 29602.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ---- -----------------------------
<S> <C>
Jeffrey P. Cohen Jeffrey P. Cohen has been a Manager of the Purchaser since its inception in
375 Park Avenue April 1998. For additional information regarding Mr. Cohen, see Schedule
Suite 3401 III.
New York, NY 10152
Daniel M. LeBey Daniel M. LeBey has been a Manager of the Purchaser since its inception in
April 1998, Assistant Secretary of Insignia since April 30, 1997 and Associate
General Counsel of Insignia since July 1996. Prior to June 1996, Mr. LeBey's
principal occupation was as an attorney with the law firm of Alston & Bird
LLP, Atlanta, Georgia.
Ronald Uretta Ronald Uretta has been a Manager of the Purchaser since its inception in April
1998. For additional information regarding Mr. Uretta, see Schedules III and IV.
</TABLE>
S-2
<PAGE>
SCHEDULE III
INFORMATION REGARDING THE
TRUSTEES AND EXECUTIVE OFFICERS OF IPT
Set forth in the table below are the name and the present principal
occupations or employment and the name, principal business and address of any
corporation or other organization in which such occupation or employment is
conducted, and the five-year employment history of each of the trustees and
executive officers of IPT. Each person identified below is employed by
Insignia and is a United States citizen. The principal business address of IPT
and, unless otherwise indicated, the business address of each person
identified below, is One Insignia Financial Plaza, Greenville, South Carolina
29602. Trustees are identified by an asterisk.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ---- ----------------------------
<S> <C>
Andrew L. Farkas* Andrew L. Farkas has served as a Trustee of IPT and as
Chairman of the Board of Trustees and Chief Executive Officer of IPT
since December 1996. For additional information regarding Mr.
Farkas, see Schedule IV.
James A. Aston* James A. Aston has served as a Trustee of IPT since its
inception in May 1996, and has served as President of IPT since
December 1996. For additional information regarding Mr. Aston, see
Schedule IV.
Frank M. Garrison* Frank M. Garrison has served as a Trustee of IPT since December
102 Woodmont Boulevard 1996. Mr. Garrison has also served as an Executive Managing
Suite 400 Director of IPT since December 1996. For additional information
Nashville, TN 37205 regarding Mr. Garrison, see Schedule IV.
Jeffrey P. Cohen Jeffrey P. Cohen has served as a Senior Vice President of IPT
375 Park Avenue since August 1997, and served as a Vice President of IPT from
Suite 3401 June 1997 until August 1997. Since April 1997, Mr. Cohen's
New York, NY 10152 principal occupation has been to serve as a Senior Vice President --
Investment Banking of Insignia. Prior to April 1997, Mr. Cohen's
principal occupation was as an attorney with the law firm of Rogers
& Wells, New York, New York.
William D. Falls William D. Falls has served as the Controller of IPT since August
1997. Since April 1995, Mr. Falls' principal occupation has been
to serve as an accountant with Insignia. Prior to April 1995, Mr.
Falls' principal occupation was as a senior auditor with the
accounting firm of Ernst & Young LLP.
Adam B. Gilbert Adam B. Gilbert has served as Secretary of IPT since March 1998.
375 Park Avenue For additional information regarding Mr. Gilbert, see Schedule IV.
Suite 3401
New York, NY 10152
S-3
<PAGE>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ---- ----------------------------
William H. Jarrard, Jr. William H. Jarrard, Jr. has served as a Senior Vice President of
IPT since August 1997, and served as Vice President and Director
of Operations of IPT from December 1996 until August 1997.
Mr. Jarrard's principal employment has been with Insignia for
more than the past five years. From January 1994 to September
1997, Mr. Jarrard served as Managing Director-- Partnership
Administration of Insignia.
Ronald Uretta Ronald Uretta has served as Vice President and Treasurer of
IPT since December 1996. Mr. Uretta served as a Vice President of
IPT from December 1996 until August 1997 and as Chief Financial
Officer of IPT from May 1996 until December 1996. For additional
information regarding Mr. Uretta, see Schedule IV.
Carroll D. Vinson Carroll D. Vinson has served as Chief Operating Officer of
IPT since May 1997. Since August 1994, Mr. Vinson's principal
occupation has been to serve as President of the various corporate
general partners of partnerships controlled by Metropolitan Asset
Enhancement, L.P., which is an affiliate of Insignia.
</TABLE>
S-4
<PAGE>
SCHEDULE IV
INFORMATION REGARDING THE
DIRECTORS AND EXECUTIVE OFFICERS OF INSIGNIA
Set forth in the table below are the name and the present principal
occupations or employment and the name, principal business and address of any
corporation or other organization in which such occupation or employment is
conducted, and the five-year employment history of each of the directors and
executive officers of Insignia. Unless otherwise indicated, each person
identified below is employed by Insignia and is a United States citizen. The
principal business address of Insignia and, unless otherwise indicated, the
business address of each person identified below, is One Insignia Financial
Plaza, Greenville, South Carolina 29602. Directors are identified by an
asterisk.
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ---- ----------------------------
Andrew L. Farkas* Andrew L. Farkas has been a Director of Insignia
since its inception in July 1990. Mr. Farkas has
been Chairman and Chief Executive Officer of
Insignia since January 1991 and President since May
1995. Mr. Farkas has also been President of
Metropolitan Asset Group, Ltd. ("MAG"), a real
estate investment banking firm, since 1983.
