<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
---------------------------
KRUPP REALTY LIMITED PARTNERSHIP-V
(NAME OF SUBJECT COMPANY)
ERP OPERATING LIMITED PARTNERSHIP
(BIDDER)
UNITS OF INVESTOR LIMITED PARTNERSHIP INTEREST
(TITLE OF CLASS OF SECURITIES)
501128 30 0
(CUSIP NUMBER OF CLASS OF SECURITIES)
----------------------------
COPY TO:
BRUCE C. STROHM, ESQ. DON S. HERSHMAN, ESQ.
EQUITY RESIDENTIAL PROPERTIES TRUST HOLLEB & COFF
TWO NORTH RIVERSIDE PLAZA 55 EAST MONROE STREET
CHICAGO, ILLINOIS 60606 CHICAGO, ILLINOIS 60606
(312) 474-1300 (312) 807-4600
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER)
CALCULATION OF FILING FEE
Transaction Valuation* Amount of Filing Fee
$15,919,200 $3,183.84
* For purposes of calculating the filing fee only. Assumes the purchase of
23,584 Units at a purchase price equal to $675 per Unit in cash.
/ / 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: Filing Party:
Form or Registration Number: Date Filed:
<PAGE>
CUSIP NO. 501128 30 0 PAGE 2 OF 6
14D-1
- ----------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
ERP OPERATING LIMITED PARTNERSHIP: 36-3894853
- -----------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
(a) [___]
(b) [___]
- -----------------------------------------------------------------------------
3. SEC USE ONLY
- -----------------------------------------------------------------------------
4. SOURCES OF FUNDS (SEE INSTRUCTIONS):
WC
- -----------------------------------------------------------------------------
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(e) OR 2(f): [___]
- -----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
Illinois
- -----------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
0
- -----------------------------------------------------------------------------
8. CHECK IF THE AGGREGATE IN ROW (7) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) [___]
- -----------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7):
0
- -----------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):
PN
- -----------------------------------------------------------------------------
<PAGE>
PAGE 3 OF 6
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) This Schedule relates to Units of Investor Limited Partnership
Interest (the "Units") in KRUPP REALTY LIMITED PARNTERSHIP-V, a
Massachusetts limited partnership (the "Issuer"), the subject company. The
address of the Issuer's principal executive offices is 470 Atlantic Avenue,
Boston, Massachusetts 02210.
(b) This Schedule relates to the offer by ERP OPERATING LIMITED
PARTNERSHIP (the "Purchaser") to purchase, in cash, up to 23,584 Units at a
purchase price equal to $675 per Unit, less the amount of any distributions
declared or made with respect to the Units between November 23, 1999 and
January 12, 2000 or such other date to which this Offer may be extended (the
"Expiration Date"), upon the terms and subject to the conditions set forth
in the Offer to Purchase (the "Offer to Purchase") dated November 23, 1999
(the "Offer Date"), and the related Letter of Transmittal, copies of which
are attached hereto as Exhibits (a)(1) and (a)(2), respectively. The Issuer
had 35,200 Units issued and outstanding held by approximately 2,100 holders
of Units (the "Unitholders") as of December 31, 1998, according to its
Annual Report on Form 10-K for the year ended December 31, 1998.
(c) The information set forth under the captions
"Introduction--Establishment of the Offer Price," "Effects of the Offer" and
"Background and Reasons for the Offer" in the Offer to Purchase is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) This Schedule is being filed by the Purchaser, an Illinois
limited partnership. The principal business of the Purchaser is the
ownership, acquisition, development, expansion and management of multi-family
apartment properties. The information set forth in "Introduction,"
"Certain Information Concerning the Purchaser" and in Schedule I is
incorporated herein by reference.
(e)-(g) The information set forth in "Certain Information Concerning
the Purchaser" and Schedule I is incorporated herein by reference. During
the last five years, neither the Purchaser nor, to the best of the knowledge
of the Purchaser, any person named on Schedule I nor any affiliate of the
Purchaser, including its general partner: (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 were or are
subject to a judgment, decree or final order enjoining future violations of,
or prohibiting activities subject to, Federal or state securities laws or
finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in "Certain Information Concerning
the Purchaser" in the Offer to Purchase regarding information concerning
purchases of Units by the Purchaser or one of its affiliates is incorporated
herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth under the caption "Source of Funds" in
the Offer to Purchase is incorporated herein by reference.
(b)-(c) Not Applicable.
<PAGE>
PAGE 4 OF 6
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(g) The information set forth under the caption "Future Plans" in
the Offer to Purchase is incorporated herein by reference. Other than as set
forth therein, the Purchaser has no plans or proposals that would relate to
or would result in any of the transactions, changes or other results
described in Items 5(a) through (g) of Schedule 14D-1.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in "Certain Information Concerning
the Purchaser" in the Offer to Purchase 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 "Certain Information Concerning the
Purchaser" in the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Fees and Expenses" in the Offer to
Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth under the caption "Certain Information
Concerning the Purchaser" in the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) None.
(b)-(c) The information set forth in "Certain Legal Matters" in the
Offer to Purchase is incorporated herein by reference.
(d)-(e) None.
(f) Reference is hereby made to the Offer to Purchase and the related
Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1)
and (a)(2), respectively, and which are incorporated herein in their entirety
by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated November 23, 1999.
(a)(2) Letter of Transmittal and related instructions, dated
November 23, 1999.
(a)(3) Form of Letter to Unitholders, dated November 23, 1999.
(b)-(f) Not Applicable.
<PAGE>
PAGE 5 OF 6
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: November 23, 1999
ERP OPERATING LIMITED PARTNERSHIP
By: EQUITY RESIDENTIAL PROPERTIES TRUST,
GENERAL PARTNER
By: /s/ Bruce C. Strohm
----------------------------
EXECUTIVE VICE PRESIDENT,
Its: GENERAL COUNSEL
----------------------------
<PAGE>
PAGE 6 OF 6
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- ------------
(a)(1) Offer to Purchase, dated November 23, 1999.
(a)(2) Letter of Transmittal and related instructions, dated
November 23, 1999.
(a)(3) Form of Letter to Unitholders, dated November 23, 1999.
(b)-(f) Not Applicable.
<PAGE>
EXHIBIT 99.(a)(1)
TENDER OFFER
OFFER TO PURCHASE FOR CASH UP TO 23,584
UNITS OF INVESTOR LIMITED PARTNERSHIP INTEREST
OF
KRUPP REALTY LIMITED PARTNERSHIP-V
AT
$675 PER UNIT
BY
ERP OPERATING LIMITED PARTNERSHIP
(THE "PURCHASER")
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, CENTRAL
STANDARD TIME, ON JANUARY 12, 2000, UNLESS THE OFFER IS EXTENDED.
ERP OPERATING LIMITED PARTNERSHIP (the "Purchaser") hereby seeks to acquire
units of investor limited partnership interest (the "Units") in KRUPP REALTY
LIMITED PARTNERSHIP-V, a Massachusetts limited partnership (the "Partnership").
The Units are collectively referred to as the "Units". The Purchaser is not
affiliated with the Partnership or its general partners (the "General
Partners"). The Purchaser hereby offers to purchase up to 23,584 Units at a
purchase price equal to $675 per Unit (the "Offer Price"), less the amount of
any distributions declared or made with respect to the Units between
November 23, 1999 and January 12, 2000, or such other date to which this Offer
may be extended (the "Expiration Date"), in cash, without interest, upon the
terms and subject to the conditions set forth in this Offer to Purchase (the
"Offer to Purchase") dated November 23, 1999 (the "Offer Date") and in the
related Letter of Transmittal, as each may be supplemented or amended from time
to time (which together constitute the "Offer"). The 23,584 Units sought
pursuant to the Offer represent 67% of the Units outstanding as of December 31,
1998. One of the Purchaser's affiliates currently owns an interest in ten Units.
If all of the Units sought hereunder are purchased, the Purchaser and its
affiliate would hold 67% of the outstanding Units.
Holders of Units (the "Unitholders") are urged to consider the following
factors:
- The Purchaser is making the Offer for investment purposes and with the
intention of making a profit from the ownership of the Units. In
establishing the purchase price of $675 per Unit, the Purchaser is
motivated to establish the lowest price which might be acceptable to
Unitholders consistent with the Purchaser's objectives. There is no public
market for the Units, and neither the Unitholders nor the Purchaser has
any accurate means for determining the actual present value of the Units.
Although there can be no certainty as to the actual present value of the
Units, the Purchaser has estimated, solely for the purposes of determining
an acceptable Offer Price, that the Units could have an estimated value of
$675 per Unit. It should be noted, however, that the Purchaser has not
made an independent appraisal of the Units or the Partnership's
properties. Accordingly, there can be no assurance that this estimate
accurately reflects an approximate value of the Units or that the actual
amounts which may be realized by Unitholders may not vary substantially
from this estimate. A Unitholder may receive more value if it retains its
Units until the Partnership is liquidated.
- A tendering Unitholder will not be required to pay any expenses, except
any personal income tax on the sale of tendered Units, if any, in
connection with the tendering of its Units to the Purchaser. The Purchaser
will pay any and all other fees, commissions, charges and expenses
incurred in connection with the Offer.
1
<PAGE>
- Unitholders who tender their Units will give up the opportunity to
participate in any future benefits from the ownership of Units, including
potential future distributions by the Partnership, and the purchase price
per Unit payable to a tendering Unitholder by the Purchaser may be less
than the total amount which might otherwise be received by the Unitholder
with respect to the Unit over the remaining term of the Partnership.
- The Purchaser is not affiliated with the Partnership or the General
Partners. However, as a result of consummation of the Offer, the Purchaser
may be in a position to significantly influence all Partnership decisions
on which Unitholders may vote including, but not limited to, the removal
of the General Partners, most amendments to the Amended Agreement of
Limited Partnership of the Partnership (the "Partnership Agreement") and
the sale of all or substantially all of the Partnership's assets. The
Purchaser will vote the Units acquired in the Offer in its own interest,
which may be different from or in conflict with the interests of the
remaining Unitholders.
THE OFFER TO PURCHASE IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF UNITS
BEING TENDERED. IF, AS OF THE EXPIRATION DATE, MORE THAN 23,854 UNITS ARE
VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN, THE PURCHASER WILL ONLY ACCEPT FOR
PURCHASE ON A PRO-RATA BASIS 23,854 UNITS, SUBJECT TO THE TERMS AND CONDITIONS
HEREIN.
The Purchaser 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,
any Units; (ii) upon the occurrence of any of the conditions specified in
Section 14 of the Offer to Purchase, to terminate the Offer and not accept for
payment any Units not theretofore accepted for payment or paid for, or to delay
the acceptance for payment of, or payment for, any Units not theretofore
accepted for payment or paid for; and (iii) to amend the Offer in any respect.
Notice of any such extension, termination or amendment will promptly be
disseminated to Unitholders in a manner reasonably designed to inform
Unitholders of such change in compliance with Rule 14d-4(c) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). In the case of an
extension of the Offer, such extension will be followed by a press release or
public announcement which will be issued no later than 9:00 a.m., central
standard time, on the next business day after the scheduled Expiration Date, in
accordance with Rule 14e-1(d) under the Exchange Act.
November 23, 1999
IMPORTANT
Any Unitholder desiring to tender any or all of such Unitholder's Units
should complete and sign the Letter of Transmittal (a copy of which is enclosed
with this Offer to Purchase, printed on green paper) in accordance with the
instructions in the Letter of Transmittal and mail, deliver or telecopy the
Letter of Transmittal and any other required documents to MMS Escrow and
Transfer Agency, Inc. (the "Depositary") at the address or facsimile number set
forth below.
<TABLE>
<S> <C>
By Hand or Overnight Courier: By Mail:
MMS Escrow and Transfer MMS Escrow and Transfer
Agency, Inc. Agency, Inc.
1845 Maxwell St., Suite 101 P.O. Box 7090
Troy, MI 48084 Troy, MI 48007-7090
</TABLE>
By Facsimile: (248) 614-4536
Please call the Depositary with any questions at (888) 292-4264.
Questions or requests for assistance or additional copies of this Offer to
Purchase or the Letter of Transmittal may be directed to the Purchaser at
(312) 474-1300.
2
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION OR ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR TO PROVIDE ANY INFORMATION OTHER
THAN AS CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. NO SUCH
RECOMMENDATION, INFORMATION OR REPRESENTATION MAY BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
The Partnership is subject to the information and reporting requirements of
the Exchange Act and in accordance therewith is required to file reports and
other information with the Securities and Exchange Commission (the "Commission")
relating to its business, financial condition and other matters. Such reports
and other information are available on the Commission's electronic data
gathering and retrieval (EDGAR) system, at its internet web site at
HTTP://WWW.SEC.GOV, and may be examined and copies may be obtained from the
offices of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549; 7 World Trade Center, 13th Floor, New York, New York
10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661.
