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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): June 26, 1998
REAL ESTATE ASSOCIATES LIMITED VII
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(Exact name of Registrant as specified in charter)
California 0-13810 95-3290316
- --------------- ------------ --------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
9090 Wilshire Boulevard
Suite 201
Beverly Hills, California 90211
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Address of Principal Executive Offices
Registrant's telephone number, including area code: 310/278-2191
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ITEM 5. OTHER EVENTS.
The Registrant recently became aware through several of its limited
partners that an entity identified as Bond Purchase, L.L.C. was apparently
conducting a tender offer for units in the Registrant pursuant to an "Offer to
Purchase Limited Partnership Interests For $43.00" dated June 26, 1998.
Registrant has no further information about this "Offer to Purchase" or Bond
Purchase, L.L.C. By letter dated July 15, 1998, the Registrant's general
partners, on behalf of the Registrant, advised the limited partners to consult
with their tax advisors about the tax consequences that could result from a
sale of their units. Copies of the "Offer to Purchase" and the Registrant's
letter are attached hereto as exhibits.
EXHIBITS
The following exhibits are attached to this Current Report and thereby
made a part thereof:
1. Copy of the "Offer to Purchase" documents dated June 26, 1998 as
received from Registrant's limited partners.
2. Copy of Registrant's letter to its limited partners dated July 15,
1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
DATED: August 9, 1998
REAL ESTATE ASSOCIATES LIMITED VII,
a California limited partnership
By: National Partnership Investment Corp.,
a California corporation,
its General Partner
By: _______________________________
Its: _________________________
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BOND PURCHASE L.L.C.
P.O. Box 26730
Kansas City, MO 64196
June 26, 1998
To the Holders of Limited Partnership Interests in Real Estate
Associates Limited VII.
RE: OFFER TO PURCHASE LIMITED PARTNERSHIP INTERESTS FOR $43.00
Dear Investor:
We are offering you an opportunity to sell your limited partnership
interests (the "Units") in Real Estate Associates Limited VII (the
"Partnership") for cash in the amount of $43.00 per Unit (which amount will be
reduced by any cash distributions declared by the Partnership after the date of
this letter). Our offer provides you with an opportunity to sell your Units now
without the costly transfer fees and commission costs (typically up to 10%)
usually paid by the seller in secondary market sales. ALL TRANSFER COSTS AND
FEES WILL BE PAID BY BOND PURCHASE, L.L.C.
We believe that it is appropriate for investors to have financial choices.
Our offer gives you, the investor, the ability to make a decision about your
continued involvement with the Partnership. You may no longer wish to continue
with your investment in the Partnership for a number of reasons, including:
* NO FURTHER IRS FILING
* If you sell your units, 1998 will be the final year for which you
receive a K-1 tax form from the partnership.
* You may be able to realize a tax loss that would reduce your taxes for
1998.
* The Partnership was closed thirteen years ago in 1985. Your money has
been tied up for this long period with minimal return.
* More immediate use for the cash tied up in your investment in the Units.
* The absence of a formal trading market for the Units and their resulting
relative illiquidity.
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* The lack of any current cash distributions.
* General disenchantment with real estate investments, particularly
long-term investments in limited partnerships;
Our offer is limited to 1,020 of the 20,800 outstanding Units. If we were
to acquire more than this amount, the administrative costs of our offer would
become burdensome.
We will accept for purchase properly documented Unites on a
"first-received, first-buy" basis. You will be paid promptly following
confirmation of a valid, properly executed Agreement of Transfer and other
required transfer documents. We will pay for all Partnership transfer fees and
costs. All tenders of Units will be irrevocable and may not be rescinded or
withdrawn.
We are real estate investors who are not affiliated with the Partnership
or the General Partners. The General Partners of the Partnership have not
analyzed approved, endorsed or made any recommendation as to acceptance of the
offer. The purchase offer has been determined solely at the discretion of Bond
Purchase, L.L.C. and does not necessarily represent the true market value of
each unit. We are seeking to acquire Units for investment purposes only and not
with a view to their resale.
An Agreement of Transfer is enclosed which you can use to accept our
offer. Please execute page 3 of this document, as well as the Power of
Attorney. Obtain all other required signatures and return the documentation in
the enclosed envelope. Please note that all signatures must be medallion
guaranteed. The transfer cannot be processed without signatures that are
medallion guaranteed and failure to obtain them will result in needless delays.
In addition, place your Unit Certificate in the enclosed envelope. We encourage
you to act immediately if you are interested in accepting or offer as only
1,020 Units will be purchased.
OUR OFFER WILL EXPIRE AT 5:00 PM ON JULY 31, 1998, UNLESS EXTENDED.
Please call John Katzer at (816) 421-4670 if you have any questions.