Robert J. Denison* Robert J. Denison has been a Director of Insignia
1212 North Summit Drive since May 1996. For more than the past five years,
Santa Fe, NM 87501 Mr. Denison's principal occupation has been as a
General Partner of First Security Company II, L.P.,
an investment advisory firm.
Robin L. Farkas* Robin L. Farkas has been a Director of Insignia
730 Park Avenue since August 1993. Mr. Farkas is the retired
New York, NY 10021 Chairman of the Board and Chief Executive Officer
of Alexander's Inc., a real estate company. He also
serves as a director of Refac Technology
Development Corporation, Noodle Kiddoodle, and
Containerways International Ltd.
Robert G. Koen* Robert G. Koen has been a Director of Insignia
125 West 55th Street since August 1993. Since February 1996, Mr. Koen
New York, NY 10019 has been a partner in the law firm of Akin, Gump,
Strauss, Hauer & Feld, which represents Insignia
and certain of its affiliates from time to time.
From January 1991 to February 1996, Mr. Koen was a
partner in the law firm LeBoeuf, Lamb, Greene &
MacRae.
Michael I. Lipstein* Michael I. Lipstein has been a Director of Insignia
110 East 59th Street since August 1993. For more than the past five
New York, NY 10022 years, Mr. Lipstein's principal occupation has been
as a self-employed consultant in the real estate
business, including ownership, management and
lending.
Buck Mickel* Buck Mickel has been a Director of Insignia since
301 N. Main Street August 1993. For more than the past five years, Mr.
Greenville, SC 29601 Mickel's principal occupation has been to serve as
Chairman of the Board and Chief Executive Officer
of RSI Holdings, a company which distributes
outdoor equipment. Mr. Mickel is also a director of
The Liberty Corporation, NationsBank Corporation,
Emergent Group, Inc., Delta Woodside Industries,
Inc., Duke Power Company, and Textile Hall
Corporation.
S-5
<PAGE>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ---- ----------------------------
James A. Aston James A. Aston's principal employment has been with
Insignia for more than the past five years. Mr.
Aston currently serves as Chief Financial Officer
of Insignia (since August 1996), with the Office of
the Chairman (since July 1994) and Executive
Managing Director of Investment Banking of Insignia
(since January 1991).
Albert J. Frazia Albert Frazia has been a Senior Vice President --
Human Resources of Insignia since August 1997.
Prior to August 1997, Mr. Frazia's principal
employment for more than the prior five years was
as Director -- Human Resources of E&Y Kenneth
Leventhal Real Estate Group, New York, New York.
Frank M. Garrison Frank M. Garrison's principal employment has been
102 Woodmont Boulevard with Insignia for more than the past five years.
Suite 400 Mr. Garrison currently serves as an Executive
Nashville, TN 37205 Managing Director of Insignia (since July 1994) and
as President of Insignia Financial Services, a
division of Insignia (since July 1994).
Adam B. Gilbert Adam B. Gilbert has been General Counsel and
375 Park Avenue Secretary of Insignia since March 1998. Prior to
Suite 3401 that time, Mr. Gilbert's principal occupation was
New York, NY 10152 as a partner with the law firm of Nixon, Hargrave,
Devans & Doyle, LLP, New York, New York.
Jeffrey L. Goldberg Jeffrey L. Goldberg's principal employment has been
375 Park Avenue with Insignia for more than the past five years.
Suite 3401 Mr. Goldberg currently serves as a Managing
New York, NY 10152 Director -- Investment Banking of Insignia (since
July 1994).
Edward S. Gordon Edward S. Gordon has been with the Office of the
200 Park Avenue Chairman of Insignia and has been Chairman of
New York, NY 10166 Insignia/ESG, Inc. since July 1996. Prior to July
1996, Mr. Gordon's principal employment for more
than the prior five years was as a founder and
Chairman of Edward S. Gordon Company, Incorporated
("ESG"), a commercial property management and
brokerage firm located in New York, New York that
was acquired by Insignia in June 1996.
Albert H. Gossett Albert H. Gossett's principal employment has been
with Insignia for more than the past five years.
Mr. Gossett currently serves as a Senior Vice
President of Insignia (since July 1994) and as
Chief Information Officer of Insignia (since
January 1991).
Henry Horowitz Henry Horowitz's principal employment has been with
Insignia since January 1993. Mr. Horowitz currently
serves as an Executive Managing Director of
Insignia (since June 1994) and Chief Operating
Officer of Insignia Commercial Group (since January
1997). From January 1987 to January 1993, Mr.
Horowitz's principal employment was as Chief
Executive Officer of First Resource Realty, Inc., a
commercial property management organization located
in Oklahoma that Insignia acquired in January 1993.
S-6
<PAGE>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ---- ----------------------------
Neil Kreisel Neil Kreisel has been an Executive Managing Director
909 Third Avenue of Insignia since September 1995 and President of
New York, NY 10022 Insignia Residential Group since September 1997.
Mr. Kreisel has also served as President of
Insignia Management Services -- New York, Inc., a
subsidiary of Insignia, since September 1995. Prior
to September 1995, Mr. Kreisel's principal
occupation was to serve as President and Chief
Executive Officer of Kreisel Company, Inc., a
residential property management firm located in New
York, New York which Insignia acquired in September
1995.
Martha Long Martha Long has been a Senior Vice President --
Finance of Insignia since January 1997 and
Controller of Insignia since June 1994. Prior to
June 1994, Ms. Long was Senior Vice President and
Controller of The First Savings Bank, FSB located
in Greenville, South Carolina.