The Purchaser has filed with the Commission a Tender Offer Statement on
Schedule 14D-1 (including exhibits) pursuant to Rule 14d-3 of the General
Rules and Regulations under the Exchange Act, furnishing certain additional
information with respect to the Offer. Such statement and any amendments
thereto, including exhibits, may be inspected and copies may be obtained from
the offices of the Commission in the manner specified above.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION................................................ 5
TENDER OFFER................................................ 7
Section 1. Terms of the Offer............................. 7
Section 2. Proration; Acceptance for Payment and Payment
for Units................................................. 7
Section 3. Procedures for Tendering Units................. 8
Section 4. Withdrawal Rights.............................. 10
Section 5. Extension of Tender Period; Termination;
Amendment................................................. 10
Section 6. Certain Federal Income Tax Consequences........ 11
Section 7. Effects of the Offer........................... 13
Section 8. Background and Reasons for the Offer........... 14
Section 9. Future Plans................................... 15
Section 10. Certain Information Concerning the
Partnership............................................... 16
Section 11. Conflicts of Interest.......................... 19
Section 12. Certain Information Concerning the Purchaser... 20
Section 13. Source of Funds................................ 20
Section 14. Conditions of the Offer........................ 21
Section 15. Certain Legal Matters.......................... 22
Section 16. Fees and Expenses.............................. 22
Section 17. Dissenters' Rights............................. 23
Section 18. Miscellaneous.................................. 23
SCHEDULE I--THE PURCHASER AND THE RESPECTIVE PRINCIPALS OF
ITS GENERAL PARTNER....................................... S-1
</TABLE>
4
<PAGE>
INTRODUCTION
The Purchaser hereby offers to purchase up to 23,584 Units at a purchase
price of $675 per Unit, less the amount of any distributions declared or paid
with respect to the Units between November 23, 1999 and the Expiration Date (the
"Offer Price"), in cash, without interest, upon the terms and subject to the
conditions set forth in the Offer to Purchase. Unitholders who tender their
Units will not be obligated to pay any Partnership transfer fees, or any other
fees, expenses or commissions in connection with the tender of Units. The
Purchaser will pay all such costs and all charges and expenses of the Depositary
in connection with the Offer.
Unitholders are urged to consider the following factors:
- The Purchaser is making the Offer for investment purposes and with the
intention of making a profit from the ownership of the Units. In
establishing the purchase price of $675 per Unit, the Purchaser is
motivated to establish the lowest price which might be acceptable to
Unitholders consistent with the Purchaser's objectives. There is no public
market for the Units, and neither the Unitholders nor the Purchaser has
any accurate means for determining the actual present value of the Units.
Although there can be no certainty as to the actual present value of the
Units, the Purchaser has estimated, solely for the purposes of determining
an acceptable Offer Price, that the Units could have an estimated value of
$675 per Unit. It should be noted, however, that the Purchaser has not
made an independent appraisal of the Units or the Partnership's
properties. Accordingly, there can be no assurance that this estimate
accurately reflects an approximate value of the Units or that the actual
amounts which may be realized by holders for the Units may not vary
substantially from this estimate. A Unitholder may receive more value if
it retains its Units until the Partnership is liquidated.
- A tendering Unitholder will not be required to pay any expenses, except
any personal income tax on the sale of tendered Units, if any, in
connection with the tendering of its Units to the Purchaser. The Purchaser
will pay any and all other fees, commissions, charges and expenses
incurred in connection with the Offer.
- Unitholders who tender their Units will give up the opportunity to
participate in any future benefits from the ownership of Units, including
potential future distributions by the Partnership, and the purchase price
per Unit payable to a tendering Unitholder by the Purchaser may be less
than the total amount which might otherwise be received by the Unitholder
with respect to the Unit over the remaining term of the Partnership.
- The Purchaser is not affiliated with the Partnership or the General
Partners. However, as a result of consummation of the Offer, the Purchaser
may be in a position to significantly influence all Partnership decisions
on which Unitholders may vote including, but not limited to, the removal
of the General Partners, most amendments to the Partnership Agreement and
the sale of all or substantially all of the Partnership assets. The
Purchaser will vote the Units acquired in the Offer in its own interest,
which may be different from or in conflict with the interests of the
remaining Unitholders.
The Offer will provide Unitholders with an opportunity to liquidate their
investment without the usual transaction costs associated with market sales.
Unitholders may have a more immediate need to use the cash now tied up in an
investment in the Units and wish to sell them to the Purchaser. Unitholders who
sell all of their Units will also eliminate the need to file Form K-1
information with their federal tax returns for years after 2000.
For further information concerning the Purchaser, see Section 12 below and
Schedule I.
5
<PAGE>
ESTABLISHMENT OF THE OFFER PRICE
The Purchaser has set the Offer Price at $675 per Unit, less the amount of
any distributions declared or made with respect to the Units between the Offer
Date and the Expiration Date. In determining the Offer Price, the Purchaser
analyzed a number of quantitative and qualitative factors, including: (i) the
Partnership's Annual Report on Form 10-K for the year ended December 31, 1998;
(ii) the Partnership's Quarterly Reports on Form 10-Q; (iii) prices reported
from private sales of Units; (iv) prior tender offer statements; and (v) the
Partnership Agreement.
The Purchaser is offering to purchase Units which are an illiquid investment
and are not offering to purchase the Partnership's underlying assets. The
Purchaser has relied solely on publicly available information in making its
estimate of the value of the Units. The Purchaser's estimated value of the Units
was calculated solely for purposes of formulating the Offer and cannot be relied
upon as representing an amount which might actually be realized upon a
liquidation of the Partnership, whether now or at any time in the future.
The Partnership currently owns interests in two multi-family apartment
complexes: Century II Apartments, a 468-unit complex in Cockeysville, Maryland,
and Park Place Tower Apartments, a 901-unit complex in Chicago, Illinois.
The Offer Price represents the price at which the Purchaser is willing to
purchase Units. No independent person has been retained to evaluate or render
any opinion with respect to the fairness of the Offer Price and no
representation is made by the Purchaser or any affiliate of the Purchaser as to
such fairness. Other measures of the value of the Units may be relevant to
Unitholders. Unitholders are urged to consider carefully all of the information
contained herein and consult with their own advisors, tax, financial or
otherwise, in evaluating the terms of the Offer before deciding whether to
tender Units.
GENERAL BACKGROUND INFORMATION
Except as otherwise indicated, information contained in this Offer to
Purchase is based upon documents and reports publicly filed by the Partnership
with the Commission. Although the Purchaser has no information that any
statements contained in this Offer to Purchase are untrue, the Purchaser does
not take responsibility for the accuracy or completeness of any information
contained in this Offer to Purchase which is derived from such public documents,
or for any failure by the Partnership to disclose events which may have occurred
and may effect the significance or accuracy of any such information but which
are unknown to the Purchaser.
According to publicly available information, there were 35,200 Units issued
and outstanding held by approximately 2,100 Unitholders at December 31, 1998. An
affiliate of the Purchaser owns an interest in ten Units.
If, prior to the Expiration Date, the Purchaser increases the consideration
offered to Unitholders pursuant to the Offer, such increased consideration will
be paid with respect to all Units that are purchased pursuant to the Offer,
whether or not such Units were tendered prior to such increase in consideration.
Each Unitholder must make his or her own decision based on his or her
particular circumstances. Unitholders should consult with their respective
advisors about the financial, tax, legal and other implications to them of
accepting the Offer. UNITHOLDERS ARE URGED TO READ THIS OFFER TO PURCHASE AND
THE ACCOMPANYING LETTER OF TRANSMITTAL AND THE OTHER ACCOMPANYING MATERIALS
CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR UNITS.
6
<PAGE>
TENDER OFFER
SECTION 1. TERMS OF THE OFFER. Upon the terms and subject to the
conditions of the Offer, the Purchaser will accept for payment and pay for Units
validly tendered on or prior to the Expiration Date and not withdrawn in
accordance with Section 4 of this Offer to Purchase. The term "Expiration Date"
shall mean 12:00 midnight, central standard time, on January 12, 2000, unless
and until the Purchaser has 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 so extended by the Purchaser, shall expire.
The Offer is conditioned on satisfaction of certain conditions. See
Section 14, which sets forth in full the conditions of the Offer. The Purchaser
reserves the right (but shall not be obligated), in its sole discretion and for
any reason, to waive any or all of such conditions. If, by the Expiration Date,
any or all of such conditions have not been satisfied or waived, the Purchaser
reserves the right (but shall not be obligated) to: (i) decline to purchase any
of the Units tendered, terminate the Offer and return all tendered Units to
tendering Unitholders; (ii) waive all 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
Unitholders 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;
or (iv) amend the Offer.
The Purchaser does not anticipate and has no reason to believe that any
condition or event will occur that would prevent the Purchaser from purchasing
tendered Units as offered herein.
SECTION 2. PRORATION; ACCEPTANCE FOR PAYMENT AND PAYMENT FOR UNITS. The
Purchaser is offering to purchase 23,584 Units. An affiliate of the Purchaser
already owns an interest in ten Units. If the Purchaser were to purchase the
23,584 Units being offered for, it and its affiliate would own 67% of the
outstanding Units.
If Units are validly tendered and not properly withdrawn on or before the
Expiration Date and the purchase of all such Units would result in there being
less than 350 Unitholders, the Purchaser will purchase only 99% of the total
number of Units so tendered by each Unitholder with adjustments rounded up or
down, at the sole discretion of the Purchaser, to avoid the purchase of
fractional Units.
If more than 23,584 Units are validly tendered on or prior to the Expiration
Date and not properly withdrawn on or prior to the Expiration Date, the
Purchaser will only accept for payment, upon the terms and subject to the
conditions of the Offer, and pay for an aggregate of 23,584 Units so tendered,
pro rata according to the number of Units validly tendered 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 10.4 of the Partnership Agreement. If the number of Units validly
tendered and not properly withdrawn on or prior to the Expiration Date is less
than or equal to 23,584 Units, the Purchaser will purchase all Units as tendered
and not properly withdrawn, upon the terms and subject to the conditions of the
Offer.
In the event that proration of tendered Units is required, and because of
the difficulty of determining the proration results, the Purchaser may not be
able to announce the final results of such proration until at least
approximately seven business days after the Expiration Date. Subject to the
Purchaser's obligation under Rule 14(e)-1(c) under the Exchange Act, to pay
Unitholders the Purchase Price in respect of Units tendered or return those
Units promptly after the termination or withdrawal of the Offer, the Purchaser
does not intend to pay for any Units accepted for payment pursuant to the Offer
until the final proration results are known.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment, and will pay for, Units
validly tendered and not withdrawn in accordance with Section 4, as
7
<PAGE>
promptly as practicable following the Expiration Date. 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 Letter of Transmittal
(or facsimile thereof) and any other documents required by the Letter of
Transmittal.
For purposes of the Offer, the Purchaser shall be deemed to have accepted
for payment (and thereby purchased) tendered Units when, as and if the Purchaser
gives oral or written notice to the Depositary of the Purchaser's acceptance for
payment of such Units pursuant to the Offer. Upon the terms and subject to the
conditions of the Offer, payment for Units purchased pursuant to the Offer will
in all cases be made by deposit of the Offer Price with the Depositary, which
will act as agent for the tendering Unitholders for the purpose of receiving
payment from the Purchaser and transmitting payment to tendering Unitholders.
Under no circumstances will interest be paid on the Offer Price by reason of
any delay in making such payment.
If any tendered Units are not purchased for any reason, the Letter of
Transmittal with respect to such Units not purchased will be of no force or
effect. If, for any reason whatsoever, 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 (but
subject to compliance with Rule 14e-1(c) under the Exchange Act), the Depositary
may, nevertheless, on behalf of the Purchaser, retain tendered Units, subject to
any limitations of applicable law, and such Units may not be withdrawn except to
the extent that the tendering Unitholders are entitled to withdrawal rights as
described in Section 4.
If, prior to the Expiration Date, the Purchaser shall increase the
consideration offered to Unitholders pursuant to the Offer, such increased
consideration shall be paid for all Units accepted for payment pursuant to the
Offer, whether or not such Units were tendered prior to such increase.
SECTION 3. PROCEDURES FOR TENDERING UNITS.
VALID TENDER. For Units to be validly tendered pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal (a copy of which is
enclosed with this Offer to Purchase, printed on green paper) with any other
documents required by the Letter of Transmittal must be received by the
Depositary at its address on or prior to the Expiration Date. A Unitholder may
tender any or all Units owned by such Unitholder.
In order for a tendering Unitholder to participate in the Offer, Units must
be validly tendered and not withdrawn prior to the Expiration Date, which is
12:00 midnight, central standard time, on January 12, 2000, or such date to
which the Offer may be extended.
The method of delivery of the Letter of Transmittal and all other required
documents is at the option and risk of the tendering Unitholder and delivery
will be deemed made only when actually received by the Depositary.