Sincerely,
Bond Purchase, L.L.C.
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AGREEMENT OF TRANSFER
OR LIMITED PARTNERSHIP INTERESTS IN
REAL ESTATE ASSOCIATES LIMITED VII
Subject to and effective upon acceptance for payment, the undersigned
(the "Seller") hereby sells, assigns, transfers, conveys and delivers and
irrevocably directs any custodian or trustee to sell, assign, transfer, convey
and deliver (the "Transfer") to Bond Purchase, LLC, a Missouri limited
liability company, or it's assigns (the "Purchaser"), all for the Seller's
right, title and interest in Partnership Units (the "Units") of Real Estate
Associates Limited VI, (the "Partnership"), or $43.00 per Unit, net to the
Seller in cash, which amount shall be reduced by any distributions declared by
the Partnership after June 26, 1998.
Such Transfer shall include, without limitation, all rights in, and
claims to, any Partnership profits and losses, cash distributions, voting
rights and other benefits of any nature whatsoever distributable or allocable
to such Units under the Partnership's Certificate and Agreement of Limited
Partnership, as amended (the "Partnership Agreement"). The Seller hereby
irrevocably constitutes and appoints the Purchaser as the true and lawful agent
and attorney-in-fact of the Seller 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 vote, inspect Partnership books and records or
act in such manner as any such attorney-in-fact shall, in its sole discretion,
deem proper with respect to such Units, to deliver such Units and transfer
ownership of such Units on the Partnership's books maintained by the General
Partner of the Partnership, together with all accompanying evidences of
transfer and authenticity to, or upon the order of, the Purchaser of the
purchase price, to receive all benefits and cash distributions, endorse
Partnership checks payable to Seller and otherwise exercise all rights of
beneficial ownership of such Units. The Purchaser shall not be required to post
bond of any nature in connection with this power of attorney.
The Seller hereby represents and warrants to the Purchaser that the
Seller owns such Units and has full power and authority to validly sell,
assign, transfer, convey and deliver such Units to the Purchaser, and that when
any such Units are accepted for payment by the Purchaser, the Purchaser will
acquire good, marketable and unencumbered title thereto, free and clear of all
options, 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. The Seller further
represents and warrants that the Seller is a "United States person", as defined
in Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended, or if
the Seller is not a United States person, that the Seller does not own
beneficially or of record more than 5% of the outstanding Units.
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Agreement of Transfer
Page 2
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity or liquidation of the Seller and any obligations of the
Seller shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. This agreement is irrevocable and may not be
withdrawn or rescinded.
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 Seller releases and discharges the General Partners, any IRA or KEOGH
Custodian, and their respective officers, shareholders, directors, employees
and agents from all causes of action, claims, or demands the Seller has or may
have against them resulting from their reliance on this Agreement of Transfer
or any of the terms and conditions contained herein.
The Seller hereby certifies, under penalties of perjury, that (1) the
number shown below on this form and the Sellers Taxpayer Identification Number
is correct and (2) Seller is not subject to backup withholding either because
Seller has not been notified by the Internal Revenue Service (the "IRS") that
Seller is subject to backup withholding as a result of a failure to report all
interest on dividends, or the IRS has notified Seller that Seller is no longer
subject to backup withholding.
The Seller hereby also certifies, under penalties of perjury, that the
Seller, if an individual, is not a nonresident alien for purposes of U.S.
income taxation, and if not an individual, is not a foreign corporation,
foreign partnership, foreign trust, or foreign estate (as those terms are
defined in the Internal Revenue Code and Income Tax Regulations). The Seller
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.
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Agreement of Transfer
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Date: ______ 1998
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(Specify Number of Units Tendered: (Signature of Owner)
Indicate "ALL" if Number Not Available)
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Place Medallion Guarantee Stamp Here
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(Your Telephone Number) (Signature of Co-Owner)
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Place Medallion Guarantee Stamp Here
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(Your Social Security or Taxpayer ID Bond Purchase, LLC
Number) P.O. Box 26730
Kansas City, MO 64196
(816) 421-4670
FAX (816) 221-1829
- -------------------------------------- Bond Purchase, LLC
(Name of IRA Custodian, if applicable)
By:
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Its Authorized Representative
NOTE: All signatures on this agreement must be guaranteed by a member from a
registered national securities exchange, a member of the National Association
of Securities Dealers, Inc. or a commercial bank, savings bank, credit union,
savings and loan association or trust company having an office, branch or
agency in the United States, which is a participant in the Security Transfer
Agent Medallion Program.