Thomas R. Shuler Thomas R. Shuler's principal employment has been
with Insignia for more than the past five years.
Mr. Shuler currently serves as Chief Operating
Officer of Insignia Residential Group (since
January 1997).
Stephen B. Siegel Stephen B. Siegel has been a Managing Director of
200 Park Avenue Insignia since June 1996, President of Insignia
New York, NY 10166 Commercial Group since January 1997 and President
of Insignia/ESG, Inc. since June 1996. From
February 1992 until July 1996, Mr. Siegel's
principal employment was as President of ESG. Mr.
Siegel currently serves as a Director of Liberty
Property Trust and Tower Realty, Inc.
Ronald Uretta Ronald Uretta's principal employment has been with
Insignia for more than the past five years. Mr.
Uretta currently serves as Chief Operating Officer
(since August1996) and Treasurer (since January
1992) of Insignia. Mr. Uretta has also served as
the Chief Financial Officer and Controller of MAG
since September 1990.
Joseph T. Aveni Joseph T. Aveni's principal employment has been with
6000 Rockside Woods Realty One, Inc., a wholly-owned subsidiary of
Blvd. Insignia ("Realty One"), for more than the past
Cleveland, OH 44131 five years. Mr. Aveni currently serves as a
Director and Chief Executive Officer of Realty One
(since October 1997).
Anthony M. Ciepiel Mr. Ciepiel currently serves as a Director and Chief
6000 Rockside Woods Operating Officer of Realty One (since October
Blvd. 1997). From 1994 to 1997, Mr. Ciepiel was the
Cleveland, OH 44131 President of Realty One. Prior to 1994, Mr. Ciepiel
was the Chief Financial Officer and Executive Vice
President of Griswold, Inc., a full service
advertising agency.
Andrew J.M. Huntley Andrew Huntley's principal employment has been with
Richard Ellis Group Limited, a wholly-owned U.K.
subsidiary of Insignia ("Richard Ellis"), for more
than the past five years. Mr. Huntley currently
serves as Chairman of Richard Ellis (since
Insignia's acquisition of Richard Ellis in 1998).
Alan C. Froggatt Alan C. Froggatt's principal employment has been
with Richard Ellis for more than the past five
years. Mr. Froggatt currently serves as Chief
Executive Officer of Richard Ellis (since
Insignia's acquisition of Richard Ellis in 1998).
S-7
<PAGE>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- ---- ----------------------------
Hugh V.A. Ellingham Hugh V.A. Ellingham's principal employment has been
with Richard Ellis for more than the past five
years. Mr. Ellingham currently serves as a Managing
Director of Insignia for Richard Ellis (since
Insignia's acquisition of Richard Ellis in 1998)
and has been a director of Richard Ellis since its
inception in 1997.
S-8
<PAGE>
SCHEDULE V
IPT PARTNERSHIPS
Consolidated Capital Growth Fund
Consolidated Capital Institutional Properties
Consolidated Capital Institutional Properties/2
Consolidated Capital Institutional Properties/3
Consolidated Capital Properties III
Consolidated Capital Properties IV
Consolidated Capital Properties V
Consolidated Capital Properties VI
Johnstown/Consolidated Income Partners
Multi-Benefit Realty Fund 87-1
Shelter Properties I Limited Partnership
Shelter Properties II Limited Partnership
Shelter Properties III Limited Partnership
Shelter Properties IV Limited Partnership
Shelter Properties V Limited Partnership
Shelter Properties VI Limited Partnership
Shelter Properties VII Limited Partnership
National Property Investors III
National Property Investors 4
National Property Investors 5
National Property Investors 6
National Property Investors 7
National Property Investors 8
Century Properties Fund XIV
Century Properties Fund XV
Century Properties Fund XVI
Century Properties Fund XVII
Century Properties Fund XVIII
Century Properties Fund XIX
Century Properties Growth Fund XXII
Fox Strategic Housing Income Partners
Davidson Growth Plus, L.P.
Davidson Diversified Real Estate II, L.P.
Davidson Income Real Estate, L.P.
HCW Pension Real Estate Fund
Angeles Income Properties, Ltd. II
Angeles Income Properties, Ltd. IV
Angeles Income Properties, Ltd. 6
Angeles Opportunity Properties, Ltd.
Angeles Partners IX
Angeles Partners XII
S-9
<PAGE>
Manually signed facsimile copies of the Assignment of Partnership
Interest will be accepted. The Assignment of Partnership Interest and any
other required documents should be sent or delivered by each Limited Partner
or such Limited Partner's broker, dealer, bank, trust company or other nominee
to the Depositary as set forth below.
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
<S> <C> <C> <C>
By Mail: By Facsimile: To Confirm: By Hand/Overnight Delivery:
Wall Street Station (212) 701-7636 (212) 701-7624 Wall Street Plaza
P.O. Box 1023 88 Pine Street, 19th Floor
New York, New York 10268-1023 New York, New York 10005
</TABLE>
Questions and requests for assistance or for additional copies of
this Offer to Purchase and the Assignment of Partnership Interest may be
directed to the Information Agent at its telephone number and address listed
below. You may also contact your broker, dealer, bank, trust company or other
nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
BEACON HILL PARTNERS, INC.