BACKUP FEDERAL INCOME TAX WITHHOLDING. To prevent the possible application
of 31% backup federal income tax withholding with respect to payment of the
Offer Price for Units purchased pursuant to the Offer, a tendering Unitholder
must provide the Depositary with such Unitholder's correct taxpayer
identification number and make certain certifications that such Unitholder is
not subject to backup federal income tax withholding. Each tendering Unitholder
must insert in the Letter of Transmittal the Unitholder's taxpayer
identification number or social security number in the space provided on the
Letter of Transmittal. The Letter of Transmittal also includes a substitute Form
W-9, which contains the certifications referred to above. (See the Instructions
to the Letter of Transmittal.)
FIRPTA WITHHOLDING. To prevent the withholding of federal income tax in an
amount equal to 10% of the sum of the Offer Price plus the amount of Partnership
liabilities allocable to each Unit tendered,
8
<PAGE>
each Unitholder must complete the FIRPTA Affidavit included in the Letter of
Transmittal certifying such Unitholder's taxpayer identification number and
address and that the Unitholder is not a foreign person. (See the Instructions
to the Letter of Transmittal and "Section 6. Certain Federal Income Tax
Consequences.")
ASSIGNMENT OF INTEREST IN FUTURE DISTRIBUTIONS. By executing the Letter of
Transmittal, a Unitholder will irrevocably assign to the Purchaser and its
assigns all of the Unitholder's right, title and interest in and to any and all
distributions made by the Partnership from any source and of any nature,
including, without limitation, distributions in the ordinary course,
distributions from sales of assets, distributions upon liquidation, winding-up
or dissolution, payments in settlement of existing or future litigation, and all
other distributions and payments from and after the expiration date of the
Offer, in respect of the Units tendered by the Unitholder and accepted for
payment and thereby purchased by the Purchaser. If, after the Unit is accepted
for payment and purchased by the Purchaser, the Unitholder receives any
distribution from any source and of any nature, including, without limitation,
distributions in the ordinary course, distributions from sales of assets,
distributions upon liquidation, winding-up or dissolution, payments in
settlement of existing or future litigation and all other distributions and
payments, from the Partnership in respect of its Unit, it will agree to forward
promptly such distribution to the Purchaser.
OTHER REQUIREMENTS. By executing a Letter of Transmittal as set forth
above, a tendering Unitholder irrevocably appoints the designees of the
Purchaser as such Unitholder's proxies, in the manner set forth in the Letter of
Transmittal, each with full power of substitution, to the full extent of such
Unitholder's rights with respect to the Units tendered by such Unitholder and
accepted for payment by the Purchaser. Such appointment will be effective when,
and only to the extent that, the Purchaser accepts such Units for payment. Upon
such acceptance for payment, all prior proxies given by such Unitholder with
respect to such Units will, without further action, be revoked, and no
subsequent proxies may be given (and if given will not be effective). The
designees of the Purchaser will, with respect to such Units, be empowered to
exercise all voting and other rights of such Unitholder as they in their sole
discretion may deem proper at any meeting of Unitholders, by written consent or
otherwise. In addition, by executing a Letter of Transmittal, a Unitholder also
assigns to the Purchaser all of the Unitholder's rights to receive distributions
from the Partnership with respect to Units which are accepted for payment and
purchased pursuant to the Offer, other than those distributions declared or paid
during the period commencing on the Offer Date and terminating on the Expiration
Date.
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 procedures described above will be determined by the
Purchaser, in its sole discretion, which determination shall be final and
binding. The Purchaser reserves the absolute right to reject any or all tenders
determined by it not to be in proper form, or the acceptance of or payment for
which may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser
also reserves the right to waive any defect or irregularity in any tender with
respect to any particular Units of any particular Unitholder, and the
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letter of Transmittal and the Instructions thereto) will be final and
binding. Neither the Purchaser, the Depositary, nor 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.
A tender of Units pursuant to any of the procedures described above will
constitute a binding agreement between the tendering Unitholder and the
Purchaser upon the terms and subject to the conditions of the Offer, including
the tendering Unitholder's representation and warranty that: (i) such Unitholder
owns the Units being tendered within the meaning of Rule 14e-4 under the
Exchange Act; and (ii) the tender of such Units complies with Rule 14e-4.
Rule 14e-4 requires, in general, that a tendering security holder actually be
able to deliver the security subject to the tender offer, and is of concern
particularly to any Unitholders who have granted options to sell or purchase the
Units, hold option rights
9
<PAGE>
to acquire such securities, maintain "short" positions in the Units (i.e., have
borrowed the Units) or have loaned the Units to a short seller. Because of the
nature of limited partnership interests, the Purchaser believes it is unlikely
that any option trading or short selling activity exists with respect to the
Units. In any event, a Unitholder will be deemed to tender Units in compliance
with Rule 14e-4 and the Offer if the holder is the record owner of the Units and
the holder: (i) delivers the Units pursuant to the terms of the Offer;
(ii) causes such delivery to be made; (iii) guarantees such delivery;
(iv) causes a guaranty of such delivery; or (v) uses any other method permitted
in the Offer (such as facsimile delivery of the Transmittal Letter).
SECTION 4. WITHDRAWAL RIGHTS. Except as otherwise provided in this
Section 4, all tenders of Units pursuant to the Offer are irrevocable, provided
that Units tendered pursuant to the Offer may be withdrawn at any time prior to
the Expiration Date and, unless theretofore accepted for payment as provided in
this Offer to Purchase, may also be withdrawn at any time on or after March 31,
2000.
For withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at the address or the
facsimile number set forth in the attached Letter of Transmittal. 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 Letter of
Transmittal in the same manner as the Letter of Transmittal was signed.
If purchase of, or payment for, Units is delayed for any reason or if the
Purchaser is unable to purchase or 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 on behalf of the Purchaser and may not be withdrawn
except to the extent that tendering Unitholders are entitled to withdrawal
rights as set forth in this Section 4, subject to Rule 14e-1(c) under the
Exchange Act, which provides that no person who makes a tender offer shall fail
to pay the consideration offered or return the securities deposited by or on
behalf of security holders promptly after the termination or withdrawal of the
tender offer.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, which determination shall be final and binding. Neither the
Purchaser, the Depositary, nor any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
will incur any liability for failure to give any such notification.
Any Units properly withdrawn will be 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.
SECTION 5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT. The
Purchaser 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, any Units
by giving oral or written notice of such extension to the Depositary; (ii) upon
the occurrence or failure to occur of any of the conditions specified in
Section 14, to delay the acceptance for payment of, or payment for, any Units
not heretofore accepted for payment or paid for, or to terminate the Offer and
not accept for payment any Units not theretofore accepted for payment or paid
for, by giving oral or written notice of such termination to the Depositary; and
(iii) to amend the Offer in any respect (including, without limitation, by
increasing or decreasing the consideration offered or the number of Units being
sought in the Offer or both or changing the type of consideration) by giving
oral or written notice of such amendment to the Depositary. Any extension,
termination or amendment will be followed as promptly as practicable by public
announcement, the announcement in the case of an extension to be issued no later
than 9:00 a.m., central standard time, on the next business day after the
previously scheduled Expiration Date, in accordance with the public announcement
requirement of Rule 14d-4(c) under the Exchange Act. Without limiting the manner
in which the Purchaser may choose to make any public announcement, except as
provided by applicable law (including Rule 14d-4(c) under the Exchange Act), the
Purchaser will have
10
<PAGE>
no obligation to publish, advertise or otherwise communicate any such public
announcement. The Purchaser may also be required by applicable law to
disseminate to Unitholders certain information concerning the extensions of the
Offer and any material changes in the terms of the Offer.
If the Purchaser 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 on behalf of the Purchaser, and such Units may not be
withdrawn except to the extent tendering Unitholders are entitled to withdrawal
rights as described in Section 4. However, the ability of the Purchaser to delay
payment for Units that the Purchaser has accepted for payment is limited by
Rule 14e-1 under the Exchange Act, which requires that the Purchaser pay the
consideration offered or return the securities deposited by or on behalf of
holders of securities promptly after the termination or withdrawal of the Offer.
If the Purchaser 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 to the extent required by Rules 14d-4(c),
14d-6(d) and 14e-1 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, other than a change in price or a change in
percentage of securities sought, will depend upon the facts and circumstances,
including the relative materiality of the change in the terms or information.
With respect to a change in price or a change in percentage of securities sought
(other than an increase of not more than 2% of the securities sought), however,
a minimum ten business day period is generally required to allow for adequate
dissemination to security holders and for 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, central standard time.
SECTION 6. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. THE FEDERAL INCOME TAX
DISCUSSION SET FORTH BELOW IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY AND
DOES NOT PURPORT TO ADDRESS ALL ASPECTS OF TAXATION THAT MAY BE RELEVANT TO A
PARTICULAR UNITHOLDER. For example, this discussion does not address the effect
of any applicable foreign, state, local or other tax laws other than federal
income tax laws. Certain Unitholders (including trusts, foreign persons,
tax-exempt organizations or corporations subject to special rules, such as life
insurance companies or S corporations) may be subject to special rules not
discussed below. This discussion is based on the Internal Revenue Code of 1986,
as amended (the "Code"), existing regulations, court decisions and Internal
Revenue Service ("IRS") rulings and other pronouncements. EACH UNITHOLDER
TENDERING UNITS SHOULD CONSULT SUCH UNITHOLDER'S OWN TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO SUCH UNITHOLDER OF ACCEPTING THE OFFER, INCLUDING
THE APPLICATION OF THE ALTERNATIVE MINIMUM TAX AND FEDERAL, FOREIGN, STATE,
LOCAL AND OTHER TAX LAWS.
The following discussion is based on the assumption that the Partnership is
treated as a partnership for federal income tax purposes and is not a "publicly
traded partnership" as that term is defined in the Code.
GAIN OR LOSS. A taxable Unitholder will recognize a gain or loss on the
sale of such Unitholder's Units in an amount equal to the difference between:
(i) the amount realized by such Unitholder on the sale; and (ii) such
Unitholder's adjusted tax basis in the Units sold. The amount realized by a
Unitholder will include the amount of cash received in exchange for the Units
plus the Unitholder's share of the Partnership's liabilities, if any, allocable
to the Units sold (as determined under Code Section 752 and the regulations
thereunder). If the Unitholder reports a loss on the sale, such loss generally
could not be currently deducted by such Unitholder except against such
Unitholder's capital gains from other investments assuming the Units were a
capital asset in the Unitholder's hand. In addition, such loss would be treated
as a passive activity loss. (See "Suspended Passive Activity Losses" below.)
11
<PAGE>
The adjusted tax basis in the Units of a Unitholder will depend upon
individual circumstances. (See "Partnership Allocations in Year of Sale" below.)
Each Unitholder who plans to tender hereunder should consult with the
Unitholder's own tax advisor as to the Unitholder's adjusted tax basis in the
Unitholder's Units and the resulting tax consequences of a sale.
If any portion of the amount realized by a Unitholder is attributable to
such Unitholder's share of "unrealized receivables" or "substantially
appreciated inventory items" as defined in Code Section 751, a corresponding
portion of such Unitholder's gain or loss will be treated as ordinary gain or
loss. It is possible that the basis allocation rules of Code Section 751 may
result in a Unitholder recognizing ordinary income with respect to the portion
of the Unitholder's amount realized on the sale of a Unit that is attributable
to such items while recognizing a capital loss with respect to the remainder of
the Unit.
A tax-exempt Unitholder (other than an organization described in Code
Section 501(c)(7) (social club), 501(c)(9) (voluntary employee benefit
association), 501(c)(17) (supplementary unemployment benefit trust), or
501(c)(20) (qualified group legal services plan)) should not be required to
recognize unrelated trade or business income upon the sale of its Units pursuant
to the Offer, assuming that such Unitholder does not hold its Units as a
"dealer" and has not acquired such Units with debt financed proceeds.
PARTNERSHIP ALLOCATIONS IN YEAR OF SALE. A tendering Unitholder will be
allocated the Unitholder's pro rata share of the annual taxable income and
losses from the Partnership with respect to the Units sold for the period
through the date of sale, even though such Unitholder will assign to the
Purchaser its rights to receive certain cash distributions with respect to such
Units. Such allocations and any Partnership distributions for such period would
affect a Unitholder's adjusted tax basis in the tendered Units and, therefore,
the amount of gain or loss recognized by the Unitholder on the sale of the
Units.
POSSIBLE TAX TERMINATION. The Code provides that if 50% or more of the
capital and profits interests in a partnership are sold or exchanged within a
12-month period, such partnership generally will terminate for federal income
tax purposes. It is possible that the Partnership could terminate for federal
income tax purposes as a result of consummation of the Offer. If so, the
Partnership will be treated as having made a liquidating distribution of an
undivided interest in all of its assets and liabilities to the remaining
Unitholders, the partners of the Partnership after consummation of the Offer
(i.e., the nontendering Unitholders and the Purchaser) would be treated as
having recontributed their interests in Partnership assets to the Partnership,
and the capital accounts of all partners would be restated. A Unitholder would
recognize gain on the liquidating distribution only to the extent that the
amount of cash deemed distributed to the Unitholder exceeded the Unitholder's
basis in the Units. Depending on the Unitholders' basis in their Units and the
Partnership's tax basis in its property, a tax termination could affect, perhaps
adversely, the amount of depreciation deductions reported by the Partnership for
the period following the date of such termination. A tax termination of the
Partnership also could have an adverse effect on Unitholders whose tax year is
not on a calendar year, of the inclusion of more than one year of Partnership
tax items in one tax return of such Unitholders, resulting in a "bunching" of
income. In addition, a tax termination could have an adverse effect on
non-tendering Unitholders who subsequently dispose of their Units at a gain of
requiring them to treat a greater portion of such gain as ordinary income (due
to the application of Code Section 735) than would otherwise be required absent
a tax termination of the Partnership.