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POWER OF ATTORNEY/PROXY
In conjunction with the Assignor's (seller's) Assignment of Partnership Units
dated as of even date herewith, Seller irrevocably constitutes and appoints
David L. Johnson, William C. Teel and Christine Robinson, or any of them, to be
Seller's true and lawful special attorneys-in-fact, with full power of
substitution to exercise in the name, place and stead of Seller any and all
rights, interests, powers, and duties with respect to or arising out of the
Seller's interest in:
REAL ESTATE ASSOCIATES LIMITED VII
which Units have been assigned to Bond Purchase, L.L.C. (the "Buyer") pursuant
to the Agreement of Transfer. This Power of Attorney shall include with
limitation, (1) the right to execute on behalf of Seller, all assignments,
certificates, documents and instruments that may be required for the purpose of
transferring the Units owned by the Seller, (2) the right to vote the Units or
to require or receive an information or report with respect to the partnerships'
books and records, (3) the right to endorse and cash any check made payable by
the partnership to Seller on or after the date hereof and (4) the right, if the
Units are held in an IRA account or pension account, to contact the Sellers
custodian and direct him to facilitate in the transfer of the Units from the
Seller to Buyer Fund. This Power of Attorney is part of and hereby incorporated
in the application for transfer. This Power of Attorney shall not be affected by
the subsequent mental disability of the undersigned, as principal, is
irrevocable and coupled with an interest, and Buyer shall not be required to
post bond in any nature in connection with this Power of Attorney. This Power of
Attorney shall also serve as a Letter of Authorization directing the Assignor's
custodian(s) and trustee(s) to sign any documents necessary to facilitate the
transfer of the units being assigned in conjunction with this Power of Attorney
as required by the herein named attorneys-in-fact.
__________________________________ ___________________________________
PRINT Assignor (Registered Name) PRINT Joint Assignor or
Custodian/Trustee
__________________________________ ___________________________________
SIGNATURE of Assignor SIGNATURE Jnt. Assignor or
Custodian/Trustee
DATE______________,199__ DATE______________,199__
Signature Medallion Guarantee Signature Medallion Guarantee
__________________________________ ___________________________________
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[REAL ESTATE ASSOCIATES LIMITED VII LETTERHEAD]
July 15, 1998
RE: REAL ESTATE ASSOCIATES LIMITED VII
Dear Investor:
Several limited partners have called or written us to tell us that they
have received an unsolicited tender offer to buy their interests in REAL VII
from Bond Purchase LLC for $43 per $5,000 unit. The buyers represent that these
purchases would be for investment purposes only.
The General Partners are unable to value the interests because of a lack of
a market for them, and therefore cannot comment on the fairness of Bond Purchase
LLC's tender offer. Limited Partners should be aware that a sale of their
interests in REAL VII will have tax consequences that should be evaluated in
consultation with each Limited Partner's own tax advisor.
In addition, the General Partners of REAL VII expects to solicit the
consent of the Limited Partners to a proposed transaction pursuant to which
several of the properties in which REAL VII has invested will be sold to a real
estate investment trust (the "REIT") to be organized by affiliates of the
General Partners of REAL VII. Proxy materials have been filed with the
Securities and Exchange Commission and solicitation of consents is expected to
commence in the third quarter of 1998. If the REIT transaction is consummated,
limited partners would receive distributions of net sales proceeds according to
their interests in the Partnership. It should be noted that the REIT
transaction will be subject to a number of conditions in addition to approval
by limited partners of REAL VII, including completion of a proposed private
placement of shares of the REIT. Accordingly, there can be no assurance that
the proposed purchases by the REIT of the REAL VII property interests will be
consummated or that, if consummated, will be on the currently proposed terms.
Most of the limited partners have negative capital account balances with
respect to their interests in REAL VII. Our accountants tell us that on
average, the negative capital account balance for a $5,000 investor at the end
of December 1997 was approximately $10,000. This means that an investor who
sold his interest on December 31, 1997 would recognize gain from the sale of
his REAL VII interest in an amount equal to approximately $10,043 (the $10,000
negative capital account balance plus the $43 cash sales price). The gain would
be "passive" and would be offset by passive losses which such investor may have
from REAL VII (suspended from prior years) or other sources. Unless a limited
partner has suspended or current losses available, a substantial portion of the
gain would still be subject to tax liability.
PLEASE CONSULT WITH YOUR TAX ADVISOR ABOUT THE IMPACT OF SUCH A SALE ON
YOUR OWN PARTICULAR SITUATION.
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REAL VII
The General Partners urge each investor to carefully consider the
foregoing information before tendering his or her units to the offeror.
Although the offer letter states that investors cannot withdraw units which may
already have been tendered, you should consult with your attorney to determine
if this requirement is enforceable should you wish to reconsider your decision
to tender.
Sincerely,
National Partnership Investments Corp.
/s/ CHARLES H. BOXENBAUM /s/ BRUCE E. NELSON
Charles H. Boxenbaum Bruce E. Nelson
Chairman of the Board President