90 Broad Street
20th Floor
New York, New York 10004
(800) 854-9486
(Toll Free)
(212) 843-8500
(Call Collect)
<PAGE>
ASSIGNMENT OF PARTNERSHIP INTEREST
FOR THE TENDER OF UNITS OF LIMITED PARTNERSHIP INTEREST IN
ANGELES PARTNERS XII
PURSUANT TO THE OFFER TO PURCHASE DATED APRIL 14, 1998
- -------------------------------------------------------------------------------
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK TIME, ON MAY 11, 1998 UNLESS THE OFFER IS EXTENDED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
<S> <C> <C> <C>
By Mail: By Facsimile: To Confirm: By Hand/Overnight Delivery:
Wall Street Station (212) 701-7636 (212) 701-7624 Receive Window
P.O. Box 1023 Wall Street Plaza
New York, New York 10268-1023 88 Pine Street, 19th Floor
New York, New York 10005
</TABLE>
IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE IN COMPLETING THIS ASSIGNMENT
OF PARTNERSHIP INTEREST, PLEASE CALL OUR INFORMATION AGENT, BEACON HILL
PARTNERS, TOLL FREE AT (800) 854-9486.
DELIVERY OF THIS ASSIGNMENT OF PARTNERSHIP INTEREST (OR A FACSIMILE COPY)
OR ANY OTHER REQUIRED DOCUMENTS TO AN ADDRESS OR FACSIMILE NUMBER OTHER THAN AS
SET FORTH ABOVE DOES NOT CONSTITUTE VALID DELIVERY.
PLEASE CAREFULLY READ THE ACCOMPANYING INSTRUCTIONS
Ladies and Gentlemen:
The undersigned hereby tenders to Broad River Properties, L.L.C., a
Delaware limited liability company (the "Purchaser"), the number of the
undersigned's units of limited partnership interest ("Units") in Angeles
Partners XII, a California limited partnership (the "Partnership"), specified
below, at a price of $500 per Unit (the "Purchase Price"), net to the seller in
cash, upon the terms and subject to the conditions set forth in the offer to
purchase dated April 14, 1998 (the "Offer to Purchase"), receipt of which is
hereby acknowledged, and in this Assignment of Partnership Interest (which,
together with any supplements or amendments, collectively constitute the
"Offer"). The undersigned understands and agrees that the Purchase Price will
automatically be reduced by the aggregate amount of distributions per Unit, if
any, made by the Partnership on or after April 14, 1998 and prior to the date
on which the Purchaser pays for the Units purchased pursuant to the Offer.
Holders of Units ("Limited Partners") who tender their Units will not be
obligated to pay any commissions or Partnership transfer fees, which
commissions and Partnership transfer fees, if any, will be borne by the
Purchaser. The Purchaser reserves the right to transfer or assign, in whole or
from time to time in part, to one or more of its affiliates, the right to
purchase Units tendered pursuant to the Offer.
Subject to and effective upon acceptance for payment of and payment for the
Units tendered hereby, the undersigned hereby sells, assigns and transfers to
or upon the order of the Purchaser all right, title and interest in and to all
of the Units tendered hereby. The undersigned understands that upon acceptance
for payment of and payment for the tendered Units, the Purchaser will be
entitled to seek admission to the Partnership as a substituted Limited Partner
in substitution for the undersigned as to all the tendered Units.
The undersigned irrevocably appoints the Purchaser and its managers and
designees as the attorneys-in-fact and proxies of the undersigned, each with
full power of substitution, to exercise all voting and other rights with
respect to the Units tendered by the undersigned and purchased by the
Purchaser. Such power of attorney and proxy shall be considered coupled with an
interest in the tendered Units and is irrevocable. When the Units tendered
hereby are accepted for payment pursuant to the Offer, all prior proxies and
powers given by the undersigned with respect to the Units will, without further
action, be revoked, and no subsequent proxies or powers may be given (and if
given will not be effective). The Purchaser and its managers and designees
will, with respect to the Units, be empowered to exercise all voting and other
rights of the undersigned as they in their sole discretion may deem proper,
whether at any meeting of the Partnership's Limited Partners, by written
consent or otherwise, subject to the restrictions in the Limited Partnership
Agreement of the Partnership. The foregoing proxy and power may be exercised by
the Purchaser or any of the other persons referred to above acting alone.
In addition to and without limiting the generality of the foregoing, the
undersigned hereby irrevocably (a) appoints the Purchaser and its managers and
designees (each an "Agent") as the undersigned's attorneys-in-fact, each with
full power of substitution, with an irrevocable instruction to each Agent to
execute all or any instrument of transfer and/or other documents in the Agent's
discretion in relation to the Units tendered hereby and accepted for payment by
the Purchaser, and to do all such other acts and things as may in the opinion
of the Agent be necessary or expedient for the purpose of, or in connection
with, the undersigned's acceptance of the Offer and to vest in the Purchaser,
or as it may direct, those Units, effective when, and only to the extent that,
the Purchaser accepts the tendered Units for payment; (b) authorizes and
requests the Partnership and managing general partner (the "Managing General
Partner") to take any and all acts as may be required to effect the transfer of
the undersigned's Units to the Purchaser (or its designee) and admit the
Purchaser (or its designee) as a substituted Limited Partner in the
Partnership; (c) assigns to the Purchaser and its assigns all of the right,
title and interest of the undersigned in and to any and all distributions made
by the Partnership from and after the expiration of the Offer in respect of the
Units tendered by the undersigned; (d) grants to the Purchaser and its assigns
the right to receive any and all distributions made by the Partnership on or
after the date on which the Purchaser pays for the Units tendered by the
undersigned (regardless of the record date for any such distribution), and to
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Units; (e) empowers the Purchaser and the Agent to execute and deliver
to the Managing General Partner a change of address form instructing the
Managing General Partner to send any and all future distributions to the
address specified in the form, and to endorse any check payable to or upon the
order of such Limited Partner representing a distribution to which the
Purchaser is entitled pursuant to the terms of the Offer, in each case in the
name and on behalf of the tendering Limited Partner; and (f) agrees not to
exercise any rights pertaining to the Units without the prior consent of the
Purchaser.