SUSPENDED "PASSIVE ACTIVITY LOSSES". A Unitholder who sells all of the
Unitholder's Units would be able to deduct "suspended" passive activity losses
from the Partnership, if any, in the year of sale free of the passive activity
loss limitation. As a limited partner of the Partnership, which was engaged in
real estate activities, the ability of a Unitholder, who or which is subject to
the passive activity loss rules, to claim tax losses from the Partnership was
limited. Upon sale of all of the Unitholder's Units, such Unitholder would be
able to use any "suspended" passive activity losses first against gain, if any,
on sale of the Unitholder's Units and then against income from any other source.
12
<PAGE>
FOREIGN UNITHOLDERS. Gain realized by a foreign Unitholder on a sale of a
Unit pursuant to the Offer will be subject to federal income tax. Under Code
Section 1445, the transferee of a partnership interest held by a foreign person
is generally required to deduct and withhold a tax equal to 10% of the amount
realized on the disposition. The Purchaser will withhold 10% of the amount
realized by a tendering Unitholder from the purchase price payment to be made to
such Unitholder unless the Unitholder properly completes and signs the FIRPTA
Affidavit included as part of the Letter of Transmittal certifying the
Unitholder's TIN, that such Unitholder is not a foreign person and the
Unitholder's address. Amounts withheld would be creditable against a foreign
Unitholder's federal income tax liability and, if in excess thereof, a refund
could be obtained from the IRS by filing a U.S. income tax return.
SECTION 7. EFFECTS OF THE OFFER.
LIMITATIONS ON RESALES. The Partnership Agreement restricts transfers of
Units if, among other things, in the opinion of counsel to the Partnership a
transfer would cause a termination of the Partnership for federal income tax
purposes (which termination will occur when Units representing 50% or more of
the total Partnership capital and profits are transferred within a twelve-month
period). Consequently, sales of Units in the secondary market and in private
transactions during the twelve-month period following completion of the Offer
may be restricted, and the Partnership may not process any requests for
recognition of transfers or Units during such twelve-month period which the
General Partners believe may cause a tax termination. See "Section 6. Certain
Federal Income Tax Consequences" and "Section 14. Conditions of the Offer."
EFFECT ON TRADING MARKET. The Partnership's Form 10-K for the year ended
December 31, 1998 states that "[t]here is no public market for the Units and it
is not anticipated that any such public market will develop." A reduction in the
number of Unitholders may further restrict the Unitholders' ability to find
purchasers for their Units on any secondary market.
CONTROL OF ALL UNITHOLDER VOTING DECISIONS BY PURCHASER. The Purchaser will
have the right to vote each Unit purchased pursuant to the Offer. If the
Purchaser is successful in acquiring a significant number of Units pursuant to
the Offer, the Purchaser could be in a position to significantly influence all
Partnership decisions on which investor limited partners may vote. If all Units
sought by the Purchaser are tendered and accepted for payment pursuant to the
Offer, the Purchaser and its affiliate will own 67% of the outstanding Units.
This would effectively: (i) prevent non-tendering Unitholders from taking action
desired by it but that the Purchaser opposes; and (ii) enable the Purchaser to
take action desired by it but opposed by non-tendering Unitholders. Under the
Partnership Agreement, a majority in interest of the investor limited partners
are entitled to take action with respect to a variety of matters, including:
(i) removal of any General Partner; (ii) termination of the Partnership;
(iii) sale of all or substantially all of the Partnership's properties; and
(iv) most types of amendments to the Partnership Agreement. Although the
Purchaser has no current intentions with regard to any of these matters, it will
vote the Units acquired pursuant to the Offer in its interest, which may, or may
not, be in the best interest of non-tendering Unitholders.
RECOGNITION OF TAXABLE GAIN ON A SALE OF YOUR UNITS. The sale of Units for
cash will be a taxable sale, with the result that a selling Unitholder will
recognize taxable gain or loss measured by the difference between the amount
realized on the sale and its adjusted tax basis in the Units transferred to the
Purchaser. The "amount realized" with respect to a Unit transferred to the
Purchaser will be equal to the sum of the amount of cash received by a selling
Unitholder for the Unit sold pursuant to the Offer plus the amount of
Partnership liabilities allocable to the Unit. The particular tax consequences
for a selling Unitholder of the Offer will depend upon a number of factors
related to each tax situation, including the tax basis in the Units transferred
to the Purchaser, whether all of the Units are disposed of and whether the
Unitholder has available suspended passive losses, credits or other tax items to
offset any gain recognized as a result of the sale of Units. Therefore,
depending on the basis in the Units and a Unitholder's tax position, the taxable
gain and any tax liability resulting from a sale of Units to the
13
<PAGE>
Purchaser pursuant to the Offer could exceed the Offer Price. Because the income
tax consequences of tendering Units will not be the same for everyone, each
Unitholder should consult its own tax advisor to determine the tax consequences
of the Offer.
OTHER POTENTIAL EFFECTS. The Units are registered under Section 12(g) of
the Exchange Act, which requires, among other things, that the Partnership
furnish certain information to its Unitholders and to the Commission and comply
with the Commission's proxy rules in connection with meetings of, and
solicitation of consents from, Unitholders. Registration and reporting
requirements could be terminated by the Partnership if the number of record
holders falls below 300, or below 500 if the Partnership's total assets are
below $10 million for three consecutive preceding fiscal years. The Partnership
reported total assets of over $34 million as of its most recent fiscal year end
and a total of approximately 2,100 investor limited partners. The Purchaser does
not believe that the purchase of Units pursuant to the Offer will result in the
Units becoming eligible for deregistration under the Exchange Act because the
Purchaser will not purchase Units so that there are less than 350 Unitholders
(see "Section 2. Proration; Acceptance for Payment and Payment for Units").
SECTION 8. BACKGROUND AND REASONS FOR THE OFFER.
GENERAL. The Purchaser is in the business of owning, acquiring, developing,
expanding and managing multi-family apartment properties as well as acquiring
direct and indirect interests in apartment properties such as the properties
owned by the Partnership. The Offer provides the Purchaser with an opportunity
to purchase ownership interests in the Partnership while providing Unitholders
with an opportunity to liquidate their current investment. The Purchaser is very
familiar with the residential real estate industry and wants to purchase the
Units with the intention of being able to sell them at a higher price and/or to
receive any distributions made by the Partnership.
Krescent Partners L.L.C. ("Krescent") undertook a tender offer to acquire
certain of the Units in November 1996. In this tender offer, Krescent purchased
1,070 Units, which constituted approximately 3.0% of the then outstanding Units,
and Krescent assigned to American Holdings I, L.P. 769 Units, which constituted
approximately 2.2% of the then outstanding Units. The purchase price for the
Units tendered to Krescent was $440 per Unit.
Other tender offers may have been made or are currently being made by
unaffiliated third parties to acquire less than 5% of the Units in the
Partnership. The Purchaser is unaware of any such mini-tender offers or the
amounts offered, terms, tendering parties or number of Units involved.
PURPOSE OF THE OFFER. The purpose of the Offer is to enable the Purchaser
to acquire a significant interest in the Partnership for investment purposes
based on its expectation that there may be underlying value in the Partnership's
properties. The Purchaser does not currently intend to change current management
or the operation of the Partnership and does not have current plans for any
extraordinary transaction involving the Partnership. However, these plans could
change at any time in the future. If the Purchaser's plans with respect to the
Partnership change in the future, the ability of the Purchaser to influence
actions on which investor limited partners have a right to vote will depend on
the Unitholders' response to the Offer (i.e., the number of Units tendered). If
the Purchaser acquires only a few Units pursuant to the Offer, it would not be
in a position to influence matters over which investor limited partners have a
right to vote. Conversely, if all of the Units sought are tendered and accepted
for payment pursuant to the Offer, the Purchaser and its affiliate will own 67%
of the issued and outstanding Units and, as a result, will be in a position to
exert significant control over matters on which investor limited partners have a
right to vote. The purchase of the Units will allow the Purchaser to benefit
from any of the following: (a) any cash distributions from Partnership
operations in the ordinary course of business; (b) any distribution of net
proceeds from the sale of any Partnership properties; and (c) any distributions
of net proceeds from the liquidation of the Partnership.
14
<PAGE>
DETERMINATION OF OFFER PRICE. The Purchaser has set the Offer Price at $675
net per Unit (subject to adjustment as set forth in this Offer to Purchase). In
establishing the Offer Price, the Purchaser reviewed certain publicly available
information including, among other things: (i) the Partnership's Annual Report
on Form 10-K for the year ended December 31, 1998; (ii) the Partnership's
Quarterly Reports on Form 10-Q; (iii) prices reported from private sales of
Units; (iv) tender offer statements; and (v) the Partnership Agreement.
The Purchaser established the Purchase Price by analyzing a number of
quantitative and qualitative factors including: (i) the absence of a significant
number of recent secondary market resales of the Units; (ii) the lack of
liquidity of an investment in the Partnership; (iii) the costs to the Purchaser
associated with acquiring the Units; (iv) the administrative cost of continuing
to own the Partnership's assets through a publicly registered limited
partnership; (v) the possibility that Unitholders may realize taxable income in
excess of tax distributions from the Partnership in future years; (vi) the
inability of Unitholders to exercise effective control over the management of
the Partnership through the annual election of the General Partners; and
(vii) estimated transaction costs of completing the Offer.
The Partnership's Form 10-K for the year ended December 31, 1998 states that
"[t]here is no public market for the Units and it is not anticipated that any
such public market will develop." At present, privately negotiated sales and
sales through intermediaries are the only means available to a Unitholder to
liquidate an investment in Units (other than the Offer and any other possible
tender offer the Purchaser is unaware of) because the Units are not listed or
traded on any exchange or quoted on any NASDAQ list or system. According to The
Partnership Spectrum, an independent third-party industry publication, for the
eight months ended September 30, 1999, a total of 100 Units traded at per Unit
prices between $575 and $651 with a weighted average of $624 per Unit. Set forth
below is a schedule of the trading activity of Units during the eight months
ended September 30, 1999, in two-month intervals, as reported by The Partnership
Spectrum:
<TABLE>
<CAPTION>
TRADING ACTIVITY FOR EIGHT MONTHS ENDED SEPTEMBER 30, 1999
NO. OF UNITS
PERIOD LOW/HIGH TRADED TOTAL VOLUME
- ------ --------- ------------ ------------
<S> <C> <C> <C>
February 1, 1999--March 31, 1999 $575/575 10 $ 5,750
April 1, 1999--May 30, 1999 $600/610 40 $24,200
June 1, 1999--July 31, 1999 N/A 0 0
August 1, 1999--September 30, 1999 $648/651 50 $32,431
--- -------
Total 100 $62,381
--- -------
</TABLE>
Unitholders are advised, however, that such 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 Purchase Price represents the price at which the Purchaser is willing to
purchase Units. No independent person has been retained to evaluate or render
any opinion with respect to the fairness of the Purchase Price and no
representation is made by the Purchaser or any affiliate of the Purchaser as to
such fairness. The Purchaser did not attempt to obtain current independent
valuations or appraisals of the underlying assets owned by the Partnership.
Other measures of the value of the Units may be relevant to Unitholders.
Unitholders are urged to consider carefully all of the information contained
herein and consult with their own advisors, tax, financial or otherwise, in
evaluating the terms of the Offer before deciding whether to tender Units.
SECTION 9. FUTURE PLANS. The Purchaser currently intends that, upon
consummation of the Offer, the Partnership will continue its business and
operations substantially as they are currently being conducted. The Offer is not
expected to have any effect on Partnership operations.
15
<PAGE>
Although the Purchaser has no present intention to do so, it may purchase
additional Units or sell Units after completion or termination of the Offer. Any
acquisition may be made through private purchases, through one or more future
tender or exchange offers, by merger, consolidation or by any other means deemed
advisable. Any 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,
shares of beneficial interest in the Purchaser or other consideration. The
Purchaser also may consider selling some or all of the Units it acquires
pursuant to the Offer to persons not yet determined, which may include its
affiliates. The Purchaser may also attempt to buy the Partnership's property,
although it has no present intention to do so. There can be no assurance,
however, that the Purchaser will initiate or complete, or will cause the
Partnership to initiate or complete, any subsequent transaction during any
specific time period following the expiration of the Offer or at all.