The undersigned hereby represents and warrants that the undersigned owns
the Units tendered hereby and has full power and authority to validly tender,
sell, assign and transfer the Units tendered hereby and that when the same are
purchased by the Purchaser, the Purchaser will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges,
encumbrances, conditional sales agreements or other obligations relating to the
sale or transfer thereof, and such Units will not be subject to any adverse
claims. The undersigned will, upon request, execute and deliver any additional
documents deemed by the Purchaser to be necessary or desirable to complete the
sale, assignment and transfer of the Units tendered hereby.
The undersigned understands that a tender of Units pursuant to the
procedures described in the Offer to Purchase and in the Instructions to this
Assignment of Partnership Interest will constitute a binding agreement between
the undersigned and the Purchaser upon the terms and subject to the conditions
of the Offer. All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of the undersigned, and any obligation of the
undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned.
THIS TENDER IS IRREVOCABLE, EXCEPT THAT UNITS TENDERED PURSUANT TO THE
OFFER MAY BE WITHDRAWN AS DESCRIBED IN SECTION 4 OF THE OFFER TO PURCHASE.
<PAGE>
PLEASE COMPLETE ALL SHADED AREAS
SIGN HERE TO TENDER YOUR UNITS
B
O
X
A
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
The undersigned hereby tenders the number of Units specified below pursuant
to the terms of the Offer. The undersigned hereby certifies, under penalties of
perjury, that the information and representations provided in Boxes A, B and C
of this Assignment of Partnership Interest, which have been duly completed by
the undersigned, are true and correct as of the date hereof.
<S> <C>
X ADDRESS:
-------------------------------- --------------------------------
X
-------------------------------- -----------------------------------------
SIGNATURE(S) OF LIMITED PARTNER (INCLUDE ZIP CODE)
(THE ADDRESS PROVIDED ABOVE MUST BE THE REGISTERED ADDRESS
OF THE LIMITED PARTNER)
DATE:
---------------------------------------
----------------------- --------------------------
AREA CODE AND SOCIAL SECURITY NUMBER
(MUST BE SIGNED BY REGISTERED LIMITED PARTNER EXACTLY AS TELEPHONE NUMBER OR TAXPAYER IDENTIFICATION
NAME(S) APPEAR(S) IN THE PARTNERSHIP'S RECORDS. IF SIGNATURE IS BY
AN OFFICER OF A CORPORATION, ATTORNEY-IN-FACT, AGENT, EXECUTOR,
ADMINISTRATOR, TRUSTEE, GUARDIAN OR OTHER PERSON(S) ACTING IN NUMBER OF NUMBER OF
FIDUCIARY OR REPRESENTATIVE CAPACITY, PLEASE COMPLETE THE LINE UNITS TENDERED: UNITS OWNED:
CAPTIONED "CAPACITY (FULL TITLE)" AND SEE INSTRUCTION 5.) ---------------- -------------
PRINT NAME(S):
----------------------------------
----------------------------------
CAPACITY (FULL TITILE): (If no indication is given, all Units owned of record by
------------------------- the Limited Partner will be deemed tendered.)
- -----------------------------------------------------------------------------------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS - SECTION 1)
AUTHORIZED SIGNATURE: NAME OF FIRM:
------------------------------ --------------------------------
NAME: ADDRESS:
--------------------------- ---------------------------------
DATE: AREA CODE AND TEL. NO.:
------------------------------- -----------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
IMPORTANT!
LIMITED PARTNERS MUST ALSO COMPLETE BOTH BOX B AND BOX C BELOW.
B O X B
- ------------------------------------------------------------------------------
SUBSTITUTE PART 1-- PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND
Form W-9 CERTIFY BY SIGNING AND DATING BELOW
Department of
the Treasury
Internal Revenue --------------------------------------------------------
Service Social Security Number(s) or
Employer Identification Number
--------------------------------------------------------
PAYER'S PART 2-- Certification-- Under penalties of perjury, I
REQUEST FOR certify that: (1) The number shown on this form is my
TAXPAYER correct Taxpayer Identification Number (or I am
IDENTIFICATION waiting for a number to be issued to me) and (2) I am not
NUMBER subject to back-up withholding either because I have not
(TIN) been notified by the Internal Revenue Service ("IRS") that
I am subject to back-up withholding as a result of failure
to report all interest or dividends, or the IRS has
notified me that I am no longer subject to back-up
withholding.
---------------------------------------------------------
Certification Instructions -- You must cross out item (2)
above if you have been notified by the PARTt3a-- you are
subject to back-up withholding because of underreporting
interest or dividends on your tax rAWAITING TIN |_|
However, if after being notified by the IRS that you were
subject to back-up withholding you received another
notification from the IRS that you are no longer subject
to back-up withholding, do not cross out item (2).
PART 3--
AWAITING TIN [ ]
SIGNATURE: DATE:
----------------------- --------------
- ------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
*(TO BE COMPLETED ONLY IF THE BOX IN PART 3 ABOVE IS CHECKED)
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(b) I intend to mail or deliver an application in the near future. I understand
that if I do not provide a taxpayer identification number within sixty days, 31
percent of all reportable payments made to me thereafter will be withheld until
I provide a number.
- -------------------------------------- -------------------------------------
SIGNATURE SIGNATURE
- ------------------------------------------------------------------------------
B O X C
- ------------------------------------------------------------------------------
FIRPTA AFFIDAVIT -- CERTIFICATE OF NON-FOREIGN STATUS
Section 1445 of the Internal Revenue Code provides that a transferee of a
U.S. real property interest must withhold tax if the transferor is a foreign
person. To inform the Purchaser that withholding of tax is not required upon
this disposition of a U.S. real property interest, the undersigned hereby
certifies the following on behalf of the tendering Limited Partner named above:
1. The Limited Partner, if an individual, is not a nonresident alien for
purposes of U.S. income taxation, and if not an individual, is not a
foreign corporation, foreign partnership, foreign trust, or foreign
estate (as those terms are defined in the Internal Revenue Code and
Income Tax Regulations);
2. The Limited Partner's Social Security Number (for individuals) or
Employer Identification Number (for non-individuals) is: ;
and -----------
3. The Limited Partner's address is:
----------------------------------
I understand that this certification may be disclosed to the Internal
Revenue Service by the transferee and that any false statement I have made here
could be punished by fine, imprisonment, or both.
Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct
and complete.
- -------------------------------------- -------------------------------------
SIGNATURE SIGNATURE
Title: Title:
------------------------------- ------------------------------
- ------------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS
TO
ASSIGNMENT OF PARTNERSHIP INTEREST
FOR
ANGELES PARTNERS XII
FORMING PART OF TERMS AND CONDITIONS OF THE OFFER
- ------------------------------------------------------------------------------
IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE COMPLETING THE ASSIGNMENT OF
PARTNERSHIP INTEREST, PLEASE CALL BEACON HILL PARTNERS TOLL FREE AT
(800) 854-9486 OR COLLECT AT (212) 843-8500
- ------------------------------------------------------------------------------
1. GUARANTEE OF SIGNATURES. If the Assignment of Partnership Interest
is signed by the registered holder of the Units and payment is to be made
directly to that holder, then no signature guarantee is required on the
Assignment of Partnership Interest. Similarly, if the Units are tendered for
the account of a member firm of a registered national securities exchange, a
member of the National Association of Securities Dealers, Inc. or a commercial
bank, savings bank, credit union, savings and loan association or trust company
having an office, branch or agency in the United States (each an "Eligible
Institution"), no signature guarantee is required on the Assignment of
Partnership Interest. HOWEVER, IN ALL OTHER CASES, ALL SIGNATURES ON THE
ASSIGNMENT OF PARTNERSHIP INTEREST MUST BE GUARANTEED BY AN ELIGIBLE
INSTITUTION. A notarization is not the same thing as a signature guarantee, and
a notarization of the Assignment of Partnership Interest will not be
sufficient. IN THE MAJORITY OF CASES, THE LOCAL BANK AT WHICH YOU DO YOUR DAY
TO DAY BANKING IS AN ELIGIBLE INSTITUTION AND WILL BE ABLE TO PROVIDE YOU WITH
THE REQUIRED MEDALLION GUARANTEE.
2. DELIVERY OF ASSIGNMENT OF PARTNERSHIP INTEREST. The Assignment of
Partnership Interest is to be completed by all Limited Partners who wish to
tender Units in response to the Offer. For a Limited Partner validly to tender
Units, a properly completed and duly executed Assignment of Partnership
Interest (or a facsimile copy), along with the required signature guarantees by
an Eligible Institution and any other required documents, must be received by
the Depositary at one of its addresses set forth on the Assignment of
Partnership Interest on or prior to the Expiration Date (as defined in the
Offer to Purchase).
THE METHOD OF DELIVERY OF THE ASSIGNMENT OF PARTNERSHIP INTEREST AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING LIMITED
PARTNER AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY
DELIVERY.
No alternative, conditional or contingent tenders will be accepted,
and no fractional Units will be purchased (except from a Limited Partner who is
tendering all of the Units owned by that Limited Partner). All tendering
Limited Partners, by execution of the Assignment of Partnership Interest, waive
any right to receive any notice of the acceptance of their Units for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate,
additional information may be provided on a separate signed schedule attached
hereto.
4. MINIMUM TENDERS. A Limited Partner may tender any or all of his or
her Units; provided, however, that because of restrictions in the Partnership's
Limited Partnership Agreement, in order for a partial tender to be valid, after
a sale of Units pursuant to the Offer, the tendering Limited Partner must
continue to hold a minimum of five Units. Tenders of fractional Units will be
permitted only by a Limited Partner who is tendering all Units owned by that
Limited Partner.
5. SIGNATURES ON ASSIGNMENT OF PARTNERSHIP INTEREST. If the Assignment
of Partnership Interest is signed by the registered Limited Partner(s), the
signature(s) must correspond exactly with the name(s) as shown on the records
of the Partnership, without alteration, enlargement or any change whatsoever.
If any of the Units tendered hereby are held of record by two or more
joint Limited Partners, each such Limited Partner must sign the Assignment of
Partnership Interest.
If the Assignment of Partnership Interest is signed by trustees,
executors, administrators, guardians, attorneys-in-fact, agents, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to
the Depositary of their authority to so act must be submitted.
6. WAIVER OF CONDITIONS. The Purchaser expressly reserves the
absolute right, in its sole discretion, to waive any of the specified
conditions of the Offer, in whole or in part, in the case of any Units
tendered.
7. REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions or
requests for assistance may be directed to Beacon Hill Partners, the
Information Agent, at its address and telephone number set forth on the back
cover of the Offer to Purchase. Copies of the Offer to Purchase and the
Assignment of Partnership Interest may be obtained from the Information Agent.
(Continued on Reverse Side)
<PAGE>
8. SUBSTITUTE FORM W-9. Each tendering Limited Partner is required to
provide the Depositary with a correct taxpayer identification number ("TIN"),
generally the Limited Partner's social security or federal employer's
identification number, on Substitute Form W-9, which is provided under
"Important Tax Information" below. You must cross out item (2) in the
Certification box on Substitute Form W-9 if you are subject to back-up
withholding. Failure to provide the information on the form may subject the
tendering Limited Partner to 31% federal income tax withholding on the payments
made to the Limited Partner with respect to Units purchased pursuant to the
Offer. The box in Part 3 of the form may be checked if the tendering Limited
Partner has not been issued a TIN and has applied for a TIN or intends to apply
for a TIN in the near future. If the box in Part 3 is checked and the
Depositary is not provided with a TIN within sixty (60) days, thereafter the
Depositary will withhold 31% on all such payments of the Purchase Price until a
TIN is provided to the Depositary.
9. FIRPTA AFFIDAVIT. To avoid potential withholding of tax pursuant to
Section 1445 of the Internal Revenue Code in an amount equal to 10% of the
purchase price for Units purchased pursuant to the Offer, plus the amount of
any liabilities of the Partnership allocable to such Units, each Limited
Partner who or which is a United States person must complete the FIRPTA
Affidavit contained in the Assignment of Partnership Interest stating, under
penalties of perjury, such Limited Partner's TIN and address, and that such
Limited Partner is not a foreign person. Tax withheld under Section 1445 of the
Internal Revenue Code is not an additional tax. If withholding results in an
overpayment of tax, a refund may be obtained from the IRS.
IMPORTANT: THE ASSIGNMENT OF PARTNERSHIP INTEREST (OR A FACSIMILE
COPY) (TOGETHER WITH ALL OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE
DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE.
----------------
IMPORTANT TAX INFORMATION
To prevent backup withholding on payments made to a Limited Partner or
other payee with respect to Units purchased pursuant to the Offer, the Limited
Partner is required to notify the Depositary of the Units of the Limited
Partner's correct TIN by completing the form below, certifying that the TIN
provided on Substitute Form W-9 is correct (or that such Limited Partner is
awaiting a TIN) and that (1) the Limited Partner has not been notified by the
Internal Revenue Service that the Limited Partner is subject to backup
withholding as a result of failure to report all interest or dividends or (2)
the Internal Revenue Service has notified the Limited Partner that the Limited
Partner is no longer subject to backup withholding. If backup withholding
applies, the Depositary is required to withhold 31% of any payments made to the
Limited Partner. Backup withholding is not an additional tax. Rather, the
federal income tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
The Limited Partner is required to give the Depositary the TIN (e.g.,
social security number or employer identification number) of the record owner
of the Units. If the Units are in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
Certain Limited Partners (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding
and reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that Limited Partner must submit to the Depositary a properly
completed Internal Revenue Service Form W-8, signed under penalties of perjury,
attesting to that Limited Partner's exempt status. A Form W-8 can be obtained
from the Depositary. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional institutions.
----------------
INDIVIDUAL RETIREMENT ACCOUNT (IRAS)
PLEASE NOTE THAT A TENDERING BENEFICIAL OWNER OF UNITS WHOSE UNITS ARE
OWNED OF RECORD BY AN INDIVIDUAL RETIREMENT ACCOUNT (IRA) OR OTHER QUALIFIED
PLAN WILL NOT RECEIVE DIRECT PAYMENT OF THE PURCHASE PRICE, RATHER, PAYMENT
WILL BE MADE TO THE CUSTODIAN OF SUCH ACCOUNT OR PLAN. IF THE UNITS ARE HELD IN
AN IRA ACCOUNT, THE CUSTODIAN OF THE ACCOUNT MUST SIGN THE ASSIGNMENT OF
PARTNERSHIP INTEREST.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER--Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- --------------------------------------- ------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of
(joint account) the account or, if
combined funds, any one of the
individuals (1)
3. Husband and wife The actual owner of
(joint account) the account or, if joint
funds, either person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if the
minor is the only
contributor, the
minor(1)
6. Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent person (3)
minor, or incompetent person
7. a.The usual revocable savings trust The grantor-trustee(1)
account (grantor is also trustee)
b.So-called trust account that is not The actual owner(1)
a legal or valid trust under State
law
- --------------------------------------- ------------------------------
</TABLE>
<TABLE>
<CAPTION>
GIVE THE
EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- -------------------------------------- ----------------------------------
<S> <C>
8. Sole proprietorship account The Owner(4)
9. A valid trust, estate, or pension Legal entity (Do not furnish
trust the identifying number of the
personal representative or trustee
unless the legal entity itself is
not designated in the account
title.)(5)
10. Corporate account The Corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of The public entity
Agriculture in the name of a public
entity (such as a State or local
government, school district, or
prison) that receives agricultural
program payments
- -------------------------------------- ----------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local
office of the Social Security Administration or the Internal Revenue Service
and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
o A corporation.
o A financial institution.
o An organization exempt from tax under section 501(a), or an individual
retirement plan.
o The United States or any agency or instrumentality thereof.