Except as set forth herein, the Purchaser does not have any present plans or
proposals which relate to or would result in an extraordinary transaction, such
as a merger, reorganization or liquidation, involving the Partnership or the
Partnership's subsidiary; a sale or transfer of a material amount of the
Partnership's assets (or assets of the Partnership's subsidiary); any changes in
the General Partners or the composition of the Partnership's senior management
or personnel; any changes in the Partnership's present capitalization or
distribution policy; or any other material changes in the Partnership's
structure or business. See "Section 7. Effects of the Offer--Voting Power of
Purchaser" for Purchasers ability to control the Partnership.
SECTION 10. CERTAIN INFORMATION CONCERNING THE PARTNERSHIP. Information
included herein concerning the Partnership is derived from the Partnership's
publicly-filed reports. Additional financial and other information concerning
the Partnership is contained in the Partnership's Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and other filings with the Commission. Such
reports and other documents may be examined and copies may be obtained from the
offices of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549; 7 Word Trade Center, Suite 1300, New York, NY 10048; and
Citicorp Center, 500 West Madison, Suite 1400, Chicago, IL 60661-2511; and at
the Commission's Web site at HTTP://WWW.SEC.GOV. The Purchaser disclaims any
responsibility for the information included in such reports and extracted in
this Offer to Purchase.
THE PARTNERSHIP'S ASSETS AND BUSINESS. The Partnership is a limited
partnership formed in 1983 under the laws of the Commonwealth of Massachusetts.
Its principal executive offices are located at 470 Atlantic Avenue, Boston,
Massachusetts 02210. Its telephone number is (617) 523-7722.
The General Partners of the Partnership are The Krupp Corporation, a
Massachusetts corporation, and The Krupp Company Limited Partnership-II, a
Massachusetts limited partnership.
The principal business of the Partnership is investing in, operating,
refinancing and ultimately disposing of the properties and related assets of the
Partnership. As of December 31, 1998, the Partnership owned interests in two
apartment complexes having an aggregate of 1,369 units. One of the complexes has
an additional 18,417 square feet of leaseable commercial space.
A summary of the Partnership's real estate investments is presented below:
<TABLE>
<CAPTION>
AVERAGE OCCUPANCY DECEMBER 31,
YEAR OF TOTAL UNITS/ ----------------------------------------------------
DESCRIPTION ACQUISITION LEASEABLE SQ. FT. 1998 1997 1996 1995 1994
- ----------- ----------- ----------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Century II Apts................... 1984 468 Units 100% 100% 96% 92% 92%
Cockeysville, Maryland
Park Place Tower Apts............. 1984 901 Units 99% 99% 96% 94% 94%
Chicago, Illinois 18,417 Sq. Ft. 64% 64% 76% 83% 83%
</TABLE>
16
<PAGE>
On December 10, 1997, the Partnership refinanced Century II Apartments
("Century") with a $11,000,000 non-recourse mortgage note payable at the rate of
6.75% per annum with monthly principal and interest payments of $71,346. The
note, which is collateralized by the property, matures on January 1, 2008 at
which time the remaining principal (approximately $9,401,537) and accrued
interest are due. The note may be prepaid, subject to a prepayment penalty, at
any time with 30 days notice. The Partnership used the majority of the proceeds
from the refinancing to repay the then existing debt secured by the property of
$10,309,332, pay closing costs of $236,763, pay a prepayment premium of $210,825
and establish various escrows. The prepayment premium, as well as unamortized
deferred mortgage costs of $77,331, are reported in the Statement of Operations
as an extraordinary loss from early extinguishment of debt for the year ended
December 31, 1997.
Park Place Tower Apartments ("Park Place") is subject to a non-recourse
mortgage note in the original amount of $33,000,000, dated September 15, 1993,
held by the U.S. Department of Housing and Urban Development ("HUD"). The note
is payable in equal monthly installments of principal and interest of $212,783,
based on a 31-year amortization. At maturity, all unpaid principal
(approximately $1,457,000) and any accrued interest are due. The note may be
prepaid subject to a prepayment premium. In the event prepayment of principal
occurs, a prepayment premium shall be due, based on a declining premium rate of
5% to 0% of the outstanding principal balance over a period of five years. As
stipulated in the Regulatory Agreement with HUD, the Partnership makes monthly
deposits of $17,743 in an established reserve for replacements to be used for
improvements. Under the terms of the loan, HUD restricts the distribution of
funds to Surplus Cash, as defined by HUD in the Regulatory Agreement.
In March 1989, the General Partners formed a separate limited partnership,
Krupp Realty Park Place - Chicago Limited Partnership ("Krupp Realty"), as a
prerequisite for the then refinancing of Park Place. At the same time that Krupp
Realty was formed, the General Partners transferred ownership of Krupp Realty to
the Partnership. The general partner of Krupp Realty is The Krupp Corporation.
The limited partner of Krupp Realty is the Partnership. The Krupp Corporation
has beneficially assigned its interest in Krupp Realty to the Partnership and
Krupp Realty is a subsidiary of the Partnership.
The Partnership's prospectus, dated August 2, 1983, indicates that the
Partnership was intended to be self-liquidating and that the Partnership's
properties were anticipated to be sold within five years of their acquisition,
although the General Partners are not required to sell the Partnership's
properties after any specified holding period. The Partnership's prospectus
indicates that the Partnership would terminate, in any event, on December 31,
2020. As the Purchaser is not in a management position, it is unable to predict
when the Partnership's two remaining properties will be sold or otherwise
disposed of.
SELECTED FINANCIAL DATA. Set forth below is a summary of certain financial
data for the Partnership which has been excerpted from the Partnership's Forms
10-K and Forms 10-Q for those periods as described. 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.
17
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------
1999 1998
----------- -----------
<S> <C> <C>
Revenue:
Rental.................................................... $11,634,413 $11,193,425
Interest income........................................... 129,135 84,026
----------- -----------
Total Revenue........................................... 11,763,548 11,277,451
Expenses:
Operating................................................. 2,652,161 2,351,381
Maintenance............................................... 705,272 658,108
General and administrative................................ 196,675 125,223
Real estate taxes......................................... 1,334,783 1,728,890
Management fees........................................... 467,815 395,309
Depreciation and amortization............................. 2,609,273 2,751,909
Interest.................................................. 2,223,525 2,254,400
----------- -----------
Total expenses 10,189,504 10,265,220
----------- -----------
Net Income.................................................. $ 1,574,044 $ 1,012,231
=========== ===========
Allocation of net income:
Investor Limited Partners (35,200 Units outstanding)...... $ 1,463,861 $ 941,375
Per Unit of Investor Limited Partner Interest............. 41.59 26.74
Original Limited Partner.................................. 94,443 60,734
General Partners.......................................... 15,740 10,122
</TABLE>
18
<PAGE>
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total Revenue................. $15,100,395 $14,523,598 $13,660,261 $13,839,760 $13,652,413
Loss before gain (loss) from
capital transactions........ 692,911 (304,383) (119,075) (795,377) (1,450,214)
Gain (loss) on sale of
property.................... -- -- -- 3,265,789 --
Income (loss) before
extraordinary loss.......... 692,911 (304,383) (119,075) 2,470,412 (1,450,214)
Extraordinary loss............ -- (288,156) -- (93,215) --
Net income (loss)............. 692,911 (592,539) (119,075) 2,377,197 (1,450,214)
Allocation of net income
(loss):
Investor Limited Partners... 644,407 (586,614) (117,884) 2,353,425 (1,435,712)
Per Unit.................... 18.31 (16.67) (3.35) 66.86 (40.79)
Original Limited Partner.... 41,575 -- -- -- --
General Partners............ 6,929 (5,925) (1,191) 23,772 (14,502)
Total assets at
December 31................. 34,721,709 35,457,032 37,162,269 38,555,732 42,604,180
Long-term obligation at
December 31................. 41,235,548 41,848,811 41,700,453 42,273,669 46,805,538
Distribution to Partners:
Investor Limited Partners... 1,408,000 1,408,000 704,000 -- --
Per Unit-Investor Limited
Partners.................. 40 40 20 -- --
Original Limited Partner.... 90,839 90,838 45,419 -- --
General Partners............ 15,140 15,140 7,570 -- --
</TABLE>
The Selected Financial Data results for the periods presented above are not
comparable due to the sale of Marine Terrace on July 19, 1995.
BENEFICIAL OWNERSHIP OF INTERESTS IN THE PARTNERSHIP. The Purchaser itself:
(i) does not beneficially own or have a right to acquire any Units; (ii) has not
effected any transactions in the Units in the past 60 days; or (iii) does not
have 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
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. On September 1, 1999, Duxford LLC ("Duxford") purchased an interest
in ten Units, representing less than one-percent of the number of outstanding
Units, at a price per Unit of $640. Duxford is wholly-owned by Equity
Residential Properties Trust, which is the general partner of the Purchaser.
This purchase of Units was effected through the American Partnership Board
(APB)/Gemisys Securities Corporation (GSC). Duxford's principal office is
located at 470 Groveland Avenue, Highland Park, Illinois 60035.
SECTION 11. CONFLICTS OF INTEREST.
CONFLICTS OF INTEREST WITH RESPECT TO THE OFFER. The Purchaser desires to
purchase Units at a low price and Unitholders desire to sell Units at a high
price. Such conflicts of interest in connection with the Offer and the operation
of the Purchaser differ from those conflicts of interest that currently exist
for the Partnership. UNITHOLDERS ARE URGED TO READ THIS OFFER TO PURCHASE AND
ANY SCHEDULE 14D-9 FILED BY THE GENERAL PARTNERS AND THE RELATED MATERIALS
CAREFULLY AND IN THEIR ENTIRETY BEFORE DECIDING WHETHER TO TENDER THEIR UNITS.
19
<PAGE>
COMPETITION AMONG PROPERTIES. Because the Purchaser and the Partnership
both invest in apartment properties, these properties may compete with one
another for tenants. Furthermore, the Purchaser owns and may acquire additional
properties in general market areas where the Partnership properties are located.
FUTURE OFFERS. Although the Purchaser has no current plans to conduct
future tender offers for the Units, these plans may change based on future
circumstances. Any such future offers that the Purchaser might make could be for
consideration that is more or less than the consideration currently being
offered.
SECTION 12. CERTAIN INFORMATION CONCERNING THE PURCHASER. The Purchaser is
ERP OPERATING LIMITED PARTNERSHIP. For information concerning the Purchaser and
the respective principals of its general partner, Equity Residential Properties
Trust, please refer to Schedule I attached hereto. The principal business of the
Purchaser is the ownership, acquisition, development, expansion and management
of multi-family properties. The principal business address of the Purchaser is
Two North Riverside Plaza, Chicago, Illinois 60606.
The Purchaser has available sufficient amounts of liquid capital necessary
to fund the acquisition of all Units subject to the Offer, the expenses to be
incurred in connection with the Offer, and all other anticipated costs of the
Purchaser.
Except for the interest in ten Units owned by Duxford and as otherwise set
forth herein: (i) neither the Purchaser nor, to the best knowledge of the
Purchaser, the persons listed on Schedule I nor any affiliate of the Purchaser
beneficially owns or has a right to acquire any Units; (ii) neither the
Purchaser nor, to the best knowledge of the Purchaser, the persons listed on
Schedule I nor any affiliate of the Purchaser, or any director, executive
officer or subsidiary of any of the foregoing has effected any transaction in
the Units within the past 60 days; (iii) neither the Purchaser nor, to the best
knowledge of the Purchaser, the persons listed on Schedule I nor any affiliate
of the Purchaser 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, consents or authorizations; (iv) there
have been no transactions or business relationships which would be required to
be disclosed under the rules and regulations of the Commission between any of
the Purchaser or, to the best knowledge of the Purchaser, the persons listed on
Schedule I, or any affiliate of the Purchaser on the one hand, and the
Partnership or its affiliates, on the other hand; and (v) there have been no
contracts, negotiations or transactions between the Purchaser, or to the best
knowledge of the Purchaser any affiliate of the Purchaser on the one hand, the
persons listed on Schedule I, and the Partnership or its affiliates, on the
other hand, concerning a merger, consolidation or acquisition, tender offer or
other acquisition of securities, an election of directors or a sale or other
transfer of a material amount of assets.
The Purchaser is subject to the information and reporting requirements of
the Exchange Act and in accordance therewith is required to file reports and
other information with the Commission relating to its business, financial
condition and other matters. Such reports and other information are available on
the Commission's electronic data gathering and retrieval (EDGAR) system, at its
internet web site at HTTP://WWW.SEC.GOV, and may be examined and copies may be
obtained from the offices of the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549; 7 World Trade Center, 13th Floor,
New York, New York 10048; and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661.
SECTION 13. SOURCE OF FUNDS. The Purchaser expects that approximately
$15,919,200 would be required to purchase 23,584 Units, if tendered, and an
additional $100,000 may be required to pay related fees and expenses. The
Purchaser anticipates funding all of the purchase price and related expenses
through its existing liquid capital reserves.