o A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
o A foreign government, a political subdivision of a foreign government,
or agency or instrumentality thereof.
o An international organization or any agency or instrumentality thereof.
o A registered dealer in securities or commodities registered in the U.S.
or a possession of the U.S.
o A real estate investment trust.
o A common trust fund operated by a bank under section 584(a).
o An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
o An entity registered at all times under the Investment Company Act of
1940.
o A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
o Payments to nonresident aliens subject to withholding under section 1441.
o Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
o Payments of patronage dividends where the amount received is not paid in
money.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
o Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600
or more and is paid in the course of the payer's trade or business and
you have not provided your correct taxpayer identification number to the
payer.
o Payments of tax-exempt interest (including exempt interest dividends
under section 852).
o Payments described in section 6049(b)(5) to nonresident aliens.
o Payments on tax-free covenant bonds under section 1451.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Exempt payees described above should file substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
AND RETURN IT TO THE PAYER, IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR
PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers
to payers who must report the payments to IRS. IRS uses the numbers
for identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold
31% of taxable interest, dividend, and certain other payments to a payee who
does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
<PAGE>
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER--If you
fail to furnish your taxpayer identification number to a payer, you
are subject to a penalty of $50 for each such failure unless your failure is
due to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE
2
<PAGE>
Exhibit (a)(4)
BROAD RIVER PROPERTIES, L.L.C
One Insignia Financial Plaza
Greenville, South Carolina 29602
April 14, 1998
To: The Limited Partners of
Angeles Partners XII
Enclosed for your review and consideration are documents relating to
an offer by Broad River Properties, L.L.C. ("Broad River") to purchase your
units of limited partnership interests in Angeles Partners XII for $500 in
cash per unit. This offer will expire midnight, New York City time on May 11,
1998 (unless extended by Broad River).
Broad River is an affiliate of the Managing General Partner of the
Partnership.
THE ENCLOSED DOCUMENTS CONTAIN IMPORTANT INFORMATION AND SHOULD BE
READ CAREFULLY AND IN THEIR ENTIRETY BEFORE YOU DECIDE WHETHER TO SELL YOUR
UNITS TO BROAD RIVER PURSUANT TO THIS OFFER.
If you have any questions concerning the terms of the offer, or need
assistance in completing the forms necessary to tender your units, please
contact our Information Agent, Beacon Hill Partners, at (800) 854-9486.
Thank you.
Sincerely,
Broad River Properties, L.L.C.
<PAGE>
[KTR LETTERHEAD]
September 30, 1995
Mr. Rob Keeler
IFGP Corporation
One Insignia Financial Plaza
P.O. Box 1089
Greenville, SC 29602
Reference: Limited scope appraisal report of the South Pointe Apartments
located at 25000 Rockside Road, City of Bedford Heights,
Cuyahoga County, Ohio
Dear Mr. Keeler:
In compliance with your request, we have inspected and appraised the above
captioned property as of September 21, 1995. The presentation of the limited
appraisal is found in the following summary appraisal report. This summary
appraisal report is intended to comply with the reporting requirements set
forth under Standards Rule 2-2(b), of the Uniform Standards of Professional
Appraisal Practice for a Summary Appraisal Report. As such, it presents only
summary discussions of the data, reasoning, and analyses that are used in the
appraisal process to develop the appraiser's opinion of value. Supporting
documentation concerning the data, reasoning, and analyses are retained in the
appraiser's file. The depth of discussion contained in the report is specific
to the needs of IFGP Corporation. The intended use of the summary appraisal
report is to provide our client with an independent opinion of market value for
use internal to the existing ownership of the above referenced property. The
appraiser is not responsible for unauthorized use of the report.
Furthermore, the report is the result of a limited appraisal process in
that certain allowable departures from specific guidelines of the Uniform
Standards of Professional Appraisal Practice are invoked. The user of the
report is cautioned that the reliability of the value conclusions provided may
be impacted to the degree there is departure from specific guidelines of USPAP.
Notwithstanding, this appraisal was prepared in conformance with and subject to
the Code of Professional Ethics as promulgated by the Appraisal Foundation.
Attention must be given to the Assumptions and Limiting Conditions section of
this report.
Briefly described, the subject site consists of approximately 14.6 acres
of land improved with a three building, seven-story, high-rise apartment
complex, containing 499 units. The structural improvements were reportedly
built in 1967 and contain 356,510 rentable square feet. Additional improvements
include an office, one swimming pool, a playground and asphalt paved surface
parking, concrete walkways and landscaping.
<PAGE>
[KTR LOGO]
KOEPPEL TENER REAL ESTATE SERVICES, INC.
Valuation Division
September 30, 1995
Mr. Rob Keeler
Page 2
VALUATION ESTIMATE
In view of the pertinent facts mentioned herein, and
based upon the analysis of data which has been considered in
connection with this report, it is the opinion of the undersigned
that the market value of the unencumbered fee simple estate of
the subject property, as of September 21, 1995, is:
NINE MILLION SEVEN HUNDRED AND FIFTY THOUSAND DOLLARS
($ 9,750,000)
Respectfully submitted,
KOEPPEL TENER REAL ESTATE
SERVICES, INC.
By /s/ Joseph Cicero, MAI
-----------------------
Joseph Cicero, MAI
Senior Vice President
By /s/ Mark D. Lindsay K.S.
-------------------------
Mark D. Lindsay
Senior Appraiser
By /s/ Mike Thomas, MAI
-------------------------
Mike Thomas, MAI
Senior Vice President