20
<PAGE>
SECTION 14. CONDITIONS OF THE OFFER. Notwithstanding any other term of the
Offer, the Purchaser shall 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 on or before the Expiration Date.
The Purchaser shall 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 of or payment for any Units by the
Purchaser; (ii) 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 Unitholders; (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, other than the application of the waiting period
provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, 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 hereof, in the business, properties, assets, liabilities,
financial condition, operations, results of operations or prospects of the
Partnership, which, in the reasonable judgment of the Purchaser, is or may
be materially adverse to the Partnership, or the Purchaser shall have become
aware of any fact that, in the reasonable judgment of the Purchaser, 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 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 shall have
otherwise learned that: (i) more than 50% 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 Sections 13(d) or (g) of the Exchange Act has increased or
proposes to increase the number of Units
21
<PAGE>
beneficially owned by such person or group as disclosed in such Statement by
2% or more of the outstanding Units.
The foregoing conditions are for the sole benefit of the Purchaser 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 termination by the Purchaser
concerning the events described above will be final and binding upon all
parties.
SECTION 15. CERTAIN LEGAL MATTERS.
GENERAL. Except as set forth in this Section 15, the Purchaser 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 pursuant to the Offer. 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. While 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,
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 held
separate or other substantial conditions complied with in order to obtain such
approval or action, any of which could cause the Purchaser to elect to terminate
the Offer without purchasing Units thereunder. The Purchaser's obligation to
purchase and pay for Units is subject to certain conditions, including
conditions related to the legal matters discussed in this Section 15.
ANTITRUST. The Purchaser does not believe that the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, is applicable to the acquisition
of Units pursuant to 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, such regulations are not applicable to the Offer.
STATE ANTI-TAKEOVER LAWS. A number of states have adopted anti-takeover
laws which purport, to varying degrees, to be applicable to attempts to acquire
securities of corporations which are incorporated in such states or which have
substantial assets, security holders, principal executive offices or principal
places of business therein. These laws are directed at the acquisition of
corporations and not partnerships. The Purchaser, therefore, does not believe
that any anti-takeover laws apply to the transactions contemplated by the Offer.
Although the Purchaser has not attempted to comply with any state
anti-takeover statutes in connection with the Offer, the Purchaser reserves the
right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer nor any action taken in
connection herewith is intended as a waiver of such right. If any state
anti-takeover statute is applicable to the Offer, the Purchaser might be unable
to accept for payment or purchase Units tendered pursuant to the Offer or be
delayed in continuing or consummating the Offer. In such case, the Purchaser may
not be obligated to accept for purchase or pay for any Units tendered.
SECTION 16. FEES AND EXPENSES. Except as set forth in this Section 16, the
Purchaser 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 has
retained the MMS Escrow and Transfer Agency, Inc. to act as Depositary in
connection with the Offer. The Purchaser will pay the Depositary reasonable and
customary compensation for its services in connection with the Offer, plus
reimbursement for out-of-pocket expenses, and will indemnify the Depositary
against certain liabilities and expenses in connection therewith, including
liabilities under the federal securities laws. The Purchaser will also pay all
costs and expenses of printing, publication and mailing of the Offer and all
costs of transfer.
22
<PAGE>
SECTION 17. DISSENTERS' RIGHTS. Neither the Partnership Agreement nor
applicable law provides any right for a Unitholder to have its Units appraised
or redeemed in connection with, or as a result of, the Offer. Each Unitholder
has the opportunity to make an individual decision on whether or not to tender
its Units in the Offer.
SECTION 18. MISCELLANEOUS. THE OFFER IS NOT BEING MADE TO (NOR WILL
TENDERS BE ACCEPTED FROM OR ON BEHALF OF) UNITHOLDERS IN ANY JURISDICTION IN
WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN
COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. THE PURCHASER IS NOT AWARE OF ANY
JURISDICTION WITHIN THE UNITED STATES IN WHICH THE MAKING OF THE OFFER OR THE
ACCEPTANCE THEREOF WOULD BE ILLEGAL.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER NOT CONTAINED HEREIN OR IN THE LETTER
OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
November 23, 1999
ERP OPERATING LIMITED PARTNERSHIP
23
<PAGE>
SCHEDULE I--THE PURCHASER AND THE
RESPECTIVE PRINCIPALS OF ITS GENERAL PARTNER
The following table and biographies provide certain information with respect
to the trustees and executive officers of the Purchaser's general partner,
Equity Residential Properties Trust (the "Trust"), as of August 31, 1999.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Samuel Zell............................... 57 Chairman of the Board of Trustees
(term expires in 2002)
Douglas Crocker II........................ 59 President, Chief Executive Officer and
Trustee (term expires in 2001)
John W. Alexander......................... 52 Trustee (term expires in 2000)
Stephen O. Evans.......................... 54 Executive Vice President--Strategic
Investments and Trustee (term expires in
2002)
Henry H. Goldberg......................... 61 Trustee (term expires in 2002)
Errol R. Halperin......................... 58 Trustee (term expires in 2000)
James D. Harper, Jr....................... 65 Trustee (term expires in 2001)
Boone A. Knox............................. 62 Trustee (term expires in 2002)
Edward Lowenthal.......................... 54 Trustee (term expires in 2000)
Jeffrey H. Lynford........................ 51 Trustee (term expires in 2000)
Sheli Z. Rosenberg........................ 57 Trustee (term expires in 2001)
Gerald A. Spector......................... 52 Executive Vice President, Chief Operating
Officer and Trustee (term expires in
2001)
Michael N. Thompson....................... 50 Trustee (term expires in 2001)
B. Joseph White........................... 52 Trustee (term expires in 2000)
Alan W. George............................ 41 Executive Vice President--Acquisitions
Edward J. Geraghty........................ 49 Executive Vice President--Development and
President--Eastern Property Division
Michael J. McHugh......................... 43 Executive Vice President, Chief Accounting
Officer and Treasurer
David J. Neithercut....................... 43 Executive Vice President and Chief
Financial Officer
Gregory H. Smith.......................... 48 Executive Vice President and President--
Central Property Division
Bruce C. Strohm........................... 44 Executive Vice President, General Counsel
and Secretary
Frederick C. Tuomi........................ 44 Executive Vice President and President--
Western Property Division
</TABLE>
The following is a biographical summary of the experience of the trustees
and executive officers of the Trust.
Samuel Zell has been Chairman of the Board of the Trust since March 1993.
Since January 1999, Mr. Zell has been chairman of Equity Group Investments, LLC,
an investment company ("EGI LLC"). For more than five years prior to 1999,
Mr. Zell had been chairman of the board of directors of Equity
S-1
<PAGE>
Group Investments, Inc., an owner, manager and financier of real estate and
corporations ("EGI"). He is also chairman of the board of directors of Jacor
Communications, Inc., an owner and operator of radio stations ("Jacor"),
American Classic Voyages Co., an owner and operator of cruise lines, Anixter
International Inc., a provider of integrated network and cabling systems
("Anixter"), Manufactured Home Communities, Inc., a real estate investment trust
("REIT") specializing in the ownership and management of manufactured home
communities ("MHC"), Chart House Enterprises, Inc., an owner and operator of
restaurants, and Capital Trust, Inc., a specialized finance company ("Capital
Trust"). Mr. Zell is chairman of the board of trustees of Equity Office
Properties Trust, a REIT specializing in the ownership and management of office
buildings ("EOP"). He is a director of Fred Meyer, Inc., an owner and operator
of supermarkets, Davel Communications, Inc., an operator of public payphones,
and Ramco Energy plc, an independent oil company based in the United Kingdom.
Douglas Crocker II has been Chief Executive Officer, President and a Trustee
of the Trust since March 1993. Mr. Crocker has been a director of Wellsford Real
Properties, Inc. ("WRP"), a publicly traded real estate merchant banking firm
since its formation in June 1997, Ventas, Inc., a real estate company focusing
on the ownership and acquisition of health care properties, since
November 1998, and was a director of Horizon Group Inc., an owner, developer and
operator of outlet retail properties from July 1996 to June 1998. Mr. Crocker
has been president and chief executive officer of First Capital Financial
Corporation, a sponsor of public limited real estate partnerships ("First
Capital"), since December 1992, and a director of First Capital since
January 1993. He was an executive vice president of Equity Financial and
Management Company ("EF&M"), a subsidiary of EGI, providing strategic direction
and services for EGI's real estate and corporate activities from November 1992
until March 1997. Mr. Crocker chairs and serves on boards or committees of
various multi-family housing associations, including the National Multi-Housing
Council and the Multifamily Council of the Urban Land Institute, and is a member
of the Board of Governors of the National Association of Real Estate Investment
Trusts ("NAREIT").
John W. Alexander has been a Trustee of the Trust since May 1993 and is the
president of Mallard Creek Capital Partners, Inc., an investment company with
interests in real estate and development entities. He is also a partner of
Meringoff Equities, a real estate investment and development company, and a
director of Jacor.
Stephen O. Evans has been Executive Vice President--Strategic Investments
and a Trustee of the Trust since December 23, 1997, the date of the merger of
Evans Withycombe Residential, Inc. ("Evans"), a multifamily property REIT, into
the Purchaser ("Evans Merger"). Prior to the Evans Merger, Mr. Evans served as
the chairman of the board and chief executive officer of Evans since its
formation in May 1994. Mr. Evans founded Evans Withycombe, Inc., the predecessor
of Evans, in 1977 and served as its chairman of the board and chief executive
officer from 1977 to 1994. Mr. Evans is a member of NAREIT, Lambda Alpha, a
national land economic fraternity, and the Urban Land Institute.
Henry H. Goldberg has been a Trustee of the Trust since January 1995.
Mr. Goldberg is chairman of the board, chief executive officer and founder of
The Artery Group, L.L.C., a diversified real estate company.
Errol R. Halperin has been a Trustee of the Trust since May 1993.
Mr. Halperin has been an attorney at the law firm of Rudnick & Wolfe since 1979,
serving as a senior partner and a member of the firm's policy committee since
1981, and a director of Elkay Manufacturing Company, a manufacturer of stainless
steel sinks, faucets, water coolers and cabinets, since 1980. Mr. Halperin
specializes in federal income tax counseling and real estate and corporate
transactions.
James D. Harper, Jr. has been a Trustee of the Trust since May 1993.
Mr. Harper is the president of JDH Realty Co., a real estate development and
investment company, and is the principal partner in AH Development, S.E. and AH
HA Investments, S.E., special limited partnerships formed to develop over 400
acres of land in Puerto Rico. He is a trustee of EOP and a director of Burnham
Pacific Properties Inc., a
S-2
<PAGE>
REIT that owns, develops and manages commercial real estate properties in
California, and American Health Properties, Inc., a REIT specializing in health
care facilities. Mr. Harper is also a trustee of the Urban Land Institute.
Boone A. Knox has been a Trustee of the Trust since October 19, 1998, the
date of the merger of Merry Land & Investment Company, Inc. ("Merry Land"), a
multifamily property REIT, into the Purchaser ("Merry Land Merger"). Mr. Knox
has been a director of Merry Land Properties, Inc. ("MRYP"), a publicly traded
diversified real estate company, since its formation as part of the Merry Land
Merger. Prior to the Merry Land Merger, Mr. Knox had been chairman of the board
of Merry Land since December 1996. Mr. Knox has served as chairman of the board
of directors of Regions Bank, Central Georgia since January 1997, and has been a
director of Cousins Properties Incorporated, a REIT specializing in the
ownership, development and management of retail and office buildings, since
1969, and The InterCept Group, Inc., a data processing company for community
banks, since February 1998.
Edward Lowenthal has been a Trustee of the Trust since June 1997, shortly
after the merger of Wellsford Residential Property Trust ("Wellsford"), a
multifamily property REIT, and the Purchaser on May 30, 1997 ("Wellsford
Merger"). Mr. Lowenthal has been the president, chief executive officer and a
director of WRP since its formation in January 1997, and had been the president
and chief executive officer and a trustee of Wellsford since its formation in
July 1992 until the Wellsford Merger. Mr. Lowenthal is a director of Corporate
Renaissance Group, Inc., a mutual fund, Omega Healthcare, Inc., a healthcare
REIT, Omega Worldwide, Inc., a health care finance company, and Great Lakes
REIT, Inc., an office building REIT. He is also a member of the Board of
Governors of NAREIT and a member of the New York bar.
Jeffrey H. Lynford has been a Trustee of the Trust since June 1997, shortly
after the Wellsford Merger. Mr. Lynford has been the chairman of the board and
secretary of WRP since its formation in January 1997, and had been the chairman
of the board and secretary of Wellsford since its formation in July 1992 until
the Wellsford Merger, and the chief financial officer of Wellsford from
July 1992 until December 1994. Mr. Lynford currently serves as a trustee
emeritus of the National Trust for Historic Preservation and as a director of
five mutual funds: Cohen & Steers Equity Income Fund, Inc., Cohen & Steers
Realty Income Fund, Inc., Cohen & Steers Realty Shares, Inc., Cohen & Steers
Special Equity Fund, Inc. and Cohen & Steers Total Return Realty Fund, Inc. He
is also a member of the New York bar.
Sheli Z. Rosenberg has been a Trustee of the Trust since March 1993.
Ms. Rosenberg has been chief executive officer and president of EGI LLC since
January 1999. From November 1994 until 1999, Ms. Rosenberg had been chief
executive officer, president and a director of EGI. Ms. Rosenberg had been a
principal of the law firm of Rosenberg & Liebentritt, P.C. ("R&L") from 1980 to
1997. Ms. Rosenberg is a trustee of EOP and is a director of Capital Trust,
Jacor, MHC, Anixter, CVS Corporation, a drugstore chain, Illinois Power Co., a
supplier of electricity and natural gas in Illinois, and its parent holding
company, Illinova Corp.
Gerald A. Spector has been a Trustee and Executive Vice President of the
Trust since March 1993 and Chief Operating Officer of the Trust since
February 1995. Mr. Spector was Treasurer of the Trust from March 1993 through
February 1995. From January 1973 until January 1996, Mr. Spector was an officer
of EF&M, most recently serving as vice president from November 1994 through
January 1996. From September 1990 through November 1994, Mr. Spector was
executive vice president and chief operating officer of EF&M. Mr. Spector was
executive vice president and chief operating officer of EGI from January 1991
through January 1994.
Michael N. Thompson has been a Trustee of the Trust since October 19, 1998,
the date of the Merry Land Merger. Mr. Thompson has been president, chief
operating officer and a director of MRYP since its formation as part of the
Merry Land Merger. Prior to the Merry Land Merger, Mr. Thompson served as
executive vice president and chief operating officer of Merry Land since
December 1996, and as a vice president of Merry Land from August 1992 until
December 1996.
S-3
<PAGE>
B. Joseph White has been a Trustee of the Trust since May 1993. Mr. White
has been a professor at the University of Michigan Business School since 1987
and has served as the dean since 1991. Mr. White is a director of Kelly
Services, Inc., a temporary services firm, Gordon Food Service, Inc., a
midwestern food distribution company, the Cummins Engine Foundation, the
philanthropic arm of Cummins Engine Co., a diesel engine manufacturer, and
several mutual funds managed by Alger Management, Inc., including the Alger
Fund, Alger American Fund, Alger Retirement Fund, Spectra Fund, and Castle
Convertible Fund.
Alan W. George has been Executive Vice President--Acquisitions of the Trust
since February 1997, Senior Vice President--Acquisitions of the Trust from
December 1995 until February 1997 and Vice President Acquisitions and asset
manager of the Purchaser from August 1993 until December 1995.
Edward J. Geraghty has been Executive Vice President--Development of the
Trust since March 1998 and President--Eastern Property Division since
April 1999. Mr. Geraghty was a managing director--real estate of The Travelers
Investment Group, Inc. from June 1995 to March 1998. Mr. Geraghty was an officer
of The Travelers Realty Investment Company, a subsidiary of The Travelers
Insurance Company, from July 1989 to January 1995, most recently serving as an
executive vice president from December 1992 to June 1995.
Michael J. McHugh has been an Executive Vice President of the Trust since
January 1998, and Chief Accounting Officer and Treasurer of the Trust since
February 1995. Mr. McHugh was Senior Vice President of the Trust from
February 1995 until January 1998. From May 1990 until January 1995, Mr. McHugh
was a senior vice president and chief financial officer of First Capital.
David J. Neithercut has been Executive Vice President and Chief Financial
Officer of the Trust since February 1995. Mr. Neithercut had been Vice
President--Financing of the Trust from September 1993 until February 1995.
Mr. Neithercut was a senior vice president--finance of EGI from January 1995
until February 1995, and a vice president--finance of Equity Asset
Management, Inc., a subsidiary of EGI providing real estate ownership services,
from October 1990 until December 1994.
Gregory H. Smith has been Executive Vice President of the Trust since
December 1994 and President--Central Property Division since April 1999.
Mr. Smith was a senior vice president of Strategic Realty Advisors, Inc., a real
estate and advisory company, from January 1994 until December 1994. Mr. Smith
was employed at VMS Realty Partners, a sponsor of public and private real estate
limited partnerships, from June 1989 until December 1993, most recently serving
as first vice president.
Bruce C. Strohm has been Executive Vice President and General Counsel of the
Trust since March 1995 and Secretary of the Trust since November 1995.
Mr. Strohm was a Vice President of the Trust from March 1993 through March 1995
and an Assistant Secretary of the Trust from March 1995 through November 1995.
Mr. Strohm was a vice president of R&L from January 1988 to March 1995, most
recently serving as a member of the firm's management committee.
Frederick C. Tuomi has been Executive Vice President of the Trust since
January 1994 and President--Western Property Division since April 1999.
Mr. Tuomi had been president of RAM Partners, Inc., a subsidiary of Post
Properties, Inc., a multifamily property REIT, from March 1991 to January 1994.
S-4
<PAGE>
Exhibit 99.(a)(2)
LETTER OF TRANSMITTAL
TO TENDER UNITS
OF
KRUPP REALTY LIMITED PARTNERSHIP-V
PURSUANT TO THE OFFER TO PURCHASE
DATED NOVEMBER 23, 1999
BY
ERP OPERATING LIMITED PARTNERSHIP
WE ARE OFFERING TO PURCHASE UNITS IN YOUR PARTNERSHIP FOR $675 PER UNIT.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, CENTRAL
STANDARD TIME, ON JANUARY 12, 2000 (THE "EXPIRATION DATE") UNLESS EXTENDED.
- --------------------------------------------------------------------------------
THE DEPOSITARY FOR THE OFFER IS:
MMS ESCROW AND TRANSFER AGENCY, INC.
<TABLE>
<S> <C>
By Hand or Overnight Courier: By Mail:
MMS Escrow and Transfer Agency, Inc. MMS Escrow and Transfer Agency, Inc.
1845 Maxwell St., Suite 101 P.O. Box 7090
Troy, MI 48084 Troy, MI 48007-7090
By Facsimile: (248) 614-4536
- ------------------------------------
</TABLE>
If you require additional information, please call the Depositary at (888)
292-4264.
To participate in the Offer, a duly executed copy of this Letter of
Transmittal and any other documents required by this Letter of Transmittal must
be received by the Depositary on or prior to the Expiration Date. Delivery of
this Letter of Transmittal or any other required documents to an address other
than as set forth above does not constitute valid delivery. The method of
delivery of all documents is at the election and risk of the tendering
Unitholder. Please use the pre-addressed, postage-paid envelope provided.
IF YOU HAVE THE CERTIFICATE ORIGINALLY ISSUED TO REPRESENT YOUR INTEREST IN THE
PARTNERSHIP, PLEASE SEND IT TO THE DEPOSITARY WITH THIS LETTER OF
TRANSMITTAL
This Letter of Transmittal is to be completed by holders of units of limited
partnership interest in KRUPP REALTY LIMITED PARTNERSHIP-V, a Massachusetts
limited partnership (the "Partnership"), pursuant to the procedures set forth in
the Offer to Purchase (as defined below). Capitalized terms used herein and not
defined herein have the meanings ascribed to such terms in the Offer to
Purchase.
PLEASE CAREFULLY READ THE ACCOMPANYING INSTRUCTIONS
1
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to ERP OPERATING LIMITED PARTNERSHIP (the
"Purchaser") all of the units of investor limited partnership interest (the
"Units") in the Partnership held by the undersigned or, if less than all such
Units, the number set forth below in the signature box, at a purchase price
equal to $675 per Unit, less the amount of any distributions made or declared
with respect to the Units between November 23, 1999 and the Expiration Date, and
upon the other terms and subject to the conditions set forth in the Offer to
Purchase (the "Offer to Purchase") dated November 23, 1999 (the "Offer Date")
and in this Letter of Transmittal, as each may be supplemented or amended from
time to time (which together constitute the "Offer"). Receipt of the Offer to
Purchase is hereby acknowledged. The undersigned recognizes that, if more than
23,584 Units are validly tendered prior to or on the Expiration Date and not
properly withdrawn, the Purchaser will, upon the terms of the Offer, accept for
payment from among those Units tendered prior to or on the Expiration Date
23,584 Units on a pro rata basis, with adjustments to avoid purchases of certain
fractional Units, based upon the number of Units validly tendered prior to the
Expiration Date and not withdrawn. The undersigned also recognizes that if the
purchase of the Units would result in there being less than 350 Unitholders, the
Purchaser will purchase only 99% of the total number of Units so tendered by
each investor limited partner with adjustments rounded up or down, at the sole
discretion of the Purchaser, to avoid the purchase of fractional Units. Subject
to and effective upon acceptance for payment of any of the Units tendered
hereby, the undersigned hereby sells, assigns and transfers to, or upon the
order of, Purchaser all right, title and interest in and to such Units which are
purchased pursuant to the Offer.
The undersigned hereby irrevocably constitutes and appoints the Purchaser as
the true and lawful agent and attorney-in-fact and proxy of the undersigned with
respect to such Units, with full power of substitution (such power of attorney
and proxy being deemed to be an irrevocable power and proxy coupled with an
interest), to deliver such Units and transfer ownership of such Units, on the
books of the Partnership, together with all accompanying evidences of transfer
and authenticity, to or upon the order of the Purchaser and, upon payment of the
purchase price in respect of such Units by the Purchaser, to exercise all voting
rights and to receive all benefits and otherwise exercise all rights of
beneficial ownership of such Units all in accordance with the terms of the
Offer. Subject to and effective upon the purchase of any Units tendered hereby,
the undersigned hereby requests that the Purchaser be admitted to the
Partnership as a "Substitute Limited Partner" under the terms of the Amended
Agreement of Limited Partnership of the Partnership. Upon the purchase of Units
pursuant to the Offer, all prior proxies and consents given by the undersigned
with respect to such Units will be revoked and no subsequent proxies or consents
may be given (and if given will not be deemed effective). In addition, by
executing this Letter of Transmittal, the undersigned assigns to the Purchaser
all of the undersigned's rights to receive distributions from the Partnership
with respect to Units which are purchased pursuant to the Offer, other than
distributions declared or paid through the Expiration Date and to change the
address of record for such distributions on the books of the Partnership. Upon
request, the Seller will execute and deliver, and irrevocably directs any
custodian to execute and deliver, any additional documents deemed by the
Purchaser to be necessary or desirable to complete the assignment, transfer and
purchase of such Units.
The undersigned irrevocably constitutes and appoints the Purchaser and any
designees of the Purchaser as the true and lawful agent and attorney-in-fact of
the undersigned with respect to such Units, with full power of substitution
(such power of attorney being deemed to be an irrevocable power coupled with an
interest), to withdraw any or all of such Units that have been previously
tendered in response to any tender or exchange offer provided that the price per
Unit being offered by the Purchaser is equal to or higher than the price per
Unit being offered in the previous tender or exchange offer. This appointment is
effective immediately and shall continue to be effective unless and until such
Units are withdrawn from the Offer by the undersigned prior to the Expiration
Date.
The undersigned hereby represents and warrants that the undersigned owns the
Units tendered hereby within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended, and has full power and authority to validly
tender, sell, assign and transfer the Units tendered hereby, and that when any
such Units 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 claim. Upon request, the undersigned will execute and
deliver any additional documents deemed by the Purchaser to be necessary or
desirable to complete the assignment, transfer and purchase of Units tendered
hereby.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligations of the undersigned
shall be binding upon the heirs, personal representatives, trustees in
bankruptcy, legal representatives, and successors and assigns of the
undersigned.
2
<PAGE>
The undersigned further represents and warrants that, to the extent a
certificate evidencing the Units tendered hereby (the "original certificate") is
not delivered by the undersigned together with this Letter of Transmittal: (i)
the undersigned represents and warrants to the Purchaser that the undersigned
has not sold, transferred, conveyed, assigned, pledged, deposited or otherwise
disposed of any portion of the Units; (ii) the undersigned has caused a diligent
search of the records to be taken and has been unable to locate the original
certificate; (iii) if the undersigned shall find or recover the original
certificate evidencing the Units, the undersigned will immediately and without
consideration surrender it to the Purchaser; and (iv) the undersigned shall at
all times indemnify, defend, and save harmless the Purchaser and the
Partnership, its successors, and its assigns from and against any and all
claims, actions, and suits whether groundless or otherwise, and from and against
any and all liabilities, losses, damages, judgments, costs, charges, counsel
fees, and other expenses of every nature and character by reason of honoring or
refusing to honor the original certificate when presented by or on behalf of a
holder in due course of a holder appearing to or believed by the Partnership to
be such, or by issuance or delivery of a replacement certificate, or the making
of any payment, delivery, or credit in respect of the original certificate
without surrender thereof, or in respect of the replacement certificate.
The undersigned understands that a tender of Units to the Purchaser will
constitute a binding agreement between the undersigned and the Purchaser upon
the terms and subject to the conditions of the Offer. The undersigned recognizes
the right of the Purchaser to effect a change of distribution address to Two
North Riverside Plaza, Chicago, Illinois 60606. The undersigned recognizes that
under certain circumstances set forth in the Offer to Purchase,
the Purchaser may not be required to accept for payment any of the Units
tendered hereby. In such event, the undersigned understands that any Letter of
Transmittal for Units not accepted for payment will be destroyed by
the Purchaser. All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of the undersigned and any obligations of the
undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Except as stated in the Offer to
Purchase, this tender is irrevocable.
- --------------------------------------------------------------------------------
SIGNATURE BOX
(PLEASE COMPLETE BOXES A, B, C AND D ON THE FOLLOWING PAGES AS NECESSARY)
Please sign and print your name and insert your Taxpayer Identification
Number or Social Security Number, address, telephone number and number of
Units being tendered in the spaces provided below. For joint owners, each
joint owner must sign and provide the above-listed information. (See
Instruction 1). The signatory hereby certifies under penalties of perjury
the statements in Box B, Box C and, if applicable, Box D.
X _______________________________________________ ________________________
(SIGNATURE OF OWNER) DATE
If the undersigned is tendering less than all Units held, the number of Units
tendered is set forth below. Otherwise, all Units held by the undersigned are
tendered hereby.
X _______________________________________________ ________________________
(SIGNATURE OF OWNER) DATE
Name (Printed) _________________________________________________________________
Taxpayer I.D. or Social # ______________________________________________________
Address ________________________________________________________________________
________________________________________________________________________________
Telephone No. (day) __________
(eve) ____________
Units Being Tendered ________
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
BOX A
MEDALLION SIGNATURE GUARANTEE
(REQUIRED FOR ALL SELLERS)
(SEE INSTRUCTION 1)
<TABLE>
<S> <C>
Name and Address of Eligible Institution
Authorized Signature Title
Name Date
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BOX B
SUBSTITUTE FORM W-9
(SEE INSTRUCTION 3--BOX B)
The person signing this Letter of Transmittal hereby certifies the following
to the Purchaser under penalties of perjury:
(i) The TIN set forth in the Signature Box is the correct TIN of the
Unitholder, or if this box [ ] is checked, the Unitholder has applied for a
TIN. If the Unitholder has applied for a TIN, a TIN has not been issued to
the Unitholder, and either: (a) the Unitholder has mailed or delivered an
application to receive a TIN to the appropriate IRS Center or Social
Security Administration Office; or (b) the Unitholder intends to mail or
deliver an application in the near future (it being understood that if the
Unitholder does not provide a TIN to the Purchaser within sixty (60) days,
31% of all reportable payments made to the Unitholder thereafter will be
withheld until a TIN is provided to the Purchaser); and
(ii) Unless this box [ ] is checked, the Unitholder is not subject to
backup withholding either because the Unitholder: (a) is exempt from backup
withholding; (b) has not been notified by the IRS that the Unitholder is
subject to backup withholding as result of a failure to report all interest
or dividends; or (c) has been notified by the IRS that such Unitholder is no
longer subject to backup withholding.
Note: Place an "X" in the box in (ii) if you are unable to certify that
the Unitholder is not subject to backup withholding.
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
BOX C
FIRPTA AFFIDAVIT
(SEE INSTRUCTION 3--BOX C)
Under Section 1445(e)(5) of the Internal Revenue Code and Treas. Reg.
1.1445-11T(d), a transferee must withhold tax equal to 10% of the amount
realized with respect to certain transfers of an interest in a partnership
if 50% or more of the value of its gross assets consists of U.S. real
property interests and 90% or more of the value of its gross assets consists
of U.S. real property interests plus cash equivalents, and the holder of the
partnership interest is a foreign person. To inform the Purchaser that no
withholding is required with respect to the Unitholder's interest in the
Partnership, the person signing this Letter of Transmittal hereby certifies
the following under penalties of perjury:
(i) Unless this box [ ] is checked, the Unitholder, if an individual,
is a U.S. citizen or a resident alien for purposes of U.S. income taxation,
and if other than an individual, is not a foreign corporation, foreign
partnership, foreign estate or foreign trust (as those terms are defined in
the Internal Revenue Code and Income Tax Regulations); (ii) the Unitholder's
U.S. social security number (for individuals) or employer identification
number (for non-individuals) is correctly printed in the Signature Box; and
(iii) the Unitholder's home address (for individuals), or office address
(for non-individuals), is correctly printed in the Signature Box. If a
corporation, the jurisdiction of incorporation is __________. The person
signing this Letter of Transmittal understands that this certification may
be disclosed to the IRS by the Purchaser and that any false statements
contained herein could be punished by fine, imprisonment, or both.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BOX D
SUBSTITUTE FORM W-8
(SEE INSTRUCTION 4--BOX D)
By checking this box [ ], the person signing this Letter of Transmittal
hereby certifies under penalties of perjury that the Unitholder is an
"exempt foreign person" for purposes of the backup withholding rules under
the U.S. federal income tax laws, because the Unitholder:
(i) Is a nonresident alien individual or a foreign corporation,
partnership, estate or trust;
(ii) If an individual, has not been and plans not to be present in the
U.S. for a total of 183 days or more during the calendar year; and
(iii) Neither engages, nor plans to engage, in a U.S. trade or business
that has effectively connected gains from transactions with a broker or
barter exchange.
- --------------------------------------------------------------------------------
5
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. TENDER; SIGNATURE REQUIREMENTS; DELIVERY. After carefully reading and
completing this Letter of Transmittal, in order to tender Units, a Unitholder
must sign at the "X" in the Signature Box of this Letter of Transmittal and
insert the Unitholder's correct Taxpayer Identification Number or Social
Security Number, address, telephone number and number of Units being tendered in
the spaces provided below the signature. If this Letter of Transmittal is signed
by the registered Unitholder of the Units, a Medallion signature guarantee on
this Letter of Transmittal is required. Similarly, if Units are tendered for the
account of a member firm of a registered national security exchange, a member
firm 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"), a Medallion signature guarantee is required. In all other cases,
signatures on this Letter of Transmittal must be Medallion guaranteed by an
Eligible Institution, by completing the Signature Guarantee set forth in Box A
of this Letter of Transmittal. A Medallion Signature Guarantee is provided by
your bank or brokerage house. If you obtain a Medallion Signature Guarantee from
a bank, brokerage house or trust company, a Corporate Resolution (with a raised
corporate seal) from the bank, brokerage house or trust company must be included
(stating that the Guarantor is an authorized signatory). If any tendered Units
are registered in the names of two or more joint holders, all such holders must
sign this Letter of Transmittal. If this Letter of Transmittal is signed by
trustees, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and must submit proper evidence
satisfactory to the Purchaser of their authority to so act. For Units to be
validly tendered, a properly completed and duly executed Letter of Transmittal,
together with any required signature guarantees in Box A, and any other
documents required by this Letter of Transmittal, must be received by the
depositary prior to or on the Expiration Date at its address or facsimile number
set forth on the front of this Letter of Transmittal. No alternative,
conditional or contingent tenders will be accepted. All tendering Unitholders by
execution of this Letter of Transmittal waive any right to receive any notice of
the acceptance of their tender.
2. TRANSFER TAXES. The Purchaser will pay or cause to be paid all transfer
taxes, if any, payable in respect of Units accepted for payment pursuant to the
Offer.
3. U.S. PERSONS. A Unitholder who or which is a United States citizen or
resident alien individual, a domestic corporation, a domestic partnership, a
domestic trust or a domestic estate (collectively "United States Persons"), as
those terms are defined in the Internal Revenue Code and Income Tax Regulations,
should complete the following:
BOX B--SUBSTITUTE FORM W-9. In order to avoid 31% federal income tax
backup withholding, the Unitholder must provide to the Purchaser the
Unitholder's correct Taxpayer Identification Number or Social Security
Number ("TIN") in the space provided below the signature line and certify,
under penalties of perjury, that such Unitholder is not subject to such
backup withholding. The TIN that must be provided is that of the registered
Unitholder. If a correct TIN is not provided, penalties may be imposed by
the Internal Revenue Service ("IRS"), in addition to the Unitholder being
subject to backup withholding. Certain Unitholders (including, among others,
all corporations) are not subject to backup withholding. Backup withholding
is not an additional tax. If withholding results in an overpayment of taxes,
a refund may be obtained from the IRS.
BOX C--FIRPTA AFFIDAVIT. To avoid potential withholding of tax pursuant
to Section 1445 of the Internal Revenue Code, each Unitholder who or which
is a United States Person (as defined in Instruction 3 above) must certify,
under penalties of perjury, the Unitholder's TIN and address, and that the
Unitholder 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.
BOX D--FOREIGN PERSONS. In order for a Unitholder who is a foreign
person (i.e., not a United States Person as defined in Instruction 3 above)
to qualify as exempt from 31% backup withholding, such foreign Unitholder
must certify, under penalties of perjury, the statement in BOX D of this
Letter of Transmittal attesting to that foreign person's status by checking
the box preceding such statement. However, such person will be subject to
withholding of tax under Section 1445 of the Code.
4. ORIGINAL CERTIFICATE. If you have the certificate originally issued to
represent your interest in the Partnership, please send it to the depositary
with this Letter of Transmittal.
5. ADDITIONAL COPIES OF OFFER TO PURCHASE AND LETTER OF TRANSMITTAL.
Requests for assistance or additional copies of the Offer to Purchase and this
Letter of Transmittal may be obtained from the Purchaser by calling (312)
474-1300.
6
<PAGE>
Exhibit 99.(a)(3)
[LOGO]
EQUITY
RESIDENTIAL PROPERTIES TRUST
November 23, 1999
TO: UNITHOLDERS OF KRUPP REALTY LIMITED PARTNERSHIP-V
SUBJECT: OFFER TO PURCHASE UNITS FOR $675 PER UNIT IN CASH
As described in the enclosed Offer to Purchase and related Letter of
Transmittal (collectively, the "Offer"), ERP OPERATING LIMITED PARTNERSHIP (the
"Purchaser") is offering to purchase up to 23,584 Units of investor limited
partnership interest (the "Units") in KRUPP REALTY LIMITED PARTNERSHIP-V, a
Massachusetts limited partnership (the "Partnership") at a purchase price equal
to:
$675 per Unit
The Purchaser is in the business of acquiring, owning and operating
multi-family properties. It currently controls 1,073 multi-family properties in
35 states, consisting of 228,501 units.
The Offer provides Unitholders with an opportunity to liquidate all, or a
portion of, its investment in KRUPP REALTY LIMITED PARTNERSHIP-V.
A tendering unitholder will not be required to pay any expenses, except any
personal income tax on the sale of the tendered Units, if any, in connection
with the tendering of its Units to the Purchaser. The Purchaser will pay any and
all other fees, commissions, charges and expenses incurred in connection with
the Offer.
Please consider the following additional points in evaluating the Offer:
- FAST, COMMISSION-FREE SALE. The Offer provides a Unitholder with the
opportunity to sell its Units without the commission costs (generally, up
to 10% of the sales price, subject to a $150-$200 minimum commission per
trade) paid by the seller in typical secondary market sales. With
secondary market matching services, the process to sell the Units will not
even begin until an interested buyer can be found, which cannot be assured
and can take days, weeks or even months.
- ELIMINATION OF RETIREMENT ACCOUNT FEES. If a Unitholder sells its Units,
2000 could be the final year in which it would incur fees for its IRA or
retirement account. Many custodians will not allow the transfer of limited
partnership units into new retirement accounts. While many investors have
consolidated their retirement accounts and taken advantage of custodial
services offered through discount brokerage firms, they may have had to
maintain separate retirement accounts for limited partnership units
because of custodial restrictions on the transfer of such units. Once the
Offer Price is sent directly to a Unitholder's retirement account, it is
free to consolidate its retirement accounts or transfer the funds to a
custodian that offers lower fees.
- ELIMINATION OF K-1 TAX FILINGS. If a Unitholder sells its Units now,
2000 will be the final year for which it receives a K-1 tax form from the
Partnership. Many investors who have tax professionals prepare their taxes
find the cost of filing K-1s to be burdensome, particularly if more than
one limited partnership is owned.
- ILLIQUID UNITS. The relative illiquidity of the Units resulting from the
absence of a formal trading market means the Units are difficult to sell.
<PAGE>
After carefully reading the enclosed Offer, if you elect to tender your
Units, mail (using the enclosed pre-addressed, postage paid envelope) or
telecopy a duly completed and executed copy of the Letter of Transmittal (the
green form) and any other documents required by the Letter of Transmittal, to
the Depositary at:
<TABLE>
<S> <C>
By Hand or Overnight Courier: By Mail:
MMS Escrow and Transfer Agency, Inc. MMS Escrow and Transfer Agency, Inc.
1845 Maxwell St., Suite 101 P.O. Box 7090
Troy, MI 48084 Troy, MI 48007-7090
By Facsimile: (248) 614-4536
</TABLE>
If you have any questions or need assistance, please call the Depositary at
(888) 292-4264.
This Offer expires (unless extended) January 12, 2000.
